Maruti Udyog's Accounting Policies (Page 2)

Abstract

Maruti Udyog Limited, India''s largest car manufacturer is a joint venture between Suzuki Motors of Japan and the Indian government. The financial statements of the company are prepared in accordance with the Indian generally accepted accounting policies. The case discusses Maruti Udyog''s accounting policies with special reference to revenue recognition, depreciation, inventory, investments, foreign currency transactions and deferred taxation.

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Background Note contd...

In 1985, another utility vehicle Gypsy, designed for tough road conditions, was launched. In the late 1980s, Suzuki increased its equity stake in Maruti from 26% to 40% and further to 50% in 1992. This converted Maruti into a non-government company and gave Suzuki a much freer hand in managing the affairs of the company.

However, in mid-1996, the government approved the plan and Suzuki agreed to transfer its technology. Meanwhile, in 1994, Maruti had become the first Indian company to reach a cumulative production of one million vehicles. In 1995, Maruti received ISO 9002 certification. In 1997, Maruti crossed the two million mark in cumulative vehicle production. In 1997-98, Maruti's overall market share was 83.1%.

In 1997, Suzuki and the government again faced a series of disputes over management control and the appointment of Bhargava's successor. It was Bhargava who had played a significant role in getting Maruti up and running. Bhargava had also managed the relations between Suzuki and the government well. When the government announced R.S.S.L.N. Bhaskarudu would succeed Bhargava, Suzuki claimed that the appointment was illegal since a majority (five out of nine) of the board members had objected. Suzuki even alleged that Bhaskarudu was incompetent and unsuitable for the post of MD. Later, the two partners decided to settle their differences amicably. Bhaskarudu indicated he would step down two years ahead of schedule, and Jagdish Khattar would replace him in January 2000.

        Case Code   FINA008
   Case Length    10 Pages
              Period    2003
 Organization     Maruti Udyog Limited
        Pub Date     2004
Teaching Note    Not Available
     Countries    India
      Industry    Automobile

Issues

Maruti Udyog's Accounting Policies

Unilever in India; Hindustan Lever Limited (HLL); Working capital; Banga; Fast moving consumer goods; Market value added; Economic value added; Financials; Balance sheet; Profit and loss; Dell; Finance case; Operational efficiency; Working capital needs

Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.