Institute Of Management Science.manishan.docx

INSTITUTE OF MANAGEMENT SCIENCE (IMS)

UNIVERSITYOFJAMMU

A Project Report On “Ratio Analysis of Bajaj Auto”

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF BACHELOR IN BUSINESS ADMINISTRATION (BBA)

PROJECTGUIDE: Ms. GURSHISH KOUR

SUBMITTED BY: MANISH SINGH KATOCH ROLL NO 7 BBA 6THSEM

CERTIFICATE It is certified that this Summer Internship Project Report Titled “Ratio Analysis of Bajaj Auto” is the bonafide work of MANISH SINGH KATOCH, who is a student of our institute.

We further certify,

1. Theprojectembodiestheworkofthecandidatehimself. 2. Thecandidateworkedundermefortheperiodrequired. 3. Theconductofthecandidateremainedsatisfactoryduringhisprojectperiod.

SUPERVISOR

DIRECTOR

ACKNOWLEDGEMENT

IamverythankfultoUniversityofJammubecausetheycontaintrainingasanessentialpart of B.B.A.course&makeitcompulsorytoeach&everystudent. IwouldliketoexpressmysincerethanksandgratitudetoourDirector Prof. J.R.Dhotraand MissGurshishKour(AssistantProfessor)forgivinginnovativeideas,constanthelp,and Encouragementtothisprojectwork&givemebettersupportintheindustrialtraining Withoutwhomitwouldbeverydifficultformetocompletethisreport. I

am

highlyindebtedtoMrSandeepDogra(Showroom

Limited)fortheirguidanceandconstantsupervisionaswell

Manager,JammuMotorsPrivate asforprovidingnecessary

informationregardingtheproject&alsofortheirsupportincompletingthereport. IwouldliketoexpressmygratitudetowardsmembersofJammuMotorsPrivateLimitedfor theirkindco-operationandencouragementwhichhelpedmeincompletionofthisreport.

MANISH SINGH KATOCH

EXECUTIVESUMMARY Analysis

Ihaveselectedtopicformyprojecti.e.“Ratio

BajajAuto”.IhavecompletedmytrainingatJammuMotorsBajajPrivateLimited,Jammu. wheelerautomobileindustryHeroMotoCorp.

haveahighestmarketshare.India

thesecondlargestmanufacturerandproduceroftwo-wheelersintheworld.Majorplayers

of Intwois oftwo-

wheelerindustryareHero,Honda,Suzuki,Bajaj,TVS, Yamaha andRoyal Enfieldetc. Theobjectiveofmyresearchiswhichis/arethemost

attractive

attributesforpurchasing

Bajajbikes.Ihavetakensomesamplesforthesurvey.Typeofdesignisdescriptive researchdesign;data

collection

throughoutquestionnaire;andsamplingmethodforthe

studyisanon-probabilityconveniencesampling. AspersurveyHeroisa1strankandBajajisa3rdrankinIndia.Thereisnoassociation Betweencustomerincomeandmileage attribute ofbike;andcustomeroccupationand Brandimage.Thereisassociationbetweencustomerageandlook&styleofbikes.

Ch.

Particulars

Page

No. 1.

2.

3.

No. Introduction

1

a. IntroductionofBajaj

2

b. Introductionof Yamaha

3

CompanyProfile

4

a. HistoryofBajaj

5

b. CompanyProfileofBajaj

6

c. ModelsofBajaj

8

d..Dealer’sProfile

16

d. Organogram

17

e. SWOTanalysisofBajaj

18

f. Historyof Yamaha

19

g. Modelsof Yamaha

22

i. SWOTanalysisof Yamaha

26

ResearchMethodology

27

a. ProblemStatement

28

b. ResearchObjective

28

c. ResearchDesign

28

d. LimitationsoftheStudy

29

4.

DataAnalysisandInterpretation

30

5.

FindingandRecommendations

43

a. Findings

44

b. Conclusion

45

6.

Bibliography

46

7.

Annexure

48

CHAPTER-1 INTRODUCTION

IntroductionofBajajAutoLimited

BajajAuto

Limited

is

a

globaltwo-wheelerand

company.BajajAutomanufacturesandsells

three-wheeler

manufacturing

motorcycles

scooters

andautorickshaws.BajajAutoisapartoftheBajajGroup.ItwasfoundedbyJamnalalBajajinRajas thaninthe1940s.ItisbasedinPune,MumbaiwithplantsinChakan (Pune),Waluj(nearAurangabad)andPantnagarinUttrakhand.Theoldestplantat Akurdi(Pune)nowhousestheR&Dcentre'Ahead'. BajajAutoistheworld'ssixth-largestmanufacturerofmotorcyclesandthesecondlargestinIndia.Itistheworld'slargestthree-wheelermanufacturer. OnMay2015,itsmarketcapitalizationwas₹640billion(US$10bilion),makingit India's23rdlargestpubliclytradedcompanybymarketvalue.TheForbesGlobal2000 listfortheyear2012rankedBajajAutoat1,416.

CHAPTER-2 COMPANYPROFILE

HistoryofBajajAuto TheBajajGroupwasfoundedin1926byJamnalalBajaj.TheBajajgroupcomprisesof 34companies.TheBajajGroupisamongstthetop10businesshousesinIndia.Its footprintstretchesoverawiderangeofindustries,spanningautomobiles(twowheelersandthree-wheelers),homeappliances,lighting,ironandsteel,insurance, travelandfinance. BajajAutocameintoexistenceon29November1945asM/sBachrajTrading CorporationPrivateLimited.Thecompanyisintomanufacturingofmotorcycles, Scootersandthree–wheelers.InIndia,BajajAutohasadistributionnetworkof485 Dealersandover1,600authorizedservicescentres.Ithas171exclusivedealersforthe three– wheelersegment.Ithastotal3750ruraloutletsinruralareas.TheBajajbrandis

wel–

knownacrossseveralcountriesinLatinAmerica,Africa,MiddleEast,Southand

South-

EastAsia.Ithasadistributionnetworkin50countrieswithadominantpresence

inSri-

Lanka,Colombia,Bangladesh,Mexico,CentralAmerica,PeruandEgypt. Itstartedoffbysellingimportedtwo-andthree-wheelersinIndia.In1959,itobtaineda from

theGovernmentofIndiato

manufacture

two-wheelers

and

license three-

wheelersanditbecameapubliclimitedcompanyin1960.In1970,itrolledoutits 100,000thvehicle.In1977,itsold100,000vehiclesinafinancialyear.In1985,it startedproducingatWalujnearAurangabad.In1986,itsold500,000vehiclesina financialyear.In1995,itrolledoutitsten millionth vehiclesandproducedandsoldone million vehiclesinayear.Withthelaunchofmotorcyclesin1986,thecompanyhas changeditsimagefromascootermanufacturertoatwo-wheelermanufacturer.It has technical tie up with Kawasaki Heavy Industries of Japan to manufacture latest models in the two– wheeler space. Bajaj Auto has launched brands like Boxer, Caliber, Wind125, Pulsar and many more .It has also launched India's first real cruiser bike, Kawasaki Bajaj Eliminator.

