239809541 22105138-maruti-suzuki-1

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N.R. Institute Of Business Administration
GLS Campus, Maida plaza Lane,Off. C.G. Road
Ellisbridge, Ahmedabad – 380 006.
Certificate
This is to certify that the report based on 3
years published Annual Report of Maruti Suzuki
ltd. Is submitted by Varasani Mahendra Devjibhai
to the N. R. Institute Of Business Administration
1 FINANCIAL REPORT N.R.I.B.A.

affiliated to the Gujarat University in a partial
fulfillment requirement for the completion of
“practical study” at the second year B.B.A.
programme for the year 2007.
--------- ----------
Director’s sign Prof. In charge
Date : 22/02/2008
ACKNOWLEDGEMENT
I am highly thankful to MARUTI SUZUKI for
helping me in my Practical Studies at second year B.B.A.
programme. It has provided me many details and enlightens
me in preparation of this financial report.
I take this opportunity to thanks our director A. B.
Dixit and Pro. Seema Pandit for giving me an opportunity to
prepare my financial project report. She also helped me in
finding out the Ratios and some important aspects.

PREFACE
Finance management in India has substantially in scope and
complexity in view of recent government policy. The modern approach
to corporate finance is much more than traditional approach to
financial management or with more procurement of funds. In present
situational financial management is real with procurement of funds and
maximum utilization of it. “Finance Is A Blood Of Any Business Body”.
Less capital creates problems in the business and more capital is also
creating problems.
In this report, I am trying to explain how we can find out
financial result with the help of ratio analysis and some more in
portent graphs with the help of Ratio Analysis. We can easily
understand the profitability of the business, efficiency of business,
useful in inter comparison. It is also useful for budgeting control and
decision-making. Ratio analysis helps interested parties like share
holders, investors, creditors, government also and analysis to make an
evaluation of a certain aspect of a firm’s performances.

INDEX
Sr.
no.
Title Page No.
Certificate 01
Acknowledgement 02
Preface 03
1. Company profile
Name of the company
Registered office address
Status in the market
Special achievement
Finance highlights
Meaning of analysis and objectives of study
05
2. Results of operations
Profits of three years GP,NP,EBIT,EBT,EAT
Importance of cash profit (theory)
Cash flow statement
Conclusion
3. Ratio Analysis
Meaning and importance of ratio and
classification – traditional classification &
functional classification

PROFITABILITY RATIO
Gross profit ratio
Net profit ratio
Expense ratio
Operating ratio
Return on investment
Return on share holders fund
Return on equity share capital
Return on equity shareholders fund
Earning per share
Dividend per share
Price earning ratio
Dividend yield ratio
Interest coverage ratio
ACTIVITY / TURNOVER RATIO:
Overall turnover ratio
Fixed asset turnover ratio
Debtor turnover ratio
Creditors ratio
Creditors turnover ratio
Stock turnover ratio
LIQUIDITY RATIO :
Current ratio
Liquid ratio
Quick / acid ratio
LEVERAGE RATIO:
Proprietary ratio
Debt equity ratio
Capital gearing ratio
OTHERS:
Long term fixed fund to fixed asset
4. Accounting policies and notes
Notes of accounts
Main policies pertaining the unit
Implication
5. Director’s Report
6. Auditors Reports
Name of the auditors
To state weather reports is qualified or

unqualified
Implication
7. Common sized statement
P & L A/c – common size
Balance sheet – common size
Comparison
8. Conclusion
Findings
Conclusion
suggestion
MARuTI uDyOG LIMITED
 REGISTERED AND CORPORATE OFFICE:
11th
Floor, Jeevan Prakash Building,
25, Kasturba Ganghi Marg,
New Delhi – 110001
 Brief Introduction Of The Production Of The
Business:
Maruti Udyog does the make vehicle and also produces
spares and accessories of the vehicle.
 States In The Market :
No.1 car producer Company in the Indian market and
runner up in foreign country.
 Special Achievement :
MARUTI SUZUKI HAS WON OVER 50 AWARDS SINCE YEAR 2000

 NO. 1 IN THE AUTOMOBILES SECTOR IN THE INDIA MOST
RESPECTED COMPANIES SURVEY, 2006.
 RANKED AMONG THE TOP 5 CAR COMPANIES IN THE 2006
WORLD’S MOST REPUTED CSOMPSNIES LIST PUBLISHED BY FORBES
MAGAZINE.
 NO. 1 IN CUSTOMER SATISFACTION, 7 TEARS IN ROW, 2000 – 06.
 NO. 1 IN SALES SATISFACTION, 3 YEARS IN ARAW, 2004 – 06.
 NO. 1 INITIAL QUALITY STUDY, 2006.
 NO. 1 IN INDIA APEAL STUDY, 2006.
 NO. 1 IN TOTAL CUSTOMER SATISFACTION, 5 YEARS IN A ROW,
2002 – 06.
 NO. 1 IN GLOBAL CORPORATE SOCIAL RESPONSIBILITY STUDY,
2006.

 RANKED AMONG TOP 3 IN THE CORPORATE IMAGE MONITOR, 2005
 MANUFACTURER OF THE YEAR, 2005
FINANCIAL HIGHLIGHT:
YEAR 2005 – 06 2006 - 07
Net Sales 120,034 145,922
Profit Before Tax. 17,500 22,798
Profit After Tax. 11,891 15,620
EPS 41.16 51.12
MEANING OF ANALYSIS AND OBJECTIVE OF STUDY :
Financial statement namely the statement of the profit & loss
account and the balance sheet are indication of two signify-cant
factors profitability and financial soundness analysis of statements
means such a treatment of the information contained to afford a
diagnosis of the profitability and financial statements analysis as the
process of methodical classification comparison with other co-rising
question and then seeking answer for them.

Finance is the very typical aspect in course of management. The
main objective behind the study is to get precisely. It also helps us to
study the present finance scenario. The objective is such that
company’s profitability, liquidity and capacity by such analysis we can
interpret the position of the company. So it is very important to study.

[ 2.1] Profit of 3 years :
PARTICULARS 2004 – 05 2005 – 06 2006 - 07
Net profit 8,536 11,891 15,620
Gross Profit 19.93 % 20.51 % 24.59 %
EBIT 16.6% 17.1% 17.7%
EAT 8,536 11,891 15,620
EBT 17500 25888 20558
[ 2.2 ] IMPORTANCE OF CASH PROFIT THEORY :
MEANING
Cash flow means inflows that is, sources of cash which are at the
disposable at the firm and outflows of the fire that is the use of the
firm.
The difference between inflows and outflows is either net
inflow or net outflow. A cash outflow statement deals with the cash
fund flow, which excludes working capital movements. The Accounting
standard (A53) classifies cash flows as under:
1) Cash from operating activities
2) Cash from investing activities
3) Cash from financing activities
The operating activities include receipts from sale of goods or
Rendering of services receipts from royalty, fees, commission etc.
Outflow is the resulting from payment to creditors for goods and
services, payment for expenses such as lighting, power, rent, wages
salaries etc.
Only cash from operating activities is included in this report.

