maruti suzuki analysis of automobile manufacturers of india and china

7/29/2019 Maruti Suzuki Analysis of Automobile Manufacturers of India and China

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SUMMER TRAINING REPORT

ON

MARUTI SUZUKI

ANALYSIS OF AUTOMOBILE MANUFACTURERS OF

INDIA AND CHINA

Submitted in partial fulfillment of the requirements of

Submitted to:

BY


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Executive summary:

It has been a very good learning experience for me. I got this golden

opportunity to pursue my summer internship with MARUTI which is pride

of India. Maruti has taken Indian automobile industry to a new height andthus helped India to gain name and fame all over the globe. Since its

inception in 1981 there has been no looking back for the company. It is

known as the peoples car company in India. Today almost 60% cars which

run on Indian roads are manufactured by MARUTI. It has helped Indian

economy to grow a lot by expanding its cars to all over the world. After the

liberalization when MARUTI joined hands with SUZUKI motors it was just

like two powers coming together to become a super power. MARUTI

SUZUKI is today Indias largest car manufacturer covering almost a shareof 54% in the automobile market.

I would like to extend my vote of thanks to Mr. Satya Pal Singh has been

there althrough my internship with me. I learnt many things to start of with

the first is IRFS which is International Financial Reporting Standards which

every multi national corporation has to implement from April 1st, 2010.

Apart from this I also learnt the methodology to read and interpret the

financial statements of companies what important entries are to be

compared and what have to be left out. In my report, I have compared

MARUTI and HYUNDAI which today are the biggest automobile

manufacturers of India with FORD motors operating in China. I have

compared them in terms of profitability, GDP, Fixed assets, profit after tax,

total income and liquidity.

During my course of internship I have learnt many things about finances

and money control in any organization. Like treasury management, wealth

management etc.

Starting with investment into Fixed Assets MARUTI uses many Capital

Budgeting Techniques like N.P.V and Payback period. Maruti is presently

using many techniques and methods to centre its cost in this period of price-

rise.

Maruti at its excellence centre is using many techniques like value

engineering and value analysis to reduce its cost. Localization of parts is

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around 80-90% in the new as well as existing cars which has helped Maruti

to reduce its cost and increase profitability.

Maruti at its excellence centre is doing effective R & D to all its existing as

well as new models to reduce the costs. It has also trained its suppliers toprovide them with better quality goods so as to reduce wastage and increase

profits. Maruti has also build up a good and efficient dealer network all

across INDIA to provide cars and efficient after sales services to its

customers.

Maruti today stands as a no. 1 car manufacturer in INDIA which provides

cars not only in INDIA but also exports a large number all across the globe

which has directly and indirectly helped Indian Economy to strengthen its

position in World Economy.

My findings were that MARUTI is the leader in the Indian market whereas

Hyundai is biggest competitor of Maruti and is doing well. In all the basis

of comparison Maruti is highest except one or two clauses here and there.

Marutis growth rate is around 22% whereas Hyundai is just doing at the

rate of 9%. Ford motors (China) despite of having high sales are incurring

losses may be due to high taxes and high cost of raw material in China. We

can clearly state there is no comparison with Maruti in India if any othercompany wants to overlap Maruti has to really tie their belts.

Maruti is also launching some special schemes for the benefit of Indian

citizens like associating itself with public awareness programmes like polio

and AIDS and also opened some driver training schools.

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ACKNOWLEDGEMENT:

A formal statement of acknowledgement hardly need the ends of justice

in manner of expression if my deeply felt sincere and allegiant gratitude to

all those who encouraged me and helped me during my internship. I standindebted to Mr. S.K. Bhatia (HRD manager) for allowing me the

opportunity to pursue the summer internship with Maruti. The help,

assistance and guidance that I received during the course of this project

from Mr. Satyapal Singh (Sr. manager, Finance) corporate accounting and

reporting department and Mr. Rajesh Gupta ( Department Manager)

corporate accounting and reporting would be earnestly cherished in times to

come.

Throughout my internship, I tried to put in practice the theories and cases

taught during the classroom studies. Hence, I would extend thanks to

Faculty members who taught me during my PGP programme so far. Lastly,

I would thank each and everyone who has directly or indirectly helped me

to complete my project and apologize for any names omitted.

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Overview of the INDIAN Automobile Industry

Since the first car rolled out on the streets of Mumbai (then Bombay) in1898, the Automobile Industry of India has come a long way. During its

early stages the auto industry was overlooked by the then Government andthe policies were also not favorable. The liberalization policy and varioustax reliefs by the Govt. of India in recent years has made remarkableimpacts on Indian Automobile Industry. Indian auto industry, which iscurrently growing at the pace of around 18 % per annum, has become a hotdestination for global auto players like Volvo, General Motors Ford.

A well developed transportation system plays a key role in the developmentof an economy, and India is no exception to it. With the growth of

transportation system the Automotive Industry of India is also growing atrapid speed, occupying an important place on the 'canvas' of Indianeconomy.

Over the last few decades. the car market in India have been in aburgeoning stage with all types of cars flooding the market in order to meetthe demands of Indian customers who are increasingly exposed to state-of-the-world automobiles and want the best when it comes to purchasing a car.

It is expected that by 2030, the Indian car market will be the 3rd largest carmarket across the globe. Small cars seem to be ruling the roost in the Indianautomobile market with over 7.5 lakh small cars being sold in India in2006-07. The main encouraging factors for the success story of the carmarket in India are the increase in the opportunity for new investments, therise in the GDP rate, the growing per capita income, massive population,and high ownership capacity.

The liberalization policies followed by the Indian government had been

inviting foreign investors and manufacturers to participate in the car marketin India. The recent trend within the new generation to get work in thesoftware based sector has led to the rise in the income level and change inthe lifestyle which has further led to the increase in the demand for differentvarieties of cars among them. Moreover, there are many financingcompanies providing easy car loans at reasonable interest rates andaffordable installments.

The car Market in India is crowded with all varieties of car models like thesmall cars, mid-size cars, luxury cars, super luxury cars, and sports utility

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vehicles. Initially the most popular car model dominating the Car Market inIndia was the Ambassador, which however today gave way to numerousnew models like Maruti, Fiat, Hyundai, BMW, and many others. Moreover,there are many other models of cars in the pipeline, to be launched in the

car market in India.

Some of the leading brands dominating the car market in India at presentare Hindustan Motors, Reva Electric Car Co., Fiat India Private Ltd.,Daimler Chrysler India Private Ltd, Ford India Ltd., Honda Siel Cars IndiaLtd., General Motors India, Hyundai Motors India Ltd., Skoda Auto IndiaPrivate Ltd., and Toyota Kirloskar Motor Ltd. Since the demand for foreigncars are increasing with time, big brands like Mercedes Benz, Aston Martin,Ferrari, and Rolls-Royce have long since made a foray into the Indian car

market.

Today Indian automotive industry is fully capable of producing variouskinds of vehicles and can be divided into 03 broad categories : Cars, two-wheelers and heavy vehicles.

Cars dominate the passenger vehicle market by 79%. Maruti Suzuki has

52% share in passenger cars and is a complete monopoly in multi purpose

vehicles. In utility vehicles Mahindra holds 42% share.

