Embed Size (px)
Citation preview
A
PROJECT REPORT
ON
“FINANCIAL ANALYSIS”
OF
Submitted to
FACULTY OF
SARDAR PATEL COLLEGE OF ADMINISTRATION & MANAGEMENT
Submitted by:
MAHENDRAKUMAR D. KUMAVAT [Enrollment no. 117550592047]
RAJESH M. VIKMA [Enrollment no. 117550592136]
M.B.A – Semester I
SARDAR PATEL COLLEGE OF ADMINISTRATION & MANAGEMENT
M.B.A PROGRAMME
Affiliated To Gujarat Technological University
BAKROL
November-2011
1
INDEX Chapter NO.
Subject
1 Introduction
2 Company profile
3 Theoretical concept
4 Research methodology
5 Analysis & Interpretation
6 Conclusion
7 Annexure
2
3
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.
4
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.
New Competition in the 1980s
Japanese and Italian scooter companies began entering the Indian market in the early
1980s. Although some boasted superior technology and flashier brands, Bajaj Auto had
built up several advantages in the previous decades. Its customers liked the durability of
the product and the ready availability of maintenance; the company's distributors
permeated the country.
5
The Bajaj M-50 debuted in 1981. The new fuel-efficient, 50cc motorcycle was
immediately successful, and the company aimed to be able to make 60,000 of them a year
by 1985. Capacity was the most important constraint for the Indian motorcycle industry.
Although the country's total production rose from 262,000 vehicles in 1976 to 600,000 in
1982, companies like rival Lohia Machines had difficulty meeting demand. Bajaj Auto's
advance orders for one of its new mini-motorcycles amounted to $57 million. Work on a
new plant at Waluj, Aurangabad commenced in January 1984.
The 1986-87 fiscal year saw the introduction of the Bajaj M-80 and the Kawasaki
Bajaj KB100 motorcycles. The company was making 500,000 vehicles a year at this
point.
Although Rahul Bajaj credited much of his company's success with its focus on one
type of product, he did attempt to diversify into tractor-trailers. In 1987 his attempt to buy
control of Ahsok Leyland failed.
The Bajaj Sunny was launched in 1990; the Kawasaki Bajaj 4S Champion followed a
year later. About this time, the Indian government was initiating a program of market
liberalization, doing away with the old 'license raj' system, which limited the amount of
investment any one company could make in a particular industry.
A possible joint venture with Piaggio was discussed in 1993 but aborted. Rahul Bajaj
told the Financial Times that his company was too large to be considered a potential
collaborator by Japanese firms. It was hoping to increase its exports, which then
amounted to just five percent of sales. The company began by shipping a few thousand
vehicles a year to neighboring Sri Lanka and Bangladesh, but soon was reaching markets
in Europe, Latin America, Africa, and West Asia. Its domestic market share, barely less
than 50 percent, was slowly slipping.
By 1994, Bajaj also was contemplating high-volume, low-cost car manufacture.
Several of Bajaj's rivals were looking at this market as well, which was being rapidly
liberalized by the Indian government.
Bajaj Auto produced one million vehicles in the 1994-95 fiscal year. The company
was the world's fourth largest manufacturer of two-wheelers, behind Japan's Honda,
6
Suzuki, and Kawasaki. New models included the Bajaj Classic and the Bajaj Super Excel.
Bajaj also signed development agreements with two Japanese engineering firms, Kubota
and Tokyo R & D. Bajaj's most popular models cost about Rs 20,000. 'You just can't beat
a Bajaj,' stated the company's marketing slogan.
The Kawasaki Bajaj Boxer and the RE diesel Autorickshaw were introduced in 1997.
The next year saw the debut of the Kawasaki Bajaj Caliber, the Spirit, and the Legend,
India's first four-stroke scooter. The Caliber sold 100,000 units in its first 12 months.
Bajaj was planning to build its third plant at a cost of Rs 4 billion ($111.6 million) to
produce two new models, one to be developed in collaboration with Cagiva of Italy.