IMPORTANCE OF CASH PROFIT :
The cash profit is an important measure of profitability as well
as liquidity. When the cash profit differs from the profit is shown in the
profit and loss account or profit and loss statement. Adjusting
depreciation arrives at the cash profit, amortize action of capital
expenses etc. The cash profit is much less or negative compared to
the profit declared in the profit and loss account. It indicates
liquidity and signals for appropriate cash management. The net cash
from operations can be calculated through adjustment of non-cash
items like depreciation, changes in inventory and receivable and
payables , and or other items for which cash offers the investing and
financing activities.
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31st
MARCH 2007
(A) Cash flow from Operating Activities : Rs. In
million
Net Profit before Tax 22,798
Adjustments for :
Depreciation 2714
Interest Expense 376
Interest Income 1109
Dividend Income 1528
Net Loss on Sale / discarding of fixed assets 4
Profit on sale of Investments 389
Debts / Advances Written back 22
Provisions no longer required written off 459
Opening Loss of MSAIL adjusted from opening surplus on
amalgamation
84
Impact of transition provision of Accounting Standard 15 5
Employee benefit -
Operating profit before Working Capital changes 22340
Adjustments for changes in Working Capital
(increase) / decrease in sundry debtors 1035
(increase) / decrease in other current Assets, Loan & advances 1523
(increase) / decrease in Inventories 1680
increase / (decrease) in current Liabilities and Provisions 5170
Cash generated from Operating Activities 26632
Taxes / received (Net of TDS) 6352
Net cash from Operating Activities 20,280

(B) Cash flow from Investing Activities :
Purchase of fixed assets 13955
Sale of fixed Assets 123
Sale of investments 109253
Purchase of investments 122444
Interest received 1127
Dividend received 1528
Net cash from Investing Activities 24368
(C) Cash flow from Financing Activities :
Proceeds from Short term borrowings 233
Proceeds from Long term borrowings 5675
Repayment of Short term borrowings 317
Interest paid 280
Dividend paid 1011
Net Cash from Financing Activities 4300
Net Increase / (Decrease) in Cash & Cash Equivalents 212
Cash and Cash Equivalents as at 1st
April (Opening Balance) 14016
Cash and Cash Equivalents as at 31st
March (Closing Balance) 14228
Cash and Cash Equivalents comprise 14228
Cash, Cheques & Drafts (in hand) 946
Balance with Scheduled Bank in Current Account 202
Balance with Scheduled Bank in Deposit Account 13080
Interpretation
Above cash flow of Maruti Suzuki Ltd. Is shown that year 2006 – 07
net profit is higher than 2005 – 06 and this is good condition for the
company. Also investing as well as financing activities cash flow
describes strong condition from the previous years cash flow activities.

3.1 MEANING & IMPORTANCE OF RATIO :
An idea the financial position can be had from the balance
sheet. The director’s report and chairman’s speech would assist him in
foresting the future prospects of the company. However, accurate
conclusions cannot be drawn from the mass of figures included in
these financial statements. Hence, they are to be analyzed and
interpreted with the help of a number of devices. So let us at this
stage, clarify the meaning of important terms useful in our study of
analysis of accounts.
Ratio is a figure showing, logical relationship between any two
items taken from financial statement as prepared and presented
annually are of little use for guidance of prospective investors,
creditors and even management. If relationships between various
related items in these financial statements are established, they can
provide useful dues to garage accurately the financial health and
ability of business to make profit. The relation between in two related
items of financial statements is known ratio.
[ 3.2 ] UTILITY OF RATIO ANALYSIS :
It is very important to find the ratio of liquidity, profitability etc.
Because the ratio analysis provides useful data to the management,
important uses of it are given as below:
 PROFITABLITY :
Useful information about the trend of profitability is from
profitability ratio. The gross profit ratio, net profit ratio and ratio of
return on investment give a good idea of the profitability of the
business. On the basic of this ratio, investors get an idea about
overall efficiency of managers and bank as well as other creditors
draw useful conclusion about repaying capacity of the borrowers.
 LIQUIDITY :
In fact the use of ratio was made initially to ascertain the
Liquidity of business. The current ratio, acid test ratio will tell whether
the firm will be able to meet its current liabilities and when they

nature. Banks and other leaders will be able to conclude from these
ratios whether the firm will be able to pay regularly the interest and
loan installments.
 EFFCIENCY :
The turnover ratios are excellent guide to measure the efficiency of
managers. All such ratio related to sales present a good picture of the
success on the business.
 INTER FIRM COMPARION :
The absolute ratios of a firm are not of much use, unless they are
compared with similar ratios of other firms belonging to the same
industry. This is a inter firm compared to other firms comparison,
which shows the strength and weakness of the firm as compared to
other firms and will indicate corrective measures.
 INDICATE TREND :
The ratio of the last 3 to 5 years will indicate the trend in the
respective fields. A particular ratio of a company , for one year may
compare favorably with industry average, but its trend shows a
deteriorating position, it is not desirable only ratio analysis will
provide this information.
 USEFUL FOR BUDGETARY CONTROL :
Regular budgetary reports are prepared in a business where the
system of budgetary control is in use. If various ratios are presented
these reports, it will give a fairly good idea about various aspects of
financial position.
 USEFUL FOR DECISION MAKING :
Ratio guide the management in making some of the important
decision, suppose, the liquidity ratios shows an unsatisfactory
position, the management may decide to get additional liquid
funds. Even for capital expenditure decision, the ratio of investment.
The efficiency of each department a thus be deter minded. Thus, the
ratio are the most useful I financial statement.

[ 3.3 ] CLASSIFICATION OF RATIO :
1) Profitability ratio :
These ratios indicate the profit generating capacity of Business.
This category includes:
 Gross Profit Ratio
 Net Profit Ratio
 Operating ratio
 Return on Company Employee’s Ratio
 Return on Shareholder’s Funds
 Debt Service Coverage Ratio
2) Liquidity Ratios :
These ratios indicate whether short – term assets are enough to
meet short - term obligation from short assets. These categories
include :
 Current Ratio
 Liquid Ratio
 Acid Test Ratio
3) Leverage Ratios :
These ratios indicate compensation of company’s capital and
Its distribution into debt and equity. These categories include:
 Proprietary Ratio
 Debt Equity Ratio
 Capital Gaining Ratio
 Fixed Capital to Fixed Assets Ratio
4) Activity Ratio :
These ratios indicate the efficiency of investment in the
organization. These categories include :
 Creditor’s Turnover Ratio
 Debtors Turnover Ratio
 Fixed Assets Turnover Ratio
 Total Assets Turnover Ratio

[ 3.2.1 ] Gross Profit Ratio :
Meaning :
It is a ratio expressing relationship between Gross Profit earned
to sales. It is a useful indication of the profitability of business.
Implementation :
 Gross profit is result of the relation between price, sales volume
and costs. A change in the gross margin can be brought about
by changes in any of these factors.
 The gross profit ratio can also be used in determining the extent
of loss caused by theft, spoilage, damage and so on in the case
of those firms which follow the policy of fixed gross profit margin
in pricing their product.
 The gross margin represents the limit beyond which fall in sales
price are outside the tolerance limit.
Formula :
= Gross profit X 100
Sales
TABLE OF THREE YEARS RATIO :
PARTICULAR 2006–07 2005-06 2004-05
Gross profit 24.59 20.51 19.93
Calculation of three years : [ Rs. In million]
PARTICULAR 2006 – 07 2005 – 06 2004 - 05
Gross Profit 35880 24626 21744
Sales 145922 120034 109108
INTERPRETATION :

This ratio indicates relation between G/P and Sales. For the year 2004-
05 it was 19.93 and 2005-06 was 20.51 and increase to 24.59 in
2006-07.

[ 3.2.2 ] Net Profit Ratio :
Meaning :
Net profit ratio is valuable for the purpose of ascertaining the over-all
profitability of business and shows the efficiency of operating the
business.
Implementation :
 The net profit ratio is indicative of management’s ability to
operate the business with sufficient success not only to recover
from revenue of the period the cost of merchandise or services,
the expenses of operating the business and the cost of the
borrowed funds, but also to leave a margin of reasonable
compensation to the owners for providing their capital at risk.
 The ratio of net profit ratio to sales essentially expresses the
cost price effectiveness of the operation.
 A high net profit margin would ensure adequate return to the owners as well as enable
a firm to withstand adverse economic conditions when selling price is declaiming, cost
of production raising and a low net profit margin has the opposite implication.
Formula :
= Net Profit X 100
Sales
TABLE OF THREE YEARS RATIO :
PARTICULAR 2006–07 2005-06 2004-05
Net profit ratio 16.47 % 16.47 % 16.47 %
CALCULATON : [ Rs. In million]
PARTICULAR 2006 - 07 2005 –06 2004 – 05
Net Profit 15620 11891 8536
Sales 145922 120034 109108
Interpretation :
This ratio shows a better profitability of the firm as compared to the last year i.e.
2005 – 06. This suggests a satisfactory position. It is sound financial position to the
company. Higher the ratio better for the company.