A well developed transport network indicates a well developed economy.For rapid development a well-developed and well-knit transportation

system is essential. As India's transport network is developing at a fast pace,

Indian Automobile Industry is growing too. Also, the Automobile industry

has strong backward and forward linkages and hence provides employment

to a large section of the population. Thus the role of Automobile Industry

cannot be overlooked in Indian Economy. All kinds of vehicles are

produced by the Automobile Industry. India Automobile Industry includes

the manufacture of trucks, buses, passenger cars, defense vehicles, two-wheelers, etc. The industry can be broadly divided into theCar

manufacturing , two-wheeler manufacturing and heavy vehicle

manufacturing units.

The Indian automobile industry crossed a landmark with total vehicleproduction of 10 million units.

Car sales was 8,82,094 units against 8,20,179 units in 2004-05.

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The two-wheeler market grew by 13.6 per cent with 70,56,317 units against62,09,765 units in 2004-05.

Commercial vehicles segment grew at 10.1 per cent with 3,50,683 units

against 3,18,430 units in 2004-05.

Facts & Figures

India, in auto sector, is turning to be a sourcing base for the global automajors. The passenger car and the motorcycle segment is set to grow by 8-9

per cent in coming couple of years, says the ICRA report. The industry islikely to maintain the growth momentum picked up in 2002-03.

The ICRA's analysis points on the auto sector that the passenger car marketin the country was inching towards cars with higher displacements. Thesports-utility-vehicle (SUV) that was getting crowded everyday, wouldwitness intense competition as many SUVs had been competitively priced,the report said.

Honda, Suzuki, General Motors and Hyundai, the global automakers hadalready launched their premium SUVs in the market to broaden their

portfolio and create product excitement in the segment estimated at about10,000 units annually.

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0

10000

20000

30000

40000

50000

60000

70000

1997 1998 1999 2000 2001 2002 2003 2004

Ye ar

World Vehicle Production Trends (in '0

North America South America European Union Other Europe Japan Asia-other than Japa

The reason behind the immense growth of the India Car Industry can beattributed to the availability of car loans, affordable rates of interest, smooth

repayment facilities and the deductions offered to the customers by theretailers.

The constant changes in the existing car models with regard to design,innovation, technology, and colors, have led to a fiercely competitivemarket. Now that technology and innovation are not alien concepts forIndian car makers, Indian cars are becoming increasingly sleek, stylish, andluxurious.

Major players in the Indian Car Industry:Fierce competition among the major car players can be witnessed in theIndian Car industry. The India car industry is being dominated by thefollowing major players:

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Car Manufacturers In India

Hindustan Motors Maruti Udyog

Reva Electric Car Co Fiat India Private Ltd Ford India Ltd General Motors India Honda Siel Cars India Ltd Hyundai Motors India Ltd Toyota Kirloskar Motor Ltd

Skoda Auto India Private Ltd

AUDI AG

BMW

CHEVROLET

NISSAN MOTOR CO. LTD

PORSCHE

ROLLS-ROYCE MOTOR

TATA MOTORS

The latest developments in the car market in India:

In Nashik, a car manufacture plant has been established as a result of a jointventure of Renault and Mahindra & Mahindra to manufacture acomparatively cheap cars (at US$ 9,700), mainly targeting the Indian

middle classes, the youth, and the affluent classes in rural India. TataMotors has plans to launch a luxury car with an engine of 33 horsepower.The recent reduction in the excise duty of the small cars from 24% to 16%will definitely prove to be a boon for the India car industry.

Technical advancements in the Indian Car Industry:

The latest technical advancements in the car market in India include the

following features

Power Steering Radial Tires Anti-lock Breaking Systems Tip-tronic Transmission

The varied car markets in India:

The market for small cars now occupies a substantial share of 70% out of

the annual production of 1 million cars in India. Maruti Udyog, with its

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legendary Maruti -800 is the leader in the small car market. A number ofmanufacturing plants are coming up for advancements in the field of smallcars. The recent launches in the small car market in India are:

Getz Prime by Hyundai Motor Co. Tata Magic by Tata Motors Tata Magic Palio Stile byFiat India Pvt. Ltd

Mid-sized cars are normally cars ranging from Rs. 3-8 lakh and generallymeant to be 4 seaters. The mid-sized car section has recently moved beyondthe 1 lakh target. The recent launches in the mid-size car market in Indiaare:

1.4 SXI Duratorq by Ford Motor Co. Indigo XL by Tata Motors

Luxury cars and premium cars are quite expensive and they are purchasedfor their design, innovation, and technology. They are usually priced overRs. 20 lakh and have many takers in India. The recent launches in the

premium car market in India and the luxury car market in India are:

Sonata Embera H-Matic by Hyundai Motor Co. Nissan Teana by Nissan Motor Co. Ltd

Sports Utility Vehicles (SUVs) have also become very popular in India as

they are considered advantageous due to their ability to accommodate more

passengers. They are ideal for trips with the whole family. The Sport Utility

Vehicle market in India is the most booming market in India presently and

SUVs have become the fastest selling cars of India.

The Indian Automobile Market is expected to grow at a CAGR of 9.5percent amounting to Rs. 13,008 million by 2010. The Commercial Vehicle

Segment has been contributing to the automobile market to a great extent.

Many foreign companies have been investing in the Indian AutomobileMarket in various ways such as technology transfers, joint ventures,strategic alliances, exports, and financial collaborations. The auto market inIndia can boast of attractive finance schemes, increasing purchasing power,and launch of the latest products.

Total sales of major car manufacturers in India registered a figure of 0.674million units at the end of March, 2007. The number of car exports in India

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was 39,295 units. General Motors, Maruti, and Honda accounted for 60percent of the market sales at the end of April, 2007. There has been anincrease in the purchase of motorcycles and cars both, in the rural as well asurban areas.

Some vital statistics regarding the automobile market in India has beenmentioned below:

Two wheelers - 2nd largest in the world Commercial Vehicle - 4th largest in the world Passenger car- 11th largest in the world

As such, the Indian automobile market comprises of a wide variety ofvehicles such as light, medium, and heavy commercial vehicles, cars,

scooters, mopeds, motor cycles, 3 wheelers, and multi-utility vehicles suchas jeeps and trax.

The modern automobile market in India has been considering key issues inthe process of growth:

Customer care, and not just 'service'

Domestic as well as multinational investments

Searing through cut-throat competition

Road safety Anti-pollution norms

Coordination with the government to enable advancement

Used vehicle trade

The future of Indian Automobile market is bright as it looks forward to

manufacturing and implementing new innovations such as electric cars as

provided by Reva, alternate fuels like CNG and LPG, and probably

customized Internet automobile orders.Key Challenges facing the industry

Increasingly Stringent Emission & Safety Regulations

Technological capability

Cost

Increase in input prices

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Ferrous & Non-Ferrous Metals

Crude oil & derivatives

Natural rubber

Rising Customer Expectations

Product features

Quality & reliability

Integration with Global Markets

Lowering product life cycles

Reducing time-to-market for new products

Threat of new competition

Different Segments of the industry

Passenger Car Sales- Domestic & Exports

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Maruti 45%

Tata 17%Hyundai 22%Toyota 4%Honda 4%others 8%

Tata Motors, Maruti Udyog Limited, Hyundai, Honda, Fiat, Ford, Toyota,

Mahindra & Mahindra, etc are the leaders in Indian passenger car segment

delivering compact and luxurious cars. Some of the domestic as well as the

global players are in the process of delivering more compact cars in Indianmarkets.