CompanyprofileofBajajAuto

Type

Publiccompany

Industry

Automotive-Two&ThreeWheelers

YearofEstablished

November29,1945inPune,Maharashtra, India

Founder

JamnalalBajaj

Headquarters

Pune,India

Keypeople

RahulBajaj(Chairman) RajivBajaj(ChiefExecutiveOfficer)

Products

Scooters,Motorcycles,Auto-rickshaw 9,119(March2014)

Numberofemployee

Presence

Distributionnetworkcovers50countries. DominantpresenceinSriLanka ,Peru, Bangladesh, Columbia,Guatemala,Egypt, IranandIndonesia.

BusinessGroup

BajajGroup

Subsidiaries

BajajAutoIndonesia

Website

www.bajajauto.com

 PlantsofBajajAuto BajajAuto’shasinallthreeplants,two atWalujandChakan in Maharashtraandone plantatPantNagarinUtaranchal,westernIndia. 

Waluj–BajajrangeofMotorcyclesandthree-wheelers



Chakan-BajajrangeofMotorcycles



PantNagar-BajajrangeofMotorcycles

 

 VisionandMissionstatementofBajajAuto 

Vision

“To atain world class Excellencybydemonstrating value added products tocustomers”



Mission

“Focusonvaluebasedmanufacturingcontinualimprovementtotaleliminationwastespollutio n freeandsafeenvironment”

ModelsofBajajMotorcycle 

Avenger220CruiseDesertGoldEdition



Avenger220Cruise



Avenger220Street



Avenger150Street



CT100



CT100B



Dominar400

     



Discover125



Pulsar 135LS



Pulsar150



Pulsar180



Pulsar220F



PulsarAS150



PulsarNS200



PulsarAS200



PulsarNS160



PulsarRS200



V15



V12

          

1. BajajCT100

99.27cc,89kmpl,8.1bhp,109kgs Price:₹32,028onwards 2. BajajPlatina

102cc,90kmpl,8.1bhp,108kgs Price:₹42,806onwards 3. BajajDiscover125

124.6cc,82kmpl,10.9bhp,121kgs Price: ₹52,259onwards

4. Bajaj V12

124.5cc,57kmpl,11.8bhp,135kgs Price: ₹64,246onwards 5. BajajPulsar135LS

135cc,64kmpl,13bhp,122kgs Price: ₹61,052onwards 6. BajajV15

149.5cc,57kmpl,11.8bhp,135kgs Price: ₹64,246onwards

7. BajajPulsar150

149cc,65kmpl,15bhp,143kgs Price: ₹74,313onwards 8. BajajAvenger150Street

150cc,45kmpl,14.3bhp,148kgs Price: ₹78,368onwards 9. BajajPulsar180

178cc,45kmpl,17bhp,147kgs Price: ₹79,220onwards

10. BajajAvenger220Street

220cc,40kmpl,19bhp,150kgs Price: ₹86,630onwards 11. BajajPulsar220F

220cc,38kmpl,21bhp,150kgs Price: ₹90,445onwards 12. BajajPulsarNS200

199.5cc,40kmpl,23.2bhp,152kgs Price:₹95,642 onwards

13. BajajPulsarRS200

199.5cc,35kmpl,24.5bhp,165kgs Price: ₹1,24,205onwards

14. BajajDominar400

373.3cc,34.5bhp,182kgs Price: ₹1,41,611onwards

 AwardsandRecognition 

BajajPulsar135LSreceivedBikeoftheYear2010awardfrom BBC–TopGear andBikeIndia.

 

Pulsar220DTS-FireceivedtheBikeoftheYear2008awardbyall

majorIndian

automobilemagazineslikeOverdrive,Auto-Car,BusinessStandardMotoringand BikeTopGear.  

In 2006,BajajAuto won the Frost& Sullivan SuperPlatinum Award for manufacturing excellence initsChakanPlant.

 

ItreceivedawardforTheMostCustomerResponsiveCompanyinAutomobiles categoryinasurveyconductedbyEconomicTimesfortheyears2004,2006and 2008.

 

BajajAutoreceivedtheBikeMakeroftheYearawardinICICIBankOverdrive Awards2004.



BajajPulsar180DTS-I wontheBBCWorldWheelsViewer’sChoice2Wheelerofthe



Year2003award.

 ManagementteamofBajajAuto BoardofDirectors

Designation

RahulBajaj

Chairman

MadhurBajaj

Vicechairman

RajivBajaj

ManagingDirector

SanjivBajaj

ExecutiveDirector

PradeepShrivastava

ChiefOperatingOfficer

AbrahamJoseph

ChiefTechnologyOfficer

RCMaheshwari

President(CommercialVehicleBusiness)

RakeshSharma

President(InternationalBusiness)

EricVas

President(MotorcycleBusiness)

KevinPD’sa

President(Finance)

SRavikumar

President(BusinessDevelopment&Assurance)

AmrutRath

President(HumanResources)

RanjitGupta

President(Insurance,BFSL)

NHHingorani

Advisor(Materials)

CPTripathi

Advisor(CorporateSocialResponsibility)

J.Sridhar

CompanySecretary

DEALER’SPROFILE JammuBajajisstartedon.JammuBajajisanauthorizeddealerofBajajin Jammu.ItexclusivelyhandlesBajajtwo-wheelersandpromotesbusiness basedonpoliciesthatfocusoncustomersatisfaction.JammuBajajinits marketsandprovide4SfacilitiesunderoneroofasperBajaj'sworldwidestandards. Likesales,services,spareparts,saferidingetc.

activities respective

Company profile of Jammu Motors Private Limited

CompanyName

JAMMUMOTORSPRIVATELIMITED

Established

1999

Address

BajajStop,B.C.Road,Jammu-180005

PhoneNo.

