A Dissertation

On
Summer Training Project

“Financial Performance Analysis of

Bajaj Finserv limited”

Submitted in partial fulfillment of the requirements of Award of Degree

Master of Business Administration (MBA)

Supervised by: Submitted by: Rohit

Dr. Manish Kumar Roll no- 201238

Course code: SLM MGT 01 301 C 0042
Central university of Haryana, Mahendergarh
Session: 2020-2022

1
Declaration

I Mr. Rohit, Roll No 201238 certify that the dissertation on project work

entitled “Financial Performance Analysis of Bajaj Finserv limited” is

done by me and it is an authentic work. The matter embodied in this report

has not been submitted earlier for the award of any degree or diploma in any

university/institution to the best of my knowledge and belief.

Rohit

2
Certificate

Certified that the project work entitled “Financial Performance Analysis of

Bajaj Finserv limited” undertaken by Mr. Rohit, Roll no. 201238, has been
completed under my supervision. He has completed with the guidelines for
submission of the same. It is fit for evaluation.

Signature of the supervisor

Name of the supervisor: Dr. Manish Kumar

Designation: Assistant Professor (Department of Management Studies)
Date: 06/02/2022

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Acknowledgement

With Profound sense of gratitude and regard, I express my sincere thanks to my

guide and member Dr. Manish Kumar for her valuable guidance and the
confidence he gave me, which helped me in successful completion of the Project
report. Without her help, this project would have been distant affair. Her thorough
understanding of the subject and the professional guidance is indeed of immense
help to me.

I am also greatly thankful to the faculty members of our institute who co-operated
with me and gave me their valuable time.

Rohit

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TABLE OF CONTENT

Chapter No. PARTICULARS Page no

1 Introduction 6-13

2 Literature Review 14-17

3 Research Methodology 18-24

a) Rationale of study 19

b) Objective of study 19

c) Research method 19

d) Research design 20

e) Data collection method 20-21

f) Financial Ratio 21-24

g) Limitation of study 24

Financial analysis 25-38

4 Findings 39-41

Conclusion 41

Suggestion 42

References 43-44

Annexure 45-46

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Chapter 1

INTRODUCTION

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1.1 BAJAJ FINSERV LIMITED
In 1931 Bajaj group first set up as sugar manufacturing factory and become one of the largest
business groups of India. Bajaj group is one of the oldest and largest conglomerates based in
Mumbai, Maharashtra India. The group comprises of 34 companies and its flagship company is
Bajaj Auto limited and other entity in the field of home appliances, lighting iron and steel,
insurance travel and finance.
Bajaj Finserv limited is formed in 2007 as a result of demerger from Bajaj auto limited and came
into existence in May, 2008. It is holding company for the financial services business of the
Bajaj group. Its insurance is joint venture with Allianze SE; Germany based company deals in
life insurance and general insurance business. It is non-banking finance company engaged in
consumer finance, SME finance commercial lending and wealth management.

1.1.1. Services and Products Offered by Bajaj Finserv limited

[Link] Lending/ Finance:
Bajaj finance limited is participated in the financial business and it also operates through his
subsidiary Bajaj house financing limited operates all the mortgage business
E.g.:- Consumer finance, SME finance and Commercial Lending etc.
[Link] Insurance:
All the insurance related work of the company done through Bajaj Allianz general insurance and
Bajaj Allianz Life insurance these are formed through joint venture with Allianz SE, one the
world’s leading composite insures.

[Link] Wealth management:

Bajaj Finserv Wealth management provides simple and effective long term financial planning
concepts and tools for assisting our customers in making informed decision for their saving and
investment needs.

1.1.2 Business Objective

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[Link] Vision

To become a full fledged financial services company and to attain word class Excellency by
demonstrating value added products to customer
[Link] Mission
Company has aim to most useful reliable and efficient provider of financial services and become
trustworthy advisor to customer, helping in to achieve their goals.

