I

A PROJECT REPORT ON
"A COMPERATIVE STUDY OF LIQUIDITY AND PROFITABILITY
POSITION OF MAHINDRA & MAHINDRA AND MARUTI SUZUKI "

Submitted By

RAVI KUMAR RAM

(19MC201040)

Under the supervision and guidance of

Dr. Yoowanka Lyngdoh

School of Management & Commerce

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

Bachelors of Business Administration

Submitted to the

School of Management & Commerce

SRM University, Sikkim

5th Mile, Tadong

Gangtok, Sikkim - 737102

 BONAFIDE CERTIFICATE
Certificate that this project report titled "A COMPARATIVE OF LIQUIDITY AND
ROFIT ABILITY POSITION OF MAHINDRA & MAHINDRA AND MARUTI SUZUKI"
s a bonafide work of RA VI KUMAR RAM (19MC201040) who carried out the research
der my supervision.

ertificate further, that to the best of my knowledge the work reported herein is not a part of
y other project report or dissertation on the basis of which a degree or award was conferred
n an earlier occasion to this or any other candidate.

ubmitted for the VIVA-VOICE examination held on

. 3-0 ,/')/Ref?
I

ASSOCIATE DEAN

INTERNAL EXAMINER EXTERNAL EXAMINER

 Declaration
I Ravi Kumar Ram (Reg No. 19MC201040) hereby declare that the project
report entitled “A COMPERATIVE STUDY OF LIQUIDITY AND PROFITABILITY
POSITION OF MAHINDRA AUTOMOBILES AND SUZUKI AUTOMOBILES”
submitted to SRM UNIVERSITY ( SCHOOL OF MANAGEMENT ) in partial
fulfilment of the for the requirement of the Degree of Batchelor Of Business
Administration id s record of the original research work done by me under the
supervision and guidance of Dr. Yoowanka Lyngdoh, Hod & Assistant Professor
of School of management, SRM University of Sikkim, and that it has not formed
the basis for the award of any degree / associateship / fellowship of similar
title to any candidate of any University.

Date: Signature Of the Candidate

Place:
Acknowledgement
 Table Of Contents

5
 1. INTRODUCTION

Ratio analysis
Once financial statement an organization are prepared, they need to be analysed, one such
tools to analyse and asses the financial situation of a firm is Ratio Analysis. It allows the
shareholder to make better sense of the accounts and better understand the current fiscal
scenario of an entity, let us take in detail look at ratio analysis.

Meaning of Ratio Analysis

Now, we have previously learned what ratios are, they are a comparison of two numbers
with respect to each other, similarly, in finance, ratio is correlation between two numbers,
or rather two accounts. So, two numbers derived from the financial statement are
compared to give us a clearer understanding of them, this is accounting ratio.

Let us take an example, the income for the year from operations is let us say 1,00,000/- for a
given year. The purchases and other direct expenses cost around 75,000/- so the Gross
Profit of the year is 25,000/-. Now it can be said that the Gross profit is 25% of the
Operations Revenue. We calculate this as

G. P. Ratio= GPSales/ RevenueGPSales/ Revenue x 100

Example:
G. P. Ratio = 25,0001,00,00025,0001,00,000 x 100
G. P. Ratio = 25%

One factor to be kept in mind is that ratio analysis is used only to compare numbers that the
make sense and give us a better understanding of the financial statement. Comparing
random financial accounts should be avoided.
The Objective of Ratio Analysis
Interpreting the financial statement and other financial data is essential fir all stakeholder of
an entity. Ratio Analysis hence becomes a vital tool for financial analysis and financial
management. Let us take a look at some objectives that ratio analysis fusils.

1) Measure of Profitability
Profit is the ultimate aim of every organization. So, if I say that ABC firm earned a profit
of 5 lakhs last year, how will you determine if that is a good or bad figure? Context is
required to measure profitability, which is provided by ratio analysis, Gross Profit Ratios,
Net Profit Ratio, Expenses ratio etc provide a measure of the profitability of a firm, the
management can use such ratios to find out problem areas and improve upon them.

2. Evaluation of operational Efficiency

Certain ratios highlight the degree of efficiency of a company in the management of its
assets and other resources, it is important that assets and financial resources be
allocated and used efficiently to avoid unnecessary expenses. Turnover Ratios and
efficiency Ratios will point out any mismanagement of assets.

