MAJOR PROJECT REPORT ON

A PROFITABILITY ANALYSIS OF BAJAJ AUTO FROM 2007-2011

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF BACHELOR OF BUSINESS ADMINISTRATION 2011-14 Under the Guidance of: Ms. ARTI MALIK Assistant Professor MSI Submitted by: AMIT KUMAR JAIN Roll. No: 03121201711 BBA (General) 2nd Shift 3rd Semester

Maharaja Surajmal Institute C-4, Janakpuri, New Delhi-110058

STUDENTS DECLARATION

This is to certify that I have completed this Project titled A PROFITABILITY ANALYSIS OF BAJAJ AUTO FROM 2007-2011 under the guidance of Ms. ARTI MALIK in partial fulfillment of the requirement of the award of degree of Bachelor of Business Administration at Maharaja Surajmal Institute, Delhi. This is an original piece of work and I have not submitted it earlier elsewhere.

Date: 25-10-12 Place: NEW DELHI

AMIT KUMAR JAIN ROLL. NO. 03121201711

CERTIFICATE FROM THE GUIDE

This is to certify that the project titled A PROFITABILITY ANALYSIS OF BAJAJ AUTO FROM 2007-2011 is an academic work done by KARTIK GUPTA submitted in the partial fulfillment of the requirement for the award of the degree of Bachelor of Business Administration from Maharaja Surajmal Institute, C-4, JANAKPURI, Delhi, under my guidance & direction. To the best of my knowledge and belief the data & information presented by him in the project has not been submitted earlier.

Ms. ARTI MALIK

ASSISTANT PROFESSOR MSI

ACKNOWLEDGEMENT
First of all, I would like to express my thanks to Prof. AZAD. S. CHHILLAR (Director, MSI) for giving me such a wonderful opportunity to widen the horizons of my knowledge. In no small measures, I would also like to gratefully thank to all those who gave me constructive suggestions for the improvement of all the aspect related to this project. In particular, I would like to thank Ms. ARTI MALIK, my research guide for her valuable suggestions and guidance. I also owe a deep sense of gratitude to other faculty members for their continuous encouragement. Despite all efforts, I have no doubt that error and obscurities remain that seen to afflict all research project and for which I am culpable.

AMIT KUMAR JAIN Roll. No.: 03121201711

TABLE OF CONTENTS
CHAPTER 1= INTRODUCTION - INTRODUCTION - OBJECTIVES OF THE STUDY - RESEARCH METHODOLOGY - LIMITATIONS OF THE STUDY - SCOPE OF THE STUDY CHAPTER 2 = COMPANY PROFILE
- HISTORY AND FORMATION OF BAJAJ AUTO

CHAPTER 3=DATA ANALYSIS AND INTERPRETATION

GRAPHS, CHARTS

CHAPTER 4=RECOMMENDATIONS AND CONCLUSIONS

BIBLIOGRAPHY

CONCLUSIONS

- WEBSITES - BOOKS - JOURNALS

LIST OF TABLES
Table No 1 2 3. Title PRODUCTS OFFERED BY BAJAJ AUTO MAIN COMPETITORS OF BAJAJ AUTO FINANCIAL HIGHLIGHTS OF BAJAJ AUTO FROM 2007-2011 Page No

LIST OF FIGURES
Figure No 1 Title FIGURES OF SALES ,COGS, TOTAL EXPENSES , EBIT ,NET PROFIT ,CAPITAL EMPLOYED ,ADJUSTED NET PROFIT , NET INCOME , TOTAL ASSETS GROSS PROFIT MARGIN RATIO Page No

2.

3. 4.

OPERATING PROFIT MARGIN RATIO NET PROFIT MARGIN RATIO

5.

RETURN ON CAPITAL EMPLOYED

6.

RETURN ON ASSETS RATIO

LIST OF SYMBOLS

S No 1 2 @

Symbol

Nomenclature & Meaning Sigma (Summation) At the rate

LIST OF ABBREVIATIONS

S No 1 2 3

Abbreviated Name COGS EBIT GP

Full Name COST OF GOODS SOLD EARNING BEFORE INTEREST AND TAX GROSS PROFIT

CHAPTER-1

INTRODUCTION OF THE PROJECT

Someone has rightly said that practical knowledge is far better than classroom teaching. During this project I fully realized this and I came to know about how a consumer chooses among a varied range of products available to him. The subject of my study is market survey of customer buying behavior in motorcycles, goods carriers, passenger carriers taking BAJAJ AUTO LIMITED for comparison, which has slowly but steadily evolved, from a beginner to a corporate giant earning laurels and kudos throughout. The report contains first of all brief introduction about the company. Finally there comes data presentation and analysis in the end of my report. I also put forward some of my suggestion hoping that they help BAJAJ AUTO LIMITED move a step forward to being the very best.

OBJECTIVES OF THE STUDY

The objective of the study is to analyze the financial position of bajaj auto limited from 2007-2011 using profitability ratios. To study the strengths of bajaj auto limited. To study the weaknesses of bajaj auto limited. To study the opportunities of bajaj auto limited. To study the threats of bajaj auto limited. To study the current situation and current performance. To provide suggestions by which BAJAJ AUTO LIMITED can enhance their performance.

