TERM PAPER ON A COMPARATIVE ANALYSIS OF HERO HONDA MOTORS LTD. AND BAJAJ AUTO LTD.

& SUBMITTED TO: SUBMITTED BY:DR. BHAWNA JOHRI AKASH KUMAR AKSHAY SRIVASTAVA ALOK MISHRA GOVIND KUMAR PIYUSH AGRAWAL FACULTY OF COMMERCE DAYALBAGH EDUCATIONAL INSTITUTE (DEEMED UNIVERSITY) DAYALBAGH AGRA

TABLE OF CONTENTS SR. PARTICULARS PAGE NO. 1. INTRODUCTION OF TWO WHEELER INDUSTRY 1 2. PROFILE OF HERO HONDA MOTORS LTD. 2 3. PROFILE OF BAJAJ AUTO LTD. 6 4. RATIO ANALYSIS NO.

10 5. BALANCE SHEET AND PROFIT & LOSS A/C OF HERO HONDA MOTORS LTD. 14 6. BALANCE SHEET AND PROFIT & LOSS A/C OF BAJAJ AUTO LTD. 16 7. ANALYSIS AND INTERPRETATION 18 8. FINDINGS 30 9. CONCLUSION 31

Introduction to Indian Two-wheeler Industry The Indian automotive industry consists of five segments: commercial vehicles, m ulti-utility vehicles & passenger cars, two-wheelers, three-wheelers, and tracto rs. With 78,22,963 units sold in the domestic market and 7,53,591 units exported , the industry (excluding tractors) marked a growth of 43% over the correspondin g previous. The two-wheeler sales have witnessed a spectacular growth trend sinc e the mid nineties. India is the second largest producer and manufacturer of two-wheelers in the wor ld. Indian two-wheeler industry has got spectacular growth in the last few years . Indian two-wheeler industry had a small beginning in the early 50's. The Autom obile Products of India (API) started manufacturing scooters in the country. Bikes are a major segment of Indian two wheeler industry, the other two being sc ooters and mopeds. Indian companies are among the largest two-wheeler manufactur ers in the world. Hero Honda Motors Ltd. and Bajaj Auto Ltd. are two of the Indi an 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 ope nness 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 manuf acturers lead to the increasing demand for two-wheeler vehicles in India. This l ead to the strong growth of Indian two-wheeler industry.

Profile of Hero Honda Motors Ltd. (Hero Honda Motors Ltd.) Hero Honda Motors Ltd. (Now Hero Motocorp Ltd.) is the world's largest manufactu

rer of two - wheelers, based in India. In 2001, the company achieved the coveted position of being the largest two-wheeler manufacturing company in India and al so, the 'World No.1' two-wheeler company in terms of unit volume sales in a cale ndar year. It continues to maintain this position till date. Hero Honda Motors Ltd. Type Public company Traded as BSE: 500182 NSE: Hero Honda Motors Ltd. Industry Automotive Founded 19 January 1984 (Gurgaon) Founder(s) Brijmohan Lall Munjal Headquarters New Delhi, India Key people Brijmohan Lall Munjal (Chairman), Pawan Munjal (MD & CEO) Products Motorcycles, scooters Revenue 19,669.290 crore (US$3.92 billion) Operating income Net income 2,597.07 crore (US$518.12 million) (FY 2010-2011) 1,927.90 crore (US$384.62 million) (FY 2010-2011)

Parent Hero Group Website www.heromotocorp.com 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 id entity which reflects its commitment towards providing world class mobility solu tions with renewed focus on expanding company's footprint in the global area. Mission Its mission is to become a global enterprise fulfilling its customers' 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 pr ovide 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, ex plore growth opportunities globally, continuously improve its operational effici ency, aggressively expand its reach to customers, continue to invest in brand bu ilding activities and ensure customer and shareholder delightment. Manufacturing Hero Honda Motors Ltd. two wheelers are manufactured across three globally bench marked manufacturing facilities. Two of these are based at Gurgaon and Dharuhera which are located in the state of Haryana in northern India. The third and the latest manufacturing plant is based at Haridwar, in the hill state of Uttrakhand .

