project reprot on automobile sector

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A PROJECT REPORT ON “COMPARATIVE FINANCIAL ANALYSIS OF TWO WHEELER COMPANIES (HERO HONDA LTD., TVS MOTORS LTD AND BAJAJ AUTO LTD.) IN THE AUTOMOBILE INDUSTRY” Submitted by: SUMIT HANDA Enroll No: 1661563908 MBA – IV Sem. (Submitted in Partial Fulfillment of award of MBA Degree) To N.I.E.C. BUSINESS SCHOOL FC-26, Shastri Park, New Delhi-110053 (Affiliated to GGSIP University) 1

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Page 1: Project Reprot on Automobile Sector

A PROJECT REPORT

ON

“COMPARATIVE FINANCIAL ANALYSIS OF TWO WHEELER COMPANIES (HERO HONDA LTD., TVS MOTORS LTD AND BAJAJ AUTO LTD.)

IN THE AUTOMOBILE INDUSTRY”

Submitted by:

SUMIT HANDAEnroll No: 1661563908

MBA – IV Sem.

(Submitted in Partial Fulfillment of award of MBA Degree)

To

N.I.E.C. BUSINESS SCHOOLFC-26, Shastri Park, New Delhi-110053

(Affiliated to GGSIP University)

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INDEX

S.NO. PARTICULARS

1. ACKNOWLEDGEMENT

2. PREFACE

3. OBJECTIVE OF THE STUDY

4. INTRODUCTION

5. COMPANY PROFILE

6.

RESEARCH METHODOLOGY

RESEARCH DESIGN DATA COLLECTION LIMITATIONS OF THE STUDY

7. DATA FINDINGS AND ANALYSIS

8. CONCLUSION

9. BIBLIOGRAPHY

10. ANNEXURE

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ACKNOWLEDGEMENT

The success of any project study depends upon a number of factors among which the proper guidance from the faculty in the institute plays an important role.

I take this opportunity to convey my sincere thanks and gratitude to all those who have directly or indirectly helped and contributed towards the completion of this project.

I take here a great opportunity to express my sincere and deep sense of gratitude to H.O.D. for giving us an opportunity to work on this project. The support & guidance from madam, was of great help & it was extremely valuable. I would like to express my gratitude to madam for her constant support and encouragement. Without his outright support and prompt response, it would not be possible to do any justice as well as bring authenticity to the project.

(SUMIT HANDA)

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EXECUTIVE SUMMARY

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The primary purpose of this report is to identify and analyze the dominant companies in the automobile industry and determine the strongest performer as an investment opportunity. Hero Honda Ltd., TVS Motors Ltd. And Bajaj Auto Ltd. has been competing in the automobile sector for over a century and both companies enjoy a high degree of brand consciousness globally. In this project, the comparison among these companies has been done using the following criteria: (a) Key Ratios (b) Cash Flow Statement

For the purpose of my report, all relevant financial data on these companies was derived from the reliable and authenticated website and the accompanying annual reports (2007-09) of these companies. Hero Honda Ltd. revenues have been generally outpaced by Bajaj auto Ltd. revenues with notable exception in 2000 when both companies approached parity in terms of revenue. In the year 2005-2006, the annual production of two-wheelers in India stood at around 7600801 units. The trend of owning two-wheelers is due to a variety of facts peculiar to India. One of the chief factors is poor public transport in many parts of India. Additionally, two-wheelers offer a great deal of convenience and mobility for the Indian family. Currently, India is the second largest producer of two-wheelers in the world.

The latest trend in the two-wheeler market is the introduction of electrically operated vehicles from a range of manufacturers such as Indus and Hero. Currently, the motorcycle market is witnessing a demand for higher volume engines. Previously, the 100cc bikes were very popular owning to the high fuel efficiency offered. However, the market is maturing fast. Sensing this movement, Bajaj has introduced the Bajaj Pulsar, with 150, 180 and 200 cc engines with Dual Twin Spark Ignition (DTSi) technology. The Honda Activa is a motor scooter made by Honda Motorcycle and Scooter India. It was launched in India in 2000. It is a 102 cc, 7 bhp (5.2 kW) scooter. The mileage averages around 40 km/l. It has been quite successful in India. The vehicle has the option of kick- and self-starts.

The comparative analysis of these companies has been done in very appropriate manner. All data findings and analysis in this project has been done on the basis of these automobile companies’ annual reports. The Conclusion has been stated in the project along with Bibliography and annexure. The project depicts the financial comparison among the various companies in the automobile industry.

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OBJECTIVEOF THESTUDY

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The basic objective of doing the project is to analyze the financial statements of various automobile companies and evaluate their performance in the market over the last 3 years (2006-07, 2007-08, and 2008-09)

The objective of this project is to describe the growth trends in the automobile industry and to present an analysis of different parameters by studying the relationship among the various financial factors as disclosed in the financial statements of various companies in the Indian automobile market.

Major objectives are:

1. Know the Financial Position : The basic objective of studying the financial statements of the company is to know the financial position of the company.

2. Know the Borrowing & Liquidity Position : The objective is to know the borrowings of the company as well as the liquidity position of the company.

Minor Objectives are:

1. Study the Current Assets & Liability Position: The objective of study is to review the position of the current assets and current liabilities of the company during the relevant years.

2. Help in planning: Financial Analysis helps in planning and forecasting. Over a period of time, a firm or industry develops certain norms that indicate future success & failure. If the relationship changes in firm’s data over different time periods, the various tools of financial analysis such as ratios may provide clues on trends and future problems.

3. Represent Inter-firm Comparison: Financial Analysis provides the data for inter-firm comparison. Ratios highlight the factors associated with successful and unsuccessful firms. They also reveal strong firms & weak firms, over-valued and under-valued firms. The various tools of financial analysis provides inter-firm and intra-firm comparison.

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INTRODUCTION TO THE AUTOMOBILE SECTOR

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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 Indian automobile sector by the MNCs.

Potential of the Automobile industry

In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to export 250,000 vehicles manufactured in its India plant by 2011. Similar plans are for General Motors.

Turnover of Automobile Manufacturers(In USD Million)

Year In USD Million

2002-03 14,880

2003-04 16,544

2004-05 20,896

2005-06 27,011

2006-07 34,285

The figures show that the automobile sector in India has been growing robustly. The market shares of the different types of vehicles will clearly depict the demand pattern in this sector.