BOARD OF DIRECTORS:-
Name of the Directors Designation
Shri Rahul Bajaj Chairman
Shri Nanoo Pamnani Vice Chairman
Shri Sanjiv Bajaj Managing Director
Shri Madhur Bajaj Director
Shri Rajiv Bajaj Director
Shri D J Balaji Rao Director
Shri S H Khan Director
Shri Naresh Chandra Director
7
Founder Jamnalal Bajaj
Year of Establishment 1926
Industry Automotive - Two & Three Wheelers
Business Group The Bajaj Group
Listings & its codes BSE - Code: 500490; NSE - Code: BAJAJAUTO
Presence Distribution network covers 50 countries.
Dominant presence in Sri Lanka, Bangladesh, Columbia,
8
Guatemala, Peru, Egypt, Iran and Indonesia.
Joint Venture Kawasaki Heavy Industries of Japan
Registered & Head Office Akurdi
Pune - 411035
India
Tel.: +(91)-(20)-27472851
Fax: +(91)-(20)-27473398
Works Akurdi, Pune 411035
Bajaj Nagar, Waluj Aurangabad 431136
Chakan Industrial Area, Chakan, Pune 411501
E-mail [email protected]
Website www.bajajauto.com
Company profile:
9
INTRODUCTION TO RATIO ANALYSIS
In practice a number of techniques are used for the analysis of financial statements.
Such as, common sized statement, percentage increase or decrease of various items, trend
analysis and so on. But the most popular and widely used technique is the ratio analysis
which highlights the relationship between different figures in the same financial
statement, that is, balance sheet or income statement or relationship of figures in both the
financial statement. Ratio is a numerical relationship between one item and another.
Ration analysis is a widely- used tool of financial analysis. It is defined as the
systematic use of ratio to interpret the financial statements so that the strengths and
weaknesses of a firm as well as its historical performance and current financial condition
can be determined. The term ratio refers to the numerical or quantitative relationship
between two items\ variables. This relationship can be expressed as:-
10
1) Percentages, say, net profits are 25 per cent of sales. (Assuming net profits of
25,000 and sales of Rs. 100,000)
2) Fraction (net profit is one-fourth of sales) and
3) Proportion of numbers (the relationship between net profits and sales is 1:4).
These alternative methods of expressing items which are related to each other are, for
purpose of financial analysis, referred to as ratio analysis. It should be noted that computing
the ratio does not add any information not already inherent in the above figures of profits and
sales. What the ratios do is that they reveal the relationship in a more meaningful way so as to
enable us to draw conclusions from them.
The rationale of ratio analysis lies in the fact that it makes related information
comparable. A single figure by itself has no meaning but when expressed in terms of a related
figure, it yields significant inferences. For instance, the fact that net profits of a firm amount
to, say, Rs. 10 lakh throws no light on its adequacy or otherwise. The figure of net profit has
to be considered in relation to other variables. How dose it stand in relation to sales? What
does it represent by way of return on total assets used or total capital employed? If, therefore,
net profits are shown in terms of their relationship with items such as, sales, assets, capital
employed, equity capital and so on, meaningful
conclusions can be drawn regarding their adequacy. To carry the above example
further, assuming the capital employed to be Rs. 50 lakh and Rs 100 lakh; the net profits
are 20 per cent and 10 per cent respectively. Ratio analysis, thus, as a quantitative tool,
enables analysts to draw quantitative answers to questions such as: Are the net profits
adequate? Are the assets being used efficiently? Is the firm solvent? Can the firm meet its
current obligations
IMPORTANCE OF RATIO ANALYSIS
As a tool of financial management, rations are of crucial significance. The importance
of ration analysis lies in the fact that it presents facts on a comparative basis and enables
the drawing of inferences regarding the performance of a firm. Ration analysis is relevant
in assessing the performance of a firm in respect of the following aspects:
11
Liquidity Position:-
With the help of ration analysis conclusions can be drawn regarding the liquidity
position of a firm. The liquidity position of a firm would be satisfactory if it is able to
meet its current obligations when they become due. A firm can be said to have the ability
to meet its short-term liabilities if it ahs sufficient liquid funds to pay the interest on its
short-maturing debt usually within a year as well as to repay the principal. This ability is
reflected in the liquidity ration of a firm. The liquidity ratios are particularly useful in
credit analysis by banks and other suppliers of short-term loans.