[ 3.2.3 ] Expenses Ratio :
Meaning :
Dividing expenses compute expenses ratio by sales. The term
‘expenses’ includes (1) COGS (2) administrative expenses (3) selling
expenses and (4) financial expenses but excludes taxes, dividends and
extraordinary losses due to theft of goods, good destroyed by fire and
so on.
Implementation :
 Some accountants calculate expenses ratio in respected of raw –
material consumed, direct wages and factory expenses.
 It is closely related to the profit margin, gross as well as net.
Formula :
= Expenses X 100
Sales
TABLE OF THREE YEARS :
PARTICULAR 2006–07 2005-06 2004-05
Expenses ratio 92.03 89.23 22.79
CALCULATION : [ Rs. In million]
PARTICULAR 2006–07 2005– 06 2004-05
Expenses 100416 107110 129349
Sales 109108 120034 145922
Total 209524 227144 275271
INTERPRETATION :
This ratio shows relationship between expanses to sales. Above table
shows that for the year 2004 – 05 it was 88.64 % the increase in 2005
– 06 up to 89.23% that indicates there is increase in operating
expenses for the year 2006 – 07 it is 92.03% and it is higher than
previous tear which shows increase in operating expenses.

[ 3.2.4 ] OPERATING RATIO :
Meaning :
Operating Ratio is computed by dividing expenses by sales. The term
‘operating ratio’ includes (1) COGS (2) administrative expenses (3)
selling expenses and (4) financial expenses but excludes taxes,
dividends and extraordinary losses due to theft of goods, good
destroyed by fire and so on.
Implementation :
 Some accountants calculate expenses ratio in respected of raw –
material consumed, direct wages and factory expenses.
 It is closely related to the profit margin, gross as well as net.
Formula:
= C O G S + Operating expenses X 100
Net sales
PARTICULAR 2006–07 2005-06 2004-05
operating Ratio 87.33 86.90 83.89
Calculation : [ Rs. In million]
PARTICULAR 2006-07 2005-06 2004-05
Operating Expenses 7928 8909 12370
C O G S 87364 95408 110042
Net sales 145922 120034 109108
TOTAL 182556 224351 232454
INTERPRETATION:
This ratio shows relationship between COGS + operating expanses to
sales. Above table shows that for the year 2004 – 05 it was 87.33 %
the increase in 2005 – 06 up to 86.90 % that indicates there is
increase in operating expenses for the year 2006 – 07 it is 83.89 %

and it is lower than previous year which shows increase in operating
expenses.
[ 3.2.5 ] Return on investment / Capital employed :
Meaning :
The profitability ratio can be computed by relating the profits of a firm
to its investment.
Implementation :
 Return on investment indicates the profitability of business and
is very much in use among financial analysis.
 The ratio is an indicator of the measure of the success of a
business from the owners’ point of view. The ultimate interest of
any business is the rate of return on invested capital. It may be
measured by the ratio of income to equality capital.
 It determines whether a certain goal has been achieved or
whether an alternative use of capital is justified.
Formula :
= E B I T X 100
Capital employed
PARTICULAR 2006 – 07 2005– 06 2004- 05
Return on
investment / capital
employed ratio
34.88 % 37.42 % 40.78 %
E B I T 2006 - 07 2005- 06 2004– 05
Earning before interest and
tax
25888 20558 18140
CAPITAL EMPLOYED 2006 - 07 2005- 06 2004– 05
Capital 1445 1445 1445
Reserve and surplus + long
term loan
67094 53081 42343

INTERPRETATION:
This ratio shows relationship between E B I T to CAPITAL EMPLOYED. Above table
shows that for the year 2004 – 05 it was 22.19 % the increase in 2005 – 06 up to
26.54 % that indicates there is increase in E B I T for the year 2006 – 07 it is 24.60
% and it is higher than previous year which shows decrease in capital employed.
Higher the ratio, it is better for the company.
[ 3.2.6 ] Return on shareholder’s fund:
Meaning :
It is carries the relationship of return to the sources of funds yet
another step further.
Implication :
 It expresses the profitability of a firm in relation to the funds
supplied by the creditors and owners taken to gather, the return
on shareholders’ equity measures exclusively the return on the
owners’ funds.
Formula :
= Net profit X 100
Share holders fund
PARTICULAR 2006- 07 2005-06 2004–
05
Return on
shareholder’s fund
ratio
24.30 % 23.70 % 21.90 %
Net Profit 2006 - 07 2005– 06 2004– 05
PAT 15620 11891 8536
Shareholders’ funds 2006 - 07 2005– 06 2004– 05
Capital 1445 1445 1445
Reserve and surplus
Long term funds
67094 53081 42343
INTERPRETATION:

The ratio indicates relationship between Net profits to share holders fund therefore
higher the returns to shareholders. For the year 2004 05 it is 21.90 % that
increase in the year 2005 – 06 up to 23.70.This ratio shows downward trend
in the ratio in return on shareholders fund for this company.
[ 3.2.7 ] Return on Equity share capital :
Meaning :
It is obtained by dividing net profit after tax deduction of performance
dividing by his amount of ordinary share capital plus free reserve.
Implementation :
 This is probably the single most important ratio to judge
whether the firm has earned a satisfactory return for its equity –
holders or not.
 Its adequacy can be judge by : (1) comparing it with the past
record of the same form, (2) comparisons with the overall
industry average.
Formula :
= Net profit after tax -- Preference dividend X 100
Equity capital
PARTICULAR 2006 - 07 2005 –
06
2004 – 05
Ratio of Return on
Equity share capital
22.79 % 21.81 % 19.49 %
Net profit after tax 2006- 07 2005– 06 2004– 05
EBIT
(--)Interest
EBT
(--)PAT
25888
3090
22798
15620
20558
3058
17500
11891
18140
5091
13049
5091
Shareholders’ funds 2006-07 2005-06 2004-05
Capital 1445 1445 1445

INTERPRETATION:
The ratio indicates relationship between Net profits to share holders fund
therefore higher the returns to shareholders. For the year 2004 – 05 it is 19.49 %
that increase in the year 2005 – 06 up to 21.81 %. This ratio shows downward
trend in the ratio in return on shareholders fund for this company.
[ 3.2.8 ] Return on Equity share holders fund :
Meaning :
It is obtained by dividing net profit after tax deduction of performance
dividing by his amount of ordinary share capital plus free reserve.
Implementation :
 This is probably the single most important ratio to judge
whether the firm has earned a satisfactory return for its equity –
holders or not.
 Its adequacy can be judge by : (1) comparing it with the past
record of the same form, (2) comparisons with the overall
industry average.
Formula :
= Net profit after tax -- Preference dividend X 100
Equity share holders’ funds
PARTICULAR 2006–07 2005-06 2004– 05
Ratio of Return on
Equity share capital
22.79 % 21.81 % 19.49 %
Net profit after tax 2006– 07 2005– 06 2004– 05
EBIT
(--)Interest
EBT
(--)PAT
25888
3090
22798
15620
20558
3058
17500
11891
18140
5091
13049
5091
Shareholders’ funds 2006- 07 2005– 06 2004 –05
Capital 1445 1445 1445

