Financial Performance Analysis of Selected

Automobile Companies in India

1. Dr. Samita Mahapatra

Assistant Professor,
Sinhgad Institute of Management, Pune.
samitamahapatra31@gmail.com
+91- 9890209640

2. Deven Patil
Master of Business Administration,
Sinhgad Institute of Management, Pune.
deven.pdhfb19@sinhgad.edu
+91-9404334117

3. Shubham Jadhav
Master of Business Administration,
Sinhgad Institute of Management, Pune.
shubham.adhfb19@sinhgad.edu
+91-7276004842

Abstract—The automobile market in India is the fourth largest in the world. According to the Automobile Mission Plan
2016-2026 it is projected to be third largest, contributing 12% to the GDP. Under the automatic route, 100% FDI is permitted
along with full de-licensing (www.makeinindia.com). It is one of the core sectors and has rapidly grown post reforms. The
demand for vehicles has grown leaps and bounds. The automobile sector in India experienced a slow down due to prolonged
lockdown due to COVID-19. There was a 51% decline in the domestic sale of passenger vehicles according to the Society of
Indian Automobile Manufacturers. The trend of slowdown was observed in this industry before lockdown also. After the
announcement of phase-wise unlocking this sector experience a sharp rise in the demand. In this paper, the researchers are
making an attempt to analyze the growth and financial performance of selected automobile companies. Based on the
secondary data, the trend in growth quarterly sales, revenue and market cap has been studied. For financial performance, the
selected ratios are been calculated and compared. The reasons for growth and financial performance has been identified and
discussed by the researchers.
Keywords—Automobile, Financial Performance, Growth, India, Industry, Ratios, COVID-19, Slow down

I. INTRODUCTION
The $118 billion Indian automobile industry is the fourth largest in the world and is expected to be third largest in the world
by 2026. The industry currently manufactures 26 million vehicles including Passenger Vehicles, Commercial Vehicles, Three
Wheelers, Two Wheelers and Quadricycles in April-March 2020, of which 4.7 million are exported. India holds a strong
position in the international heavy vehicles arena as it is the largest tractor manufacturer, second-largest bus manufacturer and
third largest heavy trucks manufacturer in the world. The sector takes share of 7.1% in India’s GDP which employs more
than 35 million people. India's annual production has been 30.91 million vehicles in 2019 as against 29.08 million in 2018,
registering a healthy growth of 6.26%. Hence it becomes very important to study this sector when it is going through lot of
challenges like COVID-19 pandemic, India’s new emission norms, new crash test norms and rising commodity prices.
This research paper discusses top 3 Indian automobile manufacturers by market capitalization. They are Maruti Suzuki India
Ltd., Mahindra & Mahindra Ltd. and Bajaj Auto Ltd. It examines the net sales, market capitalization and earnings per share
of last 10 quarters along with various ratios like current ratio, return on capital employed and debt to equity ratio to study
their ability to service short term liabilities, how efficiently invested capital is used and ability to pay their debt respectively.
Information about the companies is given below:

Maruti Suzuki India Ltd (formerly Maruti Udyog Ltd) is India's largest passenger car company accounting for over 50% of
the domestic car market. The company offers full range of cars from entry level Maruti Alto to stylish hatchback Baleno,
Celerio, Swift, Wagon R and sedans DZire, Ciaz and Sports Utility vehicle Vitara Brezza. The company is a subsidiary of
Suzuki Motor Corporation of Japan. The Japanese car major held 56.21% stake in Maruti Suzuki as on 31 December 2017.
The company is engaged in the business of manufacturing purchase and sale of motor vehicles and spare parts (automobiles).

Electronic copy available at: https://ssrn.com/abstract=3958367

The other activities of the company include facilitation of pre-owned car sales fleet management and car financing. They
have four plants three located at Palam, Gurgaon, Haryana and one located at Manesar Industrial Town, Gurgaon, Haryana.