+911912546868,2575269

MobileNo.

+919906064444

E-mail

[email protected]

OwnerName

Mr.VineetAggarwal

ManagerName

Mr.SandeepDogra

AuthorizedDealer

BajajAutolimited

Numberofemployee

50

Products

CT-100,Platina,Discover,Avenger,Pulsar, Dominar,INSVikrant

Organogram

Owner

Sales Manager

Marketing Manager

Sales Executive

Service Manager

Workshop BackOffice

Manager

Workshop Person

D.SWOTAnalysisofBajaj  Strengths

 



Strongmarketshare.



Widespreaddistributionnetwork.



Goodexperienceworkers.



Excellentmarketing.



Excellentreputationinmarket.

 

i

 Weaknesses 

Weakpresenceinternationaly.



Scooterswerethestrength.



 Opportunities 

Beteraccessories.



Premiumsportbikesforurbanareas.



PossiblerelaunchandsuccessofBajajChetak.

 

 Threats

 



CheaperimportsfromcountrieslikeChina.



Entryofinternationalbrands.



Othermotorcycleplayershaveastrongbrandpresence.

ResearchMethodology Survey research is the systematic gathering of information from respondents for the purpose of understanding and/or predicting some aspects of the behavior of the population of interest. It is the most common method of collecting primary data formarketing decisions. Survey can provide data on attitudes, feelings, beliefs, past and intended behavior, knowledge, ownership, personal characteristics and other descriptive items. Survey research is concerned with administration of questionnaires (interviewing). The survey research must be concerned with sampling, questionnaire design, questionnaire administration and data analysis. The administration of questionnaire to an individual or group of individuals is called an interview. A questionnaire is simply aformalized set of questions for eliciting information. As such, its function is

measurementand it represents the most common form of measurement in marketing research. The report has been prepared as per the information obtained from two sources. They are: 1. Primary data 2. 2. Secondary data Primary data: • The primary data included the information collected from the • Proprietor, manager and employees of JAMMU BAJAJ motors. • Structured questionnaire • . Personal interview with customer Secondary data: Secondary data includes a. Data from various magazines esp. bike magazines Internet. Brochures.Books. Newspapers etc Sampling plan:Data collected has been analyzed and interpreted by using simple percentage method and finally the data is presented in graphs and charts

Objectives The objective of the study is “Company image Bajaj and Survey research to measure customer satisfaction in Jammu. • To determine the effects of the company image on the sales. • To understand customer attitude towards Bajaj motorcycles and Bajaj auto. . To measure customer satisfaction of Bajaj motorcycle owners. • To know the market share of Bajaj auto in Chennai. • To predict the boom of automobile industry. • To know the tastes and preferences of people of Chennai when it comes to motorcycles. • To find the reasons for buying Bajaj motorcycle

SCOPE

The study is limited to the customer of bajaj vehicle buyers. The study will know us to understand the customers, preference and their needs expected from their business owners. Measurement of the customers satisfaction is quiet complex subject However the Bajaj automobile showroom are located in other places i.e is locally and even in the neighboring state. Only opinion of respondents in Chennai city was considered finding the opinions and respondents.

Data Analysis SWOT Analysis : Market trends must be considered as the company the company develops It’s marketing strategies. 1. Strengths • "Bajaj" is a well established Brand name in the scooter segment.• Bajaj Auto is a cost-effective producer in the two wheeler market.• It has a huge market share in the scooter segment of the two-wheeler industry This acts as a cushion for the company in their efforts offoraying into the motorcycle segment. • Bajaj has established a wide distribution network for the scooter segment which will favor them in their efforts in the motorcycle segment. • Marketing has been a strength for Bajaj since inception.Strengths are internal capabilities that can help the company reach its objectives Bajaj can build three important strengths: 1. Style 2. Pick up. 3 .Speed Weaknesses: • Bajaj has become a generic name associated with the scooters and that needs to be changed in the minds of the consumers before it could expect a great success in the motorcycle segment.• Bajaj is dependent on its foreign counterparts for technological support.This needs to be addressed as it might be crucial when the foreign players

enter the Indian market directly.Weaknesses are internal elements that may interfere with the company’s ability to achieve its objectives.The weaknesses evaluated after the study are:1. Heavy weight of the motorcycles2. Mileage3. Costly spare parts

Opportunities: • The motorcycle segment is expected to grow at a considerable rate and this would provide a good opportunity for Bajaj Auto to increase its market share in this segment. • Kawasaki of Japan, when it comes to India, can help Bajaj enhance its product portfolio in the motorcycle segment as Kawasaki plans to use Bajajs manufacturing base for its global operations.Opportunities are areas of buyer’s needs or potential interest in which the company might perform profitability. They are all external factors.Bajaj can take advantage of three major market opportunities:1.Increasing demand for high speed motorcycles.2. Launching low cost motor cycles especially India’s large number of middle classwhich is more than 60% of population.3. Reaching the towns through dealership as the middle class living in this area is getting rich and their purchasing power is also increasing

.Threats: • The market share in the scooter segment has taken a beating from TVS Suzuki s entry into this segment.• Entry of Multinational companies, especially Chinese ones, in the motorcycle segment will stiffen the competition and will hamper the efforts of Bajaj to establish itself in the motorcycle segment.Threats are challenges posed by an unfavourable trend or development that could lead to lower sales and profit.They are external factors.Bajaj faces three major threats in future: • .1 Increasing competition

• 2.Launch of cheaper motorcycles by competitors • 3.Launch of cheaper bike by Yamaha whose price is equivalent to Bajaj’s Pulsar segment

Findings After my study at jammu Bajaj service center is on the customer satisfaction after the sales and services below are list of findings: • Due to lack of people in the service department employees were not attended with in the expected times of customers. • Management is not fully aware of the relation between the customer and staff. • Most of the customer felt the staff still requires more skills to treat customers . • Customers feel that they won’t get the same response what they get during the sales. • Management must provide equal weight age for both the sales and service, as both are related to the customers.Management must seriously look to improve the overall service provided to the customers.