Reserve and surplus 67094 53081 42343
INTERPRETATION:
For the year 2004 – 05 it is 19.49 % that increase in the year 2005 – 06 up to
21.81%. These ratios shows downward trend in the ratio in return on shareholders
fund for this company.
[ 3.2.9 ] Earning per share :
Meaning :
EPS measures the profit available to the equity shareholders on a per
share basis, that is, the amount that they can get on every share
head.
Implementation :
 Earning per share is a widely used ratio. EPS s a measure of
profitability
Formula :
= profit after tax – preference dividend X 100
No. of equity shareholders fund
PARTICULAR 2006 – 07 2005– 06 2004 – 05
Ratio of Earning per
share
54.06 41.06 29.55
PARTICULAR 2006 - 07 2005 – 06 2004 – 05
P A T 15620 11891 8536
No. of shares 288910060 288910060 288910060
INTERPRETATION :
This ratio indicates the earning per share for shareholders of company.
In the year 2004 – 05 ratio is 29.55 % and 2005 – 06 it is 41.16 %

and its increase on 54.06 %.therefore it is good for company as well
as shareholders.
[ 3.2.10 ] Dividend per share :
Meaning :
DPS is the dividend paid to shareholders on a per share basis. In the
other words, DPS is the Net distributed profit belonging to the
shareholders divided by the No. of ordinary shares outstanding.
Implementation :
 The DPS would be a better indicator than EPS as the former
shows what exactly is received by the owners.
 Like the EPS, the DPS is also should not be taken at its face
value as the increase DPS may not be a reliable measure of
profitability as the equality base may have increase due to
increase relation without any change in the number of
outstanding shares.
Formula :
= total dividend declared
No. of equity shares
PARTICULAR 2006 – 07 2005– 06 2004 – 05
Ratio of dividend per
share
4.50 3.50 2.00
PARTICULAR 2006 - 07 2005 – 06 2004 – 05
Dividend declared 1300 1011 8536
No. of shares 288910060 288910060 288910060

INTERPRETATION :
This ratio indicates the total dividend declared to no. of shares. For the
year 2004 – 05 it is 2.00 % and 2005 – 06 is3.50 % and increase on
4.50 % in the year 2006 – 07.
[ 3.2.11 ] Price earning ratio :
Meaning :
It is closely related to the earning yield leanings price ratio. It is
actually the reciprocal of the latter. Thus ratio is computed by dividing
the market price of the shares by the EPS.
Implementation :
 The price earning ratio reflects the price currently being paid by
the market for each Rupee of currently reported EPS. In other
words, the PIE ratio measures investors’ expectations and the
market appraisal of the earnings. Therefore, only normally
sustainable earning associated with the assets are taken into
account.
Formula :
= market value per share
Earning per share
PARTICULAR 2006-07 2005-06 2004–05
Ratio of price
earning ratio
17.58 21.95 29.55
PARTICULAR 2006-07 2005-06 2004-05
Market value 856 933 950
E P S 29.55 41.16 54.04

INTERPRETATION :
In the year 2004 – 05 ratio is 17.58% and 2005 – 06 it is 21.95% and
it’s increase on 29.55%. Therefore it is good for company as well as
shareholders.
[ 3.2.12 ] Dividend yield ratio :
Meaning :
Dividend yield ratio is closely related to the EPS and DPS. While the
EPS and DPS are based on the book value per share, the yield is
expressed in terms of the market value per share. The earnings yield
may be defined as the ratio of earnings per share to the market value
per ordinary share.
Implementation :
 The dividend yield ratio is calculated by dividing the cash
dividends per share by the market value per share.
Formula :
= Dividend per share
Market value share
PARTICULAR 2006-07 2005-06 2004– 05
Ratio of dividend
yield
0.04 -- --
PARTICULAR 2006- 07 2005– 06 2004– 05
Dividend per share 4.50 -- --
Market value per
share
950 -- --
Note: There is no information about dividend of 2004-05-06.

INTERPRETATION :
In the year 2004 – 05 ratio is 29.55 % and 2005 – 06 it is 41.16 %
and its increase on 54.06 %.therefore it is good for company as well
as shareholders.
[ 3.2.13 ] interest coverage ratio :
Meaning :
It is also known as ‘time interest – earned ratio’. This ratio measures
the debt servicing capacity of a firm insofar as fixed interest on long
term loan is concerned. It is determined by dividing the operating
profit or earning before interest and taxes ( EBIT ) by the fixed
interest changes on loans.
Implementation :
 This ratio uses the concept of net profits before taxes because
tax is calculated after paying interest on long term loan.
 This ratio as the name suggests, show how many times the
interest changes are covered by EBIT out of which they will be
paid.
Formula :
= EBITD
Interest
PARTICULAR 2006 – 07 2005 –
06
2004 – 05
Interest coverage Ratio 68.85 100.70 50.39
PARTICULAR 2006 - 07 2005 –
06
2004 –
05
EBDIT 25888 20558 18140
Fix interest 376 204 360

INTERPRETATION :
This ratio indicates the EBDIT to interest. In the year 2004 – 05 ratio
is 50.39 and 2005 – 06 it is 100.70 and it’s decrease on
68.85.therefore it is good for company as well as shareholders.
[ 3.3.1 ] Overall turnover ratio :
Meaning :
The amount invested in business is invested in all capital employed
and sales are affected through them to earn profits so in order to find
relation between net sales to capital employed.
Implementation :
 The usefulness of the Du Pont analysis lies in the fact that it
presents the overall picture of the performance of a firm as also
enables the management to identify the factors which have a
bearing on profitability.
Formula :
= Net sales
Capital employed
PARTICULAR 2006-07 2005-06 2004-05
Overall Ratio 2.08 2.37 2.75
PARTICULAR 2006-07 2005-06 2004–05
Net sales 185922 120034 109108
Capital employed 69872 50527 39545
INTERPRETATION :
This ratio indicates net sales to capital employed. In the year 2004 –
05 ratio is 2.75 and 2005 – 06 it is 2.37 and it’s decrease on 2.08 in
the year 2006 – 07. Therefore it is bad for company.

[ 3.3.2 ] fixed assets turn over ratio :
Meaning :
It is based on the relationship between the sales and assets of the
firm. A reference to this was made while working out the overall
profitability of a form as reflected in its earning power.
Implementation :
 To ascertain efficiency and profitability of the business. The
higher the turnover ratio, the more efficiency is the
management and utilization of the assets while low turnover
ratios are indicative of underutilization of available resources.
Formula :
= sales
Fixed assets
PARTICULAR 2006-07 2005-06 2004–05
Fixed assets
turnover Ratio
5.03 6.72 5.69
PARTICULAR 2006-07 2005-06 2004-05
Net sales 145922 120034 109108
Fixed assets 28986 17872 19158
INTERPRETATION :
Fixed turn over ratio indicates the turnover of the company in one
year. In the year 2004 – 05 ratio is 5.69 and 2005 – 06 it is 6.72 and
its decrease on 5.08 in the year 2006 - 07. Therefore, it is bad for
company.

[ 3.3.3 ] Debtor turn over ratio :
Meaning :
It is allied and closely related to this is the average collection period. It
is the test of the liquidity of the debtors of a firm.
Implementation :
 This figure should be measured, as in the case of average
inventory, on the basis of the monthly average. It suggests that
number of times the amount of credit sale is collected during the
year.
Formula :
= credit sales
Avg. Debtors
PARTICULAR 2006-07 2005-06 2004– 05
Debtor turnover
Ratio
20.94 19.19 16.90
PARTICULAR 2006-07 2005-06 2004-05
Sales 145922 120034 109108
Avg. Debtors 6967.5 6271.5 6444.5
INTERPRETATION :
Debtor turnover ratio indicates credit sales to avg. debtors. In the year
2004 – 05 ratio is 16.90 and 2005 – 06 it is 19.19 and it’s increase on
20.94 in the year 2006 – 07. Therefore, it is good position for
company. How efficiently the amount is collected from the customers
from the credit sales. As compare to previous year the no. of days
collection period increase which indicate inefficiency of collection
department. Lower the collection period and higher debtor turnover
ratio is advisable.

[ 3.3.4 ] Creditor ratio :
Meaning :
It is the no. of days within which we make payment to our creditors for
credit purchases it obtained from creditor ratio.
Implementation :
 The generally the longer credit period achieved means the
operation of the payment being financial interest feels by supper
funds.
Formula :
= creditor + B / P X 365
Credit Purchases
PARTICULAR 2006-07 2005-
06
2004–05
Creditors Ratio 30.64 20.77 18.82
PARTICULAR 2006 -07 2005– 06 2004– 05
Creditors 9096 5551 4637
Credit purchases 108362 97554 89632
INTERPRETATION :
Creditor ratio indicates creditor to credit purchase. In the year 2004 –
05 ratio is 18.82 and 2005 – 06 it is 20.77 and its decrease on 18.88
in the year 2006 – 07. Therefore, it is good position for company.