Technology In the 1980's the Company pioneered the introduction of fuel-efficient, environm ent friendly four-stroke motorcycles in the country. It became the first company to launch the Fuel Injection (FI) technology in Indian motorcycles, with the la unch of the Glamour FI in June 2006. Its plants use world class equipment and pr ocesses and have become a benchmark in leanness and productivity. The company, i

n its endeavor to remain a pioneer in technology, will continue to innovate and develop cutting edge products and processes. Products It offers wide range of two wheeler products that include motorcycles and scoote rs, and has set the industry standards across all the market segments. Distribution The Company's growth in the two wheeler market in India is the result of an intr insic ability to increase reach in new geographies and growth markets. Its exten sive sales and service network now spans over to 5000 customer touch points. The se comprise a mix of authorized dealerships, service & spare parts outlets, and dealer-appointed outlets across the country. 2010-11 Performance Total unit sales of 54,02,444 two-wheelers, growth of 17.44 per cent. Total net operating income of Rs. 19401.15 Crores, growth of 22.32 per cent Net profit after tax at Rs. 2011.23 Crores Total dividend of 5250% or Rs. 105 per share including Interin Dividend of Rs. 7 0 per share on face value of each share of Rs. 2 each EBIDTA margin for the year 13.49% EPS of Rs. 96.50 Achievements of the company in 2011 Two-wheeler Manufacturer of the Year award by Bike India magazine Adjudged the "Bike Manufacturer of the Year" at the Economic Times Zig Wheels Ca r and Bike Awards "Most Recommended Two-Wheeler Brand of the Year" award by CNBC Awaaz Consumer Aw ards Colloquy Loyalty Awards "Innovation in Loyalty Marketing International 2011" for Hero Good Life "Best Activity Generating Short or Long-Term Brand Loyalty" by the Promotion Mar keting Award of Asia Order of Merit for Hero Good Life Ranked No 1 brand in the Auto (Two-Wheelers) category in the Brand Equity "Most Trusted Brand" 2011 survey New Releases Hero and Honda part company, thus forming Hero Honda Motors Ltd. and Honda movin g out of the Hero Honda joint venture. November-- Hero launched its first ever O ff Road Bike Named Hero "Impulse".

Profile of Bajaj Auto Ltd. Bajaj Auto Limited Type Public Traded as BSE: 532977, NSE: BAJAJ-AUTO BSE SENSEX Constituent Industry Automotive Headquarters Pune, Maharashtra, India Key people Rahul Bajaj (Chairman) Products Motorcycles, Scooters Revenue 16,974 crore (US$3.39 billion) (2011)

Net income

3,454 crore (US$689.07 million) (2011)

