SUBMITTED TO -: SUBMITTED BY-:

Prof. ARUP MUKHERJEE. AMRIT MOHANTY (28 )

AMIT RAJ (29)

RAVI S. SUNKARA (30)

Bajaj Auto Limited

Introduction & History

Company History

Bajaj Auto Limited is India's largest manufacturer of scooters and motorcycles. The company generally has lagged behind its Japanese rivals in technology, but has invested heavily to catch up. Its strong suit is high-volume production; it is the lowest-cost scooter maker in the world. Although publicly owned, the company has been controlled by the Bajaj family since its founding.

Origins

The Bajaj Group was formed in the first days of India's independence from Britain. Its founder, Jamnalal Bajaj, had been a follower of Mahatma Gandhi, who reportedly referred to him as a fifth son. 'Whenever I spoke of wealthy men becoming the trustees of their wealth for the common good I always had this merchant prince principally in mind,' said the Mahatma after Jamnalal's death.

Jamnalal Bajaj was succeeded by his eldest son, 27-year-old Kamalnayan, in 1942. Kamalnayan, however, was preoccupied with India's struggle for independence. After this was achieved, in 1947, Kamalnayan consolidated and diversified the group, branching into cement, ayurvedic medicines, electrical equipment, and appliances, as well as scooters.

The precursor to Bajaj Auto had been formed on November 29, 1945 as M/s Bachraj Trading Ltd. It began selling imported two- and three-wheeled vehicles in 1948 and obtained a manufacturing license from the government 11 years later. The next year, 1960, Bajaj Auto became a public limited company.

Rahul Bajaj reportedly adored the famous Vespa scooters made by Piaggio of Italy. In 1960, at the age of 22, he became the Indian licensee for the make; Bajaj Auto began producing its first two-wheelers the next year.

Rahul Bajaj became the group's chief executive officer in 1968 after first picking up an MBA at Harvard. He lived next to the factory in Pune, an industrial city three hours' drive from Bombay. The company had an annual turnover of Rs 72 million at the time. By 1970, the company had produced 100,000 vehicles. The oil crisis soon drove cars off the roads in favor of two-wheelers, much cheaper to buy and many times more fuel-efficient.

A number of new models were introduced in the 1970s, including the three-wheeler goods carrier and Bajaj Chetak early in the decade and the Bajaj Super and three-wheeled, rear engine Autorickshaw in 1976 and 1977. Bajaj Auto produced 100,000 vehicles in the 1976-77 fiscal year alone.

The technical collaboration agreement with Piaggio of Italy expired in 1977. Afterward, Piaggio, maker of the Vespa brand of scooters, filed patent infringement suits to block Bajaj scooter sales in the United States, United Kingdom, West Germany, and Hong Kong. Bajaj's scooter exports plummeted from Rs 133.2 million in 1980-81 to Rs 52 million ($5.4 million) in 1981-82, although total revenues rose five percent to Rs 1.16 billion. Pretax profits were cut in half, to Rs 63 million.

Principal Subsidiaries: Bajaj Auto Finance Ltd.; Bajaj Auto Holdings Ltd.; Bajaj Electricals Ltd.; Bajaj Hindustan Ltd.; Maharashtra Scooters Ltd.; Mukand Ltd.

Principal Competitors: Honda Motor Co., Ltd.; Suzuki Motor Corporation; Piaggio SpA.

Statistics:

Public Company Incorporated: 1945 as M/s Bachraj Trading Ltd. Employees: 17,200 Sales: Rs 42.16 billion ($903.36 million)(2000) Stock Exchanges: Pune Mumbai Delhi London Berlin Frankfurt Munich Ticker Symbols: BAJAJAUTO 490 BJATq.L 893361.BE 893361.F 893361.MU NAIC: 336991 Motorcycle, Bicycle, and Parts Manufacturing.

Key Dates:

1945: Bajaj Auto is founded. 1960: Rahul Bajaj becomes the Indian licensee for Vespa scooters. 1977: Technical collaboration with Piaggio ends. 1984: Work begins on a second plant. 1998: Bajaj plans to build its third plant to meet demand. 2000: Thousands of workers are laid off to cut costs.

DIVIDEND POLICY OF BAJAJ AUTO LTD. FOR PAST 5 YEARS-

Dividend Summary

For the year ending March 2014, Bajaj Auto has declared an equity dividend of 500.00% amounting to Rs 50 per share. At the current share price of Rs 2025.50 this results in a dividend yield of 2.47%.

