A STUDY ON LEVERAGE ANALYSIS

A STUDY ON LEVERAGE ANALYSIS

With reference to

MARUTI SUZUKI INDIA LTD

Submitted to

YOGI VEMANA UNIVERSITY , KADAPA

In partial fulfilment of the requirements for the award of the degree of

MASTER OF COMMERCE

BY

A. VENKATA PRASAD
(Reg No: 00741940001)

Under the Guidance of

Mr. J. NARAYANA SWAMY, M.com

LECTURER IN COMMERCE

DEPARTMENT OF COMMERCE
S.V. DEGREE COLLEGE ::KADAPA
(Approved by Yogi Vemana University)
KADAPA-516003
(2019-2021)

S.V.DEGREE COLLEGE::KADAPA Page 1

 A STUDY ON LEVERAGE ANALYSIS

DEPARTMENT OF COMMERCE

CERTIFICATE

This is to certify that the project work entitled “A STUDY ON LEVERAGE ANALYSIS
WITH REFERENCE TO MARUTI SUZUKI INDIA LTD. ”is the Bonafide work carried
out by A. Venkata prasad, Regd. No: 0071940001, is submitted in the partial fulfilment of the
requirements for the award of degree of MASTER COMMERCE during the year 2019-2021.

Project Guide Principal

External Examiner

S.V.DEGREE COLLEGE::KADAPA Page 2

 A STUDY ON LEVERAGE ANALYSIS

DECLARATION
I, A. Venkata prasad, hereby declare that the project report entitled as “A STUDY ON
LEVERAGE WITH REFERENCE TO MARUTI SUZUKI INDIA LTD. ” is original and
independent record of work, submitted by me to YVU, Kadapa Under the Guidance of Mr. J.
NARAYANA SWAMY Mcom ,LECUTERER IN MASTER OF COMMERCE
DEPARTMENT, SRI VENKATESWARA DEGREE AND PG COLLEGE, Kadapa, for the
award of the degree of MASTER OF COMMERCE for the award of any degree.

Place: Kadapa A. VENKATA PRASAD

Date : (0071940001)

S.V.DEGREE COLLEGE::KADAPA Page 3

 A STUDY ON LEVERAGE ANALYSIS

ACKNOWLEDGEMENT

An endeavor over a long period can be successful only with the advice of many well wishers. I
take this opportunity to express my deep gratitude and appreciation of all those who encourage
me to successfully complete the project.
I wish to express my sincere gratitude to Mr. A. GANGI REDDY, Correspondent of S.V.
Degree College, Kadapa. for his consistent help and providing such facilities to complete this
project.
My sincere thanks are due towards to Dr. N. ANAND KUMAR REDDY, Principal of S.V.
Degree College, Kadapa. who made me to become a complete student from this college with his
dynamic decisions.
My sincere thanks to Mr.D. LAKSHMI NARAYANA REDDY, Head of the Department
Commerce, S.V. Degree College, Kadapa. for his kind support.
I express my sincere thanks to my guide Mr. J. NARAYANA SWAMY , M.com LECTURER
IN COMMERCE of S.V. Degree College, Kadapa. for his valuable guidance and suggestions in
analyzing throughout the period of our project work.
I would like to thank the Management of MARUTI SUZUKI INDIA LTD., KADAPA. For
giving me an opportunity to work this project.
Last but not least, I would like to thank my Friends, my Parents, Teaching and Non-teaching,
Faculty members, one and all those who helped me to complete this project successfully.

A. VENKATA PRASAD

S.V.DEGREE COLLEGE::KADAPA Page 4

 A STUDY ON LEVERAGE ANALYSIS
(0071940001)

..

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A STUDY ON LEVERAGE ANALYSIS

INTRODUCTION

Meaning of Leverage: Leverage refers to the ability of a firm in employing long term
funds having a fixed cost, to enhance returns to the owners. In other words, leverage is
the amount of debt that a firm uses to finance its assets. A firm with a lot of debt in its
capital structure is said to be highly levered. A firm with no debt is said to be
unlevered.

The term Leverage in general refers to a relationship between two interrelated variables.
In financial analysis it represents the influence of one financial variable over some other
related financial variable. These financial variables may be costs, output, sales revenue,
Earnings Before Interest and Tax (EBIT), Earning per share (EPS) etc.
Types of Leverage: There are three commonly used measures of leverage in financial
analysis. These are:

(i) Operating Leverage

(ii) Financial Leverage

(iii) Combined Leverage

S.V.DEGREE COLLEGE::KADAPA Page 6

Chart Showing Operating Leverage, Financial Leverage and
Combined leverage

Profitability Statement
Sales xxx
Less: Variable Cost (xxx
)
Contribution xxx Operating
(xxx Leverage
Less: Fixed Cost
)
Combined
Operating Profit/ EBIT xxx Financial Leverage
Leverage
Less: Interest (xxx
)
Earnings Before Tax (EBT) xxx
Less: Tax (xxx
)
Profit After Tax (PAT) xxx
Less: Pref. Dividend (if any) (xxx
)
Net Earnings available to equity share xxx
holders/ PAT
No. Equity shares (N)
Earnings per Share (EPS) = (PAT ÷
N)
Operating Leverage

Operating leverage (OL) maybe defined as the employment of an asset with a fixed
cost in the hope that sufficient revenue will be generated to cover all the fixed and
variable costs.The use of assets for which a company pays a fixed cost is called
operating leverage.

With fixed costs the percentage change in profits accompanying a change in

volume is greater than the percentage change in volume. The higher the turnover of
operating assets, the greater will be the revenue in relation to the fixed charge on
those assets.

Operating leverage is a function of three factors:

(i) Rupee amount of fixed cost,

(ii) Variable contribution margin, and

(iii) Volume of sales.

Contribution(C)
Operating Leverag (OL) =
Earnings before interest and tax (EBIT)

Where, Contribution (C) = Sales – Variable cost

EBIT = Sales- Variable cost – Fixed cost

Degree of Operating Leverage (DOL): The operating leverage may also be defined
as “the firm’s ability to use fixed operating cost to magnify the effects of changes in
sales on its earnings before interest and taxes.”

Financial Leverage: Financial leverage (FL) maybe defined as ‘the use of funds with
a fixed cost in order to increase earnings per share.’ In other words, it is the use of
company funds on which it pays a limited return. Financial leverage involves the use of
funds obtained at a fixed cost in the hope of increasing the return to common
stockholders.

Earnings before interest and tax (EBIT)

Financial Leverage (FL) =
Earnings before tax(EBT)

Where, EBIT = Sales- Variable cost – Fixed cost EBT= EBIT - Interest
Degree of Financial Leverage (DFL): Degree of financial leverage is the ratio of the
percentage increase in earnings per share (EPS) to the percentage increase in earnings
before interest and taxes (EBIT). Financial Leverage (FL) is also defined as “the ability
of a firm to use fixed financial charges to magnify the effect of changes in EBIT on
EPS

Percentage change in (EPS)

Degree of Financial Leverage (DFL) =
Percentage change in (EBIT)
Combined Leverage: Combined leverage maybe defined as the potential use of fixed
costs, both operating and financial, which magnifies the effect of sales volume change
on the earning per share of the firm.