Employees 10,250 (2006-07) Parent Bajaj Group Website www.bajajauto.com Bajaj Auto Limited is an Indian motorized vehicle-producing company. Bajaj Auto is a part of Bajaj Group. It is founded by Jamnalal Bajaj at Rajasthan in the 19 30s. It is based in Pune, Maharashtra, with plants in Chakan (Pune), Waluj (near Aurangabad) and Pantnagar in Uttaranchal. The oldest plant at Akurdi (Pune) now houses the R&D centre ahead. The Forbes Global 2000 list for the year 2005 rank ed Bajaj Auto at 1,946. It features at 1639 in Forbes 2011 list. Over the last d ecade, the company has successfully changed its image from a scooter manufacture r to a two-wheeler manufacturer. Its product range encompasses scooterettes, sco oters and motorcycles. Its real growth in numbers has come in the last four year s after successful introduction of a few models in the motorcycle segment. The company is headed by Rahul Bajaj who is worth more than US$1.5 billion. Baja j Auto came into existence on 29 November 1945 as M/s Bachraj Trading Corporatio n Private Limited. It started off by selling imported two- and three-wheelers in India. In 1959, it obtained license from the Government of India to manufacture two- and three-wheelers and it went public in 1960. In 1970, it rolled out its 100,000th vehicle. In 1977, it managed to produce and sell 100,000 vehicles in a single financial year. In 1985, it started producing at Waluj near Aurangabad. In 1986, it managed to produce and sell 500,000 vehicles in a single financial y ear. In 1995, it rolled out its ten millionth vehicle and produced and sold one million vehicles in a year. According to the authors of Globality: Competing with Everyone from Everywhere f or Everything, Bajaj has grown operations in 50 countries by creating a line of value-for-money bikes targeted to the different preferences of entry-level buyer s. Mission Focus on value based manufacturing Fostering team work & enhancing the capability of the team Continual Improvement Total elimination of wastes Pollution free & safe environment Vision To attain World Class Excellency by demonstrating Value added products to custom ers Spin offs and acquisitions The demerger of Bajaj Auto Ltd into three separate corporate entitiesBajaj Finser v Ltd (BFL), Bajaj Auto Ltd (BAL), and Bajaj Holdings and Investment Ltd (BHIL)wa s completed with the shares listing on 26 May 2008. In November 2007, Bajaj Auto acquired 14.5% stake in KTM Power Sports AG (holding company of KTM Sportmotorc ycles AG). The two companies have signed a cooperation deal, by which KTM will p rovide the know-how for joint development of the water-cooled four-stroke 125 an d 250 cc engines, and Bajaj will take over the distribution of KTM products in I ndia and some other Southeast Asian nations. Bajaj said it is open to taking a m ajority stake in KTM and is also looking at other takeover opportunities. On 8 J anuary 2008, Managing Director Rajiv Bajaj confirmed the collaboration and annou nced his intention to gradually increase Bajaj's stake in KTM to 25%. Products Bajaj has made a number of motorcycles, scooters and cars. Motorcycles in curren t production are the XCD, Platina, Discover, Pulsar and Avenger. Bajaj also Dist

ributes many motorcycles in India for other manufacturers, such as the Kawasaki Ninja 250R, the Ninja 650R and new for 2012, the KTM Duke 200. Cars include the Bajaj ULC ultra-low-cost car. Achievements of the Company in 2010-11 Bike of the Year 2010 by BBC - TopGear Hall of Pride Awards by CNBC Overdrive Bike of the Year by Bike India Bike India upto 150 cc by Bike India 2011 Mc of the year upto 250cc 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 New releases 2012 - Bajaj RE 60, mini car for intra-city urban transportation 2012 - KTM Duke 200, launch of 200cc bike from the KTM stable 2012 - Bajaj Pulsar 200 NS, launch of 200cc bike

RATIOS 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 exp ressed in simple mathematical form is known as ratio." Analysis and interpretation of various accounting ratio gives a better understan ding of the financial condition and performance of a business concern. RATIO ANALYSIS Ratio analysis is one of the techniques of financial analysis to evaluate the f inancial condition and performance of a business concern. Simply, ratio means th e comparison of one figure to other relevant figure or figures. According to Myers, Ratio analysis of financial statements is a study of relation ship 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 stat ements." Advantages and Uses of Ratio Analysis To workout the profitability To workout the solvency Helpful in analysis of financial statement. Helpful in comparative analysis of the performance To simplify the accounting information To workout the operating efficiency To workout short-term financial position

