A

RESEARCH PROJECT ON
“PROFITABILITY ANALYSIS OF MAHINDRA
AND MAHINDRA LTD”

Submitted in the partial fulfillment of

BACHELOR DEGREE OF COMMERCE
FOR THE SESSION: 2022-23

Submitted by:
Bhagabati Behera
Roll No: BC-20-029
Exam Roll No: 42031029

Submitted to:
Prof. Mr. Manoj Kumar Das
Department of commerce, BJB Autonomous College

BUXI JAGABANDHU BIDYADHARA AUTONOMOUS COLLEGE

BHUBANESWAR, ODISHA
 ACKNOWLEDGEMENT

In the very beginning I would like to take the opportunity to express my

gratitude to the almighty god, for keeping me in good health all through this
grueling project work.

I place on record my sincere gratitude and appreciations to my project guide

Mr. Manoj Kumar Das for his kind cooperation and guidance which enabled
me to complete this project in time.

I take this opportunity to delicate my project to all our loving and respected
faculty members who were a constant source of motivation and I express my
deep gratitude to their never-ending support and encouragement during this
project. Finally, I thank each everyone who helped me to complete the task.

Place: Bhubaneswar Bhagabati Behera

Date: (signature)
 B.J.B AUTONOUMUS COLLEGE
DEPARTMENT OF COMMERCE
BHUBANESWAR – 751014, ODISHA, INDIA
Ph. No. +91-674-2432397, Fax No. +91-674-2436971
Website- [Link]

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Date: __________

CERTIFICATE
This is to certify that the project report entitled, “A Study on Profitability
Analysis of Mahindra and Mahindra LTD” submitted in the partial fulfilment of
Bachelor Degree of Commerce, carried out by Bhagabati Behera bearing Roll. No.
BC-20-029 and Exam Roll. No. 42031029, under my guidance and supervision. No
part of this research has been submitted to any other university for award for any
degree.

I wish her all the best and success in future endeavours.

Place: Bhubaneswar Certified By:

Date: MR. MANOJ KUMAR DAS
(Dept. of Commerce)
 DECLARATION
I, BHAGABATI BEHERA, hereby declare that the project work entitled
“A Study on Profitability Analysis of Mahindra and Mahindra LTD”
is a record of independent and bonafide project work carried out by me
under the supervision and guidance of MR. MANOJ KUMAR DAS,
Department of Commerce, BJB AUTONOMOUS COLLEGE,
BHUBANESWAR

The information and data given in the report is authentic to the best of my
knowledge. The report has not been previously submitted for the award of
any Degree, Diploma, Associateship or other similar title of any other
university or institute.

Place: Bhubaneswar Bhagabati Behera

Date: (signature)
 CONTENTS

SL NO. CHAPTERS PAGE NO.

Chapter-1 INTRODUCTION 2-6

Chapter-2 REVIEW OF LITERATURE 7-18

Chapter-3 INDUSTRY AND COMPANY 19-26

PROFILE

Chapter-4 DATA ANALYSIS AND 27-42

INTERPRETATION

Chapter-5 FINDINGS, SUGGESTIONS & 43-46

CONCLUSION

BIBLIOGRAPHY 47-48

1
 CHAPTER -1
INTRODUCTION

2
1.1 Introduction

Financial analysis is a process of identifying the strength and weakness of the firm
by properly establishing relationship. Analysis of financial statements means
establishing relationship between the items in financial statements for determining
the financial strength and weakness of the business. Therefore, the main purpose of
financial statement analysis is to utilize information about the past performance of
the company in order to predict how it will fare in the future. Another important
purpose of the analysis of financial statements is to identify potential problem areas
and troubleshoot those.

The ultimate aim of any business enterprise is to earn maximum profit. A firm
should earn profits to survive and grow over a long period of time. Profit is an
excess of revenues over associated expenses for an activity over a period of time.
Profit is an excess of revenues over associated expenses for an activity over a period
of time. Management should try to maximise its profit keeping in mind the welfare
of the society. The creditors want to get interest regularly and principle regularly.
Owners want to get reasonable return on investment. At the end of accounting
period financial statements are prepared by the business enterprise to know the
result of the business operation and the financial position. The financial statement
provides a summarized view of financial position and operation of a firm.
Therefore, much can be learned about a firm from careful examination of its
financial statement.
Mahindra and Mahindra Limited has marked its presence with significant
achievements and commands a market leadership status with regard to its service. It
is one of the largest manufactures in Indian automotive industry. Over the years the
company improved with regard to its service. This project is thus an earnest attempt
to analyze profitability of Mahindra and Mahindra Limited.

3
 (Current logo of Mahindra and Mahindra)

1.2 Statement of problem

The analysis of financial statement is a process of evaluating the relationship

between component parts of financial statements to obtain and understanding of the
firm's position and performance. Here the financial performance of Mahindra and
Mahindra Limited is analysed by using ratio analysis. It includes ratio analysis in this
environment, a study on financial performance of Mahindra and Mahindra Limited is
helpful in determining the financial strength and weakness of the firm by establishing
strategic relationship between the items of the balance sheet and profit and loss
account. Here the problem is to analyze the financial performance of the company is
satisfactory or not.

1.3 Scope of study

The scope of the study is limited to India. An attempt is made to make a study of
financial statements of Mahindra and Mahindra Ltd. The analysis of profitability
will help one to understand the financial strength and weakness of the company.

4
This study will provide the necessary information of financial and operational result
over a period of time. This will facilitate the evaluation of the financial position,
efficiency and performance easily.