During financial year 2005-06, sales of passenger cars in Indian market

showed a growth of 7.55% with an increase of 5.93% in exports by Indian

passenger car manufacturers.

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India is the fourth-largest car market in Asia. During financial year 2005-06, Indian passenger car segment grew at 19% with the sale of 1.3 million

passenger vehicles.

Passenger cars come in great variety, starting from 2-seater electric carREVA to 5-seater compact cars like Zen, Santro, Indica, etc. They come inall ranges- economical and luxurious. Tata Motors, Maruti Udyog Limited,Mahindra & Mahindra, etc are the leading Indian manufacturers in

passenger cars segment, whereas many foreign players such as Hyundai,Honda, Fiat, Ford, Toyota, etc are also serving the segment.

Production of passenger cars in Indian automobile industry witnessed an

overall growth of more than 8%. The major players are in the process of

expanding their capacity. Some companies are also in the process of

launching new compact cars in Indian market.

During financial year 2005-06, passenger vehicle sales showed a growth of

7.55% over the preceding year. Passenger vehicle exports increased by

5.93% in the same period.

Category 1998-99 2004-05 (Apr-Dec)

Passenger Car 25468 121478

Multi Utility Vehicles 2654 3892

Commercial Vehicles 10108 19931

Two Wheelers 100002 256765

Three Wheelers 21138 51535

Percentage Growth -16.6 32.8

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513,415

127,519

0

500,301

105,667

63,751

557,410

114,479

51,441

782,562

146,325

60,673

960,505

181,778

67,371

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

2000-01 2001-02 2002-03 2003-04 2004-05

Year

Passenger Vehicle Production & Market Sub-Segments (Nos.)

Passenger Cars Utility Vehicles Multi-Purpose Vehicles

Foreign auto makers, including Ford Motor Co. , General Motors Corp.,

Honda Motor Co. Ltd., Toyota Motor Corp., DaimlerChrysler AG and

Hyundai Motor Co. Ltd., are looking to increase their presence in India anduse it as an export hub.

Exports of auto components, whose manufacturing costs are 30-40 per centlower than in the West, have grown at 25% a year between 2000 to 2005.

Key Market Drivers

Increasing disposable incomes

Rising aspirational levels

Low interest rates.

Wide variety and easy availability of Financing options.

High sensitivity to Fuel prices

Lack of urban & rural public transportation infrastructure FlourishingService Sector

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Facts & FiguresThe Indian automotive export industry presently is finding a goodrecognition globally. The auto industry along with the component industryis contributing to the export effort of the country. In 2002-03, the export of

the automobile industry had registered a growth rate of 65.35%. In 2003-04,it was 55.98%. The following table briefs about the 2003-04 and 2004-05(upto April-Dec. 2004) automobile export in numbers.

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Snapshot of Maruti Suzuki:

Maruti was born as a government company, with Suzuki as a minor partner, tomake a people's car for middle class India. Over the years, their product range haswidened, ownership has changed hands and the customer has evolved. Whatremains unchanged, then and now, is their mission to motorise India.

Marutis parent company, Suzuki Motor Corporation, has been a global leader inmini and compact cars for three decades. Suzuki's technical superiority lies in itsability to pack power and performance into a compact, lightweight engine that isclean and fuel efficient. The same characteristics make their cars extremelyrelevant to Indian customers and Indian conditions. Product quality, safety and costconsciousness are embedded into their manufacturing process, which it hasinherited from their parent company.

Right from inception, Maruti brought to India, a very simple yet powerful Japanesephilosophy 'smaller, fewer lighter, shorter and neater'

From the Japanese work culture Maruti imbibed simple practices like an openoffice, a common uniform and common canteen for everyone from the ManagingDirector to the workman, daily morning exercise, and quality circle teams.From the Japanese work culture Maruti imbibed simple practices like an openoffice, a common uniform and common canteen for everyone from the CEO to theworkman, daily morning exercise, and quality circle teams.

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Overview:

Incorporated

February 1981

JointVentureAgreement

October 1982

54.2% Suzuki, Japan, balance with Other Financial Institution andPublicEquity

Structure

764, 842 including 53,024 exports.

Sales (No ofCars)Financialyear2007-08

INR 178603 Million , Yen 449 Billion ,$ 4.512 Billion *

INR 17308 Million

Sales (Netof Excise)Financialyear2007-08

7090 of Financial year 2007-08

Gurgaon: 3 vehicle assembly plantsManesar: 1 vehicle assembly plantHead Office in New Delhi, IndiaRegional offices: 16

Profit AfterTax

Financialyear2007-08

Suzuki Powertrain India Limited (SPIL), Joint Venture between

Suzuki Motor Corporation 70% Equity the rest is with MarutiSuzuki India Limited.Global hub for Diesel engines and transmissions for Suzukiworldwide.

EmployeeStrength

15 Joint Venture companies, including Suzuki Powertrain IndiaLimited for component supply.

Facilities

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True Value: for sale and purchase of preowned carsMaruti Insurance: for insurance of Maruti vehicles (fourcompanies)Maruti Finance: for financing Maruti vehicles

DieselPowertrainPlant

JointVenture

11 models with around 100 variants including:

SubsidiaryCompanies

ProductPortfolio

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Maruti 800

Omni

AltoWagonR

SwiftZen

GypsyDZire

Versa

ProposedInvestmentstill 2010

INR 9000 Crores i.e. INR 90 Billion, Yen 257 Billion ( 1Yen =0.35 Rs), $ 2.25 Billion (1 $ = Rs 40) *

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Maruti believes their core values drive Maruti in every endeavour

More than half the number of cars sold in India wear a Maruti Suzuki

badge. Maruti is a subsidiary of Suzuki Motor Corporation Japan.As India's largest passenger car company, it accounts for over 50 per cent of

the domestic car market.

Maruti have a sales network of 600 outlets in 393 towns and cities, and

provide maintenance support to customers at 2628 workshops in over 1200

towns and cities (as on March 31,2008).Since inception, it has produced

and sold over 7.5 million vehicles, including almost 500,000 units in

Europe and other export markets.

Maruti has been rated first in customer satisfaction for eight years in a row

in J D Power's Surveys, and are India's Most Respected Automobile

Company (As per survey conducted by Businessworld, a reputed Indian

Magazine)

Also, in an independent survey conducted by Forbes.Com where they rated

top 200 reputed companies on various parameters such as reputation within

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the customer and employee fraternity, it stood 91st. In the automobile

section it finsihed 7th.

Reaching out to Customers:

Their customers have rated them first in J D Power's

Customer Satisfaction Survey for eight consecutive years.

When Maruti achieved it first time in 2000, people were

skeptical. They could not fathom how could a market

leader like Maruti manage to keep happy such a vast and diverse group of

customers.

The answer perhaps lies in their approach towards customer satisfaction.

Being first in a Customer Satisfaction rating was not just simply about

winning an award. Rather, it became their weapon to fight and win in this

competitive market place.

From the very beginning, the growth of Maruti has influenced the

growth of the country as a whole.

Maruti's growth has been synonymous with the Indian auto industry. Theinception of Maruti in 1981 saw the growth of many automotive ancillarymanufacturers.The company set up a network of component vendors, dealers and service stationsand facilitated around 60 technical collaborations for Indian vendors fromJapanese, European and even American partners to upgrade technology andquality levels. Along with this came the task of instituting quality processes and

systems across this network. Today, the suppliers to Maruti are huge corporationsthemselves and are today in the global business arena.