Mahindra & Mahindra Ltd. manufactures different range of automotive vehicles, agricultural tractors, implements and
industrial engines. It is the flagship company of the Mahindra group, operating in the global tractor industry and the Indian
utility vehicles market. Through its subsidiaries, the company operates in industries such as aerospace, aftermarket,
agribusiness, automotive, components, construction equipment, consulting services, defense, energy, farm equipment, finance
and insurance, industrial equipment, information technology, leisure and hospitality, logistics, real estate, retail, and two
wheelers. The company’s portfolio comprises of a wide spectrum of vehicles from two wheelers to heavy trucks, SUVs to
school buses. Its services include maintenance and repairs, customization, providing spares, and manufacturing and
engineering. The company specializes in consulting on automotive style, engineering, computer-aided engineering, and project
management. It also offers concept definition for two wheelers, passenger vehicles, and light and heavy trucks. The company
manufactures a wide range of light commercial vehicles and heavy commercial vehicles that are rugged, reliable,
environmentally friendly and fuel-efficient.
Bajaj Auto Ltd. manufactures and markets scooters, motorcycles and three-wheeler vehicles and related spare parts. Its
footprint stretches over a range of industries, spanning automobiles, home appliances, lighting, iron and steel, insurance, travel
and finance. The company operates its business through two segments: Automotive and Investments. It also operates in
Indonesia and Netherlands through its subsidiaries located in those regions. Bajaj Auto was founded in November 29, 1945 and
is headquartered in Pune, India. It is currently the largest three wheeler manufacturer in the world and the largest exporter of
two wheelers in India.

II. LITERATURE REVIEW

Kanagavalli and Saroja Devi1 (2018) studied financial performance of selected automobile companies. Researchers performed
ratio analysis of top 3 Indian two wheeler companies named Hero Motocorp Ltd., Bajaj Auto Ltd. and TVS Motors Ltd. for the
period of 5 years from FY 2013-2018. Researchers studied the profile and growth of these companies. Researchers also
analyzed liquidity and solvency performance. Researchers studied Liquidity performance by studying Current Ratio & Quick
Ratio and Solvency performance by analysing Interest Coverage Ratio, Proprietary Ratio, Sales to Total Assets Ratio etc.
Researchers also performed ANOVA test to study variance of given ratios. The study found that Efficiency or Turnover Ratios
of Hero Motocorp is ranked higher among other automobile companies. The profitability ratios of Hero Motocorp are also
higher than other automobile companies.
Chotaliya2 (2020) published research paper titled “The Empirical Study of Financial Performance of Automobile Industry in
India”, studied Indian Commercial Vehicle sector by studying financial performance of 5 commercial vehicle manufacturers,
Ashok Leyland Ltd., Tata Motors Ltd., Swaraj Mazda Ltd., Force Motors Ltd. and Mahindra & Mahindra Ltd. She studied
Current Ratio, Quick Ratio, Investment Turnover Ratio, Fixed Assets Turnover Ratio, Total Asset Turnover Ratio & Asset
Turnover Ratio. Arithmetic Mean, Standard Deviation, Co-Efficient of Variation & ANOVA test was performed on mentioned
ratios to study variance of values. The findings of this study showed significant difference in all the ratios mentioned above of
all the companies.
Hiran3 (2016) published research paper titled “Financial Performance Analysis of Indian Companies Belongs to
Automobile Industry with Special Reference to Liquidity & Leverage” and studied the impact of various liquidity ratios i.e.
current ratio, quick ratio and inventory turnover ratio on measure of profitability i.e. operating profit ratio, net profit ratio and
return on net worth and also discussed the impact of leverage ratio i.e. degree of operating leverage, degree of financial
leverage and combined leverage on such measures of profitability of companies under study. Indian automobile companies
which are members of CNX 500 index were considered for this report. The period of the study was five years i.e. from
financial year 2011 to 2015. Researcher performed correlation analysis, regression analysis & ANOVA test. After analysing
various parameters, author concluded that companies should revisit their inventory management policy and ensure to maintain
sufficient stock level so that sales can increase above the BEP level significantly. Researcher also found that companies should
use retained earnings to meet their financial needs or restructuring existing debts to reduce interest burden and increase
earnings available to shareholders.
Bhagyalakshmi and Saraswathi4 (2019) in research paper titled ‘A Study on Financial Performance Evaluation Using Dupont
Analysis in Select Automobile Companies’ studied financial perform of 10 selected Indian automobile companies using
DuPont through measuring Return on Equity (RoE), Return on Assets (RoA) and Return on Capital Employed (RoCE). The
period of study was 5 years from 2013 to 2017. This paper also studied impact of Return on Assets (RoA) and Equity
Multiplier on Return on Equity (RoE) and impact of net profit margin & total assets turnover ratio on Return on Assets (RoA).
From the study, it was found that there is strong relationship within Net Profit Margin, RoA, RoE and RoCE. Another
observation was that higher RoE of the companies was due to higher asset turnover ratio, which indicated higher operating
efficiency with low debt.
Ranjithkumar and Eahambaram5 (2018) in research paper titled ‘A Study on Profitability Analysis of Indian Selected
Automobile Industry in India’ studied 8 parameters study profitability of top 5 Indian automobile companies viz. Tata Motors
Ltd., Mahindra & Mahindra Ltd., Maruti Suzuki India Ltd., Hero Motocorp Ltd. & Bajaj Auto Ltd. The parameters studied
were Profit Before Depreciation, Interest & Taxes (PBDIT), Profit Before Interest, Taxes (PBIT), Profit Before Tax (PBT), Net

