Maruti Financial Report

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MARUTI UDYOG LTD.

Final Progress Report
(09 September 2008)

Table of Contents
INTRODUCTION2
ABOUT MARUTI SUZUKI3
SWOT ANALYSIS4
FUTURE OUTLOOK4
AUDITOR’S VIEW5
DIRECTOR’S REPORT’S INTERPRETATION5
REVENUE RECOGNITION POLICY6
INVENTORY VALUATION POLICY7
DEPRECIATION POLICY8
ACCOUNTING POLICY FOR VALUATION OF TANGIBLE AND INTANGIBLE ASSETS9 CLAUSE 49 AND ITS IMPLEMENTATION AT MARUTI10
BALANCE SHEET13
INCOME STATEMENT13
RATIO ANALYSIS14
CASH FLOW STATEMENT ANALYSIS24
INTER COMPANY ANALYSIS25
OTHER ACCOUNTING POLICIES AND THEIR IMPACT ON QULAITY OF EARNING25 OPERATING CYCLE CALCULATION AND TREND ANALYSIS28
VITALITY OF MARUT’s SHARES29

PART I - BASIC ANALYTICAL TECHNIQUES

INTRODUCTION

The rapid economic growth in the country in the past decade has augured well for all sectors. The automobile industry hailed as ‘the industry of industries’ by Peter Drucker, has a strong multiplier effect and is both driver and indicator of economic growth. It provides direct or indirect employment to over 13 million people.

Indian auto manufacturers produced 1.71 m (million) cars and 2.31 m motor vehicles in 2007¹. Domestic passenger car sales increased by 11.8 % to 1.20 m in 2007-08 (year ended March 2008) whereas two-wheeler (motorcycles, scooters and mopeds) sales decreased slightly to 7.25 m.

Statistics show that India is the tenth and ninth largest producer of motor vehicles and passenger cars respectively, and has beaten major car producers such as UK and Italy. Source: OICA (International Organization of Motor Vehicle Manufacturers)

Some of the biggest players in Indian passenger car segment are Tata Motors, Maruti Udyog, Hyundai, Ford, FIAT, General Motors and Honda. [pic]
*Numbers represent number of vehicle units soldSource: http://knowindia.net/auto.html

ABOUT MARUTI SUZUKI

Maruti Udyog, now Maruti Suzuki, is the first automobile company to be started in India. Maruti Udyog Limited (MUL) was established in February 1981, though the actual production commenced in 1983. Born as a government company, with Suzuki as a minor partner, the company has evolved over the years, the product range has widened and ownership has changed hands. The company is now a subsidiary of Suzuki Motor Corporation, Japan, which owns 54.2 per cent of Maruti. Suzuki Motor Corporation, the parent company, is a global leader in mini and compact cars for three decades. Suzuki’s technical superiority lies in its ability to pack power and performance into a compact, lightweight engine that is clean and fuel efficient. The rest is owned by the public and financial institutions. Maruti Suzuki is one of India's leading automobile manufacturers and the market leader in the car segment, both in terms of volume of vehicles sold and revenue earned. It is listed on the Bombay Stock Exchange and National Stock Exchange in India. More than half the cars sold in India are Maruti cars. During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, over six million Maruti cars are on Indian roads since the first car was rolled out on December 14, 1983. Nearly 75,000 people are employed directly by Maruti and its partners. The company vouches for customer satisfaction. For its sincere efforts it has been rated (by customers) first in customer satisfaction among all car makers in India for seven years in a row in annual survey by J D Power Asia Pacific. Maruti Suzuki also emerged as the fourth most reputed among auto companies in the world, even ahead of its parent Suzuki Motor Co of Japan in a list called "Global 200: The World's Best Corporate Reputations", compiled by US-based Reputation Institute. Maruti Suzuki offers 11 models, ranging from the people’s car, Maruti 800, for less than Rs 200,000 ($ 5000) ex-showroom to the premium sedan SX4 and luxury SUV, Grand Vitara. Currently, Maruti Alto tops the sales charts. The models, with around 100 variants from Maruti Suzuki are:...
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