1.4 Objectives of the study

 To analyse overall profitability of Mahindra and Mahindra Limited over the

last 5 years
 To study the trend of profit of Mahindra and Mahindra Limited over the past
5 years
 To achieve the overall financial position of the company

1.5 Research Design


 Nature of Study:- Analytical Research is used for the purpose of study
 Nature of Data:- The present study is based on secondary data.
 Sources of data:- Sources of Data are collected from the annual report
published on the official website of the company , magazine, books and
journals.
 Period of study:-The present study analyses the profitability of Mahindra and
Mahindra Limited for a period of five years from 2017-18 to 2021-22

1.6 Tools for Analysis

 Ratio analysis

 Comparative balance sheet

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1.7 Chapterization

 Chapter-1- Introduction
 Chapter-2-Review of literature
 Chapter-3-Industry and company profile
 Chapter-4-Data analysis and Interpretation
 Chapter-5-Finding, suggestions and conclusions

(New Logo of Mahindra and Mahindra)

6
 CHAPTER – 2
REVIEW OF LITERATURE

7
2.1 Introduction

This chapter deals with review of literature. This chapter includes conceptual
literature and empirical literature. Conceptual literature includes different concepts
used in the study. Empirical literature includes studies done by different authors

2.2 Conceptual literature

2.2.1 Meaning of Finance

Business concern needs finance to meet their requirements in the economic world.
Any kind of business activity depends on the finance. Hence, it is called as life
blood of business organization. Whether the business concerns are small or big, they
need finance to fulfil their business activities. In the modern world, all the activities
are concerned with the economic activities and very particular to earning profit
through any venture or activities. The entire business activities are directly related
with making profit. A business concern needs finance to meet all the requirements.
Hence finance may be called as capital, investment, fund etc., but each item is
having different meanings and unique characters. Increasing the profit is the main
aim of any kind of economic activity.

2.2.2 Financial Performance

"Financial performance is scientific evaluation of profitability and financial strength

of any business concern" according to Kennedy and Macmillan financial statement
analysis attempt to unveil the meaning and significance of the items composed in
profit and loss account and balance sheet. The assists are the management in the
formation of sound operating and financial policies. According to accounting point
of view financial statement are prepared by a business enterprise at the end of every
financial year. "Financial statements are end products of financial accounting." They
are capsulated periodical reports of financial and operating data accumulated by a

8
firm in its books of accounts- the General Ledger. One of the most fundamental
facts about businesses is that the operating performance of the firm shapes its
financial structure. It is also true that the financial situation of the firm can also
determine its operating performance. The financial statements are therefore
important diagnostic tools for the informed manager.

2.2.3 Financial Efficiency

Financial Efficiency is a measure of the organization's ability to translate its

financial resources into mission related activities. Financial Efficiency is desirable
in all organizations regardless of individual mission or structure. It measures the
intensity with which a business uses its assets to generate gross revenues and the
effectiveness of producing, purchasing, pricing, financing and marketing decisions.
At the micro level, Financial Efficiency refers to the efficiency with which resources
are correctly allocated among competing uses at a point of time. Financial
Efficiency is a measure of how well an organization has managed certain trade-offs
in the use of its financial resources. Financial Efficiency is regarded efficiency and
is a management guide to greater efficiency the extent of profitability, productivity,
liquidity and capital strength can be taken as a final proof of financial efficiency. It
is interesting to note that sometimes, even sufficient profits can mask inefficiency
and conversely, a good degree financial efficiency could be dressed with the
absence & profit.

2.2.4 Financial Performance Analysis

In short, the firm itself as well as various interested groups such as managers,
shareholders, creditors, tax authorities, and others seeks answers to the following
important questions: (1) what is the financial position of the firm at a given point of
time? (2) How is the Financial Performance of the firm over a given period of time?
These questions can be answered with the help of financial analysis of a firm.

Financial analysis involves the use of financial statements. Thus, the term“financial

9
statements”generally refers to two basic statements: The Balance Sheet shows the

financial position of the firm at a given point of time. The income statement referred
to in India as the profit and loss statement reflects the performance of the firm over
a period of time.

However, financial statements do not reveal all the information related to the
financial operations of a firm. The financial performance analysis identifies the
financial strengths and weaknesses of the firm by properly establishing relationships
between the items of the balance sheet and profit and loss account. The first task is
to select the information relevant to the decision under consideration from the total
information contained in the financial statements. The second is to arrange the
information in a way to highlight significant relationships. The final is interpretation
and drawing of inferences and conclusions. In short, "financial performance analysis
is the process of selection, relation, and evaluation."

2.2.5 Ratio Analysis

The term accounting ratios is used to describe significant relationship between

figures shown on balance sheet, in a profit and loss account, in a budgetary control
system or in any, other part of the accounting organization. Ratio simply refers to
one number expressed in terms of another number. Ratio analysis is a technique of
analysis and interpretation of financial statement. It is the process of establishing
and interpreting the various ratios for helping in making certain decision. However,
ratio analysis is not an end to itself. It is only a means of better understanding of
financial strength, weakness of a firm. Calculation of mere accounting ratios does
not serve any purpose unless several appropriate ratios are analysed and interpreted.

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Objectives of Ratio Analysis

 To study the short term solvency o the firm.

 To study the long term solvency of the firm.
 To determine the profitability of a firm.
 To measure the performance of a firm.
 To facilitate the process of financial forecasting.
 To communicate the strength and weakness of a firm.
 To enable managerial decision making.

2.2.6 Profitability ratios

(a) Net profit ratio

Net profit ratio is the ratio of net profit earned by business and its net sales. The
objective of calculating net profit ratio is to measure the overall profitability of the
concern. It determines the return to the owners. This ratio indicates how much of
sales are left after meeting all the expenses. Net profit ratio calculated by using the
following formula.

Net Profit /Net Sales *100

The ideal N/P ratio is 5% to 10%. However, in order to understand the real ability of
management to earn profit, this ratio should be used along with working capita
turnover ratio. Higher the ratio is the profitability. This means higher returns to
shareholders.

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(b) Gross profit ratio

Gross profit ratio is the ratio of gross profit to net sales i.e. sales less sales returns.
The ratio thus reflects the margin of profit that a concern is able to earn on its
trading and manufacturing activity. It is the most commonly calculated ratio. It is
employed for inter-firm and inter-firm comparison of trading results. Gross profit is
what is revealed by the trading account. It results from the difference between net
sales and cost of goods sold without taking into account expenses generally charged
to the profit and loss account. The larger the gap, the greater is the scope for
absorbing various expenses on administration, maintenance, arranging finance,
selling and distribution and yet leaving net profit for the proprietors or shareholders.

