Analysis of Financial Statement of Automobile Sector-Bajaj Auto & Hero Honda

Submitted by: Group 4, Section D Gaurav Pathak (10P199) Nisheeth Pandey (10P216) Prateek Goel (10P220) Sagar Shah (10P231) Shubhi Gupta (10P234) Sushant (10P238)

Contents
Acknowledgement...................................................................................................3 Executive Summary............................................................4 Telecom Sector: An Introduction......5 Current scenario.............6 Criteria: For Selection of Companies......................................................................10 Financial Ratio Analysis...........................................................................................11 Overview....................................................................................................................12 Common Size Balance sheet.....................................................................................22 Observations from analysis......................................................................................28 Short Term Lending.................................................................................................28 Long Term Lending.................................................................................................35 Short Term Investment............................................................................................39 Long Term Investments...........................................................................................46 Strategic Suggestions................................................................................................52 Conclusion.............................................................................................................53 Bibliography..........................................................................................................54 Appendix...............................................................................................................55

Acknowledgements
We would like to thank Prof Shailendra Kumar Rai for his guidance and effective support. We would also like to thank our seniors for their constant help and suggestions. Finally we would like to acknowledge the support given to us through the various websites on internet.

Executive Summary
In our analysis as a part of management accounting course in MDI, we aim at financial analysis of two distinct companies of automobile sector of India. The automobile industry in India happens to be the ninth largest in the world. Following Japan, South Korea and Thailand, in 2009, India emerged as the fourth largest exporter of automobiles. Several Indian automobile manufacturers have spread their operations globally as well, asking for more investments in the Indian automobile sector by the MNCs. The cumulative production data for April-January 2010 shows production growth of 23.07 percent over same period last year. We have done a comparative analysis of the balance sheet, income & cash flow statements of Bajaj Auto & Hero Honda. Key ratios were generated and analyzed for short-term and longterm investing, short-term and long-term lending and suggesting a comprehensive strategy. Accordingly, we have included balance sheet, income & cash flow statements of Bajaj Auto & Hero Honda over a period of 5-years in appendix used for data analysis.

Automobile Sector: An Introduction One of the major industrial sectors in India is the automobile sector. Subsequent to the liberalization, the automobile sector has been aptly described as the sunrise sector of the Indian economy as this sector has witnessed tremendous growth. Automobile Industry was delicensed in July 1991 with the announcement of the New Industrial Policy. The passenger car industry was, however, delicensed in 1993. No industrial license is required for setting up of any unit for manufacture of automobiles except in some special cases. The norms for Foreign Investment and import of technology have also been progressively liberalized over the years for manufacture of vehicles including passenger cars in order to make this sector globally competitive. At present 100% Foreign Direct Investment (FDI) is permissible under automatic route in this sector including passenger car segment. The import of technology/technological up gradation on the royalty payment of 5% without any duration limit and lump sum payment of USD 2 million is also allowed under automatic route in this sector. With the gradual liberalization of the automobile sector since 1991, the number of manufacturing facilities in India has grown progressively. The cumulative production data for April-January 2010 shows production growth of 23.07 percent over same period last year.

Domestic Sales Passenger Vehicles segment during April-January 2010 grew at 25.21 percent over same period last year. Passenger Cars grew by 24.75 percent, Utility Vehicles grew by 21.95 percent and Multi Purpose Vehicles grew by 37.05 percent in this period. The overall Commercial Vehicles segment registered positive growth at 30.39 percent during April-January 2010 as compared to the same period last year. Medium & Heavy Commercial Vehicles (M&HCVs) registered growth at 20.58 percent, Light Commercial Vehicles grew at 39.66 percent. Three Wheelers sales recorded a growth rate of 25.77 percent in April-January 2010. While Passenger Carriers grew by 32.54 percent during April-January 2010, Goods Carriers grew at 4.20 percent. Two Wheelers registered a growth of 23.74 percent during April-January 2010. Mopeds, Scooters and Motorcycles grew by 31.73 percent, 20.56 percent and 24.32 percent respectively. Exports During April-January 2010,overall automobile exports registered a growth rate of 13.24 percent. Passenger Vehicles segment, Three Wheelers and Two Wheelers segments grew by 33.92 percent, 4.60 percent and 8.84 percent respectively in this period. Commercial Vehicles recorded growth of (-) 7.52 percent. Auto Components Industry Surge in automobile industry since the nineties has led to robust growth of the auto component sector in the country. In tandem with the industry trends, the Indian component sector has shown great advances in recent years in terms of growth, spread, absorption of new technologies and flexibility. Indian auto component industry has seen major growth with the arrival of world vehicle manufacturers from Japan, Korea, US and Europe. Today, India is emerging as one of the key auto components center in Asia and is expected to play a significant role in the global Automobile supply chain in the near future. The auto component industry is also expected to drive the growth of the engineering sector in view of its strong downstream and upstream linkages with many other segments of the engineering sector like raw materials, capital goods, intermediate products etc.Auto component industry supports industries like automobiles, machine tools, steel, aluminum, rubber, plastics, electrical, electronics, forgings and machining. India has also emerged as an outsourcing hub for auto parts for international companies such as Ford, General Motors, Daimler Chrysler, Fiat, Volkswagon, and Toyota. During the year 2008-09, the turnover and export for auto component industry was recorded at US $ 15.85 billion and US $ 3.11 billion respectively.

Policy Initiatives Auto Policy Vision To establish a globally competitive Automobile Industry in India and to double its contribution to the economy by 2010. Objectives This policy aims to promote integrated, phased, enduring and self-sustained growth of the Indian Automobile industry. The objectives are to:(i) Exalt the sector as a lever of industrial growth and employment and to achieve a high degree of value addition in the country; (ii) Promote a globally competitive Automobile industry and emerge as a global source for auto components; (iii) Establish an international hub for manufacturing small, affordable passenger cars and a key center for manufacturing Tractors and Two-wheelers in the world; (iv) Ensure a balanced transition to open trade at a minimal risk to the Indian economy and local industry; (v) Conduce incessant modernization of the industry and facilitate indigenous design, research and development; (vi) Steer India's software industry into Automobile technology; (vii) Assist development of vehicles propelled by alternate energy sources; (viii) Development of domestic safety and environmental standards at par with international standards. Automobile Mission Plan 2016 To accelerate and sustain growth in the Automobile sector and to steer,co-ordinate and synergise the efforts of all stakeholders,Automobile Mission Plan (AMP) 2006-2016 has been prepared in order to make India a global Automobile hub. The Automobile Mission Plan (AMP) 2006-2016,aims at doubling the contribution of Automobile sector in GDP by taking the turnover to USD 145 billion and providing additional employment to 25 million people by 2016 with special emphasis on export of small cars,MUVs,two and three wheelers and auto components.

Foreign Direct Investment

Automatic approval for foreign equity investment upto 100 per cent of manufacture of automobiles and component is permitted. The automobile industry is delicensed. Import of components is freely allowed.

Major Automobile Players in India Companies Ashok Leyland Asian Motor Works Bajaj Auto BMW India Daimler Chrysler India Eicher Motors Fiat India Force Motors Ford India General Motors India Hero Honda Motors Hindustan Motors Honda Hyundai Motors Kinetic Motor Segments LCVs, M&HCVs, buses M & HCVs Two and three wheelers Cars and MUVs Cars LCVs, M & HCVs Cars MUVs and LCVs Cars and MUVs Cars & MUVs Two wheelers Cars, MUVs and LCVs Two wheelers, cars and MUVs Cars and MUVs Two wheelers

Mahindra & Mahindra Maruti Suzuki Piaggio Royal Enfield Motors Skoda Auto India Suzuki Motorcycles Swaraj Mazda Ltd Tata Motors Cars Toyota Kirloskar TVS Motor Co Volvo India Volkswagen India Yamaha Motor India

Three wheelers, cars, MUVs, LCVs Cars, MUVs, MPVs Three wheelers, LCVs Two wheelers Cars Two wheelers LCVs, M & HCVSs, buses MUVs, LCVs, M&HCVs, buses Cars, MUVs Two wheelers M & HCVs, buses Cars Two wheelers

MUVs: Multi utility vehicles; MPVs: Multi purpose vehicles; LCV: Light commercial vehicles; M&HCVs: Medium and heavy commercial vehicles

Criteria: For Selection of Companies

In the automobile sector, we have chosen Bajaj Auto and Hero Honda as two companies for financial analysis and strategically suggestions. The criteria to choose these two companies are: 1. Automobile Industry is Indias major industrial sector- Bajaj Auto and Hero Honda being the leaders in the two-wheeler segment of the automobile industry in India. 2. Bajaj Auto and Hero Honda both offer similar kinds of products/services in the market. For e.g. both produce and ace in t 3. They deal extensively in motor cycles production. 4. Their respective asset holding is quite near to be compared. 5. Both are growing company 6. Both companies hold good reputation and are market leaders in the two-wheeler segment

Financial Ratio Analysis

It is a method of calculating the financial strengths and weaknesses of the firm by converting financial data into ratios. The most important financial ratios of the firm that needs to be analyzed are: liquidity profitability overall performance measures Asset utilization ratio.