[ 3.3.5 ] creditor turn over ratio :
Meaning :
It is the no. of days within which we make payment to our creditors for
credit purchases it obtained from creditor ratio.
Implementation :
 The generally the longer credit period achieved means the
operation of the payment being financial interest feels by supper
funds.
Formula :
= No. of days in a year
Creditor’s ratio
PARTICULAR 2006-07 2005-06 2004-05
creditor turnover
Ratio
11.91 17.57 19.33
PARTICULAR 2006-07 2005-06 2004-05
Days 365 365 365
Creditors ratio 30.64 20.77 18.88
INTERPRETATION :
Creditor ratio indicates creditor to credit purchase. In the year 2004 –
05 ratio is 19.33 and 2005 – 06 it is 17.57 and its increase on 11.91 in
the year 2006 – 07. Therefore, it is good position for company.

[ 3.3.6 ] stock turnover ratio :
Meaning :
It is the no. of times the average stock is turned over during the year
is known as stock turnover ratio. It measures the relationship between
COGS and inventory level.
Implementation :
 This approach has the advantage of being free from bias as it
smoothens out the fluctuations in the inventory level at different
period.
 It is measures how quickly inventory is sold. it is a test of
efficient inventory management.
 To judge whether the ratio of a firm is satisfactory or not.
Formula :
= cost of good sold
Average stock
PARTICULAR 2006 – 07 2005 –06 2004 – 05
Stock turnover Ratio 13.80 12.33 15.80
PARTICULAR 2006-07 2005-06 2004-05
COGS 110042 45408 87364
Avg. stock 7972 7737 5532
INTERPRETATION :
Stock turnover ratio indicates cost of goods sold to average stock. In
the year 2004 – 05 ratio is 15.80 times and 2005 – 06 it is 12.33
times and it’s increase on 13.80 times in the year 2006 – 07.
Therefore, it is good for company. How efficiently stock rate in the
year Higher the ratio, better position of the company as well as
efficiency.

[ 3.4.1 ] Current Ratio :
Meaning :
The current ratio is the ratio of total current assets to total current
liability. It is calculated by dividing current assets by current liability.
Implementation :
 The current ratio of a firm measures its short term solvency.
That is a measure of margin of safety to the creditors. The fact
that a firm can rarely count on such an even flow requires that
the size of the C.A. should be sufficiently larger than C.L. so that
the firm would be assured of being able to pay its current
maturing debts as and when it becomes due.
Formula :
= current Assets
Current liability
PARTICULAR 2006–07 2005-06 2004– 05
Current Ratio 1.54 : 1 1.52 : 1 1.84 : 1
PARTICULAR 2006-07 2005-06 2004-05
Current assets 38459 37407 29720
Current liability 25015 198771 16080
INTERPRETATION :
Current ratio indicates current assets to current liability. In the year
2004 – 05 ratio is 1.84 : 1 and 2005 – 06 it is 1.89 : 1 and it’s
decrease on 1.54 : 1 in the year 2006 – 07. Therefore, it is good for
company. Mainly 2 : 1 is good. It indicates, repaying condition of the
company to the current liabilities. The standard current ratio must be
2:1.

[ 3.4.2 ] liquidity Ratio :
Meaning :
It is obtained by dividing the liquid assets by liquid liabilities. It liquid
ratio is designed to show the amount of cash available to meet
immediate payments.
Implementation :
 The importance of adequate liquidity in the sense of the ability
of a firm to meet short term obligations when they become due
for payment can hardly be overstressed.
 In fact liquidity is a prerequisite for the very survival of a firm. It
measures ability of a firm to meet its short term obligations and
reflect the short term finance strength of a firm.
formula :
= liquid assets
Liquid liability
PARTICULAR 2006 – 07 2005– 06 2004 – 05
Liquid ratio 1.27 : 1 1.52 : 1 1.53 : 1
PARTICULAR 2006-07 2005-06 2004-05
Liquid assets 31327 28597 23054
Liquid liability 24575 18825 15095
INTERPRETATION :
Liquid ratio indicates liquid assets to liquid liability. In the year 2004 –
05 ratio is 1.53 : 1 and 2005 – 06 it is 1.52 : 1 and it’s decrease on

1.27 : 1 in the year 2006 – 07. Therefore, it is good for company. How
effectively the liability paid off. The standard liquidation must be 1:1.
[ 3.4.3 ] Quick / acid test ratio :
Meaning :
The measure of absolute liquidity may be obtain by comparing only
cash and bank balance as well as readily marketable securities with
liquid liabilities.
Implementation :
 This ratio is the most rigorous and conservative test of a firm’s
liquidity position. Further, it is suggested that it would be useful
for the management.
formula :
= Quick assets
Liquid liability
PARTICULAR 2006 – 07 2005– 06 2004 – 05
Quick / acid test
ratio
0.79 1.17 1.13
PARTICULAR 2006–07 2005–06 2004-05
Quick assets 23853 22136 17059
Liquid liability 24575 18825 15095
INTERPRETATION :
Quick / acid test ratio is indicates quick assets and liquid liability. In
the year 2004 – 05 ratio is 1.13 : 1 and 2005 – 06 it is 1.17 : 1 and
it’s decrease on 0.97 : 1 in the year 2006 – 07. Therefore, it is good
for company.

[ 3.5.1 ] Proprietary ratio :
Meaning :
The ratio shows the proportion of proprietors’ funds to the total assets
employed in known in the proprietary ratio.
Implementation :
 Proprietary ratio helps to known how many proprietary funds to
total assets.
Formula :
= Proprietary fund
Net asset
PARTICULAR 2006-07 2005-06 2004–05
Proprietary fund ratio 63.22 % 66.12 % 60.65 %
PARTICULAR 2006-07 2005-06 2004-05
Proprietary fund 64198 50127 38845
Total asset 101537 75793 64044
INTERPRETATION :
This ratio indicates the proprietary funds to total assets. For the year
2004 – 05 it is 60.65 %and 2005– 06 is 66.12 % and decrease in
2006 – 07 it is 60.65 %. This is a bad for company.

[ 3.5.2 ] Debt equity ratio :
Meaning :
The relationship between borrowed funds and owner’s capital is a
popular measure of the long term financial solvency of a firm. This
relationship is shown by the debt – equity ratio.
Implementation :
 This ratio reflects the relative claims of creditors and
shareholders against the assets of the firm. Alternatively this
ratio indicates the relative proportions of debts and equity in
financing the assets of a firm.
 The D/E ratio is an important tool of financial analysis to
appraise the financial structure of a firm. It has important
implication from view point of the creditors, owners and the firm
itself.
Formula :
= long term liabilities
Shareholders fund
PARTICULAR 2006 – 07 2005– 06 2004 – 05
Debt – equity ratio 8.84 0.79 22.19
PARTICULAR 2006-07 2005–06 2004–05
Debt 5674 400 700
Equity 64198 50127 38845
INTERPRETATION :

This ratio indicates the debt to equity ratio. For the year 2004 – 05 it
is 1.80 %and 2005– 06 is 0.79 % and decrease in 2006 – 07 it is
8.84%. This is a bad for company as compare to 2005-06 year is more
debt ratio which indicate the more realize on debt fund rather owned
fund. The good impact is interest burden will be more indirectly.
[ 3.5.3 ] capital gearing ratio :
Meaning :
This ratio expresses the proportion of preference capital and ordinary
capital the higher ratio, the greater propos ion of preference capital
and debenture to ordinary capital.
Implementation :
 Capital gearing ratio is helps to preference share and dividend to
equity share and helps to know about company’ s capital and
overall growth.
Formula :
= fixed investment barring capital
Ordinary capital
PARTICULAR 2006 – 07 2005– 06 2004 – 05
Capital gearing ratio 4.36 0.50 2.13
PARTICULAR 2006-07 2005-06 2004-05
Deb. + preference
capital
6308 717 3076
Ordinary capital 1445 1445 1445
INTERPRETATION :
This ratio indicates the debenture and preference capital to ordinary
share. For the year 2004 – 05 in4.13% and 2005 – 06 is 0.50%and
increased in 2006 – 07 is 2.13. This is bad for the company.