Formula: Gross Profit / Net Sales *100

(c) Operating profit ratio

Operating profit ratio explains the relationship between operating profit and net
sales. The operating profit ratio indicates that every result of operation of business.
It measures the operational efficiency Operating ratio is calculated by using
following formula:-

Operating Profit Ratio = Operating Profit/Net sales * 100

Operating profit = Net sales- Cost of goods sold- Operating expenses Or
Gross profit- Operating expenses

Operating profit can be ascertained from net profit in the following manner.

Operating profit = Net profit + Non-Operating expenses and Interest on

long term Loans and debentures - Non operating income

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(d) Operating ratio

The operating ratio is a financial term defined as a company's operating expenses as

a percentage of revenue. This financial ratio is most commonly used for industries
which require a large percentage of revenues to maintain operations, such as
railroads. In railroading, an operating ratio of 80 or lower is considered desirable.
The operating ratio can be used to determine the efficiency of a company's
management by comparing operating expenses to net sales. It is calculated by
dividing the operating expenses by the net sales. The smaller the ratio, the greater
the organization's ability to generate profit. The ratio does not factor in expansion or
debt repayment. Alternatively, it may be expressed as a ratio of sales to cost. In such
case a higher ratio indicates a better ability to generate revenue. The ideal ratio of
manufacturing concern is 75% to 85%. The operating ratio is calculated by the
following formula;

Operating Ratio = Operating cost / Net sales * 100

Operating cost = Cost of goods sold + Operating expenses

(e) Return on equity

Return on net worth is a ratio developed from the perspective of the investor and not
the company. By looking at this, the investor sees if entire net profit was passed on
to him, how much return he would be getting. It explains the efficiency of the
shareholder’s capital to generate profit

Importance

 This ratio interprets how efficiently a company uses shareholders’ money to

generate maximum profit.
 The higher the ratio, the more efficient the company is for using
shareholders’ equity

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  Investors always prefer a high return on net worth/equity Ratio of a
company for maximum profit

Positive and negative return on the net worth ratio

Positive: It interprets company is well organized at generating shareholder’s return.

It indicates how wisely a company can invest the amount and increase productivity
and profit. It shows the company can generate more assets to cover its liabilities.
Therefore, undoubtedly it is a safe investment choice.

Negative: In contrast, a decreasing return in net worth means the company is

making a poor decision and their equity management efficiency is not good at all.
So it is clear that a company with a negative return on net worth has more debt and
not a safe investment choice.

Return on net worth/equity= net income/shareholder’s equity*100

(f) Return on assets

Return on assets is a financial ratio that shows the percentage of profit of a

Company earns in relation to its overall resources. It is commonly defined as net
income divided by total assets. Net income is derived from the income statement of
a company and is the profit after tax

Return on assets is calculated by following formula

Return on asset = Profit after tax/ Total Assets *100

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(g) Return on capital employed

Return on capital employed (ROCE) is a financial ratio that measures a company's

profitability and the efficiency with which its capital is used. In other words, the
ratio measures how well a company is generating profits from its capital. The ROCE
ratio is considered an important profitability ratio and is used often by investors
when screening for suitable investment candidates.
The Formula for ROCE Is
ROCE = EBIT / Capital Employed*100 Where:

EBIT = Earnings before interest and tax

Capital employed = total assets – current liabilities

2.2.7 Liquidity ratio

The term liquidity refers to the firm’s ability to meet its current its current liabilities.
Liquidity ratios are used to measure the liquidity positions or short term financial
positions of a firm. These ratios are used to assess the short term debt paying ability
of a firm, important liquidity ratios are current ratio and quick ratio

(a) Current ratio

Current ratio is one of the oldest of all financial ratios. Current ratio is defined as the
ratio of current assets to current liabilities. It shows the relationship between total
current asset and total current liabilities. Current ratio is also called working capital

ratio or bankers’ ratio. It is calculated as follows;

Current Ratio = Current Asset/Current Liabilities

In short current ratio is a measure of the ability of a firm to pay its current liabilities
out of current assets. Generally a current ratio of 2:1 is considered satisfactory or
ideal. This means that current assets shall be at least twice the current liabilities

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(b) Liquid ratio

Liquid ratio is the ratio of liquidated assets to current liabilities. It establishes the
relationship between quick assets and current liabilities. It is the measure of the
instant debt paying ability of the business enterprise. It is also called acid test ratio.
It is called so because the ratio is calculated to eliminate all possible illiquid
elements from current assets. It is also called near money ratio.
It is computed as follows:

Liquid ratio = Liquid assets/Current liabilities

Liquid asset = Current assets - stock and prepaid expenses

A quick ratio of 1:1 is considered as satisfactory or ideal. It means that the liquid
assets are just equal to quick or current liabilities.

2.2.8 Comparative balance sheet

A comparative balance sheet shows the assets, liabilities and owner's equity of a
business enterprise at the beginning and at the end of the accounting period with
increases and decreases in the absolute data in terms of rupees and percentages. A
single balance sheet focuses on the financial status of the firm as on a particular
date, while a comparative balance sheet, focuses on the changes that have taken
place in one accounting period.

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2.3 Empirical literature

[Link] Nishi (2011) studied the financial performance of passenger and

commercial vehicle segment of the automobile industry in the terms of four
financial parameters namely liquidity, profitability, leverage and managerial
efficiency analysis for the period of decade from 2001-02 to 2010-11. The study
concludes that profitability and managerial efficiency of Tata motors as well as
Mahindra & Mahindra ltd are satisfactory but their liquidity position is not
satisfactory. The liquidity position of commercial vehicle is much better than
passenger vehicle segment.