Electronic copy available at: https://ssrn.com/abstract=3958367

 profit, Return on Net Worth (RoNW), Return on Capital Employed (RoCE), RoA (Return on Assets) and Asset Turnover Ratio
(ATR). The study was conducted for period of 5 years i.e. from FY 2014 to FY 2017. In this study, It was found that Bajaj
Auto had highest Net Profit Margin, Hero Motocorp had the highest RoCE and Hero Motocorp had highest RoA.
Jothi & Geethalakshmi6 (2017), this study tried to evaluate the profitability & financial position of selected companies of
Indian automobile industry using statistical tools like ratio analysis, mean, standard deviation, correlation. The study revealed
the positive relationship between profitability, short term and long term capital.

III. OBJECTIVES OF THE STUDY

1. To quantify the drivers of growth of selected automobile companies in India from year 2011 to 2021.
2. To analyse the financial performance of selected automobile companies in India from year 2011 to 2021.
IV. RESEARCH METHODOLOGY
Secondary data was used as a source for the study and was obtained from annual reports, financial statements and Bloomberg
Inc.
To analyze the financial performance selected ratios were calculated and statistical tools like arithmetic mean, standard
deviation, co-efficient of variation and one-way analysis of variance test (ANOVA) were used to quantify growth, market
capitalization and net sales.

A. Period of the study

The study is carried out over period of 10 years ranging from 01/04/2010 to 31/12/2020 (FY 2011-2021).

B. Source of data
Secondary data was used for the study and was considered more appropriate as financial performance of a company can be
determined by analyzing annual and quarterly reports shared by respective companies. Bloomberg Inc. was used to
streamline and maintain consistency in data collection process.
C. Selected Automobile Companies For Research Work

TABLE I. SELECTED COMPANIES FOR RESEARCH WORK

Sr. Date of
No. Selected Companies incorpora
tion
MARUTI SUZUKI INDIA
1. 1981
LTD
MAHINDRA &
2. 1945
MAHINDRA LTD
3. BAJAJ AUTO LTD 1945
a.

D. HYPOTHESIS OF THE STUDY

Following hypothesis has been developed to fulfill the objectives of the study
1. NULL HYPOTHESIS (H0)

 H0: There is no significant difference in Market Capitalization for selected automobile companies for a given period of
time.
 H0: There is no significant difference in Net Sales for selected automobile companies for a given period of time.
 H0: There is no significant difference in Earnings per share for selected automobile companies for a given period of
time.
 H0: There is no significant difference in Current Ratio for selected automobile companies for a given period of time.
 H0: There is no significant difference in Return on capital employed for selected automobile companies for a given
period of time.
 H0: There is no significant difference in Debt-to-Equity ratio for selected automobile companies for a given period of
time.