Long-term Solvency:-
Ratio analysis is equally useful for assessing the long-term financial viability of a
firm. This aspect of the financial position of a borrower is of concern to the long-term
creditors, security analysts and the present and potential owners of a business. The long-
term solvency is measured by the leverage/capital structure and profitability ratios which
focus on earning power and operating efficiency. Ration analysis reveals the strengths
and weaknesses of a firm in this respect. The leverage ratios, for instance, will indicate
whether a firm has a reasonable proportion of various source of finance or if it is heavily
loaded with debt in which case its solvency is exposed to serious strain. Similarly, the
various profitability ratios would reveal whether or not the firm is able to offer adequate
return to its owners consistent with the risk involved.
Operating Efficiency:-
Yet another dimension of the usefulness of the ratio analysis, relevant from the
viewpoint of management, is that it throws light on the degree of efficiency in the
management and utilization of its assets. The various activity ratios measure this kind of
operational efficiency. In fact the solvency of a firm is, in the ultimate analysis,
dependent upon the sales revenues generated by the use of its assets-total as well as its
components.
Overall Profitability:-
Unlike the outside parties which are interested in one aspect of the financial position
of a firm, the management is constantly concerned about the over-all profitability of the
12
enterprise. This is, they are concerned about the ability of the firm to meet its short-term
as well as long-term obligations to its creditors, to ensure a reasonable return to its owners
and secure optimum utilization of the assets of the firm. This is possible if an integrated
view is taken and all the ratios are considered together.
Inter-firm Comparison:-
Ratio analysis not only throws light on the financial position of a firm but also serves
as a stepping stone to remedial measures. This is made possible due to inter-firm
comparison and comparison with industry averages. A single figure of a particular ratio is
meaningless unless it is related to some standard or norm. One of the popular techniques
is to compare the ratio of a firm with the industry average. It should be reasonably
expected that the performance of a firm should be in broad conformity with that of the
industry to which it belongs. An inter-firm comparison would demonstrate the firm’s
position vis-à-vis its competitors. If the results are at variance either with the industry
average or with those of the competitors, the firm can seek to identify the probable
reasons and, in that light, take remedial measures.
Trend Analysis:-
Finally, ratio analysis enables a firm to take the time dimension into account. In other
words, whether the financial position of a firm is improving or deteriorating over the
years. This is made possible by the use of trend analysis. The significance of a trend
analysis of ratios lies in the fact that the analysts can know the direction of movement,
that is, whether the movement is favourable or unfavourable. For example, the ratio may
be low as compared to the norm but the trend may be upward. On the other hand, though
the present level may be satisfactory but the trend may be a declining one.
ADVANTAGE OF RATIO ANALYSIS
The accounting ratios offer the following advantages:
Help in financial statement analysis:-
It is easy to understand the financial position of a business enterprise in respect of
short term solvency, capital structure position etc., with the help of various ratios. The
users can also gain by knowing the profitability rations of the firm.
13
Help in simplifying accounting figures:-
The single figures in terms of absolute amount such Rs. 10 lakhs income, Rs. 50 lakhs
sales etc, are not of much use. But they become important when relationship are
established, say for example, between gross profit and sales or net profits and capital
employed and so on.
Help in calculating the operating efficiency of the business enterprise:-
Ratios enable the users of financial information to determine operational efficiency of
a business firm by relating the profit figure to the capital employed for a given period.
Help in locating weak points of the firms:-
Ratio analysis would pin-point the deficiency of various departments or a branch of a
business unit even through the overall performance is satisfactory.
Help in inter-firm and inter-period comparisons:-
A firm can compare its results not only with other firms in the same industry but also
its own performance over a period of time with the help of ratio.
Help in forecasting:-
Accounting ratios calculated and tabulated for a numbers of years enable the users of
financial information to determine the future result on the basis of past trends.
LIMITATION OF RATIO ANALYSIS
The ratio analysis is not a fool-proof method in financial statement analysis. In spite
of many good points, in suffers from a numbers of limitations which arise from the nature
of financial information itself. Some of the important limitations are given below:
Ratios Ignore Qualitative Factors:-
The ratios are obtained from the figure expressed in money. In this way, qualitative
factors, which may be important, are ignored. For instance, it is just possible that the
financial position of a firm may be quite satisfactory in terms of money, yet it may not be
desirable to extend credit because of inefficient management in the matter of payments on
due dates.
