Geetika Final Project..... 123456 PDF

CHAPTER-1
INTRODUCTION
Introduction to Indian Two-wheeler Industry

The two-wheeler industry in India has grown rapidly in the country since the
announcement of the process of liberalization in 1991. Previously, there were only a
handful of two-wheeler models available in the country.
Currently, India is the second largest producer of two-wheelers in the world. It stands
next only to China and Japan in terms of the number of two-wheelers produced and
the sales of two-wheelers respectively. In the year 2005-2006, the annual production
of two-wheelers in India stood at around 7600801 units. The trend of owning two-
wheelers is due to a variety of facts peculiar to India. One of the chief factors is poor
public transport in many parts of India.
Additionally, two-wheelers offer a great deal of convenience and mobility for the
Indian family. The latest trend in the two-wheeler market is the introduction of
electrically operated vehicles from a range of manufacturers such as Indus and Hero.
These can be recharged from convenient household electrical points.
Bikes are a major segment of Indian two-wheeler industry, the other two being
scooters and mopeds. Indian companies are among the largest two-wheeler
manufacturers in the world. Hero Moto corp. and Bajaj auto ltd. are two of the Indian
companies that top the list of world companies manufacturing two–wheelers.
The two-wheeler market was opened to foreign companies in the mid-1980s. The
openness of Indian market to foreign companies lead to the arrival of new models of
two-wheelers into India. Easy availability of loans from the banks, relatively low rate
of interest and the discount of prices offered by the dealers and manufacturers lead to
the increasing demand for two-wheeler vehicles in India. This lead to the strong
growth of Indian two-wheeler industry.
The scooter segment has reported positive demand trends during all three quarters of
the current fiscal, supported by the underlying factors that enabled the industry
growth. Overall, during 11m FY2018, scooters reported growth of 21.2% with lowest
growth of 0.5% during October 2017 (owing to high base of October 2016), outpacing
the industry growth and continuing to gain share in the overall domestic two-wheeler
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While demonetisation had marred the growth in the motorcycle segment during the
second half of FY2017, the product segment revived impressively since the beginning
of the current fiscal. While channel-filling and dealer-stocking prior to festive season
supported the sales during the first half of the year, the demand recovery and positive
sentiment has continued into the second half of the fiscal as well. The growth has
been led by the entry-level 110-cc sub-segment, driven by a general improvement in
rural demand sentiment on the back of near normal monsoon. The executive sub-
segment of motorcycles (110-125cc) also contributed to maintaining the growth
momentum, despite volatility in growth trends reported during the course of the fiscal
due to production constraints faced by one of the best-selling models, Glamour. The
125-150 cc sub-segment continues to be the only sub-segment in motorcycles where
volumes have been shrinking, owing to growing preference for 160-cc and 180-cc
offerings of OEMs. The higher displacement premium motorcycles continue to
expand their share in the domestic motorcycle pie and accounted for 7% of the total
volumes in 11m FY2018 as against 2% in FY2014. This trend is expected to continue
with the gradual up-trading and premium
20192672
vehicles sales in units
17589738
15975561 16455851
14806778
13409150 13797185
11768910
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

Year
Source – https://www.statista.com/statistics/318023/two-wheeler-sales-in-india/
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History of Bajaj Auto Ltd
“NAYE BHARAT KI NAYI TASWEER BULUND BHARAT KI BULUND

TASWEER HAMARA BAJAJ”
The company came into existence on 29th November, 1945 as M/s Bach raj Trading
Corporation Private Limited. Initially, it used to import and sell two and three-
wheelers in the country. It was post 1959, the company started to manufacture the
two-wheelers and three-wheelers. The year 1960 one of the important years for the
company as it went public that year. The launches started the same year.
The first launch was that of the Vespa 150 in the year 1960. Then on in the year 1971,
the company started to launch their three-wheeler goods carrier. The turning point for
the company just lays ahead. Just a year after, Bajaj Auto launched its ever-famous
Bajaj Chetak. The name was given after the legendary horse of Indian warrior Rana
Pratap Singh, the Chetak. The Chetak was an affordable means of transportation for
millions of Indian families for decades and thus the slogan ‘Hamara Bajaj.’
In the year 1990, the teenagers were offered the Bajaj Sunny. Being a scooter Ette, it
had a 60cc engine and attained a maximum speed of 50 km/h. However, the model is
no longer on the shelves. Then on every year, there was a new launch by the
company. 1991 saw the launch of the Kawasaki Bajaj 4S Champion. Starting from
1993, the company launched the vehicles (Bajaj Stride, Classic and Super Excel
respectively) in succession every year till 1995.
In 1999, Bajaj came up with yet another scooter Ette called the Spirit. Ideal for
college students, it was powered by a two-stroke, 60cc, single-cylinder and air-cooled
engine. It was one of the eighteen models Bajaj Auto launched in eighteen months.
The same year, Caliber motorcycle notched up 100,000 sales in record time of 12
months. In 2000, the y2k year, Bajaj Suffire was introduced.
Last year Bajaj Auto launched the Kawasaki Ninja 650R, while earlier this year, Bajaj
geared up again and unveiled the RE60, a mini 4-wheeler for intra-city urban
transportation. Bajaj RE60 is expected to challenge the supremacy of Tata Nano. But
the much eventful launch was that of the KTM Duke 200. The orange colour was
everywhere with great publicity measures being taken by the company. In 1995, it
rolled out its ten millionth vehicles and produced and sold one million vehicles in a
year.
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With the launch of motorcycles in 1986, the company has changed its image from a
scooter manufacturer to a two-wheeler manufacturer.
In 2017 it was announced that Bajaj Auto and Triumph Motorcycles Ltd would form
an alliance to build mid-capacity motorcycles. According to the authors of Globality
Competing with Everyone from Everywhere for Everything, Bajaj has operations in
50 countries creating a line of bikes targeted to the preferences of entry-level buyers.
Company Profile
Type Public
Traded as · BSE: 532977
· NSE: BAJAJ-AUTO
· BSE SENSEX Constituent
· CNX Nifty Constituent
Industry Automotive
Founded November 29, 1945; 73 years ago,
Founder Jamnalal Bajaj
Headquarters Pune, India [[1]]
Key people · Rahul Bajaj (Chairman)
· Rajiv Bajaj (CEO)
Products Motorcycles, three-wheeler vehicles and cars
Revenue ₹ 269105.10 million
Number of employees 9,503 (March 2018)
Parent Bajaj Group
Website www.bajajauto.com
Source – https://en.wikipedia.org/wiki/Bajaj_Auto
About the Company