1.1.3 SWOT Analysis of Bajaj Finserv limited

[Link] Strength
 Solid capital structure

 Larger range of financial product

 Return on investment is very high

 Revenue turnover is quite good

[Link] Weakness

 Company have lack of coverage in Rural areas in respect of financial product

 Non-performing Assets
[Link] Opportunities

 Opportunity to rise in the private banking sector

 Global opportunities

 Advancements in technology
[Link] Threats

 Government policies

 Lack of proper cyber security

 Global uncertainty in financial ecosystem

8
1.1.4 Competitors
 Edelweiss Financial Services Limited
 Reliance Capital Limited
 Aditya Birla Capital Limited

1.2 Financial Analysis

Financial analysis refers to assessing the performance, stability and profitability of a business,
small business or project. Developed experts prepared reports using estimates using information
from financial statements and other reports. These reports are often presented to senior
management as one of their basis for making business decisions
Financial analysis is the process of evaluating businesses, projects, budgets and other financial-
related organizations to determine their effectiveness and efficiency. Generally, financial
analysis is used to determine whether a business is stable, liquid or profitable enough to justify
an investment. When looking at a particular company, a financial analyst performs analysis by
focusing on the income statement, balance, and cash flow statement. Financial analysis is used to
assess economic trends, set monetary policy, build long-term business plans, and identify
projects or companies to invest in. This is done by combining financial numbers with data. One
of the most common ways to analyze financial data is to calculate estimates from the data, to
compare it with those of other companies or against the historical performance of the company
itself. For example, return on assets (ROA) is a standard measure used to determine how well a
company performs in using its assets and as a profit margin. This rating can be attributed to a
few similar companies and compared as part of a larger analysis.

1.2.1 Corporate Finance and Investment Finance

Financial analysis can be done in both business finance and investment settings. In business
finance, an analysis is performed internally, using estimates such as current value (NPV) and
internal return rate (IRR) to determine which projects to use. An important area of business
financial analysis involves extending a company's past performance, such as total revenue or

9
profit margin, to the company's future performance. This allows the business to predict the
budget and make decisions based on past trends, such as list levels. In investing funds, an
external financial analyst performs financial analysis for investment purposes. Analysts can work
out how to invest from the bottom up. The way to the top starts with looking at the opportunities
for the big economy, such as the most efficient sectors, and then down to finding the best
companies in that sector.

1.2.2Technical and Fundamental Analysis

There are two types of financial analysis: technical analysis and basic analysis. Technical
analysis looks at multiple charts, such as moving averages, while the underlying analysis uses
estimates, such as corporate earnings per share (EPS).
Financial analysis can determine the following:
• Whether or not the business will continue to operate

• Manufacturing or purchasing certain goods during the production of the product

• Acquire or lease / rent certain equipment and equipment for the production of its goods

• Withdraw shares or negotiate a bank loan to increase operating costs

• Make decisions about investing or borrowing

• Making other decisions that allow managers to make informed choices about different
alternatives to running their business.

Financial analysts often check the following aspects of the firm:-

1. Profit - its ability to earn income and sustain growth in the short and long term. The

10
company’s profit margin is usually based on the income statement, which reports on the
company’s performance results

2. Solvency - its ability to repay its obligation to lenders and other third parties over a long
period of time;

3. Liquidity - its ability to maintain good cash flow, while satisfying immediate obligations;
(Both 2 and 3 are based on the company's balance sheet, which indicates the financial position of
the business at a point in time.)

4. Stability - the firm's ability to stay in business over time, without losing a lot in running its
business. Assessing the stability of a company requires the use of a statement of income and
balance sheet, as well as other financial and non-financial indicators.

1.3 Ratio Analysis

A ratio analysis is the analysis of the amount of information contained in a company's financial
statements. It is used to evaluate various aspects of a company’s performance and financial
performance such as its efficiency, financial performance, profitability and solvency. When
investors and analysts talk about basic or quantitative analysis, they usually refer to Ratio
analysis. It involves evaluating the performance and financial performance of a company using
data from current and historical financial statements. The data obtained from the statements is
used - to compare the performance of the company over time to assess whether the company is
improving or not; compare company financial position with industry rating; or compare a

