CAPITAL STRUCTURE ANALYSIS OF

MARUTI & INFOSYSBy: Priyatosh Pradhan(29)

PROJECT STUDY

BRIEF ABOUT PROJECT STUDY

• ACKNOWLEDGEMENT:- PROF SRINIVAS• OBJECTIVE:- TO KNOW PRACTICAL

APPLICATION OF CAPITAL BUDGETTING.• METHODOLOGY:- COMPLETELY ON

SECONDARY DATA• LIMITATION:- LACK OF SOME DATA

Maruti Suzuki India Ltd is one of India's leading automobile manufacturers.

Maruti Suzuki India Limited (MUL) was established in Feb 1981.

Introduction

BOARD OF DIRECTORS

Objective of “MUL”

• Modernization of the Indian Automobile Industry.• Production of fuel-efficient vehicles to conserve scarceresources.• Production of large number of motor vehicles which wasnecessary for economic growth.

SHAREHOLDING PATTERN

MARKET SHARE

2003-04

2004-05

2005-06

2006-07

2007-08

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

3591.2

4378.8

5452.6

6853.9

8415.4

EQUITY Rs(in crore)

EQUITY Rs(in crore)

2003-04

2004-05

2005-06

2006-07

2007-08

0

100

200

300

400

500

600

700

800

900

1000

311.9 307.6

71.7

630.8

900.2

DEBT Rs(in crore)

DEBT Rs(in crore)

DEBT AND EQUETY

LIQUIDITY RATIO:

RATIO ANALYSIS

These are the indicators of the ability of the company to convert its assets into cash or toobtain cash to meet short term obligations

WORKING CAPITAL:

Working capital is a widely used measure of liquidity.

Working Capital = Current Assets – Current Liabilities

TREND ANALYSIS

DER = LTL / Shareholder's Equity

Debt Ratio

Debt Ratio = Total Debt / Total Assets

Equity Ratio

Equity Ratio = Net worth / Total Assets

TREND ANALYSIS

2007-08 2006-07 2005-06 2004-05 2003-04

Debt Equity Ratio 0.004 0.01 0.02 0.07 0.08

Debt Ratio 0.003 0.009 0.02 0.05 0.06

Equity Ratio 0.80 0.58 0.67 0.70 0.67

2007-08 2006-07 2005-06 2004-05 2003-040

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

Debt Equity RatioDebt RatioEquity Ratio

A new plant opened at Manesar near Gurgaon in 2006. NEW K SERIES PLANT INSTALLED IN PUNE IN 2007-08.

FINANCIAL ANALYSIS INFOSYS

InfosysCompany’s profile

Infosys a Banglore based company started in 1981 .

The company was the first in India to register on the American stock exchange - NASDAQ with an issue of two million American Depository Shares(ADR)that raised $70 million.

Development centers in India –

Mohali, Mangalore, Mysore, Hyderabad, Pune, Chennai and Bhubhaneshwar Pioneered in ESOP in INDIA. 5th best managed company in Asia.

Global presence

Global development center in TORONTO.

Two Proximity center at 1.Freemont. 2.California 3.Boston

Infosys continues to expand in Europe.

Management Profile

The board consists of senior officers of Infosys including all active founders, along with external members of the board who are global leaders and high achievers in business and society.

Independent Members of Board :

Rama BijapukarDr.Omkar GoswamiSridar IyengarDeepak M satwalekarClaude SmadjaDr.Marti G SubrahmanyamDavid L BoylesProf.Jaffrey Sean LehmanInfosys Executives,members of the Board and CFO:V.Balakrishnan,CFOSrinath BatniK.DineshN.R,Narayana MurthyNandan M. Nilekani

Learing consulting & Business process

System Integration,PLC management

Technology ConsultingBPR & Enterprise solution

Application Development & maintenanceSoftware

Reengineering

Infosys Global Delivery Model

2008

2001

1996

1981

NEXT GENERATION BUSINESS MODEL

COMPETITIVE SITUATION

High quality Delivery And offering

Abundand Skilled Resources

Established Industry

Strong Govt. Support

Significant benefit

Established track record of Quality.

2.5 million english speaking graduate pools.

Services markets(including BPO) estumated at $50 billion in 2008 ,export to grow to $60 billion in 2010.

Large intangible benefits such as reduce time to market.