RESEARCH METHODOLOGY
METHOD OF DATA COLLECTION
Data may be obtained either from the primary sources or from the secondary sources. A primary source is a one that itself collect the data and a secondary source is a one that makes use of available data which was collected by some other agencies. Depending on the source, statistical data is classified under two categories. 1. PRIMARY DATA, 2. SECONDARY DATA. Primary is that which is collected for the first time and thus happens to be original in character. Secondary is that which is already being collected by someone else and which has already passed through the statistical process.

SAMPLE DESIGN AND DATA COLLECTION

My research is based upon secondary data which is collected from various Books, Internet and various records of bajaj auto limited.

LIMITATIONS OF THE STUDY

1. This project is entirely based upon secondary data so, it lacks the personal touch. 2. Because of time constraint, I was not able to collect much of information. 3. Profitability ratios calculated are based on estimates rather than exact figures.

SCOPE OF THE STUDY

The scope of the study is to find out the financial position of BAJAJ AUTO LIMITED and attain the awareness level of the customers. The scope is that the inflation , competitors , complexity of different products has made an effect on the customer or not and how much. This study also allows knowing the future prospects of the company and where it is at present in the market.

CHAPTER-2 COMPANY PROFILE

ABOUT BAJAJ AUTO

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 and three-wheelers), 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 two- and three- 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 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. This close relationship and his deep involvement in the independence movement did not leave Jamnalal Bajaj with much time to spend on his newly launched business venture. His son, Kamalnayan Bajaj, then 27, took over the reigns of business in 1942. He too was close to Gandhiji and it was only after Independence in 1947, that he was able to give his full attention to the business. Kamalnayan Bajaj not only consolidated the group, but also diversified into various manufacturing activities.

The present Chairman of the group, Rahul Bajaj, took charge of the bus iness 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. He is one of Indias most distinguished business leaders and internationally respected for his business acumen and entrepreneurial spirit.

MANAGEMENT TEAM OF BAJAJ AUTO

1. RAHUL BAJAJ -: CHAIRMAN

2. MADHUR BAJAJ -: VICE CHAIRMAN

3. RAJIV BAJAJ -: MANAGING DIRECTOR

4. PRADEEP SRIVASTAVA -: CHIEF OPERATING OFFICER

5. ABRAHAM JOSEP -: CHIEF TECHNOLOGY OFFICER

6. K . SRINIVAS -: PRESIDENT ( MOTORCYCLE BUSINESS)

7. R.C MAHESHWARI -:PRESIDENT ( COMMERCIAL VEHICLE)

8. RAKESH SHARMA -: PRESIDENT ( RETIAL FINANCE)

9. ERIC VAS -: PRESIDENT ( FINANCE)

10. AMRUT RATH -: VICE PRESIDENT ( HUMAN RESOURCES)

GROUP OF COMPANIES OF BAJAJ

Bajaj Auto is the flagship of the Bajaj group of companies. The group comprises of 34 companies and was founded in the year 1926. The companies in the group are: Bajaj Auto Ltd. Bajaj Holdings & Investment Ltd. Bajaj Finserv Ltd. Bajaj Allianz Life Insurance Co. Ltd Bajaj Financial Solutions Ltd. Bajaj Auto Finance Ltd. Bajaj Allianz Financial Distributors Ltd. Bajaj Auto Holdings Ltd. P T Bajaj Auto Indonesia (PTBAI) Bajaj Auto International Holdings BV Bajaj Electricals Ltd. Hind Lamps Ltd. Bajaj Ventures Ltd. Mukand Ltd. Mukand Engineers Ltd. Mukand International Ltd.

PRODUCTS

BAJAJ
Brands

AUTO

Products Motorcycles

4S Champion Bajaj Discover Bajaj Pulsar DTSi Bajaj Wind 125 Caliber KB RTZ

Bajaj Avenger Bajaj Platina PULSAR DTS FI 220 Bajaj XCD 125 Caliber115 KB100

Pulsar 135 Platina DTS SI Kawasaki Ninja250 Discover 150 Pulsar 200 DTSi

Bajaj Chetak

Bajaj Kristal Dtsi

Bajaj Wave

Goods Carriers

GC max CNG

RE600

Passenger Carriers RE25 CNG RE 4S LPG

RE25 LPG RE Diesel

RE4S RE GDI

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MAIN COMPETITORS OF BAJAJ AUTO

COMPANIES Ashok Leyland LTD LOCATION Chennai , India

Ek chor China Motorcycle Co. Ltd Hero Motocorp TVS motor LML Kinetic Motors Maharashtra scooters Honda

Hong kong India India India India Maharashtra , India India

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CHAPTER-3 ANALYSIS AND INTERPRETATION

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CONCEPT OF RATIO ANALYSIS

A tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis. Ratios can provide meaningful comparisons of companies in similar industries or of a company in a single industry. As such, financial ratios should be evaluated in comparison to other companies in the same industry. For example, a dividend ratio of 5.2 means nothing by itself, and means very different things if the industry average is 22.5 as opposed to 1.5. For businesses that have operations in more than one industry, ratio analysis is less meaningful. Also, keep in mind that ratio analysis does not tell the entire story. There may be good business reasons to support management's decision to reduce or increase liquidity or fixed assets in a different manner than the rest of the industry. Having a single ratio out of line with an industry, therefore, does not necessarily mean there is a problem.