Helpful for forecasting purposes Limitations of Ratio Analysis Limited Comparability False Results Effect of Price Level Changes Effect of window-dressing Absence of standard university accepted terminology Main ratios Covered in this Project For interpreting financial information, we include following underlined ratios Profitability Ratios These ratios tell us whether a business is making profits - and if so whether at an acceptable rate. The key ratios are: Ratio Calculation Interpretation Gross Profit Margin [Gross Profit / Revenue] x 100 This ratio tells us abou t the business's ability consistently to control its production costs or to mana ge the margins it makes on products it buys and sells. Net Profit Ratio [Net Profit/Net Sales] x 100 Net Profit Ratio shows the relationship between Net Profit of the concer n and its Net Sales. This ratio is helpful to determine the operational ability of the concern. While comparing the ratio to previous years ratios, the increment shows the efficiency of the concern & vice versa. Return on capital employed ("ROCE") Net profit before interest & tax ("EBIT" ) / Capital Employed ROCE is sometimes referred to as the "primary ratio"; it tells us what returns management has made on the resources made available to th em before making any distribution of those returns. Liquidity Ratios Liquidity ratios indicate how capable a business is of meeting its short-term ob ligations as they fall due: Ratio Calculation Interpretation Current Ratio Current Assets / Current Liabilities A simple measure that es timates whether the business can pay debts due within one year from assets that it expects to turn into cash within that year. Quick Ratio (or "Acid Test Ratio Quick Assets / Current Liabilities Not all assets can be turned into cash quickly or easily. Some - notably raw materials a nd other stocks - must first be turned into final product, then sold and the cas h collected from debtors. The Quick Ratio therefore adjusts the Current Ratio to eliminate all assets that are not already in cash (or "near-cash") form. Solvency Ratio These ratios indicate the capability of a business to pay its long term obligati ons. Ratio Calculation Interpretation Debt-Equity Ratio Long Term Debt/Shareholders, Funds Debt equity rati o shows the relationship between long-term debts and shareholders funds. It is al so known as External-Internal equity ratio. Turnover Ratio Ratio Calculation Interpretation Inventory Turnover Ratio COGS / Average Stock Stock is a most importan t component of working capital. This ratio provides guidelines to the management while framing stock policy. It measures how fast the stock is moving through th e firm and generating sales. It helps to maintain a proper amount of stock to fu lfill the requirements of the concern. A proper inventory turnover makes the bus

iness to earn a reasonable margin of profit. Market Ratio Ratio Calculation Comments Earnings per share ("EPS") Net Profit after Tax & Pref. Div. / No. of Equit y Shares A requirement of the London Stock Exchange - an important ratio. EPS measures the overall profit generated for each share in existence over a pa rticular period.

Balance Sheet of Hero Honda Motors Ltd. (in Rs. Crore) Mar' 11 Mar' 10 Mar' 09 Mar' 08 Mar' 07 Sources of Funds Shareholders' Funds Share Capital 39.94 39.94 39.94 Reserves & Surplus 2916.12 3425.08 2956.06 3465.02 3800.75 2986.24 2470.06 Loan Funds Unsecured 32.71 66.03 78.49 Deferred Payment Credits 1458.45 Deferred Tax Liabilities 252.72 Total 2764.81 Application of Funds Fixed Assets Gross Block 5538.46 2750.98 2516.27 Less : Depreciation 1458.18 1092.2 942.56 Net Block 4080.28 1658.78 1573.71 Capital Work in Progress 125.14 4205.42 1706.92 1694.25 1548.7 1355.45 Investments 5128.75 3925.71 3368.75 2566.82 Deferred Tax Assets 5.95 7.88 8.65 Current Assets, Loans & Advances Inventory 524.93 436.4 326.83 Sundry Debtors 130.59 108.39 149.94

39.94 39.94 3760.81 2946.3 2430.12 132 165.17 -

160.63 153.08 130.59 129.58 4699.94 3691.68 4032.32 3248.83

1938.78 782.52 1156.26 48.14

1800.63 635.1 1165.53 120.54 392.44 189.92

1973.87 21.27 1.38 317.1 275.58 297.44 335.25

Cash & Bank Balances 71.52 1907.21 219.57 Other Current Assets 48.87 24.82 5.89 Loans & Advances 728.66 405.76 311.26 1504.57 2882.58 1013.49 936.78 913.27 Less : Current Liabilities & Provisions Current Liabilities 5063.68 3805.06 1525.85 Provisions 1081.07 1026.35 526.97 499.76 6144.75 4831.41 2052.82 1824.74 1479.16 Net Current Assets (4640.18) (1948.83) (565.89) Total 4699.94 2764.81

131.09 35.78 5.69 3.6 185.46 263.06 1324.98 1041.92 437.24 (1039.33) (887.96)

