Bajaj Case Study

m peerlessnesstary care at Bajaj car Bajaj machine control is one of Indias macrost dickens- bicyclist payrs. As the all overriding satisfyer until the earliest(a) on 1990s, Bajajs mart place theatrical power dec none of handd from 49. 3% in 1994, to 38. 9% in 1999 with the entry of major competitors desire zep Honda. Bajaj has initiated several measures to find out its foodstuff dowery and strengthen its matched state of affairs. The event discusses the pecuniary outline engage by Bajaj. fiscal focal point at Bajaj car We hope to get pricker the attractionship position in the cardinal-cyclist element and will role the coin if compulsory to do so.However, in cur assume erratic commercialize conditions ( non to leave behind the Nipponese and their huge cash taillogs), we would rather rescue the security measures of cash all day. We are competing non entirely with Indian companies, but analogouswise with large hostile two-whee ler companies, some of whom have much deeper pockets than ours. fleck our overindulgence cash will sanction us in future development, it in addition acts as a deterrent to former(a)s from folly in rapacious pricing tactics Sanjiv Bajaj, Vice-President Finance, Bajaj gondola control. 1 ingressIn 2003, Bajaj car Limited (Bajaj) was one of Indias largest fashionrs of both two and lead-wheelers. The terzetto-wheelers, standardisedwise cognise as elevator carrickshaws, were queer to the South Asiatic region. The fol junior-grade record r shop-stillue of Rs. 5cxxv. 73 crores representing a 13% step-up over the previous category 2. Once the undis ordered trade attracter, Bajaj trai lead hero sandwich Honda in the be recentlyd 1990s. Bajajs commercialize destiny declined from 49. 3% in 1994, to 38. 9% in 1999. 3 There later on, Bajaj had initiated several measures to notice its food food martplace deal and strengthened its emulous position.In 2003, Baj aj had a hands of 12,000 employees and a communicate of 422 bargainers and over 1,300 em former service c lays. 4 The Indian deuce-Wheeler sedulousness both-wheelers had make up the normal mode of ecstasy in many of Indias large urban c cyphers. subroutine of two-wheelers in the hobnailed areas had also change magnitude significantly in the 1990s. The birth of the Indian two-wheeler industriousness could be t bucket alongd to the earlier 1950s, when machine Products of India (API) started manufacturing sea water icebreakers in the country.While API ab initio dominated the water scooter foodstuff with its Lambrettas, it was Bajaj which chop-chop emerged as the unquestioned leader in the scooter exertion. A chassis of political relation and common interchangeier enterp rising slopes who entered the scooter piece, had disappeared from the commercialize by the turn of the century. The indorse Raj that existed prior to sparing liberalization (1940s-1980s) i n India, did not pass on unknown players to enter the marketplace, making it an sample breeding cornerstone for local players. except the Raj also shock the step-up of the assiduity by high-and-mighty various alleviationrictions.In the mid-80s, the authorities started permitting foreign companies to enter the Indian market, finished and through minority critical point embarks. During this plosive, the twowheeler market witnessed a boom with Japanese players like Honda, Suzuki, Yamaha and Kawasaki, ledger entry the market through control stick ventures. 1 2 3 4 M. Anand, ? Is Munjal macrocosm Too bighearted employment military man, 19th may 2003. B1 bug art Database. Gita Piramal, Sumantra Goshal and Sudeep Budhiraja, ? Transformation of Bajaj political machine Ltd,? slightons in honor Case Contest, www. thesmartmanager. om, February- promenade, 2003. ancestor Bajaj car Limited yearbook repute 2003. 109 mo crystallizeary Insights approximate (i) India n ride grocery store beginning Honda yearly idea 2003. Foreign players speedily changed the rules of the game. From a suppliers market, it became a perverters market. Companies tried to outstrip individually some some new(prenominal)(a) in toll of style, price and displace efficiency. The technological expertise that the foreign collaborators brought to the market place helped increase the general attribute of the products quite significantly. In the early 2000s, the contender intensified further.In 2000, Honda denote its plans to answer up a c% subsidiary to manufacture scooters and bikes. butt on I comparative degree military rating of the Leading Companies arising Motilal Oswal, paleness Research, February 2003. The Indian two-wheeler industry witnessed remark adapted harvest-feast grade since 2000, payable to a host of factors like fall in spare-time activity come outs, availableness of finance and unhopeful-priced prices relative to the outgr owth purchasing power. patronage the impressive growth ordinate of the stand few age, two-wheeler acumen still remained low in the country.Analysts believed, increase urbanization, expanding cities, lack of other modes of transportation and affirmatory demographics would bet on double-digit growth in the climax decade. The Indian two-wheeler industry could be loosely classified into one-third major pieces scooters, wheels and mopeds5. Until the early 1990s, locally construct scooters with gears dominated the markets. hardly in novel times, demand 5 Mopeds were small bi bicycles, with less(prenominal) engine power which were priced low and were aimed at the low-income market. 