3. Ensure suitable Liquidity

Every firm has to ensure that some of its assets are liquid, in case it requires cash
immediately, so they liquidity of a firm is measured by ratios such as Current Ratio and
Quick Ratio. These help a firm maintain the required level of short-term solvency.

4. Overall Financial Strength

There are some ratios that help determine the firm’s long-term solvency. They help
determine if there is a strain on the assets of a firm or if the firm is over-leveraged. The
management will need to quickly rectify the situation to avoid liquidation in the future.
Example of such ratios are Debt-Equity Ratio, Leverage Ratio etc.
5. Comparison
The organizations’ ratios must be compared to the industry standards to get a better
understanding of its financial health and fiscal position. The management can take
corrective action if the standards of the market are not met by the company. The ratios
can also be compared to the previous year’ ratios to see the progress of the company.
This is known as trend analysis.

 To analyse the Liquidity, solvency, and Profitability & return of Mahindra and
Suzuki Automobiles by using the liquidity ratios, long-term solvency ratios, and
profitability ratios, beside these.

 To study the comparative valuation of performance of Mahindra and Suzuki

Automobiles
COMPANY PROFILE
Mahindra & Mahindra Limited ('M&M') is the flagship company of the flagship
company of the Mahindra Group, which consists of diverse business interests across the
globe and aggregate revenues of around USD 19.4 billion. The company operates in nine
segments: automotive comprises of sales of tractors, spare parts and related services;
Information technology (IT) services comprises of services rendered for IT and telecom;
financial services comprise of services relating to financing, leasing and hire purchase of
automobiles and tractors; steel trading and processing comprises of trading and
processing of steel; infrastructure comprise of operating of commercial complexes,
project management and development; hospitality segment comprises of sale of
timeshare; Systech segment comprises of automotive components and other related
products and services, and its others segment comprise of logistics, after-market, two
wheelers and investment.
The company's manufacturing facilities are located at Kandivali,
Nashik, Igatpuri, Nagpur, Chakan, Zaheerabad, Jaipur, Rudrapur, Haridwar, Mohali and
Pithampur. Mahindra & Mahindra Ltd was incorporated on October 2, 1945 with the
name Mahindra & Mohammed Ltd. The company was renamed as Mahindra &
Mahindra Ltd in the year 1950, the company commenced the first business with
Mitsubishi Corporation and 5000 tons of wagon building plates from Yawata Iron & Iron
& Steel were supplied.
In the year 1953 Otis Elevator Company (India) was established. A join venture was
made with Rubery Owen & Company Limited, UK and established a company under the
name of Mahindra Owen. The company's Machine Tools Division was commenced its
operations in the year 1958. In the year 1960, Mahindra Sintered Products Limited was
established based on a joint venture with Bir Field (GKN Group, UK). In the year 1962,
Mahindra Ugine Steel Company was established as a joint venture between the
company and Ugine Kuhlmann, France. In the year 1963, International Harvester
Company, USA.
In the year 1965, the company entered into light commercial vehicles segment. They
established Vickers Sperry of India Ltd, a joint venture with Sperry Rand Corporation,
USA. In the year 1969, the company entered the world market with export of utility
vehicles and spare parts

In the year 1977, International Tractor Company of India merged with the company and
became its Tractor Division. In the year 1982, Mahindra brand of tractors were launched
and also became the market leader in the Indian tractor market. In the year 1991, the
company introduced commander range of vehicles in the market. Also, they established
Mahindra Financial Services Ltd as a wholesale fund provider.
Maruti Suzuki - Emerging Stronger than Ever
Maruti Suzuki India Limited, formerly known as Maruti Udyog Limited, is an Indian
automobile manufacturer headquartered in New Delhi. It is a subsidiary of the Japanese
automotive manufacturer Suzuki Motor Corporation.
Maruti Suzuki has 3,598 sales outlets across 1,861 cities in India. The Brand Trust Report
published by Trust Research Advisory, a brand analytics company, has ranked Maruti Suzuki
in the thirty-seventh position in 2013 and ninth position in 2019 among the most trusted
brands of India.
Maruti Suzuki - Company Highlights
Startup Name Maruti Suzuki India Limited
Headquarters New Delhi, India
Industry Automotive
Founded 24 February, 1981
Founder Government of India
CEO Kenichi Ayukawa
Parent Suzuki Motor Corporation
Area Served India
Website www.marutisuzuki.com

Maruti Suzuki - About and How it Works?