Domestic Market Share for 2008-09

Passenger Vehicles 15.96%

Commercial Vehicles 3.95%

Three Wheelers 3.6%

Two Wheelers 76.49%

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OVERVIEW OF TWO WHEELERS

Talking of the two wheeler industry, the names that effortlessly come to us is Bajaj Auto, Hero Honda, TVS Motor, Yamaha Motor, Kinetic and others. The two wheeler segment has played an important role in giving a push to the automobile industry in India. In fact, the production, sales and exports of the two wheelers is a fair indication of the growing importance that it enjoys in this country's manufacturing economy. An overview of the two wheeler industry makes this clear that the two wheelers are among the most sought after automobiles in India for some time and the trend is likely to stay for a while. The economic growth, need for better conveyance and gradually improving road infrastructure coupled with better credit and financing options, have acted as a major catalyst in encouraging the growth and development of the two wheeler segment in India. Further, the new and improved features on the two wheelers, their stylish and trendy looks and a rage with the country's youth who form a substantial influence in determining the consumer behavior have ensured that the two wheelers remain on top of the automobile industry's agenda in India. Some of the features that deserve attention in respect of the Indian two wheeler segment are as mentioned:

The total sale of two wheelers in India has touched a figure of 7.86 million units by March, 2007, up 11.42% from the previous fiscal figures of 7.05 million. Production during the period reached 8.63 million units.

The production of two wheelers in India is expected to reach a staggering 17.85

million units by 2011-12, more than double of the current production level.

The two-wheeler production capacity is to reach 22.31 million units in 2011-12 compared with 10.78 million in 2006-07.

Total investment for new capacity generation in two-wheeler segment is likely to be more than $2.2 billion (INR10, 000 crore).

Hero Honda, Bajaj Auto and TVS Motor remain the leading players in terms of sales and popularity of their two wheelers.

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The two-wheeler industry in India has grown rapidly in the country since the announcement of the process of liberalization in 1991 by finance minister Dr. Manmohan Singh, now Prime Minister of India. Previously, there were only a handful of two-wheeler models available in the country. Currently, India is the second largest producer of two-wheelers in the world. It stands next only to China and Japan in terms of the number of two-wheelers produced and the sales of two-wheelers respectively.

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COMPANYPROFILE

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HERO HONDA MOTORS LIMITED

Hero Honda Motors Limited, based in Delhi, India is a joint venture between the Hero Group of India and Honda Motors of Japan. It has been referred to as the world's biggest manufacturer of 2-wheeled motorized vehicles since 2001, when it produced 1.3 million motorbikes in a single year. During the fiscal year 2008-09, the company has sold 3.28 million bikes and the net profit of the company stood at Rs. 1281.7 crore, up 32% from the previous fiscal year. The Hero Honda story began with a simple vision – the vision of a mobile and an empowered India, powered by Hero Honda. This vision was driven by Hero Honda’s commitment to customer, quality and excellence, and maintains the highest standards of ethics and societal responsibilities. Twenty five years and 25 million two wheelers later, Hero Honda is closer to fulfilling this dream. Hero Honda has been the largest two wheeler company in the world for eight consecutive years. The company crossed the ten million unit milestone over a 19-year span. In the new millennium, Hero Honda has scaled this to 15 million units in just five years! In fact, during the year in review, Hero Honda sold more two wheelers than the second, third and fourth placed Two-wheeler Company put together. With Hero Honda, the domestic two wheeler market was able to show positive growth during the year in review. Without Hero Honda, the domestic market would have actually shrunk. As one of the world's technology leaders in the automotive sector, Honda has been able to consistently provide technical know-how, design specifications and R&D innovations. This has led to the development of world class, value - for- money motorcycles and scooters for the Indian market. On its part, the Hero Group has taken on the singular and onerous responsibility of creating world-class manufacturing facilities with robust processes, building the supply chain, setting up an extensive distribution networks and providing insights into the mind of the Indian customer. In the process, Hero Honda is recognized today as one of the most successful joint ventures in the world. It is therefore no surprise that there are more Hero Honda bikes on this country's roads than the total population of some European countriesput together! The best is yet to come. During the year in review, Hero Honda powered its way in a market that, for all practical purposes, was feeling the full effects of the economic slowdown in India. With an economic recovery now clearly on the cards, Hero Honda is all set to ride into another summit. As Brijmohan Lall Munjal, the Chairman, Hero Honda Motors briefly puts it, "We pioneered India's two wheeler industry, we have steered it through difficult times; now it is our responsibility to set the pace again.''

“Hero” is the brand name used by the Munjal brothers for their flagship company Hero Cycles Ltd. A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda company, India. During the 1980s, the company introduced motorcycles that were popular in India for their fuel economy and low cost. A popular advertising campaign based on the slogan 'Fill it - Shut it - Forget it' that emphasised the motorcycle's fuel efficiency helped the company grow at a double-digit pace since inception. Hero Honda has three manufacturing facilities based at Dharuhera and Gurgaon in Haryana and at Haridwar in Uttarakhand. These plants together are capable of churning out 3.9 million bikes per year. Hero Honda's has a large sales and service network with over 3,000 dealerships and service points across India. Hero Honda's customer loyalty program, the Hero Honda Passport Program, claims to be one

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of the largest programs of its kind in the world with over 3 million members. The company's most popular model is the Hero Honda's Splendor, which is the world's largest-selling motorcycle, selling more than one million units per year.

In the mid-1980s, the Indian government regulations changed and permitted foreign companies to enter the Indian market through minority joint ventures. The two-wheeler market changed with four Indo-Japanese joint ventures: Hero Honda, TVS Suzuki, Bajaj Kawasaki and Kinetic Motor Company (Kinetic Honda). The entry of these foreign companies changed the Indian market dynamics from the supply side to the demand side. With a larger selection of two-wheelers on the Indian market, consumers started to gain influence over the products they bought and raised higher customer expectations. The industry produced more models, styling options, prices, and different fuel efficiencies. The foreign companies new technologies helped make the products more reliable and with better quality. Indian companies had to change to keep up with their global counterparts.

MISSION

Hero Honda’s mission is to strive for synergy between technology, systems and human resources, to produce products and services that meet the quality, performance and price aspirations of its customers. At the same time maintain the highest standards of ethics and social responsibilities. This mission is what drives Hero Honda to new heights in excellence and helps the organization forge a unique and mutually beneficial relationship with all its stake holders.