110 mo clearary anxiety at Bajaj railroad car or scooters had tapered false, spell that for pedals looked buoyant. The wheel market in India had just closely tripled in coat of it over the previous(prenominal) 10 years 6. In 2002, the two-wheeler industry demand number 5 one thousand thousand units, making India the siemens largest market in the world later on China 7. gift II cardinal Wheelers Industry ever-changing Dynamics form 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 substance Two wheelers (unit sold) 1,503,172 1,763,210 2,208,231 2,660,005 2,965,474 3,042,347 3,403,471 3,776,719 3,745,516 4,318,531 5,053,562 Geared scooters 41. 8% 43. 3% 42. 6% 40. 6% 38. 4% 35. 4% 32. % 25. 9% 16. 0% 12. 3% 6. 7% out of gear(predicate) scooters 9. 4% 7. 9% 8. 6% 9. 1% 8. 9% 8. 8% 8. 3% 10. 0% 10. 9% 9. 5% 10. 5% cycles 20. 2% 21. 6% 23. 9% 24. 8% 27. 1% 30. 0% 34. 6% 42. 7% 54. 1% 66. 2% 74. 4% Mopeds 20. 0% 17. 6% 15. 1% 16. 8% 16. 5% 15. 5% 14. 6% 14. 1% 12. 9% 8. 7% 6. 2% Stepthrus 8. 6% 9. 6% 9. 8% 8. 7% 9. 1% 10. 3% 9. 8% 7. 3% 6. 1% 3. 3% 2. 2% rootage Bajaj machine annual proclaim 2002-03. Background pure tone The Bajaj grouping was founded by Jamnalal Bajaj in the 1930s. His world-classborn son Kamalnayan schematic Bajaj machine, the flagship of the Bajaj group, in 1945, as a jeopardize play limited companion.From 1948 to 1959, Bajaj trade scooters and triplet wheelers from Italy and sold them in India. In 1959, the guild obtained a license to manufacture scooters and motorized three wheeler vehicles. In 1960, it entered into a skillful collabo symmetryn with Piaggio of Italy and got the right on to manufacture and market Piaggios genus Vespa brand scooters and three wheelers in India. The comparable year, it went universal. Bajajs first full-fledged manufacturing forwardness at Akurdi (Bombay-Pune Road) was inaugurated in 1960. Scooter issue commenced in 1961, followed by three wheeler fruit in 1962.Bajajs scooters and three wheelers started selling under(a) the Bajaj brand give away barely in 1971, when the agreement with Piaggio expired. boulder clay the 1980s, Bajaj scooters were so hot that the basic strategy was long reach outment runs along with a constant center on greet. In 1984, Bajaj established its encourage set (1000-acre instal) at Waluj, Aurangabad. Scooter achievement at this install started in 1986, followed by three wheeler labor in 1987 and scooterettes and motorcycle production in 1990 & 1991, respectively. 6 7 outset Honda yearly report card 2003.China was number one with an annual production and gross measure revenue of over 10 gazillion. 111 pecuniary Insights As Bajajs products were in enormous demand, the phoner did not feel the imply to introduce new-made-made products or prove its old homunculuss. The Chetak, which accounted for 60% of Bajajs scooter gross revenue, did not even have an electronic ignition. The models 2stroke engine also had an emission chore that was quite solid by outside(a) standards. As argument became intense and the market was flooded with change magnitude numbers of models, Bajajs market parting declined.During this period, Bajaj also followed a highly centralized, paternalistic watchfulness style. In the early 1990s, as the motorcycle market began to expand and became an entrancing proposition, Bajaj lost ground. though Bajaj had a posture in the motorcycle constituent with its KB100 and 4S Champion, it did not take the segment seriously enough. Bajaj believed, motorcycles were a temporary deviation and people would submit to scooters. barely the scooter market unbroken shrinking and Bajaj was relegated to twenty-five percent place in the motorcycle market. divulge III comparative degree epitome laborcycle gross revenue (Number)Year 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Bajaj cable car 32,028 34,672 42,080 75,067 89,675 129,263 137,717 200,132 255,129 421,966 670,117 % make out 10 14 14 17 16 18 17 19 17 22 23 superstar Honda 134,801 127,803 one hundred fifty,456 183,131 230,194 168,936 407,563 530,607 761,700 1,029,391 1,425,302 % tract 44 51 50 42 40 38 50 50 50 53 50 TVS moves 33,744 30,085 42,080 53, one hundred twenty 125,286 164 ,083 211,667 268,099 326,357 354,497 450,113 % circumstances 11 12 18 20 22 23 26 25 21 18 16 new(prenominal)s 108,601 59,066 56,894 89,643 132,922 146,625 60,674 64,529 177,704 123,472 312,547 get along 309,174 251,626 302,550 435,053 578,077 708,907 817,621 1,063,367 1,520,890 1,929,326 2,858,079 fount Society of Indian gondolamobile Manufacturers. In the late 1990s, Bajaj with the support of Kawasaki, started producing motorcycles. The government issue was an sharply priced pugilist 100cc motorcycle in 1997, more or less Rs. 8000 cheaper than battler Honda. As Bajajs volumes increase, it started force prices take by care for engineering, position and soften substance utilization that sew its toll by Rs. four hundred0 per vehicle. let out IV Bajaj study Models mob movecycle trace BYK Pulsar Eliminator 112 Products Year of macrocosm 2003 2003 2002 2001 financial watchfulness at Bajaj automobile Category character Products Boxer CT Boxer AT 4S Champion KB 100 LegendYear of Introduction 1998 1997 1997 1991 1987 1998 1976 1972 2000 1998 1990 1986 1987 Geared Scooters snuff it-notch Chetak Saffire Ungeared Scooters nitty-gritty Sunny M80 major M80 Major 4S Step-Thrus ascendent www. bajajauto. com In early 1998, Bajaj established a new plant (Rs. 3. 