Pioneer institute of professional Studies, Indore An Autonomous Institute Established in 1996 NAAC Accreditation NBA Accreditation ISO 9001:2008 Certification [pic] Diligence & Excellence A Project report On 1st and 2nd Phase of swot analysis activity Guided by – Submitted by- Prof. Nihit Jaiswal Sanjay Sharma MBA-3rd sem Phase-1 ? Define the business & company – 1) Company’s Portfolio:- Maruti Udyog Limited (MUL),INDIA’s finest and Asia’s largest automobile industry was established in 1981 by an act of parliament.
MUL, the first automobile company in the world to be honored with an ISO 9000:2000 certificate, is a subsidiary of Suzuki Motor Corp (holds a 54% equity stake). The Government of India remains a significant equity stakeholder (10%). With its early mover advantage in Indian market; Maruti retains a dominant Market share despite increasing competition. But now Maruti Suzuki India Limited a subsidiary of Suzuki Motor Corporation of Japan, is India’s largest passenger car company, accounting for over 45% of the domestic car market.
The company offers a complete range of cars from entry level Maruti-800 and Alto, to stylish hatchback Ritz, A star, Swift, Wagon-R, Estillo and sedans DZire, SX4 and Sports Utility vehicle Grand Vitara. It was the first company in India to mass-produce and sell more than a million cars. It is largely credited for having brought in an automobile revolution to India. It is the market leader in India and on 17 September 2007, Maruti Udyog Limited was renamed Maruti Suzuki India Limited. The company’s headquarters are located in Delhi. ) Business Portfolio:- The Group’s principal activity is to manufacture, purchase and sale of Motor Vehicles and Spare parts. The other activities of the Group comprises of facilitation of Pre-Owned Car Sales, Fleet Management and Car Financing. The Group also provides services like framing of customized car policies, economical leasing of cars, maintenance management, registration and insurance management, emergency assistance and accident management. The product range includes 14 basic models with more than 150 variants.
The Group has operations in over 100 cities with more than 150 outlets and also exports cars to other countries. Promoter:- Mr. R. C. Bhargava(chairman) [pic] Vision- The Leader in the indian Automobile industry, Creating Delight and Shareholder’s Wealth; a pride of india. Mision:- Maruti Suzuki strive to undertake new service programs to meet unsaid needs of customers and retain its competitive edge by offering high quality products. Product mix:- The Group’s principal activity is to manufacture, purchase and sale of Motor Vehicles and Spare parts. The company offers a wide range of cars across different segments.
It offers 14 brands and over 150 variants – Maruti 800, people movers, Omni and Eeco, international brands Alto, Alto-K10, A-star, WagonR, Swift, Ritz and Estilo, off-roader Gypsy, SUV Grand Vitara, sedans SX4 and Swift DZire In an environment friendly initiative, in August 2010 Maruti Suzuki introduced factory fitted CNG option on 5 models across vehicle segments. These include Eeco, Alto, Estilo, Wagon R and Sx4. 1. 800 (Launched 1983) 2. Omni (Launched 1984) 3. Gypsy (Launched 1985) 4. WagonR (Launched 2002) 5. Alto (Launched 2000) 6. Swift (Launched 2005) 7. Estilo (Launched 2009) 8. SX4 (Launched 2007) 9. Swift DZire (Launched 2008) 10.
A-star (Launched 2008) 11. Ritz (Launched 2009) 12. Eeco (Launched 2010) 13. Maruti New Wagon R (Launched 2010) 14. Maruti Altok10 (Launched 2010) Joint venture:- SUZUKI’s joint venture in India, Maruti Udyog ltd. Is the country’s largest passenger car company with a 55% market Share. Suzuki and Maruti are investing US$ 1. 3 billion in new facilities for manufacturing cars and engines in India. 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 till 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 further to 50% in 1992. In 1982 both the venture partners had entered into an agreement to nominate their candidate for the post of Managing Director and every Managing Director will have a tenure of five years[6] Initially R. C. Bhargava, was the managing director of the company since the inception of the joint venture.