PRODUCTS

Achiever Ambition 133, Ambition 135 CBZ , CBZ Star, CBZ Xtreme CD 100, CD 100 SS, CD Dawn, CD Deluxe, CD Deluxe (Self Start) Glamour, Glamour F.I Hunk Joy Karizma , Karizma R, Karizma ZMR FI Passion, Passion+, Passion Pro Pleasure Street Splendor , Splendor+, Splendor+ (Limited Edition), Super Splendor, Splendor

NXG

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TVS MOTORS LIMITED

TVS Motor is the third largest two-wheeler manufacturer in India and ranks among the top ten globally. It is the first company in the world to be honored with The Deming Prize for Total Quality Management. The company was the first in India to launch 2-seater 50cc moped and 100cc Indo-Japanese motorcycles. At present TVS Apache, TVS Victor, TVS Scooty, TVS Centra and TVS Fiero are the popular bikes in Indian market. TVS Group is one of India's oldest business groups. It is a giant conglomerate with presence in diverse fields like automotive component manufacturing, automotive dealerships and electronics. Today, there are over thirty companies in the TVS Group, employing more than 40,000 people worldwide and with a turnover in excess of USD 2.2 billion. TVS Group originated as a transport company in 1911. TV Sundaram Iyengar and Sons Limited are the parent and holding company of the TVS Group. TVS has been at the forefront in bringing a revolution in the way personal commutation was happening, way back in the 1980s. Beginning with launching a simple, easy-to-use moped for the middle class in India in the 1980s to launching 7 new bikes in a single day (first time in the history of the automotive industry in the world), TVS has often taken the unbeaten path to innovation.

TVS Motor Company has its origin in Sundaram Clayton Limited, Moped Division, started in 1980. The factory was started in Hosur, Tamil Nadu in southern India. The first product launched was a 50 cc moped, which appealed to the masses because of its capability to carry two people. In the same location, the same promotors started another company in 1984, in collaboration with Suzuki Motor Corporation of Japan, for the manufacture of 100 cc motorcycles under the brand name of Ind-Suzuki Motorcycles. Subsequently in the moped division was bought by Ind Suzuki Motorcycles in 1987 and the company changed its name to TVS Suzuki Ltd. Even though the company started producing all kinds of two wheelers like mopeds, scooters and motorcycles, the collaboration with Suzuki continued for the motorcycles only. The collaboration with Suzuki Motor Corporation ended in 2001 and since then the name of the company changed to TVS Motor Company. The company now develops all types of two-wheelers through its own in house R&D facility and manufactures in three locations in India, Hosur in Tamil Nadu, Mysore in Karnataka and Baddi in Himachal Pradesh. It has recently started a new manufacturing plant in Indonesia to cater to the South East Asian market. The Chairman and Managing Director of the Company is Mr. Venu who is the grandson of TV Sundaram Iyengar.

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MISSION

We are committed to being a highly profitable, socially responsible, and leading manufacturer of high value for money, environmentally friendly, lifetime personal transportation products under the TVS brand, for customers predominantly in Asian markets and to provide fulfillment and prosperity for employees, dealers and suppliers.

PRODUCTS

Motorcycles

TVS MAX 100 TVS Shogun TVS Apache (150 cc,13.7 Ps @8500rpm) TVS Apache RTR 160 TVS Apache RTR 160 EFI (Electronic Fuel Injection) TVS Apache RTR 180 (17.3ps) TVS Centra TVS Fiero TVS Fiero F2 TVS Fiero FX TVS MAX 100 TVS MAX R 100 TVS Star TVS Star City TVS Star Sport TVS Victor (110 cc) TVS Victor EDGE (125 cc) TVS Victor GLX (125 cc)

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BAJAJ MOTORS LIMITED

Bajaj Motors Limited was incorporated in 1986 and started its commercial production in 1989. BAJAJ MOTORS have started in machining unit and backward integrated in Forgings of Auto Components. The Company is engaged into manufacturing of auto components mainly precision engine components for Two Wheelers, Four Wheelers, Tractors and other Heavy Machine Equipments. Bajaj Auto Limited is India's largest manufacturer of scooters and motorcycles. The company generally has lagged behind its Japanese rivals in technology, but has invested heavily to catch up. Its strong suit is high volume production; it is the lowest-cost scooter maker in the world. Located on the Delhi-Jaipur Highway on 39-40 milestones, Bajaj Motors Limited is ISO 9001:2000 certified & recommended for TS-16949, ISO-14001 certifications from TUV GmBH, Germany. Since its inception in 1986, BAJAJ MOTORS has its specialization in machining for Auto components specifically Precision Engine Components. The Bajaj Group was formed in the first days of India's independence from Britain. Its founder, Jamnalal Bajaj, had been a follower of Mahatma Gandhi. After Jamnalal's death, Jamnalal Bajaj was succeeded by his eldest son, 27-year-old Kamalnayan, in 1942. Kamalnayan, however, was preoccupied with India's struggle for independence. After this was achieved, in 1947, Kamalnayan consolidated and diversified the group, branching into cement, ayurvedic medicines, electrical equipment, and appliances, as well as scooters. The precursor to Bajaj Auto had been formed on November 29, 1945 as M/s Bachraj Trading Ltd. It began selling imported two- and three-wheeled vehicles in 1948 and obtained a manufacturing license from the government 11 years later. The next year, 1960, Bajaj Auto became a public limited company. Rahul Bajaj reportedly adored the famous Vespa scooters made by Piaggio of Italy. In 1960, at the age of 22, he became the Indian licensee for the make; Bajaj Auto began producing its first two-wheelers the next year. Rahul Bajaj became the group's chief executive officer in 1968 after first picking up an MBA at Harvard. The company had an annual turnover of Rs 72 million at the time. By 1970, the company had produced 100,000 vehicles. Bajaj Auto Ltd. is the largest exporter of two and three wheelers. With Kawasaki Heavy Industries of Japan, Bajaj manufactures state-of-the-art range of two-wheelers. The brand, Pulsar is continually dominating the Indian motorcycle market in the premium segment. Its Discover DTSi is also a successful bike on Indian roads. Since 1986, there is a technical tie-up of Bajaj Auto Ltd. with Kawasaki Heavy Industries of Japan to manufacture state of-art range of latest two-wheelers in India. Bajaj Auto is a major Indian automobile manufacturer started by a Rajasthani merchant. It is world's fourth largest manufacturer of two-wheelers and India's second largest two wheeler manufacturer and the world's 4th largest two- and three-wheeler maker. It is based in Pune, Maharashtra, with plants in Akurdi and Chakan (Pune), Waluj (near Aurangabad) and Pantnagar in Uttaranchal. Bajaj Auto makes and exports motor scooters, motorcycles and the auto rickshaws.