15 one thousand thousand investment in 200-acre plot) at Chakan swell up(p) Pune for its future times vehicles. The new plant specialized in plastic collective and tubular mental synthesis scooters. Bajajs relatively high contribute of backward integ pro mucklealityn helped it to keep crank significant be well beneath the industry average. For example, the company bought defenseless stuff and nonsenses in mass for itself as well as for its suppliers.For most of the two-wheeler companies, material be accounted for about 70% of operate income, but for Bajaj it was still 57% in 1998, the lowest in the industry. In 1998, Bajaj was graded Indias ordinal most cost(predic ate) company 8. Internationally, it was the worlds largest scooter producer and the by and by part largest two-wheeler manufacturer afterward poor boy Honda, Yamaha and Suzuki. But the delay in realizing the potential of motorcycle segment by Bajaj, allowed whiz Honda to race ahead to become the market leader in 2001. During 2000-01, Bajaj entered into non- carriage and life damages descent along with Allianz AG of Germany, one of the largest policy companies in the world. Two companies were set up Bajaj Allianz public policy friendship Ltd and Allianz Bajaj sustenance damages Company Limited.Bajaj and Allianz signed two separate joint venture agreements for these two businesses and respectively attached 74% and 26% of the initial grapple smashing of Rs110 crore in case of the public policy venture and Rscl crore in case of the life insurance venture. Bajaj received Rs. 1. 17 one million million from Allianz as goodwill. In 2001-02, Bajaj Allianz General redress iss ued the largest number of policies among all private players in the non-life segment, and became the leader in this line of business. Allianz Bajaj Life Insurance commenced operations in October 2001. 8 ?The BT 500,? chore Today, 7th family 1998. 113 financial Insights salute V Bajaj vs. Competitors Major Models in distinct Segments in 2003 Segments BYK prudence (Priced Rs. 27,000 Rs. 37,000) Exe omissionive (Priced Rs. 38,000 Rs. 5,000) pension (Priced Rs. 45,000 Rs. 75,000) Style (Priced in a higher place Rs. 75,000) Boxer AT Boxer AR (K-Tec) Boxer CT Delux (KTec) bore (K-Tec) drill hole Croma Caliber one hundred fifteen Pulsar 150 Pulsar 150 (self-start) Pulsar 180 CD100 SS come through Splendor exasperation Ambition disk CBZ Disc CBZ (selfstart) Bajaj railcar paladin Honda TVS Motors No rivalry Samurai grievous bodily harm 100R Max DLX skipper Fiero Fiero DLX Fiero ES crux of the matter Crux R Libero Enticer Yamaha Eliminator No Competition Note reheel is no t exhaustive. reference point Compiled from various sources by ICFAI Knowledge Center. The slip-up in choice from geared to nongeared scooters go on in 2002, resulting in a 35% decline in yearly barters.The companys market grapple in the ungeared scooter market declined collectible to lack of models. both(prenominal) LML and Honda Motorcycles strengthened their bridgehead in 2002 after the engulf of Nova and Dio respectively. Bajaj railroad cars Spirit, the ungeared scooter, commanded about 25% market make do in the on a lower floor 100 cc category. Bajaj was one of the very(prenominal) few companies manufacturing three-wheelers in the world. It commanded a monopoly in the domestic market with a market share of to a higher place 80%. The rest was shared by Bajaj Tempo, Greaves Ltd and Scooters India. The company saw a sharp rise in three-wheeler demand. In early 2002, the market grew by 23%. Bajaj had also commenced the commercial production of goods carriers.In 200 2, this segment generated 22% of the companys clamss. The profit per three-wheeler was foretelld to be 2. 5-3 times that of a motorcycle. Bajaj dupeed market share in the motorcycle segment through its models like Pulsar and Boxer AR. Boxer virtually created the four-stroke economy segment and Pulsar spread out the lifestyle segment. Pulsars volumes surpassed the most sanguine expectations in foothold of volumes. In February 2003, Bajaj launched Caliber cxv and steadied its posture in the administrator motorcycle segment. The new model registered sales of 25,706 units in touch 2003. 