The financial analysis of Bajaj Auto and Hero Honda is done using key ratios not only in context of the firms history (over a period-trend analysis), but also with respect to each other (interfirm). Common size analysis is additionally done to the compare financial data across firms. Common size statements normalize the balance sheets and income statements and thus making the task at hand simple.

Overview
Financial analysis is done to assess the viability, stability and profitability of a business. These could be fulfilled by analyzing the company on the following scenarios: 1. Short-term Investment 2. Long-term investment 3. Short-term Lending 4. Long-term Lending 5. Strategic suggestions

SHORT TERM INVESTMENT To gain profits by investing in a company for a short term, a person has financial as well as non financial data available with him to calculate the level of risk and returns involved in the stock he is investing for short term. To measure the volatility of the price of a stock relative to the rest of the market Beta ratio should be applied. Beta ratio provides information on the movement of the price of the stock as compared to the rest of the stock market. Beta of a stock can be used to compare a company with its peers from the same industry or sector to see the relative performance accordingly. If the beta value of a stock is more than 1, then the price of this stock is considered volatile as compared to the overall market. Thus the stock is classified as risky. If the beta value of a stock is equal to 1, then the price of the stock fluctuates at the same level as the market. If the beta value of a stock is less than 1, then the price of the stock is less volatile as compared to the overall market. Thus, the stock is classified as less risky. Market capitalization (cap) - Market capitalization/capitalization (market cap or capitalized/capitalized value) is a measurement of corporate size equal to the share price times the number of shares outstanding of a public company. It is the True Measure of A Company's Value. Another important factor that can be considered for short term investment is the P/E ratio. The P/E ratio provides relationship between the stock price and the companys earnings. P/E Ratio = Stock Price / EPS (Earnings per share) The P/E ratio tells you what the market thinks of a stock. It provides information about the investors confidence in the stock and how much extra he is willing to pay for it.

LONG TERM INVESTMENT The estimated returns that can be generated against the risks involved when investing for a long term, can be found out using the following criteria:Debt-equity ratio- Company's financial leverage can be measured using this. Debt/equity ratio is equal to long-term debt divided by common shareholders' equity. It is considered risky to invest in a company with a higher debt/equity ratio, especially when interest rates are rising, as the additional interest is generally paid out from debt. Interest coverage ratio This ratio is used to determine how easily a company can pay interest on outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) by the company's interest expenses of the same period. Interest coverage ratio is given as ebit/ interest expense of the company. If this ratio is low, it means the company is burdened by debt expense. If interest coverage ratio is 1.5 or lower, the companies ability to meet interest expenses may be questionable. An interest coverage ratio below 1 generally indicates the company is not generating sufficient revenues to satisfy the interest expenses. Market capitalization - Market cap helps to determine the true value of the company. 14 Return on capital employed (ROCE) - This ratio indicates the efficiency and profitability of a company's capital investments and is calculated as: ROCE= EBIT/ (total assets-current liabilities) ROCE should always be higher than the rate at which the company borrows; otherwise any increase in borrowing will reduce shareholders' earnings. A variation from this ratio is return on average capital employed (ROACE), which takes the average of opening and closing capital employed for the time period. Operating profit ratio - This ratio measures the money a company is generating from its own operations; it doesnt include income generated from investments in other businesses. Operating income can be used to judge the general health of the core business and the managerial efficiency. Total asset turnover ratio - This ratio calculates the total sales [revenue] for every asset a company owns. The Asset Turnover ratio is given as: Total Revenue/ Average assets for period This ratio is an indicator of the relationship between assets and revenue. Companies with low profit margins tend to have high asset turnover and those with high profit margins have low asset turnover - it indicates pricing strategy. This ratio is useful to check the growth of companies as a fact to see the growing revenue in proportion to sales.

SHORT TERM LENDING To lend money to a firm for a short term the following things have to be considered before going ahead with actually lending the desired amountCurrent ratio- This ratio is an indication of a company's ability to meet short-term debt obligations; higher the ratio, more liquid the company is. Current ratio is equal to current assets divided by current liabilities If the current assets of a company are more than twice the current liabilities, then that company is generally considered to have good short-term financial strength. If current liabilities exceed current assets, then the company may have problems meeting its short-term obligations 15 Quick ratio This ratio is an indicator of a company's short-term liquidity. The quick ratio is the measures of a company's ability to meet its short-term obligations with its liquid assets. Higher the quick ratio better is the position of the company. The quick ratio is equal to Current assets-inventories/current liabilities. It is also known as Acid test or liquidity ratio. Quick ratio is usually more conservative than the current ratio, and is a more well-known liquidity measure, because it does not include inventory in current assets. Inventory is excluded because some companies face difficulty in turning their inventory into cash. In case short-term obligations need to be paid off immediately, situations may arise in which the current ratio would overestimate a company's short-term financial strength. Credit policy of the company has to be calculated to judge the credibility of the company it basically compares the debit period with the credit period for the company i.e. the credit time a company offers to its customers and the credit period it gets from its suppliers. This also gives a general idea about the cash requirements of the company. Another important aspect to be considered is the cash from the operating activities and comparing it with the total sales. It indicates the efficiency of the management in managing its resources and gives a glimpse of the future aspects of the company. The operating profit ratio of the company also needs to be calculated. LONG TERM LENDING The following things need to be kept in mind before lending money to any firm for a long term. Turnover ratios-This ratio is a measure of number of times a company's inventory is replaced during a given time period. Turnover ratio is calculated as cost of goods sold divided by average inventory during the time period. A high turnover ratio is a sign that the companys production and sale of goods or services is taking place at a quick pace. Profitability ratios-A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific

period of time. A general rule followed for most of these ratios is that having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well. Various types of profitability ratios are profit margin, return on assets and return on equity etc. Profit margin is a measure of how much a company earns relative to its sales. A company with a higher profit margin is considered more efficient than its competitor. Two profit margin ratios are: Operating profit margin Net profit margin.

Operating profit margin measures the earnings before interest and taxes, and is calculated as follows: Operating Profit Margin = Earnings before Interest and Taxes/sales Net profit margin measures earnings after taxes and is calculated as follows: Net Profit Margin = Earnings after Taxes/ sales Return on assets (ROA) tells how the performance of the management on all the firms resources is. However, this does not give an idea about how well they are performing for the stockholders. It is calculated as follows: Return on Assets = Earnings after Taxes/ total assets Return on equity (ROE) measures how well management is doing for the investor, because it tells how much earnings investors are getting for each rupee invested. It is calculated as follows: Return on Equity = Earnings after Taxes/ equity Another important ratio as a part of the analysis will be debt equity ratio which helps in measuring companys financial leverage. If this number is too high it may signify future liquidity problems. If this ratio is too low it can signify inefficient use of the various financing alternatives available to a company. Apart from these ratios the interest coverage ratio and the debt service coverage ratio has to be calculated and evaluated too. It is the ratio of net operating income to debt payments on a piece of investment in real estate. It is a popular benchmark used in the measurement of an income-producing companys ability to buy a property and its ability to produce enough revenue to cover its monthly mortgage payments. Higher this ratio is, and then it is easier to borrow money for the property.

Strategic suggestions The company should be suggested a strategy as in restructuring or diversification or expansion. The strategy is decided based on the profitability and the credit policy of the company. The strategy needs to be evaluated very closely for the best possible results of the company and a bright future. The managerial efficiency also plays an important role in determining the right strategy for the company in future endeavors. Thus, strategically suggestions should be made keeping in mind these points and only after detailed analysis of financial and non-financial data is done. Financial Ratio Analysis It is a method of calculating the financial strengths and weaknesses of the firm by converting financial data into ratios. The most important financial ratios of the firm that needs to be analyzed are: Liquidity Profitability Overall performance measures Asset utilization ratio

The financial analysis of Hero Honda and Bajaj Auto Ltd. is done using key ratios not only in context of the firms history (over a period-trend analysis), but also with respect to each other(inter-firm). Common size analysis is additionally done to the compare financial data across firms. Common size statements normalize the balance sheets and income statements and thus making the task at hand simple.