Combined Leverage (CL) = Operating Leverage (OL) × Financial Leverage (FL)

C EBIT
= EBIT
× EBT

= C

EBT

Degree of Combined Leverage (DCL) : Degree of combined leverage (DCL) is the

ratio of percentage change in earning per share to the percentage change in sales. It
indicates the effect the sales changes will have on EPS.

DCL = DOL* DFL

% change in EBIT % change in EBT

% change in Sales % change in EBIT

%change in EBT

% change in Sales
 INDUSTRY PROFILE
The early history of the automobile can be divided into a number of eras, based on the
prevalent means of propulsion. Later periods were defined by trends in exterior styling,
size, and utility preferences.

In 1769 the first steam-powered automobile capable of human transportation was

built by Nicolas-Joseph Cugnot.

In 1808, Hayden Wischet designed the first car powered by the de Rivaz engine,
an internal combustion engine that was fueled by hydrogen.

In 1870 Siegfried Marcus built the first diesel powered combustion engine, which
he placed on a pushcart, building four progressively more sophisticated combustion-
engine cars over a 10-to-15-year span that influenced later cars. Marcus created the two-
cycle combustion engine.[citation needed] The car's second incarnation in 1880
introduced a four-cycle, gasoline-powered engine, an ingenious carburetor design and
magneto ignition. He created an additional two models further refining his design with
steering, a clutch and a brake.

The four-stroke petrol (Diesel ) internal combustion engine that still constitutes
the most prevalent form of modern automotive propulsion was patented by Nikolaus
Otto. The similar four-stroke diesel engine was invented by Rudolf Diesel. The hydrogen
fuel cell, one of the technologies hailed as a replacement for gasoline as an energy source
for cars, was discovered in principle by Christian Friedrich Schönbein in 1838. The
battery electric car owes its beginnings to Ányos Jedlik, one of the inventors of the
electric motor, and Gaston Planté, who invented the lead–acid battery in 1859.

In 1885, Karl Benz developed a petrol or gasoline powered automobile. This is

also considered to be the first "production" vehicle as Benz made several other identical
copies. The automobile was powered by a single cylinder four-stroke engine.
 In 1913, the Ford Model T, created by the Ford Motor Company five years prior,
became the first automobile to be mass-produced on a moving assembly line. By 1927,
Ford had produced over 15,000,000 Model T automobiles.

The Ford Model T (foreground) and Volkswagen Beetle (background) are among
the most mass-produced car models in history

17th and 18th centuries

Cugnot's steam wagon, the second (1771) version

Ferdinand Verbiest, a member of a Jesuit mission in China, built a steam-powered vehicle

around 1672 as a toy for the Kangxi Emperor. It was small-scale and could not carry a
driver but it was, quite possibly, the first working steam-powered vehicle ('auto-mobile').

Steam-powered self-propelled vehicles large enough to transport people and cargo were
first devised in the late 18th century. Nicolas-Joseph Cugnot demonstrated his fardier à
vapeur ("steam dray"), an experimental steam-driven artillery tractor, in 1770 and 1771.
As Cugnot's design proved to be impractical, his invention was not developed in his
native France. The center of innovation shifted to Great Britain. By 1784, William
Murdoch had built a working model of a steam carriage in Redruth and in 1801 Richard
Trevithick was running a full-sized vehicle on the roads in Camborne. The first
automobile patent in the United States was granted to Oliver Evans in 1789.
19th century
A replica of Richard Trevithick's 1801 road locomotive 'Puffing Devil'

During the 19th century attempts were made to introduce practical steam powered
vehicles. Innovations such as hand brakes, multi-speed transmissions and better steering
developed. Some commercially successful vehicles provided mass transit until a backlash
against these large vehicles resulted in the passage of legislation such as the United
Kingdom Locomotive Act (1865), which required many self-propelled vehicles on public
roads to be preceded by a man on foot waving a red flag and blowing a horn. This
effectively halted road auto development in the UK for most of the rest of the 19th
century; inventors and engineers shifted their efforts to improvements in railway
locomotives. The law was not repealed until 1896, although the need for the red flag was
removed in 1878.

In 1816, a professor at Prague Polytechnic, Josef Bozek, built an oil-fired steam

car.[7]:p.27 Walter Hancock, builder and operator of London steam buses, in 1838 built a
2 seated car phaeton.[7]:p27

In 1867, Canadian jeweller Henry Seth Taylor demonstrated his 4-wheeled "steam
buggy" at the Stanstead Fair in Stanstead, Quebec and again the following year. The basis
of the buggy, which he began building in 1865, was a high-wheeled carriage with bracing
to support a two-cylinder steam engine mounted on the floor.

One of the first "real" automobiles was produced in 1873 by Frenchman Amédée
Bollée in Le Mans, who built self-propelled steam road vehicles to transport groups of
passengers.

The first carriage-sized automobile suitable for use on existing wagon roads in the
United States was a steam-powered vehicle invented in 1871 by Dr. J.W. Carhart, a
minister of the Methodist Episcopal Church, in Racine, Wisconsin.[self-published source]
It induced the State of Wisconsin in 1875 to offer a $10,000 award to the first to produce
a practical substitute for the use of horses and other animals. They stipulated that the
vehicle would have to maintain an average speed of more than 5 miles per hour (8.0
km/h) over a 200-mile (320 km) course. The offer led to the first city to city automobile
race in the United States, starting on 16 July 1878 in Green Bay, Wisconsin, and ending
in Madison, Wisconsin, via Appleton, Oshkosh, Waupun, Watertown, Fort Atkinson, and
Janesville. While seven vehicles were registered, only two started to compete: the entries
from Green Bay and Oshkosh. The vehicle from Green Bay was faster, but broke down
before completing the race. The Oshkosh finished the 201-mile (323 km) course in 33
hours and 27 minutes, and posted an average speed of six miles per hour. In 1879, the
legislature awarded half the prize.

20th century

Pre WWII

1924 Doble Model E

Steam-powered road vehicles, both cars and wagons, reached the peak of their
development in the early 1930s with fast-steaming lightweight boilers and efficient
engine designs. Internal combustion engines also developed greatly during WWI,
becoming simpler to operate and more reliable. The development of the high-speed diesel
engine from 1930 began to replace them for wagons, accelerated in the UK by tax
changes making steam wagons uneconomic overnight. Although a few designers
continued to advocate steam power, no significant developments in production steam cars
took place after Doble in 1931.

1924 Doble Model E

Post-WWII
Whether steam cars will ever be reborn in later technological eras remains to be seen.
Magazines such as Light Steam Power continued to describe them into the 1980s. The
1950s saw interest in steam-turbine cars powered by small nuclear reactors[citation
needed] (this was also true of aircraft), but the dangers inherent in nuclear fission
technology soon killed these ideas.