14
Trends and not the Actual Ratios:-
The different ratios calculated from the financial statement of a business enterprise for
one single year are of limited value. It would be more useful to calculate the important
figures in respect of income, dividends, working capital, etc. for a numbers of years. Such
trends are more useful than absolute ratios.
Defective Accounting Information:-
The ratios are calculated from the accounting data in the financial statement. It means
that defective information would give wrong ratios. Thus, the deliberate omission such as
omitting purchase, would positively affect the ratios too.
Variation In General Operating Condition:-
While interpreting the results based on ratio analysis, all business enterprise have to work
within given general economic conditions, conditions of the industry in which the firms operate
and the position of individual companies within the industry. For example, if the firm has been
forced by the government to sell its products at fixed prices, its comparison with other firms
would become impossible.
15
1) OBJECTIVE OF THE STUDY:-
The main objective of project is to do Ratio analysis of an Automobile (two and three
wheeler) Industry of an India.
Analyze the information collected on sales, profit, earning per share, market price etc.
To do Ratio Analysis for the selected company and make necessary comments on it so as to
provide complete idea and core ideology of the company.
2) BENEFIT OF THE STUDY:-
It is useful for analysis of the actual financial situation of the company.
It helps the investor while taking the investment decision.
It provides vast knowledge about Automobile (two and three wheeler) industry.
16
3) SOURCES OF DATA:-
Basically the sources of data are divided into two main categories:
Primary Sources of Data.
Secondary Sources of Data.
Secondary data is the data already collected by someone for his/her purpose of study. I
have utilized secondary sources of data to suffice the need of my project adequately.
4) RESEARCH DESIGN:-
A research design specifies the methods and procedures for conducting a particular study.
Broadly speaking, research design can be grouped in three different categories:
Exploratory research
Descriptive research
Casual research
I have used DESCRIPTIVE RESEARCH design.
5) REFERENCE PERIOD:-
I have utilized Last 5 Year data of balance sheet of company for analysis of Automobile (Two
and three Wheeler) sector.
17
RATIO ANALYSIS OF BAJAJ AUTO
1) GROSS PROFIT RATIO :-
This ratio establishes the relationship between gross profit on sales and net sales in terms of
percentage indicating the percentage of gross profit earned on sales.
18
Gross ProfitGross Profit Ratio = -------------------- * 100
Net Sales
Years Gross profit (a) Net sales (b) Ratio (%) (a/b)
2006 1738.74 7,572.13 22.9624
2007 1897.05 9,420.24 20.1380
2008 1,416.21 8,827.15 16.0438
2009 1,313.99 8,700.17 15.1030
2010 2,715.06 11,813.25 22.9832
AVERAG RATIO 1,816.21 9,266.59 19,4461
2006 2007 2008 2009 20100
5
10
15
20
25 22.9623999999995
20.138
16.043815.103
22.9831999999996
Overall gross profit of the company is good. The highest ratio is in the year of 2010 and the
lowest ratio is in the year 2009.In 2006 to 2009 Ratio is decreasing year by year and after 2010
ratio is increasing. This is good sign for the company.
2) NET PROFIT RATIO :-
This ratio establishes the relationship between the amount of net profit or net income and the
amount of sales revenue.
Net Profit
19
Net Profit Ratio = ------------------- * 100
Net Sales
Years Net profit (a) Net sales (b) Ratio (%) (a/b)
2006 1,101.63 7,572.13 14.5485
2007 1,237.96 9,420.24 13.1415
2008 755.95 8,827.15 8.5639
2009 656.48 8,700.17 7.5456
2010 1,702.73 11,813.25 14.4137
AVERAG RATIO 1,090.95 9,266.59 11.6426
2006 2007 2008 2009 20100
2
4
6
8
10
12
14
1614.5485
13.1415
8.56397.5456
14.4137
Overall net profit of the company is good. The highest ratio is in the year of 2006 and the
lowest ratio is in the year 2009.In 2006 to 2009 Ratio is year by year decreasing and after
2010 ratio is increasing. This is good sign for the company.