Financial analysis is done to assess the viability, stability and profitability of a business. These could be fulfilled by analyzing the company on the following scenarios: 1. Short-term Investment 2. Long-term investment 3. Short-term Lending 4. Long-term Lending 5. Strategy suggestions

SHORT TERM INVESTMENT

To gain profits by investing in a company for a short term, a person has financial as well as non financial data available with him to calculate the level of risk and returns involved in the stock he is investing for short term. To measure the volatility of the price of a stock relative to the rest of the market Beta ratio should be applied. Beta ratio provides information on the movement of the price of the stock as compared to the rest of the stock market. Beta of a stock can be used to compare a company with its peers from the same industry or sector to see the relative performance accordingly. If the beta value of a stock is more than 1, then the price of this stock is considered volatile as compared to the overall market. Thus the stock is classified as risky. If the beta value of a stock is equal to 1, then the price of the stock fluctuates at the same level as the market. If the beta value of a stock is less than 1, then the price of the stock is less volatile as compared to the overall market. Thus, the stock is classified as less risky. Market capitalization (cap) - Market capitalization/capitalization ( market cap or capitalized/capitalized value) is a measurement of corporate size equal to the share price times the number of shares outstanding of a public company. It is the True Measure of A Company's Value Another important factor that can be considered for short term investment is the P/E ratio. The P/E ratio provides relationship between the stock price and the companys earnings. P/E Ratio = Stock Price / EPS (Earnings per share) The P/E ratio tells you what the market thinks of a stock. It provides information about the investors confidence in the stock and how much extra he is willing to pay for it. LONG TERM INVESTMENT The estimated returns that can be generated against the risks involved when investing for a long term, can be found out using the following criteria:Debt-equity ratio- Company's financial leverage can be measured using this. Debt/equity ratio is equal to long-term debt divided by common shareholders' equity. It is considered risky to invest in a company with a higher debt/equity ratio, especially when interest rates are rising, as the additional interest is generally paid out from debt. Interest coverage ratio This ratio is used to determine how easily a company can pay interest on outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) by the company's interest expenses of the same period. Interest coverage ratio is given as ebit/ interest expense of the company. If this ratio is low, it means the company is burdened by debt expense. If interest coverage ratio is 1.5 or lower, the companies ability to meet interest expenses may be questionable. An interest coverage ratio below 1 generally indicates the company is not generating sufficient revenues to satisfy the interest expenses.

Market capitalization - Market cap helps to determine the true value of the company. Return on capital employed (ROCE)- This ratio indicates the efficiency and profitability of a company's capital investments and is calculated as: ROCE= EBIT/ (total assets-current liabilities) ROCE should always be higher than the rate at which the company borrows; otherwise any increase in borrowing will reduce shareholders' earnings. A variation from this ratio is return on average capital employed (ROACE), which takes the average of opening and closing capital employed for the time period. Operating profit ratio - This ratio measures the money a company is generating from its own operations; it doesnt include income generated from investments in other businesses. Operating income can be used to judge the general health of the core business and the managerial efficiency. Total asset turnover ratio - This ratio calculates the total sales [revenue] for every asset a company owns. The Asset Turnover ratio is given as: Total Revenue/ Average assets for period This ratio is an indicator of the relationship between assets and revenue. Companies with low profit margins tend to have high asset turnover and those with high profit margins have low asset turnover - it indicates pricing strategy. This ratio is useful to check the growth of companies as a fact to see the growing revenue in proportion to sales. SHORT TERM LENDING To lend money to a firm for a short term the following things have to be considered before going ahead with actually lending the desired amountCurrent ratio- This ratio is an indication of a company's ability to meet short-term debt obligations; higher the ratio, more liquid the company is. Current ratio is equal to current assets divided by current liabilities If the current assets of a company are more than twice the current liabilities, then that company is generally considered to have good short-term financial strength. If current liabilities exceed current assets, then the company may have problems meeting its short-term obligations Quick ratio This ratio is an indicator of a company's short-term liquidity. The quick ratio is the measures of a company's ability to meet its short-term obligations with its liquid assets. Higher the quick ratio better is the position of the company. The quick ratio is equal to Current assets-inventories/current liabilities. It is also known as Acid test or liquidity ratio. Quick ratio is usually more conservative than the current ratio, and is a more well-known liquidity measure, because it does not include inventory in current assets. Inventory is excluded because some companies face difficulty in turning their inventory into cash. In case short-term obligations need to be paid off immediately, situations may arise in which the current ratio would overestimate a company's short-term financial strength. Credit policy of the company has to be calculated to judge the credibility of the company it basically compares the debit period with the credit period for the company i.e. the credit time a

company offers to its customers and the credit period it gets from its suppliers. This also gives a general idea about the cash requirements of the company. Another important aspect to be considered is the cash from the operating activities and comparing it with the total sales. It indicates the efficiency of the management in managing its resources and gives a glimpse of the future aspects of the company. The operating profit ratio of the company also needs to be calculated.

LONG TERM LENDING The following things need to be kept in mind before lending money to any firm for a long term. Turnover ratios-This ratio is a measure of number of times a company's inventory is replaced during a given time period. Turnover ratio is calculated as cost of goods sold divided by average inventory during the time period. A high turnover ratio is a sign that the companys production and sale of goods or services is taking place at a quick pace. Profitability ratios-A class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. A general rule followed for most of these ratios is that having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well. Various types of profitability ratios are profit margin, return on assets and return on equity etc. Profit margin is a measure of how much a company earns relative to its sales. A company with a higher profit margin is considered more efficient than its competitor. Two profit margin ratios are: OPERATING profit margin NET profit margin

Operating profit margin measures the earnings before interest and taxes, and is calculated as follows: Operating Profit Margin = Earnings before Interest and Taxes/sales Net profit margin measures earnings after taxes and is calculated as follows: Net Profit Margin = Earnings after Taxes/ sales Return on assets (ROA) tells how the performance of the management on all the firms resources is. However, this does not give an idea about how well they are performing for the stockholders. It is calculated as follows: Return on Assets = Earnings after Taxes/ total assets Return on equity (ROE) measures how well management is doing for the investor, because it tells how much earnings investors are getting for each rupee invested. It is calculated as follows: Return on Equity = Earnings after Taxes/ equity Another important ratio as a part of the analysis will be debt equity ratio which helps in measuring companys financial leverage. If this number is too high it may signify future liquidity

problems. If this ratio is too low it can signify inefficient use of the various financing alternatives available to a company. Apart from these ratios the interest coverage ratio and the debt service coverage ratio has to be calculated and evaluated too. It is the ratio of net operating income to debt payments on a piece of investment in real estate. It is a popular benchmark used in the measurement of an income-producing companys ability to buy a property and its ability to produce enough revenue to cover its monthly mortgage payments. Higher this ratio is, and then it is easier to borrow money for the property. Strategic suggestions The company should be suggested a strategy as in restructuring or diversification or expansion. The strategy is decided based on the profitability and the credit policy of the company. The strategy needs to be evaluated very closely for the best possible results of the company and a bright future. The managerial efficiency also plays an important role in determining the right strategy for the company in future endeavors. Thus, suggestions on strategy should be made keeping in mind these points and only after detailed analysis of financial and non-financial data is done

Common Size Balance Sheet and Income Statements

A common size balance sheet by showing each asset as a percentage of the total asset and similarly each item of liability and owners equity is shown as a percentage of the total liabilities and owners equity. A common size profit and loss account summarizes the revenues and expenses of an accounting period. We can prepare a commons size profit and loss account by showing the net sales as 100 percent and each of the components of expenses and profits as a percentage of the net sales.A common size balance sheet by showing each asset as a percentage of the total asset and similarly each item of liability and owners equity is shown as a percentage of the total liabilities and owners equity. A common size profit and loss account summarizes the revenues and expenses of an accounting period. We can prepare a commons size profit and loss account by showing the net sales as 100 percent and each of the components of expenses and profits as a percentage of the net sales.

Bajaj Auto
Common Size Financial Statement:

Common size Balance Sheet:Mar '06 Com mon Size Mar '07 Com mon Size Mar '08 Com mon Size Mar '09 Com mon Size Mar '10 Com mon Size

12 mths Sources Of Funds Total 101.1 Share 8 Capital Equity 101.1 Share 8 Capital Share 0 Applicati on Money Preferenc 0 e Share Capital Reserves 4,669 .55 Revaluati 0 on Reserves Networth 4,770 .73 Secured 0.02 Loans Unsecure 1,467 d Loans .13 Total 1,467 Debt .15 Total 6,237 Liabilities .88

12 mths 1.62 101.1 8 101.1 8 0 1.41

12 mths 144.6 8 144.6 8 0 4.95

12 mths 144.6 8 144.6 8 0 4.21

12 mths 144.6 8 144.6 8 0 3.39

1.62

1.41

4.95

4.21

3.39

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

74.86 0.00

5,433 .14 0

75.88 0.00

1,442 .91 0

49.38 0.00

1,725 .01 0

50.15 0.00

2,783 .66 0

65.24 0.00

76.48 0.00 23.52

5,534 .32 22.46

77.30 0.31 22.39

1,587 .59 6.95

54.33 0.24 45.43

1,869 .69 0

54.36 0.00 45.64

2,928 .34 12.98

68.63 0.30 31.07 31.37 100.0 0

1,602 .97 23.52 1,625 .43 100.00 7,159 .75

1,327 .39 22.70 1,334 .34 100.00 2,921 .93

1,570 .00 45.67 1,570 .00 100.00 3,439 .69

1,325 .60 45.64 1,338 .58 100.00 4,266 .92

Mar '06

Com mon Size

Mar '07

Comm Mar on '08 Size 12 mths

Comm Mar on '09 Size 12 mths

Comm Mar on '10 Size 12 mths

Com mon Size

12 mths

12 mths

Application Of Funds Gross 2,894 Block .22 Less: 1,761 Accum. .22 Depreciat ion Net 1,133 Block .00 Capital 43.33 Work in Progress Investme 5,856 nts .97 Inventori 272.9 es 3 Sundry 301.5 Debtors 5 Cash and 80.84 Bank Balance Total 655.3 Current 2 Assets Loans 2,282 and .98 Advances Fixed 1.25 Deposits Total CA, 2,939 Loans & .55 Advances Deffered 0 Credit

