Bajaj Auto limited

• Chairman :Rahul Bajaj

• Vice Chairman :Madhur Bajaj

Bajaj Auto Ltd (BAL) is one of the leading two & three wheeler manufacturers in
India. The company is well known for its R&D, product development, process
engineering and low-cost manufacturing skills. The company is the largest exporter of
two and three-wheelers in the country. The company has two subsidiaries, namely Bajaj
Auto International Holdings BV and PT Bajaj Indonesia.On 29 November 1945, Bajaj
Auto came into being under the name M/s Bachraj Trading Corporation Private Limited.
In 1948, Bajaj Auto started selling imported two- and three-wheelers in India.

Bajaj manufactures and sells motorcycles, scooters, auto-rickshaws and most recently,
cars. Bajaj Auto is India's largest exporter of motorcycles and three-wheelers.[1] 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.
 2. What is a 'Horizontal Analysis'

Horizontal analysis is used in financial statement analysis to compare historical data, such
as ratios, or line items, over a number of accounting periods. Horizontal analysis can
either use absolute comparisons or percentage comparisons, where the numbers in each
succeeding period are expressed as a percentage of the amount in the baseline year, with
the baseline amount being listed as 100%. This is also known as base-year analysis.

Horizontal analysis of the balance sheet is also usually in a two-year format, such as the
one shown below, with a variance showing the difference between the two years for each
line item. An alternative format is to add as many years as will fit on the page, without
showing a variance, so that you can see general changes by account over multiple years.
A less-used format is to include a vertical analysis of each year in the report, so that each
year shows each line item as a percentage of the total assets in that year
Particular 2018 2017 Increase/Decrease Percentage(%)

ASSETS
Non-current
assets
Property,plant 1,821.22 1,898.61 -7739 -407.61
and equipment
Capital work-in 11.15 10.64 0.51 4.79
progress
Investment 57.11 58.53 -1.42 -2.42
property
Intangible - 44.65 44.65 --
assets
Intangible 45.32 31.53 45.32 --
assets under
development
Investment in 1,222.72 1,222.72 -- --
subsidiaries

Financial assets
Investments 10,600.17 7,458.67 3141.5 42.11
Trade ---- ---- -- --
receviables
loans 30.64 29.74 0.9 3.02
Other financial 0.02 0.02 -- --
assets
 438.66 399.94 38.72 9.68
Income tax
asstes
Other non 356.85 268.47 88.38 32.91
current asstes
14,583.86 11,423.52 3160.34 27.66

Current asstes ----- ------

Inventories 742.58 728.38 14.2 1.94
Financial Asstes ---- ------ --
Investments 5,765.41 6,050.08 -284.67 -4.70
Trade 1,491.87 953.29 53.80 56.40
receviables
Cash and cash 760.94 279.82 481.12 171.93
equivalent
Other bank 17.06 13.06 4 30.62
balance
Loans 6.26 6.47 -0.21 -3.24
Other financial 79.36 263.18 -183.82 -69.84
assets
Other current 372.15 1,096.29 -724.14 -66.00
asstes
9,235.63 9,391.37 -155.74 -1.65
Total 23,819.49 20,814.89 3004.11 14.43

Particulars 2018 2017 Increase/Decreas Percentage(%)

Equity & --- --- ---- -----
liabilities
Equity
Equity share 289.37 289.37 ---- ----
capital
Other equity 18,814.49 16,744.76 2069.73 12.36
19,103.86 17,034.13 2069.73 12.15

Non current ---- ----

liabilities
Financial
liabilites
Sales tax 120.77 119.90 0.87 0.72
provisions 112.19 78.13 34.06 43.59
Deferred tax 323.42 313.62 9.8 3.12
Government 46.61 49.26 -2.65 -5.37
grant
 Other non 1.35 7.27 -5.92 -81.43
current
604.34 568.18 36.18 6.36

Current ---- ----

liabilities
Financial
liabilities
Trade payables
Total 1.06 13.65 -12.59 -92.2
outstanding
Total 3243.26 2222.08 1021.18 45.09
outstanding
dues
Other financial 329.26 279.92 49.34 17.62
Other current 393.72 557.61 -163.89 -29.39
liabilites
provisions 125.60 120.93 4.67 3.86
Government 2.65 2.65 0 0
grant
Current tax 15.74 15.74 0 0
4,111,29 3212,58 898.91 27.97
23,819.49 20,814.89 3004.6 14.43

What is 'Ratio Analysis'

A ratio analysis is a quantitative analysis of information contained in a company’s
financial statements. Ratio analysis is used to evaluate various aspects of a company’s
operating and financial performance such as its efficiency, liquidity, profitability and
solvency.

1. Liquidity Ratios: liquidity ratios measure a company's ability to pay off its
short-term debts as they come due using the company's current or quick assets. Liquidity
ratios include current ratio, quick ratio, and working capital ratio.

2. Solvency Ratios: also called financial leverage ratios, solvency ratios compare a
company's debt levels with its assets, equity, and earnings to evaluate whether a company
can stay afloat in the long-term by paying its long-term debt and interest on the debt.
Examples of solvency ratios include debt-equity ratio, debt-assets ratio, and interest
coverage ratio.

3. Profitability Ratios: these ratios show how well a company can generate profits
from its operations. Profit margin, return on assets, return on equity, return on capital
employed, and gross margin ratio are examples of profitability ratios.
4. Efficiency Ratios: also called activity ratios, efficiency ratios evaluate how well a
company uses its assets and liabilities to generate sales and maximize profits. Key
efficiency ratios are the asset turnover ratio, inventory turnover, and days' sales in
inventory.