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ADVANTAGES OF RATIO ANALYSIS -:

(a). Helpful in Decision Making

All our financial statements are made for providing information. But this information is not helpful for decision making because financial statements provide only raw information. When we calculate different ratios in ratio analysis, at that time, we get useful information.

(b). Helpful in Financial Forecasting and Planning

Every year we calculate lots of accounting ratios. When we make trend of all these ratios, we can get useful information for our future forecasting and planning. For example, we can tell five year collection period with followingway: 2007 = 90 days 2008 = 70 days 2009 = 60 days 2010 = 50 days 2011 = 30 days

(c). Helpful in Communication

Ratio analyses are more important from communication point of view. Suppose, we have to appoint new sales agents for our company. At that time, we can communicate them by using our company's sales and profit related ratios. There is no need of hi-tech for understanding the meaning of any specific ratio. For example, our gross profit in 2010 is 26.6% and in 2011, it is 28.55%. By just telling this ratio, we can understand whether our company is growing or falling.

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(d). Helpful in Co-ordination

No company has all the strength points. Company's financial results shows some strength points and some weak points. Ratio analysis can create co-ordination between strength points and weak points.

(e). Helps in Control

Ratio analysis can also use for controlling our business. We can easily create the standard of each financial item of our balance sheet and profit and loss account. On this basis, we can also calculate standard ratios. By comparing standard ratios with actual accounting ratios, we can find variance. These variance may be favorable and unfavorable. On this basis, we can control our business from financial point of view.

(f). Helpful for Shareholder's decisions

For example, I am a shareholder. I want to invest in any company's shares. Before buying any company's shares, I will be interested to know company's long term solvency. So, I have to calculate long term solvency ratios. In which, I have to calculate fixed assets to net worth ratio, fixed assets to long term debt ratio. On this basis, I can know the level of fixed assets and its main resource. After checking my money's security, I will be interested to know my return on this investment. ROI, EPS and DPS are most useful ratios which I can calculate for knowing this.

(g). Helpful for Creditors' decisions

Creditors are those persons who provide goods on credit to company or provides short period loan to company. All the creditors are interested to know whether company will repay their debt or not. For this, the calculate current ratio and quick liquid ratio and average payment period. On this basis, they take decisions.

(h). Helpful for employees' decisions

Every employee wants to increase his salary. He also wants to get more and more incentives from company. For this, he takes help from company's profitability ratios. Profitability ratios will be helpful for employees to pressure on the company for increasing their salary.

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DISADVANTAGES OF RATIO ANALYSIS

(a) While ratio analysis can be great for comparison between companies, however if there is only one company then ratio analysis can be misleading. (b). Since ratio analysis is done from the data in the financial statements like profit and loss and balance sheet, in case of any mistakes in those financial statements will reflect in the ratios also. (c ). Since Ratios are easy to manipulate they are misused by managers for window dressing; window dressing refers to presenting of better picture of the company than what it is. (d). Ratio analysis does not take into account the qualitative factors; it only presents the figures as they are. So for example it may possible that company may have higher current ratio indicating that liquidity position of the company is good, however if large portion of those current asset includes inventory then it does not mean a sound liquidity position. (e). Ratios are not same for everybody that is different people have different perception regarding the ratios. So a current ratio of 2:1 may be good for some people, however some people may think it is not adequate

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Types of ratios

Some of the different types of ratios that can be calculated from data in the financial statements and used to evaluate a business include:

Liquidity ratios

Solvency ratios

Activity ratios

Profitability ratio

Liquidity ratios
Liquidity ratios measure a businesss ability to cover its obligations, without having to borrow or invest more money in the business. The idea is that there should be sufficient cash and assets that can be readily converted into cash to cover liabilities as they come due. One of the most common liquidity ratios is: Current Ratio = Current Assets / Current Liabilities Current assets basically include cash, short-term investments and marketable securities, accounts receivable, inventory, and prepaid expenses. Current liabilities include accounts payable to vendors and employees, and installments on notes or loans that are due within one year. This ratio could also be seen as a measure of working capital the difference between current assets and current liabilities. A company with a lot of working capital will be in a better position to expand and improve its operations. On the contrary, a company with negative working capital does not have sufficient resources to meet its current obligations, and therefore is not in a position to take advantage of opportunities for growth.