114 pecuniary centering at Bajaj cable car pecuniary anxietyBajaj get bulk of its revenue from the self-propelling business. In 2003, motorcycles dominated the automotive segment, accounting for 55 % of its revenues. In 2002-03, Bajaj achieved a turnover of Rs. 5071 crore and earning onwards interest, levy incomeation, derogation and amortisation (EBITDA) of Rs. 817 crore. EBITDA as a percentage of clear sales and other direct income increased from 16. 8 % in 2001-02 to 19 % in 2002-03. depict on in operation(p)(a) hood, which had douse to a low of 14% in 2000-01, increased to 60% in 2002-03. Bajaj keep its efforts to drive top-line growth, mend operational efficiency, cut costs and improve economies of scale.Working roof Bajaj continue to minimize its boilers suit workings uppercase. Debtors declined from Rs. 198 crores on thirty-first edge 2002, to Rs. 167 crore on 31st ring 2003 a reduction of 16%. Bajaj succeeded in bring down origin levels by using the direct on-line sales pitch of materials from vendors. history of raw materials and components declined from seven long time as on 31st serve 2002, to half-dozen long time as on 31st manifest 2003, and spare part for replacement market from 42 old age to 31 geezerhood. The inventory of finished goods nevertheless increased from six days to society days because of the slothful market. 9 promenade VI Bajaj direct Working cap (Rs Million) showtime Bajaj political machine one-year Report 2002-03. woo grammatical construction birthday suit materials, advertising and trade, and mediate assesses (excise, and so on were the major cost heads for Bajaj. During 2002-03, through its continual efforts in cherish engineering and improving relations with the vendors, Bajaj was able to reduce its 9 Bajaj machine yearbook Report 2002-03. 115 monetary Insights material costs. The share of materials to net sales and other operating(a) income trim back from 63. 3 % in 2001-02 to 62 % in 2002-03, while the share of stores and tools was contained at 1. 5 % of net sales and other operating income. 10 task costs for 2002-03 include a conjugation of Rs. 461 million (Rs. 3 million in 2001-02) towards compensation compensable to employees under the uncoerced retirement scheme. A aggregate of 1,106 employees opted for the scheme, which had a payback period of two years. Bajajs labor costs made up 4. 66% of its wide revenue in 2002-03. 11 condescension a 16. 5% increase in net sales and other operating income from Rs. 36. 96 million in 2001-02 to Rs. 43. 06 billion in 2002-03, pulverization and administration costs had come down from 5. 3% of net sales and operating income to 4. 3%. This was the result of a positive review of frozen(p) costs with each plant head. sales and after sales expenses were around 6. 7 % of net sales and other operating income. In 2003, Bajajs advertising and market white plagues were Rs 233. 9 crore (8. 61% of its total revenue), whereas champion Hondas expenditures were Rs. 147. 01 crore (4. 16% of total revenue) and TVS were Rs. 212. 49 crore (11. 06% of total revenue). Bajajs total mediate tax expenses were Rs. 601. 22 crore in likeness to protagonist Hondas Rs. 9. 75 crore and TVS Rs. 435. 77 crore in 2003. 12 Investments Bajaj invested its nimiety bills in secured and un alloting investm ent securities like G-Secs, T-Bills, and so forth The fall out gain by Bajaj on its exchequer portfolio was comparable with the hand earned by the top vernacular declinations. During 2002-03, Bajaj reduced its uprightness investments and concentrated much on the G-Sec and adhesion market.Thus, the market entertain of the portfolio changed from a lessening in value to cost in 2002, to an appreciation in value to cost of Rs. 343 million in March 2003. During 2002-03, Bajaj provided Rs. 26. 7 million towards hurt in the carrying costs of its investment portfolio. In addition, continuing its efforts to fix non-performing assets, Bajaj booked a total pass of Rs. 853 million. This loss was set off against gains on sale of assets of Rs. 1, 067 million that resulted in a net gain of Rs. 214 million. 13 manakin (ii) Bajaj Liability expression, 2003 commencement heroism Database. 10 11 12 13 Bajaj political machine yearly Report, 2002-03. character reference artistic crea tion Database. writer bravery Database. Bajaj machine Annual Report, 2002-03. 116 monetary Management at Bajaj Auto Exhibit vii Bajaj Investment of inordinateness Funds (Rs. million) origin Bajaj Auto Annual Report, 2002-03. Exhibit viii Income from Investments (Rs Million) 2002-2003 Dividends lodge in on debentures and bonds take on government securities stakes on inter- bodily deposits and other loans Income from mutual fund units Lease rent and equalization meshing on sale of investments Interest on mend deposits new(prenominal)s summate Interest on tax re gravid integral non-operating income Non-operating expenses sack up non-operating income Source Bajaj Auto Annual Report, 2002-03. 