ACCOUTING POLICIES
1)BASIS OF PREPARATION OF ACCOUNTS
These accounts have been prepared in accordance with the historical.
Cost convention, the applicable accounting Standards issued by the
institute charted accounts of India and the relent provisions of the
companies act, 1956.
2) FIXED ASSETS
Fixed Assets (except freehold lamed which is carried at cost) are
carried at cost of acquisition or construction or at manufacturing cost.
[in case of own manufactured assets ] in the year of capitalization less
accumulated depreciation.
Assets required under finance lease are capitalized at the lower of their
fair value and present value of minimum lease payments.
3) DEPRECIATION
Fixed assets excepts for lease hold land are depreciated on the straight
line method on a prorate basis from the month in which each asset
is put, to use, at the following rates :
1. Assets capitalized before 02/04/1987. Depreciation has been
provided at the rates computed in accordance with sation 205
(2) (b) of the companies act, 1956, in terms of circular no.1186
dated 21/05/86 of the government of India.
2. Assets capitalized on or after 02/04/1987. Depreciation has been
provided at the rates. Prescribed in schedule x/v to the
companies act 1956.except for certain fixed Assets. Where based

on the managements estimates of the useful life of the assets ,
higher depreciation has been provide on the straight line
method.
a) Lease- hold land is amortized over the period of lease.
b) In case historical cost of an asset undergoes a change due to
an increase or decrease in related long term liability. On
account of foreign exchange fluctuations, change in duties etc,
the depreciation on the revised unamortized despicable amount
is provided prospectively over the residues useful life of asset.
4) INVESTMENTS
• Investments to be held for period exceeding one year, are
classified as long term investments.
• Long term investments are valued at cost, provision for
domination in the value of such investment is made. Only if such
a decline is, other then temporary on individual investment
basis.
5) INVENTORIES
a) Inventories are valued of lower of cost determined on the
weighted average basis and net realizable value.
b) Tools are written off over a period of three years except for
tools valued at Rs.5000/- or less individually which are
charged off to revenue in the year of purchase.
c) Machinery spares (other than those supplied along with main
plant and machinery, which are capitalized and depreciated
accordingly) are charged to revenue on consumption. Except
those valued at Rs. 5000/- or less individually, which are
charged off to revenue in the year of purchases.
6) INVESTMENTS
Current investments are valued at the lower of cost and fair value.
Long term investments are valued at cost except. In the case of a
permanent diminution in their value, in which case the necessary
provisions made.
7) RESEARCH AND DEVELOPMENT

Revenue expenditure on research and development is charged off
against the profit of the year in which it is incurred. Capital
expenditure on research and development is shown as an addition to
fixed assets depreciated accordingly.
8) RETIREMENT BENIFITS COSTS
The company has Defined contribution plans for post employment
benefits’ namely Provident Fund and Superannuation Fund which are
recognized by the income tax authorities. These funds are
administered through trust and the company’s contributions thereto
are charged to revenue every year.
The company also maintains insurance policy to fund post
employment medical assistance scheme, which is Defined
contribution plan administered by New India Insurance Company
(NIIC). The company’s contribution to state plans namely
Employee state insurance fund and Employee Pension Scheme 1995
are charged to revenue every year.
The company has Defined benefits plans namely leave Encashment /
compensated absence. Gratuity and Retirement Allowance for
employees, the liability for which is determined on the basis of an
actuarial valuation at the end of the year. The Gratuity Fund is
recognized by the income tax authorities and is administered through
trusts. Termination benefits are recognized as an expense
immediately.
Gains and losses arising out of actuarial evaluations are recognized
immediately in the Profit and Loss account as income or expense.
9) DIFERRED TAXES
Tax expense of the period, comprising current tax, fringe benefits tax
and deferred tax, is included in determining the net profit / (loss) for
the year. Current tax is recognized based on assessable profit
Compute in accordance with the income tax act and at the prevailing
tax rate. Deferred tax is recognized for all timing differences. Deferred
tax assets are carried forward to the extent it is reasonably/ virtually
certain that future taxable profit will be available against which such

deferred tax assets can be realized. Deferred tax assets are reviewed
at each balance sheet date and written down /written up to reflect the
amount that is reasonably / virtually certain to be realized. Deferred
tax assets and liabilities are measured at the tax rates that have been
enacted or substantively enacted at the balance sheet date.
10) PROVISION AND CONTINGENCIES
The company creates a provision when there is a present obligation as
a result of past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of obligation. A
disclosure of contingent liability is made when there is a possible
obligation or a present obligation that will probably not require
out flow of resources or where a reliable estimate of the
obligation can not be made.

NOTES OF ACCOUNTS
1) C0NTINGENT LIABILITIES :
a) Claims against the Company disputed and not acknowledged as
debts :
1) Sales tax demands of Rs. 50 million( previous year Rs.
50million ). Against this, the company has deposited a sum of
2) Rs. 2 million( previous year Rs. 2 million )under protest.
3) Excise duty demands / showcases – cause notices of Rs.2,592
million ( previous year Rs. 1,790 million ). Against this, the
company has deposited a sum of Rs. 27 million ( previous year
Rs. 29 million ) under protest.
4) Customs duty demands of Rs. 118 million ( previous year Rs.
118 million against this the company has deposited a sum of
Rs. 22 million ( previous year Rs. 22 million ) under protest.
5) Income tax demands of Rs. 8,157 million (previous year
Rs. 7,620 million) against this the company has deposited a
sum of Rs. 4,869 million ( previous year Rs. 2,756 million )
under protest.
6) Service tax demands of Rs. 8,157 million (previous year Rs.
7,620 million).
a. Guarantee given to HDFC Limited for term loan of
Rs.300million (previous year Rs. 300 million (previous year
Rs. 300 million)givenbyHDFC Limited to employees co-
Operative House Building SocietyLimited, Bonds, Against
this, the contingent liability as at the year – end is Rs. Nil (
previous year Rs. 34 million ).
b. As co-lessee in agreements entered into between various
vendors of the company, as lessee, and banks as lessors
for leasing of dies and moulds of certain models
aggregating Rs. 2,000 million ( previous year Rs. 15
million )

c. A Guarantee given to HDFC Bank against non-fund based
facilities granted by the Bank to a group company Suzuki
Powertain India Limited of Rs. 2,000 million(previous year
Rs.2,000 million).Against this the contingent liability as at
the year end is as Rs. 26 million.
• Outstanding commitments under letters of credits
established by the company aggregate to
Rs.1,050 million.
• Cotimated value of contracts on capital account ,
excluding Capital advances, remaining to be
executed and not provided for, amount to Rs.
8,076 million.
• Consumption of Raw material and components
includes a provision of Rs. 56 million and is net of
Rs. Nil for earlier years, on account of estimated
reversal of tax benefit on quantity differences on
inputs.
• The company was granted sales tax benefit in
accordance with the provisions of rule 28C of
Haryana General Sales Tax Rules, 1975 for the
period from 1st
August, 2001 to 31st
July, 2015.
The ceiling amount of concession to be availed of
during entitlement period is Rs. 5,644 million. Till
31st
March 2007, the company has availed of sales
tax benefits amounting to Rs. 1,469
million(previous year Rs.1150 million ).
• The company is primarily in the business of
manufacture, purchase and sale of Motor
Vehicles and spare parts (“ automobile ”). The
other activities of the company comprise facilitation
of Pre-owned Car sales, Fleet Management Car
Financing. The income from these activities, which
are incidental to the Company’s business is not
material, in financial terms but contribute
significantly ingenerating the demand for the
products of the company. Accordingly segment
information has not been disclosed.