The company has a good dividend track report and has consistently declared dividends for the last 5 years.

Dividend Declared

AnnouncementDate

EffectiveDate

DividendType

Dividend(%)

Remarks

15-05-14 03-07-14 Final 500.00 Rs.50.0000 per share(500%)Dividend

16-05-13 04-07-13 Final 450.00 Rs.45.0000 per share(450%)Dividend

17-05-12 05-07-12 Final 450.00 -

18-05-11 29-06-11 Final 400.00 -

12-05-10 08-07-10 Final 400.00 -

21-05-09 02-07-09 Final 220.00 -

26-05-08 27-06-08 Final 200.00 AGM

BALANCE SHEET OF BAJAJ AUTO LTD. FOR PAST 5 YRS-

Balance sheet(Rs crore)

Mar ' 14 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10

Sources of funds

Owner's fund

Equity share capital 289.37 289.37 289.37 289.37 144.68

Share application money - - - - -

Preference share capital - - - - -

Reserves & surplus 9,318.65 7,612.58 5,751.70 4,620.85 2,783.66

Loan funds

Secured loans - - - 23.53 12.98

Unsecured loans 57.74 71.27 97.48 301.62 1,325.60

Total 9,665.76 7,973.22 6,138.55 5,235.37 4,266.92

Uses of funds

Fixed assets

Gross block 4,077.04 3,828.85 3,425.94 3,395.16 3,379.25

Less : revaluation reserve - - - - -

Less : accumulated depreciation 2,071.00 2,024.42 1,914.33 1,912.45 1,899.66

Net block 2,006.04 1,804.43 1,511.61 1,482.71 1,479.59

Capital work-in-progress 144.06 293.55 343.15 149.34 120.84

Investments 8,549.63 6,430.48 4,882.81 4,795.20 4,021.52

Net current assets

Current assets, loans & advances 4,047.87 3,182.58 4,501.40 5,358.19 3,111.75

Less : current liabilities & provisions 5,081.84 2,410.69 5,100.42 6,550.07 4,466.78

Total net current assets -1,033.97 771.89 -599.02 -1,191.88 -1,355.03

Miscellaneous expenses not written - - - - -

Total 9,665.76 9,300.35 6,138.55 5,235.37 4,266.92

Mar ' 14 Mar ' 13 Mar ' 12 Mar ' 11 Mar ' 10

Notes:

Book value of unquoted investments 7,256.26 4,057.88 1,786.39 1,658.50 2,573.36

Market value of quoted investments 1,277.50 2,351.82 2,999.50 3,110.73 1,484.81

Contingent liabilities 1,170.58 1,252.99 1,445.67 959.66 818.25

Number of equity sharesoutstanding (Lacs) 2893.67 2893.67 2893.67 2893.67 1446.84

Bajaj Auto Previous Years »

Standalone Profit & Loss account

------------------- in Rs. Cr. -------------------

  Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

  12 mths 12 mths 12 mths 12 mths 12 mths

Income

Sales Turnover 20,149.51 19,997.25 20,475.74 17,386.51 12,420.95

Excise Duty 0.00 0.00 959.09 934.71 607.70

Net Sales 20,149.51 19,997.25 19,516.65 16,451.80 11,813.25

Other Income 706.41 795.49 413.66 1,176.00 22.50

Stock Adjustments 18.90 -24.00 94.15 82.79 47.60

Total Income 20,874.82 20,768.74 20,024.46 17,710.59 11,883.35

Expenditure

Raw Materials 14,289.20 14,761.83 14,580.24 11,965.30 8,187.11

Power & Fuel Cost 106.16 121.33 101.85 86.61 70.35

Employee Cost 726.58 639.48 541.04 494.33 411.76

Other Manufacturing Expenses 0.00 0.00 73.76 61.77 57.54

Selling and Admin Expenses 0.00 0.00 364.06 517.27 407.61

Miscellaneous Expenses 940.73 815.36 263.37 168.53 221.94

Preoperative Exp Capitalised 0.00 0.00 -49.43 -16.66 -15.67

Total Expenses 16,062.67 16,338.00 15,874.89 13,277.15 9,340.64

  Mar '14 Mar '13 Mar '12 Mar '11 Mar '10

  12 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit 4,105.74 3,635.25 3,735.91 3,257.44 2,520.21