Electronic copy available at: https://ssrn.com/abstract=3958367

 2. ALTERNATE HYPOTHESIS (H0)

 H1: There is significant difference in Market Capitalization for selected automobile companies for a given period of
time.
 H1: There is significant difference in Net Sales for selected automobile companies for a given period of time.
 H1: There is significant difference in Earnings per share for selected automobile companies for a given period of time.
 H1: There is significant difference in Current Ratio for selected automobile companies for a given period of time.
 H1: There is significant difference in Return on capital employed for selected automobile companies for a given period
of time.
 H1: There is significant difference in Debt-to-Equity ratio for selected automobile companies for a given period of time.

V. ANALYSIS
A. Market Capitalization

Market capitalization refers to how much a company is worth as determined by the stock market. It is defined as the total
market value of all outstanding shares.

Formula:

Market Cap = Share price x Number of shares outstanding

TABLE II. MARKET CAPITALIZATION OF SELECTED COMPANIES AS OF 01/02/2021.

Year Company Name

MARUTI SUZUKI MAHINDRA & MAHINDRA
INDIA LTD LTD BAJAJ AUTO LTD
2019 Q2 2.22E+12 7.78E+11 1.07E+12
2019 Q3 2.26E+12 7.87E+11 9.99E+11
2019 Q4 2.02E+12 8.42E+11 8.38E+11
2020 Q1 1.97E+12 8.18E+11 8.15E+11
2020 Q2 2.03E+12 8.51E+11 6.80E+11
2020 Q3 2.23E+12 9.22E+11 6.61E+11
2020 Q4 1.30E+12 5.85E+11 3.54E+11
2021 Q1 1.76E+12 8.18E+11 6.35E+11
2021 Q2 2.04E+12 8.34E+11 7.56E+11
2021 Q3 2.31E+12 9.97E+11 8.96E+11
Mean 2.01E+12 8.23E+11 7.70E+11

Standard Error 9.52E+10 3.35E+10 6.47E+10

Median 2.03E+12 8.26E+11 7.85E+11

Standard Deviation 3.01E+11 1.06E+11 2.05E+11

Minimum 1.30E+12 5.85E+11 3.54E+11
Maximum 2.31E+12 9.97E+11 1.07E+12
Source: Bloomberg L.P. Data as of 01/02/2021

Electronic copy available at: https://ssrn.com/abstract=3958367

 Market Capitalization of Selected Automobile Companies
5.00
Trillions

4.00

3.00

2.00

1.00

0.00
2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2021 Q1 2021 Q2 2021 Q3

MARUTI SUZUKI INDIA LTD MAHINDRA & MAHINDRA LTD BAJAJ AUTO LTD

Fig. 1. Line chart to depict market capitalization of selected automobile companies.

From above chart, we can see that market cap of all three companies declined continuously upto Q3 2020, due to
sluggish economic growth, hurt demand because of negative consumer sentiment & lack of liquidity in NBFC sector due to
IL&FS crisis. In Q4 2020, Indian automobile shares correct sharply due to imposition of nationwide lockdown because of
COVID-19 spread in India. Investores feared of steep fall in sales due to closure of showrooms and production of vehicles in
plants. From Q1 2021, India entered the unlock phase and majority of auto dealerships gradually recommenced
operations, OEMs recorded significant uptick in MoM wholesales. However, domestic sales for 2W / PV were still
30%/55% lower YoY. Since then, share prices and so market cap started rising continuously due to rising sales figures and
liquidity infusion by central banks.

TABLE III. ONE WAY ANOVA TEST FOR MARKET CAPITALIZATION OF SELECTED AUTOMOBILE COMPANIES.
ANOVA
Source of P- F
Variation SS df MS F value crit
Between
Groups 6.53E+08 2.00 3.27E+08 25.27 0.00 3.35
Within
Groups 3.49E+08 27.00 1.29E+07

Total 1.00E+09 29.00

 Degree of freedom = 30-1=29

 Table Value of 'F' = 3.35
 Calculate Value of 'F' = 25.27
 Fcal > Ftab
 25.27 > 3.35
 Fcal > Ftab
Table III indicates the calculated value of 'F' is 25.27 and the table value of 'F' at 5% levels of significance is 3.35. So, the
calculated value 'F' which is more than the table value. It indicates that the Null Hypothesis is rejected and Alternate
Hypothesis is accepted. So, it indicates that there is significant difference in Market Capitalization of selected automobile
companies under study for the period.