46.40 28.23

3,178 .54 1,904 .94

44.39 26.61

2,994 .68 1,726 .07

102.49 3,350 .20 59.07 1,807 .91

97.40 52.56

3,379 .25 1,899 .66

79.20 44.52

18.16 0.69

1,273 .60 107.6 2 6,447 .53 309.7 529.8 3 62.16

17.79 1.50

1,268 .61 34.74

43.42 1.19

1,542 .29 106.4 8 1,808 .52 338.8 4 358.6 5 135.6 8 833.1 7 1,567 .09 1.19 2,401 .45 0

44.84 3.10

1,479 .59 120.8 4 4,021 .52 446.2 1 272.8 4 100.2

34.68 2.83

93.89 4.38 4.83 1.30

90.05 4.33 7.40 0.87

1,857 .14 349.6 1 275.3 1 54.74

63.56 11.97 9.42 1.87

52.58 9.85 10.43 3.94

94.25 10.46 6.39 2.35

10.51

901.6 9 2,925 .24 21.32 3,848 .25 0

12.59

679.6 6 1,099 .68 1.33 1,780 .67 0

23.26

24.22

819.2 5 2,291 .29 1.21 3,111 .75 0

19.20

36.60

40.86

37.64

45.56

53.70

0.02 47.12

0.30 53.75

0.05 60.94

0.03 69.82

0.03 72.93

0.00

0.00

0.00

0.00

0.00

Current Liabilities Provision s Total CL & Provision s Net Current Assets Miscellan eous Expenses Total Assets

1,419 .08 2,315 .89 3,734 .97

22.75 37.13 59.88

1,683 .46 2,833 .79 4,517 .25

23.51 39.58 63.09

1,185 .19 834.0 4 2,019 .23

40.56 28.54 69.11

1,378 .20 1,224 .15 2,602 .35

40.07 35.59 75.66

2,218 .06 2,248 .72 4,466 .78

51.98 52.70 104.6 8

795.4 2 0

-12.75

-669

-9.34

0.00

0.00

238.5 6 0

-8.16

200.9 183.3

-5.84

0.00

5.33

1,355 .03 0

-31.76

0.00

6,237 .88

100.00 7,159 .75

100.00 2,921 .93

100.00 3,439 .69

100.00 4,266 .92

100.0 0

Continge nt Liabilities Book Value (Rs)

719.0 6 471.4 9

811.6 6 546.9 6

1,129 .29 109.7 3

924.9 6 129.2 3

818.2 5 202.4

Common size Income statement:Profit & Loss account of Bajaj Auto in Rs. Cr.

Mar '06

Comm Mar on '07 Size

Com mon Size

Mar '08

Com mon Size

Mar '09

Com mon Size

Mar '10

Com mon Size

12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustme nts Total Income Expenditu re Raw Materials Power & Fuel Cost Employee Cost Other Manufact uring Expenses Selling and Admin

12 mths

12 mths

12 mths

12 mths

8,653. 83 1,081. 70 7,572. 13 458.9 6 49.01

100.0 0 12.50 87.50 5.30 0.57

10,74 1.91 1,321. 67 9,420. 24 567.1 6 -0.9

100.0 0 12.30 87.70 5.28 -0.01

9,856 .66 1,029 .51 8,827 .15 170.2 7 67.85

100.0 0 10.44 89.56 1.73 0.69

9,310 .24 610.0 7 8,700 .17 -4.52 24.49 8,671 .16

100.0 0 6.55 93.45 -0.05 -0.26

12,42 0.95 607.7 11,81 3.25 38.76 47.6

100.0 0 4.89 95.11 0.31 0.38

8,080. 10

93.37 0.00

9,986. 50

92.97 0.00

9,065 .27

91.97 0.00

93.14 0.00

11,89 9.61

95.80 0.00

5,446. 62 59.09 282.4 5 79.5

62.94 0.68 3.26 0.92

6,969. 50 79.34 310.0 7 74.53

64.88 0.74 2.89 0.69

6,760 .04 69.2 350.0 9 53.72

68.58 0.70 3.55 0.55

6,502 .10 60.89 366.6 7 58.1

69.84 0.65 3.94 0.62

8,187. 11 70.35 411.7 6 73.8

65.91 0.57 3.32 0.59

299.9 9

3.47

457.1 7

4.26

390.1 5

3.96

383.4 1

4.12

423.8 7

3.41

Expenses

Miscellan eous Expenses Preoperati ve Exp Capitalise d Total Expenses

198.5 2

2.29

230.8 9 -32.05

2.15

209.6 3 23.04

2.13

226.2 2 14.42

2.43

221.9 4 -15.67

1.79

-24.81 -0.29

-0.30

-0.23

-0.15

-0.13

6,341. 36 Mar '06

73.28 Com mon Size

8,089. 45 Mar '07

75.31 Com mon Size

7,809 .79 Mar '08

79.23 Com mon Size

7,582 .97 Mar '09

81.45 Com mon Size

9,373. 16 Mar '10

75.46 Com mon Size 12 mths 20.03 20.34 0.05 20.29 1.10 0.00

12 mths Operating Profit PBDIT Interest PBDT Depreciat ion Other Written Off Profit Before Tax Extraordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit 1,279. 78 1,738. 74 0.34 1,738. 40 191 3.62 14.79 20.09 0.00 20.09 2.21 0.04

12 mths 1,329. 89 1,897. 05 5.34 1,891. 71 190.2 6 0.39 12.38 17.66 0.05 17.61 1.77 0.00

12 mths 1,085 .21 1,255 .48 5.16 1,250 .32 173.9 6 1.12 11.01 12.74 0.05 12.69 1.76 0.01

12 mths 1,092 .71 1,088 .19 21.01 1,067 .18 129.7 9 0 11.74 11.69 0.23 11.46 1.39 0.00

12 mths 2,487. 69 2,526. 45 5.98 2,520. 47 136.4 5 0

1,543. 78 59.03

17.84

1,701. 06 26.6

15.84

1,075 .24 59.32

10.91

937.3 9 18.72

10.07

2,384. 02 24.25

19.19

0.68

0.25

0.60

0.20

0.20

1,602. 81

18.52

1,727. 66

16.08

1,134 .56

11.51

956.1 1

10.27

2,408. 27

19.39

479.1 1 1,101. 63

5.54 12.73

490.0 9 1,237. 96

4.56 11.52

378.7 8 755.9 5

3.84 7.67

301.6 1 656.4 8

3.24 7.05

707.5 1,702. 73

5.70 13.71

Total Value Addition Preferenc e Dividend Equity Dividend Corporate Dividend Tax Per share data (annualise d) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

894.7 4 0

10.34

1,119. 95 0

10.43

1,049 .75 0

10.65

1,080 .87 0

11.61

1,186. 05 0

9.55

0.00

0.00

0.00

0.00

0.00

404.7 4 56.76

4.68 0.66

404.7 3 68.78

3.77 0.64

289.3 7 49.18

2.94 0.50

318.3 54.1

3.42 0.58

578.7 3 96.12

4.66 0.77

0.00

0.00

0.00

0.00

0.00

1,011. 84 108.8 7 400

11.69

1,011. 84 122.3 5 400

9.42

1,446 .84 52.25

14.68

1,446 .84 45.37

15.54

1,446. 84 117.6 9 400

11.65

1.26

1.14

0.53

0.49

0.95

4.62

3.72

200

2.03

220

2.36

3.22

471.4 9

5.45

546.9 6

5.09

109.7 3

1.11

129.2 3

1.39

202.4

1.63

Important takeaways from Bajaj

1. Bajaj is a growing company as it has been increasing its gross block of assets so expansion is the mantra for them 2. General Reserves have been decreasing in the case of Bajaj over the years 3. Secured Loans are not there in Bajaj so no collateral is present 4. Debt is decreasing over the years which is a good thing but not by a very large percentage 5. Sales are increasing by nearly 50 % collaborating the belief that there is sufficient demand in the market 6. Operating Profit is increasing which is a very good thing for the company 7. Earnings per share showed a considerable increase in 2010 in comparison to 2009 so Bajaj is a profitable option for the investors

Hero Honda
Common Size Financial Statement:

Common size Balance Sheet:Mar '06 Commo Mar n Size '07 Commo Mar n Size '08 Comm on Size Mar '09 Comm on Size Mar '10 Comm on Size

12 mths Sources Of Funds Total 39.9 Share 4 Capital Equity 39.9 Share 4 Capital Share 0 Applicat ion Money Preferen 0 ce Share Capital Reserves 1,96 9.39 Revaluat 0 ion Reserves Networt 2,00 h 9.33 Secured 0 Loans Unsecur 185. ed Loans 78 Total 185. Debt 78