2. Afar S.M. Tariq & Khalid S.M(2012) the study explore that ratios are
calculated from financial statements which are prepared as desired policies adopted
on depreciation and stock valuation by the management. Ratio is simple comparison
of numerator and a denominator that cannot produce complete and authentic picture
of business are manipulated and also may not highlight other factors which affect
performance of firm by promoters.

3. Dawar Varun (2012) study to analyse the effect of various fundamental

corporate policy variables like dividend, debit, capital expenditure on stock prices of
automobile companies of India. The study trends that dividend &investment policy
are relevant and capital structure irrelevant to stock prices.

4. HotwaniRakhi (2013) the author examines the profitability position and growth
of company in light of sales and profitability of Tata motors for past ten years. Data
is analysed through rations, standard deviations and coefficient of variance. The
study reveals that there not exist a strong relationship between sales & profitability
of company.

17
5. Dhole Madhavi (2013) Investing the impact of price movement of share on
selected company performance. It advice due investors consider various factors
before choosing the better portfolio. Sentimental factors do play a role in price
movement only in short term but in long run annual performance is sole factor
responsible for price movement.

6. Shende Vikram (2014) this research will be helpful for the new entrants and
existing car manufacturing companies in India to find out the customer expectations
and their market offerings. The objective of study is the identification of factors
influencing customer's performance for particular segment of cars.

7. Buvaneswari .R &Kanimozhip (2014) to study the credit worthiness of selected

firms in Indian car industry, tiruchy. Professor Edward Altman of New York
University developed method Z score analysis to predict the company failure or
bankruptcy. To measure the fiscal fitness of a company combined a set of five
financial ratios.

8. Sarwade Walmik Kachru (2015) analysed the effects of liberalisation,

government de-licensing and liberal trade policies on the growth of Indian auto
mobile industry. The study recommends that investing four-wheeler is going to be
smart potion not only in India but all around the world. 8. Becker Dieter (2015) the
report shows about the current state and future prospects of the worldwide
automobile industry. This survey reports the manufacturer, executive and customer
views about four aspects, mobility culture, technological fit, business model
readiness and market share.

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 CHAPTER – 3
INDUSTRY AND COMPANY PROFILE

19
3.1 INDUSTRIAL PROFILE

India became the fourth largest auto market in 2018 with sales increasing 8.3 per
cent year-on-year to 3.99 million units. It was the seventh largest manufacturer of
commercial vehicles in 2018. The Two Wheelers segment dominates the market in
terms of volume owing to a growing middle class and a young population.
Moreover, the growing interest of the companies in exploring the rural markets
further aided the growth of the sector. India is also a prominent auto exporter and
has strong export growth expectations for the near future. Automobile exports grew
14.50 per cent during FY19. It is expected to grow at a CAGR of 3.05 per cent
during 2016-2026. In addition, several initiatives by the Government of India and
the major automobile players in the Indian market are expected to make India a
leader in the two-wheeler and four-wheeler market in the world by 2020.

Market Size Overall domestic automobiles sales increased at 6.71 per cent CAGR
between FY13-19 with 26.27 million vehicles getting sold in FY19. Domestic
automobile production increased at 6.96 per cent CAGR between FY13-19 with
30.92 million vehicles manufactured in the country in FY19. In FY19, year-on-year
growth in domestic sales among all the categories was recorded in commercial
vehicles at 17.55 per cent followed by 10.27 per cent year-on-year growth in the
sales of three-wheelers. Premium motorbike sales in India crossed one million units
in FY18. During January-September 2018, BMW registered a growth of 11 per cent
year-on-year in its sales in India at 7,915 units. Mercedes Benz ranked first in sales
satisfaction in the luxury vehicles segment according to J D Power 2018 India sales
satisfaction index (luxury).

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3.2 COMPANY PROFILE

1945 - The Company was Incorporated and converted into Public Limited in 1955 at
Mumbai. The Company Manufacture Jeep type vehicles, petrol industrial engines,
industrial process control instruments and flow meters. Trading in steel and
manufacture of professional grade electronic components. Jeeps are manufactured
under a license and an agreement with Willys Motors Inc., Toledo, Ohio, U.S.A., for
whom the Company also acts as exclusive distributors for the whole of India for their
entire range of vehicles including utility vans, cargo/personnel carriers and pick-up
trucks.

1968 - The Instrumentation & Electronics Division came into existence as a result of
merger of the wholly-owned subsidiary of Mahindra Engineering Co. Ltd., with the
Company with effect from 1st April 1968. The activities of the merged company were
being carried on in this division. - The Company acquired the whole paid-up capital of
Mahindra Electro-Chemicals Products Ltd. Company. - With effect from 1st April, the
wholly owned subsidiary Mahindra Engineering Co. Ltd., was merged with the
Company. International Tractor Company of India Ltd., was merged with the
Company effective from 1stNovember1977.

1970 - The name was changed from Mahindra Van Wijk & Visser Ltd. to Mahindra &
Mahindra Ltd. This was merged with the Indian National Diesel Engine Co., Ltd.,
during 1977-78.

1989 - During the year improved versions of CJ 500 range of jeeps and FJ range of
LCVs were introduced. Also a sporty model of jeep was introduced which was well
received by the target audience. - During September, the Company acquired the
automotive pressing unit at Kanhe from Guest Keen Williams, Ltd. for a gross
consideration of Rs 28.75 crores. The unit has an installed capacity of 10,000 tons per
annum.

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1990 - The Automotive division faced adverse market conditions resulting in a drastic
reduction in production and sales of vehicles. The Automotive division introduced a
direct injection diesel engine, the MDI 2500 A engine on the CJ 500 vehicles. A new
fuel efficient 10-seater vehicle having a direct injection diesel engine was introduced.

1992 - It was proposed to launch a new LCV with a much larger platform, imported
driving comfort and better styling. - The Company issued 72,42,719 - 14.5% secured
Non-convertible redeemable debentures of Rs 100 each with a detachable warrant
attached to each debenture entitling the holder thereof to apply for 1 equity share of Rs
10 each at a premium of Rs 20 per share in the ratio 1 debenture: 5 equity shares held,
on the expiry of six months and 36 months from the date of allotment of debentures.