The Bajaj Group is amongst the top 10 business houses in India. Its footprint stretches
over a wide range of industries, spanning automobiles (two wheelers manufacturer
and three wheelers manufacturer), home appliances, lighting, iron and steel,
insurance, travel and finance. The group's flagship company, Bajaj Auto, is ranked as
the world's fourth largest three and two-wheeler manufacturer and the Bajaj brand is
well-known across several countries in Latin America, Africa, Middle East, South and
South East Asia. Founded in 1926, at the height of India's movement for
independence from the British, the group has an illustrious history. The integrity,
dedication, resourcefulness and determination to succeed which are characteristic of
the group today, are often traced back to its birth during those days of relentless
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devotion to a common cause. Jamnalal Bajaj, founder of the group, was a close
confidant and disciple of Mahatma Gandhi. In fact, Gandhiji had adopted him as his
son. The present Chairman of the group, Rahul Bajaj, took charge of the business in
1965. Under his leadership, the turnover of the Bajaj Auto the flagship company has
gone up from INR.72 million to INR. 120 billion, its product portfolio has expanded
and the brand has found a global market.
Vision
To attain world Class Excellency by demonstrating Value added products to the
customers.
Mission
 Focus on value-based manufacturing
 Fostering team work & enhancing the capability of the team
 Continual Improvement
 Team elimination of wastes
 Pollution free & safe environment
Products
Bajaj manufactures and sells motorcycles, scooters, auto-rickshaws and most recently,
cars. Bajaj Auto is India's largest exporter of motorcycles and three-wheelers. Bajaj
Auto's exports accounted for approx. 35% of its total sales. 47% of its exports are
made to Africa. Boxer motorcycle is the largest selling single brand in Africa.
Manufacturing
Bajaj is the first Indian two-wheeler manufacturer to deliver 4-stroke commuter
motorcycles with sporty performance for the Indian market, which was otherwise
dominated mostly by mileage-based products from Hero Honda and TVS Motors.
Bajaj achieved this with the 150cc and 180cc Pulsar, giving Indians the first taste of
performance biking. This was also accompanied by innovative marketing techniques -
by featuring its flagship product Pulsar 220 DTS-i in Pulsar MTV Stunt mania, India's
first stunt biking reality show.
Motorcycles in production include the Platina, Discover, Pulsar, Avenger, Domineer
and CT 100. In FY 2012-13, it sold approximately 3.76 million motorcycles which
accounted for 31% of the market share in India. Of these, approximately 2.46 million
motorcycles (66%) were sold in India and remaining 34% were exported.
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Present Scenario
The new 2019 Bajaj Domineer four hundred is ready to be launched in Republic of
India within the returning days. Ahead of the official launch, the book pictures of the
bike have leaked on the web. According to the leaked images, the new 2019 Bajaj
Domineer 400 will come with an increased power output of 39.9 PS as compared to
35 PS on the present-day model. The output, however, remains identical on the new
model at thirty-five Nm. Another change on the new model that you must have
already noticed is the inclusion of inverted forks up front as against conventional
telescopic units on the model currently on sale. The instrument cluster of the bike has
additionally been revised and it'll show a great deal of further info within the style of
alert messages compared to the warning lights at present.
Achievements of the company
 Bikes of the year 2010 by BBC – Top Gear
 Hall of pride Awards by CNBC – Overdrive
 Bike of the year by Bike India
 Bike India up to 150 cc by India
 2011 Mc of the year up to 250 cc by NDTV Car & Bike Awards
 “Golden Steering Wheel” for Executive Motorcycle by Auto Build
 Best Value for Money Vehicle of the year by ET Zig Wheels
Swot Analysis of Bajaj Auto Ltd
Strength
 Brand Positioning – Bajaj Auto is the world’s fourth largest two and three-wheeler
auto manufacturer in the world. The company manufactures motorcycles,
passenger carriers and goods carriers. The most popular brand in the two-wheeler
segment of Bajaj Auto’s portfolio is Bajaj Pulsar. In the three-wheeler segment, it
has a range of 2-stroke and 4-stroke passenger as well as goods carrier.
 Sustainable business – The Company’s extensive range of products allows them to
cater to a wide range of customers. Also, it helps the company to deliver
sustainable business growth.
 Strong Distribution – Bajaj Auto has dealers throughout India and it has always
maintained a smooth supply chain. Bajaj motorcycles and three wheelers are
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always in demand and are supplied to various small and large cities. Hence, there
are various Bajaj Auto service centres throughout the country.
 Awards and recognition – Bajaj Auto were ranked 96th in Forbes’ most
innovative companies list in 2014. Bajaj Auto was also named Company of the
year in 2011 by Economic Times. Bajaj Pulsar has been received various awards
and recognition.
 Market share in two-wheeler category – As can be seen from the graph below,
Bajaj auto has a 13% of market share in the two-wheeler category. It is 3rd in the
two-wheeler category.
Weaknesses
 Lack of Presence in the scooter market – Bajaj Auto was the leader in the scooter
market till the motorcycle momentum picked up in the 1990s. Bajaj shut down its
scooter business post that, but the scooter business is blooming and showed a
growth of 12% in 2016. Today, Honda Activa and other such models are the
leders in scoothers. The company is losing out on a huge market by not re-
entering the scooter market.
 Labour issues – Bajaj Auto has been involved in Labour and wage issues in the
recent past. In February 2014, workers in its Chakan plant threatened to go for
hunger strikes. In 2013, Chakan and Pune plant workers went on strike. This
damages Bajaj’s image and it also has an adverse effect on the production.
 Not a Global brand – Even after producing in high volume, Bajaj is not recognised
as a global brand. It has not entered other markets or not expanded internationally
as fast as it could. It is predominantly an Indian market player.
Opportunities
 Growth in motorcycle market – The global motorcycle manufacturing is expected
to grow strongly in the years to come. According to the market line, the global
motorcycle industry generated about $75000 million in 2016. It showed a growth
of about 6.3%. The market is expected to grow at 7% CAGR for the 2016-19
period to approximately reach $93450 million.
 Growing India three-wheeler Industry – The three-wheeler market registered a
growth of 11.51% in FY2016 and is expected to grow at a CAGR of 4.4% to
approximately reach $4.2 billion by 2017.
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 Launch new vehicles – Bajaj Auto should further look to strengthen
its product portfolio like it has done in the past with models of Avenger Pulsar,
Discover etc. By continuously encapsulating new technologies into its portfolio,
Bajaj’s image of being an innovative company will also be maintained.
Threats
 Intense competition in the 2-wheeler market – The 2-wheeler market in India is
highly competitive with various top brands such as Global and Indian giants such
as Suzuki, Hero MotoCorp, TVS etc. fighting to capture market share. Fuel
efficiency and price being crucial for the Indian market, all the brands are
constantly innovating to achieve higher fuel efficiency in low price.
 High Bank interest rates – In comparison with other countries, India has a higher
lending rate which is growing. The growth in interest rates affects consumer
decision on spending on vehicles etc. bought on interests.
 Environmental Regulations – Auto companies are subjected to strict
environmental regulations in India. The BS regulations are constantly updated in
India and hence the companies have to constantly modify their products in order
to fall in line with the regulations and hence, this may adversely affect company’s
financial condition.
CSR Activities
 Education – The two flagship projects for Bajaj Auto have been the Bajaj
Education Initiative (BEI) and the e-Learning Project. The BEI covers 76 low cost
schools (a mix of private and government schools) in Pimpri-Chinchwad area of
Pune, and supports them with infrastructure development and capacity building.
The e-Learning project has reached more than 1550 schools till date- covering
Maharashtra and Rajasthan. Both of these are implemented by Jankidevi Bajaj
Gram Vikas Sanstha, our own NGO.
In addition, Bajaj Auto has supported school infrastructure development,
vocational training for entrepreneurship, teach-to-lead as well as scholarships for
meritorious students. Bajaj Auto is also supporting Bhartiya Yuva Shakti Trust
(BYST) in training 25000 young persons in Aurangabad and Wardha to create
1000 entrepreneurs in 5 years. Over 177 entrepreneurs have been created in first 2
years of the project.
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 Health – Bajaj Auto works with a wide array of partners on issues related to
Health. The supported projects include projects on mid-day meals, clean drinking
water, sanitation, blood banks, path lab services in remote mountain villages,
breast cancer research, and vision care. Bajaj Auto and YCMH Hospital Pune, in
collaboration with NACO, have also been operating the ART centre in YCMH
hospital. This centre supports more than 5000 patients currently. Bajaj Auto has
also supported Sri Aurobindo Society, Puducherry, to set up the “International
Centre of Excellence for Integral Yoga”.
 Supporting arm force – Bajaj Auto has contributed Rs 1 Crore to the Armed
Forces Flag Day Fund Bajaj Auto Has also supported Paraplegic Rehabilitation
Centre at Khadaki, Pune, with 20 State of the Art wheelchairs.
 Rural development and other projects – Bajaj Auto have contributed Rs 1 Crore
to the Armed Forces Flag Day Fund. Bajaj Auto Has also supported Paraplegic
Rehabilitation Centre at Khadaki, Pune, with 20 State of the Art wheelchairs.
History of Hero MotoCorp
The principal owner of the Hero two-wheeler manufacturing unit – Hero Cycles was
founded in 1956 in Ludhiana, Punjab, by the Munjal brothers. In 1975, Hero Cycles
became the largest manufacturer of bicycles in India. An agreement of collaboration
and formation of a joint venture was signed between Hero Group of India and Honda
of Japan in 1983. A year later, Hero Honda Motors Limited came into existence. In
2001, the company attained the status of being the largest manufacturer of two-
wheelers in the world. The Japanese partner Honda walked out of the partnership in
2010, selling the 26 percent of stakes it held to be the company was named Hero
MotoCorp in August 2011.
Hero Honda became the first company in the country to introduce four–stroke
motorcycles and set the standards for fuel efficiency, pollution control and quality. It
has an excellent distribution and service network spread throughout the country.
Hero Honda bikes currently roll out from its three globally benchmarked
manufacturing facilities. Two of are based at Dharuhera and Gurgaon in Haryana and
the third state of the art manufacturing facility was inaugurated at Haridwar,
Uttarakhand in April this year. These plants together are capable of producing out 4.4
million units per year.
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The company has sold over 7 crore 2-wheelers since its inception in 1984 till March
2013. It sold 60.7 lakh 2-wheelers in 2012, out of which 55 lakhs were motorcycles.
Hero MotoCorp sells more two wheelers than the second, third and fourth placed two-
wheeler companies put together. Its most popular bike Hero Honda Splendour sells
more than ten lakh units per year.
In 2013, Hero MotoCorp registered best ever calendar year performance of more than
61 lakh unit sales. By selling 6,25,000 units in the month of October, it became the
first-ever manufacturer to cross landmark 6 lakh unit sales in a month. In the last
quarter of the year or say in the festive season, the company sold more than 16 lakh
units, while in non-festive time in April–May 2013, it managed to sell out quite good
numbers of units—11 lakh.
Company Profile
Type Public
Traded as · BSE: 500182
· NSE: HEROMOTOCO
· BSE SENSEX Constituent
Industry Automotive
Founded 19 January 1984; 35 years ago
Founder Dr. Brijmohan Lall Munjal
Headquarters New Delhi, India
· Dr. Brij Mohan Lall Munjal (Chairman Emeritus)
Key people (Deceased)
· Pawan Munjal (Chairman, MD & CEO)
Products Motorcycles, Scooters
Revenue ₹ 32,230 crore
Operating income ₹ 5280 crore
Net income ₹ 3697 crore
Number of
employees 5842
Website www.heromotocorp.com
Source – https://en.wikipedia.org/wiki/Hero_MotoCorp
About the Company
With innovation at the core of its philosophy, the New Delhi (India) headquartered
Hero MotoCorp has been at the forefront of designing and developing technologically
advanced motorcycles and scooters for customers around the world. It became the
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world’s largest two-wheeler manufacturer in 2001, in terms of unit volume sales in a
calendar year, and has maintained the coveted title for the past 18 consecutive years.
With over 85 million satisfied customers across the globe, it continues to champion
socio-economic progress and empowerment through its range of products and
services.
Led by Dr Pawan Munjal, Chairman, Hero MotoCorp, it has taken rapid strides to
expand its presence to 37 countries across Asia, Africa, and South & Central America.
Hero MotoCorp is a truly global enterprise with a workforce that comprises of people
from different nationalities including India, Bangladesh, Colombia, Germany,
Austria, Japan, and France.
Hero MotoCorp is the dominant market leader in India – the world’s largest two-
wheeler market – with over 50% share in the domestic motorcycle market.
Vision
The story of Hero Honda began with a simple vision – the vision of a mobile and an
empowered India, powered by its bikes. Hero MotoCorp Ltd.is Company’s new
identity which reflects its commitment towards providing world class mobility
solutions with renewed focus on expanding company’s footprint in the global area.
Mission
Its mission is to become a global enterprise fulfilling its customer’s needs and
aspirations for mobility, setting benchmarks in technology, styling and quality so that
it converts its customers into its brand advocates. The company will provide an
engaging environment for its people to perform to their true potential. It will continue
its focus on value creation and enduring relationship with its partners.
Strategy
Its key strategies are to build a robust product portfolio across categories, explore
growth opportunities globally, continuously improve its operational efficiency,
aggressively expand its reach to customers, continue to invest in brand building
activities and ensure customer and shareholder delightment.
Manufacturing
India's largest two-wheeler manufacturer Hero MotoCorp is planning to bring
15 new and updated two-wheelers in the running financial year. The company
officials announced that these products will be launched in domestic as well as
international markets.
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Products
It’s offers wide range of two-wheeler products that include motorcycles and scooters,
and has set the industry standards across all the market segments.
Present Scenario
Hero MotoCorp sold a total of 38.9 million units until the end of July 2017,
overtaking the cumulative sales of 37.4 million two-wheelers registered by Hero
Honda in its 27 years. Notably, in these six years, the share price of Hero Moto-Corp
has also doubled, with the market cap racing past 77,000 crores.
The overall two-wheeler market has increased by over 31% to add more than 4.2
million units in this period (FY12-FY17). Total two-wheeler sales in the domestic
market stood at 17,589,511units at the end of the last financial year. Hero MotoCorp
had a share of 36.9%, and its nearest competitor and erstwhile partner Honda
Motorcycle & Scooter India (HMSI) 26.9%.
Achievements
 Best launch - Two-wheeler at the CNB Auto Expo Awards for Excellence 2018
 Highest Ranked Executive Motorcycle in Initial Quality - Hero Super Splendor -
by JD Power India
 Bike sport award of the year - Times Auto Awards
 Hero Glamour - Commuter Motorcycle of The Year - NDTV Car and Bike awards
2017
 Creative Television Commercial of the Year - Hero MotoCorp - Play Inspire FIFA
- NDTV Car and Bike awards 2017
 Indian MNC of the Year by All India Management Association (AIMA)
 Manufacturer of the year - NDTV Car and Bike awards 2017
 Highest Ranked Executive Motorcycle in Initial Quality - Hero Super Splendor -
by JD Power
 India The Brand Trust Report published by Trust Research Advisory has ranked
Hero Honda in the 7th position among the most trusted brands in India
 It received the 'Best value for Money Bike Maker' and 'Best Advertising' in Two
Wheelers Category at the Auto India Best Brand Awards 2012
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Swot analysis of hero motocorp
Strength
 Huge Brand Equity – This is really one of the biggest strengths of Hero
MotoCorp. This company is one of the biggest players in the market of two-
wheelers.
 Strong Brand Image – A Company can only grow once it is popular by its brand
name. Hero MotoCorp is really one of those companies who can play hard on the
popularity field.
 Excellent Distribution – Hero MotoCorp has more than 3000 dealerships and
service centres which have made it the leading company in the industry.
 Wide Variety of Products– The more products a company launch successfully, the
more popular it becomes. Hero MotoCorp is, therefore, the real hero in the
market.
 Awards and Recognition – Customers can rely on a brand when it is
acknowledged with rewards and awards. Hero MotoCorp has received many in all
these years.
 Sponsorships – Events, related to sports and racing provide sponsorships to the
company that has made it hugely popular of all its competitors.
Opportunities
 The demand for two-wheelers is increasing a lot, and that brings the opportunity
for the company to grow bigger.
 Export of Hero Moto Corp bikes is limited i.e. untapped international markets.
 Introduction of bikes in the premium segment.
Threats
 Strong Competition – There are lots of other companies which are emerging
rapidly and give tough competition to the company.
 Betterment of Public Transport– As other modes of transportation have increased
a lot, the use of two-wheelers is not in demand.
 Dependence on government policies and rising fuel prices can affect business
margins for Hero Moto Corp.
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CSR Activities
At Hero MotoCorp, the principles of CSR are integral to the way we conduct our
business. We believe in 'Manufacturing Happiness' through our various factories,
where man, machine and nature work together in harmony to minimize environmental
impact and develop a healthy ecosystem. Our efforts focus on activities that enhance
environmental capital, support rural development and education, facilitate healthcare,
create sustainable livelihoods and promote sports and road safety awareness. We Care
is our CSR Umbrella, under which we have four flagship programmes – Happy Earth,
Ride Safe India, and Educate to Empower, that are aimed at fulfilling the CSR vision
to have a Greener, Safer and Equitable world.
Each Hero employee has taken the CSR pledge to be environmentally conscious and
also encourage green and sustainable lifestyle among their families and friends.
Additionally, through our portal, blogs, social media and commercial literature, we
ensure that messages focusing on conservation of natural resources and adopting a
sustainable lifestyle are spread among the masses. Few distinct events are -
 The Green Drive – This initiative was launched in Delhi NCR with an aim to plant
and maintain trees at parks of Delhi Development Authority (DDA) and Tilpath
Valley (Delhi). We partnered with DDA and Times of India to plant more than
120,000 trees in August 2015. This Drive mobilized nearly 40,000 people
including students of various schools, political and religious leaders, as well as
citizens of Delhi. To ensure the survival of saplings, we work along with relevant
organizations/individuals and volunteers.
 The Ride Safe India initiative is a nationwide campaign launched by Hero
MotoCorp to promote the cause of road safety in India.
 Supporting Girl Child and School Student Education programs with high focus on
Social and Community Development.
Financial Statements
Financial statements are written records that convey the business activities and the
financial performance of a company. Financial statements include the balance sheet,
income statement, and cash flow statement. Financial statements are often audited by
government agencies, accountants, firms, etc. to ensure accuracy and for tax,
financing, or investing purposes.
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Features of financial statements
The following are the features of financial statements.
 They are always expressing in monetary terms. They ignore the qualitative
aspects. In other words, the non- monetary events do not come under the scope of
financial statements.
 They are always prepared for a certain period of time. They generally cover the
period of one year.
 They are historical in nature since they always present the past performance.
Hence, they do not carry the futuristic approach.
Objectives of financial statements
Financial statements of a company are the result of management's past actions and
decision. They are the end products of the accounting process. They give a picture of
solvency and profitability of a company. The major objectives of the financial
statements can be listed as follows.
 To provide the financial information to the internal and external users.
 To provide the information, which are useful in the process of decision making.
 To reveal the profitability and solvency of the company.
 To facilitate the intra company and inter comparison of the financial
performance.
 To show the financial health of the company.
 To help to evaluate the financial position and efficiency of the management.
Importance of financial statement
Financial statements are the importance sources of information to all the users of
accounting information like; management, owners, debtors, creditors, employees,
government agencies, financial analysis, etc. the following are the points which
highlight the importance of financial statement;
 Financial statements are the summary of information relating to profitability, and
resources owned by the firm.
 Financial statements provide the information which can be compared with those
of other firms.
 Employees can use them to demand for increment in salary and other benefits.
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 Bankers and other financial institutions can use them to make the lending
decisions.
 Government calculate the tax revenue of the firms based on financial statements
of the companies.
 Financial statements can be used as the basis for management decision-making
purpose like planning, promotion, research and development decision, etc.
 Existing investors can use them to assess how efficiently the firm is using their
funds.
 Potential investors can obtain information which can be useful to take the
investment decisions.
 Financial statements reveal the history of the firm.
 They can be used to assess the firm's liquidity and solvency position.
The financial statements suffer from the following limitations-
 They include the quantitative information which is expressed in monetary units.
They do not provide any qualitative information which may have greater impact
upon the decision makers.
 They record and reveal only the historical date in nature. They do not include any
future possible result.
 Financial statements are strictly confined within the boundary of some accounting
principles. They are uses as the guidelines in recording and reporting the financial
transactions.
 Financial statements are just the summary reports of the company’s financial
transactions. All the detailed information regarding to such transaction cannot be
disclosed in the financial stalemates.
 Financial statements show the information on cost basis i.e. the price paid on the
transaction's date. The effect of price level changes (inflation) is not shown in the
financial statements. In another words, the information is not given in the currents
value.
Financial statement analysis
Meaning of financial statement analysis
Financial statement analysis is an analysis that highlights the important relationships
in the financial statements. It focuses on evaluation of past performance of the
business firms in terms of profitability, liquidity, solvency, operational efficiency and
16
growth potentiality. Financial statement analysis includes the methods used in
assessing and interpreting the result of past performance and current financial position
as they relate to particular factors of interest in investment decisions. Thus, it is an
important means of assessing past performance and in forecasting and planning future
performance.
 Assessment of past performance – Past performance is often a good indicator of
future performance. Therefore, an investor or creditor is interested in the trend of
past sales, cost of goods sold, operating expenses, net income, cash flows and
return on investment. These trends offer a means for judging management's past
performance and are possible indicator of future performance.
 Assessment of current position – The analysis of current position indicates where
the business stands today. Financial statement analysis shows the current position
of the firm in terms of the types of assets owned by a business firm and the
different liabilities due against the enterprises.
 Prediction of profitability and growth prospects – The financial statement analysis
help in assessing and predicting the earning prospects and growth rates in earnings
which are used by investors while comparing investment alternatives and other
users in judging the earnings potential of business entries. Investors also consider
the risk or uncertainty associate with the expected return. The decision makes are
futuristic are always concerned with the future. Financial statements which
contain the information on past performance are analyzed interpreted and used as
the basis for forecasting the future return and risk.
 Predication of bankruptcy and failure – Financial statement analysis is a
significant tool in assessing and predicting the bankruptcy and probability of
business failure. Through the analysis of the solvency position, the probability of
business failure can be predicated to the greater extent. After such prediction
managers and investors both can take some preventive measures to avoid or
minimize losses.
 Loan decision by banks and financial institutions – Financial statement analysis is
used by banks, finance companies, lending agencies, and other to make sound
loan or credit decision. With the help different borrowers. Because it helps in
determining credit risks, deciding terms and condition of loans, interest rates,
maturity date, etc.
17
 Assessment of the operational, efficiency – Financial statement analysis is the tool
that helps to assess the operational efficiency of the management of a company.
The actual performance of the firm which are revealed in the financial statements
can be compared performance can be used as the indicator of efficiency of the
management.