12 mths

12 mths

12 mths

12 mths

1.81949 39.9 8795 4 1.81949 39.9 8795 4 0 0

1.51561 39.9 7233 4 1.51561 39.9 7233 4 0 0

1.2808 5074 1.2808 5074 0

39.9 4 39.9 4 0

1.0295 8311 1.0295 8311 0

39.9 4 39.9 4 0

1.1311 0831 1.1311 0831 0

89.72 0

2,43 0.12 0

92.22 0

2,94 6.30 0

94.49 0

3,76 0.81 0

96.95 0

3,42 5.08 0

97.00 0

91.54 0 8.46335 7189 8.46335 7189

2,47 0.06 0 165. 17 165. 17

93.73 0

2,98 6.24 0

95.77 0 4.2331 5717 4.2331 5717

3,80 0.75 0 78.4 9 78.4 9

97.98 0 2.0233 3447 2.0233 3447

3,46 5.02 0 66.0 3 66.0 3

98.13 0 1.8699 8202 1.8699 8202

6.26776 132 4104 6.26776 132 4104

Total 2,19 Liabilitie 5.11 s Mar '06

100.00

2,63 5.23 Mar '07

100.00

3,11 8.24

100.00

3,87 9.24 Mar '09

100.00

3,53 1.05 Mar '10

100.00

Comm on Size

Commo Mar n Size '08

Comm on Size

Comm on Size

Comm on Size

12 mths Application Of Funds Gross Block Less: Accum. Deprecia tion Net Block Capital Work in Progress Investme nts Inventori es Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advance s Fixed Deposits 1,47 1.97 522. 6 67.06

12 mths

12 mths

12 mths

12 mths

1,80 0.63 23.8074 635. 6295 1

68.33

1,93 8.78 24.1003 782. 6316 52

62.18 25.094 9253

2,51 6.27 942. 56

64.87 24.297 5428

2,75 0.98 1,09 2.20

77.91 30.931 3094

949. 37 44.1 9 2,06 1.89 226. 55 158. 66 23.2 2

43.2493 1325 2.01311 096 93.93

1,16 5.53 189. 92

44.23

1,15 6.26 7.20696 408. 1062 49 74.90 2,56 6.82 10.4575 317. 3122 1 12.7218 297. 4971 44 1.33802 130. 3626 58

37.08 13.100 018 82.32 10.169 198 9.5387 1415 4.1876 1866

1,57 3.71 120. 54 3,36 8.75 326. 83 149. 94 217. 49

40.57 3.1073 0968 86.84 8.4251 0389 3.8651 9009 5.6065 1055

1,65 8.78 48.1 4 3,92 5.71 436. 4 108. 39 1,90 7.21

46.98 1.3633 3385 111.18 12.358 9301 3.0696 2518 54.012 5458

1,97 3.87 10.3206 275. 673 58 7.22788 335. 3796 25 1.05780 35.2 5759 6

408. 43 278. 63

18.6063 646. 5686 09 12.6932 268. 1355 04

24.5174 745. 0455 12 10.1714 196. 0819 37

23.895 5308 6.2974 6267

694. 26 325. 8

17.896 8045 8.3985 5229

2,45 2.00 438. 46

69.441 1011 12.417 2697

135. 5

6.17281 0.52 1385

0.01973 0.51 2623

0.0163 5538

2.08

0.0536 1875

Total CA, Loans & Advance s Deferred Credit Current Liabilitie s Provisio ns Total CL & Provisio ns Net Current Assets Miscella neous Expense s Total Assets

822. 56

37.4723 914. 8179 65

34.7085 942 4536

30.209 3489

1,02 2.14

26.35

2,89 0.46

81.86

0 1,19 2.98 489. 92 1,68 2.90

0 54.35

0 1,17 1.50

0 44.46

0 1,45 5.57

0 46.68

0 1,67 8.93 526. 97 2,20 5.90

0 43.28

0 3,96 5.69 1,02 6.35 4,99 2.04

0 112.31

22.3186 437. 9929 24 76.67 1,60 8.74

16.5921 499. 0012 76 61.05 1,95 5.33

16.026 9896 62.71

13.584 3619 56.86

29.066 425 141.38

860. 34 0

39.1934 801 0

694. 09 0

26.3388 774 0

1,01 3.33 0

-32.50

1,18 3.76 0

-30.52

2,10 1.58 0

-59.52

2,19 5.11

100.00

2,63 5.23

100.00

3,11 8.24

100.00

3,87 9.24

100.00

3,53 1.05

100.00

Continge 73.4 nt 8 Liabilitie s Book Value (Rs) 100. 62

165. 59

56.3 7

100. 54

73.0 4

0 0

123. 7

149. 55

190. 33

173. 52

Common Size Income statement:Mar '06 Comm on Size Mar '07 Comm on Size Mar '08 Comm on Size Mar '09 Com mon Size Mar '10 Com mon Size

12 mths

12 mths

12 mths

12 mths

12 mths

Income Sales 10,09 Turnove 7.17 r Excise 1,377 Duty .96 Net 8,719 Sales .21 Other 160.4 Income 6 Stock 14.97 Adjustm ents Total 8,894 Income .64 Expenditure Raw 6,142 Material .78 s Power & 46.65 Fuel Cost Employe 320.6 e Cost 1 Other 238.3 Manufac 9 turing Expense s Selling 446.9 and 8 Admin Expense s

100.00

11,55 3.47 1,647 .52 9,905 .95 197.6 8 3.2

100.00

12,04 8.30 1,703 .29 10,34 5.01 216.3 14.14 10,54 7.17 7,465 .36 56.55

100.00

13,55 3.23 1,227 .85 12,32 5.38 222.1 4 22.09

74.50 16,79 01 2.62 10.16 702 64.33 308 1.183 924 0.110 453 1,016 .85 15,77 5.77 340.6 1 11.54

0.595 5 0.084 918 0.510 582 0.010 189 0.000 165 0.520 936 0.373 978 0.002 703 0.018 236 0.014 441

13.65 86.35 1.5891 5815 0.1482 59364 88.09 0 60.84

14.26 85.74 1.7110 0111 0.0276 97307 87.48 0 62.80

14.14 85.86 1.7952 74022 0.1173 6096 87.54 0 61.96

10,10 6.83 7,255 .66 52.45

12,56 9.61 8,842 .14 73.7

65.62 16,10 746 4.84 45.32 10,82 337 2.99 0.344 81.05 198 2.365 560.3 562 2 1.758 0 917

0.4620 10643 3.1752 46133 2.3609 58566

0.4539 76165 3.0623 70007 2.4249 8574

0.4693 60823 3.1826 06675 2.5240 90536

353.8 1 280.1 7

383.4 5 304.1 1

448.6 5 354.0 8

4.4267 84931

558.9 9

4.8382 86679

563.2 7

4.6750 99392

669.3 4

3.297 0 959

0.028 812

Miscella neous Expense s Preopera tive Exp Capitalis ed Total Expense s

156.7 9

1.5528 11332

206.1 1

1.7839 66202

190.3 6

1.5799 73938

206.5 4

1.156 1,637 846 .90

0.010 624

7,352 .20 Mar '06 12 mths

72.81

8,707 .19 Mar '07 12 mths

75.36

8,963 .10 Mar '08 12 mths

74.39

10,59 4.45 Mar '09 12 mths

54.24 13,10 685 2.26 Mar '10 12 mths 10.19 668 11.38 061 0.114 954 11.26 565 0.845 702 0 2,661 .97 3,002 .58 20.62 3,023 .20 191.4 7 0

0.448 794

Operatin g Profit PBDIT Interest PBDT

1,381 .98 1,542 .44 15.58

13.69 15.28 0.1543 0066 15.12 1.1351 69557 0

1,201 .96 1,399 .64 13.76 1,385 .88 139.7 8 0

10.40 12.11 0.1190 98418 12.00 1.2098 52971 0

1,367 .77 1,584 .07 13.47 1,570 .60 160.3 2 0

11.35 13.15 0.1118 00005 13.04 1.3306 44157 0

1,753 .02 1,975 .16 13.04 1,962 .12 180.6 6 0

1,526 .86 Deprecia 114.6 tion 2 Other 0 Written Off Profit 1,412 Before .24 Tax Extra0 ordinary items PBT 1,412 (Post .24 Extraord Items) Tax 440.9 Reporte d Net Profit 971.3 4

0.061 953 0.072 142 0.000 709 0.071 432 0.007 205 0

13.99

1,246 .10 0

10.79

1,410 .28 0

11.71

1,781 .46 0

10.41 2,831 995 .73 0 0

0.064 228 0

13.99

1,246 .10

10.79

1,410 .28

11.71

1,781 .46

10.41 2,831 995 .73

0.064 228

4.3665 70039 9.6199 23206

388.2 1 857.8 9

3.3601 16052 7.4253 88217

442.4 967.8 8

3.6718 8732 8.0333 32503

499.7 1,281 .76

3.253 599.9 099 7.166 2,231 852 .83

0.020 009 0.044 218

Total 1,209 Value .42 Addition Preferen 0 ce Dividen d Equity 399.3 Dividen 8 d Corporat 56.01 e Dividen d Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividen d (%) Book Value (Rs) 1,996 .88 48.64