3) OPERATING RATIO :-
This ratio takes into account the aggrerate of manufacturing cost of goods sold and other
operating expenses on the one hand, and the net sales revenue on the other.
Cost of Sales
20
Operating Ratio = ------------------- * 100
Sales Revenue
Years Cost of sales(a) Sales revenue(b) Ratio (%) (a/b)
2006 6,341.36 7,572.13 83.7461
2007 8,089.45 9,420.24 85.8731
2008 7,809.79 8,827.15 88.4746
2009 7,582.97 8,700.17 87.1589
2010 9,373.16 11,813.25 79.3445
AVERAG RATIO 7,839.35 9,266.59 84.9194
2006 2007 2008 2009 201074
76
78
80
82
84
86
88
90
83.7461
85.8731
88.4746
87.1589
79.3445
Operating ratio of the company is increasing 2006 to 2008 and then after year by year
decreasing. It is higher in year 2008 and lowest in the year 2010. So it shows company increases
its cost of sales. This is not shows good sign.
4) OPERATING PROFIT RATIO:-
Operating profit ratio defines the relationship between operating profit and net sales. It
shows the percentage of operating profit on net sales.
Operating Profit
21
Operating Profit Ratio = ---------------------- * 100
Net sales
2006 2007 2008 2009 20100
5
10
15
20
25
16.9012
14.117412.294 12.5596
21.0584999999999
Operating profit of the company is increasing year by year except year 2008. It means operating
profit of the company is increasing. So it shows better efficiency of the company.
5) CURRENT RATIO :-
The ability of a company to meet its short-term commitment is normally assessed by
comparing current assets with current liabilities. The current ratio establishes the
relationship between the current assets and the current liabilities. The ideal ratio is 2:1.
22
Years Operating
Profit(a)
Sales revenue (b) Ratio (%) (a/b)
2006 1,279.78 7,572.13 16.9012
2007 1,329.89 9,420.24 14.1174
2008 1,085.21 8,827.15 12.2940
2009 1,092.71 8,700.17 12.5596
2010 2,487.69 11,813.25 21.0585
AVERAG RATIO 1,455.06 9,266.59 15.3861
Current Assets
Current Ratio = -------------------------
Current Liabilities
Years Current Assets
(a)
Current Liabilities
(b)
Ratio (a/b)
2006 2,939.55 3,734.97 0.7870
2007 3,848.25 4,517.25 0.9257
2008 1,780.67 2,019.23 0.8819
2009 2,401.45 2,602.35 0.9228
2010 3,111.75 4,466.78 0.6966
AVERAG RATIO 2,816.33 3,468.12 0.8428
2006 2007 2008 2009 20100
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
0.787
0.925700000000001
0.88190.9228
0.696600000000009
Overall ratio of the current assets to current liability is not good of this company. Ratio is
increasing is good but below 1 is the bad sign of the company.
6) LIQUIDITY RATIO :-
A liquidity ratio is also known as acid-test ratio, therefore, used as a complementary ratio to
the current ratio. The ratio is concerned with the establishment of relaionship between the
liquid assets and the liquid liabilities. The ideal ratio is 1:1
23
Liquidity Assets
Liquidity Ratio = ------------------------
Curent Liabilities
2006 2007 2008 2009 20100
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
0.2
0.1024
0.1315
0.1634
0.19
0.0840000000000001
Liquidity ratio of the company is also not good. The company should have it above 1. But in no
years it is above 1. So it is bad sign for the company.
7) DEBT EQUITY RATIO :-
This ratio is calculated to measure the relative proportion of outsiders’s funds invested in
the company. This ratio determined to ascertain the soundness of long term financial
policies of that company and is also known as external-internal equity ratio.