B. Net Sales

Net sales are the total revenue generated by a company, excluding any sales returns, allowances, and discounts.

Electronic copy available at: https://ssrn.com/abstract=3958367

Formula:

Net Sales = Gross Sales – Returns – Allowances – Discounts

TABLE IV. NET SALES (IN CRORE RUPEES) OF SELECTED COMPANIES AS OF 01/02/2021.

Year MSIL MM BJAUT

Sep-18 22,433 12,989 8,036

Dec-18 19,668 13,070 7,436

Mar-19 21,459 14,035 7,421

Jun-19 19,720 12,923 7,756

Sep-19 16,985 11,076 7,707
Dec-19 20,707 12,345 7,640
Mar-20 18,199 9,144 6,816
Jun-20 4,107 5,602 3,079
Sep-20 18,745 11,710 7,156
Dec-20 23,458 14,216 8,910
Mean 2.01E+12 8.23E+11 7.70E+11

Standard Error 9.52E+10 3.35E+10 6.47E+10

Median 2.03E+12 8.26E+11 7.85E+11

Standard Deviation 3.01E+11 1.06E+11 2.05E+11

Minimum 1.30E+12 5.85E+11 3.54E+11
Maximum 2.31E+12 9.97E+11 1.07E+12
Source: Bloomberg L.P. Data as of 1/02/2021

Fig. 2. Line chart to depict net sales of selected automobile companies.

Above chart shows data of last 10 quarters. Here we can observe that net sales of all three companies were flat or declining in
all the quartes since Indian auto sector was going through slowdown during the period. The lockdown imposed due to COVID-

Electronic copy available at: https://ssrn.com/abstract=3958367

19 further deteriorated sales numbers of all three companies in Q1 FY21. When India entered in unlock phase in June 2020,
public started preferred personal mobility over public transport to commute. This worked as tailwind for auto sector & all 3
mentioned companies posted highest sales in 10 quarters in Q3 FY21.

TABLE V. ONE WAY ANOVA TEST FOR NET SALES OF SELECTED AUTOMOBILE COMPANIES.

Source of P-
Variation SS df MS F value F crit
Between
Groups 6.53E+08 2.00 3.27E+08 25.27 0.00 3.35
Within
Groups 3.49E+08 27.00 1.29E+07

Total 1.00E+09 29.00

 Degree of freedom = 30-1=29
 Table Value of 'F' = 3.35
 Calculate Value of 'F' = 25.27
 Fcal > Ftab
 25.27 > 3.35
 Fcal > Ftab

Table V indicates the calculated value of 'F' is 25.27 and the table value of 'F' at 5% levels of significance is 3.35. So, the
calculated value 'F' which is more than the table value. It indicates that the Null Hypothesis is rejected and Alternate
Hypothesis is accepted. So, it indicates that there is significant difference in Net Sales of selected automobile companies under
study for the period.

C. Earnings Per Share (EPS)

EPS indicates how much money a company makes for each share of its stock, and is a widely used metric to estimate
corporate value.

Formula:

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 − 𝑃𝑟𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠

𝐸𝑃𝑆 =
𝐸𝑛𝑑 𝑜𝑓 𝑃𝑒𝑟𝑖𝑜𝑑 𝐶𝑜𝑚𝑚𝑜𝑛 𝑆ℎ𝑎𝑟𝑒𝑠 𝑂𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔

TABLE VI. EARNINGS PER SHARE OF SELECTED COMPANIES AS OF 01/02/2021

Year
MSIL MM BJAUT
Sep-18 74.19 13.9 39.83

Dec-18 49.31 9.04 38.08

Mar-19 59.46 7.12 45.12

Jun-19 47.53 19.4 38.9

Sep-19 44.99 10.2 48.46

Dec-19 51.81 2.57 43.6

Mar-20 42.77 -21 45.28

Electronic copy available at: https://ssrn.com/abstract=3958367

Jun-20 -8.26 0.94 18.25

Sep-20 45.42 0.65 39.33

Dec-20 64.28 0.26 53.78

Mean 47.15 4.3 41.063

Standard Error 6.91196 3.44 2.973307

Median 48.42 4.85 41.715

Standard Deviation 21.8575 10.9 9.402422

Minimum -8.26 -21 18.25

Maximum 74.19 19.4 53.78

Source: Bloomberg L.P. Data as of 1/02/2021

80

60

40
Maruti
20 MM
BJAUT
0

-20

-40

Fig. 3. Line chart to depict earnings per share of selected automobile companies.

The above chart shows EPS graph of last 10 quarters. We can see that Sept. 2018 quarter was showing highest EPS of all 3
companies. It showed some growth in one or two quarters but it did not sustain. Mar. 2021 quarter showed sharp deep in EPS
due to almost zero sales for two months in lockdown. In Sep. 2020 it reached near to pre- COVid level. In Dec. 2020 Bajaj
Auto’s EPS touched 10 quarter high figure.

TABLE VII. ONE WAY ANOVA TEST FOR EARNINGS PER SHARE OF SELECTED AUTOMOBILE COMPANIES

Electronic copy available at: https://ssrn.com/abstract=3958367

Source of
Variation SS df MS F P-value F crit
Between
Groups 10746.85 2 5373.43 23.541 1.21E-06 3.354
Within
Groups 6163.008 27 228.26

Total 16909.86 29
 Degree of freedom = 30-1=29
 Table Value of 'F' = 3.354
 Calculate Value of 'F' = 23.541
 Fcal > Ftab
 23.541 > 3.354
 Fcal > Ftab

Table VII indicates the calculated value of 'F' is 23.541 and the table value of 'F' at 5% levels of significance is 3.354. So, the
calculated value 'F' which is more than the table value. It indicates that the Null Hypothesis is rejected and Alternate Hypothesis is
accepted. So, it indicates that there is significant difference in Earnings per Share of selected automobile companies under study
for the period.

D. Current Ratio:
The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one
year.

Formula:

Current assets
Current Ratio =
Current Liabilities

TABLE VIII. CURRENT RATIO OF SELECTED COMPANIES AS OF 01/02/2021

Year MSIL MM BJAUT

Mar-11 1.55 0.91 0.79
Mar-12 1.35 1.08 1.12
Mar-13 1.31 1.1 1.5
Mar-14 1.38 1.29 1.19
Mar-15 0.96 1.13 2.13
Mar-16 0.71 1.18 1.7
Mar-17 0.66 1.31 2.92
Mar-18 0.51 1.24 2.25
Mar-19 0.87 1.27 1.45
Mar-20 0.75 1.38 1.55
Mean 1.005 1.189 1.66
Standard
Error 0.114797 0.043677 0.197467
Median 0.915 1.21 1.525

Electronic copy available at: https://ssrn.com/abstract=3958367

 Standard
Deviation 0.36302 0.138118 0.624446

Minimum 0.51 0.91 0.79

Maximum 1.55 1.38 2.92

Source: Bloomberg L.P. Data as of 1/02/2021

3.5
3
2.5
2
1.5
1
0.5
0
Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20

MSIL MM BJAUT

Fig. 4. Line chart to depict current ratio of selected automobile companies.

Generally, current ratio above 1 is considered as good. As per above chart, all companies have managed to maintain current
ratio more than 1 over period of 10 years except Maruti Suzuki. Its ratio fell below 1 in 2016 and still below the benchmark
until now. Bajaj Auto have maintained highest current ratio for given period.

TABLE IX. ONE WAY ANOVA TEST FOR EARNINGS PER SHARE OF SELECTED AUTOMOBILE COMPANIES.