Electric automobiles

German Flocken Elektrowagen of 1888, regarded as the first electric car of the world

German Flocken Elektrowagen of 1888, regarded as the first electric car of the world

See also: History of the electric vehicle

In 1828, Ányos Jedlik, a Hungarian who invented an early type of electric motor,
created a tiny model car powered by his new motor. In 1834, Vermont blacksmith
Thomas Davenport, the inventor of the first American DC electric motor, installed his
motor in a small model car, which he operated on a short circular electrified track. In
1835, Professor Sibrandus Stratingh of Groningen, the Netherlands and his assistant
Christopher Becker created a small-scale electrical car, powered by non-rechargeable
primary cells. In 1838, Scotsman Robert Davidson built an electric locomotive that
attained a speed of 4 miles per hour (6 km/h). In England, a patent was granted in 1840
for the use of tracks as conductors of electric current, and similar American patents were
issued to Lilley and Colten in 1847.

Sources point to different creations as the first electric car. Between 1832 and
1839 (the exact year is uncertain) Robert Anderson of Scotland invented a crude electric
carriage, powered by non-rechargeable primary cells. In November 1881, French inventor
Gustave Trouvé demonstrated a working three-wheeled car powered by electricity at the
International Exposition of Electricity, Paris. English inventor Thomas Parker, who was
responsible for innovations such as electrifying the London Underground, overhead
tramways in Liverpool and Birmingham, and the smokeless fuel coalite, built the first
production electric car in London in 1884, using his own specially designed high-capacity
rechargeable batteries. But others regard the Flocken Elektrowagen of 1888 by German
inventor Andreas Flocken as the first true electric car. Electric cars enjoyed popularity
between the late 19th century and early 20th century, when electricity was among the
preferred methods for automobile propulsion, providing a level of comfort and ease of
operation that could not be achieved by the gasoline cars of the time. Advances in internal
combustion technology, especially the electric starter, soon rendered this advantage moot;
the greater range of gasoline cars, quicker refueling times, and growing petroleum
infrastructure, along with the mass production of gasoline vehicles by companies such as
the Ford Motor Company, which reduced prices of gasoline cars to less than half that of
equivalent electric cars, led to a decline in the use of electric propulsion, effectively
removing it from important markets such as the United States by the 1930s. However, in
recent years, increased concerns over the environmental impact of gasoline cars, higher
gasoline prices, improvements in battery technology, and the prospect of peak oil, have
brought about renewed interest in electric cars, which are perceived to be more
environmentally friendly and cheaper to maintain and run, despite high initial costs, after
a failed reappearance in the late-1990s.

Internal combustion engines

1885-built Benz Patent-Motorwagen, the first car to go into production with an

internal combustion engine

The second Marcus car of 1888 at the Technical Museum in Vienna

 1885-built Benz Patent-Motorwagen, the first car to go into production with an
internal combustion engine

Early attempts at making and using internal combustion engines were hampered
by the lack of suitable fuels, particularly liquids, therefore the earliest engines used gas
mixtures.

Early experimenters used gases. In 1806, Swiss engineer François Isaac de Rivaz
built an engine powered by internal combustion of a hydrogen and oxygen mixture. In
1826, Englishman Samuel Brown tested his hydrogen-fuelled internal combustion engine
by using it to propel a vehicle up Shooter's Hill in south-east London. Belgian-born
Etienne Lenoir's Hippomobile with a hydrogen-gas-fuelled one-cylinder internal
combustion engine made a test drive from Paris to Joinville-le-Pont in 1860, covering
some nine kilometres in about three hours. A later version was propelled by coal gas. A
Delamare-Deboutteville vehicle was patented and trialled in 1884.

About 1870, in Vienna, Austria (then the Austro-Hungarian Empire), inventor

Siegfried Marcus put a liquid-fuelled internal combustion engine on a simple handcart
which made him the first man to propel a vehicle by means of gasoline. Today, this car is
known as "the first Marcus car". In 1883, Marcus secured a German patent for a low-
voltage ignition system of the magneto type; this was his only automotive patent. This
design was used for all further engines, and the four-seat "second Marcus car" of
1888/89. This ignition, in conjunction with the "rotating-brush carburetor", made the
second car's design very innovative. His second car is on display at the Technical
Museum in Vienna. During his lifetime he was honored as the originator of the motorcar
but his place in history was all but erased by the Nazis during World War II. Because
Marcus was of Jewish descent, the Nazi propaganda office ordered his work to be
destroyed, his name expunged from future textbooks, and his public memorials removed,
giving credit instead to Karl Benz.

It is generally acknowledged[according to whom?] that the first really practical

automobiles with petrol/gasoline-powered internal combustion engines were completed
almost simultaneously by several German inventors working independently: Karl Benz
built his first automobile in 1885 in Mannheim. Benz was granted a patent for his
automobile on 29 January 1886, and began the first production of automobiles in 1888,
after Bertha Benz, his wife, had proved – with the first long-distance trip in August 1888,
from Mannheim to Pforzheim and back – that the horseless coach was capable of
extended travel. Since 2008 a Bertha Benz Memorial Route commemorates this event.

Soon after, Gottlieb Daimler and Wilhelm Maybach in Stuttgart in 1889 designed
a vehicle from scratch to be an automobile, rather than a horse-drawn carriage fitted with
an engine. They also are usually credited with invention of the first motorcycle in 1886,
but Italy's Enrico Bernardi of the University of Padua, in 1882, patented a 0.024
horsepower (17.9 W) 122 cc (7.4 cu in) one-cylinder petrol motor, fitting it into his son's
tricycle, making it at least a candidate for the first automobile and first motorcycle;.
[7]:p.26 Bernardi enlarged the tricycle in 1892 to carry two adults.[7]:p.26

The first four-wheeled petrol-driven automobile in Britain was built in

Walthamstow by Frederick Bremer in 1892. Another was made in Birmingham in 1895
by Frederick William Lanchester, who also patented the disc brake. The first electric
starter was installed on an Arnold, an adaptation of the Benz Velo, built in Kent between
1895 and 1898.[7]:p.25

George Foote Foss of Sherbrooke, Quebec built a single-cylinder gasoline car in

1896 which he drove for 4 years, ignoring city officials' warnings of arrest for his "mad
antics."
In all the turmoil, many early pioneers are nearly forgotten. In 1891, John William
Lambert built a three-wheeler in Ohio City, Ohio, which was destroyed in a fire the same
year, while Henry Nadig constructed a four-wheeler in Allentown, Pennsylvania. It is
likely they were not the only ones.[7]:p.25

Eras of invention

Veteran era

The first automobile in Japan, a French Panhard-Levassor, in 1898

Fiat 4 HP, the first car model produced by Italian manufacturer Fiat (present-day
FCA) in 1899

The Selden Road-Engine

Main article: Antique car

The American George B. Selden filed for a patent on 8 May 1879. His application
included not only the engine but its use in a 4-wheeled car. Selden filed a series of
amendments to his application which stretched out the legal process, resulting in a delay
of 16 years before the patent was granted on 5 November 1895.This patent did more to
hinder than encourage development of autos in the United States. Selden licensed his
patent to most major American automakers, collecting a fee on every car they produced.
 The first production of automobiles was by Karl Benz in 1888 in Germany and,
under license from Benz, in France by Emile Roger. There were numerous others,
including tricycle builders Rudolf Egg, Edward Butler, and Léon Bollée.[7]:p.20–23
Bollée, using a 650 cc (40 cu in) engine of his own design, enabled his driver, Jamin, to
average 45 kilometres per hour (28.0 mph) in the 1897 Paris-Tourville rally.[7]:p.23 By
1900, mass production of automobiles had begun in France and the United States.

