Users of Accounting

Information for Automobile

Sector

MADE BY – ARJIT BHARDWAJ (187211)

ASHKA ARORA (187212)
ASHUTOSH SUREKA (187213)
AVISH BINDAL (187214)
AYUSHI CHHABRA (187215)
 What is Accounting?
2

Accounting is a systematic process of identifying,

measuring, recording, classifying, summarizing,
analyzing and interpreting, and communicating the
financial information.

8/13/2018 Users of Accounting Info.- Automobile Sector

 Why Accounting matters?
3

 Accounting is important because it is the language of business, and

it is at the root of making informed business decisions.

 Without accounting, managers would not know which products

were successful, which business decisions were the right ones, and
whether the company was earning money.

 It would not know how much to pay in taxes, whether to lease or

buy an asset, or whether to merge with another company.

 In short, accounting doesn't just count the beans, it measures a

company's success at meeting its goals and it helps investors
understand how efficiently their economic resources are being used.
This is why companies must be proficient in accounting in order to
make good decisions.
8/13/2018 Users of Accounting Info.- Automobile Sector
 TATA Motors Mahindra

Maruti Suzuki
8/13/2018 4 Users of Accounting Info.- Automobile Sector
 About the Automobile sector
5

 The Indian auto industry is the 4th largest in the world

and 7th largest manufacturer of commercial vehicles in
2017.

 Overall domestic sales increased at 7.01% CAGR between

FY 2013-18.

 The range of GST in automobile sector varies from 18-

28%.

 The major asset in this sector is long-term investment

whereas the major liability is reserves and surplus.

8/13/2018 Users of Accounting Info.- Automobile Sector

 Different types of Users of Accounting
Information
6

Internal users

 Management – Organization’s management requires accounting

information for analyzing the performance and actual position of the
business. Accounting information helps the management to arrive at an
evaluated decision. It helps with cost determination, investment
decisions, helps to identify warning signals in case of a downfall etc.

 Owners/Partners – Owners are more concerned about the returns

they get out of their investment in the organization and this purpose is
fulfilled through the accounting information. Not only do they want
their capital safe they are also interested in knowing the profit earned
or loss incurred by the business time to time.

8/13/2018 Users of Accounting Info.- Automobile Sector

 Different types of Users of Accounting
Information
7

 Employees – Employees are interested to know the accounting details

of their organization so that they are aware of overall profitability of the
company which has a direct impact on their remuneration and job
security.

8/13/2018 Users of Accounting Info.- Automobile Sector

 Different types of Users of Accounting
Information
8

External users

 Investors – Similar to owners, external investors are concerned

about their ROI (Return on Investment) from the organization.
Since investors do not have a direct control over the business
operations they use accounting information to find out how their
money is being spent by the managers. It helps them in decision-
making such as whether to increase, decrease or hold their
investments.

 Banks – They are a crucial part of any business environment

since they advance both short & long-term loans to a
business. Accounting information helps them in determining the
creditworthiness of the organization. Based on the financial
health of an organization, the future terms and conditions of
credit are assessed by the Banks.

8/13/2018 Users of Accounting Info.- Automobile Sector

 Different types of Users of Accounting
Information
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 Regulatory and Tax Authorities – Regulatory Authorities including

the govt. Agencies ensure that the accounting information is prepared
based on the accounting principles, standards and rules & regulations
governing the organization. The primary objective is to protect the interest
of the stakeholders of the organization. Correct tax evaluation is also done
by the authorities after analyzing the financial statements.

 Customers – They are a complex group which includes producers at

every level of processing, wholesalers, retailers, and end users. Good
financial health shows that customers at each level are comfortable with
continuous inflow of stock from the business. Customers use the
accounting information for assessing the financial position of its suppliers
which is essential for maintaining a stable source of supply in future.

8/13/2018 Users of Accounting Info.- Automobile Sector

 Different types of Users of Accounting
Information
10

 Suppliers – Other businesses which supply goods to an organization on

credit would also want to assess the repaying capacity of that organization
before providing any form of credit. As the gestation period is long in auto
mobile industry, the credit period is usually high and the funds of the
suppliers are blocked for a longer duration.

 Public – General public would want to know the financial health of a

business to get a fair idea of the firm’s niche & overall economy of the
nation. It can help to analyze employment trends, the general financial
stability of a country etc.

8/13/2018 Users of Accounting Info.- Automobile Sector

 Investments in Auto mobile sector
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 In order to keep up with the growing demand,

several auto makers have started investing heavily in
various segments of the industry during the last few
months.

 The industry has attracted Foreign Direct

Investment (FDI) worth US$ 18.413 billion during
the period April 2000 to December 2017, according
to data released by Department of Industrial Policy
and Promotion (DIPP).

8/13/2018 Users of Accounting Info.- Automobile Sector

 Road Ahead
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 The automobile industry is supported by various

factors such as availability of skilled labour at low
cost, robust R&D centres and low cost steel
production. The industry also provides great
opportunities for investment and direct and indirect
employment to skilled and unskilled labour.

 Indian automotive industry (including component

manufacturing) is expected to reach Rs 16.16-18.18
trillion (US$ 251.4-282.8 billion) by 2026.

8/13/2018 Users of Accounting Info.- Automobile Sector

 ANALYSIS - Company Wise
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Ratios Maruti Suzuki Tata Motors Mahindra

Operating Profit (%) 15.12 5.62 12.78

Net profit (%) 9.68 -1.75 8.94
Return on Capital Employed (%) 18.49 -5.13 14.37
Current Ratio (times) 0.49 0.71 1.11
Debt to Equity (times) 0.01 0.8 0.09
Earnings per share (Rs) 255.62 -0.2 31.55

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THANK YOU

8/13/2018 Users of Accounting Info.- Automobile Sector