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MISSION

Focus on value based manufacturing

Fostering team work & enhancing the capability of the team

Continual Improvement

Total Elimination of wastes

Pollution Free & Safe Environment

PRODUCTS

1972 - Bajaj Chetak 1976 - Bajaj Super 1977 - Rear engine Autorickshaw 1981 - Bajaj M-50 1986 - Bajaj M-80, Kawasaki Bajaj KB100 1990 - Bajaj Sunny 1991 - Kawasaki Bajaj 4S Champion 1994 - Bajaj Classic 1995 - Bajaj Super Excel 1997 - Kawasaki Bajaj Boxer, Rear Engine Diesel Autorickshaw 1998 - Kawasaki Bajaj Caliber, Bajaj Legend, India's first four-stroke scooter,

Bajaj Spirit 2000 - Bajaj Saffire 2001 - Eliminator, Bajaj Pulsar 2003 - Caliber115, Bajaj Wind 125, Bajaj Pulsar 2004 - Bajaj CT 100, New Bajaj Chetak 4-stroke with Wonder Gear, Bajaj

Discover DTS-i 2005 - Bajaj Wave, Bajaj Avenger, Bajaj Discover 2006 - Bajaj Platina 2007 - Bajaj Pulsar-200 (Oil Cooled), Bajaj Kristal, Bajaj Pulsar 220 DTS-Fi

(Fuel Injection) , XCD 125 DTS-Si 2008 - Bajaj Discover 135 DTS-i - sport (Upgrade of existing 135cc model) 2009 - Bajaj Pulsar 135(December 9)[6](January) Bajaj XCD 135 cc , Bajaj Pulsar

150 DTS-i UG IV, Bajaj Pulsar 180 DTS-i UG IV, Bajaj Pulsar 220 DTS-i , Bajaj Discover 100 DTS-Si.

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RESEARCH METHODOLOGY

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Research is a diligent and systematic inquiry or investigation into a subject in order to discover or revise facts, theories, applications etc. Methodology is system of methods followed by particular discipline. Thus, Research Methodology is the way how we conduct our research or the way in which the data are collected for the research study.

For my project I have considered most of the finance related books. The best websites are considered which gives all the efficient and effective information. References for the project are from the websites and books and the company’s annual reports. It is assured that the project has been completed with full dedication, sincerity and required intensity of hard work. All the data is gathered from the secondary methods of data collection. Like mostly the books and internet facilities, i.e., websites are used. All the books and websites used are mentioned in bibliography.

RESEARCH DESIGN

The descriptive form of research method is adopted for the study.

Descriptive research is a research in which specific predictions has been made. Descriptive research, also known as statistical research, describes data and characteristics about the population or phenomenon being studied. Descriptive research answers the questions who, what, where, when and how.

The major purpose of descriptive research is the description of the state of affairs of the company as it exits at present.

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DATA COLLECTION

SOURCES OF DATA

The study undertaken to be based on the secondary data i.e. data from authenticated websites, company’s annual report and books for the latest updates just to gain an insight for the views of various experts.

METHODS OF DATA COLLECTION

This study is based on the annual reports of various automobile companies. Hence, the information related to the profitability, short - term and long - term solvency and turnover were very much required for attaining the objectives of the present study. But at the same time, information related to the past performance and present performance of the company and its cash reserves information is also essential for attaining the objectives of the study.

TOOLS APPLIED

To have a meaningful analysis and interpretation of various data collected, the following tools were used for this study:

Ratio Analysis

Ratio Analysis is a study of the relationships between financial variables. Ratios of one firm are often compared with the same ratios of similar firms or of all firms in a single industry.

Cash Flow Statements

Cash Flow Statement is a statement that shows flow of cash and cash equivalents during a period.

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LIMITATIONS OF THE STUDY

Lack of experience on the part of the researchers.

Lack of enthusiasm on the part of officials to provide the required data.

Uniformity of Content and Mode of preparation of financial statements was not there among the various companies. So it became difficult to compare among each other.

Limited Time Span

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DATA FINDINGS AND

ANALYSIS

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Analysis of Financial Statements/Financial Analysis/Financial Statements Analysis

Financial Statements are the summarized statements of accounting data produced at the end of the accounting process by an enterprise through which it communicates accounting information to the external users. The external users can be investors, lenders, suppliers and trade creditors, customers, government and their agencies, public at large and employees. Analysis of Financial Statements is a systematic process of the critical examination of the financial information contained in the financial statements in order to understand and make decisions regarding the operations of the firm.

Customarily, a set of financial statements include:

(i) Balance Sheet(ii) Profit and Loss Account(iii) Schedules and notes forming part of the Balance Sheet and Profit & Loss Account

This depicts that:

(i) Balance Sheet is a statement of assets and liabilities indicating the financial position of an enterprise at a given date.

(ii) Profit and Loss Account shows the net result of business operations during an accounting period.

(iii) Schedules have the details of amounts in the Balance Sheet and Profit and Loss Account, while the Notes are the statement of accounting policies adopted and explanation of material information.

Essentials of Financial Statements

1. Accurate information2. Understandability3. Comparable4. Verifiable5. Relevant6. Timeliness

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RATIO ANALYSIS

A Ratio gives the mathematical relationship between one variable and another. Ratio analysis helps in valuing the firm in quantitative terms. Ratios are classified as follows:

1. Liquidity Ratios2. Turnover Ratios3. Profitability Ratios4. Ownership Ratios

1. Liquidity Ratios

Liquidity implies firm’s ability to pay its debts in short run. This ability can be measured by Liquidity Ratios. Current Ratio and Quick Ratio are the two ratios which directly measure Liquidity. Receivables turnover Ratio and Inventory Turnover Ratio are the two ratios which in directly measure Liquidity.

A. Current ratio = Current AssetsCurrent Liabilities

Current assets which are converted into cash within one year.Current liabilities are liabilities which are to be repaid within a period of 1 year.

Current Assets Current Liabilities

Cash Loans And Advances

Marketable Securities Trade Creditors

Debtors O.S. Expenses

Inventories Provisions

Loans and Advances Pre Received incomes

Prepaid Expenses

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O/S Incomes

IDEAL RATIO = 2:1

B. Quick ratio or Liquid ratio or Acid Test ratio = Quick Assets/Liquid AssetsCurrent Liabilities

Quick Assets = Current Assets – Inventories- Prepaid expenses

Ratio of quick assets to quick liabilities. Quick assets which can be converted into cash very quickly. Quick liabilities are liabilities which have to be necessarily paid with in 1 year.

IDEAL RATIO = 1:1

2. Turnover Ratios (Activity Ratios)

The turnover ratio is a process of measuring the number of times that holdings are sold within a specified period of time. Generally, a turnover ratio is calculated to cover either a calendar year or a period encompassing twelve consecutive calendar months. The same formula may be used to evaluate shorter or longer periods of time.

A. Fixed Assets Turnover Ratio = Cost of Sales Average Net Fixed Assets

B. Inventory Turnover Ratio = Cost of goods Sold Average Inventory

It indicates no. of times stock has been turned into sales in a year.