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Working with Suppliers:

Participation has been the key to their success. Through a participative and collaborativeapproach called Value Analysis & Value Engineering, it has been successful in bringing

cost reduction across all their models. The localization levels are as high as 85 per cent.

Their supplier partners have been major contributors to their turnaround. Less than 20 percent of a car is manufactured in-house. The rest is accounted for by their 215 suppliersand hundreds of second and third tier of vendors who, in turn, supply to them.The underlying basis of their relationship has been that rather than focus on "pricereduction" of the component, they have to work together to bring down the "cost" of thecomponent.

One of the ways to reduce their cost has been to replicate the Maruti Production Systemon the shop floor of supplier companies. These techniques have been transplanted throughthe Maruti Centre for Excellence. The suppliers, too, have been able to reduce wastageand make their operations lean and efficient.Rather than appropriate the entire gains, they have a system whereby suppliers keep a partof the productivity and cost gains and pass on the rest in the form of a price reduction.The other route to cost reduction has been Value Analysis & Value Engineering, another

collaborative effort between their suppliers and Maruti.Thanks to their efforts to improve efficiencies and reduce cost, both in-house and at theirsuppliers, they have been able to reduce car prices for customers over the past 5-6 years

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Marutis Gurgaon facility

Their facility in Guragoan houses three fully integrated plants. While the threeplants have a total installed capacity of 350,000 cars per year, several productivityimprovements or shop floor Kaizens over the years have enabled the company tomanufacture nearly 650,000 cars per year at the Gurgaon facilities.

The entire facility is equipped with more than 150 robots, out of which 71 havebeen developed in-house. More than 50 per cent of their shop floor employeeshave been trained in Japan.

Marutis Manesar facility

Their Manesar facility has been made to suit Suzuki Motor Corporation (SMC) andMaruti Suzuki India Limited's (MSIL) global ambitions. Rated high amongSuzuki's best plants worldwide the plant was inaugurated in February 2007.

The plant has several in-built systems and mechanisms to ensure that cars beingmanufactured here are of good quality. There is a high degree of automation androbotic control in the press shop, weld shop and paint shop to carry onmanufacturing work with acute precision and high quality. In particular, areaswhere manual operations are hazardous or unsafe have been equipped with robots.

The plant is designed to be flexible: diverse car models can be made hereconveniently owing to automatic tool changers, centralized weld control systemand numerical control machines that ensure high quality.

The open lay-out and ergonomic design make work convenient and improve

productivity.

The plant at Manesar is the company's fourth car assembly plant and has startedwith an initial capacity of 100,000 cars per year. This will be scaled up to 300,000cars per year. A total investment of Rs 2,500 crore will be made in this car plant by2010

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Marutis Diesel engine plant

Suzuki Powertrain India Limited the diesel engine plant at Manesar is Suzuki &Maruti's first and perhaps the only plant designed to produce world class dieselengine and transmissions for cars.

The plant is under a joint venture company, called Suzuki Powertrain IndiaLimited (SPIL) in which SMC holds 70 per cent equity with the rest held by MSIL.

This facility has an initial capacity to manufacture 100,000 diesel engines a year.This will be scaled up to 300,000 engines per year by 2010.

The diesel engines manufactured at this plant will also be exported to SMCcompanies across the world.

This facility, too, has a high level of automation. Final inspection of components isdone through automatic measuring and marking machines, which leads to auniform and error free production.

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MarutiExports

Maruti Suzuki exports entry level models across the globe to over 100 countriesand the focus has been to identify new opportunity markets. Latin America andAfrica constitute new emerging markets where Maruti exports have increased atleast by 60% in the last year.

New technology:The company is working towards localization, development andtesting of products - both new and existing. This would help inindegenisation of various vehicle aggregates at lower costs. Thelaunch of Zen Estilo, launched with a localization of 94.2% is a casein point.

Capabilities strengthened in component and vehicle evaluation,

benchmarking and design optimization will further improve andupgrade existing models for comfort, style and value for money.

Alternative fuels like CNG, LPG, which could help make environmentally friendlyvehicles are being worked upon.Global Sourcing and advanced sourcing get advanced technologies into India at

lower costs

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Marutis Facilities.

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Board of Directors:

Maruti Suzuki Limited is a Board-managed company. Currently the directors on the Boarare:Mr. R. C. Bhargava, ChairmanMr. Shinzo Nakanishi, Managing Director & Chief Executive OfficerMr. Keiichi Asai, Director (R&D).Mr. Hirofumi Nagao, Joint Managing DirectorMr. Tsuneo Ohashi, Director (Production)Mr. Shuji Oishi, Director (Marketing & Sales)Mr. Osamu Suzuki, DirectorMr. D. S. Brar, Director

Mr. Amal Ganguli, DirectorMs. Pallavi Shroff, DirectorMr. Manvinder Singh Banga, Director

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Analysis Of Marutis Financial Statements

Capital of Maruti:

FinancialYears Amount2005 14452006 14452007 1445

Analysis:

So by looking at this we can conclude that the companys Capital has

remained same over the years. Which shows the company is working well

& its earning enough profit to manage its operations & feel no need to

borrow money or raise fresh capital. By doing this the company can also

save on the costs involved in raising fresh capital. Likewise cost of debt,

cost of Equity and other likely costs can be saved. Thus the money saved

can be added to reserves and surplus and can be allocated to some better

project.

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Reserves & Surplus:

Financial Years Amount

2005 437882006 545262007 68539

Analysis:

We can state that the reserves of the company are growing at a rate of

around 25%. The rate of growth is very good the basic reason for the

growth in the amount of reserves is that the sales are growing at a

good speed for the company. With this we can also conclude that the

company is making more & more profits. Thus the treasury and wealth

management of the company has a role to play now as it has a good amount

of wealth with itself and has to now evaluate different projects and choose

those which are beneficial for the company.

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Fixed Assets:

Financial Years

Amount

2005 505312006 495462007 61468

Analysis:

We can see that the fixed assets decreased in the year 2005-06 the reason

may be that some old models like Zen was stopped & new models were

launched so the company might have to sell off the old plant & machinery

& purchased new one in the following year so the fixed assets have

increased. The fixed assets of Maruti mainly includes the assembly lines

and paint shops so if there is any increase in the amount of fixed assets it

must be due to addition to either of the two. Maruti uses different Capital

Budgeting Techniques like NPV and Payback Period to evaluate different

projects before investing in Fixed Assets.

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Current Assets:

Financial Years Amount2005 29720

2006 374092007 38459

Analysis:

The current assets of the company are growing which shows that the

company is investing more in inventories and other current assets. So that it

can meet the growing demands of the industry. The company is prepared

for any short-term increase in demand which arises in near future by

keeping high inventory level. The company follows Just In Time inventory

system and along with this it also follows Economic Order Quantity model

for inventory management. Maruti also uses KANBAN system in its

assembly lines.

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Current Liabilities:


2006 201102007 15058

Analysis:

The current liabilities of the company increased in 2005-06 but there was a

significant decrease in 2006-07. This is because Maruti has built aparticipative and collaborative approach called Value analysis and Value

Engineering with their partners and suppliers it has been successful in

bringing down levels of Current liabilities as there is fixed period of time

after which it makes payment to its creditors. The localization levels are as

high as 85 per cent. Their supplier partners have been major contributors to

their turnaround. Less than 20 per cent of a car is manufactured in-house.