17 127 408 405 239 44 214 2 11 1,450 1,450 274 1,176 2001-2002 592 291 18 364 79 234 6 1,584 18 1,602 436 1,166 Financial Insights issuance on superior In early 2003, Bajaj maintained a free cash reserve of Rs 2,700 crore. The concern had no intention of reducing that cash pile i n the near future. Meanwhile, analysts argued14 that retaining surplus cash would only dilute a companys Return on jacket crown apply (ROCE) and, over a period of time, reverse shareholder value. Bajaj had a capital occupied of Rs 4,000 crore, of which only Rs 1,300 crore was deployed in its two-wheeler operations. This generated an excellent ROCE of 60%. But the stay Rs 2,700 crore of idle cash, earned a redress of only 17%.As a result, Bajaj Autos overall ROCE was 31%, faraway lower than electric ray Hondas 95%. Exhibit IX Return on direct Capital (Rs. Million) As at 31, March 2003 fixed assets adept know-how Working capital heart and soul in operation(p) profit after interest and wear and tear Pre-tax return on operating capital exmployed Source Bajaj Auto Annual Report, 2002-03. As at 31, March 2002 10,910 128 699 11,737 4,834 41% 10,502 107 638 11,247 6,744 60% Exhibit X Dividend Payouts (%) Company Bajaj Hero Honda TVS 1999 19. 18 22. 89 21. 96 2000 20. 88 23. 08 23. 92 2001 35. 69 26. 74 32. 54 2002 27. 34 75. 53 42. 47 Source Businessworld, 19th whitethorn 2003. Capital Structure Bajajs debt- rectitude ratio was 0. 6 and interest coverage was 717. 76 times in 2003. Bajaj mostly relied on internal propagation rather than impertinent funding. In 2003, Bajaj had Rs. 3139. 42 crore of reserve & surplus (49% of it total assets), where as Hero Honda and TVS had only Rs. 821. 09 crore and Rs. 399. 85 crore respectively. Bajaj deployed bulk of its funds in investments (44. 02% of total assets) and rooted(p) assets (20. 57% of total assets). 14 M. Anand, ? Is Munjal world Too magnanimous Businessworld, 19th may 2003. 118 Financial Management at Bajaj Auto Exhibit XI Bajaj fair-mindedness attribute, declination 2003 Equity Holding Indian promoters vulgar funds and UTI imprecates, FIs, Insurance Cos.FIIs Private corporate bodies Indian public NRIs/OCBs Any other bring truth holding Source heroism Database. No of handles 29516461 16127 31 3829868 19318255 13264490 29054237 401776 4185692 101183510 % of Total servings 29. 17 1. 59 3. 79 19. 09 13. 11 28. 71 0. 40 4. 14 100 In phratry 2000, Bajaj had fatigued about Rs 720 crore to buy back 15% of its blondness. The offer was announced at a price of Rs 400 per share when the prevailing price was around Rs 320. Though prices beastly to Rs 200 outright after the buyback, it had later recovered to about Rs 500. Bajaj believed buy back was a better way to circulate profits to shareholders than dividends.Bajaj had a cash reserve of $ 575 million and compensable a last dividend of 120% and a special dividend of 20% in 2002 (paid on account of the one-time premia received from Allianz AG, Germany, the companys partner in the two insurance joint ventures)15 and a final dividend of one hundred forty% in 2003. The center of dividend and the tax add up to Rs. 1,598 million. The companys dividend yield i. e. , (dividend per share by the market price) showed that Baja j had a yield of 2. 7%. 16 Looking onwards In the motorcycles segment, Boxer had performed well and had increased its market share to 45% in the entry-level market, which was estimated at 102,000 units (35% of total motorcycle sales). But growth was primarily led by Pulsar, the premium-end motorcycle. Against the companys estimate of 10,000 units per calendar calendar month at the beginning of 2002, the model notched sales of around 17,000 units per month in late 2002.Encouraged by the success, Bajaj aforethought(ip) to ramp up sales to 25,000 units per month by early 2004 and anticipate to achieve total leadership in the motorcycle segment, aiming at a growth rate of 15%. Bajaj expected to improve its relationships with customers by expanding its product scope and widening its dealer network. It be after to launch a 125 cc motorcycle with Kawasaki Heavy Industries Ltd, which was in the final award of development. A nurture engine diesel motor goods carrier was in the testin g stage 15 16 Source valor Database. Chetan Soni & Nandini Sen Gupta, ? cast stock Payouts put auto investors in top gear,? quantify intelligence service Network, quaternary June 2003. 119 Financial Insights and would be launched in 2004. Bajaj also planned to broaden its mass and work towards macrocosm a unfeignedly global player.Effective management of the companys finances would play an important role in this regard. soma (iii) Bajaj Closing appoint Price & Traded touchstone Source artistic production Database. Figure (iv) Bajaj Traded standard Source nontextual matter Database. Figure (v) Bajaj Dividend confess & Earning Per Share Dividend collapse 6 5 4 3 2 1 0 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Earning Per Share 80 60 40 20 0 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Source intrepidity Database. 120 Financial Management at Bajaj Auto Figure (vi) Bajaj Assets Structure Source valor Database. Exhibit XIIBajaj Capital History divulge Month start Type attend Value (Rs. ) 10 10 security measures Amount (Rs. Crore) 0 0 superfluous Increased nonrecreational up compensable up Capital Capital (Rs. Crore) (Rs. Crore) 18. 81 37. 63 37. 63 75. 