Bajaj vs HCL

8/14/2019 Bajaj vs HCL

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BYANITA MISHRA(29)

ARCHIT KHARE (33)

HARSH VARDHAN (39)

VIKRANT GARG(66)

FINANCIAL ANALYSIS OFFINANCIAL ANALYSIS OF

MANUFACTURINGMANUFACTURINGVSVS

IT COMPANYIT COMPANY



COMPANIESCOMPANIES

HCL TECHNOLOGIES VS BAJAJAUTO

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HCLHCL BAJAJBAJAJ

Current ly ranked third in India andwit h revenue of over INR 63.84croreand it has its presence all over the wor ld. It provides IT andconsulting services.

HCL Technolog ies estab lished in 1976currently works work under VineetNayar is headquar tered in Noida andas on 30 sept 2009 has 54443workers.

HCL Technolog ies offer ings span

business and technology consulting ,application services, systemsintegrat ion, product engineering,custom software development ,m aintenance, re-engineering,independent testing and validation

services, IT infrast ructure servicesand business process outsourcing.

Bajaj group's flagshipcompany, Bajaj Auto, isranked as the world's fourthlargest two- and three-wheeler manufacturer

Group was founded in 1926,

at the height of India'smovement for independencefrom the British, the grouphas an illustrious history

n

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The present Chairman of thegroup, Rahul Bajaj, tookcharge of the business in1965. Under his leadership,the turnover of the BajajAuto the flagship companyhas gone up from Rs.72million to Rs.46.16 billion(USD 936 million), itsproduct portfolio has



Major functions of HCLMajor functions of HCL



HCL Global FootprintHCL Global Footprint



Bajaj Auto Global PresenceBajaj Auto Global Presence

Bajaj is present in over 50countries all over the globe

Dominant presence inAfrica and Latin Amer ica

with increasing m arketshare every year

Market leader in 2-wheelers in Sri Lanka,Bangladesh , Colombia andCentral America772,519 units exported in2008-09, an increase of over 25% over theprevious year

Largest exporter of threewheelers in the world:



Plantsn Bajaj Auto's has in all three plants, two at Waluj and Chakan in

Maharashtra and one plant at Pant Nagar in Uttranchal,western India.

n Waluj(Aurangabad ) Bajaj range of motorcycles and three-

wheelersChakan (Pune) Bajaj range of motorcyclesPant Nagar(Uttaranchal) Bajaj range of motorcycles

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1.1. Preparation of FinancialPreparation of Financial

StatementsStatements

The financialstatements have beenprepared andpresented under thehistorical costconvention on accrualbasis of accounting to

comply with theaccounting standardsprescribed in theCompanies(AccountingStandards) Rules,2006

and with the relevantprovisions of the

The financial

statements have beenprepared to complywith the accountingstandards prescribedin the GenerallyAccepted AccountingPrinciples (GAAP)



3. Short Term Investments3. Short Term Investments

As the norm inmost manufacturingcompanies APL hasmade a lot of short

term investments (29)– Interval Funds, Fixedmaturity plans,Portfolio fundsscheme.

All investments eithertrade or non trade aremade for long term.



4. Tax benefit4. Tax benefit

Sales taxdeferment benefitsclaimed for expansion

of plant capacity.

Income fromoperations in softwaretech parks exemptedfor 10 yrs

Income fromoperations in SEZs

exempted for 1st

5 yrsand 50% for next 5yrs.



5. Loans and Advances5. Loans and Advances

- To wholly ownedsubsidiaries.

- Balances with customsand central excise

-Advance to employees

- Advances againstcapital expenditure.

- Others

Advances mainly

comprise of prepaidtravel and per diemexpenses andadvances for vendors.



6. Goodwill and Brand Valuation6. Goodwill and Brand Valuation

- Consolidated Goodwillaccounted for inApplication of fundsunder Cash Flow

Statement.-

-

- Not mentioned

- Goodwill is accountedfor in Fixed Assets

-

- Considers intangibleassets to have asignificant role indefining growth.

-Methodology: Brand

Earnings multiplemodels by MichaelBerkin.(Pg 131)

-

http://smb//tmp/svf37.tmp/Infosys-AR-09.pdf

http://smb//tmp/svf37.tmp/Infosys-AR-09.pdf



7. Raw materials and Inventory7. Raw materials and Inventory

- Packaging material,fixed goods, stores,spares andconsumables.

-Accounting for

opening and closingstock of inventoriesunder WC changes

- Detailed analysis of raw materials usedin manufacturing

-

- Computerequipments,furniture

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Other differencesOther differences

- Consolidated Goodwillaccounted for inApplication of fundsunder Cash Flow

Statement.-

-

- Not mentioned

- Goodwill is accountedfor in Fixed Assets

-

-

-

-

- Considers intangible

assets to have asignificant role indefining growth.

- Methodology: BrandEarnings multiple

models by MichaelBerkin.



Balance SheetBalance SheetSources of fundsSources of funds



Loan fundsLoan funds

Application of fundsApplication of funds



Application of fundsApplication of fundsFixed AssetsFixed Assets



PROFITABILITY RATIOSPROFITABILITY RATIOS



n Bajaj has seen a low operating profit margin on account of high raw material costs .

n Bajaj has seen higher expenses due to raw materials ,Excise duty ,etc

n HCL has seen higher costs due to employee costs , sellingand admin expenses

n Bajaj has a lower net profit margin

n Bajaj has paid higher taxes compared to HCL . IT industryenjoys higher tax benefits and holidays .

n

Return on equity of Bajaj is more because of lower networthas compared to HCL (reserves)

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CURRENT RATIOSCURRENT RATIOS



n HCL has higher current assets – sundrydebtors , fixed deposits .

n HCL has higher receivables from

subsidiariesn Quick ratio decreases for bajaj due to

higher inventories

n High Debt to equity ratio for Bajaj auto due

to high unsecured loansn The high debt is on account of deferred

sales tax liability .



TURNOVER RATIOSTURNOVER RATIOS



n Inventory turnover is higher for HCLon account of lower inventory

n

n Debtors turnover is high for HCLn Large number of receivables from

foreign clients and subsidiaries

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n

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PAYOUT RATIOSPAYOUT RATIOS



n Earning per share is lower for HCLbecause of higher number of shares

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Stock Movement

Bajaj vs HCL

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