Bav Report

7/30/2019 Bav Report

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Indian Institute of Management Rohtak

Inter Company AnalysisExxonMobil, Dabur, & Bajaj Automobiles

Submitted By

Laxmikant Borase PGP02.075

Mithilesh Pathak PGP02.092

Avinash Agarwal PGP02.074Dishari Halder PGP02.

Abhishke Ra ut PGP02.64


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Applying Concepts of Business Analysis and Valuation

Indian Institute of Management Rohtak Page 2

Table of ContentsIntroduction ...................................................................................................................................................................................... 3

Methodology .................................................................................................................................................................................... 3

Company overview ........................................................................................................................................................................... 3

ExxonMobil .................................................................................................................................................................................. 3Bajaj Automobiles ........................................................................................................................................................................ 3

Dabur ........................................................................................................................................................................................... 4

Revenue & Cost Composition ........................................................................................................................................................... 5

ExxonMobil .................................................................................................................................................................................. 5

Bajaj ............................................................................................................................................................................................. 5

Dabur ........................................................................................................................................................................................... 6

Relationship ...................................................................................................................................................................................... 6

ExxonMobil .................................................................................................................................................................................. 6

Relationship among stakeholders ........................................................................................................................................... 6

Company and Society/Environment ....................................................................................................................................... 7

Dabur ........................................................................................................................................................................................... 7

Shareholding Pattern ........................................................................................................................................................................ 7

ExxonMobil .................................................................................................................................................................................. 7

Bajaj Automobiles ........................................................................................................................................................................ 8

Dabur ........................................................................................................................................................................................... 8

Capital Structure ............................................................................................................................................................................... 9

Dabur ........................................................................................................................................................................................... 9

Bajaj ............................................................................................................................................................................................. 9

Dabur ........................................................................................................................................................................................... 9

Cost of Capital ................................................................................................................................................................................. 10

Bajaj ........................................................................................................................................................................................... 10

ExxonMobil Corporation ............................................................................................................................................................ 10

Dabur ......................................................................................................................................................................................... 10

Dividend policy ............................................................................................................................................................................... 10

Dabur ......................................................................................................................................................................................... 10

Bajaj ........................................................................................................................................................................................... 11Risk and Return ............................................................................................................................................................................... 11

Bajaj ........................................................................................................................................................................................... 11

Dabur India Ltd. ......................................................................................................................................................................... 12

Exxon Mobil ............................................................................................................................................................................... 12


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IntroductionThe objective of the report is to employ the knowledge and tools studied in the course Business

Analysis and Valuation and analyze & valuate companies from different industries and do a comparative

analysis and find out the similarities and differences in these industries. The report also tries to find out

relationships between management and shareholder, firm and financial market, firm and society, and

shareholders and debt holders.

MethodologyFor financial analysis, business analysis and valuation a lot of data is required. These data include income

statements, balance sheet, interest rates of the country, return on govt. bonds among many other

things. These data was collected for all the 3 companies through various sources. These sources include

companys annual report, companys financial supplements, stock exchanges, RBI website, and

Capitaline database among many other sources. These sources of data were chosen because of their

reliability and easy availability, ease of access and also these are the primary sources of data which

could be trusted.

Company overview

ExxonMobil

Exxon Mobil Corporation or ExxonMobil is an American multinational oil and gas corporation. It is a

direct descendant ofJohn D. Rockefeller's Standard Oil company, and was formed on November 30,

1999, by the merger ofExxon and Mobil. Its headquarters are in Irving, Texas. It is affiliated with

Imperial Oil which operates in Canada.

ExxonMobil is one of the largest publicly traded companies by market capitalization in the world and is

the largest company in the world by revenue. The company is ranked #1 globally in Forbes Global

2000 list in 2012.

ExxonMobil markets products around the world under the brands ofExxon, Mobil, and Esso. It also

owns hundreds of smaller subsidiaries such as Imperial Oil Limited (69.6% ownership) in Canada,

and SeaRiver Maritime, a petroleum shipping company.

Bajaj Automobiles

Bajaj Auto Limited is an Indian motorized vehicle-producing company. Bajaj Auto is a part ofBajaj

Group. Its founded by Jamnalal Bajaj at Rajasthan in the 1930s. It is based in Pune, Maharashtra, with

plants in Chakan (Pune), Waluj (near Aurangabad) and Pantnagar in Uttaranchal. The oldest plant at

Akurdi (Pune) now houses the R&D centre Ahead. Bajaj Auto makes and

exports automobiles, scooters, motorcycles and the auto rickshaw.

Bajaj Auto is the world's third-largest manufacturer of motorcycles and second-largest in India.