3691.68 4032.32 3248.83

Profit & Loss A/c of Hero Honda Motors Ltd. (in Rs. Crore) Particulars Mar' 11 Mar' 10 Mar' 09 Mar' 08 Mar' 07 Income Gross Sales 20662.39 16780.62 13543.09 12038.53 11542.04 Less : Excise Duty 1417.36 1022.44 1223.97 1706.73 1642.08 Net Sales 19245.03 15758.18 12319.12 10331.80 9899.96 Other Income 424.87 340.61 220.72 185.42 189.95 19669.90 16098.79 12539.84 10517.22 10089.81 Expenditure Manufacturing & Other Expenses 16784.77 13096.21 10609.40 8982.43 8726.92 Depreciation 402.38 191.47 180.66 160.32 139.78 Interest(Net) (1.85) (20.62) (31.68) (35.81) (22.99) 17185.3 13267.06 10758.38 9106.94 8843.71 Profit for the Year before tax 2404.76 2871.73 1781.46 1410.28 1246.10 Provision for Taxation Current 392.43 590.34 475.65 417.49 375.81 Deferred 94.02 8.32 33.85 1.20 23.41 Fringe Benefit (92.92) 4.99 4.39 2.98 Profit after Tax 2011.23 2233.07 1266.97 987.20 843.90 Balance of Profit brought forward 2146.55 2707.28 2021.77 1594.78 1224.05 Balance available for Appropriation 4157.78 4940.35 3288.74 2581.98 2067.95 Appropriations Interim Dividend 1397.81 1597.50 Proposed Dividend 698.91 599.06 399.38 379.41 339.47 Tax on Dividend 340.14 371.00 67.87 64.48 57.69 Transfer to General Reserve 276.12 226.24 114.21 116.32 76.01 Balance carried to Balance Sheet 1444.80 2146.55 2707.28 2021.77 1594.78 4074.45 4939.11 3303.53 2562.66 2081.94

Balance Sheet of Bajaj Auto Ltd. (in Rs. Crore) Mar' 11 Mar' 10 Mar' 09 Mar' 08 Mar' 07 Sources of Funds Shareholders' Funds Share Capital 289.37 144.68 144.68 144.68 101.18 Reserves & Surplus 4620.85 2783.66 1725.01 1442.91 5433.14 4910.22 2928.34 1869.69 1587.59 5534.32 Loan Funds Secured 23.53 12.98 6.95 22.46 Unsecured 301.62 1325.60 1570 1327.39 1602.97 Deferred Tax Liabilities 197.70 191.81 164.79 141.94 184.49 Deferred Tax Assets (167.99) (190.12) (160.60) (130.96) (110.32) Total 5265.08 4268.61 3443.88 2932.91 7233.92 Application of Funds Fixed Assets Gross Block 3390.88 3379.25 3333.94 2984.15 3174.41 Less : Depreciation 1912.45 1899.66 1807.91 1726.07 1922.44 Net Block 1478.43 1479.59 1526.03 1258.08 1251.97 Capital Work in Progress 69.86 41.52 22.06 34.74 286.7 1548.29 1521.11 1548.09 1292.82 1296.39 Technical know how 4.28 - 16.26 10.53 4.13 Investments 4795.20 4021.52 1808.52 1857.14 6447.53 Current Assets, Loans & Advances Inventory 547.28 446.21 338.84 349.61 309.70 Sundry Debtors 362.76 239.45 358.65 275.31 529.83 Cash & Bank Balances 556.49 101.41 136.87 56.07 83.48 Other Current Assets 216.42 139.36 125.68 79.95 36.22 Loans & Advances 1189.64 657.40 1365.23 888.77 2859.40 2872.59 1583.83 2325.27 1649.71 3818.63 Less : Current Liabilities & Provisions Current Liabilities 2426.65 2026.25 1213.41 1043.25 1498.97 Provisions 1528.63 831.60 1224.15 834.04 2833.79 3955.28 2857.85 2437.56 1877.29 4332.76 Net Current Assets (1082.69) (1274.02) (112.29) (227.58) (514.13) Miscellaneous Expenditure - 183.3 Total 5265.08 4268.61 3443.88 2932.91 7233.92

Profit & Loss A/c of Bajaj Auto Ltd.