Long Term Debt
24
Years Liquid Assets(a) Current
Liabilities(b)
Ratio(a/b)
2006 382.39 3,734.97 0.1024
2007 593.99 4,517.25 0.1315
2008 330.05 2,019.23 0.1634
2009 494.33 2,602.35 0.1900
2010 373.04 4,466.78 0.0840
AVERAG RATIO 434.76 3468.12 0.1342
Debt Equity Ratio = -------------------------
Shareholder Fund
Years Long term debt(a) Shareholder
fund(b)
Ratio(a/b)
2006 1,467.15 4,770.73 0.3075
2007 1,625.43 5,534.32 0.2937
2008 1,334.34 1,587.59 0.8405
2009 1,570.00 1,869.69 0.8397
2010 1,338.58 2,928.34 0.4571
AVERAG RATIO 1,467.10 3,338.13 0.5477
2006 2007 2008 2009 20100
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
0.3075 0.2937
0.84050.839700000000
01
0.4571
The debt of the company compares to its share holders fund is very low. It fluctuate year by
year. This is not good sign for the company.
8) PROPRITORY RATIO :-
This ratio shows the relationship between shareholder’s fund and total assets. The result
clearly shows the share of owners in the total assets of the company. When the proprietary
25
ratio is substracted from one, the resultant figure represents the share of outsider’s claim on
the assets of the company.
Shareholder Fund Propritory Ratio = --------------------------
Total assets
2006 2007 2008 2009 20100
0.10.20.30.40.50.60.70.80.9 0.76480000
00000130.77300000
0000011
0.5433 0.5436
0.6863
Most of the fund of the company is shareholders own fund. Debts are very less of the company. Majority part of the fund is contributed by the shareholders so it is good sign for the company.
9) RETURN ON CAPITAL EMPLOYED RATIO:-
This is an important ratio as it shows the amount of profit available on the total capital
employed.
26
Years Shareholder
fund(a)
Total assets(b) Ratio(a/b)
2006 4,770.73 6,237.88 0.7648
2007 5,534.32 7,159.75 0.7730
2008 1,587.59 2,921.93 0.5433
2009 1,869.69 3,439.69 0.5436
2010 2,928.34 4,266.92 0.6863
AVERAG RATIO 3,338.13 4,805.23 0.6622
Earning Befor Intrest Tax
Return on Propritory Fund Ratio = ------------------------------ ----
Total capital employed
Years EBIT (a) Capital employed (b) Ratio (a/b)
2006 1,738.40 6,237.88 0.2787
2007 1,891.71 7,159.75 0.2642
2008 1,250.32 2,921.93 0.4279
2009 1,067.18 3,439.69 0.3103
2010 2,520.47 4,266.92 0.5907
AVERAG RATIO 1,693.62 4,805.23 0.3744
2006 2007 2008 2009 20100
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.2787 0.2642
0.427900000000005
0.310300000000006
0.5907
Return on capital employed is very less of the company. A firm gets very less return compare to
employment of its fund. It is not good for the company. Company should increase its return.
10) NET PROFIT TO TOTAL ASSETS RATIO :-
This ratio establishes the relationship between the net profit and otal assets. This ratio tries
to findout how efficient the company was in utilizing the funds to generate or earn profit.
Net profit
27
Net Profit to Total Assets Ratio = ------------------
Total assets
Years Net profit (a) Total assets (b) Ratio (a/b)
2006 1,101.63 6,237.88 0.1766
2007 1,237.96 7,159.75 0.1729
2008 755.95 2,921.93 0.2587
2009 656.48 3,439.69 0.1909
2010 1,702.73 4,266.92 0.3991
AVERAG RATIO 1,090.95 4,805.23 0.2396
2006 2007 2008 2009 20100
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.1766 0.1729
0.2587
0.1909
0.399100000000005
Net profit compare to total assets of the company is also very less. To have a better efficiency,
company should increase its net profit. Overall return is not good for the company.
11) DEBTORS TURNOVER RATIO :-
Debtor turnover ratio, also known as receivables turnover ratio or debtors velocity
establishes the relationship between the net credit sales of the year and the average
receivable.
Debtors Debtors Turnover Ratio = ----------------------- * 365
28
Net Credit Sales
2006 2007 2008 2009 20100
5
10
15
20
25
15
21
11
15
8
The debtor’s turnover ratio is fluctuating year by year. This ratio should not be decrease. It
becomes high in the year 2007 and low in the 2010 which is good sign for the company.
12) FIXED ASSETS TO PROPRIETERS FUND RATIO :-
This ratio establishes the relationship between the fixed assets and propritor’s fund. This
ratio tries to findout how much percentage is the fixed assets of total net worth.