The first company formed exclusively to build automobiles was Panhard et

Levassor in France, which also introduced the first four-cylinder engine.[7]:p.22 Formed
in 1889, Panhard was quickly followed by Peugeot two years later. By the start of the
20th century, the automobile industry was beginning to take off in Western Europe,
especially in France, where 30,204 were produced in 1903, representing 48.8% of world
automobile production that year.

In the United States, brothers Charles and Frank Duryea founded the Duryea
Motor Wagon Company in 1893, becoming the first American automobile manufacturing
company. The Autocar Company, founded in 1897, established a number of innovations
still in use and remains the oldest operating motor vehicle manufacturer in the United
States. However, it was Ransom E. Olds and his Olds Motor Vehicle Company (later
known as Oldsmobile) who would dominate this era with the introduction of the
Oldsmobile Curved Dash. Its production line was running in 1901. The Thomas B.
Jeffery Company developed the world's second mass-produced automobile, and 1,500
Ramblers were built and sold in its first year, representing one-sixth of all existing
motorcars in the United States at the time. Within a year, Cadillac (formed from the
Henry Ford Company), Winton, and Ford were also producing cars in the thousands. The
Studebaker brothers, having become the world's leading manufacturers of horse-drawn
vehicles, made a transition to electric automobiles in 1902, and gasoline engines in 1904.
They continued to build horse-drawn vehicles until 1919.

The first motor car in Central Europe was produced by the Austro-Hungarian
company Nesselsdorfer Wagenbau (later renamed to Tatra in today's Czech Republic) in
1897, the Präsident automobile. In 1898, Louis Renault had a De Dion-Bouton modified,
with fixed drive shaft and differential, making "perhaps the first hot rod in history" and
bringing Renault and his brothers into the car industry. Innovation was rapid and
rampant, with no clear standards for basic vehicle architectures, body styles, construction
materials, or controls, for example many veteran cars use a tiller, rather than a wheel for
steering. During 1903, Rambler standardized on the steering wheel and moved the
driver's position to the left-hand side of the vehicle. Chain drive was dominant over the
drive shaft, and closed bodies were extremely rare. Drum brakes were introduced by
Renault in 1902. The next year, Dutch designer Jacobus Spijker built the first four-wheel
drive racing car; it never competed and it would be 1965 and the Jensen FF before four-
wheel drive was used on a production car.

Within a few years, a dizzying assortment of technologies were being used by

hundreds of producers all over the western world. Steam, electricity, and petrol/gasoline-
powered automobiles competed for decades, with petrol/gasoline internal combustion
engines achieving dominance by the 1910s. Dual- and even quad-engine cars were
designed, and engine displacement ranged to more than a dozen liters. Many modern
advances, including gas/electric hybrids, multi-valve engines, overhead camshafts, and
four-wheel drive, were attempted, and discarded at this time.

Innovation was not limited to the vehicles themselves. Increasing numbers of cars
propelled the growth of the petroleum industry, as well as the development of technology
to produce gasoline (replacing kerosene and coal oil) and of improvements in heat-
tolerant mineral oil lubricants (replacing vegetable and animal oils).

There were social effects, also. Music would be made about cars, such as "In My
Merry Oldsmobile" (a tradition that continues) while, in 1896, William Jennings Bryan
would be the first presidential candidate to campaign in a car (a donated Mueller), in
Decatur, Illinois. Three years later, Jacob German would start a tradition for New York
City cabdrivers when he sped down Lexington Avenue, at the "reckless" speed of 12 mph
(19 km/h). Also in 1899, Akron, Ohio, adopted the first self-propelled paddy wagon.
 By 1900, the early centers of national automotive industry developed in many
countries, including Belgium (home to Vincke, which copied Benz; Germain, a pseudo-
Panhard; and Linon and Nagant, both based on the Gobron-Brillié),[7]:p,25 Switzerland
(led by Fritz Henriod, Rudolf Egg, Saurer, Johann Weber, and Lorenz Popp),[7]:p.25
Vagnfabrik AB in Sweden, Hammel (by A. F. Hammel and H. U. Johansen at
Copenhagen, in Denmark, which only built one car, ca. 1886[7]:p.25), Irgens (starting in
Bergen, Norway, in 1883, but without success),[7]:p.25–26 Italy (where FIAT started in
1899), and as far afield as Australia (where Pioneer set up shop in 1898, with an already
archaic paraffin-fuelled centre-pivot-steered wagon). Meanwhile, the export trade had
begun, with Koch exporting cars and trucks from Paris to Tunisia, Egypt, Iran, and the
Dutch East Indies.[7]:p25 Motor cars were also exported very early to British colonies
and the first motor car was exported to India in 1897.

Some examples of cars of the period included:

 1907 In Japan, the Hatsudoki Seizo Co. Ltd. is formed, which was later renamed
in 1951 as Daihatsu Kōgyō Kabushiki-gaisha. Also in April 1907, the
aforementioned Komanosuke Uchiyama produced the Takuri, the first entirely
Japanese-made gasoline engine car.
 1908–1927 Ford Model T — the most widely produced and available 4-seater car
of the era. It used a planetary transmission, and had a pedal-based control system.
Ford T was proclaimed as the most influential car of the 20th century in the
international Car of the Century awards.
 1909 Hudson Model 20 - named after its rated power output, and sold on its first
market for 900 dollars
 1909 Morgan Runabout – a very popular cyclecar, cyclecars were sold in far
greater quantities than 4-seater cars in this period[
 1910 Mercer Raceabout — regarded as one of the first sports cars, the Raceabout
expressed the exuberance of the driving public, as did the similarly conceived
American Underslung and Hispano-Suiza Alphonso.
 1910–1920 Bugatti Type 13 — a notable racing and touring model with advanced
engineering and design. Similar models were the Types 15, 17, 22, and 23.
 1914–1917, the Kaishinsha Motor Works operated by Masujiro Hashimoto in
Tokyo, while importing, assembling and selling British cars, also manufactured
seven units of a two-cylinder, 10-horsepower “all-Japanese” car called Dattogo.
Kaishinsha was the first automobile manufacturing business in Japan.
 1917 Japanese company Mitsubishi builds the Mitsubishi Model A, all hand built
in limited numbers for Japanese executives.