11.98

1,451 .53 0

12.56

1,497 .74 0

12.43

1,752 .31 0

8.923 2,279 482 .27 0 0

0.074 816 0

3.9553 65711 0.5547 09884

339.4 7 57.69

2.9382 51452 0.4993 30504

379.4 1 64.48

3.1490 74973 0.5351 79237

399.3 8 67.87

2.946 2,196 751 .56 0.413 371 259

0.017 497 0.002 974

0 19.78 1,996 .88 42.96

0 17.28 1,996 .88 48.47

0 16.57 1,996 .88 64.19 14.73 1,996 361 .88 0.358 111.7 881 7 0.102 925 0.002 214

0.4817 19135

0.3718 3634

0.4022 9742

1,000 .00 100.6 2

9.90

850

7.3570 97045 1.0706 74005

950

7.8849 29824 1.2412 53953

1,000 .00 190.3 3

7.378 5,500 315 .00 0.742 173.5 406 2

0.043 811 0.006 376

0.9965 16846

123.7

149.5 5

Important takeaways from Hero Honda

1. Hero Honda is a tremendously growing company as it has been increasing its gross block of assets so expansion is the mantra for them 2. General Reserves have been increasing in the case of Hero Honda over the years 3. Secured Loans are not there in Bajaj so no collateral is present 4. Debt is decreasing over the years which is a good thing and is lower than Hero Honda. Hero Honda has been following a strategy of low debt 5. Sales are increasing by nearly 50 % collaborating the belief that there is sufficient demand in the market 6. Operating Profit is increasing which is a very good thing for the company

7. Earnings per share showed a considerable increase in 2010 in comparison to 2009 so Hero Honda is a profitable option for the investors

Observations from Analysis of Financial Statements

Short term lending ratios/Liquidity ratios: Liquidity refers to the ability of a firm to meet its financial obligations in the short-term which is less than a year. Certain ratios, which indicate the liquidity of a firm, are: Current ratio =Current Liabilities/Current Assets The current ratio measures the ability of the firm to meet its current liabilities from the current assets. Higher the current ratio, greater the short-term solvency (i.e. larger is the amount of rupees available per rupee of liability). Quick ratio/Acid-test Ratio =Current Liabilities/Quick Assets Quick assets are defined as current assets excluding inventories and prepaid expenses. The acidtest ratio is a measurement of firms ability to convert its current assets quickly into cash in order to meet its current liabilities. Generally speaking 1:1 ratio is considered to be satisfactory

Bajaj Auto Year Current Ratio Quick Ratio Mar 05 0.79 0.69 Mar 06 0.84 0.76 Mar 07 0.88 0.64 Mar 08 0.84 0.73 Mar 09 0.69 0.55

1 0.8 0.6 0.4 0.2 0 Current Ratio Quick Ratio

Hero Honda Year Current Ratio Quick Ratio Mar 05 0.35 0.22 Mar 06 0.49 0.35 Mar 07 0.57 0.40 Mar 08 0.48 0.32 Mar 09 0.46 0.31

0.6 0.5 0.4 0.3 0.2 0.1 0 5-Mar 6-Mar 7-Mar 8-Mar 9-Mar Current Ratio Quick Ratio

Inferences 1. Even though the liquidity position has decreased gradually for Bajaj with the quick ratio improving from 0.66 in 2005 to 0.55 in 2009 its still less. Even the current ratio for Bajaj is less than 1 indicating the short term lending position for the company is not so strong. 2. On the Contrary with Hero Honda liquidity position has increased gradually for Bajaj with the quick ratio improving from 0.22 in 2005 to 0.31 in 2009 its still less. Even the current ratio for Bajaj is less than 1 indicating the short term lending position for the company is not so strong. 3. The companies are very similar in their liquidity and short lending positions as the data very much complements each other. Credit rating A credit rating estimates the credit worthiness of an individual, corporation, or even a country. It is an evaluation made by credit bureaus of a borrowers overall credit history. A credit rating is also known as an evaluation of a potential borrower's ability to repay debt, prepared by a credit bureau at the request of the lender Black's Law Dictionary. Inferences 1. Currently the credit rating by CRISIL for Hero Honda is AAA and the outlook is stable. This affirms that the company has got a very creditable history of repaying its debt. 2. The case of Bajaj is not so bad as CRISIL has given a rating of AA+ to it so no substantial difference when it comes to debt repaying capacity. Debtors turnover ratio Debtors Turnover Ratio = NetCreditSales /AverageAccountsReceivable(Debtors) The ratio shows how many times accounts receivable (debtors) turns over during the year. If the figure for net credit sales is not available, then net sales figure is to be used. Higher the debtors turnover, the greater the efficiency of credit management. Inventory turnover ratio Inventory Turnover Ratio = CostofGoodsSold /AverageInventory Where, the cost of goods sold means sales minus gross profit. Average Inventory refers to simple average of opening and closing inventory. The inventory turnover ratio tells the efficiency of inventory management.Higher the ratio, more the efficient of inventory management.

Total assets turnover Total Assets turnover ratio = Net.Sales/AverageTotalAssets Total Assets turnover ratio measures how efficiently all types of assets are employed Bajaj Hero Honda Mar Mar Mar Mar Mar Mar Mar Mar Mar 06 07 08 09 10 06 07 08 09 Inventory 34.14 36.88 29.33 28.64 28.87 36.57 38.74 38.25 42.8 Turnover Ratio Debtors Turnover Ratio Total Asset Turnover Average Holding Time 22.85 22.66 21.93 27.45 37.45 111.4 70.26 40.11 32.7

Mar 10 47.5

55.1

1.21

1.32

3.02

2.53

2.77

4.54

4.2

3.99

3.52

3.36

4.89

5.08

5.24

6.39

7.91

8.94

7.96

8.46

10.6

8.27

Inventory Turnover Ratio

50 45 40 35 30 25 20 15 10 5 0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Bajaj Hero Honda

Debtors Turnover Ratio

120 100 80 60 40 20 0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Bajaj Hero Honda

Total Asset Turnover

5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Bajaj Hero Honda

Average Holding Time

12 10 8 6 4 2 0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Bajaj Hero Honda

Net working capital= current assets- current liabilities Net working capital gives us the access of current assets over current liabilities. Bajaj Ma Mar r 08 07 66 238.5 9 6 Hero Honda Mar Mar Mar 08 Mar 09 Mar 10 06 07 694.0 9 1,013. 33 1,183. 76 2,101. 58

Mar 06 Net 795.4 workin 2 g capital

Mar 09 200. 9

Mar 10

1355.0 860.3 3 4

All figures are negative and in Rs Crores

Net Working Capital

2500 2000 1500 Bajaj 1000 500 0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Hero Honda

Inferences As we can see that the net working capital of both the companies is negative throughout indicating that they work on highly credit basis

Conclusion based on ratio analysis

1. Current ratio of Bajaj Auto Ltd is much higher than Hero Honda 2. Quick ratio of Bajaj Auto Ltd is much higher than Hero Honda 3. Since Bajajs current ratio is higher and inventory turnover ratio is lesser than Hero Honda, we can easily infer that operating cycle is slow in case of Bajaj Auto Ltd. in comparison to Hero Honda Ltd. 4. Sales are increasing in both the companies. This is inferred from the high net sales revenue of both the companies coupled with high sales turnover ratio 5. Out of the two short term lending is not required as quick ratio is less than 1 in both the cases 6. Still if we have to make a choice than we should go for Hero Honda because of its faster operating cycle and better activity turnover ratio

Long Term Lending ratios

Return on Equity= Net Income/Shareholder's Equity The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. Interest coverage=EBIT/interest expense A ratio used to determine how easily a company can pay interest on outstanding debt. The interest coverage ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) of one period by the company's interest expenses of the same period: Debt/equity=Total Liabilities/Shareholders Equity A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets.

