Bajaj Auto Ltd.

About the company Bajaj Auto Limited is an Indian two-wheeler and three-wheeler manufacturing company. Bajaj Auto manufactures and sells motorcycles, scooters and auto rickshaws. Bajaj Auto is a part of the Bajaj Group. It was founded by Jamnalal Bajaj in Rajasthan in the 1930s. It is based in Pune, Mumbai, with plants in Chakan (Pune), Waluj (near Aurangabad) andPantnagar in Uttarakhand. The oldest plant at Akurdi (Pune) now houses the R&D centre 'Ahead'. Bajaj Auto is the world's third-largest manufacturer of motorcycles and the second-largest in India. It is worlds largest three-wheeler manufacturer. On 31 March 2013, its market capitalisation was INR 520 billion (US$9.57 billion), making it India's 23rd largest publicly traded company by market value. The Forbes Global 2000 list for the year 2012 ranked Bajaj Auto at 1,416. History Bajaj Auto came into existence on 29 November 1945 as M/s Bachraj Trading Corporation Private Limited. It started off by selling imported two- and three-wheelers in India. In 1959, it obtained a licence from the Government of India to manufacture two-wheelers and threewheelers and it became a public limited company in 1960. In 1970, it rolled out its 100,000th vehicle. In 1977, it sold 100,000 vehicles in a financial year. In 1985, it started producing at Waluj near Aurangabad. In 1986, it sold 500,000 vehicles in a financial year. In 1995, it rolled out its ten millionth vehicle and produced and sold one million vehicles in a year. With the launch of motorcycles in 1986, the company has changed its image from a scooter manufacturer to a two-wheeler manufacturer. Products Bajaj manufactures and sells motorcycles, scooters, auto-rickshaws and most recently, cars. Bajaj Auto is Indias largest exporter of motorcycles and three-wheelers. Bajaj Autos exports accounted for approx. 35% of its total sales. 47% of its exports are made to Africa. Boxer motorcycle is the largest selling single brand in Africa.

Hero MotoCorp Ltd.

About the company Hero Motocorp Ltd., formerly Hero Honda, is an Indian motorcycle and scooter manufacturer based in New Delhi, India. The company is the largest two wheeler manufacturer in the world. In India, it has a market share of about 46% share in 2-wheeler category. The 2006 Forbes 200 Most Respected companies list has Hero Honda Motors ranked at #108. On 31 March 2013, the market capitalisation of the company was INR 308 billion (USD 5.66 billion).

History
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 Motors Limited at Dharuhera, India. Munjal family and Honda group both owned 26% stake in the Company. 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 doubledigit pace since inception. In 2001, the company became the largest two-wheeler manufacturing company in India and globally. It maintains global industry leadership till date. The technology in the bikes of Hero Motocorp (earlier Hero Honda) for almost 26 years (19842010) has come from the Japanese counterpart Honda.

Termination of Honda joint venture Hero Honda started in 1984 as a joint venture between Hero Cycles of India and Honda of Japan. In December 2010, the board of directors of the Hero Honda Group had decided to terminate the joint venture between Hero Group of India and Honda of Japan in a phased manner. The Hero Group would buy out the 26% stake of the Honda in JV Hero Honda. Under the joint venture Hero Group could not export to international markets (except Sri Lanka and Nepal) and the termination would mean that Hero Group can now export. Since the beginning, the Hero Group relied on their Japanese partner Honda for the technology in their

bikes. So there are concerns that the Hero Group might not be able to sustain the performance of the joint venture alone.

Formation of Hero MotoCorp In 2010, when Honda decided to move out of the joint venture, Hero Group bought the shares held by Honda. Subsequently, the name of the company was changed from Hero Honda Motors Limited to Hero MotoCorp Limited on July 29, 2011. The new brand identity and logo of Hero MotoCorp were developed by the British firm Wolff Olins. The logo was revealed on 9 August 2011 in London, to coincide with the third test match between England and India. Hero MotoCorp can now export to Latin America, Africa and West Asia. Hero is free to use any vendor for its components instead of just Honda-approved vendors. In June 2012, Hero Motocorp approved a proposal to merge the investment arm of its parent Hero Investment Pvt. Ltd. into the automaker. The decision comes after 18 months of its split from Honda Motors.

Efficiency Ratios
Efficiency ratios are concerned with measuring the efficiency in asset management. The efficiency with which the assets are used would be reflected in the speed and rapidity with which the assets are converted into sales. The greater is the rate of turnover or conversion, the more efficient is the utilization of assets, other things being equal.An efficiency is defined as a test of the relationship between sales and the various assets of a firm. These ratios are also known as activity ratios or asset utilization ratios.

Some of the types of efficiency ratios are: Inventory Turnover Ratio Debtors Turnover Ratio Fixed Asset Turnover Ratio Total Assets Turnover Ratio

Interpretation:
Inventory Turnover Ratio:
Bajaj Auto Ltd. Inventory Turnover Ratio (2013) 31.43 Hero MotoCorp Ltd. 37.33

A look at efficiency parameters , suggest that the Inventory turnover Ratio of Bajaj Auto Ltd. is 31.43 times as compared to 37.33 times for Hero MotoCorp Ltd, suggesting that inventory turnover ratio of Hero MotoCorp Ltd. is better than that of Bajaj Auto Ltd. Bajaj Auto Ltd. has a Inventory conversion period of 12 days and Hero MotoCorp Ltd.s Inventory Conversion period is of 10 days.

Debtors Turnover Ratio:

Bajaj Auto Ltd. Debtors Turnover Ratio (2013) 94.51 Hero MotoCorp Ltd. 50.72

The Debtors turnover ratio of Bajaj Auto Ltd. is 94.51 times & Debtors collection period is 4 days which means Bajaj Auto Ltd. takes 4 days to convert its debtors into cash. However the Debtors turnover ratio is 50.72 times for Hero MotoCorp Ltd. & Debtors collection period is 7 days which means Hero MotoCorp Ltd. takes 7 days to convert its debtors into cash. This shows that Bajaj Auto Ltd. is more efficient as compared to Hero MotoCorp Ltd.

Fixed & Total Assets Turnover Ratio:

Bajaj Auto Ltd. Fixed Assets Turnover Ratio (2013) Total Assets Turnover Ratio (2013) 5.22 2.15 Hero MotoCorp Ltd. 7.32 5.76

The Fixed asset turnover ratio of Bajaj Auto Ltd. is 5.22 times & of Hero MotoCorp Ltd. is 7.32 times & the total asset turnover ratio is 2.15 times & 5.76 times for Bajaj Auto Ltd. & Hero MotoCorp Ltd. respectively. The above data implies that Hero MotoCorp Ltd. utilizes its fixed assets & total assets in generating sales in a more optimum manner.