Financial Statement Analysis Project

Master of Business Administration

Batch 2018-20

Submitted by

Abhishek Mevawala

18020841062(Finance)

Submitted to

Prof. Pooja Gupta

SYMBIOSIS INSTITUTE OF BUSINESS MANAGEMENT, BENGALURU

95/1 & 95/2, Electronic City Phase-I, Hosur Road, Bengaluru - 560100
Auto-Component Industry Background:

The Indian auto-segments industry has encountered solid development in the course of the most
recent couple of years. The auto-segment industry of India has extended by 18.3 percent to reach
at a degree of US$ 51.2 billion in FY 2017-18.

The auto-parts industry represents 2.3 percent of India's Gross Domestic Product (GDP) and
utilizes the same number of as 1.5 million individuals straightforwardly and in a roundabout way
each. A steady government system, expanded obtaining power, enormous residential market, and
a consistently expanding advancement in framework have made India an ideal goal for
speculation..

Jay Bharat Maruti Ltd Background:

JBM Group is a focused and progressive conglomerate aiming to add value to our customers
business via its products, services and innovative solutions. The Group has a diversified portfolio
with presence in multiple domains such as Automotive, Engineering & Design services,
Renewable energy, Railways and OEM. JBM Group currently has an infrastructure of 40
manufacturing plants, 4 Engineering & Design centers across 18 locations globally. The
multibillion-dollar JBM Group has broadened its horizons by focusing on quality delivery,
solutions approach, product development processes, flexible manufacturing systems and contract
manufacturing. JBM Group comprising primarily of auto component division, caters services to
esteemed clients that include Ashok Leyland, Bajaj Auto Ltd, Fiat, Ford, General Motors
Corporation, Honda, Hero, JCB, Mahindra, Maruti Suzuki, Renault, Nissan, TATA, Toyota, TVS,
Volvo-Eicher, Volkswagen and many more.
The ratio analysis of Jay Bharat Maruti Ltd is as follows:
Profitability
2015 2016 2017 2018 2019
Ratios Remarks
Operating Profit Operating Profit Margin as well as Net profit
8.75 8.99 8.71 8.99 8.14 Margin is same is all the 5 Years but in the last year
Margin (%)
it has reduced because of an obvious reason is a
Net Profit Margin decline in sales. However, this can occur if sales
2.61 3.4 3.52 3.05 3.08 increase comes from higher sales of low-margin
(%)
items
Return on Capital There has been a significant increase in Return of
15.41 17.65 17.32 23.53 24.06 Capital employed which is would be more
Employed (%)
favourable because it means that more dollars of
Return on Net profits are generated by each dollar of capital
12.91 16.34 17.66 15.75 19.3
Worth (%) employed.
Return on Assets 186.63 166.39 140.63 116.73 95.65 Decreased because of increase in Total Assets
Liquidity and Solvency
Ratios
It is more or less same and matching to industries
Current Ratio 0.5 0.57 0.57 0.59 0.57
average
It is more or less same and matching to industries
Quick Ratio 0.3 0.23 0.64 0.29 0.31
average
Debt Equity Ratio 0.86 0.73 0.76 0.38 0.5 It reduced in 2018 due to increment in equity
Long Term Debt
0.67 0.59 0.38 0.22 0.32
Equity Ratio Its reduction is very good for the company
It is more or less same and matching to industries
Interest Cover 3.38 5.48 5.09 3.7 3.5
average
Management Efficiency
Ratios
Inventory It is more or less same and matching to industries
11.78 8.83 15.14 11.06 11.77
Turnover Ratio average
A higher ratio means that the company is
Debtors Turnover
38.99 21.46 17.95 32.57 35.25 collecting cash more frequently and/or has a
Ratio
good quality of debtors
Investments It is more or less same and matching to industries
11.78 8.83 15.14 11.06 11.77
Turnover Ratio average
Asset turnover ratio measures the value of a
company's sales or revenues relative to the value
Asset Turnover
2.9 2.98 3.45 3.96 4.22 of its assets. The asset turnover ratio can be used
Ratio
as an indicator of the efficiency with which a
company is using its assets to generate revenue.
Cash Flow Indicator Ratios
Dividend Pay-out
-- 9.19 8.05 10.87 10.82
Ratio Net Profit They are paying Good Dividend to the Shareholder
Cash Earning
100 94.99 95.46 94.51 94.47
Retention Ratio They are paying Good Dividend to the Shareholder

The ratios have improved in 2018 which shows their better performance. The operating margin
has improved from 2017 to 2018 which means that the company is making enough money from
its ongoing operations to pay for its variable costs as well as its fixed costs.