 Simplifying the information – basically, the financial statement analysis further
interprets the information disclosed in the financial statements. It attempts the
tools that make the information readable and understandable even the average
types of users. For this purpose, the information is analyzed in rations, trend
percentages, graphs, diagrams, etc.
Techniques of financial statement analysis
Various techniques are used in the analysis of financial date to emphasize the
comparative and relative importance of date presented and to evaluate the position of
the firm. These techniques of analysis are intended to show relationships and change.
Among several techniques; the following are some of the most widely used
techniques.
 Horizontal analysis – The percentage analysis of increases or decreases in
corresponding items in comparative financial statements is called horizontal
analysis. It involves the computation of amount charges and percentage changes
from the previous to the current year. The amount of each item in the most recent
statement is compared with the corresponding item on the earlier statements. The
increase or decrease in the amount of the item is the listen together with the
percent of increase or decrease. When the comparison is made between two
statements, the earlier statement is used as the base.
 Vertical analysis – Vertical analysis uses percentage to show the relationship of
the different part to the total in a signal statement. Vertical analysis sets a total
figure in the statement equal to 100 percentages and computes the percentages of
each component of that figure. The figure to use as 100 percent will be total assets
or total liabilities and equity capital in the case of balance sheet and revenue or
sales in the case of the profit and loss account.
 Trend analysis – Using the previous year's data of a business enterprise, trend
analysis can be done to observe percentage changes over time in selected data. In
trend analysis, percentage changes are calculated for several successive years
18
instead of between two years. Trend analysis is important because with its long
run view, it may point to basis changes in the nature of business. By looking at a
trend in a particular ratio, one may find whether that ration is falling, rising or
remaining relatively constant.
 Ratio analysis – Ratio analysis is an important measure of expressing the
relationship between two numbers. A ratio can be computed from any pair of
numbers. To be useful a ration must represent a meaningful relationship. Ratios
are useful in evaluating the financial position an operation of company and in
comparing them to previous years or to other companies.
Importance of financial statement analysis
Financial statement analysis is equally important to the management, shareholders
creditors, debtors, potential investors, government agencies, bankers, general public,
etc. the importance of financial statement analysis can be summarized as follows-
 Helpful in planning and decision making.
 Helps in the evaluation of performance.
 Helps in the diagnosis of managerial and operating problems.
 Helpful to the bankers for credit decision.
 Basis for tax calculations.
 Helps the government to formulate polices.
 Basis of controlling.
Limitations of financial statement analysis
The following are the limitations of financial statement analysis
 It ignores the qualitative aspects of the business.
 Accurate comparison may not be possible if the companies have followed
different accounting principles.
 Financial statement analysis only identifies/ diagnoses the problems but cannot
suggest the solutions.
 There is the change of wrong analysis and misleading to the users.
Parties interested in financial statement analysis
The users of accounting information can be divided into two parties' namely internal
and external parties.
19
 Internal parties – The internal parties of the accounting information are concerned
with the management of the concern. They need financial statement so as to
perform the different organizational activities properly and smoothly and achieve
the objectives. Such activities are planning, policy making, implementing,
controlling etc. the internal uses of accounting information might
Directors
Partners
Managers
Officers Etc.
 External parties – The external parties are not directly involved in the
management and operation of a concern and they are external to the organization.
They are closely associated with the concern. They are -
a. Present as well as potential stockholder: a present stockholder needs accounting
information so that he/ she can decide whether to continue to hold the stock or sell
it. On the other hand a potential stockholder needs the financial information to
choose among competing alternative investments.
b. Bondholders, bankers and other creditors – A potential bondholder wants to be
ensured that the company will be able to pay back the amount owed at maturity
and the periodic interest payments. Similarly, a bank needs financial information
that will help it to determine the company's ability to pay the principle as well as
interest. Other creditors also want the assurance of their claims on due date and
make them interested on the financial information.
c. Government agencies – The government needs financial information to decide
on permitting contraction or expansion of business, import/ export etc. in many
cases, it becomes mandatory for the business to submit its financial information to
different government agencies as prescribed by law.
d.Other external users: many other individuals and groups rely on financial
information provides by business. They are -
 Public – The public needs financial information to know about the employment
opportunities, discharge of responsibility towards the society etc.
 Employees – The employees are interested in financial information since their
present as well as future is associated with the concern.
20
 Suppliers – When the suppliers sell the goods in credit, they want the payment on
time.
 Customers – The customers want to know whether the concern is able to supply
goods continually or not.
21
CHAPTER - 2
RESEARCH METHODOLOGY
Research Methodology provides information about the manner in which research has
been carried out. Research Methodology describes the procedure followed by the
researcher. Research Methodology is a systematic way to solve the research problem.
It deals with all the necessary steps that a researcher has to take to carry out the
research or steps taken towards problem-solving. The attempt of evaluation of the
Indian companies from different sectors has been done in the said research work. A
thorough analysis of impact of Ratio Analysis on the Financial Performance has been
carried out. The ‘financial performance’ has been defined using four important pillars
of performance. The pillars are Profitability, Liquidity, Solvency and Efficiency.
Objective of study
The main objective of the study is to apply ratio analysis to measure overall
performance of the organization. The following are the specific objectives for this
analytical study.
 To analyse the comparative financial soundness of both companies.
 To ascertain the optimum utilization of funds.
 To get the current scenario of Bajaj ltd as well as Hero moto corp ltd.
 To know the earning capacity or profitability in the form of ratio.
 To make the comparative study of ratio analysis between Bajaj Auto Ltd and Hero
MotoCorp Ltd.
 To know the capability of paying interest and dividend.
 To know the practice of presenting financial statement.
 To analyse financial and non-financial activities of the companies.
Hypothesis
H0: Bajaj Auto Ltd Company is in better financial position than Hero MotoCorp.
H1: Bajaj Auto Ltd Company is not in better financial position than Hero MotoCorp.
Scope of study
The scope of the study is limited to collecting financial data published in the annual
reports of the company every year. The analysis is done to suggest the possible
solutions. The study is carried out for 2 years (2016-2017) & (2017-2018) of Bajaj
Auto Ltd and Hero MotoCorp Ltd.
22
Sources of Data
Every research is based on sound facts and data that are collected data by the
researcher. The kind of data collected and the methods used to collect the data has a
very important aspect of the research.
Secondary Data
Secondary data refers to that data which is already in existence and someone has
obtained for specific purpose but reutilize by the researcher. The said research work is
based on the secondary Data of published financial statement of selected Indian
industries and the selected companies within them. The data of various financial
parameters have been obtained from the Annual Reports of the companies directly
from the official web sites of the company or stock exchange website.
Limitation of the study
 The study was confined only to one particular company.
 Ratio may be misleading in the absence of absolute data.
 Lack of proper standards.
Financial Ratios Analysis
Financial ratios analysis is the most common form of financial statements analysis.
Financial ratios illustrate relationships between different aspects of a company’s
operations and provide relative measures of the firm conditions and performance.
Financial ratios may provide clues and symptoms of the financial condition and
indications of potential problem areas.
Financial ratios generally hold no meaning unless they are compared against
something else, like past performance, another company/competitor or industry
average. Thus, the ratios of firms in different industries, which face different
conditions, are usually hard to compare.
Financial ratios can be an important tool for small business owners and managers to
measure their progress toward reaching company goals, as well as toward competing
with larger companies within an industry. In addition, tracking various ratios over
time is a powerful way to identify trends. Ratio analysis, when performed regularly
over time, can also give help small businesses recognize and adapt to trends affecting
their operations.
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Financial ratios are categorized according to the financial aspect of the business which
the ratio Measures -
 Liquidity ratios examine the availability of company’s cash to pay debt.
 Profitability ratios measure the company’s use of its assets and control of its
expenses to generate an acceptable rate of return.
 Leverage ratios examine the company’s methods of financing and measure its
ability to meet financial obligations.
Different ratios used in the study
 Current Ratio – The current ratio is a popular financial ratio used to test a
company's liquidity (Also referred to as its current or working capital position) by
deriving the Proportion of current assets available to cover current liabilities.
 Quick Ratio – The quick ratio or the acid-test ratio is a liquidity indicator that
further refines the current ratio by measuring the amount of the most liquid
current assets there are to cover current liabilities. The quick ratio is more
conservative than the current ratio because it excludes inventory and other current
assets, which are more difficult to turn into cash. Therefore, a higher ratio means a
more liquid current position.
 Inventory Turnover Ratio – The inventory turnover ratio is an efficiency ratio that
shows how effectively inventory is managed by comparing cost of goods sold
with average inventory for a period. This measures how many times average
inventory is “turned” or sold during a period.
 Debtors Turnover Ratio – The Debtors turnover ratio is an accounting measure
used to quantify a company's effectiveness in collecting its receivables or money
owed by clients. The ratio shows how well a company uses and manages the
credit it extends to customers and how quickly that short-term debt is collected or
is paid. The Debtors turnover ratio is also called the accounts receivable turnover
ratio.
 Debtor’s velocity Ratio – Debtor’s turnover ratio or accounts receivable turnover
ratio or velocity ratio indicates the velocity of debt collection of a firm. In simple
words, it indicates the speed of collection of credit sales.
 Creditors Turnover Ratio – The accounts payable turnover ratio is a short-term
liquidity measure used to quantify the rate at which a company pays off its
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suppliers. Accounts payable turnover shows how many times a company pays off
its accounts payable during a period.
 Working capital Turnover Ratio – Working capital turnover is a ratio that
measures how efficiently a company is using its working capital to support a
given level of sales. Also referred to as net sales to working capital, work capital
turnover shows the relationship between the funds used to finance a company's
operations and the revenues a company generates as a result.
 Dividend Pay-out Ratio – The dividend pay-out ratio is the ratio of the total
amount of dividends paid out to shareholders relative to the net income of the
company. It is the percentage of earnings paid to shareholders in dividends. The
amount that is not paid to shareholders is retained by the company to pay off debt
or to reinvest in core operations. It is sometimes simply referred to as the 'pay-out
ratio.'
 EBIT Margin – EBIT Margin is the ratio of Earnings before Interest and Taxes to
net revenue - earned. It is a measure of a company's profitability on sales over a
specific time period.
 EBT Margin – EBT margin shows company’s earnings before tax as a percentage
of net sales (revenues). This ratio is very close to the net income margin as it also
shows “bottom line” profit, except for the fact that the deducted income taxes are
not excluded, and that’s why this ratio is sometimes called pre-tax profit margin.
 Cash Ratio – The cash ratio is the ratio of a company's total cash and cash
equivalents to its current liabilities. The metric calculates a company's ability to
repay its short-term debt with readily-liquidated cash resources.
 Stock to Working Capital Ratio – Stock to working capital ratio is defined as a
method to show what portion of a company’s inventories is financed from its
available cash. This is essential to businesses which hold inventory and survive on
cash supplies. In general, the lower the ratio, the higher the liquidity of a company
is. However, the value of inventory to working capital ratio varies from industry
and company.
 Interest Coverage Ratio – The interest coverage ratio is a debt ratio and
profitability ratio used to determine how easily a company can pay interest on its
outstanding debt. The interest coverage ratio may be calculated by dividing a
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company's earnings before interest and taxes (EBIT) during a given period by the
company's interest payments due within the same period.
 Proprietary Ratio – The proprietary ratio (also known as the equity ratio) is the
proportion of shareholders' equity to total assets, and as such provides a rough
estimate of the amount of capitalization currently used to support a business.
Thus, the equity ratio is a general indicator of financial stability. It should be used
in conjunction with the net profit ratio and an examination of the statement of cash
flows to gain a better overview of the financial circumstances of a business.
 Working Capital Ratio – The working capital turnover ratio measures how well a
company is utilizing its working capital to support a given level of sales. Working
capital is current assets minus current liabilities. A high turnover ratio indicates
that management is being extremely efficient in using a firm's short-term assets
and liabilities to support sales. Conversely, a low ratio indicates that a business is
investing in too many accounts receivable and inventory assets to support its sales,
which could eventually lead to an excessive amount of bad debts and obsolete
inventory.
 Return on Capital Employed – The return on capital employed (ROCE) measures
the proportion of adjusted earnings to the amount of capital and debt required for a
business to function. For a company to remain in business over the long term, its
return on capital employed should be higher than its cost of capital; otherwise,
continuing operations gradually reduce the earnings available to shareholders. It is
commonly used to compare the efficiency of capital usage of businesses within
the same industry.
 EPS – Earnings per share is a measure of how much profit a company has
generated. Companies usually report their earnings per share on a quarterly or
yearly basis.
 DPS – Dividend per share (DPS) is the sum of declared dividends issued by a
company for every ordinary share outstanding. The figure is calculated by
dividing the total dividends paid out by a business, including interim dividends,
over a period of time by the number of outstanding ordinary shares issued. A
company's DPS is often derived using the dividend paid in the most recent
quarter, which is also used to calculate the dividend yield.
26
 Book Value Per Share – Book value per share is a market value financial ratio,
and the purpose of calculating it is to relate shareholders' equity to the number of
shares of common stock outstanding. The number of shares of preferred stock is
not considered, making book value more directly relevant to common shares
outstanding.
 Return on Net Worth – Return on Net worth is a ratio developed from the
perspective of the investor and not the company. By looking at this, the investor
sees if entire net profit was passed on to him, how much return would be getting.
It explains the efficiency of the shareholders’ capital to generate profit.
 Dividend Coverage Ratio – Dividend coverage ratio essentially calculates the
capacity of the firm to pay a dividend. Generally, this ratio is calculated
specifically for preference equity shareholders. Preference shareholders have the
right to receive dividends. The dividends of preference shares may be postponed
but payment is compulsory and therefore they are considered as a fixed liability.
 Earnings Yield – The earnings yield refers to the earnings per share for the most
recent 12-month period divided by the current market price per share. The
earnings yield (which is the inverse of the P/E ratio) shows the percentage of each
dollar invested in the stock that was earned by the company. This yield is used by
many investment managers to determine optimal asset allocations.
 Price Earnings Ratio – ‘The price-to-earnings ratio (P/E ratio) is the ratio for
valuing a company that measures its current share price relative to its per-share
earnings (EPS). The price-to-earnings ratio is also sometimes known as the price
multiple or the earnings multiple.
27
CHAPTER-3
REVIEW OF LITERATURE
Pai, Vadivel & Kamala (1995) have studied about the diversified companies and
financial performance. Main purpose of research was found out the relationship
between diversified firms and their financial performance. For the purpose of
research, they have selected seven large firms and analysed those firm which having
different products-both related and otherwise-in their portfolio and operating in
diverse industries. In this study, a set of performance measures / ratios was employed
to determine the level of financial performance and variation in performance from one
firm to another has been observed and statistically established. They revealed that the
diversified firms studied have been healthy financial performance.
According to Lesakova (2007) ratios reveals much more about the company and its
operation though it is only the mathematical calculation dividing one number by
another number but cautioned for taking into other related considerations to get the
real picture of the concern, otherwise the inferences may be misleading.
GM-Marketing, Bajaj Auto Ltd, Milind Bade (2011) has mentioned that Bajaj Auto
Limited is currently trying to move the industry from a commuter to a biker mindset
and at present the focus of the company is on keeping the sub brands and the mother
brand different and the main motive behind establishing individual brand is to create
differentiation which would help Bajaj auto, as an organization to develop
relationship easily with its customers.
Pawan Chhabra (2011) has quoted that the dominant position of Bajaj auto limited
can be seen through the sales of premium segment where in every second bike sold is
pulsar., one major reason for this was the company’s ability to constantly focus on
R&D with regular alterations to make the motorbike look fresh at all times as a result
and as a result of this today Bajaj has almost more than fifty percent market in the
premium segment (for FY 2010-2011) which is followed by Honda Motorcycle &
scooter India with a nineteen percent market share.
Bhunia, Mukhuti & Roy (2011) have discussed about “Financial Performance
Analysis-A Case Study”. The main aim of study was to identify the financial strengths
and weaknesses by covering two public sector drug & pharmaceutical enterprises
listed on BSE. For study purpose, they have been selected twelve years from 1997- 98
to 2008-09. They analysed the data by using ratios, and statistical tools like A.M.,
28
S.D., C.V., linear multiple regression analysis and test of hypothesis t-test. They used
SWOT analysis to overcome the weakness and grab the opportunities available in
public sector drug & pharmaceutical enterprises in consideration of strengths and
threats. They concluded that growth during last decade was noteworthy and market
trend was growing at a faster rate. They suggested that the opportunities can be
grabbed through the diversification of export basket in untouched foreign
destinations. They also revealed that strict quality standards, services and use of latest
technology can provide an edge over competitors across the globe
Amrit Raj (2012) has reported that Hero Moto Corp Ltd is a focusing on technology
revamp by having tie ups with US based EBR racing and with Austria based engine
maker AVL these moves are with an ultimate aim to extend arm in R&D as the
company has decided not to run the existing brands on Honda engines. According to
Arvind Saxena (2010), no company in automobile sector can fight competition on
price. Companies need to have the right product, distribution, CRM and after sales
service network to grow.
Mahantesh Sabarad (2012) has argued in context to Hero moto corps move to
replace all Honda products and not brand names, that Indian consumers tend to be
quick in noticing any difference between the current and past variants of motorcycles
they buy and any product shortcoming would be at the Hero moto-corps disadvantage.
The researcher agrees the same.
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CHAPTER-4
DATA ANALYSIS AND INTERPRETATION
A relationship between various accounting figures, which are connected with each
other expressed in mathematical terms, is called accounting ratios. According to
Kennedy and Macmillan, the relationship of one item to another expressed in simple
mathematical form is known as known as ratio Analysis and Interpretation of various
accounting ratio gives a better understanding of the financial condition and
performance of a business concern.
Ratio analysis
Ratios analysis is one of the techniques of financial analysis to evaluate the financial
condition and performance of a business concern. Simply, ratio means the comparison
of one figure to other relevant figure or figures. According to Myres, “Ratios analysis
of financial statements is a study of relationship among various financial factors in a
business as disclosed by a single set of statements and a study of trend of these factors
as shown in a series of statements.”
Objectives of ratio analysis
Interpreting the financial statements and other financial data is essential for all
stakeholders of an entity. Ratio Analysis hence becomes a vital tool for financial
analysis and financial management. Let us take a look at some objectives that ratio
analysis fulfils.
 Measure of Profitability – Profit is the ultimate aim of every organization. So if I
say that ABC firm earned a profit of 5 lakhs last year, how will you determine if
that is a good or bad figure? Context is required to measure profitability, which is
provided by ratio analysis. Gross Profit Ratios, Net Profit Ratio, Expense ratio etc
provide a measure of profitability of a firm. The management can use such ratios
to find out problem areas and improve upon them.
 Evaluation of Operational Efficiency – Certain ratios highlight the degree of
efficiency of a company in the management of its assets and other resources. It is
important that assets and financial resources be allocated and used efficiently to
avoid unnecessary expenses. Turnover Ratios and Efficiency Ratios will point out
any mismanagement of assets.
 Ensure Suitable Liquidity – Every firm has to ensure that some of its assets are
liquid, in case it requires cash immediately. So the liquidity of a firm is measured
30
by ratios such as Current ratio and Quick Ratio. These help a firm to maintain the
required level of short-term solvency.
 Overall Financial Strength – There are some ratios that help determine the firm’s
long-term solvency. They help determine if there is a strain on the assets of a firm
or if the firm is over-leveraged. The management will need to quickly rectify the
situation to avoid liquidation in the future. Examples of such ratios are Debt-
Equity Ratio, Leverage ratios etc.
 Comparison – The organizations’ ratios must be compared to the industry
standards to get a better understanding of its financial health and fiscal position.
The management can take corrective action if the standards of the market are not
met by the company. The ratios can also be compared to the previous years’ ratios
to see the progress of the company. This is known as trend analysis.
Importance of ratio analysis
Another importance of ratio analysis is the fact that it allows a company to compare
its performance with that of other companies in the same industry. In the case of huge
corporations with different subsidiaries and branches in various locations around the
globe, the importance of ratio analysis is clear. Such companies can compare the
result of the ratio analysis of the different subsidiaries with the aim of finding out
which ones are performing better than the rest. This type of an analysis can be applied
toward allocating necessary resources to the under-performing subsidiaries in a more
efficient manner.
Also, the importance of ratio analysis can be seen in the way it gives potential
investors a quick snap shot of the financial condition of a business. Such information
may help the investor decide if the business will be profitable or not. If the results of
the ratio analysis point toward strong profits, the investor may decide to invest in the
business. In the same sense, if the business is not performing well, a prospective
buyer may use this information as a bargaining chip to bid a low price for the
business.
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I. Solvency ratio – The ratios which indicate financial soundness of the company,
these ratios can be analysed to understand short term solvency of the company.
A. Short term solvency ratio
 Current Ratio – The current ratio indicates a company's ability to meet short-
term debt obligations. The current ratio measures whether or not a firm has
enough resources to pay its debts over the next 12 months. Potential creditors use
this ratio in determining whether or not to make short-term loans. The current
ratio can also give a sense of the efficiency of a company's operating cycle or its
ability to turn its product into cash.
Current Asset
Current Ratio =
Current Liabilities
Table No.1 Current Ratio