LIMITATION 

The study is limited to three years only.



Price level changes are not considered.



Time is short for deep research.



Separate records of the all units are not available.



No comparison made with other firm’s ratio while during the study period

and making conclusion time.



The readjusted and regroup figure slightly affects the ratio figures.



Study is limited with the one unit of Bajaj auto



The data is used in the project have been taken from annual report only.

Hence, grouping and sub grouping and annuliasation of data may slightly affect the results.

SUGGESTION Although BAJAJ AUTO has satisfied the ratios. The following are the suggestion being made out by me as observed during study of the performance through ratio analysis:  Company should increase its sales of all the production units with increase in the sales of the company that can be able to increase its financial position. 

Company should decrease the operating expenses to increase its operating

profit. 

Maximize the production capacity.



Maintain the amount of current sales level and try to increase it.



Maximize the utilization of fixed assets and working capital.

 All other management, personal and administrative suggestion to be incorporated.  To follow the strict credit collection policy.  Reduce the current assets and quick assets ratio to maintain the standard ratio.  Cash ratio performance is poor. So make policies to improve it.  Return on investment is in satisfactory position and they try to maintain it in future.

 Try to start those companies, which are closed due to non-availability of funds.  Try to best utilization of the available resources.  Try to maintain the standard ratio in the financial ratios.

RATIO ANALYSIS An analysis of the financial statements with the help of ratio may be termed as “Ratio Analysis”. It involves the process of computing, determine and presenting the relationship of items of financial statements and comparison and interpretation of these ratios and uses them for future projections.

MEANING

OF

RATIO: A ratio is a mathematical relationship between two related items expressed in quantitative firm. This quantitative relationship may be expressed in either of the following ways:

a) In proportion: In this form the amounts if two items are being expressed in a common denomination. b) In rate or times or co-efficient: when ratio is expressed in this c) Form, it is called as turnover and is written in times. d) In percentage: a special type of rate, which expressed the relation in hundredth.

OBJECTIVE: The objective of ratio analysis is to help management in analyzing and interpreting the financial statement, to get adequate information useful for the performance of various functio like planning coordination, control, communication and forecasting etc. Some general utility of ratio analysis is given below:

a) Trends in cost, sales, profit and other facts are related by the past ratios and the future events can be forecasted on the basis of such trends. b) Ideal ratios may be constructed and the relation found between strategic ratios may be used for achieving ‘desired coordination’. c) Ratios may be used as instrument of management control particularly in the areas of sales and costs. d) Ratios are also facilitating the function of communication. e) Ratios also may be used as a measure of efficiency. f) It helps to make profitable investments.

NEEDS

FOR

RATIO

ANALYSIS: The need or significance of ratio analysis arises due to the following facts: a) Business facts shown in financial statement do carry any importance individually. Their importance lies in the fact that they are interrelated and any correct or accurate conclusion is to be drawn by their uses. b) Ratio analysis as a tool for their interpretation of financial statements is also significant because ratios help the analysis to have a deep peep into the data given in statements. Ratios provide power to speak. The uses of ratio analysis have increased considerably. It is now being used as a device to diagnose the financial health of a concern. Ratio analysis may highlight upon the few phases of the business operation in which the outsiders are most interested. In financial analysis, a ratio is used as a benchmark for evaluating the financial position and performance of the firm. Thus ratio analysis is a powerful tool for both external and internal analysis.

STAGES

FOR

RATIO ANALYSIS: The following procedure is generally followed, while analyzing the financial statements through ratio analysis: STEP I: Selection of the relevant data from the financial statements depending upon the objective of the analysis. STEP II: Calculation of appropriate ratios from the above data. STEP III: Comparison of the calculated ratio with the ratios of the same from in the past, or the ratios developed from projected financial statements or the Ratio’s of some other, firm or the comparison with the ratio of the industry to which the firm belongs.

STEP IV: Interpretation of ratios. a) Balance sheet ratio: i.e., ratios calculated on the basis of tile figures of the balance sheet only.

b) Profit and loss account ratios: i.e., ratios calculated on the basis of the figures of profit and loss account only. c) Combined ratio: i.e., ratios based on figure of profit and loss account as well as balance sheet.

STANDARD

OF

COMPARSION: The ratio involved comparison for a useful interpretation of the financial statements. A single ratio in itself does not indicate favourable or unfavourable condition. It should be compared with some standard. Standards of comparison may consist of: a) Past ratios, i.e., ratios calculated from the past financial statement of the same firm; b) Competitors ratios, i.e., ratios of some selected firms, especially the most progressive and successful competitor , at the same point in time; c) Industry ratios , i.e., ratio of the industry to which the firm belongs; And

d) Projected ratios, i.e., ratios developed using the projected, or Performa, financial statements of the same firm.

ADVANTAGES OF RATIO ANALYSIS a) The detailed ideas of he working of a concern are found out. b) The efficiency of a concern becomes evident when analysis is based on accounting ratios. c) Comparison can be made on the basis of the ratio over a number of years to measure profitability. d) Accounting ratios reveal the financial position of a company that in turn make lending and investment decision easier. e) If the accounting ratios are prepared for a number of years, then a trend is established which helps in preparation of plans for the future. f) Weakness in financial structure on account of incorrect policies in the past or present is revealed through these accounting ratios. g) Comparison can also be made between one department of a firm and another department of the same firm to find out the performance o the various departments in the firm.

LIMITATIONS OF RATIO ANALYSIS: a) False results: Ratios are based upon the financial statements. In case financial statements are combined or the data upon which the ratios are based is in combined, ratios calculated will be also be false and defective. b) Limited Comparability: The ratio of the one firm cannot always be compared with the performance of other firm, if they do not adopt uniform accounting policies. c) Absence of standard university accepted technology. d) Price level changes affect ratios: Changes in price level often make comparison of figure for various years difficult. e) Ignore Qualitative Factors:

Ratio analysis is the qualitative measurement of the performance of the business. It ignores the qualitative aspect of the firm, how so ever important it may be. It shows that ratio is only one-sided approach to measure the efficiency of the business. f) No single standard ratio: There is not a single standard ratio, which can indicate the true performance of the business at all time and in all circumstances. Every firm has to work in different situations and circumstances: so a particular ratio can be not been supposed to be standard for every one.

g) Ratios may be worked out for insignificant and unrelated figures: Accounting ratios may be worked out for any two figures even if they are not significantly related.