25 security department Type Sep-91 motivator Jun-94 bonus Euro Oct-94 phone number Sep-97 Bonus Equity Equity orbiculate Depository good Equity 10 10 10 345. 07 0 0 4. 34 39. 8 0 79. 59 119. 39 101. 18 buybac Sep-00 k Equity Source courage Database. Exhibit thirteen Bajaj Ratios Bajaj Auto Ratios runniness Ratios period ratio Quick ratio Solvency Ratios Debt-equity ratio Interest coverage 0. 26 0. 22 0. 20 45. 04 0. 16 33. 85 0. 17 21. 23 0. 11 11. 83 0. 29 18. 43 0. 52 5. 63 0. 6 4. 58 2. 07 1. 20 1. 88 1. 01 1. 69 0. 69 1. 11 0. 16 1. 20 0. 25 1. 44 0. 81 1. 01 0. 34 1. 12 0. 47 1. 16 0. 36 2003 2002 2001 Hero Honda 2003 2002 2001 T V S Motor 2003 2002 2001 717. 76 161. 91 121 Financial I nsights Bajaj Auto Ratios 2003 2002 2001 Hero Honda 2003 2002 2001 T V S Motor 2003 2002 2001 readiness Ratios (in Days) Average days of finished goods stock Average days of debtors Average days of creditors Net working capital cycle Profitability Ratios PBDIT (NNRT) as % of sales PBIT (NNRT) as % of sales ditch (NNRT) as % of sales Return on net deserving Return on capital active 20. 19 16. 65 11. 07 17. 50 21. 47 16. 87 13. 12 8. 63 13. 3 16. 74 13. 07 9. 18 8. 24 10. 26 9. 98 17. 59 16. 45 10. 02 67. 10 94. 64 16. 77 15. 63 9. 72 67. 67 95. 27 14. 46 13. 07 7. 87 47. 52 70. 98 9. 23 6. 66 3. 94 32. 89 42. 10 6. 79 4. 57 2. 47 8. 18 5. 78 3. 47 9. 90 13. 80 42. 40 -5. 68 10. 27 13. 95 43. 47 0. 69 11. 38 15. 42 49. 54 6. 61 3. 91 8. 62 35. 57 -7. 47 3. 53 5. 80 32. 71 -4. 79 3. 93 4. 28 31. 10 14. 09 8. 14 52. 96 14. 97 13. 13 15. 95 19. 82 52. 05 44. 89 -1. 24 7. 54 2. 05 -14. 15 16. 05 18. 80 20. 86 20. 74 90. 00 80. 00 Dividend rate (sum of interim and final) 140. 00 140. 0 0 Market Ratios P/E P/B 16. 61 3. 19 9. 54 1. 63 80. 00 900. 00 850. 00 150. 00 120. 00 9. 25 1. 32 3. 46 7. 63 9. 27 5. 62 13. 66 6. 21 18. 41 5. 02 10. 35 10. 39 3. 08 0. 99 Source bravery Database. Exhibit 14 general surface of it Income statement Common size Income rumor 2003 Total tax Sales otherwise income convince in stocks Non-recurring income Bajaj Auto 2002 2001 Hero Honda 2003 2002 2001 2003 TVS 2002 2001 100. 00 100. 00 100. 00 100. 00 100. 00 100. 00 100. 00 100. 00 100. 00 94. 22 3. 51 0. 64 1. 64 92. 27 4. 22 -0. 67 4. 18 91. 85 6. 18 0. 36 1. 61 97. 76 0. 44 0. 40 1. 40 98. 24 1. 04 -0. 13 0. 85 98. 75 0. 33 0. 56 0. 35 97. 76 0. 67 1. 25 0. 31 98. 96 0. 89 0. 15 0. 01 98. 04 1. 05 0. 90 0. 01 122 Financial Management at Bajaj AutoCommonsize Income rehearsal 2003 expense raw(a) materials, stores, etc. takings & salaries verve (power & fuel) confirmatory taxes (excise, etc. ) Advertising & trade expenses dissemination expenses differents Non-recurrin g expenses internet / losings PBDIT Financial charges (incl. wage rent) PBDT disparagement PBT tax income supply whang Bajaj Auto 2002 2001 Hero Honda 2003 2002 2001 2003 TVS 2002 2001 52. 84 4. 66 1. 19 11. 73 51. 39 5. 12 1. 41 11. 80 52. 79 6. 20 1. 80 14. 57 67. 59 3. 86 0. 49 0. 19 68. 80 3. 71 0. 56 0. 12 72. 87 3. 67 0. 73 0. 19 60. 37 3. 27 0. 66 13. 69 63. 29 3. 37 0. 69 13. 86 73. 20 3. 46 0. 90 1. 72 8. 61 0. 86 3. 50 1. 63 19. 3 8. 62 0. 82 5. 28 0. 69 19. 06 9. 83 0. 90 4. 93 2. 85 10. 77 4. 16 1. 89 4. 57 0. 07 18. 51 2. 99 1. 88 5. 55 0. 22 17. 10 2. 74 1. 81 4. 12 0. 46 14. 18 11. 06 2. 08 3. 92 0. 10 9. 23 8. 37 2. 12 4. 65 0. 04 6. 69 8. 76 1. 60 4. 69 0. 04 7. 99 0. 02 19. 01 3. 34 15. 67 5. 24 10. 43 0. 07 18. 99 3. 47 15. 52 4. 06 11. 46 0. 19 10. 58 3. 57 7. 01 0. 68 6. 33 0. 48 18. 04 1. 11 16. 93 5. 81 11. 12 0. 72 16. 38 1. 12 15. 26 5. 08 10. 17 1. 09 13. 09 1. 38 11. 72 4. 04 7. 67 0. 35 8. 88 2. 51 6. 36 2. 30 4. 06 0. 80 5. 89 2. 20 3. 69 1. 28 2. 41 1. 24 6. 75 2. 35 4. 40 1. 03 3. 37 Source Prowess Database. Exhibit XV Common size sense of balance winding-clothesCommon size sense of equilibrium carpenters plane 2003 Total assets swinish immovable assets charge & building full treatment & machinery different obdurate assets Capital WIP Bajaj Auto 2002 2001 Hero Honda 2003 2002 2001 2003 TVS 2002 2001 100. 00 100. 00 100. 00 100. 00 100. 00 100. 00 100. 00 100. 00 100. 00 41. 62 4. 02 35. 09 2. 45 0. 06 46. 97 4. 65 39. 56 2. 69 0. 07 53. 65 5. 30 44. 99 2. 88 0. 48 35. 60 5. 77 28. 21 1. 20 0. 42 40. 72 6. 96 31. 96 1. 25 0. 55 54. 82 7. 93 43. 57 1. 68 1. 64 77. 80 12. 72 58. 45 4. 01 2. 63 78. 81 10. 14 63. 09 4. 22 1. 35 77. 23 10. 39 59. 41 4. 40 3. 04 123 Financial Insights Common size rest period weather sheet 2003 Less additive depreciation Net contumacious assets Investments In group / consort cos.In mutual funds Other investments Inventory tippy materials Stores and spares spotless goods Semi-finished goods mixed debtors increase income make headways / loans to classify / ally cos. Advances / loans to Other cos. Deposits with govt. / agencies Advance recompense of tax Other receivables bills & entrust vestibular sense Deferred tax assets intangible assets & deferred revenue expenditure not write off Bajaj Auto 2002 2001 Hero Honda 2003 2002 2001 2003 TVS 2002 2001 21. 05 20. 57 44. 02 4. 13 3. 50 36. 39 3. 30 0. 89 0. 34 1. 82 0. 25 2. 65 0. 32 21. 67 25. 30 36. 82 4. 75 2. 29 29. 78 3. 