PBDIT 4,812.15 4,430.74 4,149.57 4,433.44 2,542.71

Interest 0.49 0.54 22.24 1.69 5.98

PBDT 4,811.66 4,430.20 4,127.33 4,431.75 2,536.73

Depreciation 179.61 163.97 145.62 122.84 136.45

Other Written Off 0.00 0.00 2.14 2.14 0.00

Profit Before Tax 4,632.05 4,266.23 3,979.57 4,306.77 2,400.28

Extra-ordinary items 0.00 0.00 46.60 46.77 26.87

PBT (Post Extra-ord Items) 4,632.05 4,266.23 4,026.17 4,353.54 2,427.15

Tax 1,388.73 1,222.66 1,022.12 1,011.02 710.12

Reported Net Profit 3,243.32 3,043.57 3,004.05 3,339.73 1,702.73

Total Value Addition 1,773.47 1,576.17 1,294.65 1,311.85 1,153.53

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 1,446.84 1,302.15 1,302.15 1,157.47 578.73

Corporate Dividend Tax 245.89 221.30 211.24 187.77 96.12

Per share data (annualised)

Shares in issue (lakhs) 2,893.67 2,893.67 2,893.67 2,893.67 1,446.84

Earning Per Share (Rs) 112.08 105.18 103.81 115.42 117.69

Equity Dividend (%) 500.00 450.00 450.00 400.00 400.00

Book Value (Rs) 332.04 273.08 208.77 169.69 202.40

Analysis of Balance sheet and Profit and Loss Statement-

1. Comparing with 2013 data shows that there is a steady increase in the Sales Turnover which shows that there is an increase in Profit as well.

2. Decline in Other’s Income shows that Company’s other sources of income are not yielding High Rate of Return.

3. Decrease in Raw Materials and maintaining the high profits as compared to previous year shows increased efficiency of the company.

4. Employee Cost has increased compared to last year shows that the company is expanding and there is a need for recruiting new employees.

5. Sources of paying Dividends-

After analyzing the Balance Sheet and P/L Statement, we can interpret that there is an increase in Operating profit from 3,635.25 in 2013 to 4,105.74 in 2014. Also, there is an increase in Reported Net Profit from 3,043.57 in 2013 to 3,243.32 in 2014. This shows that the company is financially sound and got enough funds to pay dividends to its shareholders.

FINANCIAL STATEMENT OF BAJAJ AUTO LIMITED

Quarter Ended 31-Dec-201230-Sep- 30-Jun- 31-Mar- 31-Dec-

2012 2012 2012 2011Net Sales/Income from Operations 530720.00 481707.00 471364.00 451555.00 483995.00

Total Expenditure 444204.00 409823.00 402920.00 377431.00 403390.00

Profit (+)/Loss (-) before Interest,

86516.00 71884.00 68444.00 74124.00 80605.00Dep. & Taxes

Net Profit (+)/Loss (-) after Tax 81874.00 74067.00 71839.00 77200.00 79519.00

Diluted EPS 28.30 25.60 24.80 26.70 27.50

Net Sales/Income from530720.00 481707.00 471364.00 451555.00 483995.00

Operations

Other Income - - - - -

Total Income 541271.00 497240.00 486566.00 465144.00 -

Changes in inventories of finishedgoods, work-in-progress and 13288.00 -9024.00 11555.00 -17077.00 338.00stock-in-trade

Cost of materials consumed 358286.00 344623.00 320076.00 331198.00 335624.00

Purchases of stock-in-trade 20533.00 21264.00 19173.00 17144.00 20399.00

Employee benefits expense 15923.00 15322.00 16040.00 11956.00 13204.00

Depreciation and amortisation4108.00 4104.00 3524.00 4342.00 3214.00

expense2

Total Expenditure (Excluding

412138.00 376289.00 370368.00 347563.00 372779.00Other Expenditure)