CARE IN USE OF RATIOS: Ratio analysis is useful for financial analysis but to get better result ratio analysis is required to done with care as several factors affect the efficiency of ratios. These factors are discussed below: a) Type of business under consideration affects the ratios and conclusions drawn from them. b) Seasonal character of the business affects the ratio for a particular type of industry or business enterprise. c) Quality of assets also affects the ratio analysis and gives different interpretation to different business enterprises. d) Adequacy of data is another considers ratio for comparison of particular factors with each other. e) Modification of ratios reflects only the past performance and must be modified by future trends of business. f) Interpretation of ratios should not be relied upon in isolated and should be considered with accounting document for interpretation.

g) Non –financial data ratios based on financial data of firm should be considered with non- –financial data to supplement the financial ratios and give better interpretation.

TYPES OF RATIOS Ratio can be classified for the purpose of exposition into four broad groups:  Liquidity ratio  Leverage ratio  Profitability ratio  Activity ratio

LIQUIDITYRATIO: Liquidity ratio s measures the short –term solvency or the short –term financial soundness of the business. It is extremely essential for a firm to be able to meet its obligations they become due. Liquidity Ratio’s measure the ratio ability of the firm to meet his current obligation, this ratio is also an effective source to ascertain whether the working capital has been effectively utilizes. Liquidity in the ratio means ability to repays loans. In fact analysis of liquidity needs the preparation of cash budget and cash and fund flow

statements but Liquidity ratio by establishing a relation ship between cash and other current assets to current obligation, provide a quick measure of liquidity. The failure of company to meet its obligation, due to lack sufficient liquidity, will result in bad credit image; loss of creditor’s confidence, or even in lawsuits resulting in the closure of the company. A very high degree of liquidity is also bad. Idle assets earn nothing. The firm’s funds will be unnecessarily tied up in current assets. Therefore, it is necessary to strike a proper balance between liquidity and lack of liquidity. The ratios calculated for Bajaj autowho indicates the extent of liquidity are:

 CURRENT RATIO  QUICK RATIO  CASH RATIO  NET WORKING CAPITAL RATIO

LEVERAGE RATIOS A firm should have a short-term as well as long –term financial position. To judge the long –term financial leverage or capital structure. In other word, it can be said that this financial ratio’s through light on the long-term solvency of a firm as reflected in its ability to assure the long-term creditors with regard to: (a) Periodic payment of interest during the period of the loan.

(b) Repayment of principal on maturity. As a general rule; there should be an appropriate mix of debt and owner’s equity in financing the firm’s assets, the manner in which assets are financed has the number of implications. The process of magnifying the shareholder’s return through the employment of debt is called “financial leverage” or “trading on equity”. If the cost of debt is higher than the firms overall rate of return, the earning of Solvency shareholder’s will be reduced an addition there is a threat of insolvency of the firm is actually liquidated for non-payment of debt holder’s dues the worst sufferers will be shareholders the residual owners. OBJECTIVES OF LIQUIDITY RATIOS: Refer to the financial capability of the enterprises in honoring their long term commitments (obligations) these ratios serve our following purposes: (a) Ascertaining capability to honor long term obligation, such as repayment of loan and interest; there on. (b) Ensuring long-term financial stability of the business. (c) Measuring relationship between internal and external equity. (d) Leverage ratios may be calculated to determine the proportion of debt in total financing. Those calculated for these studies are:  DEBT – EQUITY RATIO  TOTAL DEBT RATIO  INTEREST COVERAGE RATIO

 FIXED ASSETS RATIO  DEBT TO TOTAL FUNDS  RESERVE TO CAPITAL RATIO  CAPITAL GEARING RATIO  PROPRIETORY RATIO TURNOVER RATIOS: Turnover means “sales” so turnover ratio is related to sales. It is an accepted fact that sales have direct relationship with the performance of the business. Higher salesmeans better performance which really means of the business. Fund are invested in various assets in business to make sales and to earn profit .the efficiency with which assets are managed directly effects the volume of sales. The better the management of assets, the larger is the amount of sales and profits. This ratio indicates the speed with which assets are converted or turned over into sales. Depending upon the purpose, a number of turnover ratios can be calculated. Activity ratios involve a relationship between sales and assets .A proper balance between sales and assets generally reflects that assets are managed well. Several activity ratios can be calculated to judge the effectiveness of assets utilization.

Those calculations for this study are:

 TOTAL CAPITAL TURNOVER RATIO  WORKING CAPITAL TURNOVER RATIO  FIXED ASSETS TURNOVER RATIO  DEBTOR’S TURNOVER RATIO  CREDITOR’S TURNOVER RATIO

PROFITABILITY RATIOS: It is fact that sufficient profit must be earned to sustain the operations of the business to be able to obtain funds from investor’s for expansion and growth and to contribute towards the social overheads for the welfare of the society. Profit is the difference between revenue and expenses over a period of times. Profit is the ultimate output of the company; it will have no, future if it fails to make sufficient profit. Therefore the profit ability ratios are calculated to measure the operating efficiency of the company. Generally, the major types of profitability ratios are:  Profitability in relation to sales  Profitability in relation to investment A company should be able to produce adequate profit on each rupee of sales .The profitability of the company should also be evaluated in term of firm’s investment in assets and in term of capital contribution b creditor’s and owners. If the company profit has to be examined from the point of view of all investors.He appropriate measure of profit is operating profit. Operating profit is equivalent of earning before interest and tax. When the firm does not have non-operating in company. This measure of profit shows earning arising directly from the commercial operation of the business without the effect of financing. Those calculations for this study are:

 GROSS PROFIT RATIO  NET PROFIT RATIO  EXPENSE RATIO: 1. SELING AND DISTRIBUTION EXPENSES RATIO 2. OFFICE EXPENES RATIO 3. RATIO OF MATERIAL CONSUMED 4. RATIO OF DIRECT LABOUR 5. RATIO OF FACTORY EXPENSES  OPERATING EXPENES RATIO  RETURN ON INVESTMENT RATIO

LIQUIDITY RATIOS CURRENT RATIO:

Current ratio may be defined as the relationship between current assets and current liabilities. The ratio indicates the short-term financial soundness of the company. It judge whether the current assets are sufficient to meet the current obligation out of the current assets. This ratio known as working capital ratio, is a measure of general liquidity and is most widely used make the analysis of short term financial position or liquidity of a firm .It is calculated by dividing the total of current assets by the total of current liabilities. Current assets are those assets, which are converted into cash with in one year, and current liabilities are those liabilities, which are to be paid within a year.