Company Bajaj Auto Ltd Hero MotoCorp Ltd
Year 2016-2017 2017-2018 2016-2017 2017-2018
Current Asset 9468.53 9250.83 7570.51 9002.23
Current Liabilities 3212.84 4111.40 4176.09 4481.36
Current Ratio 2.94 2.25 1.81 2.01
Source – Done by the researcher
4
Current ratio (Graph No.1)
3
0
2016-2017 2017-2018
Bajaj Auto Ltd Hero Moto Ltd
 Interpretation – In 2016-2017 Bajaj has 2.94 ability of firm to repay it’s against
Rs 1 loan & here hero MotoCorp has 1.81. In 2017-2018 Bajaj has 2.25 ability of
firm to repay its short-term loan & Hero MotoCorp has 2.01. So, if the current
ratio is greater than 2:1, it means that company has adequate current assets as
compared to its current liabilities. From the above we can say Bajaj has dominant
position in market as compared to Hero MotoCorp. However, if we look of
32
individual performance Bajaj current ratio is dropped from 2.92 to 2.25 and Hero
MotoCorp is increased from 1.82 to 2.0.
 Quick Ratio – Quick ratio is refined version of current ratio, it excludes those
assets which company may have in possession from a very long time and may not
be able to convert them into cash in next 12 months, because such assets cannot be
used to finance current liabilities and include all current liabilities except Bank
OD, Cash credit and Income received in advance.
uic Assets
Quick Ratio =
uic Liabilities
Table No.2 Quick Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
Quick Asset 8740.15 8508.25 6862.03 8905.95
Quick Liabilities 3212.84 4111.40 4176.69 4481.36
Quick Ratio 2.72 2.07 1.64 1.79
Quick Ratio (Graph No.2)

