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Analysis of
Mahindra &
Mahindra Limited
Financial Accounting
Prof. Jayanta Kr.
MBA (IB) 2015-17
Seal
Tushar Saklecha Roll No.50
Biprojit Roychaudhary Roll
No.61
Juhi Arya Roll No.69
Victor Ganguly Roll No.102
Table of Contents
Gross Profit
Margin
Margin on
Sales
Operati ng
Profit Margin
EBIT Margin
Net Profit
Margin
Profitability
Return on
Investment
Net Income
to Total
Asset
Efficiency
Total Asset
Turn Over
Return per
Share
Financial
Ratios
Earning per
Share
Dividend per
Share
Current
Ratio
Short term
Quick Ratio
Inventory
Turnover
Solvency
Debt Equity
Long term
Long term
Debt to Total
Capital
Interest
Cover
FY1314
6.3
6.94
10.2
-0.93
4.03
FY1415
4.36
8.52
9.83
6.1
4.11
FY10-11
FY11-12
FY12-13
FY13-14
FY14-15
Analysis: M&M Ltds gross profit margin has come down and moved up
again in the last 5 fiscal years, but as compared to Tata Motors-it has
always been less. M&M Ltd must focus on its pricing and cost structure. The
margin decreased is more because of the prevailing market conditions,
where automobile sector has taken a hit. Only Maruti Suzuki did reasonably
well in these years, sustaining the overall growth. Year 2013-14, was quite
good for M&M Ltd as its gross profit was the highest compared to others.
FY1314
13.67
11.7
14.96
1.67
5.81
FY1415
12.22
13.47
14.93
7.56
5.84
FY10-11
FY11-12
FY12-13
FY13-14
FY14-15
Analysis: Based on the data, it is very well inferred that pricing strategy
and operating efficiency of M&M Ltd has been reasonable well. It has also
reflected that M&M Ltd has forayed into new products being launched every
year. M&M Ltd has EARNING relatively higher per rupee sale as compared
to most of its competitors. This margin has decreased in the last fiscal.
3. EBIT Margin
All the non-operating surplus or deficit is adjusted to the operating profit
margin, to obtain the earnings before interest and taxes.
FY1415
9.2
8.37
9.8
4.45
4.1
FY10-11
FY11-12
FY12-13
FY13-14
FY14-15
Analysis: In the last 5 fiscal years, EBIT for M&M Ltd has been the highest
compared to rest all companies. It clocked the highest profitability in the
fiscal of 2010, but has reduced since then falling to its lowest in the last
fiscal. M&M Ltd has over the years enjoyed a credit free risk loan from
investors because of strong EBIT, but specially in the last fiscal this has
reduced as compared to some other players.
Where Net Profit = Revenue COGS Operating Expenses Interest & Taxes
Net Profit Margin
FY10FY1111
12
Mahindra & Mahindra Ltd.
8.35
5.26
Maruti Suzuki India Ltd.
6.41
4.65
Tata Motors
7.59
8.15
Ashok Leyland Ltd.
5.64
4.4
TVS Motors
1.94
1.78
FY1213
5.96
5.57
5.23
3.47
2.67
FY1314
6.3
6.41
6
0.29
2.22
FY1415
4.36
7.49
5.32
2.46
3.18
FY10-11
FY11-12
FY12-13
FY13-14
FY14-15
Analysis: According to the graph, it clearly shows that M&M Ltd has
maintained almost equal trend as compared to the other four companies.
M&M Ltd and all its rivals have been able to extract profit almost equally
from its sales in those fiscal years. This indicator is intended to be a
7
Net Income to
FY1011
Mahindra & Mahindra Ltd.
116.6
8
Maruti Suzuki India Ltd.
189.3
1
Tata Motors
222.9
2
Ashok Leyland Ltd.
151.8
6
TVS Motors
98.51
Total Asset
FY11FY1212
13
82.96
90.25
115.7
4
226.0
1
128.5
6
84.62
FY1314
90.54
FY1415
50.8
142.5
8
144.8
7
78.1
145.3
7
139.9
2
4.92
184.4
3
134.0
2
60.28
130.5
8
136.6
170.2
9
FY10-11
FY11-12
FY12-13
FY13-14
FY14-15
Analysis: The Net Income to Total Asset for M&M Ltd has always been high
for the initial years as compared to its rival companies, but has decreased
9
in the last fiscal and is below compared to all. In fact TVS motors has done
pretty well here, where it has achieved the highest.
10
FY1314
1.35
1.92
2.52
1.48
5.17
FY1415
1.21
2.08
2.93
2.15
4.64
FY10-11
FY11-12
FY12-13
FY13-14
FY14-15
Analysis: As clearly seen in the graph, the Total Asset Turnover ratio of
M&M Ltd has been below the industry average. On the other hand,
strangely TVS Motors which is quite a conservative player, has the highest
Asset Turnover. The ratio is on the downward slide in the last fiscal. So TVS
Motors as such has proven to be quite an efficient player in turning its
assets to sales, whereas M&M Ltd is lagging behind is this aspect.