Objective and significance: This ratio is an indicator of the firm’s ability to promptly meet its short-term liability. It is used to assets the short-term financial position.

This ratio is calculated as follow:

CURRENT RATIO =

CURRENT ASSETS CURRENT LIABILITIES

Where,

Year

2013

2014 (lacs)

(lacs)

A)

Current assets:



Inventories

348.86

275.38



Sundry Debtor’s

397.44

362.49



Cash in hand and Bank



Accrued Interest



Loans & Advances

Total (A)

B)

Current Liabilities:



Sundry Creditor’s



Other Liabilities



Pro. for Leave Encashment

Total (B) Then the Ratio is: Remarks:

129.19

98.62 0.44

0.54

65.39

59.09

941.32

796.12

227.03

249.60

52.88

26.56

73.33

84.26

353.24

360.42

2.66

2.21

A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligation in time as when they become due, vise versa. As a

convention the minimum two to one ratio e.g. 2:1 is referred as a banks rule of thumb. QUICK RATIO: Quick ratio establishes a relationship between quick assets or liquid assets and current liabilities. An asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of value. Cash is considered most liquid assets. OBJECTIVE AND SIGNIFICANCE: This ratio is also an indicator of short term solvency of the firm .It is used to test the short-term liquidity of the firm in its correct form. This is calculated as by dividing of liquid assets by current liabilities. CURRENT ASSETS – INVENTORIES

QUICK RATIO =

CURRENT LIABILITIES Where, Year

2013

2014

(lacs)

(lacs)

A)

Current assets:



Inventories

348.86

275.38



Sundry Debtor’s

397.44

362.49



Cash in hand and Bank



129.19 Accrued Interest

Loans & Advances

Total (A)

98.62 0.44

65.39

941.32

0.54 59.09

796.12

B) Current Liabilities: 

Sundry Creditor’s



Other Liabilities

227.03

249.60

52.88

26.56

Pro.for Leave Encashment

Total (B)

73.33

84.26

353.24

360.42

1.68

1.44

Then ratio is:

Remarks:

Usually high quick ratio is an indication that the firm is liquid and has the ability to meet its current liabilities in time .As a rule of thumb or as a convention quick ratio of one to one i.e., 1: 1 is considered satisfactory.

CASH RATIO: Since cash is the most liquid assets be examined cash ratio and its equivalent to current liabilities.

Trade investment or marketable securities are equivalent of cash; therefore, they may be included in the computation of cash ratio.

CASH RATIO

=

CASH + MARKETABLE SECURITIES

CURRENT LIABILITIES

Year

2013

2014 (lacs)

(lacs)

NET WORKING CAPITAL RATIO: The difference between current assets and liabilities is called Net Working Capital Ratio.

Net Working Capital used as a measure of a firm’s liquidity. It is considered as that’ between two firm’s the one having the larger Net Working Capital has the greater ability to meet its current obligation.

Net Working Capital measures the firm’s potential reserveror of funds. It can be related to net assets or capital employed.

NET WORKING CAPITAL=

NET WORKINGCAPITAL

NET ASSETS Net Working Capital: Year

2013

2014

(lacs) Current assets

Less :current

941.32

liabilities

(lacs) 796.12

353.24

436.42

588.08

435.70

2013

2014

(lacs)

(lacs)

114.25

115.53

NET ASSETS:

Year

FIXED ASSETS (LESS DEPRICATION)

ADD: NET CURRENT ASSETS (CA-CL)

588.08

702.33

Then the ratio is:

0.80

Remarks: Higher the ratio higher the liquidity.

435.70

551.23

0.79

Table 1) LIQUIDITY RATIO’S

2013

2014

YEAR 2.66

2.21

1.68

1.44

CURRENTRATIO QUICK RATIO

CASH RATIO

1 . 3 6 0.36

0 . 3 6 0.80

WORKING CAPITAL RATIO

0.27

0.79 0 . 8 0

COMMENT: In the above calculation of liquidity ratio, the entire ratios are good but above the standard ratio limit of the liquidity except the cash ratio. In the current ratio of the company in year the 2015, 2016, 2017 the ratio is 2.66, 2.21, and 2.03 respectively. These ratios of liquidity indicate the over capitalization of current assets. In quick ratio, the ratios shows the company enjoy the high liquidity position, it is good however too much liquidity is not beneficial for the company future and the quick ratios is also more than the standard ratio. The cash ratio of the company, the ratios is well below the standard, it means that the company does not keep sufficient cash. Working capital ratio shows the liquidity position of the company is good. So overall liquidity position of the company is satisfactory except the cash poor performance and the Current ratio and Quick ratio shows over the standard ratio.

ACTIVITY RATIO

A) CAPITAL TURNOVER RATIO: Turnover here indicates the speed or rate with which capital employed is rotated in the process of doing business. Efficient rotation of capital would to higher profitability. The resulted raw would show the number of times and capital has been in the process of during business.

OBJECTIVE AND SIGNIFICANCE:

Capital turnover ratio establishes the relationship between sales and capital employed. The objective of working out this ratio is to determine how efficiently the capital employed is being used and this in turn shows the promises of profitability and efficiency of management. It is calculated as Capital Turnover Ratio.