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Another stringent test of liquidity is the:

Acid-test Ratio = Current Assets minus Inventories/ Current Liabilities

Inventory is a current asset that may or may not be quickly converted into cash. This depends on the rate at which inventory is being turned over. By excluding inventory, the acid-test ratio only considers that part of current assets that can be readily converted into cash. This ratio, also called the Quick Ratio, tells how much of the business's short-term debt can be met by using the company's liquid assets at short notice. A ratio that shows how many times inventory is turned over, or sold during the period is: Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory A high turnover ratio is a sign that products are being produced and sold quickly during the period. A ratio of 1.0, for example, would mean that at any given time you have enough inventory on hand to cover sales for the entire period. The higher this ratio, the more quickly inventory is being turned over and producing assets that are more liquid -- accounts receivable and then cash. If you want an even clearer idea of exactly how much ready cash is on hand to cover current liabilities, you can use the: Cash ratio = Cash + Marketable securities / Current Liabilities The cash ratio measures the extent to which a business could quickly cover short-term liabilities, and therefore is of particular interest to shortterm creditors. A ratio of 1.0 would indicate that all current liabilities would be covered at any average point in time by cash and marketable securities that could be readily sold and converted to cash. A ratio of less than 1.0 would mean that other assets, such as accounts receivable or inventory, would have to be converted to cash to cover short-term obligations. A ratio of greater than 1.0 means that there is more than enough cash on hand.

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Solvency Ratios
Solvency ratios are measures to assess a companys ability to meet its long-term obligations and thereby remain solvent and avoid bankruptcy. Two general, overall solvency ratios include: Solvency Ratio = Total Assets / Total Liabilities and
Solvency Ratio = Net Worth (Total Capital or Equity) / Total Liabilities

These ratios basically tell whether a company owns more than it owes. The higher the ratio, the more solvent the company. Another ratio that can tell how much a company relies on debt to finance its assets is: Debt Ratio = Total Debt / Total Assets Traditionally, both short-term and long-term debts and assets are used in determining this ratio. In general, the lower a companys reliance on debt to finance its assets, the less risky the company. The debt to equity ratio is a measure of a companys leverage how much financing it has in the form of debt as compared with how much it has invested in the business. Debt-equity Ratio = Total Liabilities / Total Owners Equity, or Debt-equity Ratio = Long-Term Liabilities / Total Owners Equity In assessing solvency, it is also important to take into consideration the breakdown of a companys liabilities. Not all liabilities are debt in the form of bank loans or notes payable, for example. There are also accounts payable to vendors, salaries and wages payable, taxes payable and accrued liabilities, among others. One of the measures of what debt constitutes in terms of total liabilities is: Indebtedness Ratio = Total Debts / Total Liabilities

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In general, a company that is heavy on debt may be better leveraged, but is also less solvent. The debt repayment terms are another consideration. Short-term debt, payable within one year, may pose a greater burden on cash flow and eventual solvency than long-term debt, which is due beyond one year. A ratio used to quantify this is:
Short-term Debt Ratio or Quality of Debt = Short-term Debt / Total Debt

A lower value for this ratio would indicate less concern for installments coming due within a year. There are other ratios intended to assess a companys capacity to cover its debt repayments and financing costs. One of these ratios measures how interest expense is being covered by the net income the company is generating: Interest expense coverage = Net income before interest and taxes / Interest expense This ratio is also called Number of Times Interest Earned, and represents how many times the net income generated by the company, without considering interest and taxes, covers the total interest charge. The higher the ratio the more solvent the company. Another similar ratio often used to measure a companys capacity to cover its fixed charges is: Ratio of Earnings to Fixed Charges = Earnings before income tax and fixed charges / Interest expense (including capitalized interest) and amortization of bond discount and issue costs Capitalized interest is the amount of interest on a loan to finance a project or acquisition of fixed assets, that has been capitalized and included as part of the cost of the project or asset on the balance sheet. You will probably need to see the notes to the financial statements to find this figure.

Activity Ratios
Many useful gauges of operations can be calculated from data reported in the financial statements. For example, you can determine the average number of days it takes to collect on customer accounts, the average number of days to pay vendors, and how much of the operation iseffectively being financed with payment terms extended by vendors.

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Accounts Receivable Turnover = Total Credit Sales / Average Accounts Receivable This tells you the average duration of accounts receivable for credit sales to customers. This in turn can be expressed in terms of the collection period, as follows: Average Collection Period = Days in Year / Accounts Receivable Turnover or Days to Collect = Trade Accounts Receivable / Credit Sales x 365 A similar calculation can be made on the liabilities side, with accounts payable to vendors: Days to Pay = Trade Accounts Payable / Purchases x 365 To determine how much of a companys accounts receivable and inventory are effectively being financed by the credit extended to the company by its vendors: Financing of Trade Accounts Receivable in terms of Trade Accounts Payable = Trade Accounts Payable / Trade Accounts Receivable Financing of Inventory in terms of Trade Accounts Payable = Trade Accounts Payable / Inventory Effectively managing the credit extended by vendors can help a companys cash flow and therefore its liquidity and solvency. From data reported on the income statement, various relationships can be calculated between different expenses and revenues, or a certain type of expense as a percentage of total expenses. Labor Cost Percentage = Payroll and Related Expenses / Total Revenue or Total Expenses Interest Expense Percentage = Interest Expense / Total Revenue or Total Expenses

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These types of ratios or percentages can be calculated for any item on the income statement. Which accounts are more important will depend on the nature of the business. For example, some operations are more labor intensive and some are more capital intensive. In a labor intensive operation, the percentage that employee-related expenses, including wages, salaries and benefits, represent in terms of total operating expense is relevant. In a capital intensive operation, repairs and maintenance may take on more importance.

