Economic Slowdown catalysed by few Individuals
Economic Slowdown catalysed by few Individuals
To understand economic slowdown and massive talk about auto slowdown I tried to look into balance sheet and income statement of Maruti ( which has 50% market share in car segment ) .
Some facts
| Profit & Loss account of Maruti Suzuki India | ——————- in Rs. Cr. ——————- |
| Mar ’19 | Mar ’18 | Mar ’17 | Mar ’16 | Mar ’15 |
| Sales Turnover | 86,020.30 | 81,994.40 | 77,266.20 | 65,054.60 | 55,133.60 |
| Reported Net Profit | 7,500.60 | 7,721.80 | 7,350.20 | 5,364.30 | 3,711.20 |
| Earning Per Share (Rs) | 248.30 | 255.62 | 243.32 | 177.58 | 122.85 |
| Equity Dividend (%) | 1,600.00 | 1,600.00 | 1,500.00 | 700.00 | 500.00 |
| Book Value (Rs) | 1,527.46 | 1,382.33 | 1,206.01 | 989.28 | 784.70 |
| Balance Sheet of Maruti Suzuki India | ——————- in Rs. Cr. ——————- |
| Mar ’19 | Mar ’18 | Mar ’17 | Mar ’16 | Mar ’15 |
| Reserves | 45,990.50 | 41,606.30 | 36,280.10 | 29,733.20 | 23,553.20 |
| Networth | 46,141.50 | 41,757.30 | 36,431.10 | 29,884.20 | 23,704.20 |
| Current Liabilities | 15,976.80 | 16,915.50 | 13,865.00 | 11,564.70 | 8,013.60 |
| Book Value (Rs) | 1,527.46 | 1,382.33 | 1,206.01 | 989.28 | 784.70 |
I do not have last 3-4 months data but assuming that sales are down as per various report should this company can be called a loss making company which has fired thousands of employees .
Sitting on a net profit of 7500 cr which rose from 3711 cr in just 4 years . Reserves doubled in same 4 years . Its very simple the promoter wants book value not to go down and so be the very very high dividend payout rate ( 1600% on face value of a share ) so has reduced the current liability through salary cut/losses by firing employees .
Economic showdown is a result of lesser spending due to lesser earning . Those thousands employee will add more to slowdown and not solve the economic slowdown problems . If the Management had been prudent they would have withered the present situation at least for a year as has enough reserves ( 3 times of their current liability ) , can think of skipping/reducing extremely high dividend ( reward to shareholder but most going to promoter ) .
This is the analysis of just one company . If 100 such companies behave the same manner then the economic slowdown which could have been avoided will definitely balloon to unmanageable level as personal income will get reduced drastically ( layoffs ) which will have an impact on spending and consumption ,
Just think and analyse how economic slowdown are catalysed even by a profit making big company . Its not a God creation but a result of greed of few individuals .