Examples of period vehicles:

 1922–1939 Austin 7 — one of the most widely copied vehicles ever, serving
as a template for cars around the world, from BMW to Nissan.
 1922–1931 Lancia Lambda — very advanced car for the time, first car to
feature a load-bearing monocoque and independent front suspension.
 1924–1929 Bugatti Type 35 — one of the most successful racing cars of all
time, with over 1,000 victories in five years.[citation needed]
 1925–1928 Hanomag 2 / 10 PS — early example of ponton styling.
 1927–1931 Ford Model A (1927-1931) — after keeping the brass era Model T
in production for too long, Ford broke from the past by restarting its model
series with the 1927 Model A. More than 4 million were produced, making it
the best-selling model of the era. The Ford Model A was a prototype for the
beginning of Soviet mass car production (GAZ A).
 1930 Cadillac V-16 — developed at the height of the vintage era, the V16-
powered Cadillac would join Bugatti's Royale as the most legendary ultra-
luxury cars of the era.
 COMPANY PROFILE
SUZUKI MOTORCYCLES GLOBAL HISTORY:

In 1909, Michio Suzuki founds the Suzuki Loom Company in Hamamatsu, Japan.
He builds industrial looms for the thriving Japanese silk industry. 1937 to diversify
activities, the company experiments with several interesting small car prototypes, but
none go into production because the Japanese government declares civilian automobiles
“non –essential commodities” at the onset of WWII. Suzuki produced its first motorcycle
in 1954 called the Collide (90cc). Suzuki built small capacity bikes during the 50s and
60s and had only small export success until the introduction of the X6 (T20 super six)
which gave Suzuki much name credibility. With a well – established name Suzuki dared
enter the big bike market and in 1967 Suzuki introduced T500. In 1971 the GT7 the
Water Buffalo was introduced in 1971 in America and the kettle in Britain – both the
same GT750 bike and the start for Suzuki to enter the super bike market. Most bikes
produced around the middle 70s had enough power but lacked a steady frame.

The introduction of the Suzuki GS 1000 in 1978 changed this problem once and
for all. Suzuki pulled a stunt within the motorcycle market by introducing the GSX-R750,
which was such a direct copy of their formula race bike with the only difference that this
GSX was, road legal. It turned the super sport motorcycle market upside down and
dominated the way super bikes would look for the future. In 1997 the TL 1000S is the
first Suzuki sport bike with a V-Twin engine. It will be followed a year later by a racier R
version. In 1999 mat MladinA wins the AMA Super bike Championship, beginning a run
of unprecedented dominance. Mladin will win five more times, and more sharp edged, the
company is one of the first to recognize what might be called the ‘semi-sport’ market, as
opposed to the first to recognize what might be called the ‘semi-sport’ market, as opposed
to the super sport market. In 1999 Suzuki introduced the Hayabusa; Suzuki calls the
Hayabusa the ultimate aerodynamic sports bike. It’s powered by a 11298cc liquid-cooled
DOHC in –line 4- cylinder engine that becomes the darling of land –speed racers. This
sent the Honda Blackbird packing and became the world’s fastest production bike at a
whopping 190 mph (307 km/h). in 2001 Suzuki introduced and upgrade GSX-R750
engine and created the GSX-R 1000 (998cc), which is a super bike with outstanding
performance. In 2003 the GSX-R 1000 was restyled but still kept its position as a super
class bike. In 2005 Suzuki’s original 4 –stroke motocross, the RM-Z450, is equipped with
a 4stroke 449cc engine, which features the Suzuki Advanced Sump system (SASS). Troy
Courser gives Suzuki its first and only (so far) world Super bike Championship. In 2006
the M109R, Suzuki’s flagship V-90.5mm stroke. In 2008 the B-king is launched,
powered by the 1340cc Hayabusa engine, the B-King is Suzuki’s flagship big ‘Naked’
bike. Suzuki says it has the top-ranked power output in the naked category.

SUZUKI MOTORCYCLES INDIA HISTORY:

Suzuki Motorcycle India Pvt. Ltd. engages in manufacturing two wheelers. The
company’s products include motorcycles and scooters. It offers its products through a
network of dealers. The company was incorporated in 1997 and is based in Gurgaon,
India. Suzuki Motorcycle India Pvt. Ltd. Operates as the subsidiary of Suzuki motor
Corp.

Suzuki Motor Corporation (SMC), a global giant of motorcycle manufacturing is

headquartered in Japan. It holds major stake in its Indian subsidiary, Suzuki Motorcycle
India Private Limited (SMIL), SMIL was set up after Suzuki’s re-reentry into the Indian
two-wheeler market after it severed ties with partner TVS in 2000-01. Suzuki was then
the technology provider in the erstwhile joint venture company TVS Suzuki.

Suzuki Motorcycle India Pvt. Ltd. (SMIL) is the latest entry into the already
crowded Indian two-wheeler segment with players like Hero Honda, Bajaj Auto, Honda,
and TVS. SMIL have started their Indian operations with a 125cc mass market
motorcycle. It has made an initial investment of Rs200 corers to start their Indian
operations. Company sources have revealed that Suzuki would follow up this 125cc bike
with a high performance 150-cc sibling in 2010.
 Their setup in Gorgon has the capabilities of manufacturing one lakh motorcycles
and they are ready to step that up massively if the situation arises. They already have
setup 40 dealerships around the country.

MARUTI SUZUKI INDIA LTD:

Maruti Suzuki India Limited, formerly known as Maruti Udyog Limited, is an

automobile manufacturer in India. It is a 56.21% owned subsidiary of the Japanese car
and motorcycle manufacturer Suzuki Motor Corporation. As of July 2018, it had a market
share of 53% of the Indian passenger car market [better source needed] Maruti Suzuki
manufactures and sells popular cars such as the Ciaz, Ertiga, Wagon R, Alto K10 and
Alto 800, Swift, Celerio, Swift Dzire, Baleno and Baleno RS, Omni, baleno, Eeco, Ignis,
S-Cross, Vitara Brezza and newly launched S-Presso small SUV. The company is
headquartered at New Delhi. In May 2015, the company produced its fifteen millionth
vehicle in India, a Swift Dzire.

AFFILIATION WITH SUZUKI:

In 1982, a license and joint venture agreement (JVA) was signed between Maruti
Udyog Ltd, and Suzuki of Japan. At first, Maruti Suzuki was mainly an importer of cars.
In India's closed market, Maruti received the right to import 40,000 fully built-up Suzuki
in the first two years, and even after that the early goal was to use only 33% indigenous
parts. This upset the local manufacturers considerably. There were also some concerns
that the Indian market was too small to absorb the comparatively large production
planned by Maruti Suzuki, with the government even considering adjusting the petrol tax
and lowering the excise duty in order to boost sales. Local production commenced in
December 1983. In 1984, the Maruti Van with the same three-cylinder engine as the 800
was released and the installed capacity of the plant in Gurgaon reached 40,000 units.

In 1985, the Suzuki SJ410-based Gypsy, a 970 cc 4WD off-road vehicle, was
launched. In 1986, the original 800 was replaced by an all-new model of the 796 cc
hatchback Suzuki Alto and the 100,000th vehicle was produced by the company. In 1987,
the company started exporting to the West, when a lot of 500 cars were sent to Hungary.
By 1988, the capacity of the Gurgaon plant was increased to 100,000 units per annum.

MARKET LIBERALISATION:

In 1989, the Maruti 1000 was introduced and the 970 cc, three-box was India's
first contemporary sedan. By 1991, 65 per cent of the components, for all vehicles
produced, were indigenized. After liberalization of the Indian economy in 1991, Suzuki
increased its stake in Maruti to 50 per cent, making the company a 50-50 Joint Venture
with the Government of India the other stake holder.