3
2.5
2
1.5
1
0.5
0
2016-2017 2017-2018
Bajaj Auto ltd Hero Moto Corp
Interpretation – Quick ratio evaluates the liquidity of a company by comparing its

cash plus almost cash current assets with its entire current financial obligations. A
firm with a quick-or-acid-test-ratio of 1:1 is considered to have sufficient liquidity. A
higher quick ratio is best. From above data we can conclude that both the company’s
ratio is greater than 1 which means they both have enough quick assets to pay off their
liabilities but Bajaj Auto Ltd. Has higher Liquidity as compared to Hero MotoCorp
Ltd.
33
 Cash Ratio – Cash ratio signifies absolute liquidity of the company. It indicates
the level of cash and cash equivalent the company has to meet its current
liabilities. It is the most conservative of all the liquidity measurements, since it
excludes inventory and accounts receivable. This ratio may be too
conservative, especially if receivables are readily convertible into cash within
a short period of time.
Cash and ban balance Mar etable Securities

Cash ratio =
Current Liabilities
Table No.3 Cash Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
Cash and Bank 301.36 792.66 195.39 237.57
Balance
Marketable securities 6050.08 5765.41 4423.01 5591.12
Current Liabilities 3212.84 4111.40 4176.69 4481.36
Cash Ratio 1.98 1.60 1.11 1.30
Cash Ratio (Graph No.3)

2.5
1.5
0.5
0
2016-2017 2017-2018
Bajaj Auto Ltd Hero Motocorp Ltd
Interpretation – Cash ratio measures the immediate amount of cash available to

satisfy short-term liabilities. A cash ratio of 0.5:1 or higher is preferred. Both the
companies Bajaj and Hero Motocorp have cash ratio more than 1. Which means that
company will be able to pay off its current liabilities with cash and cash equivalents.
Here bajaj has higher current ratio as compared to Hero Motoorp.However if we look
34
at individual performance bajaj current ratio is dropped from 1.98 to 1.60 and hero
motocorp ltd is increased from 1.11 to 1.30.
 Stock to Working Capital Ratio – The Inventory to Working Capital ratio
measures how well a company is able to generate cash using Working Capital at
its current inventory level. This ratio signifies the percentage of stock in working
capital. Higher percentage signifies that more money is blocked in stock which
may create a liquidity problem in short term. This is a great ratio to be used with
several others to thoroughly investigate the inner workings of a company.
Closing inventory
Stock to working capital ratio =
Wor ing capital
Table No.4 Stock to Working Capital Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
Closing Inventory 728.38 742.58 708.58 962.68
Working Capital 6255.69 5139.43 3393.82 4520.87
Stock to Working 11.64 14.45 20.89 21.29
Capital Ratio
Stock To Working Capital Ratio (Graph No.4)

25
20
15
10
5
0
2016-2017 2017-2018
Bajaj Auto Ltd Hero MotoCorp Ltd
Interpretation – A Low value of 1 or less of stock to working capital means that a

company has high liquidity of current asset. From the above data can conclude that
the Bajaj ratio is increased from 11.64 to 14.45 but the Hero MotoCorp has higher
ratio as compared to Bajaj Auto Ltd which may be due to excessive inventories can
place a heavy burden on the cash resources of a company, it is not favourable for
management. So, it is not a good indication for the company.
35
B. Long term solvency ratio
a. Capital Structure Ratios
 Structure ratio – This ratio studies the extent of the total assets financed by
proprietors. When a higher proportion of Capital employed is financed by owners,
the financial leverage of the firm is low and therefore long-term solvency of the
firm is high, accordingly the financial risk also reduces. The ratio is relevant to
loan providers like bankers, financial institutions. It is also important to investors.
wner s Funds
Structure ratio =
Total Capital Employed
Table No.5 Structure Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
wner’s Funds 17856.6 20425.26 10382.89 12064.67
Total Capital 18424.78 21029.6 11135.31 12915.37
Employed
Structure Ratio 1 1 0.80 0.93
Structure Ratio (Graph No.5)

1.2
1
0.8
0.6
0.4
0.2
0
2016-2017 2017-2018
Interpretation– From the above ratios, it is clearly evident that Bajaj Auto has no
borrowed funds indicating entire capital employed is financed by owners and
therefore solvency of firm is high and this is no financial risk. Even Hero MotoCorp is
largely financed by owners indicating solvency of firm is high and low financial risk.
Comparing we can say both the firms are capable of facing depression in years of low
profit.
36
 Debt Equity Ratio – The debt to equity ratio (D/E) is also widely used as an
indication of the level of financial leverage. While there are several ways of
computing this ratio, the most useful version is to express long-term debt as
percent of total equity. Thus, it focuses only on the long-term financing, both debt
and equity, and it is meaningful when we want to examine the long-term leverage.
Total equity includes both preferred equity and common equity. A higher debt
equity ratio indicates greater leverage and potentially higher financial risk.
Debt
Debt Equity Ratio =
Equity
Table No.6 Debt Equity Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
Debt 0.00 0.00 248 225
Equity 17856.59 20425.26 10382.89 12064.67
Debt Equity Ratio 0.00 0.00 0.02 0.02
0.025
Debt Equity Ratio (Graph No.6)
0.02
0.015
0.01
0.005
0
2016-2017 2017-2018
Bajaj Auto Ltd. Hero MotoCorp Ltd.
Interpretation – The ratio tells about how much is the ratio of total debt with respect
to total equity of the company. Higher the total debt to equity ratio higher will be the
debt of the company. Optimum Debt Equity Ratio should be 1:2. A high debt and
equity ratio is preferable to firm from profitability’s point of view but harmful when
the return on capital employed is less than cost of capital. In Bajaj Auto Ltd there is
balance between debt and equity as the ratio in both the years is nil. In Hero
MotoCorp Ltd There is Low Debt-Equity ratio reflects the strong paying ability of the
concern i.e. 0.02 in both the years.
37
b. Coverage Ratios
 Interest coverage ratio – The interest coverage ratio is a debt ratio and
profitability ratio used to determine how easily a company can pay interest on its
outstanding debt. The interest coverage ratio may be calculated by dividing a
company's earnings before interest and taxes (EBIT) during a given period by the
company's interest payments due within the same period.
EBIT
Interest Coverage Ratio =
Interest
Table no.7 Interest Coverage Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
EBIT 5334.33 5647.11 4595.67 5273.24
Interest 1.40 1.31 27.28 30.80
Interest Coverage 3810.24 4310.80 168.46 171.21
Ratio
Interest Coverage Ratio (Graph No.7)

5000
4000
3000
2000
1000
0
2016-2017 2017-2018
Bajaj Auto Ltd Hero Motocorp Ltd

Interpretation – Interest coverage ratio tells about how much are the interest
expenses of the company as compared to the operating profit of the company. So, by
this ratio we can estimate the position of company that how much the company is
paying interest as compared to other companies in the industry. Interest Coverage
Ratio of Bajaj Auto Ltd and Hero MotoCorp for the year ended 2017 is 3810.24%
and 168.46 % respectively and for the year 2018 it is 4310.80% and 171.21%
respectively which shows that both the companies have better interest coverage ratio
in the year 2018 as lower ratio is good for the companies.
38
 Dividend Coverage Ratio – The Dividend Coverage Ratio, also known as
dividend cover, is a financial metric that measures the number of times that a
company can pay dividends to its shareholders. The dividend coverage ratio is the
ratio of the company’s net income divided by the dividend paid to shareholders.
Dividend Coverage Ratio =
Table No .8 Dividend Coverage Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
EPS 141.01 145.83 179.57 186.30
DPS 5 55 87 85
Dividend Coverage 28.2 2.65 2.06 2.19
Ratio
Dividend Coverage Ratio (Graph No.8)

30
25
20
15
10
5
0
2016-2017 2017-2018
Interpretation – Higher the ratio better it is. Comparing both Bajaj has higher ratio
as that of hero moto corp. It shows the number of times the dividend is covered by
company’s profits. However Individually Bajaj auto ltd ratio is decreased from 28.2 to
2.43 so there is less capacity of an organization to pay dividends out of profit
attributable to the shareholders and Hero MotoCorp ratio is increasing from 2.06 to
2.19 which indicates that the company is trying to retain a higher portion of its
earnings to meet its financing requirements which may result in higher dividend pay-
outs in the future
39
c. Gearing ratio
 Proprietary Ratio – This ratio shows the proportion of total assets of a company
which are financed by proprietors’ funds. The proprietary ratio is also nown
as equity ratio. It helps to determine the financial strength of a company & is
useful for creditors to assess the ratio of shareholders’ funds employed out of total
assets of the company.
Proprietor s Funds
Proprietary ratio =
Total Assets
Table No.9 Proprietary Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
Proprietor’s Funds 17856.6 20425.26 10382.89 12064.67
Total Assets 21637.62 25141.00 15312.00 17396.73
Proprietary Ratio 0.83 0.81 0.68 0.69
Proprietary Ratio (Graph No.9)

1
0.8
0.6
0.4
0.2
0
2016-2017 2017-2018
Interpretation – Proprietary ratio is the ratio between shareholders fund and total
assets and reveals the ownership of the shareholders in total assets of the organization.
In Bajaj Auto Ltd in both the years there is a high proprietary ratio as compare to
Hero MotoCorp Ltd i.e. 0.83 & 0.81 respectively and it is negative for the return on
shareholders fund’s point of view. A high proprietary ratio indicates that the firm is
not working on equity. In Hero MotoCorp there is very low proprietary ratio i.e. 0.68
& 0.69 indicates the lower ownership of the shareholders in the concern and difficult
to pay out its external liabilities.
40
II. Profitability Ratio – The Profitability Ratios measure the overall performance of
the company in terms of the total revenue generated from its operations. In other
words, the ratios that measure the capacity of a firm to generate profits out of the
expenses and the other cost incurred over a period are called the profitability ratios.
A. Quantitative Profitability Ratio
 Net worth turnover ratio – The net worth ratio states the return that
shareholders could receive on their investment in a company, if all of the
profit earned were to be passed through directly to them. The ratio is useful as
a measure of how well a company is utilizing the shareholder investment to
create returns for them, and can be used for comparison purposes with
competitors in the same industry.
et Sales
Net worth turnover ratio =
Average Closing et Worth
Table No.10 Net Turnover Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
Net Sales 21373.52 24700.30 28281.40 31805.78
Closing Net Worth 21637.62 20425.26 15312.00 17396.73
Net Worth Turnover 1.00 1.21 1.85 1.83
Ratio
Net Worth Ratio (Graph No.10)

2
1.5
0.5
0
2016-2017 2017-2018
Bajaj Auto Ltd Hero MotoCorp ltd

Interpretation – Higher ratio indicates better employment of proprietor’s funds and
higher efficiency. As for Hero MotoCorp, the equity turnover ratio is more than the
Bajaj Ltd. It means Company Hero MotoCorp is able to generate better revenue out of
their average shareholders’ equity than Bajaj Auto ltd. However, we can see the
41
individual performance of Hero MotoCorp Ltd is decreasing from 1.85 to 1.83 which
is bad indication for the company and Bajaj Auto Ltd is increasing from 1 to 1.21
which shows that company is improving their performance by making profits, as long
as these earnings are not fully distributed to shareholders as dividends but are retained
in the business.
 Working Capital Turnover Ratio – The working capital ratio is a measure of
liquidity, revealing whether a business can pay its obligations. The ratio is the
relative proportion of an entity's current assets to its current liabilities, and
shows the ability of a business to pay for its current liabilities with its current
assets. A working capital ratio of less than 1.0 is a strong indicator that there
will be liquidity problems in the future, while a ratio in the vicinity of 2.0 is
considered to represent good short-term liquidity.
et Sales
Working Capital Ratio =
Average Closing Wor ing Capital
Table No.11 Working Capital Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
Net Sales 21373.52 24700.30 28281.40 31805.78
Closing Working 6255.69 5139.43 3393.82 4520.87
Capital
Working Capital 3.42 4.81 8.33 7.04
Ratio
Working Capital Ratio (Graph No.11)