The rest is accounted for by their 215 suppliers and hundreds of second and

third tier of vendors who, in turn, supply to them.

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Gross Sales:

Financial Years Amount2005 1329142006 1470432007 171442

Analysis

Gross sales of the company have grown by 13% in 2005-06 and have grown

by 24% in 2006-07 which shows a drastic growth. Due to growth in sales

the company has grown all over. This growth is due to launch of new

models in 2005 and opening up of new plant at manesar. Now customers

have a lot more variety to opt from as their own trusted brand Maruti is

providing them with more luxurious cars at an economical price.The diesel

engine plant at manesar has also helped Maruti to increase its sales. Thesales of the company are the highest by any automobile company operating

in India. Some other factors which have helped Maruti increase its sales

are high aspiration levels, Increasing disposable income, easy availability of

financing options

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EBITDA:


2006 258882007 20558

Analysis

The earnings of the company have grown by 4% in the year 2005-06 due to

the launch of SWIFT which was a huge hit amongst the consumers. Buthave dipped down in 2006-07 due to the rises in prices of almost all the

factors of inputs but company has not raised the the prices of cars

accordingly. Still the earnings stand at 20,558 million Rs which is not bad.

The reason behind decrease in earnings can be that the consumers today are

switching over to high class and luxury cars. Another reason could be that

maruti is investing more in its subsidiary schemes like True Value, Maruti

Insurance , Maruti Finance etc.

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Net cash from Operating Activities:


2006 122262007 20280

Analysis

Cash, the most liquid asset, is of vital importance to the daily operations of

any business firm. Net cash from operating activities has grown 20% in

2005-06 and 65% in 2006-07 which shows immense growth. Cash from

operating activities is the sole component which helps in running of the

company. To achieve a growth of 65% in it is a very difficult task which

MARUTI has achieved. MARUTI is using Adjusted Net Income Method to

estimate its future cash flows. As the company is growing it may need

higher amount of cash balance with itself so with a high amount of cash

available it can increase its optimal level of cash balance with ease.

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Profit margin ratio = Profit after tax /sales

For Maruti

Financial Years = P.A.T/ SALES =P.M.R

2005 = 34421/132914 = 25.89%

2006 = 43939/147043 = 29.88%

2007 = 59471/171442 = 34.68%

A high gross profit margin relative to its competitors means that the firm is

able to produce at a relatively lower cost.

Analysis

Maruti Suzuki has undertaken several measures like use of energy efficientlamps, use of solar energy for heating water in security barracks, use ofnatural lighting, etc. These initiatives and other efforts have reducedelectricity consumption per car by 2.5%, water by 4% and gas by 2.2% forthe Maruti. This has reduced production cost.Target costing and value engineering/value analysis during the time ofdesigning and production have reduced production cost.

Localization of parts has led to reduced inventory levels. This leads toreduced transportation and storage cost. E.g. Zen Estilo is havinglocalization of 94.2%.Maruti Centre for Excellence imparts training to supplier and helps themupgrade productivity and operational efficiencies leading to lower materialcost.

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Asset Turnover Ratio = Sales/Average total assets

For Maruti

Financial years = Sales/Avg. total Assets = A.T.R

2005 = 132914/50531 = 2.63 times

2006 = 147043/49546 = 2.96 times

2007 = 171442/61468 = 2.78 times

The Inventory Turnover ratio tells us how many times a company has gone

through, or turned over, its inventory during a specified time period,

usually a year. It gives us an indication of how fast a company can sell its

products. Higher the ratio, greater, greater the efficiency of inventory

management

Analysis

Asset turnover ratio for Maruti is over 2.5 times which shows that the

company is utilizing its assets very efficiently and effectively. It is very

important for any organization to grow that it utilizes its assets well. Thereason behind this ratio being high for Maruti is that the sales are very high

and with use of JIT inventory system for Maruti a lot of time is saved on the

assembly line and products are manufactured quickly. Maruti on an average

produces a car every 32 seconds this has also helped Maruti increase it

assets turn over ratio.

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Comparison of Maruti,Hyundai &Ford Motors (China)

In terms of Fixed Assets

Fixed Assets(in Million) Financial Years

Hyundai31339 200531840 200638906 2007

Analysis

Fixed assets of Hyundai is almost same in the year 2005 and 2006. But the

growth in 2007 is around 20% which is good. This shows that the company

is growing which can be a threat to MARUTI as HYUNDAI is the biggest

competitor of MARUTI in the INDIAN CAR MARKET.

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MarutiFixed Assets(in Millions) Financial Year

50,531 200549,546 2006

61,468 2007

Analysis

Fixed assets of MARUTI have slightly dipped in 2006 but have grown by

around 22% in 2007 which is more growth than HYUNDAI. The reason

may be launch of new models for which the company has to set up new

resources. This shows that both MARUTI and HYUNDAI have grown in

the year 2006 so it was a good year for the automobile manufacturers but

growth in MARUTI is higher than growth in HYUNDAI. Although Marutiis very careful in investing into fixed assets as before investing it evaluates

different projects using Capital Budgeting Techniques. Setting up of new

plant at Manesar has also played a part in rising Fixed Assets for the

company.

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Ford Motors (China)Fixed Assets(in Million) Year

61945 200560658 200662500 2007

Analysis

Fixed assets of FORD motors is almost same in all the years. It can be

concluded that the growth in FORD motors china is very slow. The reason

behind this could be that the Automobile Industry is not growing at a pace

at which the INDIAN automobile industry is growing.

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COMPARISION (year 2005)

Fixed Assets(in Million) Automobile Co.

50,531 Maruti31,339 Hyundai61,945 Ford China

Analysis

In the year 2005 we can see that the Fixed Assets of MARUTI are almost

1.75 times of HYUNDAI. The reason is that MARUTI is offering more

variety in terms of its product to its customers for which it requires more

bigger plant space and more assembly lines to manufacture its cars. So in

order to cater to diverse needs of customers it has to maintain a high level

of Fixed Assets. As fixed assets are the lifeline of any manufacturingorganization it is very important for Maruti to maintain a good level of

fixed assets.

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Fixed Assets(in Million) Automobile (Co.)49,546 Maruti31,840 Hyundai60,658 Ford China

Analysis

In this year we can see that Fixed Assets of all the three firms have dipped a

little. The reason is that Maruti has disposed of some of its machinery used

at assembly lines and weld shops in order to make the process faster and

better to implement Six sigma and JIT systems it has thought to use robots

at assembly Lines.

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Fixed Assets(in Million) Automobile (Co.)

61,468 Maruti38,906 Hyundai62,500 Ford China

Analysis

In the year 2007 we can see that the INDIAN market has grown. Due to

this there is rise in the level of Fixed Assets. The growth in both INDIAN

companies is good but growth in FORD motors operating in China is stable.In this year also MARUTI is almost 1.75 times bigger than HYUNDAI.

The increase in the levels of fixed assets in this year is the setting up of new

plant at Manesar where Maruti has to invest a lot in setting up of new paint

shops, weld shops and assembly lines to manufacture world class cars.

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Analysis Based On Total Income Of All The 3 Firms

MarutiTotal Income(in Million) Years

113538 2005124814 2006152523 2007

Analysis

Marutis total income is quite good. In the year 2006 it has grown at around

9% which is the same rate at which the industry is growing in INDIA & in

the year 2007 the growth is around 24% which is very good. It is a verygood sign for the company that it is growing at a faster rate than the

industry. It stands at almost double of Hyundais Total Income which is

MARUTIs largest competitor. So we can conclude that at the present time

it has a very little threat to Maruti. Maruti today is the largest car seller in

the Indian Market today its share is 54% which means more than half of

the cars that run in India today are manufactured by Maruti.