Ideal Ratio = 8

Cost of goods sold = Sales – gross profit

Average Inventory = Opening Stock + Closing Stock 2

Stock Conversion Period = Cost of goods Sold * No of days in a year/Average Inventory

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3. Profitability or Efficiency Ratios

These Ratios measure the efficiency of forms activities and its ability to generate profits.

(i) Gross Profit Margin Ratio (ii) Net Profit Margin Ratio(iii) Return On Equity

These are elucidate as follows:

(i) Gross Profit Margin Ratio = Revenue – Cost of Sales - DepreciationRevenue

Gross Profit = Sales – Cost of goods soldNet Sales = Sales – Sales Return - Excise Duty There is no Ideal Ratio. Higher the ratio better will be the performance of the business.

(ii) Net Profit Margin Ratio = Net Profit Net Sales

It measures the overall efficiency of production, administration, selling, financing, pricing and tax management. It shows the result of overall operation of the firm.

(iii) Return on Equity = Net Income Average Equity

Net income = PAT (Profit after Tax) is an important profit indicator to share holders of the firm.

4. Ownership Ratios/ Capital Structure Ratios

The capital structure ratio shows the percent of long term financing represented by long term debt. In finance, capital structure refers to the way a corporation finances its assets through some combination of equity, debt, or hybrid securities.

a) Debt Equity Ratio = DebtEquity

= Long Term Liabilities + Current LiabilitiesShare Holders Funds

Ratio 2 or Less – Exposes Its Creditors Lesser RiskRatio >2 – Exposes Its Creditors Higher Risk

b) Debt Assets Ratio = Debt

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Assets

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HERO HONDA LTD.

Particulars  Mar ' 09 Mar ' 08 Mar ' 07

Profitability Ratios (%)

Gross profit margin 12.75 11.67 10.72

Net profit margin 10.39 9.35 8.66

Return on net worth 32.09 24.23 21.47

Leverage Ratios

Debt Equity ratio 0.02 0.04 0.06

Debt Assets ratio 0.02 0.04 0.06

Liquidity Ratios

Current ratio 0.46 0.48 0.56

Quick ratio 0.31 0.31 0.39

Turnover Ratios (times)

Fixed assets turnover ratio 7.74 7.73 9.36

Inventory turnover ratio 32.84 30.29 34.69

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TVS MOTORS LTD.

Particulars Mar ' 09 Mar ' 08 Mar ' 07

Profitability Ratios (%)

Gross profit margin 0.49 (1.53) 1.35

Net profit margin 0.85 0.98 1.71

Return on net worth 1.31 1.38 2.79

Leverage Ratios

Debt Equity ratio 1.11 0.81 0.78

Debt Assets ratio 0.52 0.44 0.43

Liquidity Ratios

Current ratio 1.15 1.07 1.04

Quick ratio 0.68 0.46 0.51

Turnover Ratios (times)

Fixed assets turnover ratio 3.52 3.50 4.93

Inventory turnover ratio 13.31 9.61 11.86

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BAJAJ AUTO LTD.

Particulars Mar ' 09 Mar ' 08 Mar ' 07

Profitability Ratios (%)

Gross profit margin 11.06 10.32 12.09

Net profit margin 7.52 8.56 13.13

Return on net worth 4.52 5.22 12.22

Leverage Ratios

Debt Equity ratio 0.83 0.84 0.29

Debt Assets ratio 0.45 0.45 0.22

Liquidity Ratios

Current ratio 0.92 0.88 0.85

Quick ratio 0.73 0.64 0.75

Turnover Ratios (times)

Fixed assets turnover ratio 5.41 6.09 6.72

Inventory turnover ratio 22.10 23.48 27.77

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GRAPHICAL REPRESENTATION AND INTERPRETATION

1. CURRENT RATIO

From the year 2006-07 to 2008-09, the current ratio of TVS Motors is quite good among both Hero Honda and Bajaj Auto. This shows that the company can successfully pay off its debt while at the same time still have cash left over to continue operating.

2. QUICK RATIO or LIQUID RATIO or ACID TEST RATIO

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From the year 2006-07 to 2008-09, the Liquid ratio of Bajaj Auto is quite good among both Hero Honda and TVS Motors. This shows that the company can successfully meet its current liability.

3. DEBT EQUITY RATIO

Debt-to-Equity Ratio of Hero Honda Ltd. is 0.02 times for the year 2008-2009 which means that the company is not using its debt instruments, while it is relying more on the shareholders capital. This also indicates the company’s assets are primarily supplied with equity. This graphical representation indicates that Hero Honda company has employed 0.02 times long-term debts that of the shareholders funds.

4. DEBT ASSETS RATIO

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The Debt Assets Ratio of TVS Motors Ltd. is higher among all other players for the years (2006-07, 2008-09) which indicate the claims of investors against the assets are higher.

5. GROSS PROFIT RATIO

Gross Profit Ratio of Hero Honda Ltd. is 12.75% for the year 2008-2009, means that Hero Honda Ltd. is making a profit before interest, depreciation and tax of 12.75%. Hero Honda Ltd. has been able to generate gross profit more than the industry standards and also among all other major players in two wheeler segment of the automobile industry.

6. NET PROFIT RATIO

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Net Profit Ratio of Hero Honda Ltd. is 10.39% for the year 2008-2009 which is higher in comparison with the other players, so this goes to show the efficiency of the operation of the company. But, Net Profit Ratio of TVS Motors is 0.85% for the year 2008-2009, which is lower in comparison with the other players. This shows that TVS Motors had to pay other indirect expenses which led to fall in the net profit. In overall comparison of 3years, the net profit of Bajaj Auto Ltd. is declining at a rapid pace.

7. RETURN ON NET WORTH

Return on Net Worth of TVS Motors Ltd. is 1.31% for the year 2008-2009, which is lower than the other players and therefore shows a profit of 1.31 times per rupee invested by the investors. But, Return on net worth of Hero Honda Ltd. is outstanding. This depicts that the company is showing tremendous performance in the competitive market.

8. FIXED ASSETS TURNOVER RATIO

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The fixed asset turnover ratio measures the company's effectiveness in generating sales from its investments in plant, property, and equipment. Generally speaking, the higher the ratio, the better, because a high ratio indicates the business has less money tied up in fixed assets for each rupee of sales revenue. A declining ratio may indicate that the business is over-invested in plant, equipment, or other fixed assets. For these years, this ratio of all companies is low as compared to the industry or past years of data for the firm, it means that sales are low or the investment in plant and equipment is too much. But, in overall comparison among these companies, Hero Honda Ltd. shows good results.