Maruti Suzuki India Limited is a holding company. The Company is engaged in the
manufacture, purchase and sale of motor vehicles, components and spare parts
(automobiles). The other activities of the Company comprise facilitation of pre-owned car
sales, fleet management and car financing.
Its geographical segments include the domestic segment, which includes sales to customers
located in India, and the overseas segment, which includes sales to customers located
outside India. The Company's product portfolio includes Alto 800, Alto K10, Wagon R,
Celerio, Ritz, Swift, DZire, Ertiga, Omni, Eeco, Gypsy, Ciaz, etc.
Its service offerings include Maruti Finance, True Value, Maruti Genuine Parts, Maruti
Genuine Accessories, Maruti Suzuki Auto Card and Maruti Driving School. It has
approximately five plants, located in Palam Gurgaon Road, Gurgaon, Haryana, and at
Manesar Industrial Town, Gurgaon, Haryana, with an installed capacity of over 1.5 million
vehicles per year.
Maruti Suzuki - Founder and History
Maruti Udyog Limited was founded by the government of India on 24 February 1981, only to
merge with the Japanese automobile company Suzuki in October 1982. The first
manufacturing factory of Maruti was established in Gurugram, Haryana, in the same year.
The company was formed as a government company with Suzuki as a minor partner to make
a people's car for middle class India. Over the years the company's product range has
widened ownership has changed hands and the customer has evolved.
On October 2, 1982 the company signed the licence and joint venture agreement with
Suzuki Motor Corporation Japan. In the year 1983 the company started their productions
and launched Maruti 800. In the year 1984 they introduced Maruti Omni and during the
next year they launched Maruti Gypsy in the market. In the year 1987 the company forayed
into the foreign market by exporting first lot of 500 cars to Hungary.
In the year 1990 the company launched India's first three-box car Sedan. In the year 1992
Suzuki Motor Corporation Japan increased their stake in the company to 50%. In the year
1993 they introduced the Maruti Zen and in the next year they launched Maruti Esteem in
the market.In the year 1995 the company commenced their second plant. In the year 1997
they started Maruti Service Master as a model workshop in India to look after sales services.
In the year 1999 the third plant with new press paint and assembly shops became
operational. In the year 2000 the company launched Maruti Alto in the market. In the year
2002 Suzuki Motor Corporation increased their stake in the company to 54.2%.
Maruti Suzuki - Mission
Maruti Suzuki's mission statement says, "To be The Leader in the Indian Automobile
Industry, Creating Customer Delight and Shareholder's Wealth; A pride of India."
Maruti Suzuki - Joint Ventures
Relationship between the Government of India, under the United Front (India) coalition and
Suzuki Motor Corporation over the joint venture was a point of heated debate in the Indian
media until Suzuki Motor Corporation gained the controlling stake. This highly profitable
joint venture that had a near monopolistic trade in the Indian automobile market and the
nature of the partnership built up till then was the underlying reason for most issues.
The success of the joint venture led Suzuki to increase its equity from 26% to 40% in 1987,
and to 50% in 1992, and further to 56.21% as of 2013. In 1982, both the venture partners
entered into an agreement to nominate their candidate for the post of Managing Director
and every Managing Director would have a tenure of five years.
Maruti Suzuki - Business Model
Maruti Suzuki's product range extends from entry level small cars like Alto 800, Alto K10 to
the luxury sedan Ciaz. Other activities include facilitation of pre-owned car sales fleet
management, car financing. Its Business Segments are divided into : Operating Income from
sales of cars and Interests from Investments.
Maruti Suzuki offers 17 models of cars Company focuses on catering to the needs of almost
all the segments from the middle class to high class through wide range of products
Maruti Suzuki - Revenue and Growth
Auto major Maruti Suzuki reported 2.05 per cent year-on-year growth in consolidated profit
at Rs 1,419.6 crore for the September quarter of FY21 (Q2FY21) while revenue rose 10.34
per cent to Rs 18,755.6 crore. In comparison, the company had posted revenue of Rs
16,997.9 crore and profit of Rs 1,391 crore in the corresponding quarter of last year.
Maruti Suzuki - Recent Acquisition
Maruti Suzuki India on 13 May 2020, said its board took a slew of decisions, including
acquisition of Delhi-based JJ Impex, and supply of Vitara Brezza to Toyota Kirloskar Motor