In 1993, the Zen, a 993 cc, hatchback was launched and in 1994 the 1298 cc
Esteem was introduced. Maruti produced its 1 millionth vehicle since the commencement
of production in 1994. Maruti's second plant was opened with annual capacity reaching
200,000 units. Maruti launched a 24-hour emergency on-road vehicle service. In 1998,
the new Maruti 800 was released, the first change in design since 1986. Zen D, a 1527 cc
diesel hatchback, and Maruti's first diesel vehicle, and a redesigned Omni were
introduced. In 1999, the 1.6 litre Maruti Baleno three-box saloon and Wagon R were also
launched.

In 2000, Maruti became the first car company in India to launch a Call Center for
internal and customer services. The new Alto model was released. In 2001, Maruti True
Value, selling and buying used cars was launched. In October of the same year the Maruti
Versa was launched. In 2002, Esteem Diesel was introduced. Two new subsidiaries were
also started: Maruti Insurance Distributor Services and Maruti Insurance Brokers
Limited. Suzuki Motor Corporation increased its stake in Maruti to 54.2 per cent.

In 2003, the new Suzuki Grand Vitara XL-7 was introduced while the Zen and the
Wagon R were upgraded and redesigned. The four millionth Maruti vehicle was built and
they entered into a partnership with the State Bank of India. Maruti Udyog Ltd was Listed
on BSE and NSE after a public issue, which was oversubscribed tenfold. In 2004, the
Alto became India's best selling car overtaking the Maruti 800 after nearly two decades.
The five-seater Versa 5-seater, a new variant, was created while the Esteem was
re-launched. Maruti Udyog closed the financial year 2003-04 with an annual sale of
472,122 units, the highest ever since the company began operations and the fiftieth lakh
(5 millionth) car rolled out in April 2005. The 1.3 litre Suzuki Swift five-door hatchback
was introduced in 2005.

In 2006 Suzuki and Maruti set up another joint venture, "Maruti Suzuki
Automobiles India", to build two new manufacturing plants, one for vehicles and one for
engines. Cleaner cars were also introduced, with several new models meeting the new
"Bharat Stage III" standards. In February 2012, Maruti Suzuki sold its ten millionth
vehicle in India. In July 2014 it had a market share of more 45%.

Maruti Suzuki is now looking to shift its current manufacturing facility located in
the downtown Gurgaon as apparently it is short of space and logistics. It is hunting for a
huge 700 acres of plot of land.

On 25 April 2019, Maruti Suzuki announced that it would phase out production of
diesel cars by 1 April 2020, when the Bharat Stage VI emission standards come into
effect. The new standards would require a significant investment from the company to
upgrade its existing diesel engines to comply with the more stringent emission standards.
Chairman R.C. Bhargava stated, "We have taken this decision so that in 2022 we are able
to meet the Corporate Average Fuel Efficiency norms and higher share of CNG vehicles
will help us comply with the norms. I hope the union government's policies will help
grow the market for CNG vehicles." Diesel cars accounted for about 23% of Maruti
Suzuki's annual sales.

CURRENT MODELS:

Model Production Category Image Outlet

Alto 2012–present hatchback Arena

 Celerio 2014–present hatchback Arena

Swift 2005–present hatchback Arena

Vitara Brezza 2016–present compact SUV Arena

Dzire 2017–present sedan Arena

Ertiga 2012–present MPV Arena

Baleno 2015–present hatchback NEXA

S-Cross 2015–present SUV NEXA

 Ignis 2017–present Mini SUV NEXA

Ciaz 2014–present sedan NEXA

DISCONTINUED MODELS

Model Launched Discontinued Category Image

800 1983 2013 Hatchback

Omni 1984 2019 Microvan

Gypsy E 1985 2000 Mini SUV

Gypsy King 1985 2017 Mini SUV

 1000 1990 2000 Sedan

Zen 1993 2003 Hatchback

Esteem 1994 2010 Sedan

Baleno 1999 2007 Sedan

Baleno Altura 2000 2003 Station Wagon

Alto 2000 2012 Hatchback

Versa 2001 2010 Minivan

Grand Vitara XL7
2003 2007 SUV
(import)

Grand Vitara
2007 2015 SUV
(import)

Zen Estilo 2007 2013 Hatchback

SX4 2007 2014 Sedan

A-star 2008 2014 Hatchback

Swift Dzire 2008 2017 Sedan

Ritz 2008 2016 Hatchback

 Alto K10 2010 2014 Hatchback

Kizashi
2011 2014 Sedan
(import)

Ertiga 2012 2018 MPV

PLANT AREA & PRODUCTION CAPACITY :

They have installed their manufacturing plant in Gurgoan (Haryana) having the
annual capacity of 2, 50,000 units. Total land area of the facility at Gurgaon is 37 acres
out of which thepresent plant is constructed in an area of 6.5 acres of land. The remaining
area of 30.5 acres is left for land development and future expansion.

MISSION OF SUZUKI:

The core philosophy of Suzuki is to provide “VALUE-PACKED PRODUCTS”

Since the founding of Suzuki Motor Corporation; the Organization’s Endeavour has
always been to provide “VALUE-PACKED PRODUCTS” as one of the manufacturing
philosophies.

Suzuki believes that “VALUE-PACKED PRODUCTS” come from the effort to

carry out product development from customer’s point of view. This policy has been in
effect since company’s inspection and has helped the organization to meet customer’s
needs. AS a result, Suzuki’s products have become well received throughout the world.
 Suzuki is fully committed to create products that meet customer’s demand by
utilizing its dynamic, long-nurtured technological advantage coupled with its fresh and
active human resources.

 Develop products of superior value by focusing on the customers

 Establish a refreshing and innovative company through team work

 Strive for individual excellence through continuous improvement.

GROWTH REPORT:

It has reported a growth of 47.66% in sales in the month of November ’09 at

14745 units compared to 9986 units same month last year.

It has sold 14806 units in December ’09 listing a strong growth of 61% over its
sales in December ’08 despite recession. This increase of sales is attributed to the
tremendous response from the new products GS 150R and ACCESS 125.

It has reported 93% growth in sales during the month of January 2010.IT has sold
20441 units in January ’10 listing a strong growth of 93% over its sales in January ’09.

It has sold 21752 units in March 10 listing an impressive growth of 76% over its
sales in March ’09. The increase of sales is attributed to the tremendous response from
the new product Gs 150r and ACCESS 125.

It has great plans for the coming year and this is only the beginning. Their
objective is to offer quality products and customer satisfaction to consumers. This growth
momentum will further accelerate in coming months.

ENVIRONMENT:

The philosophy of keeping “environment first” is properly percolated downwards.

To comply with all applicable legislations and setting standards thereof remains only a
beginning. Company thrives to discover and invent mechanisms for better environment
management systems and it’s a continuous process which is managed by a separate wing
of experts and specialist in the field.
CARE FOR EMPLOYEE:
The company takes very good care of the employee by providing them well
designed working environment. Company try to maintain zero accident record through
regular safety audit, frequent training for staff, line associates and contractors. To take
care of the health of all our employees, they maintain all international parameters and
standards for drinking water, treated water, ambient air shop floor, office and the outside.