9. INVENTORY TURNOVER RATIO

Inventory turnover ratio measures the velocity of conversion of stock into sales. Usually a high inventory turnover/stock velocity indicates efficient management of inventory because more frequently the stocks are sold; the lesser amount of money is required to finance the inventory. A low inventory turnover ratio indicates an inefficient management of inventory. A low inventory turnover implies over-investment in inventories, dull business, poor quality of goods, stock accumulation, accumulation of obsolete and slow moving goods and low profits as compared to total investment. The inventory turnover ratio is also an index of profitability, where a high ratio signifies more profit; a low ratio signifies low profit. Sometimes, a high inventory turnover ratio may not be accompanied by relatively high profits. Similarly a high turnover ratio may be due to under-investment in inventories. Hence, high inventory turnover ratio may indicate that the inventory is too low. This often can result in stock shortages. Here, Hero Honda Ltd. has High Inventory Turnover ratio for 3 consecutive years, whereas TVS Motors Ltd. has low inventory turnover ratio for 3 consecutive years and Bajaj Auto Ltd. also shows considerable results, but has less stock turnover ratio than Hero Honda Ltd.

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CASH FLOW STATEMENT

Introduction of Cash

Cash, the most liquid asset, and also referred to as the life blood of a business enterprise is of vital importance to the daily operation of business firms. Its efficient management is crucial to the solvency of business because cash is the focal point of the fund flow in a business. ‘Cash’ refers to the cash as well as bank balance of the company to the end of the accounting period, as reflected in the balance sheet of the company. While the profits reflects the earning capacity of the company and cash reflects its liquidity position.

Introduction of Cash Flow

Cash Flow is the movement of cash and its equivalents. It includes the inflow and the outflow of cash during a particular period. All transactions which lead to increase in cash and cash equivalents are classified as inflows of cash and all those transactions which lead to decrease in cash and cash equivalents are classified as outflows of cash.

Introduction of Cash Flow Statement

Cash Flow Statement is a statement that shows flow of cash and cash equivalents during a period. Cash Flow Statement is prepared with an objective to highlight the sources and uses of cash and cash equivalents for a period. Cash Flow Statement is classified under operating activities, investing activities and financing activities.

Cash from operating activities includes the cash effects of those transactions which lead to calculation of net profit or loss such as cash receipts from sale of goods & rendering of services, royalties, fees, commission & other revenue and cash payments to suppliers, employees, and cash relating to future contracts for dealing purposes.

Cash from investing activities include transactions involving purchase and sale of long-term productive assets like machinery, land and building and cash payments for capitalized research and development costs.

Cash from financing activities includes cash proceeds from issue of shares, debentures and other short-term borrowings, payment of dividend and cash repayments of the amounts borrowed.

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HERO HONDA LTD.

(In crores)

Particulars  Mar ' 09 Mar ' 08 Mar ' 07

Profit before tax 1,781.46 1,410.28 1,246.10

Net cash flow-operating activity 1,359.03 1,211.78 625.05

Net cash used in investing activity (861.19) (781.01) (273.13)

Net cash used in financing activity (499.93) (432.33) (474.34)

Net increase/decrease in cash and equivalent (2.09) (1.56) (122.42)

Cash and Cash equivalents at the beginning of year 15.19 16.66 158.72

Cash and Cash equivalents at the end of year 13.10 15.10 36.30

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TVS MOTORS LTD.

(In crores)

 Particulars Mar ' 09 Mar ' 08 Mar ' 07

Profit before tax 31.10 35.37 90.85

Net cash flow-operating activity 161.56 6.33 120.09

Net cash used in investing activity (204.30) (106.30) (228.84)

Net cash used in financing activity 20.62 (5.12) 170.96

Net increase/decrease in cash and equivalent (22.12) (105.09) 62.21

Cash and Cash equivalents at the beginning of year (18.53) 86.56 24.35

Cash and Cash equivalents at the end of year (40.65) (18.53) 86.56

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BAJAJ AUTO LTD.

(In crores)

Particulars  Mar ' 09 Mar ' 07 Mar ' 06

Profit before tax 958.09 1,728.05 1,580.74

Net cash flow-operating activity 411.49 681.73 1,072.62

Net cash used in investing activity (207.66) (429.99) (1,087.54)

Net cash used in financing activity (123.03) (250.35) (11.68)

Net increase/decrease in cash and equivalent 80.80 1.39 (26.60)

Cash and Cash equivalents at the beginning of year 56.07 82.09 108.69

Cash and Cash equivalents at the end of year 136.87 83.48 82.09

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INTERPRETATION

The Cash Flow statement of Hero Honda Ltd. shows that net cash at the end of financial year is declining at a rapid pace. This is because Cash from operating activities are increasing due to increase in non-cash and non-operating items such as depreciation, preliminary expenses, goodwill written off, interest on borrowing and debentures, loss on sale of fixed assets etc. and decrease in current assets and increase in current liabilities. Cash from Investing activities depicts that more cash is invested in the Purchase of an asset (assets can be land, building, equipment, marketable securities, etc.) for last 3 years. Cash from Financing activities depicts that downbeat amount can mean the company is servicing debt, but it can also mean the company is making dividend payments and stock repurchases, which investors might be glad to see.

The Cash Flow statement of TVS Motors Ltd. shows that net cash at the end of financial year is declining at a rapid pace showing negative indication. This is because Cash from operating activities are increasing due to increase in non-cash and non-operating items such as depreciation, preliminary expenses, goodwill written off, interest on borrowing and debentures, loss on sale of fixed assets etc. and decrease in current assets and increase in current liabilties. Cash from Investing activities depicts that more cash is invested in the Purchase of an asset (assets can be land, building, equipment, marketable securities, etc.) for previous financial year. Financing cash flow is related to money in and out to investors and shareholders.  Cash from Financing activities depicts that when a company raises funds from bonds or stock, this is considered cash in.  While dividends paid out to investors and interest paid to bond holders is considered cash out. Here, Cash from financing activities are increasing. This means that the company is raising its funds through issuance of bonds or stock.

The Cash Flow statement of Bajaj Auto Ltd. shows that net cash at the end of financial year is increasing at a deliberate pace. This is because Cash from operating activities are increasing due to increase in non-cash and non-operating items such as depreciation, preliminary expenses, goodwill written off, interest on borrowing and debentures, loss on sale of fixed assets etc. and decrease in current assets and increase in current liabilities. Cash from investing activities depicts that more cash is invested in the Purchase of an asset (assets can be land, building, equipment, marketable securities, etc.) for last 3 years. Cash from financing activities is increasing which depicts that the company is raising its funds through bonds and stock.

So in comparison of these companies, Bajaj Auto Ltd. is considered to be the better one among all. As a result, Hero Honda Ltd. and TVS Motors Ltd. have to take effective steps to control its Flow of cash position in order to maintain its liquidity.