FINANCIAL RESULTS :
Maruti’s performance during the year as compared with that during the
previous year is summarized below :
DIVIDEND :
The Board recommends a dividend of 90% (i.e. Rs.4.50 Per equity
share of Rs. 5 each ) for the year ended 31st
March 2007 amounting
to Rs. 1,300 million as against a dividend of 70% amounting to
Rs.1,011 million , paid for the year ended 31st
March 2006.
NETWORK :
The record sales performance was effected through Maruti‘s vast
dealership network. The new car sales network grew from 375 outlets
to 500 during the year. These outlets covered 312 cities across the
country. In addition to this, there are 223. Maruti true value outlets
Figures in Rs. Million
2006 - 07 2005 – 06
Gross Total Income 178,043 151,823
Profit before Tax 22,798 17,500
Provision for taxation
( Incl. Prev. Year ) 7,178 5,609
Profit after tax 15,620 11,891
Balance brought forward 43,939 34,421
MSAIL (Maruti Suzuki Automobiles
India Limited ) Loss : Adjusted
On Amalgamation & Transition
Adjustment for employee benefits 88 0
Profit available for appropriation 59,471 46,421
Appropriations :
Debenture Redemption Reserve 17 31
General Reserve 1,562 1,189
Proposed Dividend 1,300 1,011
Corporate Dividend tax 219 142
Balance carried forward to balance 56,373 43,939
sheet

spread across 148 cities , which are engaged in the sale , purchase
and exchange of pre owned cars. Maruti true value is the largest
organized pre-owned car sales network in India.
The service network had a total of 2445 service outlets, covering
1172 cities.
DIRECTORS :
As per Articles of Association of the company and relevant
provisions of the companies act, 1956,Mr. R.C.Bhargava ,Mrs. Pallavi
Shroff and Mr. Shuji Oishi are liable to retire by rotation at the ensuing
Annual General Meeting and, being eligible, offer themselves for
reappointment, During the year, Mr. Tsuneo Kobayashi was elevated
as Senior Joint Managing Director with effect from 13th
November
2006. Pursuant to the promotion and transfer to Suzuki Motor
Corporation, japan, Mr. Shinichi Takeuchi has resigned with effect
from close of hours of 26th
May 2007, from the post of Director and
joint Managing Director. The Board records its appreciation for the
invaluable contribution made by him during his tenure. Mr. Masayuki
Osada was appointed as Director and whole-time Director designated
as Director (Research & Development) w.e.f26th
July 2007 to fill the
casual vacancy caused by the resignation of Mr. Takeuchi.
All the above appointments/ re-appointments are subject to the
approval of the members in the ensuing Annual General Meeting.
The brief resume/ details relating to the Directors who are to be
appointed/re-appointed as stipulated under listing Agreement
executed with the stock exchanges are furnished in the explanatory
statement of the notice of the ensuing Annual General Meeting.
DIRECTORS’ RESPONSIBILITY STATEMENT :
As required under section 217(2AA) of the companies Act,
1956, your Directors confirm having :
a) Followed in the preparation of the Annual Accounts, the
applicable accounting standards with proper explanation relating to the
material departures.
b) Selected such accounting policies and applied them
consistently and made judgment and estimates that are reasonable

and prudent so as to give a true and fair view of the state of affairs of
your company at the end of the financial year and of the profit of your
company for that period.
c) Taken proper and sufficient care for the maintenance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
your company and for preventing and detecting fraud and other
irregularities ; and
d) Prepared the Annual Accounts on a going concern basis.

AUDITORS’ REPORT
TO THE MEMBERS OF MARUTI UDYOG LIMITED
1.. We have audited the attached balance sheet of maruti udyog
limited, as at 31st
March 2007 and the related profit and loss account
and cash flow statement for the year ended on that date annexed
thereto, which we have signed under reference to this report. These
financial statements are the responsibility of the company’s
management. Our responsibility is to express an option on these
financial statement statements based on our audit.
2.. We conducted our audit in accordance with the auditing
standards generally accepted in India. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
An audit includes examining, on test basic, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management presentation. We believe that our
audit provides reasonable basic for our opinion.
3.. As required by the companies order, 2003, as amended by the
companies order,200, issued by the central government of India in
terms of sub – section of section 227 of the ‘The companies Act, 1956’
of India and on the basic of such checks of such checks of the books
and according to the information and explanations given to us, we
further report that:
1) a) The company is maintaining proper records showing full
particulars including quantitative details and situation of fixed assets.
b) The fixed assets are physically verified by the management
according to a phased programme designed to cover all the
items , except furniture and fixtures, office application and
certain other assets aggregating to Rupees 339 million , over a
period of three years, which in our opinion, is reasonable having
regard to the size of its assets have been physically verified by the
material discrepancies between the book records and the physical
inventory have been noticed.

c) In our opinion and according to the information and
explanations given to us, a substantial part of fixed assts has not
been disposed off by the company during the year.
2) a) The inventory (excluding materials lying with vendors has
been physically verified by the management during the year.
Confirmations have been received for materials lying with vendors at
the year end. In our opinion, the frequency of verification is
reasonable.
b) In our opinion, the procedures of physical verification of
inventory followed by the management are reasonable and adequate
in relating to the nature of its business.
c) On the basis of our examination of the inventory records, In
our opinion, the company is marinating proper records of inventory.
The discrepancies noticed on physical verification of inventory as
compared to book records were not material.
3) The company has not taken or granted any loans, secured or
unsecured from/ to companies, firms or other parties covered in the
register maintained under Section 301 of the act.
4) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the company and nature of its
business for the purchase of inventory, fixed assets and for the sale
of goods and service. Further, on the basis of our examination of the
books and records of the company, and according to the information
and explanation given to us, we have neither come across nor have
been informed of any continuing failure to correct major weakness in
the aforesaid internal control procedure.
5) In our opinion and according to the information and explanation
gives to us, there are no transactions made in pursuance of such
contracts or arrangements and exceeding the value of Rupees five
lakes in respect of any party during the year, which have been made
at prices which are not reasonable having regard to the prevailing
market prices at the relevant time. In respect of purchase of goods
and materials including components from the holding company, the
prices paid for these items are not comparables these are of special
nature.

6) The company has not accepted any deposits from the public with in
the meaning of section 58A and 58AA or any other relevant provisions
of the act and the rules framed there under.
7) In our opinion, the company has an internal audit system
commensurate with its size and nature of its business.
8) We have broadly reviewed the books of account maintained by the
company in respect of products where , pursuant to the rules made
by the Central Government of India, the maintenance of cost
records has been prescribed under clause (d) of sub section (i) of
section 209 of the act and are of the opinion that prima facie, the
prescribed account and records have been made and maintained .
We have not, however, made a detailed examination of the records
with a view to determine whether they are accurate or complete.
9) According to the information and explanations given to us and the
records of the company examined by us, in our opinion, the company
is regular in depositing undisputed statutory dues in respect of
provident fund, investor education and protection fund, employee’s
state insurance, income tax, sales tax, service tax, customs duty,
excise duty, less and other material statutory dues as applicable with
the appropriate authorities.
10) The company has no accumulated losses as at March 31,2007
and it has not incurred any cash losses in the financial year
ended on that date or in the immediately preceding financial
year.
11) According to the records of the company examined by us and the
information and explanations gives to us, the company has not
defaulted in repayment of dues to any bank or debenture holders as at
the balance sheet date.
12) The company has no granted any loans and advances on the basic
of security by way of pledge of shares, departures and other securities.
13) The provisions of any special statute applicable to chit
fund/nidhi/mutual benefit fund /societies are not applicable to the
company.
14) In our opinion, the company is not a dealer or trader in shares,
securities, debentures and other investments.