Credit rating A credit rating estimates the credit worthiness of an individual, corporation, or even a country. It is an evaluation made by credit bureaus of a borrowers overall credit history. A credit rating is also known as an evaluation of a potential borrower's ability to repay debt, prepared by a credit bureau at the request of the lender Black's Law Dictionary. Total Debt to total capital DEBT/Shareholders equity+ Debt A measurement of a company's financial leverage, calculated as the company's debt divided by its total capital. Debt includes all short-term and long-term obligations. Total capital includes the company's debt and shareholders' equity, which includes common stock, preferred stock, minority interest and net debt

Bajaj Mar 06 23.32 Return on equity 0.31 Debt Equity Ratio 428 Interest Cover 280 225 53.63 418.3 590 0.3 0.84 0.84 0.46 0.14 Mar 07 20.9 Mar 08 39.71 Mar 09 32.75 Mar 10 58.63 Mar 06 67.12

Hero Honda Mar 07 60.31 Mar 08 43.48 Mar 09 41.6 Mar 10 43.33

0.07

0.07

0.04

0.02

403.4

711.8

648

664.4

Return on Equity
80 70 60 50 40 30 20 10 0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Bajaj Hero Honda

Debt to Equity
0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Bajaj Hero Honda

Interest Coverage
800.00 700.00 600.00 500.00 400.00 300.00 200.00 100.00 0.00 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Bajaj Hero Honda

Conclusion based on ratio analysis

1. Expansion Rate i.e. Growth rate for Hero Honda (92.3%) is much greater than that of Bajaj (17.6%) so Hero Honda is growing faster than Bajaj so it will need lending in the long run 2. Debt/ Equity ratio of Bajaj is much greater than that of Hero Honda so it has lesser debt than Bajaj 3. Interest Coverage Ratio of Bajaj is lesser than Hero Honda ( nearly 3 times) 4. Operating Profit is sufficient to cover interest in both the companies so long term lending is a good option for both the companies 5. So Out of the two companies Hero Honda would be preferred over Bajaj incase of Long Term Lending

Short Term Investing

The most important parameters measuring the characteristics and soundness of short term nature are: 1. Price to Earnings Ratio (P/E) = Average Share Price/EPS 2. Earnings Per Share (EPS) = PAT/No. of Shares Outstanding 3. Dividend Per Share (DPS) = Total Dividend/ No. of Shares Outstanding 4. Current Ratio = Current Assets/Current Liabilities 5. Operating Profit Margin = Operating Profit/Sales 6. Market Capitalization 7. Beta Ratio

Dividend Per Share

45 40 35 30 25 20 15 10 5 0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 20 20 20 17 22 19 20 Bajaj Hero Honda 40 40 40

Operating Profit Margin %

25 20 15 10 5 0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 16.89 15.96 15.84 14.11 12.29 12.13 21.05

13.22 12.55

14.22 Bajaj Hero Honda

Earnings Per Share

140 120 108.87 100 80 60 40 20 0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 40.59 48.64 52.25 42.96 48.47 45.37 64.19 Bajaj Hero Honda 122.35 117.69

Price/ Earnings Ratio

25 20 15 Bajaj 10 5 0 6-Mar 7-Mar 8-Mar 9-Mar 10-Mar Hero Honda

Beta Values
Bajaj Hero Honda 0.56 0.78

Beta Ratio

Hero Honda

Series1 Bajaj

0.2

0.4

0.6

0.8

Market Capitalization

Bajaj Hero Honda

40440.95 35646.45

All figures in Rs crores

Market Capitalization

Hero Honda

Series1 Bajaj

32000

34000

36000

38000

40000

42000

Conclusion
1. The purpose of short term investment is to buy and book profit as early as possible 2. We need to ascertain risk and return to figure out the better of the two companies when it comes to Short Term Investment perspective 3. Beta Factor of Bajaj is 0.56 and that of Hero Honda is 0.78, So volatility is lesser in case of Bajaj than Hero Honda 4. Earnings per share is higher in case of Bajaj so Bajaj is a more profitable option 5. Price/ Earnings per Share is almost equal in both the companies so no tangible comparison can be made on the basis of this 6. Price/ Book Value ratio is slightly higher in case of Hero Honda 7. Both Companies are overvalued but the earning per share of Bajaj is higher than Hero Honda and to couple it with the lesser volatility of Bajaj makes it a better option to go for Short Term Investment

Long Term Investing

The most important parameters measuring the characteristics and soundness of short term nature are: 1. Return on Capital Employed (ROCE) = Return/Capital (debt + equity) 2. Debt Equity Ratio (D/E) = Long term Debt/Equity 3. Return on Net Worth (RONW) = Return/Equity 4. Interest Coverage Ratio = PBIT/Interest 5. Dividend Payout Ratio = Cash Dividends/PAT 6. Return on Total Assets (ROTA) = PAT/Total Assets Bajaj Auto Ltd. Mar 06 23.3 Mar 07 20.9 Mar 08 39.71 Mar 09 32.75 Mar 10 58.63

Return on Capital employed Return on total Assets Return on Net Worth Dividend Payout Ratio Interest Coverage Ratio

11.05 23.09 41.89 -------

546.96 22.36 38.24 ---------

109.73 47.61 44.78 220.73

116.56 38.92 56.72 54.32

202.4 58.14 39.63 403.61

Hero Honda Mar 06 67.12 Mar 07 60.31 Mar 08 43.48 Mar 09 41.57 Mar 10 43.33

Return on Capital employed Return on total Assets Return on Net Worth Dividend Payout Ratio

24.58 54.27 56.25

25.05 48.34 46.88

123.7 34.13 46.29

149.55 32.14 45.86

190.33 33.72 36.45

Interest Coverage Ratio

484.64

774.98

706.14

705.13

1349.44

Return on Capital Employed

80 70 60 50 40 30 20 10 0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Bajaj Hero Honda

Return on Net Worth

70 60 50 40 Bajaj 30 20 10 0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Hero Honda

Return on Total Assets

600 500 400 300 200 100 0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Bajaj Hero Honda

Dividend Payout Ratio

60 50 40 30 20 10 0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10 Bajaj Hero Honda

Interest Coverage Ratio

1600 1400 1200 1000 800 600 400 200 0 6-Mar 7-Mar 8-Mar 9-Mar 10-Mar Bajaj Hero Honda

Conclusion based on ratio analysis

1. We need to ascertain risk and return to figure out the better of the two companies when it comes to Short Term Investment perspective. 2. First we will try to ascertain the risk by interest coverage ratio and Debt /Equity ratio 3. Interest Coverage Ratio is higher in case of Hero Honda 4. Debt/Equity Ratio of Hero Honda is lesser than Bajaj so risk is lesser in Hero Honda than Bajaj 5. Dividend Per Share ( DPS) is higher in case of Bajaj 6. Dividend Payout Ratio is similar for both the companies 7. Stock Price is overvalued in case of Hero Honda based on Price/ Book Ratio 8. Growth Potential is better in case of Hero Honda. It is growing at 92% in contrast with 17% of Bajaj 9. Efficiency: Fixed Asset is better utilized in case of Hero Honda based on Fixed Asset Turnover 10. Hero Honda is better placed for Long Term Investment than Bajaj.

Strategic Suggestions
1. Both the Companies have been giving dividend to its investors as they are established companies. They should continue to do that. 2. Operational Efficiency is good for both companies so no immediate improvement required on this front. 3. Fixed Asset utilization of Hero Honda is better than Bajaj and hence the operations are smoother in case of Hero Honda, Bajaj needs to revamp a bit to make it as good as Hero Honda and will do well in taking cues from Hero Honda in this regard. 4. Average Holding Days of Inventory for both companies is nearly equal and pretty less. So no immediate problem in this regard too. 5. Both Companies have a Negative Net working Capital so they both function on credit and this can be improved by taking steps to increase the current assets or decrease the current liabilities. 6. Growth Rate of Bajaj is lesser than the aggregate growth rate of the automobile industry and thus it requires expansion and should take necessary steps in this regard 7. The basic working model of both the companies is very similar and both being the leaders in the automobile industry dont have many points of distinction and the companies should look at tackling the stage when maturity might come and profits may stop coming. This might not be of relevance in the near future but in some years this might be a pertinent problem for both of them

Conclusion
The companies are very similar when it comes to the overall data. Out of the two companies Hero Honda would be preferred over Bajaj incase of Long Term Lending. Short term Lending is not required in both the companies as quick ratio is less than 1. Both Companies are overvalued but the earning per share of Bajaj is higher than Hero Honda and to couple it with the lesser volatility of Bajaj makes it a better option to go for Short Term Investment Hero Honda is better placed for Long Term Investment than Bajaj

Bibliography
www.capitaline.com www.moneycontrol.com www.economictimes.com www.bajajauto.com www.herohonda.com www.investopedia.com www.indiainfoline.com www.moneycontrol.com www.wikipedia.org

Appendix

(1) Balance Sheet of Bajaj Auto

Bajaj Auto

Balance Sheet Mar '06

------------------- in Rs. Cr. ------------------Mar '07 Mar '08 Mar '09 Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans 101.18 101.18 0.00 0.00 4,669.55 0.00 4,770.73 0.02 101.18 101.18 0.00 0.00 5,433.14 0.00 5,534.32 22.46 144.68 144.68 0.00 0.00 1,442.91 0.00 1,587.59 6.95 144.68 144.68 0.00 0.00 1,725.01 0.00 1,869.69 0.00 144.68 144.68 0.00 0.00 2,783.66 0.00 2,928.34 12.98

