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1.1. Introduction:-
Empirical approaches ha become very popular during the recent years. The reason for the growing popularity of the subject is that it primarily concerns with the concepts and techniques of the analysis of profitability which can be advantages only used by managers, creditors, owners.
Analytical and critical assessment of the various aspects of financial principles helps judicious application of assets and enables to take right decision at right time. A comprehensive idea is gained to run day to day business in proper perspective.
The significance of production/operation , marketing, finance and personal management is being increasingly realized in modem-corporate world both in India and abroad.
This realization has come into light because of increasing complexities of the task of the managers and administrators. These branches of management helps the managers to reach the objective of an organization.
A study of this management activities enables the people, engaged in either small size unit or a large core industry, to understand their objectives and the way how to achieve them successfully.
Tata motors limited is India’s largest automobile company, with consolidated revenues of INR 1,23,133 corors (USD 27 billon) in 2010-11. it is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. It is the world’s fourth largest truck and bus
Manufacturer.
Maruti suzuki India Limited commonly referred to as Maruti, is a subsidiary company of Japanese automaker Suzuki motor corporation. Italian was the first company in India to mass-
Produce and sell more than million cars. It is largely credited for having brought in an
Automobile revolution to India. It Is market leader in India, and on 17 September 2007,
Maruti Udyog Limited was renamed as Maruti Suzuki India Limited. The company’s
Headquarters are located in New Delhi. In February 2012, the company sold its 10th million
Vehicle in India it has a market share of 44.9% of the Indian passenger car market as of March
2011. Maruti Suzuki offers a complete range of cars from entry level Maruti 800 and Alto, to
hatchback Ritz, A-Star, Swift, Wagon-R, Estillo and sedans Dzire, SX4, in the ‘C’ segment
Maruti Eeco and sports Utility vehicle Grand Vitara.
1.2 Selection of the problem:-
In all over world, INDIA has ranking in Auto industry 2d in two vehicle, 3rd rank
In small car and 5th rank commercial vehicles.
15 manufacturer of passenger cars and multi-utility Y vehicles,
Ο 9 manufacturer of commercial vehicles,
Ο 16 manufacturer two/three wheelers,
Ο 14 manufacturer tractors,
Ο manufacturer of engine.
In India Tata group works from the year 1868. It works in different Sectors like
Services, Information technology & communication, Materials, Engineering, Energy, Consumer
Products and Chemical.
The chart below illustrates how Tata companies in each of these sectors contribute, in percentage
Terms, to the overall financial makeup of the Group. The table that follows shows the Group’s
Sector-wise financial performance. And in as you can very well see that the major holding of
31% is by TATA MOTORS which shows that profitability in this sector is more than the
Other sector of the company:
Maruti Suzuki India Limited:-
As mentioned earlier, Maruti Suzuki India Limited is leading the automobile industry in India forQuite a Longer number of years. The company began its journey in the year 1981 with its name as Maruti Udyog Limited, and the company began to attract the market when in introduced its Popular four-wheeler model maruti 800. It got its present name in the year 2007
When talking about top automobile companies, one name that would come in most of our mindsIs Maruti Suzuki and this company has consistently been the leader in the automobile industry inIndia. There are also other top players and the list of top ten players in this industry is given below:
There is always a race to sell the maximum units amongst the car manufacturers. With the arrival Of festive season, the auto-manufacturers are assured of selling good number of their lineup Products . So far, Maruti Suzuki and Hyundai Motors have been head to head to sell the maximum of their production. With the new season peeping in, the present sales stats have become quite interesting. Maruti Suzuki has its upper hand in selling the most number of cars whereas, from the Hyundai Motors, the i10 has been the bestselling car. For the enthusiast we have brought list of top 5 most selling cars in india 4 cars from MARUTI SUZIKI. In top ten car manufacturing companies MARUTI SUZUKI has 1st rank.