1993 - The Automotive division undertook to introduce a wide range of products such
as mini bus, MM Deluxe, Armada deluxe, Cabking pick-up, CL-Classic & a
single/double Cab pick-up etc.

1994 - During the year a new Company Mahindra USA Inc. had been established in
Texas, U.S.A. with the objective of increasing tractor sales in U.S. - 9, 73,200 shares
allotted to the erstwhile shareholders of MNAL 11,14,682 shares allotted against the
detachable warrants. 35,85,874 shares allotted to Ford Motor Company USA, at a
premium of Rs 370 per shares. 28,00,000 shares allotted to the promoter group.

1995 - A New LCV model-cabking DI 3150 - with a payload of 2.5 tonnes, a 5-speed
transmission and high-quality components was launched. Also, a sporty 4-wheel drive
vehicle Mahindra Classic with modern fitments such as Vacuum assisted brakes, disc
brakes in front, wire wheels & bull bar was launched for the domestic market.

1996 - The Company proposed to introduce the `Armada Grand' with XD3 diesel
engine, 5 speed BA 10 transmission with air-conditioning and power steering as
standard features.

22
1997 - The Zaheerabad plant and R&D division were awarded Iso 9002 and ISO 9001
certification respectively. With the technology received from Fuji Technica, Japan the
company undertook to manufacture dies for vehicle bodies in the new Die Shop.

1998 - A joint venture company is being promoted by Mahindra and Mahindra

Limited, Infrastructure Leasing and Financial Services and Tamil Nadu Industrial
Development Corporation to set up an industrial park near Chennai to attract auto
ancillary units and all categories of non-polluting industries.

1999 - M&M has set up a new company - Mahindra Auto Specialities Ltd - for bullet-
proofing passenger vehicles and providing specialised services. M&M has signed an
MoU with Plasan Sasa of Israel for design and development of armoured (bullet proof)
solutions on M&M utility vehicles for use by Indian security forces.

2000 - The Company will be launching its first CNG-powered utility vehicle in Delhi.
- The Company consequent to disciplinary action taken by the Management against
certain workmen and Union representative, the workmen of Kandivli Plant of Tractor
Division of the company initially stopped work and thereafter resorted to illegal strike
on 11th January.

2001 - The Company has set up a farm extension services division called Mahindra
Shubh Labh, which will pioneer the building of a chain of one-stop shops offering a
comprehensive range of farm-gate services. - Mahindra Intertrade, the largest non-
automotive company of the Mahindra & Mahindra group, has entered into a
distribution alliance with Lego.

2002 -Mahindra & Mahindra Ltd has informed BSE that ICICI Bank Ltd has
withdrawn the nomination of Mr Inder Chand Jain as their Nominee Director from the
Board of M& M with immediate [Link] Mr Inder Chand Jain ceases to
be a Director of Mahindra & Mahindra Ltd with immediate effect.

23
2003 -Unleashes MaXX Pik Up utility vehicle - Signed an agreement with Canara
Bank. Where in, Canara Bank will provide loan to those farmers who are willing to
buy Mahindra's tractors and other farm implements.

2004 -Mahindra & Mahindra delisting of shares from DSE -M&M launches two
variants of Bolero utility vehicle in TN -The former managing director of Rallis India,
Mr Rajeev Dubey, is joining Mahindra & Mahindra Ltd (M&M) as Executive Vice-
President (Human Resources & Corporate Services).

2005 - Mahindra & Mahindra tractors' top dealer in the US has become the largest
tractor dealer in the US, muscling past dealers of John Deer, New Holland and Kubota.
-M&M forays into Australian tractor market on February 14.

2006 -M&M unleashes Scorpio Pik-Up in South Africa -M&M unveils three-wheeler
car -M&M Hingna unit enters into new wage agreement - Mahindra & Mahindra Ltd
on Oct 11,2006 signed a agreement with ITMCo (Iran Tractor Manufacturing Co) to
sell tractors in Iran.

2007 - Mahindra & Mahindra acquires a leading German Forging Company

Schoneweiss & Co. GmbH. - Mahindra unveils new Bolero in Gujarat. -Mahindra and
Mahindra (M&M) has launched the line of sports utility vehicles (SUV) and pick-up
trucks that it plans to begin selling in the United States starting from 2009.

2008 -Mahindra & Mahindra acquires renowned Italian design house, GRD Italy.

2009 - Mahindra & Mahindra unveiled its fourth generation Scorpio at an unbeatable
price. - Mahindra & Mahindra (M&M) signed a memorandum of understanding with
the State Bank of Bikaner and Jaipur (SBBJ) for vehicle finance. - Mahindra launches
luxury sedan XYLO - M&M enters retail space with Mom & Me - Mahindra sold
1,788 XYLOs in two weeks - M&M signs pact with State Bank of Bikaner - Mahindra
gets order for 15,000 Xylo in three months

24
2010 - Mahindra & Mahindra has hiked prices of its products by up to Rs 18,000 due
to the in-excise duty announced in the Budget. - Anand Mahindra, vice-chairman and
managing director, M&M, is keen on attaining companies that boost M&MÂ’s global
aspirations. This can be done by giving a combination of facilities, technology and
dealer network.

2012 - Mahindra and Mahindra had acquired Ssangyong Motor Company, a South
Korean SUV maker, almost a year ago and are now planning to set up a assembly
plant and invest Rs 800 crore over next 3-4 years - Mahindra and Mahindra wins
arbitration award and class action suit against global vehicles. Holland and Kubota. -
M&M forays into Australian tractor market on February 14.

2014 -Mahindra introduces 'Yoga Seats' in Quanto Compact SUV -Mahindra signs
MoU with Government of Bhutan to promote usage of Electric Vehicles in the country
-Mahindra Defence Naval Systems Inaugurates new Chakan plant.