(in Rs. Crore) Particulars Mar' 11 Mar' 10 Mar' 09 Mar' 08 Income Gross Sales 16931.53 12118.08 Less : Excise Duty 933.41 609.58 612.72 Net Sales 15998.12 11508.50 Other Income 1701.17 534.98 495.32 505.55 17699.29 12043.48 8932.26 Expenditure Manufacturing & Other Expenses 13224.01 Depreciation 122.84 136.45 129.79 173.96 Interest 1.69 5.98 21.01 5.16 13348.54 9470.85 7988.59 8057.15 Profit for the Year before tax 4350.75 2411.13 Provision for Taxation Current 983 716.14 300.90 Deferred 28.02 (5.12) (6.79) Fringe Benefit 9.48 3.52 3.00 Profit after Tax 3339.73 1700.11 654.50 Balance of Profit brought forward 854.99 Balance available for Appropriation 4194.72 Appropriations Interim Dividend Proposed Dividend 1157.47 578.73 318.30 Tax on Dividend 187.77 96.12 54.10 49.18 Transfer to General Reserve 334 170.27 Balance carried to Balance Sheet 2515.48 4194.72 1700.11 654.50 755.78 1237.10 Mar' 07 9049.66 1026.66 8436.94 783.82 9168.84 9689.95 10606.09 1313.86 8663.29 9292.23 10076.05

9328.42 7837.79 7878.03 8184.45 190.26 5.34 8348 958.09 1134.73 1728.05 392.75 501.36 (17.32) (13.41) 755.78 1237.10 1700.11 654.50 755.78 1237.10 289.37 404.73 69.64 282.10 417.23 762.73 854.99 -

Data Analysis & Interpretation Gross Profit Ratio (GPR):Table Presentation

YEARS (31st MARCH) Selected companies Hero Honda Motors Ltd. Bajaj Auto Ltd. Gross Profit Net Sales Gross

Profit Ratio (%) Gross Profit Net Sales Gross Profit Ratio 2006-07 1906.84 9899.96 19.26 2007-08 2059.34 10331.80 2008-09 2535.31 12319.12 2009-10 3783.25 15758.18 2010-11 3587.21 19245.03 Avg. GPR 20.48 25.76

2391.22 19.93 20.58 24.01 18.64

9292.23 2042.92 1973.47 3438.06 4199.31

25.73 8663.29 23.58 8436.94 23.39 11508.50 15998.12

29.87 26.25

Graphical Presentation & Interpretation

The GPR of Hero Honda increased its sale as s cost of production. ncrease in production

increased till 2009-10. It indicates that the company has well as its rate of margin and on the other hand reduce it But in 2010-11, GPR of the company declined because of % i overheads comparatively more than the % increase in sales.

While the GPR of Bajaj was decreasing consistently till 2008-09 due to the decre ase in sales as well as the rate of margin and thereafter in 2009-10 & 2010-11, it increased and decreased respectively. Net Profit Ratio (NPR):Table Presentation

YEARS (31st MARCH) Selected companies Hero Honda Motors Ltd. Bajaj Auto Ltd. Net Profit Net Sales Net Profit Ratio (%) Net Profit Net Sales Net Profit Ratio (%) 2006-07 843.90 9899.96 8.52 1237.10 9292.23 2007-08 987.20 10331.80 9.55 755.78 2008-09 1266.97 12319.12 10.28 654.50 2009-10 2233.07 15758.18 14.17 1700.11 2010-11 2011.23 19245.03 10.45 3339.73 Avg. NPR 10.59 13.09

13.31 8663.29 8.72 8436.94 7.76 11508.50 15998.12

14.77 20.88

Graphical Presentation & Interpretation

The NPR of Hero Honda was increasing continuously till 2009-10.It indicates that the company has reduced its operating as well as non operating expenses in thes e years but in 2010-11, it decreased due to increase in non operating expenses s pecially the burden of interest. On the other hand, NPR of Bajaj Auto Ltd. was d ecreasing continuously till 2008-09 as a result of increase in operating overhea ds of the company. Thereafter it was increasing which shows that the company foc used upon reducing its cost of operations.