Balance Sheet Of Infosys

Particulars 2007-08 2006-07 2005-06 2004-05 2003-04

Share Capital 286 286 138 135.29 33.32

Reserves & Surplus

13,204 10,876 6,759 5,106.44 3,220.11

Fixed Assets 3,931 3,107 2,133 1,494.42 970.30

Investments 964 839 876 1,328.70 1,027.38

Deferred Tax Assets

99 79 56 34.03 35.63

Net Current Assets

8,496 7,137 3,832 2,384.58 1,220.12

OPERATING PROFIT

2004-05 2005-06 2006-07 2007-080.00

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

2325.11

2989

4225

4963

operating profit Rs (in crore)

Particulars

2007-08 2006-07 2005-06 2004-05 2003-04

Share capital

286 286 138 135.29 33.32

Reserve & surplus

13,204 10,876 6759 5106.44 3220.11

Total equity

13490 11162 6897 5241.73 3253.43

Equity Capital

Graphical form

2007-08 2006-07 2005-06 2004-050

2000

4000

6000

8000

10000

12000

14000

16000

Strong and Liquid Balance Sheet

• Highly liquid .

•Zero debt

•Dividends up to 30% of annual post-tax profits

•Superior return on invested capital & capital employed

2007-08 2006-07 2005-06 2004-05 2003-04

LTL - - - - -

OWNER’S FUND

13490 11162 6897 5241.73 3253.43

DEBT EQUITY RATIO

0 0 0 0 0

DEBT EQUITY RATIOIt is a measure of a company's financial leverage calculated by dividing its total liabilitiesby stockholders' equity. It indicates what proportion of equity and debt the company isusing to finance its assets.DER = LTL / Shareholder's Equity

SOLVENCY RATIO

Particulars 2007-08 2006-07 2005-06 2004-05 2003-04

Debt-equity ratio - - - - -

Debtors revenue (days) 72 64 61 67 48

Current ratio 3.28 4.91 2.73 2.77 1.65

Cash and cash equivalents/ Total assets (%)/ (Equity ratio)

57.00 50.62 64.71 54.38 85.11

Cash and cash equivalents/ Total revenue (%)

49.14 42.97 49.44 41.56 58.16

Higher the current ratio, greater is the assurance we have that current liabilities will be paid.Total assets divided by shareholder equity. Asset/equity ratio is often used as a measure of leverage.(Equity Ratio = Net worth / Total Assets)

COMPARITIVE ANALYSIS

SOURCES OF FUND

Year

2007-08

2006-07 2005-06

2004-05

2003-04

Sources of fund

Owners fund

Equity share capital

144.50 144.50 144.50 144.50 144.50

Share application money

Preference share capital

Reserve and surplus

8,270.90 6,709.40 5,308.10 4,234.30 3,446.70

TOTAL 8415.40 6853.90 5452.60 4378.80 3591.20

Year

2007-08

2006-07 2005-06

2004-05

2003-04

Sources of fund

Owners fund

Equity share capital

286 286 138 135.29 33.32

Share application money

Preference share capital

Reserve and surplus

13240 10876 6759 5106.49 3220.11

TOTAL 13409 1162 6897 5241.73 3253.43

MARUTI INFOSYS

2003-04 2004-05 2005-06 2006-07 2007-08

EQUITY Rs(in crore) 3591.2 4378.8 5452.6 6853.9 8415.4

1000

3000

5000

7000

9000

EQUITY Rs(in crore)

Infosys

Maruti

2003-04 2004-05 2005-06 2006-07 2007-08

Rs in Cr. 3253.43 5241.73 6897 11162 13490

1000

5000

9000

13000

Maruti

2003-04 2004-05 2005-06 2006-07 2007-08

DEBT Rs(in crore) 311.9 307.6 71.7 630.8 900.2

100300500700900

DEBT Rs(in crore)

Infosys has no Debt.

YEAR 2007-08 2006-07 2005-06 2004-05 2003-04

SECURED LOAN 0.10 63.50 71.70 307.60 311.90

UNSECURED LOAN

900.10 567.30

TOTAL 900.20 630.80 71.70 307.60 311.90

2007-08 2006-07 2005-06 2004-05 2003-04

LTL 308 835 1,217 3,076 3,119

Owners Fund 90,010 56,730 56,635 44,888 37,582

Debt Equity Ratio 0.004 0.01 0.02 0.07 0.08

Maruti

Solvency Ratios

2007-08 2006-07 2005-06 2004-05 2003-04

LTL - - - - -

OWNER’S FUND

13490 11162 6897 5241.73 3253.43

DEBT EQUITY RATIO

0 0 0 0 0

Infosys

Debt Equity Analysis

INFERENCE

This project helped us to know the various insights of the companies(Maruti and Infosys).We came across the various financial aspects of the companies and it is clear that the solvency of Infosys is better than that of Maruti.