Till today he is regarded as instrumental for the success of Maruti Suzuki. Joining in 1982 he held several key positions in the company before heading the company as Managing Director. Currently he is on the Board of Directors. [7] After completing his five year tenure, Mr. Bhargava later assumed the office of Part-Time Chairman. The Government nominated Mr. S. S. L. N. Bhaskarudu as the Managing Director on 27 August 1997. Mr. Bhaskarudu had joined Maruti Suzuki in 1983 after spending 21 years in the Public sector undertaking Bharat Heavy Electricals Limited as General Manager.
Later in 1987 he was promoted as Chief General Manager, 1988 as Director, Productions and Projects, 1989 Director, Materials and in 1993 as Joint Managing Director. Top management:- Mr. Shinzo Nakanishi ( CEO & MD ) [pic] Mr. Manvinder Singh Banga (Director) [pic] Mr. Amal Ganguli (Director) [pic] Mr. D. S. Brar (Director) [pic] Mr. Keiichi Asai (Director) [pic] Mr. Osamu Suzuki (Director) [pic] Mr. Shuji Oishi (Director) [pic] Ms. Pallavi Shroff (Director) [pic] Mr. Kenichi Ayukawa (Director) [pic] Mr.
Tsuneo Ohash (Director and Managing Executive Officer (Production) [pic] Manufacturing Unit:- |[pic] | | | | | |Gurgaon Facility:- | | | |Maruti Suzuki has two state-of-the-art manufacturing facilities in India.
The first facility is at Gurgaon spread over 300 acres and the | |other facility is at Manesar, spread over 600 acres in North India. | | | |Maruti Suzuki’s facility in Gurgaon houses three fully integrated plants. Together the three plant have an installed capacity of around | |700,000 units. |[pic] | | | | | |K- series Plant:- | | | |The Gurgaon facilities also houses the ‘K’ Engine Plant.
Commissioned in 2008, the K-series engine plant has an installed capacity of | |500,000 units. | | | |K-series engines are available in 1 litre and 1. 2 litre capacities. The highly fuel efficient, technologically advanced K series engines | |have been very well appreciated by our customers for their performance. | | | | | | |Several Maruti Suzuki cars such as the A-star, Estilo, Swift, Swift | | | |Dzire, Ritz and WagonR sport the K-series engines. | | |[pic] | | | |Company has announced an investment of around Rs. 12500 crores to expand engine capacity by 250,000 units by 2010. | | |Manesar Facility:- | | | |The state of the art Manesar facility was inaugurated in February 2007. | | | |At present the Manesar plant rolls out World Strategic Models Swift, A-star, SX4 and swift DZire. | | |There is a high degree of automation and robotic control in the press shop, weld shop and paint shop to help manufacture with acute | |precision, high quality and speed. |The Manesar plant is designed to be flexible: diverse car models can be made here conveniently | |[pic] | | | |Owing to automatic tool changers, centralized weld control system and numerical control machines that ensure high Quality. | | |The plant at Manesar is the company’s fourth car assembly plant and has a capacity of 300,000 | |cars per year. | | | |Company has announced an investment of Rs. 1700 crores to expand its capacity by 250,000 units. The new facility is expected to be ready by | |2011-12. | | | | |Suzuki Powertrain:- | | | |Suzuki Powertrain India Limited is a joint venture of Maruti Suzuki with Suzuki Motor Corporation, Japan. t Manesar. It manufactures world | |class diesel engines and transmissions for cars. | | | |SMC holds 70 per cent equity in SPIL the rest is held by Maruti Suzuki. | | | | | | | | | | |[pic] | | | |This diesel engine plant has a capacity to manufacture 300,000 diesel engines a year. Touch point- The Group has operations in over 100 cities with more than 150 outlets and also exports cars to other countries. Phase II Current Goals & objective- Current Goals- They intend to continue to focus on the small car segment, while offering products in most segments of the Indian passenger car market. They aim to achieve their principal objectives by pursuing the following business strategies: Maintain and enhance their product range:
They intend to utilize Suzuki’s expertise in small car technology to produce new variants of their existing models and to upgrade their products with contemporary technology and features. Increase reach and penetration: They plan to continue to utilize their extensive sales and service network to increase the reach, in terms of geographical spread, and penetration, in terms of sales volumes, of their products across India. Increased availability of automobile finance:
They continue to seek opportunities to expand the size of the Indian passenger car market, especially in the small car segment, through facilitating easy availability of automobile finance. To that end, they have recently entered into an agreement with the State Bank of India. Secure repeat purchases by offering a “360 degree customer experience”: On the basis of their belief that securing repeat purchases from an existing customer requires less expenditure than acquiring a new customer, they aim to provide customers with a “one-stop shop” for utomobiles and automobile-related products and services. Continue to benchmark their manufacturing capabilities: They plan to continue to benchmark our manufacturing capabilities with the most efficient car manufacturing facilities of Suzuki and its subsidiaries. Continue to reduce costs to offer more competitive products: Cost competitiveness has been, and continues to be, central to their strategy as the leading manufacturer in the small car segment to expand the size of the market by offering competitively priced, high quality products.