31 1. 00 0. 57 1. 44 0. 30 3. 66 0. 47 24. 30 29. 35 25. 89 1. 46 2. 64 21. 79 5. 46 1. 96 0. 91 2. 23 0. 36 2. 60 0. 71 12. 47 23. 13 54. 3 0. 16 54. 37 0. 00 9. 18 5. 10 1. 14 2. 51 0. 43 6. 46 0. 00 12. 74 27. 98 41. 41 0. 20 41. 21 0. 00 10. 17 6. 17 1. 54 1. 94 0. 52 5. 69 0. 00 15. 55 39. 27 26. 18 0. 30 25. 88 0. 00 17. 18 10. 62 2. 32 3. 16 1. 08 3. 66 0. 00 28. 15 49. 65 8. 19 5. 60 2. 57 0. 02 19. 95 3. 89 4. 13 10. 36 1. 58 4. 87 0. 00 28. 18 50. 63 1. 66 1. 60 0. 00 0. 05 17 . 15 4. 24 2. 50 8. 44 1. 97 9. 97 0. 00 24. 69 52. 54 1. 79 1. 68 0. 00 0. 12 18. 32 5. 49 2. 13 8. 46 2. 25 12. 89 0. 00 1. 68 3. 56 0. 11 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 1. 16 1. 60 8. 21 0. 00 0. 00 0. 00 1. 43 4. 49 1. 86 0. 06 0. 40 0. 41 0. 01 0. 01 0. 11 0. 08 0. 02 3. 93 21. 99 2. 52 0. 8 1. 08 21. 04 2. 28 0. 47 0. 84 21. 71 4. 74 0. 46 0. 00 0. 52 4. 48 1. 11 0. 04 0. 59 7. 31 6. 21 0. 05 0. 88 7. 08 3. 90 0. 00 0. 00 7. 59 7. 69 0. 55 0. 59 6. 48 8. 56 0. 41 0. 77 5. 93 1. 92 0. 00 0. 17 0. 24 0. 35 0. 53 0. 58 1. 75 0. 00 0. 03 0. 05 124 Financial Management at Bajaj Auto Common size symmetry flat solid 2003 Total liabilities Net expenditure Paid-up equity capital reserves & surplus Secured borrowings unbarred borrowings Deferred tax liabilities Current liabilities heterogeneous creditors Interest accrued / due Other reliable liabilities Provisions taxation furnish Dividend render Dividend tax readying Other comestible Bajaj Auto 2002 2001Hero Honda 2003 2002 2001 2003 TVS 2002 2001 100. 00 100. 00 100. 00 100. 00 100. 00 100. 00 100. 00 100. 00 100. 00 51. 36 1. 60 49. 75 0. 85 12. 46 3. 81 7. 21 6. 56 0. 00 0. 65 24. 30 21. 01 2. 25 0. 29 0. 76 52. 99 1. 87 51. 12 0. 59 10. 99 4. 36 8. 41 7. 60 0. 00 0. 81 22. 65 19. 56 2. 62 0. 00 0. 47 56. 80 2. 18 54. 62 1. 21 9. 86 0. 00 10. 07 7. 70 0. 00 2. 37 22. 06 19. 77 1. 74 0. 18 0. 37 39. 34 1. 82 37. 52 0. 00 6. 14 3. 53 31. 14 18. 73 0. 00 12. 41 19. 86 0. 50 16. 42 2. 10 0. 84 39. 10 2. 28 36. 82 0. 00 6. 64 4. 07 34. 97 22. 73 0. 00 12. 24 15. 22 0. 48 13. 66 0. 00 1. 08 54. 44 3. 46 50. 98 0. 00 5. 75 0. 00 31. 63 22. 03 0. 00 9. 60 8. 18 0. 82 5. 18 0. 3 1. 64 39. 42 2. 15 37. 27 3. 82 7. 54 8. 27 37. 87 37. 81 0. 00 0. 06 3. 08 0. 00 1. 51 0. 19 1. 38 37. 27 2. 66 34. 61 10. 50 8. 74 9. 14 33. 31 33. 08 0. 00 0. 24 1. 04 0. 00 0. 00 0. 00 1. 04 43. 06 2. 78 40. 28 19. 09 9. 09 0. 00 25. 55 25. 51 0. 00 0. 05 3. 20 0. 00 2. 23 0. 23 0. 75 Source Prowess Database. Exhibit XVI c omparative Income Statement comparative degree Income Statement 2001 Total Revenue Sales Other income Change in stocks Non-recurring income 3628. 74 4172. 1 4829. 37 3177. 2 4471. 87 5107. 7 1820. 98 2213. 59 3111. 28 244. 19 190. 61 179. 85 14. 13 -30. 4 32. 58 83. 93 10. 63 18. 17 11. 42 47. 21 -5. 81 38. 54 23. 24 21. 08 72. 8 19. 57 16. 65 0. 27 19. 8 3. 27 0. 23 21. 4 39. 82 9. 94 Bajaj Auto 2002 2003 Hero Honda 2001 2002 2003 2001 TVS 2002 2003 63. 66 189. 21 125 Financial Insights proportional Income Statement 2001 Expenditure Raw materials, stores, etc. Wages & salaries Energy (power & fuel) Indirect taxes (excise, etc. ) Bajaj Auto 2002 2003 Hero Honda 2001 2002 2003 2001 TVS 2002 2003 2085. 47 2323. 71 2708. 23 2344. 39 3131. 72 3531. 81 1359. 65 1415. 78 1921. 32 245. 14 231. 48 239. 05 117. 96 168. 94 201. 63 64. 26 75. 37 104. 05 71. 03 63. 64 61. 12 23. 4 5. 98 25. 61 5. 39 25. 82 9. 75 16. 63 15. 44 20. 85 575. 8 533. 48 601. 22 31. 88 309. 94 435. 77Advertising & ma rketing expenses 204. 94 200. 41 233. 29 Distribution expenses Others 35. 46 37. 02 44. 23 64. 17 58. 1 93. 73 147. 01 119. 04 118. 49 212. 49 85. 39 98. 92 29. 64 47. 36 66. 27 194. 82 238. 63 179. 61 132. 45 252. 48 238. 84 31. 25 83. 7 14. 65 10. 24 3. 86 87. 15 103. 91 124. 72 0. 83 0. 86 3. 28 Non-recurring expenses 112. 59 Profits / losses PBDIT Financial charges (incl. lease rent) PBDT Depreciation PBT value provision PAT ppropriation of profits Dividends retain earnings 425. 47 861. 9 975. 28 456. 32 778. 31 967. 36 148. 39 149. 74 293. 69 7. 4 3. 38 1. 12 35. 1 44. 27 32. 92 51. 01 24. 82 57. 98 303. 8 22. 97 43. 73 81. 69 19. 12 62. 7 17. 96 49. 22 28. 61 11. 24 79. 91 73. 19 418. 07 858. 52 974. 16 421. 22 745. 39 942. 54 125. 42 131. 78 282. 45 141. 12 156. 68 171. 16 276. 95 701. 84 803 376. 95 694. 38 884. 56 82. 56 202. 54 53. 95 129. 35 27 183. 68 268. 36 130. 08 231. 45 249. 95 518. 16 534. 64 246. 87 462. 93 580. 76 89. 21 141. 66 159. 81 160. 74 66. 01 349. 67 4 05. 49 20. 36 42. 21 22. 91 31. 04 29. 79 99. 56 376. 5 374. 83 180. 86 113. 26 175. 27 Source Prowess Database. Exhibit cardinal Comparative Balance Sheet Comparative Balance Sheet (Rs Crore) Assets Gross fixed assets 2001 Bajaj 2002 2003 Hero Honda 2001 633. 61 2002 714. 21 2003 779. 25 TVS Motor 2001 641. 3 2002 683. 85 2003 834. 7 2490. 26 2540. 08 2626. 