(TKM). The car major on said its board has approved acquiring 39.13% equity stake held by
Sumitomo Corporation, Japan and 10% held by Sumitomo Corporation India in JJ Impex
(Delhi), a company engaged in automobile service and repair business.
The cost of acquisition or the price at which the shares are to be acquired is fixed at Rs
21.73 crore, the company said.
After the acquisition, the company shall become the wholly-owned subsidiary of MSIL. MSIL
shall have the right to nominate/ appoint all the directors on the board of the company. The
nominee Directors of Sumitomo Group shall resign from the board of the company, Maruti
Suzuki India (MSIL) said. The acquisition does not require any government approvals, it
added.
Maruti Suzuki - Challenges Faced
Suzuki Motors Corporation had to recall certain models of vehicles such as the Grand Vitara
and XL 7 which were manufactured in the year 2005. A problem was detected in the
adjuster pulley for the drive belt which has the outer portion made up of plastic and
operates the power steering pump and air conditioner compressor. Repeated heat stress
caused the outer body made up of plastic to weaken and pieces of the pulley broke off.
The company found out that the broken pieces of pulley can get caught between the pulley
and the drive belt which can cause the drive belt to come off resulting in increased effort to
steer the vehicle by the driver which in turn increased the risk of a crash or accidents. The
company made a plan to resolve the issues in the vehicles with this problem and the dealers
of Suzuki Motor Corporation replaced the power steering pump belt tension adjuster free of
charge for the customers whose vehicles had the same defect.
Suzukis subsidiary Maruti Suzuki India Limited faced a great challenge to keep its lead in the
small market segment of automobiles in India. The company was facing severe production
issues which resulted in a long gestation period for some top-selling brands such as Maruti
Suzuki Swift, Maruti Suzuki Swift Desire and a few other models. These production issues
could have lead to loss in the market share of Maruti Suzuki in India however the company
dealt with the situation by working with their vendors to increase the supply of the
materials and the company was able to deal with the backlogs of its normal sales on many
models.
Difficult days, but we will emerge stronger—This was the message India’s biggest car
company gave out on Wednesday as it came out with its annual integrated report for the
2020 financial year and took stock of the toll that the pandemic was inflicting on its bottom
line.
The market leader had posted losses for the first time in about two decades, as the April-
June 2020 quarter showed nearly Rs 250 crore loss. Net sales had declined to less than Rs
4,000 crore, compared to nearly Rs 19,000 crore from the period in the previous year.
Maruti Suzuki - Future Plans
In an alliance with Toyota, Maruti Suzuki will be targeting the Hyundai Creta space with a
midsized SUV in 2022, and this vehicle will be based on the current Brezza architecture. A C-
segment MPV in 2023 is also planned, and both vehicles are likely to be produced at
Toyota's factory in Bidadi.
Unlike the re-badged Baleno, Ciaz and Ertiga, which will be shared by Maruti and Toyota in
India till 2022, the SUV and MPV under development are likely to have distinct
characteristics or differentiation to ensure that both companies gain from India’s growing
preference for utility vehicles.
“With over a dozen SUVs planned by its rivals, Maruti Suzuki knows it has to have
competitive offerings to retain its 50% overall share. The exit from diesel makes compact
UVs a challenge, but a 1.5-litre diesel engine is not yet ruled out,” said one of four
executives aware of Maruti’s plans. “Plus, Maruti will be relying on the localised hybrid
solutions from Toyota to spruce up its future portfolio.”
The utility vehicle segment is expected to overtake the humble hatchback segment in India,
as an increasing number of buyers prefer the tall and high-seating SUVs and MPVs that cost
as low as Rs 5 lakh and as high as Rs 1 crore. According to vehicle forecasting firm IHS
Markit, utility vehicle sales will close 2019 at 38%, a tad behind the hatchback segment,
before overtaking the latter in 2020. The share of entry-car or mini-car segment, once
Maruti's mainstay, today accounts for just 10% of the overall market as against 25% share it
enjoyed 5-7 years ago.
Apart from bringing in the petrol versions of Vitara Brezza and S-Cross, Maruti created an
entrylevel SUV with S-presso. Maruti expects a significant number of its Swift, Dzire, Ciaz,
and Ertiga buyers to eventually upgrade to a bigger SUV and MPV.