Return on Net Capital Employed (ROCE):Table Presentation

YEARS (31st MARCH) Selected companies Hero Honda Motors Ltd. Bajaj Auto Ltd. Net Profit before Int. & Tax Net Capital Employed ROCE (%) Net Profit before Int. & Tax Net Capital Employed ROCE (%) 2006-07 938.14 2635.23 35.60 1237.20 2007-08 1050.84 3118.24 33.70 755.90 2008-09 1423.68 3879.24 36.70 654.57 2009-10 2129.22 3531.05 60.30 1700.11 4266.92 2010-11 1452.54 2988.77 48.60 3339.73 5235.37 Avg. ROCE 42.98 33.16 Graphical Presentation & Interpretation

7159.75 17.28 2921.93 25.87 3439.69 19.03 39.84 63.79

The ROCE of Hero Honda was consistent till 2008-09 as the net profit increased i n same proportion as capital employed and in 2009-10 it increased highly as the company made repayment of its long term loans. Thereafter it reduced in 2010-11 due to the decrease in net profit before interest & tax. On the other hand, the ROCE of Bajaj Auto Ltd. increased in 2007-08 as the resul t of decrease in long term loans and in 2008-09, it decreased as the total liabi lities including reserves increased and finally 2009-10 onwards, it was increasi ng because of increase in net profit before interest & tax. Current Ratio:Table Presentation

YEARS (31st MARCH) Selected companies Hero Honda Motors Ltd. Bajaj Auto Ltd. Current Assets Current Liabilities Current Liabilities Current Ratio 2006-07 913.70 1087.23 0.84 3818.63 4339.35 2007-08 936.78 1377.62 0.68 1649.71 1874.67 2008-09 1013.49 1583.58 0.64 2325.70 2448.11 2009-10 2882.58 6405.73 0.45 1583.83 2879.69 2010-11 1504.57 3761.43 0.40 2872.59 3935.05 Avg. CR 0.60 0.80

Current Ratio 0.88 0.88 0.95 0.55 0.73

Current Assets

Graphical Presentation & Interpretation

Current Ratio of Hero Honda was continuously decreasing till 2010-11 due to incr ease in current liabilities. On the other hand, Current Ratio of Bajaj Auto Ltd. is constant in first two yea rs and in 2008-09 it increased due to increment in current assets. But thereafte r, in 2009-10 it reduced due to decrease in current assets and increase in curre nt liabilities and in 2010-11 it increased due to increase in current assets muc h more than increase in current liabilities.

Liquid Ratio:Table Presentation

YEARS (31st MARCH) Selected companies Hero Honda Motors Ltd. Bajaj Auto Ltd. Liquid Assets Current Liabilities Current Liabilities Liquid Ratio 2006-07 641.47 1087.23 0.59 3514.87 4339.35 2007-08 619.93 1377.62 0.45 1293.52 1874.67 2008-09 680.93 1583.58 0.43 1982.97 2448.11 2009-10 1665.49 6405.73 0.26 1151.88 2879.69 2010-11 977.97 3761.43 0.26 2321.68 3935.05

Liquid Ratio 0.81 0.69 0.81 0.40 0.59

Liquid Assets

Avg. LR 0.40

0.66

Graphical Presentation & Interpretation

Liquid Ratio of Hero Honda was continuously decreasing till 2010-11 due to high increase in current liabilities in comparison to increase in liquid assets. On the other hand, Liquid Ratio of Bajaj Auto Ltd. decreased in 2007-08 as the r esult of high degree of decrement in liquid assets and in 2008-09, it increased due to increase in liquid assets was more than the increase in current liabiliti es. In 2009-10, it again decreased because of increase in current liabilities & simultaneous decrease in liquid assets and thereafter in 2010-11, it increased d ue to high degree of increment in liquid assets in comparison to increase in cur rent liabilities. Debt Equity Ratio (DER):Table Presentation

YEARS (31st MARCH) Selected companies Hero Honda Motors Ltd. Bajaj Auto Ltd. Long Term Loans Shareholders Funds Debt Equity Ratio m Loans Shareholders Funds Debt Equity Ratio 2006-07 165.17 2470.06 0.07 1625.43 5534.32 0.29 2007-08 132.00 2986.24 0.04 1334.34 1587.59 0.84 2008-09 78.49 3800.75 0.02 1570.00 1869.69 0.84 2009-10 66.03 3465.02 0.02 1338.58 2928.34 0.46 2010-11 32.71 2956.06 0.01 325.15 4910.22 0.07 Avg. DER 0.03 0.50

Long Ter

Graphical Presentation & Interpretation

The DER of Hero Honda was continuously decreasing as the amount of unsecured loa ns was decreasing and amount of reserves was increasing continuously. The DER of Bajaj Auto Ltd. was increasing till 2008-09 as there was decrease in shareholders funds and thereafter it started declining in connection with the inc rease in shareholders funds.