The components of this strategy are: ? Higher levels of localization ? Vendor participation in cost reduction ? Cost reduction on warranties ? Reduction in initial investment cost ? Reduction in number of vehicle platforms ? Achieve further cost reduction through higher productivity Lower cost of ownership: Through their business strategies, they seek to reduce the consumer ’s cost of ownership of their cars, which comprises the cost of purchase, the cost of fuel and maintenance, including spare parts and repairs, during the life of the vehicle, insurance, and resale value
Objective- Maruti’s objective is to continually offer the customer new products and services that: ? Reduce the customer ’s cost of ownership of their cars; ? And anticipate and address the customer ’s needs and preferences in all aspects and stages of car ownership, to provide what they refer to as the “360 degree customer experience. Stakeholder of company- Mr Shinzo Nakanishi, Chairman Mr Jagdish Khattar, Managing Director Mr Hirofumi Nagao, Joint Managing Director Mr Shinichi Takeuchi, Joint Managing Director
Mr Kinji Saito, Director (Marketing and Sales) Mr Osamu Suzuki, Director Mr R C Bhargava, Director Mr S V Bhave, Director Mr Kumar Mangalam Birla, Director Mr Amal Ganguli, Director Ms Pallavi Shroff, Director Mr Manvinder Singh Banga, Director Analysis of Financial Aspect of Company: ? Operating margin (%) ? Gross profit margin (%) ? Net profit margin (%) ? EPS (Rs) ? Return on net worth (%) ? Dividend payout ratio (net profit) ? PBDIT ? Depreciation ? PBIT ? PBT ? PAT ? Net profit ¦ Operating margin (%): It compares the quality of a company’s activity to its competitors.
A business that has a higher operating margin than others in the industry is generally doing better as long as the gains didn’t come by piling on debt or taking highly risky speculations with shareholders’ money. Operating Margin = Profit before interest and taxes / sales ¦ Gross profit margin (%): The gross profit margin is a measurement of a company’s manufacturing and distribution efficiency during the production process. The gross profit tells an investor the percentage of revenue / sales left after subtracting the cost of goods sold.
Gross Profit Margin = (Total Sales- COGS) / Total sales Where: COGS = Cost of Goods Sold ¦ Net profit margin (%): The profit margin tells you how much profit a company makes for every $1 it generates in revenue or sales. Option 1- Net Profit Margin =Net Income After Taxes ? Revenue Option-2- Net Profit Margin=(Net Income + Minority Interest + Tax-Adjusted Interest) ? Revenue ¦ EPS (Rs): Earnings per share is generally considered to be the single most important variable in determining a share’s price.
It is also a major component used to calculate the price-to-earnings valuation ratio. EPS = Profit After Tax / sales ¦ Return on net worth (%): Indicator of profitability. It is the ratio of net profit to share holder’s investment. It is the relationship between net profit (after interest and tax) and share holder’s/proprietor’s fund. Return on Net worth = Net Profit / Average Shareholder Equity for Period ¦ Dividend payout ratio (net profit): Measures what a company’s pays out to investors in the form of dividends. Dividend Payout Ratio= Yearly Dividend per share/ EPS
OR Dividend Payout Ratio= Dividend/Net Income ¦ PBDIT: It is profit before any expenses like depreciation, interest & tax. PBDIT = Total Sales – Expenses (excluding depreciation, interest and tax) ¦ Depreciation: A noncash expense that reduces the value of an asset as a result of wear and tear, age, or obsolescence. ¦ PBIT: Profit before interest and taxes ( PBIT ) or operating income is a investment formula to measure of a corporation’s profitability by subtracting operating expenses from revenue excluding tax and interest.