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HyundaiTotal Income(in Million) Years

58,830 200563648 2006

69601 2007

Analysis

Hyundais Total Income is growing at a pace which industry is growing i.e

9%. But if Hyundai wants to grow more it has to put in more efforts in

order to please its customers with its product range so that the company

earns more profit. It has to pull up his socks think to increase customers byproviding some more services which Maruti is providing and build trust and

loyalty which Maruti has built over the years.

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Ford Motors (China)Total Income(in Million) Years

176835 2005160065 2006172455 2007

Analysis

Fords Total Income stands at a very high position as compared to both the

Indian companies. But we can see a huge decline in the year 2006 and a

slight increase in 2007. This shows that the conditions prevailing in China

are not as favourable as conditions prevailing in the Indian Car Market.

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Total Income(in Million) Automobile Co.

113538 Maruti58830 Hyundai176835 Ford China

Analysis

In the year 2005 Marutis Income stand at almost double that of Hyundais

income but it is lower than Fords Income .So in the Indian Market there is

still a minimum level of threat to Marurti as its major competitor today

stands at half of its position. Maruti has a share of 54% in the Indian Car

Market which shows that Maruti is the leader of the market so enjoying the

position which Maruti has built it has a vey high income.

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Analysis

In the year 2006 also Marutis income is double that of Hyundai . But the

income of Ford has declined from previous year. So we can say that

Hyundai has to put in some serious efforts to give a tough competition to

Maruti & Maruti is enjoying the brand image & loyalty which it has build

over the years in the Indian car Market. Maruti has built a very strong andefficient dealer network all across India it has a sales network of 600 outlets

in 393 towns and cities, and provide maintenance support to customers at

2628 workshops in over 1200 towns and cities which in turn has helped

Maruti increase its income.

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152523 Maruti69601 Hyundai

172455 Ford China

Analysis

In the year 2007 we can see that Maruti has grown by 24 %but Hyundai has

grown only by 8-89%. The growth at which the industry is growing in

India. We can conclude that the Hyundai is growing with the sector but

Maruti is growing more than the sector is growing in India. Also Maruti has

exported almost 500,000 units in Europe and other export markets which

has also played a very important part in increasing income of Maruti.

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Analysis Based On Profit After Tax Of All The 3 Firms

MarutiProfit After Tax((in

Million) Year34421 200543939 2006

59471 2007

Analysis

The profit after tax is 17 times higher than of Hyundai and also the growth

in profit after tax is also more than the growth of Hyundai. This shows that

Maruti is the leader in the Indian Car Market because it is earning more

profit than any other automobile manufacturer operating in India. So the

brand and trust Maruti has build among Indian still strong and favoring

Maruti. Maruti has also used many techniques at its excellence centre like

Value based Engineering and Value Analysis which has helped Maruti

reduce its Cost and increase profits.

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HyundaiProfit After Tax(in

Million) Year2445 200512592 200616004 2007

Analysis

Hyundai has shown a tremendous growth in the year 2006 and the growth

in the year 2007 is also good. This shows that being not a very old company

the Hyundai motor corporation is doing good in the Indian market. The

profit after tax is not as high as Maruti but is satisfactory. May be the

growing economy of India has helped Hyundai to grow at a good pace.

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Ford Motors (China)Profit After Tax((in

Million) Years1909 2005-12419 2006-2452 2007

Analysis

Though the sales of Ford are higher than that of both the Indian

organizations the profits are very lo. The reason behind this could be that

the the expenses incurred and taxes paid are very higher. We can conclude

that the conditions prevailing in China do not favor the organizations

operating there.

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COMPARISION(year 2005)

Profit After Tax((inMillion) AutomobileCo.


Analysis

In the year 2005 Profit after tax for Maruti is the highest. It is 17 timesmore than that of Hyundai. This shows that the profitability of Hyundai is

less though is income is half that of Maruti its profit after tax is very less

as compared to Maruti. Maruti is earning huge profit as compared to Ford

also whereas income of Ford was much higher. Fords profit is even lesser

than Hyundai.Maruti has taken special schemes at its excellence centre to

train its suppliers to provide them with better quality goods to reduce

wastage it has helped Maruti increase its profits.

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Profit After Tax((in Million) Automobile Co.

43939 Maruti12592 Hyundai-12419 Ford China

Analysis

In the year 2006 the rate of growth of Hyundai is more than the rate of

growth of Maruti. This shows that Hyundai has started doing well in the

Indian Market but still it has to do a lot to reach to Marutis positionwhereas the profit of Ford has become negative. The reason behind this

could be high expenses and taxes. Maruti is using methods like Value

Analysis and value Engineering which has also helped Maruti to reduce its

cost and increase profits.

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Automobile co.

MarutiHyundai

Ford China

Analysis

In the year 2007 all 3 companies have shown growth in their profits but the

growth in Maruti is maximum out of the 3. Maruti is still enjoying its

position at the top. Maruti is using localization and intensive R & D for itsexisting as well as new products which has also helped Maruti reduce cost

and increase profits.

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Analysis Based On Cash Balance at the end of the year Of All The 3 Firms

MarutiCash Balance(in

Million) Years10294 200514016 200614228 2007

Analysis

Maruti is holding a good amount of cash with itself in order to meet futureuncertainties. This shows that the company is ready to meet futurechallenges and is very strong in terms of liquidity. As cash is the lifeline of

any business it is very important for Maruti to hold a good amount of cashas all the funding into new projects is done through reserves. This high cash

balance of Maruti Suzuki proves that the company is in a quite strongposition to meet its current obligations with large amount of cash balances.

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Ford Motors (China)Cash Balance(in

Million) Years5585 2005505 20066387 2007

Analysis

Ford is also keeping low amount of cash with itself as their profit is also

low. They are also not strong in terms of liquidity.

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Cash Balance(in Million) Automobile Co.


Analysis

In the year 2005 the cash balance of Hyundai is the highest out of the 3

companies which is a cause of worry for Maruti. The reason behind this

could be that it is a new company and capital may be high. The reason isthat maruti has engaged itself with many other schemes like True Value and

other schemes and today it is spending a lot of money on Advertising

through all the media sources. Some examples are Maruti Suzuki traffic

update, top 20 songs of the week etc.

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Cash Balance(in Million) Automobile Co.

14016 Maruti-6678 Hyundai505 Ford China

Analysis

In this year cash balance of Maruti is the highest whereas cash balance ofHyundai have gone negative. So there must have been some problem inHyundai as from top it has come to the bottom. Maruti Suzuki has thehighest cash balance among its competitors for the year2006, as most of itsfunding is done through cash reserves it is justified in maintaining high cash

balance.

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COMPARISION (year

2007)

Cash Balance(inMillion) AutomobileCo.


Analysis

In this year also the cash balance of Maruti is highest whereas Hyundai hasdone well to recover itself from negative cash balance and cash balance of

Hyundai is also good. This high cash balance of Maruti Suzuki proves thatthe company is in a quite strong position to meet its current obligations withlarge amount of cash and bank balances.