CAPITAL TURNOVER RATIO = NET SALES WORKING CAPTIALCAPITAL EMPLOYED: NET FIXED ASSETS

114.25

115.53

Add. WORKING CAPITAL

588.08

435.71

TOTAL

702.33

551.23

WORKING CAPITAL: YEAR

CURRENT ASSETS

2013

2014

(lacs)

(lacs)

941.32

796.12

Less. CURRENT LIABILITIES

353.24

TOTAL

YEAR

SALES

Then ratio is:

360.42

588.08

2013

1914.66

2.72

435.70

2014

2142.51

3.89

Remarks:

Higher the ratio the better it is. However too high a ratio may indicate over trading resulting in paucity of funds.

B) WORKING CAPITAL TURNOVER RATIO:

Working capital of a concern is directly related to sales ‘the current assets like debtors, bill receivable, cash, stock etc. change with the increase or decrease of sales. The working Capital is taken as: Working capital = Current Assets – Current Liabilities

Working Capital turnover ratio indicates the velocity of the Utilization of net working capital. This ratio indicates the number of times the working capital is turn over in the course of a year.

This ratio can be calculated as under: WORKING CAPITAL TURNOVER=

SALES WORKING CAPITAL

Where, Year

2013

2014 (lacs)

(lacs)

Sales

1914.66

2142.51

941.32

796.12

Working Capital: Current assets Less:Current Liabilities

Total

Then ratio is:

353.24

360.42

588.08

435.70

3.26

4.92

Remarks: A higher the ratio indicates efficient utilization of working capital.

C) FIXED ASSETS TURNOVER RATIO: Fixed assets are used in the business for producing goods to be sold. The effective utilization of fixed assets will result in increased production and reduced cost. It also ensures whether investment in the assets have been judicious or not.

OBJECTIVE AND SIGNIFICANCE: Fixed assets turnover ratio indicates how efficiently or other wise the fixed assets are used The following formula is used for measurement of the ratio:

FIXED ASSETS TURNOVER =

NET SALES

FIXED ASSETS Where Year

Sales

2013

2014

(lacs)

(lacs)

1914.66

2142.51

Net FIXED ASSETS :

114.25

115.53

Then the ratio is:

16.76

18.55

Remarks:

Higher the ratio is it better of the business. An increasing trend shows that financial Assets are utilized efficiently to achieve higher sales.

D) DEBTOR’S TURNOVER RATIO: This ratio establishes the relationship between net credit sales and averages of debtor’s of the year.

OBJECTIVE AND SIGNIFICANCE:

This ratio indicates the efficiency with which debts are collected .It will be in the interest of business, if the ratio is higher which will indicate the debts are collected quickly. This ratio is calculated as by the following formula:

DEBTOR’S TURNOVER RATIO =

TOTAL SALES

ACCOUNT RECEIVABLE

YEAR

2013

2014

(lacs)

(lacs)

1914.66

2142.51

TOTAL DEBTOR

458.24

410.57

Then the ratio is

4.18

5.22

TOTAL SALES

Remarks:

Higher the ratio indicates economy and efficiency in the collection of amount due. It shows that collection performance of BAJAJ AUTO is improving year by year. Credit period has been reduced to 3 months to 2 months in 2016.

E)

CREDITOR’S TURNOVER RATIO:

Creditor’s turnover ratio indicates the velocity with which the payment for credit purchase is made to creditors. OBJECTIVE AND SIGNIFICANCE:

Creditor’s turnover ratio is the debt payment enjoyed with indicates whether the firm is enjoying actually the credit premised by suppliers.

This ratio of Bajaj auto is calculated as follows:

CREDITOR’S TURNOVER RATIO =

TOTAL PURCHASE

ACCOUNT PAYABLE

YEAR

TOTALPURCHASES

TOTAL PAYABLE

2013

2014

(lacs)

(lacs)

634.31

797.74

227.03

Then the ratio is:

2.79

249.60

3.20

Remarks: Higher creditor’s turnover ratio indicates that company ii increasing trend prompt in paying its creditor which enhance its creditworthiness but it also signify that company is taking full advantages of credit facilities provide by creditor’s period is beneficial for the company.

Table2) ACTIVITY RATIOS

2013

2014

2.61

3.89

3.26

4.92

16.76

18.55

4.18

5.22

2 .79

3.20

YEAR TOTALCAPITAL TURNOVER

WORKING CAPITAL TURNOVER

FIXEDASSESTS TURNOVER

DEBTORSTURNOVER

CREDITORS TURNOVER

COMMENT:

In the above calculation of turnover ratio of the company, the ratio of these shows that the performance of business is better and all the available resources are well utilized.

The total capital turnover ratio shows good sign of increasing trend. Which indicate the efficient used of the employed capital in sales.

The working capital ratio, it shows the better utilization of the working capital incurred in the operation.

The above fixed assets turnover ratio shows a good sign and indicates that company utilized its fixed assets in good manner in conversion of its net assets to the sales.

The debtor’s turnover ratio shows of increases trend year by year that means the company provide its credit payment period to its customers, which indicate the liberal debt collection policy of the company.

The calculated creditor’s turnover ratio indicates the company enjoys good credit payment period from its creditor’s.

So, overall the turnover ratio of the company is good except the debtor’s turnover ratio, which shows the liberal collection policy, and more credit collection period given to its customers, which is not beneficial of company growth.

PROFITABILITY RATIOS A)

GROSS PROFIT RATIO:

Gross profit equal the difference between net sales revenue and the cost of goods sold.

The gross profit margin reflects the efficiency with which management produces the each unit of product.

This ratio indicates the average speed between the cost of goods sold and the sales revenue.

It is calculated by dividing gross profit by sales.

OBJCTIVEAND SIGNIFICANCE: Gross profit ratio is a reliable guide to the adequacy of selling prices and efficiency of stock control.

The help of following formula calculates it:

GROSS PROFIT RATIO =

GROSS PROFIT

NET SALES

x

100

OR Sales – cost of goods sold

x

100

Net sales

Where, Year

2013

GROSS PROFIT:

NET SALES:

2014

(lacs)

(lacs)

770.00

825.41

1914.66

2142.51

40%

39%

Then the ratio is:

Remarks: Higher the ratio better is the result.

B) NET PROFIT RATIO: A commonly used measure is return on sales after termed net profit margin.

This ratio establishes a relationship between net profit and sales and indicates management efficiency in manufacturing, administrating, and selling the product.