11
company with one or more companies operating in its field to see how a company makes a stack-
up.
Most investors are familiar to the few key ratios; basically we can say that to those who are easy
to calculate. Some of these include the current ratio, return on equity, the Debt-equity, Dividend
payout ratio, and the Price/earnings ratio. Ratio analysis is divided in mainly in these six groups
1. Liquidity Ratios: These ratios are used to measure a company's ability to pay off its short-term
loans / debts as they come due using the company's current or quick assets. These ratios include
quick ratio, current ratio, and working capital ratio.
2. Solvency Ratios: They are also known as financial leverage ratios; they compare a company's
debt levels with its assets, equity, and earnings to evaluate whether a company can maintain
long-term sustainability by repaying its long-term debt and interest debt. Examples of solvency
ratios include debt-equity, debt-assets, and interest coverage ratios.
3. Profitability Ratios: how well a company can generate profits from its operations will be
known by these ratios. Examples of profitability ratios are Profit margin, return on assets, return
on equity, return on capital employed, and gross margin ratios.
4. Coverage Ratios: Is a company has ability to make the interest payments and other obligations
associated with its debts is calculated in coverage ratios. Times interest earned and debt-service
ratio are two examples.

5. Efficiency Ratios: these are also known as activity ratios, these ratios are used to evaluate how
well a company uses its assets and liabilities to generate sales and maximize profits. Key
efficiency ratios are the inventory, assets turnover, and days' sales ratios in inventory.

6. Market Prospect Ratios: In fundamental analysis these are used most commonly. Use of these
ratios by investor to determine what they may receive in earnings from their investments and to
predict what the trend of a stock will be in the future. P/E Ratio and earnings per share are the
examples.

Use by Analysts
It can provide an early warning of a potential improvement or decrease in the financial
performance of company. Analysts engage in financial data in a company’s quarterly financial

12
reports or yearly financial for any such hints. Successful companies generally have good ratios in
all areas, and any weakness may be seen in the company financial ratio. Further ratio analysis
using more ratios and using qualitative analysis should be beneficial for company’s financial
position. Companies in the same sector are usually compared using ratio analysis.

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Chapter 2

LITERATURE REVIEW

14
This chapter represents the review of literature related to this study. The purpose of review of
literature is to understand the results of various studies already undertaken in the relevant field
and to find out the research gap in the present study. In this part of study is collection of
literatures in the selected area of research in which the scholar has limited experience. In the
past, various studies relating to the financial performance of companies have been conducted by
researchers.

 I.M. Pandey (2005)

An efficient allocation of capital is the most important financial function in modern times. It
involves decision to commit the firm's funds to the long term assets. The firm’s value will
increase if investments are profitable and add to the shareholders wealth. Financial decisions
are important to influence the firm’s growth and to involve commitment of large amount of
funds. The types of investment decisions are expansion of existing business, expansion of
new business and replacement and modernization. The capital budgeting decisions of a firm
has to decide the way in which the capital project will be financed. The assets of a company
can be financed either by increasing the owners claims on the creditors’ claims. The various
means of financing represent the financial structure of an enterprise.

 Medhat Tarawneh (2006)

Using Return on Assets (ROA) financial performance of a company can be measured and
the intent income size. The independent variables are the size of banks as measured by total
assets of banks, assets management measured by asset utilization ratio (Operating income
divided by total assets) operational efficiency measured by the operating efficiency ratio
(total operating expenses divided by net income).

 Jhala Urvashi (2007)

Discussed in her Ph. D thesis titled “An Analytical Study of Financial Performance of
Refinery Industry of India” and for the purpose of analysis, seven units have taken for the
period 1998-2003 for the analytical study of performance of the selected units. In this
research, she has covered the financial aspects of these 7 units and has been analyzed by
performance analysis. She had tried to find financial results of the selected units and Z-

15
score, ANOVAs test, various ratio analysis, correlation matrix trend analysis, as well as
multivariable analysis method have been used to analyze the data of the units.