The Forbes Global 2000 list for the year 2005 ranked Bajaj Auto at 1,946. It features at 1639 in forbes

2011 list.
http://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/List_of_petroleum_companieshttp://en.wikipedia.org/wiki/John_D._Rockefellerhttp://en.wikipedia.org/wiki/Standard_Oilhttp://en.wikipedia.org/wiki/Exxonhttp://en.wikipedia.org/wiki/Mobilhttp://en.wikipedia.org/wiki/Irving,_Texashttp://en.wikipedia.org/wiki/Imperial_Oilhttp://en.wikipedia.org/wiki/List_of_corporations_by_market_capitalizationhttp://en.wikipedia.org/wiki/List_of_companies_by_revenuehttp://en.wikipedia.org/wiki/List_of_companies_by_revenuehttp://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Exxonhttp://en.wikipedia.org/wiki/Mobilhttp://en.wikipedia.org/wiki/Essohttp://en.wikipedia.org/wiki/Imperial_Oilhttp://en.wikipedia.org/wiki/SeaRiver_Maritimehttp://en.wikipedia.org/wiki/Bajaj_Grouphttp://en.wikipedia.org/wiki/Bajaj_Grouphttp://en.wikipedia.org/wiki/Jamnalal_Bajajhttp://en.wikipedia.org/wiki/Rajasthanhttp://en.wikipedia.org/wiki/Punehttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Chakanhttp://en.wikipedia.org/wiki/Aurangabad,_Maharashtrahttp://en.wikipedia.org/wiki/Pantnagarhttp://en.wikipedia.org/wiki/Uttaranchalhttp://en.wikipedia.org/wiki/Automobilehttp://en.wikipedia.org/wiki/Scooter_(motorcycle)http://en.wikipedia.org/wiki/Motorcyclehttp://en.wikipedia.org/wiki/Auto_rickshawhttp://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Auto_rickshawhttp://en.wikipedia.org/wiki/Motorcyclehttp://en.wikipedia.org/wiki/Scooter_(motorcycle)http://en.wikipedia.org/wiki/Automobilehttp://en.wikipedia.org/wiki/Uttaranchalhttp://en.wikipedia.org/wiki/Pantnagarhttp://en.wikipedia.org/wiki/Aurangabad,_Maharashtrahttp://en.wikipedia.org/wiki/Chakanhttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Punehttp://en.wikipedia.org/wiki/Rajasthanhttp://en.wikipedia.org/wiki/Jamnalal_Bajajhttp://en.wikipedia.org/wiki/Bajaj_Grouphttp://en.wikipedia.org/wiki/Bajaj_Grouphttp://en.wikipedia.org/wiki/SeaRiver_Maritimehttp://en.wikipedia.org/wiki/Imperial_Oilhttp://en.wikipedia.org/wiki/Essohttp://en.wikipedia.org/wiki/Mobilhttp://en.wikipedia.org/wiki/Exxonhttp://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/Forbes_Global_2000http://en.wikipedia.org/wiki/List_of_companies_by_revenuehttp://en.wikipedia.org/wiki/List_of_companies_by_revenuehttp://en.wikipedia.org/wiki/List_of_corporations_by_market_capitalizationhttp://en.wikipedia.org/wiki/Imperial_Oilhttp://en.wikipedia.org/wiki/Irving,_Texashttp://en.wikipedia.org/wiki/Mobilhttp://en.wikipedia.org/wiki/Exxonhttp://en.wikipedia.org/wiki/Standard_Oilhttp://en.wikipedia.org/wiki/John_D._Rockefellerhttp://en.wikipedia.org/wiki/List_of_petroleum_companieshttp://en.wikipedia.org/wiki/Multinational_corporation


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Dabur

Dabur is India's largest Ayurvedic medicine manufacturer. Dabur's Ayurvedic Specialities Division has

over 260 medicines for treating a range of ailments and body conditions-from common cold to chronic

paralysis. Dabur India Limited is the fourth largest FMCG Company in India with Revenues of US$1 Billion

(over Rs 5,300 Cr) & Market Capitalization of US$4 Billion (Rs 20,000 Cr). Building on a legacy of quality

and experience of over 125 years, Dabur operates in key consumer products categories like Hair Care,

Oral Care, Health Care, Skin Care, and Home Care & Foods

Company Bajaj Automobiles Dabur India ExxonMobil Corporation

Industry Automobiles Ayurvedic Medicine-FMCG Oil and Gas Integrated

Geography India, Export all over

world.