Profitability Ratios
One of the most common profitability ratios is the profit margin. This can be expressed as the gross profit margin or net profit margin, and it can be expressed by company, by sector, byproduct, or by individual unit. The information reported on the income statement will enable you to determine the overall profit margin. If additional breakdowns are provided, more detailed margins can be calculated. Gross Profit Margin = Gross Income / Total Revenue Net Profit Margin = Net Income / Total Revenue Other commonly used ratios are returns, expressed as return on investment or equity, return on assets, and return on capital employed. These ratios measure a companys ability to use its capital, or its assets, to generate additional value. Return on Investment (ROI) or Return on Owners Equity = Net Income / Average Owners Equity Return on Assets (ROA) = Net Income / Average Total Assets Return on Capital Employed (ROCE) = Net Income Before Interest and Tax / Capital Employed (Total Assets minus Current Liabilities) When evaluating investment opportunities, profits are often measured per share: Earnings per Share = Net Profit After Tax and Dividends / Ordinary Shareholders' Equity

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Another commonly used ratio to show the yield on an investment is: Dividend Yield Ratio = Dividends per Share / Market Value per Share And, to measure how the price of an investment correlates with the earnings on that investment, you can use the: Price to Earnings Ratio = Market Value per Share / After-Tax Earnings per Share

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FINANCIAL HIGHLIGHTS OF BAJAJ AUTO FROM 2007 2011

YEARS / PARTICULARS NET SALES (CRORES)

2007-08 2008-09

2009-10

2010-11

9292.3 8663.2

11508

15998

GROSS PROFIT 1728 (CRORES) NET PROFIT (CRORES)

1134.7

1836.4

4314.99

1237.9 755

1700.11 4192.71

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CALCULATION OF THE PROFITABILITY RATIOS OF BAJAJ AUTO FROM THE YEAR 2007-2011

1. GROSS PROFIT MARGIN RATIO: (SALES - C.O.G.S) /

(SALES) * 100

2007
SALES IN 2007 = 9420.24 CRORE C.O.G.S IN 2007 = 7123.37 CRORE SO GROSS PROFIT MARGIN RATIO WILL BE -: = (9420.24 8089.45) / 9420.24 *100 = 14.3822

2008
SALES IN 2008 = 8827.15 CRORE TOTAL EXPENSES IN 2008 = 7809.79 CRORE SO GROSS PROFIT MARGIN RATIO FOR THE YEAR 2008 WILL BE (GROSS PROFIT) / SALES * 100 WHERE GROSS PROFIT = SALES TOTAL EXPENSES = 8827.15 7809.79 = 1017.36 = 1017.36 / 8827.15 * 100 =11.52

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2009
SALES IN 2009 = 8700.17 CRORE C.O.G.S. IN 2009 = 6620.07 CROR SO GROSS PROFIT MARGIN RATIO FOR 2009 WILL BE (SALES total expenses) / SALES *100 = 8700.17 7579.61 / 8700.17 *100 = 12.90

2010
SALES IN 2010 = 11813.25 CRORE C.O.G.S. IN 2010 = 8315 CRORE SO GROSS PROFIT MARGIN RATIO FOR THE YEAR 2010 WILL BE (SALES total expenses) / SALES*100 = 11813.25 9340.64 / 11813.25 *100 = 20.612

2011
SALES IN 2011 = 16451.80 CRORE C.O.G.S. IN 2011 = 12113.68 CRORE SO GROSS PROFIT MARGIN RATIO FOR THE YEAR 2011 WILL BE (SALES total expenses) / SALES *100 = 16451.80 13277.15 / 16451.80 *100 = 19.368

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REPRESENTATION AND INTERPRETATION OF THE GROSS PROFIT MARGIN RATIO WITH THE HELP OF BARCHART

25

20

15

2007 2008 2009

10

2010 2011

0 GROSS PROFIT MARGIN RATIO

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2 . OPERATING PROFIT MARGIN RATIO :- ( E.B.I.T.) / SALES REVENUE *100

2007
- E.B.I.T. IN 2007 = 1706.79 CRORE - SALES REVENUE IN 2007 = 9420.24 SO OPERATING PROFIT MARGIN RATIO IN 2007 WILL BE (E.B.I.T.) / SALES REVENUE * 100 = 1706.79 / 9420.24 * 100 = 18.12

2008
- E.B.I.T. IN 2008 = 1081.52 CRORE - SALES REVENUE IN 2008 = 8827.15 CRORE SO OPERATING PROFIT MARGIN RATIO IN 2008 WILL BE (E.B.I.T.) / SALES REVENUE *100 = 1081.52 / 8827.15 *100 = 12.252