10
0
2016-2017 2017-2018
42
Interpretation – Working Capital ratio below 1 is definitely not good. Higher the
ratio higher is the efficiency of the company. Comparing both the companies Hero
MotoCorp Ltd has higher working capital ratio than Bajaj Auto Ltd which may be due
to utilizing its working capital more efficiently i.e. generating more revenue using less
investment but individually Hero MotoCorp ratio has dropped from 8.33 to 7.04
which may indicate may indicate that a company does not have enough capital to
support its sales growth while Bajaj Auto Ltd is increasing from 3.42 to 4.81 trying to
run smoothly also trying to make limited need for additional funding.
 Inventory Turnover Ratio – Inventory turnover is a ratio showing how many
times a company has sold and replaced inventory during a given period. A
company can then divide the days in the period by the inventory turnover formula
to calculate the days it takes to sell the inventory on hand. Calculating inventory
turnover can help businesses make better decisions on pricing, manufacturing,
marketing and purchasing new inventory.
Cost of goods sold
Inventory Turnover Ratio =
Average Closing stoc
Table No.12 Inventory Turnover Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
Cost of Goods Sold 21766.68 25164.92 28610.43 32458.37
Closing Stock 728.38 742.58 708.58 962.68
Inventory Turnover 29.88 33.89 40.38 33.72
Ratio
Inventory Turnover Ratio (Graph No.12)

50
40
30
20
10
0
2016-2017 2017-2018
Bajaj Auto Ltd Hero MotoCorp
43
Interpretation – The inventory turnover ratio measures how many times average
inventory is “turned” or sold during a period. There is an increment in Bajaj auto ltd
ratio from 29.88 to 33.89 but it is lower than Hero MotoCorp due to inefficiency or
poor sales possible overstocking, and obsolescence, but it may also reflect a planned
inventory build-up in the case of material shortages. Hero MotoCorp ratio is
decreasing from 40.38 to 33.72 but having higher turnover than Bajaj Auto Ltd which
indicates strong sales, better liquidity but it can also indicate a shortage or inadequate
inventory levels, which may lead to a loss in the company.
 Inventory velocity – Inventory velocity is the time period beginning with the
receipt of raw materials and ending with the sale of the resulting finished
goods. Thus, it is the period over which a business has ownership
of inventory. It is very much in the interest of a company to keep inventory
velocity as high as possible.
Average Closing Stoc
Inventory Velocity =
Cost of goods sold
Table No.13 Inventory Velocity

Year 2016-2017 2017-2018 2016-2017 2017-2018
Closing Stock 728.38 742.58 708.58 962.68
Cost of Goods Sold 21766.68 25164.92 32458.37 28610.43
Inventory Velocity 12.21 10.77 9.04 10.83
Inventory Velocity (Graph No.13)

15
10
0
2016-2017 2017-2018

Interpretation – Higher the velocity coupled with a profit margin equals the true
return on sales. So, Bajaj Auto Ltd ratio is more than Hero MotoCorp Ltd it means
44
that Bajaj turns the greater the total profit or return on sales and Hero MotoCorp
keeps little stock on hand, it may find that it cannot fill unexpected customer demand,
and so must forego these sales.
 Debtors Turnover Ratio –The Debtors Turnover Ratio also called as Receivables
Turnover Ratio shows how quickly the credit sales are converted into the cash.
This ratio measures the efficiency of a firm in managing and collecting the credit
issued to the customers.
et Creditors Sales
Debtors Turnover Ratio =
Average Closing Debtors
Table No.14 Debtors Turnover Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
Net Credit Sales 21373.52 24700.30 28281.90 31805.78
Closing Debtors 953.29 1491.87 1551.75 1426.97
Debtors Turnover 22.42 16.56 18.23 22.29
Ratio
Debtors Turnover Ratio (Graph No.14)

25
20
15
10
0
2016-2017 2017-2018

Interpretation – Higher Receivables Turnover implies higher frequency of
converting receivables into cash. Comparing both the companies its clearly seen that
in 2017-2018 Hero has higher ratio as that of Bajaj Auto Ltd and in 2016-2017 Bajaj
has higher ratio as that of Hero MotoCorp Ltd. However individually ratio of Bajaj
Auto Ltd has dropped from 22.42 to 16.56 and ratio of hero moto has increased from
18.23 to 22.29. From the above data we can conclude that in 2017-2018 Hero
45
MotoCorp signifies speed and effective collection same as Bajaj Auto Ltd shows in
2016-2017.
 Debtor’s Velocity – It indicates the velocity of debt collection of a firm. Lower
ratio indicates that debtors are realised in shorter period of time and hence
indicates better efficiency of the company.
Average Closing Debtors

Debtor velocity =
et Credit Sales
Table No.15 Debtor’s Velocity

Year 2016-2017 2017-2018 2016-2017 2017-2018
Closing Debtors 953.29 1491.87 1551.75 1426.97
Net Credit Sales 21373.52 24700.30 28281.90 31805.78
Debtors Velocity 16.28 22.05 20.03 16.38
Debtors Velocity (Graph No.15)

25
20
15
10
0
2016-2017 2017-2018
Interpretation – Lower ratio indicates that debtors are realised in shorter period of
time and hence indicates better efficiency of the company .In 2017-2018 Hero Moto
corp recovers its debtor early as compared to Bajaj auto Ltd. In 2016-2017 Bajaj Auto
Ltd. Recovers its debtors early as compared to Hero MotoCorp However individually
Bajaj Auto ratio has increased from 16.28 to 22.05 which is not a good indicator and
hero MotoCorp has reduced from 20.03 to 16.38 which is a good indicator.
 Creditors Turnover Ratio – It indicates the speed with which the payments are
made to the trade creditors. It establishes relationship between net credit annual
purchases and average accounts payables. Accounts payables include trade
46
creditors and bills payables. Average means opening plus closing balance divided
by two. In this case also accounts payables' figure should be considered at gross
value i.e. before deducting provision for discount on creditors.
et Credit Purchases
Creditors turnover ratio =
Average Closing creditors Average Closing Bills Payables
Table No.16 Creditors Turnover Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
Net Credit Purchase 1382.47 1401.25 19102.46 22185.17
Closing Creditors 2235.98 3244.42 3266.20 3375.26
Creditors Turnover 0.62 0.43 5.85 6.57
Ratio
Creditors Turnover Ratio (Graph No.16)

8
0
2016-2017 2017-2018
Interpretation – Lower the ratio higher is the efficiency of the company. Bajaj Auto
Ltd has lower ratio as compared to Hero Moto Corp. Hence Bajaj Auto Ltd has strong
position in market as compared to hero moto crop and has good relations with
suppliers. Individually Bajaj Auto Ltd has lowered its ratio from 0.62 to 0.43 which
indicates Bajaj Auto Ltd is performing good in the industry and Hero MotoCorp ratio
has increased from 5.85 to 6.57 leading to lesser lower performance than Bajaj Auto
Ltd.
 Creditors Velocity – It indicates the number of times sundry creditors have been
paid during a year. It is calculated to judge the requirements of cash for paying
sundry creditors. It is calculated by dividing the net credit purchases by average
creditors.
47
Closing Creditors
Creditors Velocity Ratio =
et Credit Purchases
Table No.17 Creditors Velocity Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
Closing Creditors 2235.98 3244.42 3266.20 3375.26
Net Credit Purchase 1382.47 1401.25 19102.46 22185.17
Creditors Velocity 590.34 845.11 62.41 55.53
Source – Done by the research
Creditors Velocity Ratio (Graph No.17)

1000
800
600
400
200
0
2016-2017 20.17-2018
Interpretation – Higher Ratio indicates that creditors are paid in longer period of
time and hence indicates better efficiency of the company. Comparing both we can
say that Bajaj Auto Ltd gets higher credit period to pay off its suppliers as that of hero
moto Corp. Individually Bajaj has got more credit period to pay of its suppliers as
compared to last year and Hero Moto Corp’s credit period has reduced as compared to
last year.
A. Qualitative Profitability Ratios
 Return on Capital Employed – The Return on Capital Employed Ratio measures

the profits generated from each capital employed. Unlike return on equity that
measures only the company’s common equity, the return on capital employed is a
comprehensive approach that measures the overall financial performance of the
company, by taking both the equity and the liabilities into consideration.
Earnings Before Interest and tax

Return on Capital Employed =
Capital Employed
48
Table No.18 Return on Capital Employed
Year 2016-2017 2017-2018 2016-2017 2017-2018
EBIT 5334.33 5647.11 4595.67 5273.24
Capital Employed 18424.78 21029.6 11135.31 12915.37
Return on Capital 28.95 26.85 41.27 40.83
Employed
Return on Capital Employed (Graph No.18)

50
40
30
20
10
0
2016-2017 2017-2018

Interpretation – The return on capital employed is a better measurement than return
on equity, because ROCE shows how well a company is using both its equity and debt
to generate a return. In Hero MotoCorp Ltd Profits are generated efficiently from its
capital employed. In Bajaj Auto Ltd both the year’s rate is low at which they are
borrowing to fund the assets.
 Price Earnings Ratio – The Price Earnings Ratio is the relationship between a
company’s stoc price and earnings per share. The ratio shows the expectations of
the market and is the price you must pay per unit of current earnings or future
earnings.
Price Earnings Ratio =
Table No.19 Price Earnings Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
MPS 287.50 2748.90 3223.85 3545.50
EPS 141.01 145.83 179.57 186.30
Price Earnings Ratio 20.25 18.85 17.95 19.03
49
Price Earning Ratio (Graph No.19)
20.5
20
19.5
19
18.5
18
17.5
17
16.5
2016-2017 2017-2018
Bajaj Auto Ltd Hero Moto Corp
Interpretation –Higher the ratio is the progress of the company. PE Multiple is

one of the first ratios an investor check while investing in a company. However
individually Hero moto corp ratio has increased from 17.95 to 19.03 which shows
that the company has strong position in the market. Bajaj Auto Ltd is decreased
from 20.25 to 18.85 which indicates that there is a fall in ratio and immediately it
should be investigated.
 Earnings per share – Earnings per share is a measure of how much profit a
company has generated. Equity shareholders are the ultimate owners of the
company and they get profit after claims of all outsiders. Companies usually
report their earnings per share on a quarterly or yearly basis.
Earnings per Share =
Table No.20 Earnings per share

Year 2016-2017 2017-2018 2016-2017 2017-2018
Earnings Available 3824.86 3931.33 3229.29 3672.51
for Equity
Shareholders
No of shares 17856.6 20425.26 10382.89 12064.67
EPS 141.01 145.83 179.57 186.30
50
Earning Per Share (Graph No.20)
200
150
100
50
0
2016-2017 2017-2018
Interpretation – Comparing both Hero MotoCorp has showed tremendous increase

in Earning per share for its shareholders making shareholders happy as Bajaj Auto Ltd
i.e. 179.57 to 186.30. Individually both the companies show increase in Earning Per
Share as compared that of last year which indicates both the companies are
performing well in the industry.
 Dividend per Share – Dividend per share (DPS) is the sum of declared dividends
issued by a company for every ordinary share outstanding. The figure is calculated
by dividing the total dividends paid out by a business, including interim dividends,
over a period of time by the number of outstanding ordinary shares issued. A
company's DPS is often derived using the dividend paid in the most recent
quarter, which is also used to calculate the dividend yield.
Dividend per Share =
Table No.21 Dividend per share

Year 2016-2017 2017-2018 2016-2017 2017-2018
Equity Dividend 144.68 1591.52 1737.34 1697.5
No of shares 28.93 28.93 179.57 186.30
DPS 5 55 87 85
51
Dividend per share (Graph No.21)
100
80
60
40
20
0
2016-2017 2017-2018
Interpretation – Bajaj and Hero MotoCorp, Hero Moto Corp has paid more dividend
per share as that Bajaj Auto Ltd. Hero MotoCorp is paying more dividends and
making shareholders happy as compared to Bajaj auto. However individually both
companies have increased dividend from last year leading to companies making good
profits and having increasing growth trends in payment of dividends.
 Dividend Pay-out Ratio – The dividend pay-out ratio is the ratio of the total
amount of dividends paid out to shareholders relative to the net income of the
company. It is the percentage of earnings paid to shareholders in dividends. The
amount that is not paid to shareholders is retained by the company to pay off debt
or to reinvest in core operations.
Dividend Pay-out Ratio =
Table No.22 Dividend Pay-out Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
DPS 5 55 87 85
MPS 287.50 2748.90 3223.85 3545.50
Dividend Pay-out 2 2 3 2
Ratio
52
Dividend Payout Ratio (Graph No.22)
4
0
2016-2017 2017-2018
Interpretation – Low Pay-out ratio is the best. Baja Auto Ltd has low pay-out ratio in
both the years which may result in higher capital gains in future. Hero MotoCorp is
having high ratio in 2016-2017 as compared to Bajaj auto ltd which is not a good sign
for a company but in the next decreases from 3 to 2 which shows a sign of
improvement in the company.
 Earnings Yield – The earnings yield refers to the earnings per share for the most
recent 12-month period divided by the current market price per share. The
earnings yield (which is the inverse of the P/E ratio) shows the percentage of each
dollar invested in the stock that was earned by the company. This yield is used by
many investment managers to determine optimal asset allocations.
Earnings yield =
Table No.23
Year 2016-2017 2017-2018 2016-2017 2017-2018
EPS 141.01 145.83 179.57 186.30
MPS 287.50 2748.90 3223.85 3545.50
Earnings Yield 49.05 5.31 5.57 5.25
53
Earning Yield (Graph No.23)
60
50
40
30
20
10
0
2016-2017 2017-2018
Interpretation – The earnings yield is a way to measure returns, and it helps

investors evaluate whether those returns commensurate with an investment
risk. Earnings are the true long-term driver of dividends and stock price. Hero
MotoCorp has higher earning yield indicates company is investing in more profitable
projects which can be measure by increase in market price of the company. With this
yield we can say whether stock is overvalued or undervalued. Bajaj auto ltd also
performing increased from 49.05 to 5.13.
 Dividend Yield – Dividend yield is the financial ratio that measures the quantum
of cash dividends paid out to shareholders relative to the market value per share. It
is computed by dividing the dividend per share by the market price per share and
multiplying the result by 100. A company with a high dividend yield pays a
substantial share of its profits in the form of dividends. Dividend yield of a
company is always compared with the average of the industry to which the
company belongs.
Dividend Yield = 0
Table No.24 Dividend Yield