India, Export all over world. Global operations with

Manufacturing across the world

Business Selling 2 & 3 wheelers Selling Ayurvedic Medicines

and FMCG products

Exploration, refining and

distribution & selling of oil and ga

productsProducts & brand 1. Commercial

Vehicles (3

wheelers): Bajaj

GC Max 1000

2. Bikes: Pulsar,Platina, Boxer

1. Dabur - Ayurvedichealthcare products

2. Vatika - Premium haircare

3. Hajmola - Tastydigestives

4. Ral - Fruit juices &beverages

5. Fem - Fairnessbleaches & skin care

products

1. Oil, LPG, Natural Gas2. Diesel (ESSO, Exxon, Mob3. Gasoline4. Aviation Fuel, Jet Fuel,

heating oil

5. Plastics, high-endpolymers and Lubricant

(Mobil1)

Market Share 3-wheelers:58.8% (India)

2-Wheelers:32.1%(India)

Hair Care: 12%

Oral Care:13%

Skin Care:7%

Chywanprash:63%

Digestive:55%

Fruit Juice:45%

#1 Global 2000

#3 in Sales

#1 in Profit

#82 in Assets

#2 in Market value (Forbes)

Revenue INR 20201.25 Cr INR 5,283 Cr US $ 498.36bn

Divisions
http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Ayurvedahttp://en.wikipedia.org/wiki/Ayurvedahttp://en.wikipedia.org/wiki/India


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Revenue & Cost Composition

ExxonMobil

The prices of crude oil are very volatile. Since the major expenditure for the company is to purchase the

crude oil, with the increase in the prices of crude oil, either the profitability of the company would

decrease or the price of its finished products would increase.

Bajaj

The major cost of the company is buying the raw materials. Raw materials for the company include steel

as a major contributor. Also there is high inflation in India which also increases the cost of the

commodities. If in the near future inflation is not controlled, cost of procuring raw materials would

increase thereby eating into the profits of the company.


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Dabur

The major cost contributor for Dabur is the raw material cost which is more or less affected by inflation

alone. Therefore, the profits of the company would vary with inflation which can be controlled bypassing on the burden to the consumers.

Relationship

ExxonMobil

ExxonMobil is investing billions of dollars in exploration, R&D and building plants for new resources.

Company has been engaging in developing high impact technology to reduce the cost of production and

create the new products. However, there have been several issues between shareholders and

management on using latest technologies in generating fuel, the technology which can hamper the

environment.

Relationship among stakeholders

ExxonMobil is highly valued company in the corporate history. Founded by J.D. Rockefeller, The

Company was the part of huge company which was broken into 34 companies. Since then, the company

is accused of various issues in operating as well as in management.

Recently, ExxonMobil is accused of paying huge amount to politicians and lobbyists. Last year

shareholders had heated argument with management over following issues:

A. Executive pay and its frequencyB. Lobbying and political spendingC. Non discrimination policy (particularly in 2008 annual meeting)D. Split the chairman and chief executive officer roles amid increasing investor scrutiny of board

accountability in the energy industry.

E. Controversial deal in Iraq.


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Just eight weeks before ExxonMobils annual shareholder meeting this year 2012, the Securities and

Exchange Commission (SEC) sided with investors in their battle to address concerns about the energy

giantshydraulic fracturing (fracking) operations.

This shows that relationship between shareholders and management is not in good terms, particularly

the issue of fracking operation got much attention in outside world.

Company and Society/Environment

ExxonMobil has been accused of setting high prices since its inception. With huge amount reserve, they

can explore oil at very low cost. However, with its commitment to increase the value of shareholders,

company does not engage in such activity.

The company is also accused of spoiling the natural resources as well as disrupting environment through

activities like fracking; oil spills (Valdez Oil Spill). Valdez Oil Spill killed thousands of sea animals and birds

and took away the fishing profession of hundreds of fishermen.

American citizens want ExxonMobil to pursue alternative energy sources such as Wind Energy. However,

ExxonMobil contends that alternative energy sources are not enough to fulfill the demand from world,

which we think is not fully justifiable statement from company.

Dabur

The management of Dabur India is very active when it comes to taking care of the interests of its

shareholders. The management maintains a positive relation with its shareholders and do not hesitate

to share its profits with its shareholders. The company had announced bonus shares in the ratio of 1:1 in

the year 2010 for the employee stock option scheme. Also the company had announced a 75% final

dividend to its shareholders. This shows that the management also keeps in mind the interests of the

shareholders and do not neglect them in the course of running the company.

Shareholding Pattern

ExxonMobil


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Bajaj Automobiles

Dabur

69%

19%

1%5% 0% 1% 5%

Shareholding

Directors, Promoters and family members FIIs

Mutual Funds Financial Institutions/Banks/Insurance Companies

NRIs Corporates

Individuals


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Capital Structure

Dabur

Dabur has reduced its debt significantly. In the recent year, D/E ratio for Dabur is negligible. Therefore,

expense for interest would be reduced and so the benefit of tax .