2009
- E.B.I.T. IN 2009 = 960.08 CRORE - SALES REVENUE IN 2009 = 8700.17 CRORE SO OPERATING PROFIT MARGIN RATIO IN 2009 WILL BE (E.B.I.T.) / SALES REVENUE * 100 = 960.08 / 8700.17 * 100 = 11.035
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2010
- E.B.I.T. IN 2010 = 2406.26 CRORE - SALES REVENUE IN 2010 = 11813.25 CRORE SO OPERATING PROFIT MARGIN RATIO IN 2010 WILL BE (E.B.I.T.) / SALES REVENUE * 100 = 2406.25 / 11813.25 * 100 = 20.36

2011
- E.B.I.T. IN 2011 = 4310.6 CRORE - SALES REVENUE IN 2011 = 16451.80 CRORE SO OPERATING PROFIT MARGIN RATIO IN 2011 WILL BE (E.B.I.T.) / SALES REVENUE * 100 = 4310.6 / 16451.80 * 100 = 26.201

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REPRESENTATION AND INTERPRETATION OF THE OPERATING PROFIT MARGIN RATIO WITH THE HELP OF BARCHART

30

25

20 2007 2008 15 2009 2010 10 2011

0 OPERATING PROFIT MARGIN RATIO

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3. NET PROFIT MARGIN RATIO : - (NET PROFIT) / TOTAL REVENUE*100

2007
- NET PROFIT FOR THE YEAR 2007 = 1237.96 CRORE - TOTAL REVENUE FOR THE YEAR 2007 = 9986.50 CRORE SO THE NET PROFIR MARGIN RATIO FOR THE YEAR 2007 WILL BE ( NET PROFIT ) / TOTAL REVENUE * 100 = 1237.96 / 9986.50 * 100 = 12.40

2008
- NET PROFIT FOR THE YEAR 2008 = 755.95 CRORE - TOTAL REVENUE FOR THE YEAR 2008 = 9065.27 CRORE SO THE NET PROFIR MARGIN RATIO FOR THE YEAR 2008 WILL BE ( NET PROFIT ) / TOTAL REVENUE *100 = 755.95 / 9065.27 *100 = 8.338

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2009
- NET PROFIT FOR THE YEAR 2009 = 656.48 CRORE - TOTAL REVENUE FOR THE YEAR 2009 = 8669.48CRORE SO THE NET PROFIR MARGIN RATIO FOR THE YEAR 2009 WILL BE ( NET PROFIT ) / TOTAL REVENUE *100 = 656.48 / 8669.48 *100 = 7.572

2010
NET PROFIT FOR THE YEAR 2010 = 1702.73CRORE TOTAL REVENUE FOR THE YEAR 2010 = 11883.35CRORE

SO THE NET PROFIR MARGIN RATIO FOR THE YEAR 2010 WILL BE ( NET PROFIT ) / TOTAL REVENUE *100 = 1702.73 / 11883.35 *100 = 14.328

2011
- NET PROFIT FOR THE YEAR 2011 = 3339.73 CRORE - TOTAL REVENUE FOR THE YEAR 2011 = 17710.59 CRORE SO THE NET PROFIR MARGIN RATIO FOR THE YEAR 2011 WILL BE ( NET PROFIT ) / TOTAL REVENUE *100 = 3339.73 / 17710.59 *100 = 18.8572

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REPRESENTATION AND INTERPRETATION OF THE NET PROFIT MARGIN RATIO WITH THE HELP OF BARCHART

20 18 16 14 12 10 8 6 4 2 0 NET PROFIT MARGIN RATIO 2007 2008 2009 2010 2011

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4. RETURN ON CAPITAL EMPLOYED RATIO :- Ebit/(total assets-current liabilities) *100

2007
- E.B.I.T. FOR THE YEAR 2007 = 1706.79 CRORE

- TOTAL ASSETS CURRENT LIABILITIES FOR THE YEAR 2007 = 7051 CRORE SO RETURN ON CAPITAL EMPLOYED FOR THE YEAR 2007 WILL BE (( E.B.I.T. / CAPITAL EMPLOYED )) * 100 = 1706.79 / 7051*100 = 24.33

2008
- ADJUSTED NET PROFIT FOR THE YEAR 2008 = 1081.52 CRORE - CAPITAL EMPLOYED = 2887.19 CRORE SO RETURN ON CAPITAL EMPLOYED FOR THE YEAR 2008 WILL BE (( (ADJUSTED NET PROFIT) / CAPITAL EMPLOYED )) * 100 = 1081.52/ 2887.19 * 100 = 37.71

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2009
- ADJUSTED NET PROFIT FOR THE YEAR 2009 = 960.08 CRORE - CAPITAL EMPLOYED = 3149.91CRORE SO RETURN ON CAPITAL EMPLOYED FOR THE YEAR 2009 WILL BE