This ratio is the overall measure of the firm’s ability to turn each rupee sales into net profit.

If the net margin is inadequate firm will fail to achieve the satisfactory return on owner’s equity. OBJECTIVE AND SIGNIFICANCE: Net profit ratio helps in determining the efficiency of the business. Objective of working net profit ratio is to determine whether operating cost is with in the desired parameters or not. This ratio of Bajaj autois calculated from the following formula:

NET PROFIT RATIO =

NET PROFIT

NET SALES

Year

2013 (lacs)

Net profit:

49.99

2014 (lacs)

71.68

x

100

Net sales

Then the ratio is:

1914.66

3%

2142.51

3%

Remarks:

Higher the ratio is better is the profitable.

A)

EXPENSES RATIOS:

Expense ratios are calculated to ascertain the relationship that exists between operating expenses and volume of sales.

These ratios are calculated by dividing the sales into each individual operating expenses.

It indicates the portion of sales, which is consumed by the various operating expenses.

OBJECTIVEAND SIGNIFICANCE:

These ratios are valuable in comparing various firms in the same industry of operating data from year to year for the same firm.

The expense ratios are calculated as by the following formula:

a)

RAW-MATERIAL USED =

MATERIAL COST

x

NET SALES YEAR

2013

2014

(lacs) RAW- MATERIAL NET SALES Then the ratio is

(lacs)

673.10

812.20

1914.66

2142.51

35%

38%

RATIO OF DIRECT LABOUR:

DIRECT LABOUR COST

x

NET SALES YEAR

2013 (lacs)

DIRECT LABOUR

66.78

2014 (lacs) 70.82

100

100

NET SALES

1914.66

Then the ratio is

2142.51

3%

3%

c)RATIO OF FACTORY EXPENCES:

FACTORY EXPENCES

x

100

NET SALES Where, YEAR

2013

2014

(lacs)

(lacs)

FACTORY EXP.

169.49

183.59

NET SALES

1914.66

2142.51

9%

9%

Then the ratio is:

d) RATIO OF OFFICE EXPENSES: OFFICE EXPENSES

x

NET SALES Where, YEAR

OFFICE EXPENSES

2013

2014

(Lacs)

(Lacs)

142.43

120.70

100

NET SALES

1914.66

Then the ratio is:

2142.51

7%

6%

E) SELLING AND DISTRIBUTION EXPENSES RATIO: SELLING AND DISTRIBUTION EXPENSES X

100

NET SALES YEAR

2013

2014

(Lacs)

(Lacs)

Selling & Dist. Expenses

265.93

296.26

NET SALES

1914.66

2142.51

Then the ratio is:

14%

14%

D) OPERATING EXPENSES RATIO: This ratio measures the extent of cost incurred for making the sales. This ratio matches cost of goods sold plus other operating expenses on the one hand with net sales other hand

OBJECTIVE AND SIGNIFICANCE:

Operating profit is the test of the operational efficiency of the business. It shows the percentages of sales that are absorbed by the cost of sales and operating expenses.

This ratio of Bajaj allianz as calculated as follows: OPERATING EXPENSES RATIO =

COST OF GOODS SOLD + OTHER OPERATING EXPENSES

NET SALES

YEAR

2013

2014

(Lacs)

(Lacs)

1144.65

1317.10

COST OF GOODS SOLD

:

Add.OPERATING EXPENSES

TOTAL:

690.75

1835.40

757.13

2074.23

x

100

Then the ratio is:

96%

97%

Remarks: Lower the ratio of the net operating expenses is beneficial for the company.

RETURN ON INYESTMENT:

The term investment may refer to total assets or net assets. The funds employed in the net assets are known as capital employed.

The conventional approach of calculating return on investment (ROI) is to divide profit after tax by investment.

In vestment represents tool of funds supplied by shareholders and lenders, while profit after tax represents residue income of shareholder, therefore, it is conceptually unsound to use profit after tax in the calculation of ROI. It is calculated as under:

Return on Investment =

EBIT

x

100

Net assets Where, Year

2013

EBIT

2014

(lacs)

(lacs)

45.25

68.74

CAPITAL EMPLOYED

FIXED ASSETS

114.25

115.53

588.08

435.70

Add. WORKING CAPITAL

TOTAL

Then, the ratio is:

702.33

6%

Remarks: Higher the ratio better is the results. Table 3)

551.23

12%

PROFITABILITY RATIOS YEAR

GROSS PRIFIT RATIO NET PROFIT RATIO MATURIAL COST LABOUR COST

2013

2014

(%)

(%)

40

39

3

3

35

38

3

3 5

FACTORY EXPENSES

9

9 9

ADMINISRATION

7

6

EXPENSES SELLIND& DISTRIBUTION

5 14

14

EXPENSES

1 3

OPERATING EXPENSES

96

97 6 0

RETURN ON INVESTMENT

6

12 2 3

COMMENT: In the above-calculated ratio of the profitability ratio of the company, the entire ratio shows a good sign of except the increases in the expense ratio. The gross profit ratio indicates the good sign but not satisfactory in the year 2006, 2007 the ratio is 40%, 39% respectively. But in year 2008 it shows good sign which is 72%. Which indicates the efficiency in stock control and an adequence of the selling price.

The Net Profit ratio shows good and increasing trend sign, which indicate the operation expenses, is in desired parameters.

The factory expenses ratio, administration ratio, selling and distribution ratio indicates in under controlled.

Material and labor cost shows slightly increase, it is due to increase in sale and high cost of raw material. The operating ratio of this year is too much high in comparison to other years. Return on investment ratio is good and satisfactory in year 2008the ratio is 23%. Which indicate the better performance of the company.

So, overall profitability position of the company is good except the increasing percentages in the operating expense and expenses ratio.

CONCLUSION If these ratios are properly followed the capital investment in the current assets is above the standard ratio and the cash position of the company would substantially improve. The Turnover Ratio give good sign of the success but in the debtor’s turnover ratio shows that company provided more credit period of payment to its customer, which is not beneficial for it. The Profitability Ratio all indicates good sign but increase in the operating and financial expenses of the company, which is not good sign for the company future. Return on Investment ratio is satisfactory, it indicate the overall performance of the company is good and they enjoy a good position of profitability