Bajaj

Bajaj Auto Capital structure has been changed lot since last few years. Company mainly working on

equity and debt portion has been reduced from 45% to 1.98 %. Benefit of tax deduction has been

reduced.

Dabur

Dabur till now has not borrowed any debt. So, equity has been major source of capital for Dabur

0

0.05

0.1

0.15

0.2

0.25

0.3

2004 2005 2006 2007 2008 2009 2010 2011 2012

Industry D/E

Dabur D/E

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

2008 2009 2010 2011 2012

Equity

Debt


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Cost of Capital

Bajaj

Annual Avg Market Return 15.72%

Risk Free Rate 8%

Beta 0.966Cost of Equity 15.46%

Cost of Debt 23%

Tax 30%

Post Tax Cost of Debt 16%

D:E

WACC 15.47%

ExxonMobil Corporation

Risk Free Rate 4.5

Cost of Debt 2.38

Alpha 2

Country Risk

Premium

0

Market Risk Premium 4.1

Beta Unlevered 0.91

Beta Levered 0.97

Debt to Capital 9.6

Debt to Equity 0.106

Equity to Capital 90.4

Kd 2.3%

Ke 10.39%

WACC 9.63%

Dabur

As Dabur does not have any debt, cost of equity is WACC only which is 14.13%

Dividend policy

DaburThe company has a dividend policy of paying dividends out of its profits to its shareholders. The

company has a history of paying average dividends of 75-100% to its shareholders. According to the

dividend policy of the company, the company would pay the dividends only out of its current year of

previous year profits after setting off any losses which it might have incurred in previous years and also

keeping any reserves required for the expansion of the company. The company avoids paying out

dividends out of its reserves.


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Bajaj

Face Value Rs. 10

Announcement

Date

Effective

Date

Dividend

Type

Dividend

(%)

17/05/2012 5/7/2012 Final 450%18/05/2011 29/06/2011 Final 400%

12/5/2010 8/7/2010 Final 400%

21/05/2009 2/7/2009 Final 220%

26/05/2008 27/06/2008 Final 200%

1. The Board of Directors ofBajaj Auto constituted its shareholders and investors grievancecommittee in 2008

2. Dividend will be paid by account payee/non-negotiable instruments or through the NationalElectronic Clearing Service (NECS), as notified by the SEBI through the stock exchanges

3. In view of the significant advantages and the convenience, the Company will pay dividendthrough NECS in all major cities to cover maximum number of shareholders, as per applicable

guidelines.

4. Dividend is accrued in the year in which it is declared whereby a right to receive is established.

Risk and Return

Bajaj

Autoindex Bajaj Auto BSE Sensex

Autoindex 0.010379049

Bajaj Auto 0.0102872 0.024208836

BSE Sensex 0.007738154 0.00700567 0.007109118

Cov(Bajaj Auto,

Bse sensex) 0.00700567

Variance of Bse 0.0072513

Beta of Bajaj

auto 0.966

Beta of Auto

Industry 0.730936452

Cov(Auto index,

BSE) 0.007738154

Variance of

Auto index 0.01058663

Autoindex Bajaj Auto BSE Sensex

Autoindex 1

Bajaj Auto 0.648980198 1

BSE Sensex 0.900846342 0.534016749 1

Variance of Bajaj

Auto Stock Return 0.025

Coffecient of

Variation of Bajaj

Auto Stock

4.58

Covariance Matrix

Correlation Matrix

Risk Measurement


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As we can see that coefficient of variation that indicates risk per unit return is not very high. Beta

of stock is .966 that is not good as stock will vary with market. Auto industry beta is .73 that is

lower than Bajaj Auto, it means compans stock is more volatile than industry.

Dabur India Ltd.

Risk and Return

Covariance

Dabur India BSE

Dabur India 0.009968025

BSE 0.0014988 0.006474754

Beta of Dabur .2314

Avg Return 0.0022 0.0085

Std Dev 0.1005 0.0810

Coffecient of Variation 44.8927 9.4918

Variance 0.0101 0.0066

Variance of Dabur is lesser than the Variance of Bajaj. However, Coefficient of variation is high that

means risk per unit retun is very high.

Exxon Mobil

Risk and Return

Covariance MatrixExxon Mobil NYSE

Exxon Mobil 0.002909538

NYSE 0.001503053 0.002512789

Avg Return 0.0014 0.0056

std dev 0.054284801 0.050448033

coefficient of

variation 36.42639191 8.995151228

variance 0.00294684 0.002545004

Exxon mobil variance is very low that shows, risk is very high very low. However, coefficient of variation

is very high that means risk per unit is very high.

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