2015 -Mahindra & Mahindra Ltd - Mahindra Two Wheelers and Peugeot Motocycles
complete strategic partnership -Mahindra inaugurates its extended automotive
manufacturing facility at Zaheerabad in Telangana.

2016 -Mahi. & Mahi. inaugurates its Bio-CNG plant in Mahindra World City (MWC),
Chennai -Mahi. & Mahi. lunches its Premium Pick up 'Imperio' -M&M launches
KUV100; priced at Rs 4.42 lakh -Mahi. & Mahi - Mahindra launches its new mHawk
diesel engine variant.

2018 -Mahindra Electric launches Virtual Reality drive experience for all- electric
e2oPlus. Mahindra First Choice Wheels Raises $15 Million valuing the company at
$265 Million. Mahindra Launches All New MOJO UT 300. Mahindra and Ford Sign
MoUs to Co-Develop Midsize and Compact SUV. Electric Vehicle and Connected Car
Solutions.

25
2019 -Mahindra Presents Its Luxury SUV, Alturas G4, to His Highness Maharaja
Sawai Padmanabh Singh of Jaipur. Mahindra Launches the Stylish & Thrilling New
XUV300. Mahindra Launches FURIO Truck with Unprecedented "More Profit or
Truck back" Guarantee.

2020 -Mahindra Group Launches #SkillHaiTohFutureHai Digital Campaign. Mahindra

hands over All-New Thar #1 to auction winner Aakash Minda. Mahindra rolls out BS6
variants of Alfa, its popular 3-wheeler brand. Mahindra Racing First Team to be
certified Three-Star Excellence in sustainability by the FIA.

(Previous Logo Of Mahindra and Mahindra)

26
 CHAPTER – 4

DATA ANALYSIS AND

INTERPRETATION

27
DATA ANALYSIS AND INTERPRETATION

This chapter is considered to be the core part of this project work. It is mainly
indented to examine the profitability of the company for the last five years.
The ratio analysis is one of the most powerful tools of financial analysis. It is
a process of computing and interpreting various accounting ratios for arriving
at conclusions about financial position and performance of an enterprise. They
are the pointers or indicators of financial strength, soundness, position or
weakness of a concern. One can draw conclusions about the exact financial
position of an enterprise with the help of financial ratios.

PROFITABILITY RATIOS

A profitability ratio measures a company's ability to generate earning relative

to sales, assets and equity. It reveals the financial strength and weakness of a
firm. The operation efficiency of the firm its ability to ensure adequate return
to its shareholders depends ultimately on the profit earned by it. The
profitability of a firm can be measured by its profitability ratio. Profitability
ratios measure the ability of a firm to earn an adequate return on sales, total
assets and invested capital. There are two types of profitability ratios. First,
profitability ratios based on sales and second, profitability ratios based on
investment.

28
4.1 Net profit ratio

Table 4.1

Year Net Profit Net Sales Ratio (%)

2018 2,708.47 74,762.30 3.6227

2019 3,151.13 82,069.37 3.8395

2020 6,850.53 90,770.68 7.5470

2021 4,650.33 103,015.23 4.5142

2022 -1,363.58 93,764.51 -1.4542

(Source : Secondary Data)

INFERENCE: The above table 4.1 shows the Net Profit Ratio position of the
Mahindra and Mahindra ltd. The Net Profit Ratio was ranges from -1.4542 to 7.5470
during the study period 2018 to 2022.
Figure 4.1

Net Profit Ratio

8
7
6
5
4
3
2
1
0
2018 2019 2020 2021 2022
-1
-2

29
4.2 Gross profit ratio

Table 4.2

Year Gross Profit Net Sales Ratio (%)

2018 7,235.90 75,841.42 9.54

2019 7,816.47 83,773.05 9.33

2020 9,870.04 92,093.95 10.72

2021 11,270.77 1,04,720.68 10.76

2022 7,562.21 95,179.09 7.95

(Sources : Secondary Data)

INFERENCE: The above table 4.2 shows the Gross Profit Ratio position of the
Mahindra and Mahindra ltd. The Gross Profit Ratio was ranges from 7.95 to 10.72
during the study period 2018 to 2022.

Figure 4.2

Gross Pofit Ratio

12

10

0
2018 2019 2020 2021 2022

30
4.3 Operating profit ratio

Table 4.3

Year Operating profit Net sales Operating profit

ratio

2018 12695.55 75841.42 16.7396

2019 17882.96 83773.05 21.34691
2020 17592.51 92093.95 19.10279
2021 12811.44 104720.68 12.23392
2022 11481.27 95179.09 12.06281
(Sources : Secondary Data)

INFERENCE: The above table 4.3 shows the Operating Profit Ratio position of the
Mahindra and Mahindra ltd. The Operating Profit Ratio was ranges from 12.06281
to 21.34691 during the study period 2018 to 2022.

Figure 4.3

Operating Profit Ratio

2022

2021

2020

2019

2018

0 5 10 15 20 25

31
4.4 Operating Ratio
Table 4.4

Year Operating cost Net sales Operating ratio

2018 47567.5 79382.8 59.92167

2019 53454.1 87279.4 61.24481

2020 56820.5 91941.5 61.80071

2021 64342.4 103015 62.45925

2022 57540.6 93764.5 61.36715

(Sources : Secondary Data)

INFERENCE: The above table 4.4 shows the Operating Ratio position of the
Mahindra and Mahindra ltd. The Operating Ratio was ranges from 61.36 to 61.80
during the study period 2018 to 2022.

Figure 4.4

Operating Ratio
63

62.5

62

61.5

61

60.5

60

59.5

59

58.5
2018 2019 2020 2021 2022

32
4.5 Return on Net Worth/Equity

Table 4.5

Year Net income Shareholder’s Return on equity

equity ratio
2018 3,148.43 26492.65 11.88

2019 3,698.04 29737.99 12.43

2020 7,510.39 36775.19 20.42

2021 5,315.46 39983.41 13.29

2022 127.04 39969.31 00.31

(Sources : Secondary Data)

INFERENCE: The above table 4.5 shows the Return on Equity Ratio position of the
Mahindra and Mahindra ltd . The Return on Equity Ratio was ranges from 0.31 to
20.42 during the study period 2016 to 2020.