Inventory Turnover Ratio (ITR):Table Presentation

YEARS (31st MARCH) Selected companies Hero Honda Motors Ltd. Bajaj Auto Ltd. Cost of Goods Sold Average Stock Inventory turnover Ratio Cost of Goods Sold Average Stock Inventory turnover Ratio 2006-07 7993.12 251.07 31.84 6901.01 291.32 23.69 2007-08 8272.46 296.34 27.92 6620.37 329.66 20.08 2008-09 9783.81 321.97 30.39 6463.47 344.23 18.78 2009-10 11974.93 381.62 31.38 8070.44 392.53 20.56 2010-11 15657.82 480.67 32.57 11798.81 496.75 23.75 Avg. ITR 30.82 21.37 Graphical Presentation & Interpretation

The ITR of Hero Honda was decreased in 2007-08 as the increase in average stock was much more than the increase in COGS and 2008-09 onwards, it was increasing. On the other hand, ITR of Bajaj Auto Ltd. was decreasing upto the year 2008-09 d ue to the increase in average stock & then it was increasing. Earning Per Share (EPS):Table Presentation Years (as on 31st March) Selected companies Hero Honda Motors Ltd. Bajaj Auto Ltd. Earning per share Earning per share 2006-07 43.00 122.00 2007-08 48.50 54.20 2008-09 64.20 45.20 2009-10 111.80 58.80 2010-11 96.50 115.40 Avg. EPS 72.80 79.12 Graphical Presentation & Interpretation It is clear from the above graph that the EPS of Hero Honda Motors ltd. was incr

easing till 2009-10 as there was an increase in Profit after Tax (PAT) but in 20 10-11, it declined as there was decrease in PAT. On the other hand, EPS of Bajaj Auto Ltd. was highest in 2006-07 and thereafter it started declining till 2008-09 as there was decrease in Net Profit & increase in Share Capital but 2009-10 onwards it was increasing as there was increase in Net Profit.

Findings From the comparison of various ratios between Hero Honda Motors Ltd. and Bajaj A uto Ltd., it can be concluded that Bajaj Auto Ltd. shows good performance during the last 5 years in comparative to Hero Honda Motors Ltd. The major findings ar e GPR & NPR:The GPR as well as NPR of Bajaj Auto Ltd. is considerably more than that made by Hero Honda. This implies that the operations of Bajaj Auto Ltd. are more profit able. Return on Capital Employed:In recent Years the ROCE of Bajaj Auto Ltd. is higher than that of Hero Honda wh ich shows that the company is providing better returns to its shareholders as we ll as to its long term loan providers. Turnover:The ITR of Hero Honda Motors Ltd. is more than that of Bajaj Auto Ltd. which ind icates that the company is able to convert their inventory into sales quickly. Liquidity:The Bajaj Auto Ltd. has the higher current ratio as well as liquid ratio than th at of Hero Honda which indicates that Bajaj is comparatively more able to meet o ut its short term liabilities. EPS:Bajaj Auto Ltd. is good from the point of view of investors as its EPS is compar atively more than that of Hero Honda Motors Ltd. Debt Equity Ratio:The DER of Hero Honda is significantly low as compared to Bajaj which implies th at they are not much dependent on the outside debts and rely more on owners funds .

Conclusion On the basis of various ratios used, both the companies are doing fairly good bu t the performance of Bajaj Auto Ltd. is better than that of Hero Honda Motors Lt d. as its most of the ratios are higher than that of Hero Honda Motors Ltd. The shareholders of Bajaj Auto Ltd. are in much better position than those of He ro Honda Motors Ltd. On the basis of net profit ratio, debt equity ratio, return on capital employed etc., it can be said that Bajaj is able to provide better u tilization of funds provided by the long term lenders. Similarly the short term lenders are more secure in Bajaj Auto Ltd. as it has high current ratio & liquid ratio than that of Hero Honda Motors Ltd.