(( (ADJUSTED NET PROFIT) / CAPITAL EMPLOYED )) * 100 = 960.08 / 3149.91 * 100 = 30.80

2010
- ADJUSTED NET PROFIT FOR THE YEAR 2010 = 2406.26CRORE - CAPITAL EMPLOYED = 4146.08 CRORE SO RETURN ON CAPITAL EMPLOYED FOR THE YEAR 2010 WILL BE (((ADJUSTED NET PROFIT) / CAPITAL EMPLOYED)) * 100 = 2406.26 / 4146.08 * 100 = 58.03

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2011
- ADJUSTED NET PROFIT FOR THE YEAR 2011 = 4310.06 CRORE - CAPITAL EMPLOYED = 5086.03 CRORE SO RETURN ON CAPITAL EMPLOYED FOR THE YEAR 2011 WILL BE (( (ADJUSTED NET PROFIT) / CAPITAL EMPLOYED )) * 100 = 4310.06 / 5086.03 *100 = 74.57

REPRESENTATION AND INTERPRETATION OF THE NET PROFIT MARGIN RATIO WITH THE HELP OF BARCHART
80 70 60 50 40 30 20 10 0 RETURN ON CAPITAL EMPLOYED RATIO 2007 2008 2009 2010 2011

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5. RETURN ON ASSETS RATIO : - NET INCOME / TOTAL ASSETS * 100

2007
NET INCOME IN 2007 = 1237.96 CRORE TOTAL ASSETS IN 2007 = 7159.75 CRORE SO THE RETURN ON ASSETS RATIO FOR THE YEAR 2007 WILL BE ( NET INCOME) /TOTAL ASSETS * 100 = 1237.96 / 7159.75 * 100 = 17.29

2008
NET INCOME IN 2008 = 755.95 CRORE TOTAL ASSETS IN 2008 = 2921.93 CRORE SO THE RETURN ON ASSETS RATIO FOR THE YEAR 2008 WILL BE ( NET INCOME) /TOTAL ASSETS *100 = 755.95 / 2921.93 *100 = 25.87

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2009
NET INCOME IN 2009 = 656.48 CRORE TOTAL ASSETS IN 2009 = 3439.69 CRORE SO THE RETURN ON ASSETS RATIO FOR THE YEAR 2009 WILL BE ( NET INCOME) /TOTAL ASSETS *100 = 656.48 / 3439.69 *100 = 19.085

2010
NET INCOME IN 2010 = 1702.73 CRORE TOTAL ASSETS IN 2010 = 4266.92 CRORE SO THE RETURN ON ASSETS RATIO FOR THE YEAR 2010 WILL BE ( NET INCOME) /TOTAL ASSETS *100 = 1702.73 / 4266.92 *100 = 13.905

2011
NET INCOME IN 2011 = 3339.73 CRORE TOTAL ASSETS IN 2011 = 5235.37 CRORE SO THE RETURN ON ASSETS RATIO FOR THE YEAR 2011 WILL BE ( NET INCOME) /TOTAL ASSETS *100 = 3339.73 / 5235.37 *100 = 63.79

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REPRESENTATION AND INTERPRETATION OF THE NET PROFIT MARGIN RATIO WITH THE HELP OF BARCHART

70

60

50 2007 40 2008 2009 30 2010 2011 20

10

0 RETURN ON ASSETS RATIO

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SWOT ANALYSIS OF BAJAJ AUTO

STRENGTHS -: The company has highly experienced management

The company has high export to domestic sales ratio The company has great financial support network The company has great product design and development activities Excellent brand presence and marketing in india . Extensive research and development focus and highly Experienced player in motorcycle segment Widespread distribution network across india Wide product range in terms of price , quality and categories Featured in the forbes global brands list

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WEAKNESS -:

Not a global brand despite high volumes of production Lack of performance bikes like major international brands and sports bikes and cruisers Must employ the cash in production and product capabilities To match the competitors and for contionus export growth Hasnt employed the excess cash for a long time No collaboration with any of the foreign players Centralized paternalistic management style not a global Player despite of huge volumes Slow to make decisions and adapt to changes that affects the Profession Do not have the resources to research the market and promote the designation Overly dependent on key volunteers who developed and tought their certification courses

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OPPORTUNITIES -:

The growing gearless trendy scooter and scooterette market Can use the existing r&d capabilities for new models Can invest and grow the lifestyle segments Bajaj can expand its operations in foreign countires Bajaj can have double digit growth in the two wheeler market Bajaj can take advantage of untapped market above 180cc in motorcycle market Bajaj can have more maturity and movement towards higher end motorcycles Bajaj can take advantage of the growing world demand for entry level motorcycles

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THREATS-: The competition catches up to any new innovation in no time Threats of cheap imported motorcycles from china Margins getting squeezed from both the directions (price as well as cost) Tata ace is a serious competition in the three wheeler cargo segment A rapid increase in the entry of international brands in the domestic market Other motorcycle players have a really strong brand presence A small change in focus of a large competitor might wipe out any market position bajaj achieves Other motorcycle players would dominate the domestic market in the coming years cutting the share of bajaj to very low level

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ANALYSIS OF BAJAJ AUTO LTD

Bajaj Auto Ltd. (BAL) is one of the oldest and the largest manufacturer of automobiles in India and has been the market leader in scooters. In 1990s, the near monopolistic market structure, perhaps, lulled the company into being complacent and they gave way to the competitors like Hero Honda and TVS. Hero Honda and TVS Suzuki tied up with foreign majors to bring in the latest in terms of aesthetics and technology, and Bajaj failed to gauge the changing tastes of consumers. In 1990s, there was a marked shift in customer preference from scooters to motorcycles. Bajaj found itself at a loss here, as this was largely an unchartered territory.

