Capital structure

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Capital Structure of

Vs

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CAPITAL STRUCTURE

• A company's reasonable, proportional use of debt and equity to support its assets is a key indicator of balance sheet strength.

• A healthy capital structure that reflects a low level of debt and a corresponding high level of equity is a very positive sign of investment quality.

• A company's capitalization describes the composition of a company's permanent or long-term capital, which consists of a combination of debt and equity.

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Type Public BSE: 500570(NYSE: TTM)

Founded 1945

Founder(s) JRD Tata

Headquarters Mumbai, India

Key people Ratan Tata, Chairman

Products Automobiles and Engines

Revenue ▲ USD $9.07 billion

Net income ▲ USD $474.0 million

Parent Tata Group

Subsidiaries

Jaguar CarsLand RoverTata Daewoo Commercial Vehicle

Website TataMotors.com

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• Established in 1945,• Tata Motors Limited is India’s largest automobile company,

with revenues of Rs. 35651.48 crores (USD 8.8 billion) in 2007-08. 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. The company is the world’s fourth largest truck manufacturer, and the world’s second largest bus manufacturer.

• The company’s 23,000 employees are guided by the vision to be “best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics.”

• Tata Motors’ presence indeed cuts across the length and breadth of India. Over 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954.

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• The foundation of the company’s growth over the last 50 years is a deep understanding of economic stimuli and customer needs, and the ability to translate them into customer-desired offerings through leading edge R&D. With over 2,500 engineers and scientists, the company’s Engineering Research Centre, established in 1966, has enabled pioneering technologies and products. The company today has R&D centres in Pune, Jamshedpur, Lucknow, in India, and in South Korea, Spain, and the UK

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TATA’s SHAREHOLDING

• Indian Promoters : 33.7%• Foreign collaborators : 0.0%• Indian inst/Mutual Fund : 14.2%• FIIs/GDR : 32.8%• Free float : 19.3%• Shareholders : 221,403• Listed on BSE: 500570 (scrip no.) NSE: TATA Motors NYSE: TTM

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TATA MOTORS BOARD OF DIRECTORS• Chairman – Mr. Ratan N Tata• Managing Director – Mr. Ravi Kant• Exec. Director – Mr. P M Telang• Director – Mr. N A Soonawala• Director – Mr. J J Irani• Director – Mr. V R Mehta• Director – Mr. R Gopalakrishnan• Director – Mr. N N Wadia• Director – Mr. S M Palia• Director – Mr. R A Mashelkar

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OVERVIEW

• Maruti Suzuki India Limited is a publicly listed automaker in India. It is a leading four-wheeler automobile manufacturer in South Asia. Suzuki Motor Corporation of Japan holds a majority stake in the company. 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. On 17 September 2007, Maruti Udyog was renamed to Maruti Suzuki India Limited.

• Headquarter - Gurgaon.

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Maruti Suzuki India Ltd

Type Public (BSE MARUTI, NSE MARUTI)

Founded 1981

Headquarters Gurgaon, Haryana, India

Key peopleR C Bhargava, ChairmanShinzo Nakanishi, Managing Director

Industry Automotive

Products Cars

Revenue ▲US$2.5 billion

Employees 6,903

Parent Suzuki

Website MarutiSuzuki.com

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CLASS BRAND NAME YEAR INTRODUCED SLOGAN

City Car Maruti 800 1983 Change your life

Maruti Alto 2000 Let's go

Maruti Zen Estilo 2005 Shape your world

Suzuki Alto (A-star) 2008 Stop @ nothing

Suzuki SplashUpcoming model in

2009Super mini Car Maruti Wagon-R 1999 For the smarter race

Maruti Suzuki Swift 2005 You're the fuel

Compact Car Maruti Suzuki SX4 2007 Men are back

Maruti DZiRE 2008 The heart car

Sports Utility VehicleSuzuki Grand Vitara 2007 Play it your way

Maruti Gypsy 1985 King

Microvan Maruti Omni 1984 Fits all

Maruti Versa 2003The joy of travelling

together

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MARUTI SUZUKI BOARD OF DIRECTORS• Chairman – Mr. R. C. Bhargava• M. D. & CEO – Mr. Shinzo Nakanishi• Director – Mr. Manvinder Singh Banga• Director – Mr. Amal Ganguli• Director – Mr. D.S. Brar• Director – Mr. Keiichi Asai• Director – Mr. Osamu Suzuki• Director – Mr. Shuji Oishi• Director – Ms. Pallavi Shroff• Director – Mr. Kenichi Ayukawa• Director – Mr. Tsuneo Ohashi

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BALANCE SHEET

TATA MOTORSAs at 31st march 2008

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Particulars As on 31st March 2008

As on 31st March 2007

Sources of Fund:

Share holders fund

Equity Share Capital 385.54 385.41

Reserve & Surplus 7453.96 6484.34

Loan funds

Secured Loan 2461.99 2022.04

Unsecured loan 3818.53 1987.10

DEFERRED TAX LIABILITY (NET) 975.72 786.83

Total 15095.74 11665.72

Application of Fund:

Fixed Assets

Gross Block 10830.83 8775.80

Less :- depreciation 5443.52 4894.54

Net Block 5387.31 3881.26

Capital Work in Progress 5064.96 2513.32

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Particulars As on 31st March 2008