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CONCLUSION

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From the financial comparison among various two wheeler companies in the automobile industry, this has been concluded that Hero Honda Ltd. shows good performance during the last 3 years in comparative to TVS Motors Ltd. and Bajaj Auto Ltd.

“HERO HONDA RETAINS WORLD NO.1 TWO-WHEELER MANUFACTURER POSITION FOR THE 9TH CONSECUTIVE YEAR”

On the basis of ratio analysis, Hero Honda Ltd. has excellent gross profit and net profit ratios alongside least debt equity ratio which depicts that company is not using its debt instruments, while it is relying more on the shareholders capital and shows the efficiency of the operation for the 3 consecutive years. On the other hand, TVS Motors Ltd. does not have good net profit ratio, but has ideal current ratio which shows that the company can successfully pay off its debt, while at the same time still have cash left over to continue operating. At last, Bajaj Auto also shows fine performance during the preceding few years. The company has fair quick ratio which shows that the company can successfully meet its current liability and give attention to its net profit for last 3 years.

On the basis of Cash Flow Statement for last 3 years, Hero Honda Ltd. and Bajaj Auto Ltd. show sound performance in comparison to TVS Motors Ltd. As the cash and cash equivalents at the end of financial year of both the companies are intensifying, this shows that they are able to maintain their liquidity position. TVS Motors Ltd. does not shows fine performance in comparison to Hero Honda Ltd. and Bajaj Auto Ltd. The company’s cash and cash equivalents at the end of financial year are diminishing but not at a rapid pace, which depicts that the company is raising its funds through issuance of bonds or stock. The company has to maintain its liquidity position in order to compete with the other players in the two wheeler segment of the automobile industry.

So through the comparative analysis of the financial statements of various two wheelers companies in the automobile industry, Hero Honda Ltd. is better one among all other players. TVS Motors Ltd. and Bajaj Auto Ltd. have to show great performance in the succeeding years as the competition is growing at an accelerating pace.

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BIBLIOGRAPHY

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BOOKS REFERRED

R.P. Rustagi, Financial Management, Galgotia Pubilshing Company, Edition 2007-08

S.N. Maheshwari, Financial Management, Sultan Chand Publishers, Edition 2006-07

T.S Grewal, Analysis of Financial Statements, S.Chand & Sons Publishers, Edition 2007-08

Khan and Jain, Financial Management, Tata Mcgraw Hill Publishing House, Edition 2006-07

ANNUAL REPORTS of various two wheelers companies in the automobile industry (Hero Honda Ltd., TVS Motor Ltd. and Bajaj Auto Ltd.) of the years: 2006-07, 2007-08 and 2008-09

WEBSITES

www.herohonda.com

www.tvsmotor.in

www.bajajauto.com

www.Google.com

www.yahoofinance.com

www.info.com

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ANNEXURE

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HERO HONDA LIMITED

Balance Sheet

(In crores)

Particulars Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Sources of Funds

Owner’s Funds

Equity share capital 39.94 39.94 39.94 39.94

Share application money - - - -

Preference share capital - - - -

Reserves & surplus 3,760.81 2,946.30 2,430.12 1,969.39

Loan Funds

Secured loans - - - -

Unsecured loans 78.49 132.00 165.17 185.78

Total 3,879.24 3,118.24 2,635.23 2,195.11

Uses of Funds

Fixed Assets

Gross block 2,516.27 1,938.78 1,800.63 1,471.97

Less : revaluation reserve - - - -

Less : accumulated depreciation 942.56 782.52 635.10 522.60

Net block 1,573.71 1,156.26 1,165.53 949.37

Capital work-in-progress 120.54 408.49 189.92 44.19

Investments 3,368.75 2,566.82 1,973.87 2,061.89

Net Current Assets

Inventories 326.83 317.10 275.58 226.55

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Particulars Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Sundry Debtors 149.94 297.44 335.25 158.66

Cash and Bank Balance 217.49 130.58 35.26 23.22

Loans and Advances 325.80 196.37 268.04 278.63

Fixed Deposits 2.08 0.51 0.52 135.50

Current assets, loans & advances 1,022.14 942.00 914.65 822.56

Less : current liabilities & provisions 2,205.90 1,955.33 1,608.74 1,682.90

Total net current assets (1,183.76) (1,013.33) (694.09) (860.34)

Miscellaneous expenses not written - - - -

Total 3,879.24 3,118.24 2,635.23 2,195.11

Notes

Book value of unquoted investments 3,305.14 2,357.62 1,809.12 1,876.42

Market value of quoted investments 40.55 209.20 157.85 186.54

Contingent liabilities 100.54 56.37 165.59 73.48

No. of equity shares outstanding (Lacs) 1996.88 1996.88 1996.88 1996.88

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Profit & Loss Account

(In crores)

Particulars Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Income

Operating income 12,325.38 10,345.01 9,905.95 8,719.21

Expenses

Material consumed 8,820.05 7,479.50 7,252.46 6,127.81

Manufacturing expenses  427.78 360.66 332.62 285.04

Personnel expenses 448.65 383.45 353.81 320.61

Selling expenses 582.16 503.62 507.10 404.46

Administrative expenses 293.72 250.01 258.00 199.31

Expenses capitalized - - - -

Cost of sales 10,572.36 8,977.24 8,703.99 7,337.23

Operating profit 1,753.02 1,367.77 1,201.96 1,381.98

Other recurring income 108.56 88.85 83.73 56.53

Adjusted PBDIT 1,861.58 1,456.62 1,285.69 1,438.51

Financial expenses 13.04 13.47 13.76 15.58

Depreciation  180.66 160.32 139.78 114.62

Other write offs - - - -

Adjusted PBT 1,667.88 1,282.83 1,132.15 1,308.31

Tax charges  499.70 442.40 388.21 440.90

Adjusted PAT 1,168.18 840.43 743.94 867.41

Non recurring items 113.58 127.45 113.95 103.93

Other non cash adjustments - - - -

Reported net profit 1,281.76 967.88 857.89 971.34

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Particulars Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Earnings before appropriation 3,303.53 2,562.66 2,081.94 1,779.44

Equity dividend 399.38 379.41 339.47 399.38

Preference dividend - - - -

Dividend tax 67.87 64.48 57.69 56.01

Retained earnings 2,836.28 2,118.77 1,684.78 1,324.05

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TVS MOTORS LIMITED

Balance Sheet

(In crores)