Other expenses 32066.00 33534.00 32552.00 29868.00 30611.00

Total expenses 444204.00 409823.00 402920.00 377431.00 403390.00

Interest - - - - -

Exceptional Items - - - - -

Profit (+)/Loss (-) before- - - - -

Depreciation and Taxes

Depreciation3 - - - - -

Profit (+)/Loss (-) from117376.00 104067.00 101839.00 103512.00 106119.00Ordinary Activities before

tax1

Tax Expenses 35502.00 30000.00 30000.00 26312.00 26600.00

Other Provisions - - - - -

Misc Expd. w/o - - - - -

Net Profit(+)/Loss (-) from81874.00 74067.00 71839.00 77200.00 79519.00

Ordinary Activities after Tax

Extraordinary Items - - - - -

Net Profit (+)/Loss (-) for the

81874.00 74067.00 71839.00 77200.00 79519.00Period

Face Value of Share (in ) 10.00 10.00 10.00 10.00 10.00

Paid-up Equity Share Capital 28937.00 28937.00 28937.00 28937.00 28937.00

Reserves Excluding Revaluation- - - - -

Reserves

Dividend (%) - - - - -

Basic EPS before Extraordinary28.30 25.60 24.80 26.70 27.50

items

Diluted EPS before Extraordinary

28.30 25.60 24.80 26.70 27.50items

Basic EPS after Extraordinary28.30 25.60 24.80 26.70 27.50

items

Diluted EPS after Extraordinary28.30 25.60 24.80 26.70 27.50

items

Non-promoter Shareholding (No.

0 0 0 0 0of Shares)

Non-promoter Shareholding (%) 0.00 0.00 0.00 0.00 0.00

Public Shareholding (No. of144633688 144633688 144633688 144464600 144437440

Shares)

Public Shareholding (%) 49.98 49.98 49.98 49.92 49.91

Note :1 Figures of "Profit(+) / Loss (-) from Ordinary Activities before tax" pertaining to quarters preceding September 30, 2007 indicates "Profit(+) / Loss (-) before Tax"2 Depreciation for periods after July 1, 2007.3 Depreciation for periods before July 1, 2007

BAJAJ AUTO LIMITED

02-Jul-09DIVIDEND RS.22/- PER SHARE

Date OP HP LP LTP CP TTQ Turnover07-Jul-09 965 1010 906.6 990 989.6 147391 1459.1806-Jul-09 965 999 934 976.4 961.4 38444 373.7103-Jul-09 969.9 1005 969.9 983.65 984.85 36208 358.2702-Jul-09 1008.4 1008.4 960.1 975 978.2 78383 768.34

01-Jul-09 990.6 1021.9 950.61007.3

5 1009.2 61211 617.46

30-Jun-09 1030.11056.6

5 978.9 981.3 1003.1 210551 2114.5629-Jun-09 995 1056 995 1044 1044.4 97045 1013.45

08-Jul-10:

DIVIDEND RS.40/- PER SHARE

Date OP HP LP LTP CP TTQ Turnover13-Jul-10 2410 2420 2396 2396 2401 103808 2494.85

12-Jul-10 2435 2438 23962405.3

5 2408.9 147698 3555.3309-Jul-10 2418.75 2429.9 2400 2416 2421 110154 2657.508-Jul-10 2414.45 2430.9 2395 2400 2402.4 200644 4823.407-Jul-10 2435 2454.9 2401 2408.6 2409.7 124346 3008.8206-Jul-10 2429.2 2469.9 2417 2436 2437.9 194285 4726.0905-Jul-10 2411.25 2497.5 2411 2440.2 2445 94617 2317.89

08-Sep-10 :BONUS 1:1

Date OP HP LP LTP CP TTQ Turnover

14-Sep-10 14751512.3

5 1466 1474 1472.4 558162 8283.0213-Sep-10 1468 1479 1457 1469 1469.1 388852 5708.84

09-Sep-10 1487.31498.8

5 14501463.9

5 1459.4 946019 13838.56

08-Sep-10 1501.31512.7

5 1457 1479.3 1480.6 364405 5376.207-Sep-10 3040 3070 2988 2995 2997.4 434031 13083.95

06-Sep-10 2895 3029.9 28843017.7

5 3004 1031242 30800.4503-Sep-10 2799.25 2889.9 2790 2870 2871 397449 11278.31

29-Jun-11: DIVIDEND RS.40/- PER SHARE

Date OP HP LP LTP CP TTQ Turnover

04-Jul-11 1452.8 1452.8 1420 1424 1424.5 176103 2517.3601-Jul-11 1432.1 1438.8 1405 1420 1423.2 215369 3051.95