As on 31st March 2007

Investment 4910.27 2477.00Current Assets Loans & Advances

Interest accrued on investments 0.86 5.94

Inventories 2421.83 2500.95

Sundry Debtors 1130.73 782.18

Cash and Bank Balances 2397.31 826.76

Loans & Advances 4433.05 6396.22

Total Current Assets 10383.78 10512.05

Less : current liabilities & provisions

Current Liabilities 8667.20 6363.68

Provision 1989.43 1364.32

Total Current Liabilities 10656.63 7728.00

Net current assets (272.85) 2784.05

MISCELLANEOUS EXPENDITURE(to the extent not written off or adjusted)

6.05 10.09

Total Assets 15095.74 11665.72

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BALANCE SHEET

Maruti Suzuki India LimitedAs at 31st March, 2008

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Particulars As on 30th

Sep 2008As on 30th sep 2007

Sources of Fund:

Owner’s fund

Equity Share Capital 1,445 1,445

Reserve & Surplus 82,709 67,094

Loan funds

Secured Loan 1 635

Unsecured loan 9,001 5,673

Deferred Tax Liabilities 2,697 2,776

Deferred Tax Assets (996) (1,101)

Total 94,857 76,522

Application of Fund:

Fixed Assets

Gross Block 72,853 61,468

Less : accumulated depreciation (39,888) (34,871)

Capital Work in Progress 7,363 2,507

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Particulars As on 30th

Sep 2008As on 30th Sep 2007

Investment 51,807 34,092

Current Assets Loans & Advances

Inventories 10,380 7,014

Sundry Debtors 6,555 7,474

Cash and Bank 3,240 14,228

Loans and Advances 10,403 9,241

Total Current Assets 30,909 38,341

Less : Current Liabilities and Provisions

Current Liabilities 24,492 20,110

Provisions 3,695 4,905

Total Current Liabilities 28,187 25,015

Net Current Assets 2,722 13,326

Total Assets 94,857 76,522

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Key Ratios 2008 2007

Debt-Equity Ratio 0.80 0.58

Return on Capital Employed 14% 17%

Interest Coverage Ratio 8.18 7.11

Proprietary Ratio 0.51 0.58

Return on Investment(%) 32% 37%

RATIO ANALYSIStata

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Interpretation over ratios• Debt to equity ratio is 0.80 in 2008 & 0.58 in

2007 which shows co. is more dependent on debt in 2008 and also it can generate more returns due to leverage.

• ROCE compares earnings with capital invested in the company. If it decreases, not a good sign. It is reduced from 17% to 14%.

• Interest coverage ratio shows the strength of company in making the payment of interest regularly out of the total income. As ratio shows Co. is more efficient in paying its debt in 2008.

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• Proprietary ratio shows the general financial strength of the company. Low proprietary ratio will include greater risk to the creditors. It is 51% in 2008 & 58% in 2007.In 2008 it create risk for creditor, It is a test of creditworthiness.

• Return on Investment shows the return on shareholders fund higher the ratio means shareholders are more benefited. It is decreased here which is not good for company.

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RATIO ANALYSISmaruti

Key Ratios 2008 2007

Debt-Equity Ratio 0.09 0.10

Return on Capital Employed 20% 18%

Interest Coverage Ratio 42.54 30.04

Proprietary Ratio 0.89 0.88

Return on Investment(%) 33% 29%

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Interpretation over ratios• The company has reduced its ratio means the

company is more dependent on its own fund and does not want to take any risks. It must try to increase the debt portion in order to gain leverage and maximize returns.

• This measure narrows the focus to gain a better understanding of a company's ability to generate returns from its available capital base. Increase in ROCE is good sign from investors point of view.

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• The interest coverage ratio indicates the extent of which earnings are available to meet interest payments. As it is increased in 2008 at 42.54 from 30.04 in 2007.

• Proprietary ratio indicates the general financial position of the business concern. Higher the ratio, better is the long-term solvency position of the company.

• Return on Investment shows the earning or return on shareholder fund. Higher the ratio means shareholder are more benefited. It is 33% in 2008 & 29% in 2007.

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Current market position MARUTI

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Today’s market condition• BSE: 532500 | NSE: MARUTI

BSE NSE Open 835 827.5 Day High 837.4 837.9 Day Low 815.2 816.5 Previous Close 829.45 831.65 52-Week high 889 944.5 52-Week low 428.4 433 Market Cap (Rs cr) 23922.58 23922.57

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Current market position TATA

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Today’s market condition• BSE: 500570 | NSE: TATAMOTORS

BSE NSE Open 270.3 273 Day High 274.3 274.95 Day Low 264.3 264.2 Previous Close 272.5 271.35 52-Week high 693.4 765.5 52-Week low 122 124.8 Market Cap (Rs cr) 13811.26 14027.26

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CONCLUSION• Maruti won't cut price to take on Tata.• In Capital Structure ratio the Debt Equity is

more for Tata, So Tata is taking some risk to increase its returns for share holders by taking more debt.

• The Reserve & Surplus of Maruti Suzuki is much more than Tata Motors and also due to this reason their percentage increase from last years is 23% compare to Tata it’s 14% only.

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• Buy Tata’s share, because it is underperforming due to its declining profit & sales figures in the last few years (because of heavy capital expenditure in some projects and foreign acquisitions, its cash outflow was much more than inflows).

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WEBLIOGRAPHY

• www.tatamotors.com• www.marutimotors.com• www.google.co.in• www.en.wikipedia.com• www.indiainfoline.com• www.bse.com• www.finance.yahoo.com

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