11
12
EPS=
FY1314
61.02
92.13
1.04
0.11
5.51
FY1415
53.47
122.85
-14.72
1.18
7.32
FY10-11
FY11-12
FY12-13
FY13-14
FY14-15
Analysis: The share price of any company will decide how well the
company is doing and hence it becomes a key indicator. It is an important
component in deciding the price to earning valuation ratio. It also shows the
measure of profitability and it is viewed as the earning power of the
respected firms. The EPS of M&M Ltd has been rising continuously but only
during the last fiscal it has seen a drastic drop. It has performed better than
the rest of the other companies but is far lagging behind the Maruti Suzuki
13
Ltd as the latter has been the undoubtedly the Numero-Uno in the
automobile segment.
14
Dividend
Total Outstanding Equity shares
FY1314
14
12
2
-1.4
FY1415
12
25
-0.45
1.9
FY10-11
FY11-12
FY12-13
FY13-14
FY14-15
Analysis: The Company has been distributing its cash to the shareholders
on a steady basis until last year, where-in the distribution took a hit. While
the industry DPS had been growing, factors are not in much favour of M&M
shareholders.
15
9. Current Ratio
Current ratio measures the relationship of current assets with current
liabilities. This is one of the most important Solvency ratios.
Current Ratio=
Current Liabilities
(Current Assets)
Current Ratio
FY10FY1111
12
1.39
1.39
1.57
1.13
0.7
0.83
1.02
0.91
1
0.71
FY1213
1.47
1.04
0.81
0.73
0.85
FY1314
1.65
0.78
0.94
0.78
0.87
FY1415
1.43
0.69
0.8
0.94
0.87
Current Ratio
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
FY10-11
FY11-12
FY12-13
FY13-14
FY14-15
Analysis: The current assets for the company had been at par for FY 10-11
and 11-12, which saw a marginal growth in FY 12-13 and FY 13-14 on Yearon-Year basis. But last year shows a dip in currents assets which is in line
with most of the companies in the industry.
16
Quick Ratio=
(Current AssetInventory )
Current Liabilities
Quick Ratio
FY10FY1111
12
1.34
1.37
1.27
1.03
0.72
0.7
0.51
0.51
0.51
0.47
FY1213
1.48
0.9
0.7
0.56
0.49
FY1314
1.64
0.68
0.78
0.67
0.52
FY1415
1.6
0.42
0.66
0.69
0.58
Quick Ratio
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
FY10-11
FY11-12
FY12-13
FY13-14
FY14-15
Analysis: Quick Ratio is a step ahead from Current Ratio- taking into
account the available cash at disposal which is growing on a marginal basis
until FY 13-14, it saw a slight fall in FY 14-15 which is much in line with the
way other companies in the industry have been performing.
17
FY1314
9.96
28.19
8.68
8.36
13.68
FY1415
8.93
20.96
9.1
10.36
10.89
FY10-11
FY11-12
FY12-13
FY13-14
FY14-15
18
FY1213
1.16
0.08
1.16
1.11
1.02
FY1314
1.21
0.08
0.84
1.19
0.62
FY1415
1.14
0.01
1.23
0.63
0.83
FY10-11
FY11-12
FY12-13
FY13-14
FY14-15
Analysis: Debt to Equity is a bar for stakeholders to depict how well the
company is- in terms of stability. The ratio shows higher stability if it is less
than 1. The ratio is in line with what the industry is going through, except
for the old players who are more self-sufficient to manage on their equity
and cash reserves. In FY 14-15, the company has managed to lower its debt
burden in accordance to the equity.
19
20
FY1314
1.09
0.03
0.69
1.01
0.51
FY1415
0.86
0.01
1
0.63
0.46
FY10-11
FY11-12
FY12-13
FY13-14
FY14-15
Analysis: The ratio shows that M&M has efficiently managed to lower down
their long-term debt equity ratio in FY 14-15, which had been constantly
growing ever since FY 11-12. This shows that company has managed to
grow well and keep its debt in control for the past year.
21
Interest Cover
FY10FY1111
12
5.28
5.82
38
35.82
5.28
5.82
5.24
3.7
3.52
3.57
FY1213
5.01
16.45
5.01
1.48
2.77
FY1314
5.19
21.24
5.19
-0.32
4.55
FY1415
5.5
23.85
5.5
1.87
7.21
Interest Cover
45
40
35
30
25
20
15
10
5
0
-5
FY10-11
FY11-12
FY12-13
FY13-14
FY14-15
22