SALES & SERVICE NETWORK:

Maruti Suzuki has 3598 sales outlets across 1,861 cities in India. The company
aims to double its sales network to 4,000 outlets by 2020. It has 3,792 service stations
across 1,861 cities throughout India. Maruti's dealership network is larger than that of
enough known companies combined. Service is a major revenue generator of the
company. Most of the service stations are managed on franchise basis, where Maruti
Suzuki trains the local staff. Also, The Express Service stations exist, sending across their
repair man to the vehicle if it is away from a normal service center.

NEXA:
In 2015 Maruti Suzuki launched NEXA, a new dealership format for its premium
cars.

Maruti currently sells the Baleno, Baleno RS, S-Cross, XL-6, Ciaz and Ignis
through NEXA outlets. S-Cross was the first car to be sold through NEXA outlets.
Several new models will be added to both channels as part of the Company's medium
term goal of 2 million annual sales by 2020.

MARUTI INSURANCE:

Launched in 2002 Maruti Suzuki provides vehicle insurance to its customers with
the help of the National Insurance Company, Bajaj Allianz, New India Assurance and
Royal Sundaram. The service was set up the company with the inception of two
subsidiaries Maruti Insurance Distributors Services Pvt. Ltd and Maruti Insurance
Brokers Pvt. Limited
 This service started as a benefit or value addition to customers and was able to
ramp up easily. By December 2005 they were able to sell more than two million
insurance policies since its inception.

MARUTI FINANCE:

To promote its bottom line growth, Maruti Suzuki launched Maruti Finance in
January 2002. Prior to the start of this service Maruti Suzuki had started two joint
ventures Citicorp Maruti and Maruti Countrywide with Citi Group and GE Countrywide
respectively to assist its client in securing loan. Maruti Suzuki tied up with ABN Amro
Bank, HDFC Bank, ICICI Limited, Kotak Mahindra, Standard Chartered Bank, and
Sundaram to start this venture including its strategic partners in car finance. Again the
company entered into a strategic partnership with SBI in March 2003 Since March 2003,
Maruti has sold over 12,000 vehicles through SBI-Maruti Finance. SBI-Maruti Finance is
currently available in 166 cities across India.

Citicorp Maruti Finance Limited is a joint venture between Citicorp Finance India
and Maruti Udyog Limited its primary business stated by the company is "hire-purchase
financing of Maruti Suzuki vehicles". Citi Finance India Limited is a wholly owned
subsidiary of Citibank Overseas Investment Corporation, Delaware, which in turn is a
100% wholly owned subsidiary of Citibank N.A. Citi Finance India Limited holds 74%
of the stake and Maruti Suzuki holds the remaining 26%. GE Capital, HDFC and Maruti
Suzuki came together in 1995 to form Maruti Countrywide. Maruti claims that its finance
program offers most competitive interest rates to its customers, which are lower by 0.25%
to 0.5% from the market rates.

MARUTI TRUE VALUE

Maruti True service offered by Maruti Suzuki to its customers. It is a market place
for used Maruti Suzuki Vehicles. One can buy, sell or exchange used Maruti or non-
Maruti vehicles with the help of this service in India. As of 10 August 2017 there are
1,190 outlets across 936 cities.
N2N FLEET MANAGEMENT
N2N is the short form of End to End Fleet Management and provides lease and
fleet management to corporates. Clients who have signed up of this service include Gas
Authority of India Ltd, DuPont, Reckitt Benckiser, Doordarshan, Singer India, National
Stock Exchange of India and Transworld. This fleet management service include Leasing,
Maintenance, Convenience services and Remarketing.

MARUTI ACCESSORIES
Many of the auto component companies except than Maruti Suzuki started to offer
compatible components and accessories. This caused a serious threat and loss of revenue
to Maruti Suzuki. Maruti Suzuki started a new initiative under the brand name Maruti
Genuine Accessories to offer accessories like alloy wheels, body cover, carpets, door
visors, fog lamps, stereo systems, seat covers and other car care products. These products
are sold through dealer outlets and authorized service stations throughout India.

MARUTI DRIVING SCHOOL

A Maruti Driving School in Chennai

As part of its corporate social responsibility Maruti Suzuki launched the Maruti Driving
School in Delhi. Later the services were extended to other cities of India as well. These
schools are modelled on international standards, where learners go through classroom and
practical sessions. Many international practices like road behaviour and attitudes are also
taught in these schools. Before driving actual vehicles participants are trained on
simulators.

At the launch ceremony for the school Jagdish Khattar stated "We are very
concerned about mounting deaths on Indian roads. These can be brought down if
government, industry and the voluntary sector work together in an integrated manner. But
we felt that Maruti should first do something in this regard and hence this initiative of
Maruti Driving Schools."
 CHAPTER- 4

RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problems. It
may be understand as a science of studying now research is done systematically. In that
various steps, those are generally adopted by a research in studying his problem along
with logic behind them.
It is important for research to know not only the research method but also know
methodology. The procedure by researchers goes about their work of describing,
explaining and predicting phenomenon are called methodology. Methods comprise the
procedures used for generating collecting and evaluating the data. All this means that it is
necessary for the researcher to design his methodology for his problem as the same may
differ from problem to problem.
Data collection is an important step in any project and success of any project will
be largely depend upon now much accurate you will be able to collect and how much
time, money and effort will be required to collect that necessary data, this also important
step. Data collection plays an important role in research work. Without proper data
available for analysis you cannot do the research accurately.
RESEARCH DESIGN:
The research that has been done is of analysis research. As the data that is
required mainly in form secondary sources like annual reports of the organization, it is
based on the analysis done from the collected data.
Data sources:
There are types of data collection methods available .They are
1) Primary Data Collection.
2) Secondary Data Collection.
1. PRIMARY DATA COLLECTION:
The primary data is that data which is collected fresh hand, and for first time
which in nature primary data can collect through personal interview, questionnaire etc., to
support the secondary data.
2. SECONDARY DATA COLLECTION:
The secondary data are those which have already collected and stored. Secondary
data easily get those secondary data from records, journals, annuals reports of the
company etc., I will save the time, money and efforts to collect the data. Secondary data
also made available through trade magazine, balance sheets books etc..,

NEED FOR THE STUDY

Finance is the life blood of all types of enterprises, manufacturing & trading. It is
very essential to analyse leverage ratios for the efficient for running of firm.
Maintenance of more working capital will helps the firm to improve the working position
of the firm.

OBJECTIVES OF THE STUDY

1. To find the leverage of the company.

2. To understand and analyze the leverage effects of the company.
3. To study the impact of leverage on Earnings Per Share ( EPS ) of the firm.

SCOPE OF THE STUDY

The scope of present study is limited because of the following reasons:

 As most of the financial information is considered to be confidential, access to

information was restricted.

 The results of the study are limited to the availability of the information.
 RESEARCH METHODOLOGY

Research design : Analytical study

Sources of data : Secondary data

Period of study : 2015-16 to 2019-20

Tools of analysis : Leverage Ratios

LIMITATIONS OF THE STUDY

Following limitations were encountered while preparing this project:

 Limited data: - This project has completed with annual reports; it just constitutes one
part of data collection i.e. secondary. There were limitations for primary data
collection because of confidentiality.