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Analysis Based On Profitability Of All The 3 Firms

Ratio Analysis:

Ratios are well-known and most widely used tools of financial

analysis. A ratio gives mathematical relationship between one variable andanother. The ratios are used by different people for various purposes. RatioAnalysis compares significant numbers from financial statements. Ratherthan focusing on specific volumes, ratios are indicators of the broad state ofthe business. Though computation of ratios involves only a simplearithmetic operation, its interpretation is a difficult exercise. The analysis ofa ratio can disclose relationship as well as basis of comparison that revealconditions and trends that cannot be detected by going through theindividual components of the ratio. The usefulness of ratios ultimately

depends on their intelligent and skillful interpretation.The ratio analysis is one of the

most important tools for financial analysis. It is used as a device to analyzeand interpret the financial health of the enterprise. It is with the help of ratiothat the financial statement can be analyzed more clearly and decisionsmade from such analysis.

PROFITABILITY RATIOS: These ratios measure the efficiency of

the firm`s activities and its ability to generate profits.These ratios show ormeasure the profitability of the firm in both short term and long term.Besides management of the company, creditors and owners are alsointerested in the profitability of the firm. Creditors want to get interest andrepayment of principal regularly whereas owners want to get required rateof return on their investments. Hence these ratios are often used.

Profit margin ratio = Profit after tax /sales

The gross profit margin reflects the efficiency with whicha company produces each unit of product. This ratio indicates the averagespread between the cost of goods sold and the sales revenue. A high gross

profit margin relative to its competitors means that the firm is able toproduce at a relatively lower cost.

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For Maruti

Financial Year = P.A.T/ Sales = P.M.R

2005 = 34421/132914 = 25.89%

2006 = 43939/147043 = 29.88%

2007 = 59471/171442 = 34.68%

For Hyundai

2005 = 12322/58830 = 20.94 %

2006 =12568/63648 = 19.74%

2007 = 13347/69601 = 19.17%

For Ford Motors (china)

2005 = 1909/176835 = 0.01%

2006 = (12419)/160065 = -0.07%

2007 = (2452)/172455 = -0.01 %

Analysis

The Profit Margin Ratio of Maruti has increased over the years

and it is the highest among the 3 companies. The reason behind this is that

Maruti has taken many cost control measures like localization of parts and

followed methods like value engineering and value analysis. It has also

trained its employees to work efficiently and effectively so as to reduce

wastage and damage. It has also implemented Six Sigma Standards all these

measures have helped Maruti to earn more profits. Maruti at its excellence

centre has also trained its suppliers to provide them with better quality

parts and also used intensive R & D techniques which has helped Maruti a

lot to reduce costs and increase profits.

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The profitability of Maruti is higher which shows it has been able to control

its cost and increase profits.

Asset Turnover Ratio = Sales/Average total assets

The firms ability to generate sales from a given amount ofassets is called assets turnover ratio. It highlights the amount of assets thatthe firm used to generate its total sales. A firm should manage its assetsefficiently to maximize sales. The higher the assets turnover ratio the betterit is for the company.Idle or improperly used assets increase the firm`s need for costly financingand the expenses for maintenance and upkeep. By achieving a high asset

turnover, a firm reduces cost and increases the eventual profit to its owners.

Total assets equals to fixed assets plus current assets whereas grosssales is the total sales before deducting excise duty.

For Maruti

Financial Year = Sales/ Avg Total Assets = Assets Turn Over ratio

2005 = 132914/50531 = 2.63 times

2006 = 147043/49546 = 2.96 times

2007 = 171442/61468 = 2.78 times

For Hyundai

2005 = 58830/38892 = 1.50 times

2006 = 63648/43191 = 1.47 times

2007 = 69601/43725 = 1.57 times

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For Ford Motors (china)

2005 = 176835/61945 = 2.85 times

2006 = 160065/60658 =2.63 times

2007 = 172455/62500 = 2.75 times

Analysis

The asset turn Over Ratio of Maruti has been good it has been constant

in all the three years which shows that Maruti is following a proper system

to control assets. They increase the amount of assets when they feel the

sales may rise and there would be quick demand and vice versa. Hyundai is

not able to utilize its assets as efficiently as Maruti and ford is workingwell with its assets. Maruti is working well with its assets some methods

which it uses for investment in fixed assets are Payback Period and NPV. It

manages its Inventories in compliance with Just In Time Inventory

Systems.

Current Ratio = Current Assets/Current Liabilities

Current ratio is a measure of short-term solvency. The current

ratio shows us how well a company is able to pay off its short-term debtusing its most liquid assets.

A ratio of 1 would indicate that the company has exactlyenough cash (or assets that is relatively easy to turn into cash) to pay off itsdebt. If the ratio is higher than 1, the company can successfully pay off itsdebt while at the same time still has cash left over to continue operating.

Naturally, if the ratio is under 1, then investors should be weary of thefact that the company cannot pay off its short-term debt if necessary. If a

company has a ratio of 2.5, one can say the company can pay off itsliabilities more than two times over. The current ratio of a company shouldnot be high also. for example, if a company has a ratio of 4, it may meanthat the company is not effectively using its money; there is too much cashsitting around doing nothing.

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For Maruti

Financial Year = Current Assets/ Current Liabilities = Current Ratio

2005= 29720/ 12188 = 2.48

2006= 37409/20110 = 1.86

2007 = 38459/15058 = 2.55

For Hyundai

2005= 25014/30041 = 0.83

2006 = 25580/30953 =0.82

2007 = 28189/37003 = 0.76

For Ford Motors(China)

2005 = 153188/84937 = 1.80

2006 = 152843/101272 = 1.50

2007 = 162667/95570 = 1.70

Analysis

The Current Ratio of Maruti is very good it shows that the company isvery liquid and is very ready to meet any future any uncertainty arising innear future and is paying off well to its creditors. Ratio of Ford is alsogood but for Hyundai it is matter of concern as the ratio is very low forHyundai and is below 1 which is not considered a good position. Currentratio is much better than its competitors. Current ratio below 1.5 indicatesthat the company is not maintaining any safety margin for the payment ofits current liabilities. Ideally, current ratio of 2:1 is considered good butsince Maruti Suzuki has a very good inventory turnover ratio and only asmall portion of debtors considered doubtful, current ratio of Maruti is goodenough for short term creditors and investors.

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Comparison and growth of automobile sector with GDP

Economics experts and various studies conducted across the globe envisage

India and China to rule the world in the 21st century. For over a century theUnited States has been the largest economy in the world but majordevelopments have taken place in the world economy since then, leading tothe shift of focus from the US and the rich countries of Europe to the twoAsian giants- India and China.

The rich countries of Europe have seen the greatest decline in global GDP

share by 4.9 percentage points, followed by the US and Japan with a declineof about 1 percentage point each. Within Asia, the rising share of China and

India has more than made up the declining global share of Japan since

1990. During the seventies and the eighties, ASEAN countries and during

the eighties South Korea, along with China and India, contributed to the

rising share of Asia in world GDP.

According to some experts, the share of the US in world GDP is expected to

fall (from 21 per cent to 18 per cent) and that of India GDP to rise (from 6

per cent to 11 per cent in 2025), and hence the latter will emerge as the thirdpole in the global economy after the US and China.

Indian Economy experienced a GDP growth of 9.0 percent during 2005-06

to 9.4 percent during 2006-07. By 2025 the India's economy is projected to

be about 60 per cent the size of the US economy. The transformation into a

tri-polar economy will be complete by 2035, with the Indian economy only

a little smaller than the US economy but larger than that of Western Europe.