Particulars Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Sources of Funds

Owner’s Funds

Equity share capital 23.75 23.75 23.75 23.75

Share application money - - - -

Preference share capital - - - -

Reserves & surplus 789.38 797.83 785.52 742.37

Loan Funds

Secured loans 622.42 452.68 446.16 308.61

Unsecured loans 283.56 213.66 187.40 76.43

Total 1,719.11 1,487.92 1,442.83 1,151.16

Uses of Funds

Fixed Assets

Gross block 1,865.36 1,790.97 1,483.01 1,378.41

Less : revaluation reserve - - - -

Less : accumulated depreciation 869.42 774.49 685.93 611.63

Net block 995.94 1,016.48 797.08 766.78

Capital work-in-progress 40.43 26.57 205.83 26.97

Investments 477.71 338.96 344.74 344.19

Net Current Assets

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Particulars Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Inventories 320.55 405.38 396.56 357.90

Sundry Debtors 259.16 152.91 149.59 76.69

Cash and Bank Balances 42.05 3.73 86.56 24.35

Other current assets ------- 0.30 0.30 0.30

Loans and advances 349.51 277.52 227.58 214.88

Current assets, loans & advances 971.27 839.84 860.59 674.12

Less : current liabilities & provisions 841.57 786.70 823.95 754.41

Total net current assets 129.70 53.14 36.64 (80.29)

Miscellaneous expenses not written 75.33 52.77 58.54 93.51

Total 1,719.11 1,487.92 1,442.83 1,151.16

Notes

Book value of unquoted investments 393.77 235.77 209.95 209.95

Market value of quoted investments 55.73 118.18 137.38 147.31

Contingent liabilities 170.10 135.65 230.73 123.15

No. of equity shares outstanding (Lacs) 2310.01 2375.44 2375.44 2375.44

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Profit & Loss Account

(In crores)

Particulars Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Income

Operating income 3,670.92 3,219.50 3,854.96 3,234.96

Expenses

Material consumed 2,814.09 2,476.38 2,945.90 2,359.78

Manufacturing expenses  74.41 65.90 67.36 56.16

Personnel expenses 204.69 176.55 172.45 157.09

Selling expenses 342.95 355.03 413.91 353.66

Administrative expenses 113.70 100.33 115.39 101.35

Expenses capitalized - - - -

Cost of sales 3,549.84 3,174.19 3,715.01 3,028.04

Operating profit 121.08 45.31 139.95 206.92

Other recurring income 76.16 67.30 74.53 59.99

Adjusted PBDIT 197.24 112.61 214.48 266.91

Financial expenses 64.61 11.47 42.35 20.99

Depreciation  102.89 94.59 87.60 93.91

Other write offs 1.95 1.95 1.88 1.72

Adjusted PBT 27.79 4.60 82.65 150.29

Tax charges  0.02 3.60 24.25 51.45

Adjusted PAT 27.77 1.00 58.40 98.84

Non recurring items 3.31 30.77 8.20 18.16

Other non cash adjustments - - (0.32) 5.50

Reported net profit 31.08 31.77 66.28 122.50

Earnings before appropriation 62.48 60.86 101.78 160.71

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Particulars Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Equity dividend 16.63 16.63 20.19 30.88

Preference dividend - - - -

Dividend tax 2.83 2.83 2.94 4.33

Retained earnings 43.02 41.40 78.65 125.50

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BAJAJ AUTO LIMITED

Balance Sheet

(In crores)

Particulars Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Sources of Funds

Owner’s Funds

Equity share capital 144.68 144.68 101.18 101.18

Share application money - - - -

Preference share capital - - - -

Reserves & surplus 1,725.01 1,442.91 5,433.14 4,669.55

Loan Funds

Secured loans - 6.95 22.46 0.02

Unsecured loans 1,570.00 1,327.39 1,602.97 1,467.13

Total 3,439.69 2,921.93 7,159.75 6,237.88

Uses of Funds

Fixed Assets

Gross block 3,350.20 2,994.68 3,178.54 2,894.22

Less : revaluation reserve - - - -

Less : accumulated depreciation 1,807.91 1,726.07 1,904.94 1,761.22

Net block 1,542.29 1,268.61 1,273.60 1,133.00

Capital work-in-progress 106.48 34.74 107.62 43.33

Investments 1,808.52 1,857.14 6,447.53 5,856.97

Net Current Assets

Inventories 338.84 349.61 309.70 272.93

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Particulars Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Sundry Debtors 358.65 275.31 529.83 301.55

Cash and Bank Balance 135.68 54.74 62.16 80.84

Loans and Advances 1,567.09 1,099.68 2,925.24 2,282.98

Fixed Deposits 1.19 1.33 21.32 1.25

Current assets, loans & advances 2,401.45 1,780.67 3,848.25 2,939.55

Less : current liabilities & provisions 2,602.35 2,019.23 4,517.25 3,734.97

Total net current assets (200.90) (238.56) (669.00) (795.42)

Miscellaneous expenses not written 183.30 - - -

Total 3,439.69 2,921.93 7,159.75 6,237.88

Notes

Book value of unquoted investments 765.42 627.60 294.07 247.22

Market value of quoted investments 1,083.15 1,256.57 8,330.50 7,303.41

Contingent liabilities 924.96 1,129.29 811.66 719.06

No. of equity shares outstanding (Lacs) 1446.84 1446.84 1011.84 1011.84

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Profit & Loss Account

(In crores)

  Particulars Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Income

Operating income 8,700.17 8,827.15 9,420.24 7,572.13

Expenses

Material consumed 6,526.59 6,692.19 6,970.40 5,397.61

Manufacturing expenses  118.99 122.92 153.87 138.59

Personnel expenses 366.67 350.09 310.07 282.45

Selling expenses 345.48 351.70 419.60 258.92

Administrative expenses 264.15 248.08 268.93 240.02

Expenses capitalized (14.42) (23.04) (32.05) (24.81)

Cost of sales 7,607.46 7,741.94 8,090.82 6,292.78

Operating profit 1,092.71 1,085.21 1,329.42 1,279.35

Other recurring income 163.90 250.40 357.93 370.48

Adjusted PBDIT 1,256.61 1,335.61 1,687.35 1,649.83

Financial expenses 21.01 5.16 5.34 0.34

Depreciation  129.79 173.96 190.26 191.00

Other write offs - 1.12 0.39 3.62

Adjusted PBT 1,105.81 1,155.37 1,491.36 1,454.87

Tax charges  301.61 378.78 490.09 479.11

Adjusted PAT 804.20 776.59 1,001.27 975.76

Non recurring items (168.42) (80.13) 209.23 88.48

Other non cash adjustments 18.72 59.32 26.60 59.03

Reported net profit 654.50 755.78 1,237.10 1,123.27

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  Particulars Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Earnings before appropriation 654.50 755.78 1,237.10 1,123.27

Equity dividend 318.30 289.37 404.73 404.74

Preference dividend - - - -

Dividend tax 54.10 49.18 68.78 56.76

Retained earnings 282.10 417.23 763.59 661.77

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