PBIT = PBDIT – Depreciation ¦ PBT: A profitability measure that looks at a company’s profits before the company has to pay corporate income tax. PBT = PBIT – Interest ¦ PAT: It the net profit earned by the company after deducting all expenses like interest, depreciation and tax. It can be fully retained by a company to be used in the business. PAT = PBT – Tax ¦ Net profit: Net profit is the money left over after paying all the expenses of an endeavor . It also include other income like dividend, interest on loan. Net Profit= Gross Profit- Indirect Expenses
Calculation of Ration’s- |NO. |RATIO’S |2009-10 |08-09 |07-08 |06-07 |05-06 | |1 |Operating margin (%) |12. 52 |8. 48 |14. 12 |14. 88 |15. 29 | |2 |Gross profit margin (%) |10. 5 |7. 8 |10. 97 |13. 05 |12. 95 | |3 |Net profit margin (%) |8. 3 |5. 7 |9. 34 |10. 29 |9. 3 | |4 |EPS (Rs) |86. 42 |42. 18 |55. 94 |53. 69 |43. 87 | |5 |Return on net worth (%) |23. 58 |13. 72 |20. 56 |22. 79 |21. 81 | |6 |Dividend payout ratio |6. 94 |8. 3 |7. 36 |8. 28 |7. 81 | | |(net profit) | | | | | | |7 |PBDIT(Rs. |44510 |24333 |3,1227 |2,5942 |2,0821 | |8 |Depreciation |8250 |7065 |5682 |2714 |2854 | |9 |PBIT |36260 |17268 |25545 |23228 |17967 | |10 |PBT |35925 |16758 |2,4949 |2,2852 |1,7763 | |11 |PAT |24976 |12187 |1,7308 |1,5620 |1,1891 |
Interpretation of Ratio’s- Operating margin ratio- Operating margin ratio expresses the relationship between the operation profit and sale of a particular period. Its exhibited from the table that the operation margin ratio decreased from 15. 29% in 2005-06 to 12. 52% in 2009-10. On an average the company’s operating margin ratio has been 13. 06% during the period of study. Its not better to have a low operating margin ratio and the company is trying to increase the operating margin ratio in 09-10. Gross profit Ratio- Gross profit ratio expresses the relation between the gross profit and the net sales of a company.
Its very important measures to test the profitability of particular company. In Table exhibit that G. P. Ratio of the Maruti Suzuki ltd. has been showing an decreasing trend during the year 05-06 to 08-09. But it again increasing trend during the year 08-09 to 09-10. This is better for the growth of the company. Net profit Ratio- Net profit ration expresses the relationship between the net profit and net sales. Its more refine tool to measure the profitable of any company as to compared to G. P. its clear from the table , that there is a sharp decrease in net profit ratio of company in year 05-06 to 08-09.
But its again increasing during the year 08-09 to 09-10. This is better for the company’s financial health. Earning per share- EPS expresses the relationship between the earning available for equity share holders and the total number of equity share. Its better to have more EPS. The EPS was 43. 87 Rs. In 05-06 which was increase to 86. 42 Rs. in 09-10. Its shows a 96. 99% increase the period of study. Its clear from the above analysis that company utilize shareholder’s fund very efficiently. Return on net worth- Return on net worth the relation between the net profit and average shareholder equity for period.
The Return on net worth was 21. 81 in 05-06 which was increase to 23. 58 in 09-10. Its shows a 8. 11% increase the period of study. Dividend payout ratio- Profit remaining after payment of tax and preference dividend is not distributed among shareholders as dividend. Out of this profit a portion is retained in the business and remaining is distributed as dividend. Dividend payout ratio measures the relation between the earning available to equity shareholders and the dividend distributed among them. Table shows that there is decrease of 11. 14% in dividend payout ratio during the period of study. Phase III