Source of P- F
Variation SS df MS F value crit
Between
Groups 2.28 2 1.141 6.33 0.006 3.35
Within
Groups 4.87 27 0.18

Total 7.15 29

 Degree of freedom = 30-1=29

 Table Value of 'F' = 3.35
 Calculate Value of 'F' = 6.33
 Fcal > Ftab
 6.33 > 3.35

Electronic copy available at: https://ssrn.com/abstract=3958367

  Fcal > Ftab
Table IX indicates the calculated value of 'F' is 6.33 and the table value of 'F' at 5% levels of significance is 3.35. So, the
calculated value 'F' which is more than the table value. It indicates that the Null Hypothesis is rejected and Alternate Hypothesis is
accepted. So, it indicates that there is significant difference in Current Ratio of selected automobile companies under study for the
period.

E. Return on Capital Employed (RoCE):

A financial ratio that measures a company’s profitability in terms of all of its capital.

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝐵𝑒𝑓𝑜𝑟𝑒 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑡𝑎𝑥

𝑅𝑜𝐶𝐸 =
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑠𝑡𝑠 − 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

TABLE X. RETURN ON CAPITAL EMPLOYED OF SELECTED COMPANIES AS OF 01/02/2021

Year MSIL MM BJAUT

Mar-11 21.75 25.57 67.23
Mar-12 13.97 22.26 64.78
Mar-13 15.9 23.56 51.13
Mar-14 17.07 20.32 46.25
Mar-15 20.52 16.89 39.98
Mar-16 24.35 17.16 40.48
Mar-17 26.43 14.56 30.32
Mar-18 25.84 17.22 29.51
Mar-19 21.61 17.05 28.28
Mar-20 14.04 13.51 32.08
Mean 20.148 18.81 43.004
Standard
Error 1.480827 1.250021 4.512056
Median 21.065 17.19 40.23
Standard
Deviation 4.682786 3.952915 14.26837
Minimum 13.97 13.51 28.28
Maximum 26.43 25.57 67.23
Source: Bloomberg L.P. Data as of 1/02/2021

80

60

40

20

0
Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20

MSIL MM BJAUT

Fig. 5. LINE CHART TO DEPICT RETURN ON CAPITAL EMPLOYED OF SELECTED AUTOMOBILE COMPANIES.

Electronic copy available at: https://ssrn.com/abstract=3958367

 A higher RoCE shows a higher percentage of the company's value can ultimately be returned as profit to stockholders. While
Bajaj Auto have maintained leadership in this parameter, its RoCE has has been declining over period of last 10 years.
However, it has improved in 2020. While other two players have managed to maintain it in range of 15%-20%.

Source of P- F
Variation SS df MS F value crit
Between
Groups 3698 2 1849 23 0.00 3.35
Within
Groups 2170 27 80.38

Total 5869 29

TABLE XI. ONE WAY ANOVA TEST FOR RETURN ON CAPITAL EMPLOYED OF SELECTED AUTOMOBILE COMPANIES.

 Degree of freedom = 30-1=29

 Table Value of 'F' = 3.35
 Calculate Value of 'F' = 23
 Fcal > Ftab
 23 > 3.35
 Fcal > Ftab

Table XI indicates the calculated value of 'F' is 23 and the table value of 'F' at 5% levels of significance is 3.35. So, the calculated
value 'F' which is more than the table value. It indicates that the Null Hypothesis is rejected and Alternate Hypothesis is accepted.
So, it indicates that there is significant difference in Return on Capital Employed of selected automobile companies under study
for the period.

F. Debt to Equity Ratio:

Debt to Equity Ratio compares a company’s total liabilities to its shareholder equity and can be used to evaluate how much
leverage a company is using.