1.3 OBJECTIVES OF STUDY:-
The following are the objectives of the analysis
• To assess the financial position and profitability by deriving the various ratios and
Analyzing the different aspects of the organization.
• To understand the key areas affecting the financial growth of the organization.
• To know how the various ratios are derived and later how they are been put into test.
• To know the current position of the organization in the market.
• To study the important reasons which lead to a major achievement within the country
and also internationally.
1.4 Limitations:-
The following are the limitations of the study
• The collective data for analysis of companies for two years.
• We are analyzing the data of only two companies TATA MOTORS and MARUTI
SUZUKI. It is not sufficient to analysis overall automobile Industry.
• The data we are collected from the secondary source.
1.5 Scope of study
Scope of study as under
(1) I have selected these two companies TATA Motors and Maruti Suzuki in Automobile
Sector.
(2) The time duration of analysis of the data is five years from 2011 to 2015
1.6 RESERCH MATHODOLOGY
A research is an arrangement of conditions for the collection & analysis of data in a manner that aims the research purpose and achievement of goal with economy in procedure depending on research problem. The study of Profitability analysis is generally based on quantitative documents of the company. The data collected from the secondary source. This research included data is secondary source. Tata motors & Maruti Suzuki Both of Company are very big
Seller in Indian markets and his big goodwill are invest on Indian markets and this projects are compares Indian markets profitability evaluations of Tata motors & Maruti Suzuki India
Company we have used to balance sheet ,profit loss account in last five years are compares both of company s
Research Design
Descriptive research is used in the study because it will ensure the minimization of bias and maximization of reliability of dada collected. The researcher had to use fact and information already available through financial statements of earlier years and analyze these to make critical evaluation of the available material. Hence by making the type of the research conducted to both Descriptive and analytical in nature. From the study, the types of data to be collected and the procedure to be use for this purpose were decided.
Sampling method
Convenience sampling is method under non-probability sampling selected at the convenience of the researcher who is to select a sample. This type of sampling is also called accidental sampling, as the respondents in the sample are included in it merely on account of their being available, where the survey is in progress. Convenience sampling method was adopted to select 6 years from the live time of the company since its inception.
LIMITATIONS OF STUDY
1. Figures for the analysis are taken from the annual reports.
2. Financial statements may not be realistic because they are prepared by following certain concepts & conventions.
ANALYSIS AND INTERPRETATION OF DATA
Analysis and Interpretation of data are the creative aspect of research in financial performance decision is considered as one of the important decision to be made by any firm. The contents of financial performance comprise of a mix of long term funds like equity, preference shares, debentures and bonds.
The following ratios are studied to judge the long term financial position of the firm. These ratios indicate the mix of funds provide by the owners and the lenders in financing the assets.
Current Ratio
Debt-Equity Ratio
Proprietary Ratio
These ratios are studied to achieve the objective of analyzing the efficiency with which funds of the organization has been used during the period of study.
SHORT TERM SOLVANCY RATIO
Current Ratio
The ratio of current assets to current liabilities is called “current ratio”. Current ratio indicates the ability of a concern to meet its current obligations as and when they due are payment.
Current assets
Current ratio = ---------------------------------
Current liability
LONG TERM SOLVANCY RATIO
Proprietary Ratio
Proprietary ratio is the ratio of shareholders funds to total assets. It is also called as “Net worth to total assets” ratio. It serves as a measure of long-term solvency ratio. Higher proprietary ratios indicate that sound financial positions and low proprietary ratio indicate that weak financial positions of the, cumi .
Shareholders’ funds Proprietary Ratio = ---------------------------------------
Total Tangible
Assets
PROFITABILITY RATIO
Gross profit ratio
This ratio is also called as “gross margin” or “trading margin” ratio. It indicates the difference between sales and direct cost. Gross profit ratio explains the relationship between gross profit and net sales.
Gross profit Gross profit ratio = ------------------- X 100
Net sales