Figure 4.5

RETURN ON EQUITY RATIO

25

20

15

10

0
2018 2019 2020 2021 2022

33
4.6 Return on assets (ROA)

Table 4.6
Year Profit after tax Total Assets ROA

2018 3,148.43 100632.08 3.1287

2019 3,698.04 114742.15 3.2229

2020 7,510.39 137210.91 5.4736

2021 5,315.46 163391.57 3.2532

2022 127.04 167006.66 0.0761

INFERENCE: The above table 4.6 shows the Return on Asset Ratio position of the
Mahindra and Mahindra ltd. The Return on Asset Ratio was ranges from 0.076 to
3.253 during the study period 2018 to 2022

Figure 4.6

RETURN ON ASSET RATIO

6

0
2018 2019 2020 2021 2022

34
4.7 Return on capital employed

Table 4.7

Year EBIT Capital employed ROCE

2018 8161.84 63988.54 12.76

2019 8652.21 74909.68 11.55

2020 10577.19 88061.37 12.01
2021 12301.35 104648.2 11.75
2022 8650.57 112997.1 7.65

INFERENCE: The above table 4.7 shows the Return on Capital Employed Ratio
position of the Mahindra and Mahindra ltd. The Return on Capital Employed Ratio
was ranges from 7.65 to 12.76 during the study period 2018 to 2022
Figure 4.7

14
Return on capital employed
12

10

0
2018 2019 2020 2021 2022

35
Liquidity Ratios
4.8 Current Ratio
Table 4.8

Year Current asset Current liability Current ratio

2018 43,911.20 36,643.54 1.198334

2019 48,787.76 39,832.47 1.224824

2020 59,076.02 49,149.54 1.201965

2021 69,406.04 58,743.33 1.181514

2022 64,045.43 54,009.52 1.185817

INFERENCE: The above table 4.8 shows the Current Ratio position of the
Mahindra and Mahindra ltd. The Current Ratio was ranges from 1.18 to 1.19 during
the study period 2018 to 2022
Figure 4.8

1.23
1.225
1.22
1.215
1.21
1.205
1.2
1.195
1.19
1.185
1.18
1.175
2017.5 2018 2018.5 2019 2019.5 2020 2020.5 2021 2021.5 2022 2022.5

36
4.9 Liquid ratio

Table 4.9

Year Liquid asset Current liabilities Liquid ratio

2018 34794.88 36643 0.949564

2019 39900.99 39832 1.001732

2020 49740.43 49149 1.012033

2021 57205.84 58743 0.973832

2022 52933.14 54009 0.98008

INFERENCE: The above table shows the Liquid Ratio position of the Mahindra and
Mahindra ltd. The Liquid Ratio was ranges from 0.9738 to 1.0120 during the study
period 2018 to 2022

Figure 4.9

Liquid Ratio

2022

2021

2020

2019

2018

0.91 0.92 0.93 0.94 0.95 0.96 0.97 0.98 0.99 1 1.01 1.02

37
Comparative balance sheet

Table 4.10

Table showing comparative balance sheet of the financial year 2017 and 2018

Particulars 31.03.2017 31.03.2018 Absolute % change

(₨) (₨) change
(₨)

Equity and
liabilities
Minority 5892.23 5,920.20 27.97 0.47
interest
Shareholders 25856.38 26,492.65 636.27 2.46
fund
Non-current 29362.57 31,575.69 2213.12 7.54
liabilities
current 33732.8 36,643.54 2910.74 8.63
liabilities
Total equity 94843.98 1,00,632.08 5788.1 6.10
and liabilities

Assets

Non-Current 55093.87 56,720.88 1627.01 2.95

assets
current assets 39750.11 43,911.20 4161.09 10.47

Total assets 94843.98 1,00,632.08 5788.1 6.10

In the financial year 2018, the non-current and the current assets increased by 2.96%
and 10.47% respectively. Minority interest increased by 0.47%. Shareholder’s fund
increased by 2.46%.While non-current liabilities increased by 7.54%.

38
Table 4.11

Table showing comparative balance sheet of the financial year 2018 and 2019
Particulars 31.03.2018 31.03.2019 Absolute % change
(₨) (₨) change
(₨)

Equity and
liabilities
Minority 5,920.20 6356.9 436.70 7.38
interest
Shareholders 26,492.65 29,737.99 3,245.34 12.25
fund
Non-current 31,575.69 38,814.79 7,239.10 22.93
liabilities
current 36,643.54 39,832.47 3,188.93 8.70
liabilities
Total equity 1,00,632.08 1,14,742.15 14,110.07 14.02
and liabilities

Assets

Non-Current 56,720.88 65,954.39 9,233.51 16.28

assets
current assets 43,911.20 48,787.76 4,876.56 11.11

Total assets 1,00,632.08 1,14,742.15 14,110.07 14.02

In the financial year 2017, the non-current and the current assets increased by 16.28%
and 11.11% respectively. Minority interest increased by 7.38%. Shareholder’s fund
increased by 12.25%.While non-current liabilities increased by 22.93%.

39
Table 4.12

Table showing comparative balance sheet of the financial year 2019 and 2020
Particulars 31.03.2019 31.03.2020 Absolute % change
(₨) (₨) change
(₨)

Equity and
liabilities
Minority 6356.9 8,250.47 1,893.57 29.79
interest
Shareholders 29,737.99 36,775.19 7,037.20 23.66
fund
Non-current 38,814.79 43,035.71 4,220.92 10.87
liabilities
current 39,832.47 49,149.54 9,317.07 23.39
liabilities
Total equity 1,14,742.15 1,37,210.91 22,468.76 19.58
and liabilities

Assets

Non-Current 65,954.39 78,134.89 12,180.50 18.47

assets
current assets 48,787.76 59,076.02 10,288.26 21.09

Total assets 1,14,742.15 1,37,210.91 22,468.76 19.58

In the financial year 2020, the non-current and the current assets increased by 18.47%
and 21.09% respectively. Minority interest increased by 29.79%. Shareholder’s fund
increased by 23.66%.While non-current liabilities increased by 10.87%.