𝑇𝑜𝑡𝑎𝑙 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Debt to Equity Ratio =
𝑇𝑜𝑡𝑎𝑙 𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠’ 𝐸𝑞𝑢𝑖𝑡𝑦

TABLE XII. DEBT TO EQUITY RATIO OF SELECTED COMPANIES AS OF 01/02/2021

Year MSIL MM BJAUT

Mar-11 0.02 0.23 0.07
Mar-12 0.08 0.3 0.02
Mar-13 0.07 0.24 0.01
Mar-14 0.09 0.24 0.01
Mar-15 0.02 0.19 0.01
Mar-16 0.01 0.13 0.01
Mar-17 0.01 0.11 0.01
Mar-18 0 0.1 0.01
Mar-19 0 0.08 0.01

Electronic copy available at: https://ssrn.com/abstract=3958367

 Mar-20 0 0.09 0.01
Mean 0.03 0.171 0.017
Standard
Error 0.011255 0.024786 0.005972
Median 0.015 0.16 0.01
Standard
Deviation 0.03559 0.078379 0.018886
Minimum 0 0.08 0.01
Maximum 0.09 0.3 0.07

0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20

MSIL MM BJAUT

Fig. 6. LINE CHART TO DEPICT DEBT-TO-EQUITY RATIO OF SELECTED AUTOMOBILE COMPANIES.

Here M&M is showing highest D/E due to its subsidiary business M&M Finance. Other two companies have very low debt
as compared to M&M. Bajaj Auto is outperformer in this category with lowest mean debt.

TABLE XIII. ONE WAY ANOVA TEST DEBT-TO-EQUITY RATIO OF SELECTED AUTOMOBILE COMPANIES.

Source of P- F
Variation SS df MS F value crit
Between
Groups 0.15 2 0.073 28.2 0.00 3.35
Within
Groups 0.07 27 0.003
Total 0.22 29

 Degree of freedom = 30-1=29

 Table Value of 'F' = 3.35
 Calculate Value of 'F' = 28.2
 Fcal > Ftab
 28.2 > 3.35

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  Fcal > Ftab

Table XIII indicates the calculated value of 'F' is 28.2 and the table value of 'F' at 5% levels of significance is 3.35. So, the
calculated value 'F' which is more than the table value. It indicates that the Null Hypothesis is rejected and Alternate Hypothesis is
accepted. So, it indicates that there is significant difference in Debt-to-Equity ratio of selected automobile companies under study
for the period.

VI. FINDINGS AND SUGGESTIONS

A. Findings:
a. Indian automobile sector is going through tough times since 2018 and it is still on road of recovery.
b. After easing of lockdown, automobile sales are picking up at fast pace and are growing on YoY basis thereby
affecting revenue and EPS.
c. The pandemic has badly affected each and every parameter studied here.
d. The ratios data of all three companies for FY 2021 is yet to be studied as it will be released after completion of
financial year.
B. Suggestions: After studying all the parameters, here are our suggestions:
a. Companies should continue to implement cost cutting measures in order to survive during tough times as
COVID has not vanished fully yet and they should be ready for negative surprises.
b. All three companies, especially Maruti Suzuki should have to cut down current liabilities in order to maintain
current ratio level above 1.
c. All of the companies should refrain from raising capital through debt as it makes a company more vulnerable in
tough times.

VII. CONCLUSION
From the above study, we conclude that Indian auto sector is showing some early signs of recovery after going through
slowdown and COVID crisis. If we look at last two quarters’ revenue and EPS, the trend can be seen. As Indian economy
is recovering from first ever recession after independence, Indian automobile sector will continue to remain a major
contributor to India’s GDP. With announcement of Production Linked Incentive (PLI) by Government of India for
manufacturing sector, these three companies will be benefitted a lot and thereby improving their financial performance. All
the three companies studied are adopting to newer technologies like electric vehicles, hybrid vehicles, CNG etc. and these
technologies will constitute a larger share of their revenue in upcoming time. All three companies are also focusing on
exports which will diversify their dependence on single market. Bajaj Auto Ltd. is already India’s largest exporter of
motorcycles & three wheelers.
Overall, future of Indian auto sector looks bright and all three companies studied will continue to maintain their market
leadership in their respective segments.

REFERENCES
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Electronic copy available at: https://ssrn.com/abstract=3958367

[11] https://www.bajajauto.com/investors/annual-reports
[12] https://www.tijorifinance.com/company/maruti-suzuki-india-limited/#fr
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[17] https://www.moneycontrol.com/financials/bajajauto/results/quarterly-results/BA10#BA10

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