By 2035, India is likely to be a larger growth driver than the six largestcountries in the EU, though its impact will be a little over half that of the

US.

India, which is now the fourth largest economy in terms of purchasing

power parity, will overtake Japan and become third major economic power

within 10 years.

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India - a growing economy

A growth rate of above 8% was achieved by the Indian economy during theyear 2003-04 and in the advanced estimates for 2004-05, Indian economy has

been predicted to grow at a level of 6.9 %. Growth in the Indian economyhas steadily increased since 1979, averaging 5.7% per year in the 23-yeargrowth record. In fact, the Indian economy has posted an excellent averageGDP growth of 6.8% since 1994 ( the period when India's external crisis was

brought under control). However, in comparison to many East Asianeconomies, having growth rates above 7%, the Indian growth experience lags

behind. The tenth five year plan aims at achieving a growth rate of 8% forthe coming 2-3 years.

Though, the growth rate for 2004-05 is less than that of 2003-04, it is stillamong the high growth rates seen in India since independence. Many factorsare behind this robust performance of the Indian economy in 2004-05. High

growth rates in Industry & service sector and a benign world economicenvironment provided a backdrop conducive to the Indian economy. Another

positive feature was that the growth was accompanied by continuedmaintenance of relative stability of prices. However, agriculture fell sharplyfrom its 2003-04 level of 9 % to 1.1% in the current year primarily becauseof a bad monsoon. Thus, there is a paramount need to move Indianagriculture beyond its centuries old dependency on monsoon. This can beachieved by bringing more area under irrigation and by better watermanagement.

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Because of the weakening of the US dollar for the last two years, (caused

mainly by widening US deficits), Indian Rupee has steadily appreciated vis-

-vis US dollar. Though, this trend saw a brief reversal during may-august

2004. The latest Re/$ Exchange rate (March 2005) stood close to 44.

Despite strengthening nominally against US $, Rupee depreciated against

other major non-dollar currencies. Thus, the Real Effective Exchange rate

of the Rupee depreciated and this trend continued until end 2004. A strong

BOP position in recent years has resulted in a steady accumulation of

foreign exchange reserves. The level of foreign exchange reserves crossed

the US $100 billion mark on Dec 19, 2003 and was $142.13 billion on

March 18, 2005. The capital inflows, current account surplus and the

valuation gains arising from appreciation of the major non-US dollar global

currencies against US dollar contributed to such a rise in Forex reserves.

The current account of BOP having been in surplus since 2001-02, turned

into deficit in the first half of the current year( April-September 2004-05).

Such a reversal was observed on the back of rise in POL and non POL

imports which overwhelmed the growth of exports in US dollar terms at

over 23 per cent. Growth momentum in exports was maintained; India's

exports during Apr-Nov registered a growth of 24% from the last period but

India's position was down from 30th to 31st rank in the top exporting

countries of the world.

The main contributors to capital account surplus were the banking capital

inflows, foreign institutional investments and other capital inflows. Alike

current account, capital account too witnessed decline. The capital account

surplus in April-September was also down by around US $ 1.5 million.

Reserve money growth had doubled to 18.3% in 2003-04 from 9.2 in 2002-

03, driven entirely by the increase in the net foreign exchange assets of the

RBI. However, it declined to 6.4% in the current year to January 28, 2005.

During the current financial year 2004-05, broad money stock (M3) (up to

December 10, 2004) increased by 7.4 per cent (exclusive of conversion of

non-banking entity into banking entity, 7.3 per cent) as compared with the

growth rate of 10.3 per cent registered during the corresponding period of

the last year.

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Real GDP (USD Billio

6086

118

159

279

473

548

586

0

100

200

300

400

500

600

1950 1960 1970 1980 1990 2000 2003 2004

Year

1 95 0 1 96 0 1 97 0 1 98 0 1 99 0 2 00 0 2 00 3 2 00 4

4.2%

3.2%

3.0%

5.8%

5.4%

6.9%

The downward trend in interest rates continued in 2004-05, with bank ratestanding at 6% as on Dec 10, 2004. Banks recovery management improved

considerably with gross NPAs declining from Rs 70861 crore in 2001-02 to

Rs 68715 in 2002-03. During the current financial year (up to December 10,

2004) incremental gross bank credit increased by 20.5 per cent (exclusive

of conversion, 16.6 per cent) as compared with a growth of 5.9 per cent in

the same period of the previous year. Non-Food credit during the financial

year so far, registered a growth of 20.5 per cent (exclusive of conversion,

16.5 per cent) as compared with an increase of 8.4 per cent during the sameperiod of the last year indicated a positive outlook. Equity market return

was 85% in 2003-04, second highest in Asia. With continued higher

corporate earnings in 2004-05, the sensex crossed 6800 mark in March

2005 but high stock market volatility remained higher in India compared to

other Asian countries. The expectation of sensex crossing 7 K mark is not

yet realized. Fiscal deficit of states & center was decreasing in early 90s but

due to rise in fiscal deficit in recent years, corrective measures have been

adopted. The fiscal deficit decreased to 7.9% in 2004-05 from a 9.4% of

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GDP in 2003-04. According to recent estimates, fiscal deficit in April-

October 2004 is 45.2 per cent of BE compared with 56.0 per cent of BE in

the corresponding period last year.

We can conclude that over the years the economy of India has grown andGDP has also raised automobile sector has contributed a lot for it. Maruti

has played a major role in it because due to high number of exports made

by maruti to all over the world a high amount of money in terms of dollar

has come to India which has raised the value of Indian rupee against

dollar.The economy of India has been growing at a rate of around 8-9% in

the past years but the growth of Maruti has been more than 20% which is

very good. Hyundai which is the largest competitor of Maruti is growing at

the same rate at which the economy is growing i.e. 9%.

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CONCLUSION:

By the study of this report, we can conclude that Maruti is biggest and

largest automobile manufacturer in Indian market. Marutis share in the

passenger car segment is 54% which is almost 2.5 times of its biggestcompetitor Hyundai. Maruti is bigger as compared to all other automobile

manufacturers operating in India. Today almost 50% cars which run on

Indian roads are manufactured by Maruti Suzuki. The different basis on

which the analysis is done shows that fixed assets of Maruti are highest and

in terms of total income, sales and all other things Maruti is the leader.

Hyundai has done well being a new organisation in the Indian market.

Marutis profitability is 34% in the year FY2007-08 which is again very

high. The liquidity is also very good. This profitability of Maruti is growingat a rate of 4% every year the reason behind this is different cost control

measures which Maruti is undertaking like value Analysis and Value

engineering, localization of parts and effective R & D. It has also trained

suppliers and dealers to maintain Quality levels as well as reduce costs.

Maruti is growing in all sectors may it be EBITDA, Fixed Assets, Profit

After Tax etc.

Coming to the growth of Maruti, it is more than double that of Hyundai.

The GDP of India is growing at the rate of 9% whereas Maruti is growing at

the rate of 22%. It has also helped Indian economy to grow a lot with the

large number of exports which Maruti makes to all over the world. Even the

Ford motors operating in China has more sales than Maruti in India but

profit of Maruti is more. Hence, we can state that the Indians are proud of

Maruti and INDIA COMES HOME IN A MARUTI SUZUKI.

maruti suzuki analysis of automobile manufacturers of india and china

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