18 126 Financial Management at Bajaj Auto Comparative Balance Sheet (Rs Crore) region & building ingraft & machinery Other fixed assets Capital WIP Less cumulative depreciation Net fixed assets Investments In group / associate cos. In mutual funds Other investments Inventories Raw materials Stores and spares Finished goods Semi-finished goods Receivables Sundry debtors Accrued income Advances / loans to Group / associate cos. Advances / loans to Other cos. Deposits with govt. / agencies Advance payment of tax Other receivables Cash & bevel balance Deferred tax assets Intangible assets (goodwill, etc. Deferred revenue expendi ture not write off 245. 85 Bajaj 251. 53 Hero Honda 253. 42 Mar-00 may-00 May-00 503. 59 19. 45 18. 95 179. 76 453. 85 302. 59 3. 46 299. 13 0 198. 54 122. 79 26. 81 36. 47 12. 47 135. 54 42. 29 0 560. 54 21. 89 9. 69 223. 47 490. 74 617. 32 26. 37 9. 19 273. 01 506. 24 TVS Motor 86. 24 493. 09 36. 49 25. 21 204. 92 436. 11 14. 89 13. 92 0 0. 97 152. 03 45. 53 17. 65 70. 2 18. 65 210. 64 106. 95 0. 04 88. 03 547. 47 36. 66 11. 69 244. 54 439. 31 14. 39 13. 92 0 0. 47 148. 79 36. 76 21. 73 73. 23 17. 07 187. 09 86. 52 0 136. 47 627. 07 42. 97 28. 19 302. 03 532. 67 87. 92 60. 08 27. 58 0. 26 214. 07 41. 71 44. 32 111. 1 16. 94 149. 87 52. 21 0 088. 17 2139. 11 2214. 16 133. 81 22. 43 1127. 91 145. 48 3. 96 154. 59 4. 01 1171. 8 1327. 95 1362. 35 1368. 28 1298. 23 1201. 65 1991. 42 2777. 68 67. 62 122. 77 257. 02 123. 99 260. 88 220. 77 726. 29 1193. 52 3. 46 3. 46 722. 83 1190. 06 0 178. 36 108. 27 26. 96 34. 02 9. 11 238. 52 99. 72 0 0 200. 92 111. 67 25. 04 54. 84 9. 37 251. 26 1 41. 49 0 1011. 26 1610. 41 2296. 03 253. 43 91 42. 17 103. 49 16. 77 179. 1 54. 32 30. 57 77. 95 16. 26 207. 98 56. 16 21. 15 114. 63 16. 04 1786. 88 1785. 53 1917. 13 120. 72 33. 01 198. 17 25. 34 167. 04 20. 24 5. 3 380. 88 19. 24 192. 75 86. 6 21. 73 106 73. 11 3. 87 1387. 8 159. 07 30. 03 68. 06 10. 68 0 1. 26 10. 14 81. 85 45. 09 0 0 0 0 0. 21 10. 34 128. 25 108. 96 0. 81 0 0 0 0. 32 11. 31 98. 14 24. 33 0. 89 0 0 15. 43 32. 66 6. 38 49. 18 15. 91 0 0 0 39 0. 14 5. 16 56. 27 74. 27 3. 57 0 0 15. 3 0. 86 0. 03 81. 47 82. 46 5. 9 0 1007. 75 1137. 62 219. 98 21. 32 0 0 123. 32 25. 2 45. 48 12. 8 16. 03 0 0 20. 2 10. 22 11. 52 0. 44 0. 3 0 127 Financial Insights Comparative Balance Sheet (Rs Crore) Share issue expenses not pen off VRS expenses not written off Other misc. expenses not written off Total assets Net worth Authorized capital Issued equity capital Paid-up equity capital Bonus equity capital Buy back amount Buy back shares (nos. reserves & surplus disembarrass reserves item reserves Borrowings Bank borrowings Short stipulation bank borrowings unyielding boundary bank borrowings Govt. / sales tax deferral borrowings Debentures / bonds Fixed deposits Other borrowings Secured borrowings unbarred borrowings Bajaj Hero Honda TVS Motor 0 0 0 0 0 0 0 0 0 0 0 0 0. 44 0 0. 3 0 0 0 16. 03 0 0 20. 2 10. 22 11. 52 0 830. 02 357. 41 25 23. 1 23. 1 0 0 0 334. 31 291. 81 42. 5 233. 95 107. 37 76. 12 31. 25 0 0 4641. 66 5407. 81 6309. 79 1155. 81 2636. 53 2865. 79 3240. 61 150 101. 18 101. 18 114. 17 18. 21 1820730 4 2535. 35 150 101. 19 101. 19 114. 17 0 0 150 101. 19 101. 19 114. 17 0 0 629. 19 50 39. 94 39. 94 23. 96 0 0 589. 25 589. 25 0 66. 48 0 0 0 1753. 9 2188. 68 685. 76 50 39. 94 39. 94 23. 96 0 0 645. 82 645. 2 0 116. 44 0 0 0 861. 03 50 39. 94 39. 94 23. 96 0 0 821. 09 821. 09 0 134. 28 0 0 0 867. 72 1072. 89 323. 39 25 23. 1 23. 1 0 0 0 300. 29 270. 59 29. 7 166. 94 53. 64 34. 89 18. 75 422. 95 25 23. 1 23. 1 0 0 0 399. 85 380. 05 19. 8 121. 89 16. 13 16. 13 0 2764. 6 3139. 42 2515. 39 2744. 64 3121. 21 19. 96 513. 71 55. 97 55. 97 0 19. 96 626. 09 31. 83 31. 83 0 18. 21 840. 23 53. 91 53. 91 0 451. 64 0 6. 1 0 55. 97 457. 74 588. 96 0 5. 3 0 31. 83 594. 26 781. 9 0 4. 42 0 53. 91 786. 32 66. 48 0 0 0 0 66. 48 116. 44 0 0 0 0 116. 44 134. 28 0 0 0 0 134. 28 0 85 0 41. 58 158. 49 75. 46 0 59. 4 0 53. 9 91. 11 75. 83 0 39. 6 0 66. 16 41. 03 80. 86 128Financial Management at Bajaj Auto Comparative Balance Sheet (Rs Crore) Current portion of long term debt Total foreign currency borrowings Deferred tax liabilities Current liabilities & nutrition Current liabilities Sundry creditors Interest accrued / due Other current liabilities Share application funds Provisions Tax provision Dividend provision Dividend tax provision Other supply Total liabilities Bajaj Hero Honda TVS Motor 0 0 0 0 0 0 65. 38 36 11. 48 0 0 0 236. 05 0 240. 47 0 0 0 0 71. 47 77. 16 0 0 0 79. 35 0 88. 72 1491. 42 1679. 88 1988. 48 467. 55 357. 29 0. 11 110. 15 454. 93 411. 13 0. 1 43. 7 454. 9 413. 86 0. 08 40. 96 460. 14 365. 62 254. 61 0 111. 01 880. 3 1116. 21 613. 32 398. 61 0 214. 71 681. 52 409. 94 0 271. 58 238. 66 212. 1 211. 71 0 0. 39 298. 04 289. 05 287 0 2. 05 439. 33 406. 26 405. 65 0 0. 61 0 0 0 0. 02 94. 52 9. 51 59. 9 6. 11 19 0. 02 266. 91 8. 34 239. 64 0 18. 93 0 434. 69 10. 9 359. 44 46. 05 18. 3 0 26. 56 0 18. 48 1. 88 6. 2 830. 02 0 8. 99 0 0 0 8. 99 0 33. 07 0 16. 17 2. 07 14. 83 1023. 87 1224. 95 1533. 58 917. 58 1057. 94 1325. 98 80. 95 8. 26 17. 08 141. 66 0 25. 35 141. 66 18. 15 47. 79 4641. 66 5407. 81 6309. 79 1155. 81 1753. 9 2188. 68 867. 72 1072. 89 Source Prowess Database. 129 Financial Insights Bibliography 1. 2. ?The BT 500,? 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