40
Table 4.13

Table showing comparative balance sheet of the financial year 2020 and 2021
Particulars 31.03.2020 31.03.2021 Absolute % change
(₨) (₨) change
(₨)

Equity and
liabilities
Minority 8,250.47 8,360.57 110.10 1.33
interest
Shareholders 36,775.19 39,983.41 3,208.22 8.72
fund
Non-current 43,035.71 56,304.26 13,268.55 30.83
liabilities
current 49,149.54 58,743.33 9,593.79 19.52
liabilities
Total equity 1,37,210.91 1,63,391.57 26,180.66 19.08
and liabilities

Assets

Non-Current 78,134.89 93,985.53 15,850.64 20.29

assets
current assets 59,076.02 69,406.04 10,330.02 17.49

Total assets 1,37,210.91 1,63,391.57 26,180.66 19.08

In the financial year 2021, the non-current and the current assets increased by 20.29%
and 17.49% respectively. Minority interest increased by 1.33%. Shareholder’s fund
increased by 8.72%. While non-current liabilities increased by 30.83%.

41
Table 4.14

Table showing comparative balance sheet of the financial year 2021and 2022

Particulars 31.03.2021 31.03.2022 Absolute % change

(₨) (₨) change
(₨)

Equity and
liabilities
Minority 8,360.57 7,691.74 -668.83 -8.00
interest

Shareholders 39,983.41 39,969.31 -14.10 -0.04

fund
Non-current 56,304.26 65,336.09 9,031.83 16.04
liabilities
current 58,743.33 54,009.52 -4,733.81 -8.06
liabilities
Total equity 1,63,391.57 1,67,006.66 3,615.09 2.21
and liabilities

Assets

Non-Current 93,985.53 1,02,961.23 8,975.70 9.55

assets

current assets 69,406.04 64,045.43 -5,360.61 -7.72

Total assets 1,63,391.57 1,67,006.66 3,615.09 2.21

In the financial year 2022, the non-current asset increased by 9.55% and the current
assets decreased by 7.72%. Minority interest decreased by 8.00%. Shareholder’s fund
decreased by 0.04%. While non-current liabilities increased by 16.04%.

42
 CHAPTER – 5
FINDINGS, SUGGESTIONS &
CONCLUSION

43
5.1 Findings

The important findings of the study are:

1. The net profit ratio shows an increasing trend in first 3 years then started to
declining.
2. The current ratio of the company shows a fluctuating trend in the five years.
Generally the company having a standard current ratio 2:1 therefore the
Company’s position is not good.
3. The liquidity ratio also shows a fluctuating trend. It decreased from 2020 to
2021 then increased in 2022 but it fails to satisfy the standard ratio 1:1
4. Gross profit ratio shows a fluctuating trend. It decreased from 2018 to 2019
then increased in 2020 to 2021 and then decreased in 2022
5. Operating profit ratio shows upward trend in first 2 years from 2018 to 2019
then it started to decline.
6. Operating ratio increased in first 4 years from 2018 to 2021. Then it decreased
in 2022
7. Return on equity ratio shows a positive ratio which increases from 11.88 in
8. 2018 to 20.42 in [Link] it decreased in 2021 and 2022
9. Return on asset ratio shows an upward trend in first 3 years and decreased in
2021 and 2022. Highest ratio shows in the year 2020 with 5.47
10. Return on capital employed ratio shows a fluctuating trend which decreases
from 2018 to 2019 then it started increase in 2020, and started falling in 2021
and 2022. The ratio measures how well a company is generating profits from
its capital.
11. Total assets has been increased by 6.10, 14.2, 19.58, 19.08 respectively in the
years from 2018 to 2021 and in 2022 in falls to 2.21
12. While comparing the balance sheets it is found that shareholder’s funds has
been shown changes like 2.46, 12.25, 23.66, 8.72, -0.04 in the years 2018 to
2022

44
5.2 Suggestions

1. More focus towards the efficiency of the company

2. Improving management quality with adoption of new methodologies that
reduce operating cost
3. Working capital management is to be effectively managed to increase the
liquidity position of the company
4. Revise management of capital employed through equity to generate more
Returns

45
5.3 Conclusion

The study was conducted with the main objective of analyzing the profitability
position of Mahindra and Mahindra ltd over the last five years from 2016 to 2020. It is
found that ratios are calculated from the financial statements’ which are prepared as
desired by the management and policies adopted on depreciation and stock values and
thus produce only a collection of facts expressed in monetary term and cannot produce
complete and authentic picture of the business and also may not highlight other factors
which affects performance. profitability ratios show an increasing trend in first 3 years
and it declines thereafter however it covers the standard net profit ratio of 5-10%. The
company profits are coming down in last two years. The company is becoming
inefficient in the utilization and application of resources to get maximum return. So
this is the right time to revise their policies to overcome the decrease in returns. It is
better to change the strategies on sales and in managing cost of the company.

46
BIBLIOGRAPHY

47
 BIBLIOGRAPHY

BOOKS:

[1] Agarwal, M.P., Analysis of Financial Statements, National Publishing

House, New Delhi, 1981
[2] Batty, Management accounting, McConald and Evens Ltd., 1970
[3] Pandey I M, Financial Management, Vikas publishing house
[4] A Vinod, ‘Accounting for Management’ Calicut University
[5] Dr. S. [Link], ‘management accounting’ SahithyaBhavan publications

WEBSITE:

1. [Link]
2. [Link]
3. [Link]

JOURNALS:

1-A study on the productivity of Mahindra and Mahindra financial service (vol7)
2-‘Mahindra and Mahindra archives’ by CSR journals

48