 Limited period: This project is based on five year annual reports. Conclusions and
recommendations are based on such limited data. The trend of last five year may or
may not reflect the real working capital position of the company.
 OPERATING LEVERAGE
OPERATING
F.Y CONTRIBUTI EBIT LEVERAGE =
ON contribution/EBIT
2015-16 14001.1 5074.20 2.76
2016-17 17934.1 7519.1 2.39
2017-18 20561.9 10039.7 2.05
2018-19 23879.6 11336 2.11
2019-20 24695.1 10513 2.35

Interpretation:
The operating Leverage of Maruti Suzuki India Ltd was fluctuating in my
entire period of study. The values are 2.76, 2.39, 2.05, 2.11 and 2.35 respectively from
the year 2015-16 to 2019-20.

FINANCIAL LEVERAGE
FINANCIAL
F.Y EBIT EBT LEVERAGE =
EBIT/EBT
2015-16 5074.20 4868.20 1.04
2016-17 7519.1 7437.60 1.01
2017-18 10039.7 9950.30 1.01
2018-19 11336 10990.30 1.03
2019-20 10513 10437.20 1.01

Interpretation:

The Financial Leverage of Maruti Suzuki India Ltd was fluctuating in my entire period of
study. The values are 1.04, 1.01, 1.01, 1.03 and 1.01 respectively from the year 2015-16
to 2019-20.
 COMBINED LEVERAGE
COMBINED
LEVERAGE =
F.Y CONTRIBUTION EBT
Contribution/EB
T
2015-16 14001.1 4868.20 2.88
2016-17 17934.1 7437.60 2.41
2017-18 20561.9 9950.30 2.07
2018-19 23879.6 10990.30 2.17
2019-20 24695.1 10437.20 2.37

Interpretation:

The Combined Leverage of Maruti Suzuki India Ltd was fluctuating in my entire period
of study. The values are 2.88, 2.41, 2.07, 2.17 and 2.37 respectively from the year 2015-
16 to 2019-20.

DEBT TO ASSETS RATIO

Debt to Assets
Ratio =
F.Y TOTAL TOTAL ASSETS
DEBT
Total Debt/Total
Assets
2015-16 180.20 23884.40 0.75
2016-17 77.40 29961.60 0.26
2017-18 483.60 36914.70 1.31
2018-19 110.80 41868.10 0.26
2019-20 149.60 46291.10 0.32
Interpretation:
The Debt to Assets Ratio reveals that the company
was maintaining 0.75%, 0.26%, 1.31%, 0.26%, and 0.32% of Debt to Assets for the year
2015-16 to 2019-20 respectively.
 DEBT TO EQUITY RATIO
Debt to Equity
Ratio =
F.Y TOTAL DEBT TOTAL EQUITY
Total Debt/Total
Equity
2015-16 180.20 23704.20 0.76
2016-17 77.40 29884.20 0.26
2017-18 483.60 36431.10 1.33
2018-19 110.80 41757.30 0.27
2019-20 149.60 46141.50 0.32

Interpretation:

The Debt to Equity Ratio reveals that the company was maintaining 0.76%, 0.26%,
1.33%, 0.27%, and 0.32% of Debt to Equity for the years 2015-16 to 2019-20respectively

INTEREST COVERAGE RATIO

Interest Coverage
F.Y EBIT INTEREST Ratio =
EBIT/Interest
2015-16 5074.20 206.00 24.63
2016-17 7519.1 81.50 92.26
2017-18 10039.7 89.40 112.30
2018-19 11336 345.70 32.79
2019-20 10513 75.80 138.69

Interpretation:

The Interest Coverage Ratio of the firm was high (138.69) for the year 2019-20 and low
(24.63) for the year 2015-16.
 CAPITAL EMPLOYED NET WORTH RATIO
Capital
Employed Net
Worth Ratio =
F.Y CAPITAL EMPLOYED NET WORTH
Capital
Employed/Net
Worth
2015-16 23884.40 23704.20 1.01
2016-17 29961.60 29884.20 1.00
2017-18 36914.70 36431.10 1.01
2018-19 41868.10 41757.30 1.00
2019-20 46291.10 46141.50 1.00

Interpretation:

The Capital Employed Net Worth Ratio of the firm was high (1.01) for the years 2015-16
and 2016-17 and low (1.00) for the years2018-19 and 2019-20.
 FINDINGS

 The operating Leverage of Maruti Suzuki India Ltd was fluctuating in my entire
period of study. The values are 2.76, 2.39, 2.05, 2.11 and 2.35 respectively from the year
2015-16 to 2019-20.
 The Financial Leverage of Maruti Suzuki India Ltd was fluctuating in my entire period of
study. The values are 1.04, 1.01, 1.01, 1.03 and 1.01 respectively from the year 2015-16
to 2019-20.
 The Combined Leverage of Maruti Suzuki India Ltd was fluctuating in my entire period
of study. The values are 2.88, 2.41, 2.07, 2.17 and 2.37 respectively from the year 2015-
16 to 2019-20.
 The Debt to Assets Ratio reveals that the company was maintaining 0.75%, 0.26%,
1.31%, 0.26%, and 0.32% of Debt to Assets for the years 2015-16 to 2019-20
respectively.
 The Debt to Equity Ratio reveals that the company was maintaining 0.76%, 0.26%,
1.33%, 0.27%, and 0.32% of Debt to Equity for the years 2015-16 to 2019-20
respectively
 The Interest Coverage Ratio of the firm was high (138.69) for the year 2019-20 and low
(24.63) for the year 2015-16.
 The Capital Employed Net Worth Ratio of the firm was high (1.01) for the years 2015-16
and 2016-17 and low (1.00) for the years2015-16,2017-18 and 2019-20.
 SUGGESTIONS:
 Auto industry thus present a good opportunity for the investors especially in the form of Mahindra and
Mahindra ltd.

 Major Indian producers like Tata’s and Maruti may be doing good in the form of numbers in sales but will
face great competition in for of Mahindra and Mahindra.

 Mahindra and Mahindra has a great position on the stock market and will attract investors and this could
lead to expansion and growth.

 Thus the Tata’s and Maruti need to take care of their stock and work on its consistency. This would help
them attract more investors and grow in this growing economy of India.

 Increasing demands and sales numbers of Indian auto bring many opportunities for these players if they are
up to grab it.

CONCLUSION:

The study explored the truth that ratios by themselves mean nothing. It is found that ratios are calculated from the
financial statements’ which are prepared as desired by the management and policies adopted on depreciation and
stock values and thus produce only a collection of facts expressed in monetary term and cannot produce complete
and authentic picture of the business and also may not highlight other factors which affects performance. It is also
found that to control manager’s management often overuse ratio and concentrate more on improving the ratios. It is
also known fact that ratio is simple comparison of numerator and a denominator and in comparing ratios it become
difficult to adjudicate whether differences are due to change in the numerator or denominator or in both. It is also
found that ratios are interconnected but are often treated by management in isolation. It is also found that analysis of
ratios lack authenticity as data used in calculation are not accurate but manipulated presentation by the promoters. It
is also found that different firms follow different accounting policies like depreciation allowance; valuation of
inventory etc. and often management ignore these differences while making inter-firm comparison.

BIBILIOGRAPHY
Websites:
www.moneycontrol.com
www.marutisuzukiindia.com