30-Jun-11 1414.81420.7

5 13961408.4

5 1407.1 621078 8734.2129-Jun-11 1394 1419 1385 1403.5 1401.9 545318 7662.67

28-Jun-11 1389.71425.2

5 1380 1425 1420.1 269656 3798.327-Jun-11 1391 1444 1375 1380 1383.3 656355 9276.7724-Jun-11 1340 1395 1340 1381 1387.8 568712 7795.21

05-Jul-12DIVIDEND RS.45/- PER

SHAREDate OP HP LP LTP CP TTQ Turnover

10-Jul-12 1510 1535.55 1505 1527 1524.4 296711 4513.9809-Jul-12 1530 1534.5 1491 1506 1505.7 370594 5594.4306-Jul-12 1553 1562.1 1531 1539 1539.2 469624 7228.3405-Jul-12 1552 1563 1545 1556 1556 529214 8224.2804-Jul-12 1570 1590.9 1558 1582 1583.2 735299 11619.2403-Jul-12 1552.3 1572 1550 1563.05 1562 342167 5352.8602-Jul-12 1575 1580 1548 1557.15 1558.1 436558 6793.43

OP - Open PriceHP - High PriceLP - Low PriceLTP - Last Traded PriceCP - Close PriceTTQ - Total Traded QuantityTURNOVER (IN LAKHS)

CORRELATION BETWEEN MARKET PRICE OF SHARES AND DIVIDENDS PAID FOR LAST 5 YEARS.

INTERPRETATION OF DIVIDEND POLICY

Div. Rs.22 per share

From the given data we can see before the announcement of dividend the market price was fluctuating in anticipation of dividend. After the declaration of dividend the market price stabilised.

Div .Rs.40 per share

From the given data we can see before the announcement of dividend the market price was fluctuating in anticipation of dividend. After the declaration of dividend the market price per share increase at a steady rate. We can see that the dividend has a positive impact on

the market price. bonus 1:1

After the declaration of bonus share we see that there is a moderate fall in Market price.

Div .Rs.40 per share

After the declaration of dividend the market price per share increase at a steady rate. We can see that the dividend has a positive impact on the market price .

Div .Rs.45 per share

After the declaration of bonus share we see that there is a moderate fall in Market price of the share.

Div .Rs.45 per share

After the declaration of Dividends, the market price has dipped and then increased gradually.

Div .Rs.50 per share

After the declaration of dividends we see that there is a moderate fall in Market price of the share.

PROJECTS IN HAND-

The Bajaj auto shares rose over one per cent on the hopes that the company will re-introduce its earlier scooter brand Bajaj Chetak in the market. Bajaj auto shares closed at Rs 2030.25 per share, up by 7.35 points or 0.36 per cent on Bombay Stock Exchange (BSE).

Bajaj Auto shares rose nearly one per cent on hopes that the Supreme Court will give a positive verdict on thelaunch of quadricycles in the country.

The company has invested Rs 5.5 billion and created the capacity to produce 5,000 quadricycles a month at its Aurangabad plant in Maharashtra.As this project promises to yield good profitability that will go in favour of company and shareholders. Further company should maintain stable or increase in dividend, so that shareholders keep investing and put faith in upcoming future projects like this.

SUGGESTIONS-

Reasons why company should raise the dividend

After the declaration of dividend the market price per share increases at a steady rate. We can see that the dividend has a positive impact on the market price.

Erratic and frequent changes in dividends as has been observed for last 5 years should be avoided as this will impact the brand image of the company.

Dividend policy should be communicated clearly to investors who may then take their decisions in terms of their own preferences and needs.

Dividend policy should be analysed in terms of effect on the value of the company Dividend decisions should not be treated as a short term residual decision. If the company fails to pay dividend constantly in any year that shows the

weakness of the company in maintaining stability

CONCLUSION

1. The company as always has been the favourite pick for investors among the auto sector stocks. Company has been on aggressive mode to tame the competition created by its competitors. It has been launching various new entrants in the markets recently. Considering an expected improvement in two-wheeler industry in fourth quarter of the current fiscal on increased liquidity, Bajaj Auto is certainly a very good option one can go for.

2. The company hopes to reach a sales target of one million in the year 2010-11 with the launch of its new Pulsar 135 LS. It is the world’s first four valve DTS i-engine bike and the only light sports bike in the country.

3. The company is planning to set up an assembly plant in a free trade zone in Manaus in Brazil next financial year.

4. To address the tight competition in the two wheeler market, the company is introducing new models time-to-time.

5. The company had introduced DTSi engine for better fuel efficiency and lower emissions.