5. Coverage Ratios: these ratios measure a company's ability to make the interest
payments and other obligations associated with its debts. Times interest earned ratio and
debt-service coverage ratio are two examples of coverage ratios

(1) Current Ratios = Current Assets

--------------------------
Current liabilites

2018 2017

9235.63/ 411.29 9391.37 / 3212.58

C.R = 2.25 C.R = 2.92

Interpretation – The value of Current Ratio, here for Bajaj auto is 2.25 The Ideal
Current Ratio level tends to be 2:1. Here the value 2.25 shows that current assets are 2.25
times more than that of current liabilities. It is good that Bajaj auto has more CA than CL,
but it is very less than that of Ideal Current Ratio. SO, it would be better if Bajaj auto
increases its current ratio.

(2) Quick Ratio = Quick Asstes

----------------------
Current liabilites

2018 2017

8493.05 / 4111.29 8662.99 / 3212.58

= 2.07 = 2.70
Interpretation - The value of Quick Ratio, here for Bajaj auto is 2.07. The Ideal Quick
Ratio level tends to be 1:1. Here the value 2.07 shows that quick assets are 2.07 times
than that of current liabilities. Bajaj auto has less QA than QL, and it is very less than that
of Ideal Quick Ratio. SO, it would be better if Bajaj auto increases its Quick ratio.
.
(3) Total Assets turnover ratio = Sales
----------------
Total assets

2018 2017

25098.64 / 23819.89 22694.87 / 20814.89

= 1.16 = 1.09

Interpretation - The higher the asset turnover ratio, the better the company is performing,
since higher ratios imply that the company is generating more revenue per assets The asset
turnover ratio tends to be higher for companies in certain sectors

(4) Net profit ratio = Net profit after tax

------------------------- * 100
Net sales

2018 2017

4068 / 24700*100 3828 / 21374 * 100

= 16.65 = 17.89

Interpretation - Net profit (NP) ratio is a useful tool to measure the overall
profitability of the business. A high ratio indicates the efficient management of the
affairs of business.

(5) Return on capital employed = Net operating profit

--------------------------------
Total assets - current liabilites
 2018 2017

4068 / 19708.2 *100 3828 / 17602.31*100

= 20.6 = 21.7

Interpretation -- This ratio is used to measure the efficiency of a business in generating

return on its investment. The higher the ratio, the better it is, as it shows robust overall
profitability. This ratio has decreased from 20.6 % in 2018 to 21.7 in 2017 which shows
company’s regress.

(6) Return on investment = Net income before interest and tax

------------------------------------------------------- * 100
Capital employed

2018 2017

5145 / 20918.71 *100 4778 / 18342.03 *100

= 26.04 = 24.59

Interpretation- Return on Investment (ROI) is a performance measure used to

evaluate the efficiency of an investment or compare the efficiency of a number of
different investments. ROI tries to directly measure the amount of return on an particular
investment, relative to the investment’s cost. To calculate ROI, the benefit (or return) of
an investment is divided by the cost of the investment

(7) Earning per share = Net profit after interest tax and prefrence share
--------------------------------------------------------------
Number of equity share

2018 2017

4068 / 289.37*100 3828 / 289.37*100

= 140.60 = 132.30

Interpretation- The earning per shares of bajaj auto is 140% . Normally purchased to
earn dividend or sell them at a higher price in future because the payment of dividend and
increase in the value of stock in future largely depends on the earnings of the company.
so bajaj auto company more purchase dividend in future and get more profit.

( 8 )dividend payout ratio = dividend per share

-------------------------- *100
Earning per share

2018 2017

60 / 140.06*100 55 / 132.3 *100

= 43% = 42%

Interpretation- A dividend pay ratio of Bajaj auto is 43%. So low dividend payout ratio
means the company is keeping a large portion of its earnings for growth in future. so
Bajaj auto is more profit get in future.

(9) Inventory turn over ratio = sales

-------------------
Inventories

2018 2017

25098.64 / 74258 22694 / 728.38

= 34.42 = 31.70

Interpretation- Inventory turnover measures how fast a company sells inventory and
how analysts compare it to industry averages. Low turnover implies weak sales and
possibly excess inventory, also known as overstocking. It may indicate a problem with
the goods being offered for sale or be a result of too little marketing. A high ratio implies
either strong sales or insufficient inventory, which leads to lost business.
Conclusion
 The financial statements of the firm for the two consecutive years
2017-2018 were analysed and various ratios and analysis were done.
 The company should try to increase the duration of the average
collection period to compete with its competitors.
 The company should try to maintain its.net worth for having
satisfactory fund for equity shareholders.
 The company should give more emphasis to sufficient utilization of
the resources and funds.The company should improve the return on
capital employed as a source of tong term fund
 Net sales increased by 15.6% . This is the Company’s highest ever
top-line.
 Total operating income (net sales plus other operating income) grew
by 15.4% also Bajaj Auto’s highest ever.
 Operating earnings before interest, tax, depreciation and amortisation
(EBITDA) increased by 7.7%— the Company’s highest.
 Operating profit increased by 8.0% The operating profit margin was
19.0%.
 • Profit before tax (PBT) grew by 8.4% This, too, was the Company’s
highest ever PBT.
 • Profit after tax (PAT) increased by 6.3%, representing the highest
ever PAT.