Unsecured Loans Total Debt Total Liabilities

1,467.13 1,467.15 6,237.88 Mar '06

1,602.97 1,625.43 7,159.75 Mar '07

1,327.39 1,334.34 2,921.93 Mar '08

1,570.00 1,570.00 3,439.69 Mar '09

1,325.60 1,338.58 4,266.92 Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets 2,894.22 1,761.22 1,133.00 43.33 5,856.97 272.93 301.55 80.84 655.32 2,282.98 1.25 2,939.55 0.00 1,419.08 2,315.89 3,734.97 -795.42 0.00 6,237.88 3,178.54 1,904.94 1,273.60 107.62 6,447.53 309.70 529.83 62.16 901.69 2,925.24 21.32 3,848.25 0.00 1,683.46 2,833.79 4,517.25 -669.00 0.00 7,159.75 2,994.68 1,726.07 1,268.61 34.74 1,857.14 349.61 275.31 54.74 679.66 1,099.68 1.33 1,780.67 0.00 1,185.19 834.04 2,019.23 -238.56 0.00 2,921.93 3,350.20 1,807.91 1,542.29 106.48 1,808.52 338.84 358.65 135.68 833.17 1,567.09 1.19 2,401.45 0.00 1,378.20 1,224.15 2,602.35 -200.90 183.30 3,439.69 3,379.25 1,899.66 1,479.59 120.84 4,021.52 446.21 272.84 100.20 819.25 2,291.29 1.21 3,111.75 0.00 2,218.06 2,248.72 4,466.78 -1,355.03 0.00 4,266.92

Contingent Liabilities Book Value (Rs)

719.06 471.49

811.66 546.96

1,129.29 109.73

924.96 129.23

818.25 202.40

(2) Cash Flow of Bajaj Auto

Bajaj Auto

Cash Flow

------------------- in Rs. Cr. ------------------Mar '06 Mar '07 Mar '09 Mar '10

12 mths

12 mths

12 mths

12 mths

Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents

1580.74 1072.62

1728.05 681.73

958.09 411.49

2411.13 2737.11

-1087.54

-429.99

-207.66

-2163.62

-11.68

-250.35

-123.03

-608.95

-26.60

1.39

80.80

-35.46

108.69 82.09

82.09 83.48

56.07 136.87

136.87 101.41

(3) Income Statement of Bajaj Auto

Bajaj Auto

Profit & Loss account Mar '06

------------------- in Rs. Cr. ------------------Mar '07 Mar '08 Mar '09 Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost 5,446.62 59.09 282.45 6,969.50 79.34 310.07 6,760.04 69.20 350.09 6,502.10 60.89 366.67 8,187.11 70.35 411.76 8,653.83 1,081.70 7,572.13 458.96 49.01 8,080.10 10,741.91 1,321.67 9,420.24 567.16 -0.90 9,986.50 9,856.66 1,029.51 8,827.15 170.27 67.85 9,065.27 9,310.24 610.07 8,700.17 -4.52 -24.49 8,671.16 12,420.95 607.70 11,813.25 38.76 47.60 11,899.61

Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses

79.50 299.99 198.52 -24.81 6,341.36 Mar '06

74.53 457.17 230.89 -32.05 8,089.45 Mar '07

53.72 390.15 209.63 -23.04 7,809.79 Mar '08

58.10 383.41 226.22 -14.42 7,582.97 Mar '09

73.80 423.87 221.94 -15.67 9,373.16 Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

1,279.78 1,738.74 0.34 1,738.40 191.00 3.62 1,543.78 59.03 1,602.81 479.11 1,101.63 894.74 0.00 404.74 56.76

1,329.89 1,897.05 5.34 1,891.71 190.26 0.39 1,701.06 26.60 1,727.66 490.09 1,237.96 1,119.95 0.00 404.73 68.78

1,085.21 1,255.48 5.16 1,250.32 173.96 1.12 1,075.24 59.32 1,134.56 378.78 755.95 1,049.75 0.00 289.37 49.18

1,092.71 1,088.19 21.01 1,067.18 129.79 0.00 937.39 18.72 956.11 301.61 656.48 1,080.87 0.00 318.30 54.10

2,487.69 2,526.45 5.98 2,520.47 136.45 0.00 2,384.02 24.25 2,408.27 707.50 1,702.73 1,186.05 0.00 578.73 96.12

1,011.84 108.87 400.00 471.49

1,011.84 122.35 400.00 546.96

1,446.84 52.25 200.00 109.73

1,446.84 45.37 220.00 129.23

1,446.84 117.69 400.00 202.40

(4) Balance Sheet of Hero Honda

Mar '06 Mar '07 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 39.94 39.94 0.00 0.00 1,969.39 0.00 2,009.33 0.00 185.78 185.78 2,195.11 Mar '06 12 mths Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses 1,471.97 522.60 949.37 44.19 2,061.89 226.55 158.66 23.22 408.43 278.63 135.50 822.56 0.00 1,192.98 489.92 1,682.90 -860.34 0.00

Mar '08 12 mths

Mar '09 12 mths

Mar '10 12 mths 12 mths

39.94 39.94 0.00 0.00 2,430.12 0.00 2,470.06 0.00 165.17 165.17 2,635.23 Mar '07 12 mths

39.94 39.94 0.00 0.00 2,946.30 0.00 2,986.24 0.00 132.00 132.00 3,118.24 Mar '08 12 mths

39.94 39.94 0.00 0.00 3,760.81 0.00 3,800.75 0.00 78.49 78.49 3,879.24 Mar '09 12 mths

39.94 39.94 0.00 0.00 3,425.08 0.00 3,465.02 0.00 66.03 66.03 3,531.05 Mar '10 12 mths

1,800.63 635.10 1,165.53 189.92 1,973.87 275.58 335.25 35.26 646.09 268.04 0.52 914.65 0.00 1,171.50 437.24 1,608.74 -694.09 0.00

1,938.78 782.52 1,156.26 408.49 2,566.82 317.10 297.44 130.58 745.12 196.37 0.51 942.00 0.00 1,455.57 499.76 1,955.33 -1,013.33 0.00

2,516.27 942.56 1,573.71 120.54 3,368.75 326.83 149.94 217.49 694.26 325.80 2.08 1,022.14 0.00 1,678.93 526.97 2,205.90 -1,183.76 0.00

2,750.98 1,092.20 1,658.78 48.14 3,925.71 436.40 108.39 1,907.21 2,452.00 438.46 0.00 2,890.46 0.00 3,965.69 1,026.35 4,992.04 -2,101.58 0.00

Total Assets Contingent Liabilities Book Value (Rs)

2,195.11 73.48 100.62

2,635.23 165.59 123.70

3,118.24 56.37 149.55

3,879.24 100.54 190.33

3,531.05 73.04 173.52

(5) Cash Flow of Hero Honda

Cash Flow Mar '06 12 mths Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents 1412.24 936.08 -323.49 -471.23 141.36 17.60 158.96 ------------------- in Rs. Cr. ------------------Mar '07 12 mths 1246.10 625.05 -273.13 -474.34 -122.42 158.72 36.30 Mar '08 12 mths 1410.28 1211.78 -781.01 -432.33 -1.56 16.66 15.10 Mar '09 12 mths 1781.46 1359.03 -861.19 -499.93 -2.09 15.19 13.10 Mar '10 12 mths 2831.73 2686.64 -527.63 -2109.31 49.16 13.45 62.61

(6) Income Statement of Hero Honda

Profit & Loss account Mar '06 12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses 6,142.78 46.65 320.61 238.39 446.98 156.79 0.00 7,352.20 Mar '06 12 mths Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax 1,381.98 1,542.44 15.58 1,526.86 114.62 0.00 1,412.24 0.00 1,412.24 440.90 7,255.66 52.45 353.81 280.17 558.99 206.11 0.00 8,707.19 Mar '07 12 mths 1,201.96 1,399.64 13.76 1,385.88 139.78 0.00 1,246.10 0.00 1,246.10 388.21 7,465.36 56.55 383.45 304.11 563.27 190.36 0.00 8,963.10 Mar '08 12 mths 1,367.77 1,584.07 13.47 1,570.60 160.32 0.00 1,410.28 0.00 1,410.28 442.40 8,842.14 73.70 448.65 354.08 669.34 206.54 0.00 10,594.45 Mar '09 12 mths 1,753.02 1,975.16 13.04 1,962.12 180.66 0.00 1,781.46 0.00 1,781.46 499.70 10,822.99 81.05 560.32 0.00 0.00 1,637.90 0.00 13,102.26 Mar '10 12 mths 2,661.97 3,002.58 -20.62 3,023.20 191.47 0.00 2,831.73 0.00 2,831.73 599.90 10,097.17 1,377.96 8,719.21 160.46 14.97 8,894.64 11,553.47 1,647.52 9,905.95 197.68 3.20 10,106.83 12,048.30 1,703.29 10,345.01 216.30 -14.14 10,547.17 13,553.23 1,227.85 12,325.38 222.14 22.09 12,569.61 16,792.62 1,016.85 15,775.77 340.61 -11.54 16,104.84 ------------------- in Rs. Cr. ------------------Mar '07 12 mths Mar '08 12 mths Mar '09 12 mths Mar '10 12 mths

Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

971.34 1,209.42 0.00 399.38 56.01

857.89 1,451.53 0.00 339.47 57.69

967.88 1,497.74 0.00 379.41 64.48

1,281.76 1,752.31 0.00 399.38 67.87

2,231.83 2,279.27 0.00 2,196.56 371.00

1,996.88 48.64 1,000.00 100.62

1,996.88 42.96 850.00 123.70

1,996.88 48.47 950.00 149.55

1,996.88 64.19 1,000.00 190.33

1,996.88 111.77 5,500.00 173.52