The trend in the Liquidity Ratios seems to be more or less constant year after year. The current
ratio has been greater than 1 since past five years which tells that the company capable of paying
its obligations because it has a larger proportion of short-term asset value relative to the value of
its short-term liabilities. But the jump between 1.11 in 2016 and 1.01 in 2018 also indicates an
operational risk and likely drag on the company’s value.
The company has the quick ratio of less than 1 which means the company do not have enough
liquid asset to pay their current liabilities and should be treated with caution. Also, the quick ratio
is much lower than the current ratio, it means that the company's current assets are highly
dependent on its inventory.
The cash ratio of the company is very less that means there are more current liabilities than cash
and cash equivalents that is there is insufficient cash on hand to pay off short-term debt.
The DSO ratio measures how long it takes a company to receive payment on accounts receivable,
the DPO value measures how long it takes a company to pay off its accounts payable. 2018 figures
show that the company has started receiving its payments late and is paying its dues in a very short
period. The CCC value attempts to measure the average duration of time for which each net input
cash is tied up in the production and sales process before it gets converted into cash received
through sales made to customers. The CCC has improved in 2019.
The word analytics and sentiment analysis for the past five year’s Annual Report’s
Management Discussion are as follows:

2014-2015
2015-2016
2016-2017
2017-2018
2018-2019
Analysis:
Their were openings and dangers according to the administration that were being investigated.
Presentation of new MUV/SUV by an ever increasing number of organizations as of late in various
cost reaches is required to liven up deals, presentation of littler business vehicles will bring about
higher number of vehicles on street, Global vehicle makers keep on looking India as a potential
base because of accessibility of actually qualified and gifted workforce at relatively lower cost
were not many of the open doors available. The dangers being constantly expanding fuel costs
may have hosing impact on the rising interest for vehicles, stringent emanation standards and
security guidelines could bring new complexities and cost increments for car industry and extreme
interest for imported autos were a risk to the neighborhood producers. Car industry specialists are
shown that extreme occasions are here for long. organizations are slicing creation which is
disturbing considering the progressively outstretching influence of the proceed onward associated
businesses like auto parts and retail outlets.

The organization was experiencing Industry-log jam hazard, rivalry hazard and obtainment chance.
The above word cloud unmistakably indicates few of the words that speaks to the then
circumstances. The administration attempted to beat the circumstance by proactively padding itself
from any plausible sectoral log jams by extending its item bushel, by reinforcing its client de-
gambling by

fashioning associations with countless OEMs, growing its worldwide impression and secondary
selling nearness, by enabling the workers to look for and dispose of working wasteful aspects,
reinforcing edges.

The above word cloud shows words that are certain. Most recent Five years a few large scale
financial factors, for example, falling loan costs and diminishing fuel cost brought expanded end
clients consideration and thusly request. The comparative pattern is required to proceed for next
couple of years. The improvement in macroeconomic markers is promising. The drive of the
administration on improvement of framework; age of business, lower fuel cost, power over
swelling, defense of duty structure through GST presentation, Automotive Industry to be the motor
of "Make in India" which is an appreciated advance; are on the whole great markers. The
organization sees openings as far as storm, worldwide interest for vehicles expanding sends out.

The development energy of the Indian economy will proceed in the coming years. The
administration's pushed on the advancement of foundation, work age, usage of GST and Make in
India are the principle drivers for the development of Indian auto part organizations.
The future viewpoint of the Company stays positive as the Company alongside its Joint Venture
Companies is effectively dealing with both the key front and the activities front to exploit the
turning patterns which incorporates Research and Development, improving operational
exhibitions, center around quality and widening the client base, among others. The Company has
defined an arrangement and procedure for hazard the board. The organization has set up a center
gathering of administration group, which recognizes, evaluates the dangers and the patterns,
presentation and potential effect investigation at various level and sets out the methodology for
minimization of the dangers.