THE COMPANY
Bajaj Auto is the flagship of the Bajaj Group of Companies. Bajaj is currently India's largest two- and three-wheeler manufacturer and one of the biggest in the world. Bajaj has long left behind its annual turnover of Rs. 72 million (1968), to currently register an impressive figure of Rs. 81.06 billion.

CURRENT SITAUTION AND CURRENT PERFORMANCE

BAL is currently outperforming the industry growth rate in two-wheeler segment with 32 growth in year 2004-05 v/s industry growth of 19%. Market share in Motorcycles is improving with every passing year. It has also increased from 28% in 2004-05 to 31% in 2005-06. Annual turnover for the year 2005-06 is Rs. 81.06 billion v/s Rs. 63.23 billion a year before - an increase of 28% which is very healthy. BAL has significant presence in all the three basic segments - Price Segment, Value Segment and Performance Segment - and has been showing increased sales in all the segments over years. Besides this, BAL is a market leader in two-wheeler exports and it consists a great chunk of there overall revenues. Currently, BAL is selling over 1 lac motorcycles annually in Sri Lanka, further, they are commanding 50% market share in Central America.

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CHAPTER -4 RECOMMENDATIONS AND CONCLUSION

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CONCLUSION ON BAJAJ AUTO

- Bajaj auto is a major indian automobile manufacturer it is Indias largest and worlds 4th biggest two wheeler producing firm -B.a.l. is committed to prevention of pollution, continual improvement of environment condition and compliance with all environmental legislations and regulations. -They always believe in proving costumer value for their money and keeps an special eye on quality and safety - Bajaj should have discarded the notion of being numero uno and should have moved with times - Investments should have been made in high yielding avenues by bajaj. -The company should have sustained their jvs for long term synergies. -The company should do modification in its products specially two wheelers. - The company should increase its production -The company should sell its products at compartitively low prices. -The company should improve its after sale services to certain extent. - The company should have more products to offer to the costumers in comparatively lesser time.

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SUGGESTIONS FOR BAJAJ AUTO LTD

1. The company should keep focusing on the fast growing motorcycle segment 2. The company should strengthen its position in the gearless segment 3. The company should concentrate on jvs for technology needs 4. The company should look to expand its base outside further 5. The company should concentrate on Blue Ocean for second hand bike market. 6. The company should aggressively launch its new low cost cars. 7. The company should focus on easy credit lending in the present Economical crisis bajaj can utilize its subsidiary bajaj insurance in Coming up with schemes that will help the consumers buy two wheelers on friendly terms 8. The company needs to review it product line up and look to launch new products to cater the changing demands 9. Bajaj needs to adapt to the latest trends the company needs to Tap the export market more efficiently as there is a great potential to make india as the worlds two wheeler production base. 10. Bajaj needs to look for having joint ventures abroad and it should look for targetting the young age group more efficiently 11. The company should concentrate more on sales and marketing so that more and more products can be sold. 12. Advertisements should be the best method to popularize the products among the people 13. Cheaper products should be produced more so that the company can reach the middle class segment. 14. Transparency should be maintained between the products shown and sold to the consumers

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BIBLIOGRAPHY

BOOKS
Maheshwari SN, Financial Accounting, vikas publications ND ,2010 Tulsiyan PC , Cbse Acc. 12 (financial) Part B , Ratna Sagar (P) Ltd. 2009 Jerry Weygand , Donald E. Ceiso, Paul D. Kimmel, Financial Accounting, 8th Edition, John willy and sons

WEBSITES
References -: http://www.bajajauto.com/bajaj_corporate.asp http://www.moneycontrol.com/company-article/bajajauto/news/BA10 http://en.wikipedia.org/wiki/Bajaj_Auto http://en.wikipedia.org/wiki/List_of_Bajaj_Auto_products http://www.individual.com/storyrss.php?story=167188291&hash=0b4 fbc33b62ad22b04e4fb4fedaae3f8 http://money.rediff.com/companies/news/All/bajaj-auto-ltd/10540026 http://in.finance.yahoo.com/q?s=BAJAJAUTO.NS https://www.google.co.in/#hl=en&tbo=d&sclient=psyab&q=bajaj+auto&oq=bajaj+auto&gs_l=serp.12..35i39l2j0l2.565041. 567646.2.569008.3.3.0.0.0.0.256.733.23.3.0.les%3B..0.0...1c.1.i6EJ6blgtRM&pbx=1&bav=on.2,or.r_gc.r_p w.r_cp.r_qf.&fp=38b062bf4bd7d97c&bpcl=39314241&biw=1366&bi h=667

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