Year 2016-2017 2017-2018 2016-2017 2017-2018
DPS 5 55 87 85
MPS 287.50 2748.90 3223.85 3545.50
Dividend Yield 2.00 0.18 2.4 2.70
54
Dividend Yield (Graph No.24)
3
2.5
2
1.5
1
0.5
0
2016-2017 2017-2018
Interpretation – Dividend yield ratio is a way to measure the amount of cash flow
ploughed back for every amount invested in the equity position. Investors who target
having a minimum cash inflow from their investment portfolio can ensure this by
making investments in stocks which are known to pay relatively high and stable
dividend yields on a regular basis. Comparing both hero moto corp pays higher
dividend as that of Bajaj auto ltd.
 Book Value Per Share – Book value per share is a market value financial ratio,
and the purpose of calculating it is to relate shareholders' equity to the number of
shares of common stock outstanding. The number of shares of preferred stock is
not considered, making book value more directly relevant to common shares
outstanding.
Book Value per share =
Table No.25 Book Value per share

Year 2016-2017 2017-2018 2016-2017 2017-2018
Shareholder funds 17856.6 20425.26 10382.89 12064.67
No of Equity Shares 28.93 28.93 179.57 186.30
Book Value Per Share 617 706 519.92 604.14
55
Book Value per share (Graph No.25)
800
700
600
500
400
300
200
100
0
2016-2017 2017-2018
Interpretation – A higher book value indicates high reserves of the company.

Normally blue-chip companies have high net worth and high book value Investors
need to look at both book value and market value of the share. If the investors can
find out the book value of common stocks, she would be able to figure out whether
the market value of the share is worth. Bajaj Auto ltd has higher book value as
compared to that of Hero Moto corp but individually even hero moto corp has
increased from 519.92 to 604.14.
 Net Profit Margin: The Net Profit Margin Ratio shows the net income earned
from the sale of goods and services or simply, how much profits are generated at a
certain level of sales. This ratio shows the earnings or the revenues left for the
shareholders, both equity and preference shareholders after making the payment
of all the operating expenses, interest, taxes, etc.
Net Profit Ratio =
Table No.26 Net Profit Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
PAT 3824.86 3931.33 3229.29 3672.51
Sales 21373.52 24700.30 28281.90 31805.78
Net Profit Ratio 17.89 15.92 11.42 11.54
56
Net Profit Ratio (Graph No.26)
20
15
10
5
0
2016-2017 2017-2018
Interpretation – By using the net margin formula, the investors are able to
understand how much a firm has been profiting from its revenues. Bajaj Auto ltd as
higher ratio as compared to Hero Moto corp. However individually Bajaj has
decreased the profit from 17.89 to 15.62 and Hero MotoCorp has increased the profit
from 11.42 to11.54.
 EBT Margin – EBT margin shows company’s earnings before tax as a percentage
of net sales and it also shows “bottom line” profit, except for the fact that the
deducted income taxes are not excluded, and that’s why this ratio is sometimes
called pre-tax profit margin.
EBT Margin =
Table No.27 EBIT Margin

Year 2016-2017 2017-2018 2016-2017 2017-2018
EBT 5332.93 5645.80 4568.39 5242.44
Sales 21373.52 24700.30 28281.90 31805.78
EBT Margin 24.95 22.85 16.15 16.48
57
EBT Margin (Graph No.27)
30
25
20
15
10
5
0
2016-2017 2017-2018
Interpretation – Higher the ratio better is for the company. From the above data we
can see that Bajaj Auto Ltd has high operating profit i.e.24.95 and 22.85 which
indicates that company is earning core business activities. . The investors should look
at gross profit margin and net profit margin; but along with that, they should look for
operating profit margin which will surely bridge the gap in understanding how a
company is actually doing operationally. The Hero MotoCorp has low operating profit
i.e. 16.15 and 16.48 indicating that it has not earned more profit from its operating
activities and not even utilised its resources properly.
 EBIT Margin – EBIT Margin is the ratio of Earnings before Interest and Taxes to
net revenue - earned. It is a measure of a company's profitability on sales over a
specific time period. It indicates company's earnings ability. EBIT margin is most
useful when compared against other companies in the same industry.
EBIT Margin =
Table No.28 EBIT Margin

Year 2016-2017 2017-2018 2016-2017 2017-2018
EBIT 5334.33 5647.11 4595.67 5273.24
Sales 21373.52 24700.30 28281.90 31805.78
EBIT Margin 24.95 22.86 16.25 16.57
58
EBIT Margin (Graph No.28)
30
25
20
15
10
5
0
2016-2017 2017-2018
Interpretation – The higher EBIT margin reflects the more efficient cost
management or the more profitable business. EBIT margin of Bajaj Auto Ltd is 24.95
& 22.86 is greater than Hero MotoCorp Ltd i.e. 16.25 & 16.57 which indicates that
Bajaj auto ltd is having higher EBIT because of is mainly due to growth of net
revenue, good cost control and strong productivity and lower the EBIT of Hero
MotoCorp Ltd may be due to largely results from reduction in revenue and higher
operating costs.
 Asset Turnover Ratio – The asset turnover ratio measures the value of a
company's sales or revenues relative to the value of its assets. The asset turnover
ratio can be used as an indicator of the efficiency with which a company is using
its assets to generate revenue. The higher the asset turnover ratio, the more
efficient a company. Conversely, if a company has a low asset turnover ratio, it
indicates it is not efficiently using its assets to generate sales.
et Sales
Asset Turnover Ratio =
Closing Fixed Assets
Table No.29 Asset Turnover Ratio

Year 2016-2017 2017-2018 2016-2017 2017-2018
Sales 21373.52 24700.30 28281.90 31805.78
Closing Fixed Assets 21637.62 25141.00 14694.26 16738.80
Asset Turnover Ratio 98.78 98.25 192.47 190.01
59
Asset Turnover Ratio (Graph No.29)
250
200
150
100
50
0
2016-2017 2017-2018
Interpretation – Higher the ratio higher is the efficiency of the company. Comparing
both companies, we can say that hero moto corp ltd is utilising its assets to generate
revenue more efficiently as that of bajaj auto ltd. However individually both the
companies are showing lower ratio from 2016-2017 to 2017-2018 which is not a good
indicator for company growth in long run.
 Return on Asset: Return on Assets (ROA) is a type of return on investment

(ROI) metric that measures the profitability of a business in relation to its total
assets. This ratio indicates how well a company is performing by comparing the
profit (net income) it’s generating to the capital it’s invested in assets. The higher
the return, the more productive and efficient management is in utilizing economic
resources.
et Income
Return on Asset =
Total Asset
Table No.30 Return on Asset

Year 2016-2017 2017-2018 2016-2017 2017-2018
Net Income 3824.86 3931.33 3229.29 3672.51
Closing Fixed Assets 21637.62 25141.00 14694.26 16738.80
Return on Asset 17.68 15.64 21.98 21.94
60
Return on Asset (Graph No.30)
25
20
15
10
5
0
2016-2017 2017-2018
Interpretation – It tells that after paying off all the expenses what the company is
earning on its short term as well as long term loans and shareholder’s equity. The
more is the value of return on asset the more will be beneficial for the company.
Comparing both we can say that hero moto is able to generate more net income using
its assets as that of bajaj auto ltd. However individually the ratio is dropping for both
the companies from 2016-2017 to 2017-2018 which is not as good indicator for the
company in long run growth.
61
CHAPTER-5
CONCLUSION
Sr Particulars Bajaj Auto Ltd Hero Hypothesis

No. MotoCorp Ltd
2017 2018 2017 2018
1 Current Ratio 2.94 2.25 1.81 2.01 H0
2 Quick Ratio 2.72 2.07 1.64 1.79 H0
3 Cash Ratio 1.98 1.60 1.11 1.30 H0
4 Stock to Working 11.64 14.45 20.89 21.29 H0

Capital
5 Structure Ratio 1 1 0.80 0.93 H1
6 Debt equity 0 0 0.02 0.02 H0
7 Interest Coverage 3810.24 4310.80 168.46 171.21 H1

Ratio
8 Dividend 28.2 2.65 2.06 2.18 H0
Coverage
9 Proprietary Ratio 0.83 0.81 0.68 0.69 H0
10 Net worth 1 1.21 1.85 1.83 H1

Turnover
11 Working Capital 3.42 4.81 8.33 7.04 H1
Turnover Ratio
12 Inventory 29.88 33.89 40.38 33.72 H1
Turnover
13 Inventory 12.21 10.77 9.04 10.83 H0
Velocity
14 Debtor Turnover 22.42 16.56 18.23 22.29 H1
Ratio
15 Debtor Velocity 16.28 22.05 20.03 16.38 H1
16 Creditor 0.62 0.43 5.85 6.57 H1

Turnover Ratio
17 Creditors 590.34 845.11 62.11 55.53 H0
Velocity Ratio
18 Return on Capital 28.95 26.85 41.27 40.83 H1
employed
19 Price Earning 20.25 18.85 17.95 19.03 H0
20 EPS 141.01 145.83 179.57 186.30 H1
21 DPS 5 55 87 85 H1
62
22 Dividend pay-out 2 2 3 2 H0
23 Earnings Yield 49.05 5.31 5.57 5.25 H0
24 Dividend Yield 2 0.18 2.4 2.70 H1
25 Book Value 617 706 519.92 604.14 H0
26 Net Profit 17.89 15.92 11.42 11.54 H0
27 EBT 24.95 22.85 16.15 16.48 H0
28 EBIT 24.95 22.86 16.25 16.57 H0
29 Asset Turnover 98.78 98.25 192.47 190.01 H1

Ratio
30 Return on Asset 17.68 15.64 21.98 21.94 H0
The main aim of this research is financial comparative analysis of the Bajaj Auto Ltd
and Hero MotoCorp of the company to see that whether Bajaj Auto Ltd is in better
financial position or Hero MotoCorp is in better financial position. As from the above
research we can conclude that Bajaj Auto Ltd is in better financial position hence the
H0 Hypothesis is proved in the study.
If analysed and interpreted financial statements can provide valuable insight to its
firm’s performance.
Financial analysis is an assessment of feasibility, steadiness and profitability of the

business. It is performed by financial analyst in which they prepare the financial
reports by using the financial ratios, earning management techniques to validate the
information and evaluate it by comparing it with past performance.
In my project I calculated the financial ratios of two companies i.e. Bajaj Auto Ltd
and Hero MotoCorp Ltd by considering all the financial statements of both the
companies. The results of these financial ratios are very different.
Financial statements analysis may be done for various purposes, which may range
from simple with the short-term liquidity position of the firm to the comprehensive
assessment of the strength weakness of the firm in various firm.
One company has higher ratio compared to other ratios. But overall ratios are
fluctuating period of time. Which indicates that companies are inconsistent in their
63
policies regarding its liquidity, profitability, activity etc. So, both the companies have
different parameters of the business and have different business patterns regarding
sales policy, account receivables, creditors, equity financing, debt financing, expanses
etc. But as we supposed both the companies are from same industry so we compared
them with industry ratios. The reasons could be change in sale policy, credit policy,
asset management, different capital structure and difference in depreciation methods
and in inventory evaluation, different cost structure etc. So, on the basis of these
elements, companies’ ratios are not matching with each other and are not following
the industry trends. So, in order to tackle these problems companies, have to change
their policies to meet industry trends. They should revise the asset management
policies and their sale and credit policies to solve the liquidity and profitability
problems. They should revise the capital structure.
64
Overall Suggestions
This is overall general suggestions and it may very useful for the companies to get
better the financial position and for the better performance.
1. The company should try to increase the production so as to get economies of large-
scale production. It will assist in raising the rate of return on capital employed.
2. In order to increase the profitability of the companies, it is suggested to control the

cost of goods sold and operating expenses.
3. The management should try to adopt cost reduction techniques in their companies
to get over this critical situation. At the same way, to reduce power and fuel Cost
Company should find out another alternative for this.
4. The quantum of sales generated should be improved impressively in order better to

enjoy better Percentage of the assets and capital employed.
5. The selected automobile companies should try to match the amount of working
with the sales trends. Where there is a deficit of working capital, they should try to
build on adequate amount of working capital. Where, there is an excessive working
capital, it should be invested either in trade securities or should be used to repay
borrowings.
6. The management should try to utilize their production capacity fully in order to
reduce factory overheads and to utilize their fixed assets properly.
7. To strengthen the financial efficiency, long-term funds have to be used to finance