Total fixed assets
Fixed assets to propri. Fund ratio = ----------------------------
Years fixed assets proprietors fund Ratio (a/b)
29
Years Debtors (a) Credit sales (b) Ratio (days)
2006 301.55 7,572.13 15
2007 529.83 9,420.24 21
2008 275.31 8,827.15 11
2009 358.65 8,700.17 15
2010 272.84 11,813.25 8
AVERAG RATIO 347.64 9266.59 14
2006 1,133.00 4,770.73 0.2375
2007 1,273.60 5,534.32 0.2301
2008 1,268.61 1,587.59 0.7991
2009 1,542.29 1,869.69 0.8249
2010 1,479.59 2,928.34 0.5053
AVERAG RATIO 1,339.49 3,338.13 0.5194
Total propritors fund
2006 2007 2008 2009 20100
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
0.2375 0.2301
0.79910.824900000000
001
0.5053
Fixed assets compares to the owners fund is decreasing year by year and last year 2010 it
decreases it means company’s assets investment is decreasing compare to the owners fund.
13) EARNING PER SHARE :-
EPS Ratio shows the return that shareholders getting out of per share.
It shows the earning available to shareholder per share. It can be find
out by dividing net profit by total no. of shares.
Total Net Profit EPS = -------------------------
Total no. of shares
30
2006 2007 2008 2009 20100
20
40
60
80
100
120
140
108.8739
122.3474
52.2483000000003
45.3734
117.6861
EPS of the company is increasing in the year 2007 but it starts falling from 2008 which is
not good sign. In the year 2010 it again increases it shows good sign for the company.
31
Years Net profit No. of shares Ratio (a/b)
2006 1,101.63 10.1184 108.8739
2007 1,237.96 10.1184 122.3474
2008 755.95 14.4684 52.2483
2009 656.48 14.4684 45.3734
2010 1,702.73 14.4684 117.6861
AVERAG RATIO 1,090.95 12.7284 89.3058
32
Conclusion:-
I have prepared this report on the bases of the information available in the
balance sheet of BAJAJ AUTO (INDIA) LTD.
From the above discussion conclude that of BAJAJ AUTO (INDIA) LTD. has a good
future. The company has good technology for its product.
Total profit of company is increasing in last year and also a total sale of the
company is increasing continuously from last three years. The amount of dividend
declared by the company is increasing year by year.
The company is also engaged in a project of overseas which helps the company in
its growth.
According to me, BAJAJ AUTO (INDIA) LTD. is doing an excellent business and so it
becomes profitable company and very popular company.
33
Bajaj auto
34
Mar '06 Mar '07 Mar '08 Mar '09 Mar '1012 mths 12 mths 12 mths 12 mths 12 mths
Sources Of FundsTotal Share Capital 101.18 101.18 144.68 144.68 144.68Equity Share Capital 101.18 101.18 144.68 144.68 144.68Share Application Money 0.00 0.00 0.00 0.00 0.00Preference Share Capital 0.00 0.00 0.00 0.00 0.00Reserves 4,669.55 5,433.14 1,442.91 1,725.01 2,783.66Revaluation Reserves 0.00 0.00 0.00 0.00 0.00Networth 4,770.73 5,534.32 1,587.59 1,869.69 2,928.34Secured Loans 0.02 22.46 6.95 0.00 12.98Unsecured Loans 1,467.13 1,602.97 1,327.39 1,570.00 1,325.60Total Debt 1,467.15 1,625.43 1,334.34 1,570.00 1,338.58Total Liabilities 6,237.88 7,159.75 2,921.93 3,439.69 4,266.92Application Of FundsGross Block 2,894.22 3,178.54 2,994.68 3,350.20 3,379.25Less: Accum. Depreciation 1,761.22 1,904.94 1,726.07 1,807.91 1,899.66Net Block 1,133.00 1,273.60 1,268.61 1,542.29 1,479.59Capital Work in Progress 43.33 107.62 34.74 106.48 120.84Investments 5,856.97 6,447.53 1,857.14 1,808.52 4,021.52Inventories 272.93 309.70 349.61 338.84 446.21Sundry Debtors 301.55 529.83 275.31 358.65 272.84Cash and Bank Balance 80.84 62.16 54.74 135.68 100.20Total Current Assets 655.32 901.69 679.66 833.17 819.25Loans and Advances 2,282.98 2,925.24 1,099.68 1,567.09 2,291.29Fixed Deposits 1.25 21.32 1.33 1.19 1.21Total CA, Loans & Advances 2,939.55 3,848.25 1,780.67 2,401.45 3,111.75Deffered Credit 0.00 0.00 0.00 0.00 0.00Current Liabilities 1,419.08 1,683.46 1,185.19 1,378.20 2,218.06Provisions 2,315.89 2,833.79 834.04 1,224.15 2,248.72Total CL & Provisions 3,734.97 4,517.25 2,019.23 2,602.35 4,466.78Net Current Assets -795.42 -669.00 -238.56 -200.90 -1,355.03Miscellaneous Expenses 0.00 0.00 0.00 183.30 0.00Total Assets 6,237.88 7,159.75 2,921.93 3,439.69 4,266.92Contingent Liabilities 719.06 811.66 1,129.29 924.96 818.25Book Value (Rs) 471.49 546.96 109.73 129.23 202.40
35
Balance Sheet of Bajaj Auto --------- in Rs. Cr. ---------
Profit & Loss account of Bajaj Auto --------- in Rs. Cr. ---------
Mar '06 Mar '07 Mar '08 Mar '09 Mar '1012 mths 12 mths 12 mths 12 mths 12 mths
IncomeSales Turnover 8,653.83 10,741.91 9,856.66 9,310.24 12,420.95Excise Duty 1,081.70 1,321.67 1,029.51 610.07 607.70Net Sales 7,572.13 9,420.24 8,827.15 8,700.17 11,813.25Other Income 458.96 567.16 170.27 -4.52 38.76Stock Adjustments 49.01 -0.90 67.85 -24.49 47.60Total Income 8,080.10 9,986.50 9,065.27 8,671.16 11,899.61ExpenditureRaw Materials 5,446.62 6,969.50 6,760.04 6,502.10 8,187.11Power & Fuel Cost 59.09 79.34 69.20 60.89 70.35Employee Cost 282.45 310.07 350.09 366.67 411.76Other Manufacturing Expenses 79.50 74.53 53.72 58.10 73.80Selling and Admin Expenses 299.99 457.17 390.15 383.41 423.87Miscellaneous Expenses 198.52 230.89 209.63 226.22 221.94Preoperative Exp Capitalised -24.81 -32.05 -23.04 -14.42 -15.67Total Expenses 6,341.36 8,089.45 7,809.79 7,582.97 9,373.16
Operating Profit 1,279.78 1,329.89 1,085.21 1,092.71 2,487.69PBDIT 1,738.74 1,897.05 1,255.48 1,088.19 2,526.45Interest 0.34 5.34 5.16 21.01 5.98PBDT 1,738.40 1,891.71 1,250.32 1,067.18 2,520.47Depreciation 191.00 190.26 173.96 129.79 136.45Other Written Off 3.62 0.39 1.12 0.00 0.00Profit Before Tax 1,543.78 1,701.06 1,075.24 937.39 2,384.02Extra-ordinary items 59.03 26.60 59.32 18.72 24.25PBT (Post Extra-ord Items) 1,602.81 1,727.66 1,134.56 956.11 2,408.27Tax 479.11 490.09 378.78 301.61 707.50Reported Net Profit 1,101.63 1,237.96 755.95 656.48 1,702.73Total Value Addition 894.74 1,119.95 1,049.75 1,080.87 1,186.05Preference Dividend 0.00 0.00 0.00 0.00 0.00Equity Dividend 404.74 404.73 289.37 318.30 578.73Corporate Dividend Tax 56.76 68.78 49.18 54.10 96.12Per share data (annualised)Shares in issue (lakhs) 1,011.84 1,011.84 1,446.84 1,446.84 1,446.84Earning Per Share (Rs) 108.87 122.35 52.25 45.37 117.69Equity Dividend (%) 400.00 400.00 200.00 220.00 400.00Book Value (Rs) 471.49 546.96 109.73 129.23 202.40
36
37