15) In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantee given by the
company, for loans taken by others from banks or financial institutions
during the year, are no prejudicial to the interest of the company.
16) In our opinion, and according to the information and
explanations given to us, on an overall basic, the term loans have
been applied for the purpose for which they were obtained.
17) On the basic of an overall examination of the balance sheet of the
company, in our opinion and according to the information and
explanations given to us , there are no funds raised on a short-term
basic which have been used for long term investment.
18) The company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under
section 301 of the act during the year.
19) The company has created security and charge in respect of
debentures issued and outstanding to the year-end.
20) The company has not raised any money by public issue during the
year.
21) During the course of our examination of the books and records
of the company , carried out in accordance with the generally
accepted auditing practices in India, and according to the
information and explanations given to us, we have neither come
across any instance of fraud on or by the company, noticed or reported
during the year, nor have we been informed of such case by the
management.
Audit committee:
Mr. Amal Ganguli chairman
Mr. Shinzo Nakanishi member
Mrs. pallavi Shroff member
Mr. D. S. Brar member

INTRODUCTION
A part from ratio analysis another useful way of analyzing
financial statements to convert them into percentage when this
method is pursued the income statement exhibits each expenses item
or group of expenses as a percentage of net sales, and net sales are
taken at 100%. Similarly each individual assets and liability
classification is shown as percentage of total liabilities.
Respectively statements prepared in this way are referred to as
common size statements prepared for one firm over the years would
highlight the relative changes in each group of expenses, assets and
liabilities. This statements can be equally useful for absolute figures of
the same industry are not comparable.
COMMAN SIZE PROFIT & LOSE ACCOUNT
PARTICULARS 2006 - 07 2005 - 06
Amount % Amount % Per cent
( Rs. in
million )
( Rs. in
million )
( % )
INCOME
Net Sales 145,922 100 120,034 100 100
Income from
Services
617 0.42 488 0.40 0.02
Other Income 5984 4.10 4292 3.57 0.53
Total 152,523 104.52 124,814 103.9 0.53
EXPENDITURE
Raw materials 101,374 69.47 88,766 73.96 (4.49)
Purchase of trade
Goods.
6,159 4.22 4,644 3.69 0.53
Stores 1,097 0.75 824 0.69 0.06
Employee’s
Remuneration
and Benefits
2,884 1.98 2,287 1.90 0.08
Manufacturing ;
Administrative &
Other Expenses.
8,258 5.66 6,226 5.19 0.47
Selling and
Distribution
Expenses.
4,999 3.42 3560 2.97 0.45

Total 124,771 85.50 106,320 88.58 (3.08)
Less: vehicles/dies
for own use
143 0.09 67 0.05 0.04 224
Add: increase /
Decrease in work
Progress, finished,
Goods and spares 2,007
1.37
1,997
1.67 (0.30)
Total 2,150 86.74 2,064 86.86 (0.07)
EARNING BEFORE
ABOVE
17.74 17.12 0.62
Interest 367 0.26 204 0.16 0.1
Depreciation 2,714 2.11 2,854 2.37 (0.51)
Differed revenue
Expenditure charged
off
- - - - -
Total 3,090 2.11 3,058 2.54 (0.43)
Profit Before Tax 22,798 15.63 17,500 14.58 1.05
Less : Tax Expense 4.17 4.89 (0.72)
Current Tax 6,089 5,873
Deferred Tax 897 0.61 321 0.26 0.35
Fringe Benefits Tax 67 0.04 57 0.04 -
Previous years 125 0.08 - - 0.08
Total 7,178 6,251
Profit after Tax 15,620 1.17 11,891 9.91 0.79
Brought forward
From previous year
allount
43,851 30.11 34,421 28.68 1.43
Total 59,471 40.76 46,312 2.17
Less: Appropriation
Debenture
Redemption Reserve
17 0.01 31 0.02 (0.01)
General Reserve 562 1.07 1,189 0.99 0.08
Proposed Dividend
Tax
1,300 0.89 1,011 0.89 0.05
Corporate Dividend Tax 219 0.15 142 0.15 0.04
Total 3,098 38.63 2,373 36.60 2.03

COMMAN SIZE BALANCE SHEET
PARTICULARS 2006 - 07 2005 – 06 2004 - 05
Amount
%
Amount
%
Amount
%( Rs. in
million )
( Rs. in
million )
( Rs. in
million )
SOURCES OF
FUND
Capital 1445 1.89 1445 2.58 1445 3.01
Reserve and Surplus 67094 87.68 53081 94.75 42343 88.28
LOAN FUNDS
Secured Loans 635 0.83 717 1.28 3076 6.42
Unsecured Loans 5673 7.41
DEFFERRED TAX
Deferred Tax Liability 1675 2.19 7791 1.39 1100 2.29
TOTAL 76,522 100 56,022 100 47,964 100
APPLICATION OF FUNDS
FIXED ASSETS
Net Block 26,597 42.17 16,952 44.16 18,737 54.59
Capital Work in Progress 2389 3.79 920 2.40 421 1.23
INVESTMEENTS 34092 54.04 20,512 53.43 15.166 44.18
CURRENT ASSETS
LOANS AND
ADVANCES
Inventories 7132 18.54 8812 23.50 6666 22.43
Sundry debtors 7474 19.43 6548 17.46 5995 20.17
Cash and bank 14228 37 14016 37.38 10294 34.64
Other Current Assets 384 1.01 458 1.23 683 2.30
Loans and Advances 9241 24.02 7662 20.43 6082 20.46
CURRENT LIABILITIES
AND PROVISIONS
Current liabilities 20110 80.39 15058 75.83 12188 75.80
Provisions 4905 19.62 4800 24.17 3892 24.20
Net Current Assets 13444 17.57 17638 31.48 13640 28.44
TOTAL 76,522 56,022 100 47964 100

COMPARISION OF BALANCE SHEET
COMMAN SIZE BALANCE SHEET
PARTICULARS 2006 - 07 2005 – 06 2004 - 05
Amount
( Rs. in
million )
%
Amount
( Rs. in
million )
%
Amount
( Rs. in
million )
% difference
SOURCES OF
FUND
Capital 1445 1.89 1445 2.58 1445 3.01 2.57
Reserve and Surplus 67094 87.68 53081 94.75 42343 88.28 13.07
LOAN FUNDS
Secured Loans 635 0.83 717 1.28 3076 6.42 0.44
Unsecured Loans 5673 7.41 7.41
DEFFERRED TAX
Deferred Tax Liability 1675 2.19 7791 1.39 1100 2.29 0.07
TOTAL 76,522 100 56,022 100 47,964 100 0.73
APPLICATION OF FUNDS
FIXED ASSETS
Net Block 26,597 42.17 16,952 44.16 18,737 54.59 8.12
Capital Work in Progress 2389 3.79 920 2.40 421 1.23 12.61
INVESTMEENTS 34092 54.04 20,512 53.43 15.166 44.18 7.94
CURRENT ASSETS
LOANS AND ADVANCES
Inventories 7132 18.54 8812 23.50 6666 22.43 6.41
Sundry debtors 7474 19.43 6548 17.46 5995 20.17 1.77
Cash and bank 14228 37 14016 37.38 10294 34.64 6.41
Other Current Assets 384 1.01 458 1.23 683 2.30 0.32
Loans and Advances 9241 24.02 7662 20.43 6082 20.46 6.41
CURRENT LIABILITIES AND
PROVISIONS
Current liabilities 20110 80.39 15058 75.83 12188 75.80 0.60
Provisions 4905 19.62 4800 24.17 3892 24.20 2.01
Net Current Assets 13444 17.57 17638 31.48 13640 28.44 31.91
TOTAL 76,522 56,022 100 47964 100

CONCLUSION
When summarizing the financial results of “MARUTI UDYOG LIMITED”.
I have observed that their working is quite reasonable financial. It is
very good company. There are no any debts of long term liabilities of
the company. To conclude, from of the overall analysis of financial
management of the company, I can say that it is financial sound
and well managed three consecutive year’s shows and applauding
position. I was also able to well understand my financial concepts. It
was a tough task to make this project but at last I able to complete
the project report of analysis of annual report of the company
“MARUTI UDYOG LIMITED”.

FINDINGS:
 Annual Report of “MARUTI UDOG LIMITED” of 3
Years
1) 2004 – 05
2) 2005 – 06
3) 2006 – 07
 Financial Management by khan & jain information about ratios
and accounting policy.
 B. S. SHAH
 On the web site.

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