core current assets and a part of temporary current assets.
8. The policy of borrowed financing in selected automobile companies under study

was not proper. So, the companies should use widely the borrowed funds and should
try to reduce the fixed charges burden gradually by decreasing borrowed funds and by
enhancing the owner’s fund. For this purpose, companies should enlarge their equity
share capital by issuing new equity shares.
9. For regular supply of raw materials and the final product infrastructure facilities
are required further improvement.
65
10. Cost accounting and cost audit should be made mandatory for this units and cost
sheet along with annual financing statement should be prepared.
11. The public sector enterprises set up in backward areas were not guided by
commercial considerations. They were set up to fulfil the aim of balanced regional
development.
12. There has been too much of government interference in policy and day- today
working and decisions. This leads to delays in decision-making. This should be
abolished.
13. Improper planning and delays in implementation of projects lead to rise in their
cost. So properly planning should be made.
14. The automobile companies should reduce power and fuel consumption by using
low as content coal (imported coal), agro waste product especially ground nut husk,
and beggars should be used as coal substitute.
15. To regularize and optimize the use of cash balance proper techniques may be
adopted for planning and control of cash. The investments in inventories should be
reduced and need to introduce a system of prompt collection of debts.
16. All automobile companies should try to use properly their operating assets and
should try to minimize their non-operating expenses. With the help of these
suggestions all the selected automobile companies try to improve their financial
performance.
66
BIBLIOGRAPHY
1) https://www.marketing91.com/
2) https://www.streetdirectory.com/travel_guide/60131/motorcycles/the_two_w
heeler_industry_in_india.html
3) https://www.heromotocorp.com/en-in/csr.php
4) https://businessjargons/
5) https://www.motorbeam.com/the-history-of-bajaj-auto/
6) https://business.mapsofindia.com/automobile/two-wheelers-
manufacturers/hero-motocorp-india.html
7) http://www.bajajautoltd.com/
8) https://www.heromotocorp.com/en-in/
67
ANNEXURE
Consolidated Balance sheet account of Bajaj Auto Ltd (In Crores).
EQUITIES AND LIABILITIES Mar-18 Mar-17
SHAREHOLDER'S FUNDS
Equity Share Capital 289.37 289.37
Total Share Capital 289.37 289.37
Reserves and Surplus 20135.87 17567.2
Total Reserves and Surplus 20135.87 17567.2
Total Shareholders’ Funds 20425.24 17856.57
Minority Interest 0.02 0.03
NON-CURRENT LIABILITIES
Long Term Borrowings 0 0
Deferred Tax Liabilities [Net] 323.42 313.62
Other Long-Term Liabilities 168.73 176.43
Long Term Provisions 112.19 78.13
Total Non-Current Liabilities 604.34 568.18
CURRENT LIABILITIES
Trade Payables 3244.42 2235.98
Other Current Liabilities 741.38 855.93
Short Term Provisions 125.6 120.93
Total Current Liabilities 4111.4 3212.84
Total Capital and Liabilities 25141 21637.62
ASSETS
NON-CURRENT ASSETS
Tangible Assets 1878.33 1957.14
Intangible Assets 0 44.65
Capital Work-In-Progress 11.15 10.64
Intangible Assets Under Development 45.32 31.53
Fixed Assets 1934.8 2043.96
Non-Current Investments 13129.16 9426.96
Long Term Loans And Advances 30.68 29.74
Other Non-Current Assets 795.53 668.43
Total Non-Current Assets 15890.17 12169.09
CURRENT ASSETS
Current Investments 5765.41 6050.08
Inventories 742.58 728.38
Trade Receivables 1491.87 953.29
Cash and Cash Equivalents 792.66 301.36
68
Short Term Loans and Advances 6.26 75.76
Other Current Assets 452.05 1359.66
Total Current Assets 9250.83 9468.53
Total Assets 25141 21637.62
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES, COMMITMENTS

Contingent Liabilities 0 0
BONUS DETAILS
Bonus Equity Share Capital 258.85 258.85
NON-CURRENT INVESTMENTS
Non-Current Investments Unquoted Book Value 13129.16 9426.96
CURRENT INVESTMENTS
Current Investments Unquoted Book Value 5765.41 6050.08
Source – https://www.bajajauto.com/investors/annual-reports
69
Consolidated Profit and Loss of Bajaj Auto Ltd
(In Crores)
Mar 18 Mar-17
INCOME
Revenue from Operations [Gross] 25098.64 22694.87
Less: Excise/Service Tax/Other Levies 398.34 1321.35
Revenue from Operations [Net] 24700.3 21373.52
Other Operating Revenues 464.62 393.16
Total Operating Revenues 25164.92 21766.68
Other Income 1212.27 1222.23
Total Revenue 26377.19 22988.91
EXPENSES
Cost of Materials Consumed 15999.16 13285.36
Purchase of Stock-In Trade 1401.25 1382.47
Changes in Inventories Of FG, WIP And Stock-In Trade 9.68 -43.68
Employee Benefit Expenses 1069.48 997.39
Finance Costs 1.31 1.4
Depreciation and Amortisation Expenses 314.8 307.29
Other Expenses 1927.78 1748.02
Less: Amounts Transfer to Capital Accounts 24.07 22.27
Total Expenses 20699.39 17655.98
Profit/Loss Before Exceptional, Extraordinary Items And
Tax 5677.8 5332.93
Exceptional Items -32 0
Profit/Loss Before Tax 5645.8 5332.93
Tax Expenses-Continued Operations

Current Tax 1646.36 1455.92
Deferred Tax 68.11 50.41
Tax for Earlier Years 0 1.74
Total Tax Expenses 1714.47 1508.07
Profit/Loss After Tax and Before extraordinary Items 3931.33 3824.86
Profit/Loss from Continuing Operations 3931.33 3824.86
Profit/Loss for The Period 3931.33 3824.86
Share of Profit/Loss of Associates 287.61 254.62
Consolidated Profit/Loss After MI and Associates 4218.95 4079.49
EARNINGS PER SHARE
Basic EPS (Rs.) 146 141
DIVIDEND AND DIVIDEND PERCENTAGE
Equity Share Dividend 1591.52 144.68
Source - https://www.bajajauto.com/investors/annual-reports
70
Consolidated Balance Sheet of Hero MotoCorp
Ltd (In Crores)
Mar-18 Mar-17
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 39.94 39.94
Total Share Capital 39.94 39.94
Reserves and Surplus 11931.5 10275.6
Total Reserves and Surplus 11931.5 10275.6
Total Shareholders’ Funds 11971.5 10315.5
NON-CURRENT LIABILITIES
Long Term Borrowings 149.63 207.9
Deferred Tax Liabilities [Net] 581.89 468.9
Other Long-Term Liabilities 0 0
Long Term Provisions 119.18 75.62
Total Non-Current Liabilities 850.7 752.42
CURRENT LIABILITIES
Short Term Borrowings 75.37 40.08
Trade Payables 3375.26 3266.2
Other Current Liabilities 970.44 827.84
Short Term Provisions 60.29 42.57
Total Current Liabilities 4481.36 4176.69
Total Capital And Liabilities 17396.7 15312
ASSETS
NON-CURRENT ASSETS
Tangible Assets 4771.39 4495.03
Intangible Assets 189.57 103.82
Capital Work-In-Progress 239.02 386.5
Intangible Assets Under Development 116.46 194.46
Fixed Assets 5316.44 5179.81
Non-Current Investments 2078.12 1522.31
Deferred Tax Assets [Net] 0 0
Long Term Loans and Advances 45.85 48.52
Other Non-Current Assets 954.09 990.85
Total Non-Current Assets 8394.5 7741.49
CURRENT ASSETS
Current Investments 5591.12 4544.06
Inventories 962.68 708.58
Trade Receivables 1426.97 1551.75
Cash and Cash Equivalents 237.57 195.39
Short Term Loans and Advances 28.5 24.93
Other Current Assets 755.39 545.8
Total Current Assets 9002.23 7570.51
Total Assets 17396.7 15312
71
CONTINGENT LIABILITIES, COMMITMENTS
Contingent Liabilities 444.05 514.39
BONUS DETAILS
Bonus Equity Share Capital 23.96 23.96
NON-CURRENT INVESTMENTS
Non-Current Investments Quoted Market Value 279.02 274.38
Non-Current Investments Unquoted Book Value 1955.49 1397.79
CURRENT INVESTMENTS
Current Investments Quoted Market Value 0 123.08
Current Investments Unquoted Book Value 5591.12 4423.01
Source – https://www.heromotocorp.com/en-in/investors/annual-reports.html
72
Consolidated Profit and Loss of Hero Moto
Corp Ltd (In Crores)
Mar-18 Mar-17
INCOME
Revenue from Operations [Gross] 32448.35 30654.63
Less: Excise/Service Tax/Other Levies 642.57 2373.23
Revenue from Operations [Net] 31805.78 28281.4
Other Operating Revenues 652.59 329.03
Total Operating Revenues 32458.37 28610.43
Other Income 523.17 521.95
Total Revenue 32981.54 29132.38
EXPENSES
Cost of Materials Consumed 21995.94 19019.34
Changes in Inventories Of FG, WIP And Stock-In Trade -110.12 96.74
Employee Benefit Expenses 1583.71 1432.49
Finance Costs 30.8 27.28
Depreciation and Amortisation Expenses 574.98 502.25
Other Expenses 3663.79 3485.89
Total Expenses 27739.1 24563.99
Profit/Loss Before Exceptional, extraordinary Items and
Tax 5242.44 4568.39
Profit/Loss Before Tax 5242.44 4568.39
Tax Expenses-Continued Operations
Current Tax 1450.99 1082.24
Deferred Tax 118.94 256.86
Total Tax Expenses 1569.93 1339.1
Profit/Loss After Tax and Before extraordinary Items 3672.51 3229.29
Profit/Loss from Continuing Operations 3672.51 3229.29
Profit/Loss for The Period 3672.51 3229.29
Minority Interest -1.77 37.97
Share of Profit/Loss of Associates 49.66 317.01
Consolidated Profit/Loss After MI and Associates 3720.4 3584.27
EARNINGS PER SHARE

Basic EPS (Rs.) 186 179
Diluted EPS (Rs.) 186 179
DIVIDEND AND DIVIDEND PERCENTAGE

Equity Share Dividend 1697.5 1737.34
Tax on Dividend 345.57 353.69
Source – https://www.heromotocorp.com/en-in/investors/annual-reports.html
73

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CHAPTER-1

Introduction to Indian Two-wheeler Industry

2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

“NAYE BHARAT KI NAYI TASWEER BULUND BHARAT KI BULUND

About the Company

About the Company

Table No.1 Current Ratio

Source – Done by the researcher

Bajaj Auto Ltd Hero Moto Ltd

Source – Done by the researcher

Table No.2 Quick Ratio

Source – Done by the researcher

Quick Ratio (Graph No.2)

Bajaj Auto ltd Hero Moto Corp

Source – Done by the researcher

Interpretation – Quick ratio evaluates the liquidity of a company by comparing its

Cash and ban balance Mar etable Securities

Table No.3 Cash Ratio

Source – Done by the researcher

Cash Ratio (Graph No.3)

Bajaj Auto Ltd Hero Motocorp Ltd

Source – Done by the researcher

Interpretation – Cash ratio measures the immediate amount of cash available to

Table No.4 Stock to Working Capital Ratio

Source – Done by the researcher

Stock To Working Capital Ratio (Graph No.4)

Bajaj Auto Ltd Hero MotoCorp Ltd

Source – Done by the researcher

Interpretation – A Low value of 1 or less of stock to working capital means that a

a. Capital Structure Ratios

Table No.5 Structure Ratio

Source – Done by the researcher

Structure Ratio (Graph No.5)

Bajaj Auto Ltd Hero MotoCorp Ltd

Source – Done by the researcher

Table No.6 Debt Equity Ratio

Source – Done by the researcher

Source – Done by the researcher

Table no.7 Interest Coverage Ratio

Source – Done by the researcher

Interest Coverage Ratio (Graph No.7)

Source – Done by the researcher

Dividend Coverage Ratio =

Table No .8 Dividend Coverage Ratio

Source – Done by the researcher

Dividend Coverage Ratio (Graph No.8)

Bajaj Auto Ltd Hero MotoCorp Ltd

Source – Done by the researcher

Table No.9 Proprietary Ratio

Source – Done by the researcher

Proprietary Ratio (Graph No.9)

Bajaj Auto Ltd Hero MotoCorp Ltd

Source – Done by the researcher

Table No.10 Net Turnover Ratio

Source – Done by the researcher

Net Worth Ratio (Graph No.10)

Bajaj Auto Ltd Hero MotoCorp ltd

Source – Done by the researcher

Table No.11 Working Capital Ratio

Source – Done by the researcher

Working Capital Ratio (Graph No.11)

Bajaj Auto Ltd Hero MotoCorp Ltd

Source – Done by the researcher