 Bhunia, Mukhuti & Roy (2011)

In his study “Financial Performance Analysis- a Case Study” discussed about financial
performance of companies. The main aim of study was to identify the financial strengths and
weaknesses by covering two public sector drug & pharmaceutical enterprises listed on BSE.
For study purpose, they have been selected twelve years from 1997-98 to 2008-09. They
analyzed the data by 59 using ratios, and statistical tools like A.M., S.D., C.V., linear
multiple regression analysis and test of hypothesis t-test. They used SWOT analysis to
overcome the weakness and grab the opportunities available in public sector drug &
pharmaceutical enterprises in consideration of strengths and threats.

 Anand Pawar, [Link] Nayak (2013)

In his study “financial performance analysis – A case study of BSNL” they attempted to
analyze the financial performance of BSNL a largest public sector company which has been
providing telecom services using the Ratio analysis technique. They took nine years data
2002-03 to2010-11 for measuring the financial performance of firm. They concluded
position was strong thereby reflecting the ability of the companies to pay short term
obligations on due dates.

 Rapheal Nisha (2013)

In this study author tries to evaluate the financial performance of Indian tire industry. The
study was conducted for period 2003-04 to 2011-12 to analyze the Performance with
financial indicators, sales trend, and export trend, production trend etc. The Result suggests
the key to success in industry is to improve labour productivity, Flexibility and capital
efficiency.

16
 Hotwani Rakhi (2013)
The author examines the profitability position and growth of
Company light of sales and profitability of Tata Motors for past ten years. Data is
analyzed through rations, standard deviations, and coefficients of variance. The study
Reveals that there not exists a strong relationship between sales & profitability of
Company

 Kumar Neeraj & Kaur Kuldip (2016)

Authors made an attempt to test the size and profitability of Indian automobile industry.
Analyze the relationship linear Regression model as well as cross-sectional has been
employed for the year 1998to [Link] profitability analysis two different measures have
been used (I) ratio of net profit to Total sales turnover (ii) ratio of net income to net assets
plus working capital and for form Size two indicators used namely, total sales turn over and
net assets. The time series Analysis showed the positive relationship between firm size and
profitability but cross-sectional show no relationship between firm size and profitability.

 Jothi, K. & Geethalakshmi, A. (2016)

In this study tries to evaluate the profitability & financial position of selected companies of
Indian automobile industry using statistical tools like, ratio analysis, mean, standard
deviation, correlation. The study reveals the positive relationship between profitability, short
term and long term capital.

17
Chapter 3

RESEARCH METHODOLOGY

18
3.1 RATIONALE OF STUDY

The study of financial statement is prepared for the purpose of presenting a periodical review or
report by the management of and deal with the state of investment in business and result
achieved during with the period under review. They reflect the financial position and operating
strengths or weaknesses of the concern by properly establishing between the items of the balance
sheet and remove statements

3.2 OBJECTIVES OF THE STUDY

The main objective of the study is to know strength and weakness of a firm using the information
in the financial statements. Basically to forecast about the future prospects of the company so,
that financial analyst can take different decisions regarding the operations firm.
 To study the financial performance of the Bajaj Finserv limited
 To identify profitability and liquidity position
 To analyze possible future growth of company

3.3 SCOPE OF STUDY

In this study ratio analysis technique is used to evaluate the financial performance of company.
Company performance is observed for a period of 5 years. Solvency ratios (Current and Quick)
are used to analysis the liquidity. Debt management ratios to evaluate the capital structure of
company. Profit margin ratios used to analysis company profitability and Assets management
ratios to know how well company managing its assets to generate revenue. This study data
collected from the balance sheet & profit loss statement of the company to compare current
performance with historical conditions. So, this study will helpful to investors and creditors.

19
3.4 RESEARCH METHODOLOGY

The procedure adopted for conducting the research requires a lot of attention because it has
direct pertaining to accuracy, reliability and adequacy of results obtained. The research
methodology we used at the time of conducting the research must be elaborated upon. Research
Methodology is the basis to systematically study and solves the research problems. If a
researcher wants to say his study as an honest study, he must clearly state the methodology
adapted in conducting the research the research in order that it may be judged by the reader
whether the methodology of work done is sound or not.

3.5 RESEARCH DESIGN

In this study the descriptive research design is used because it will maximize reliability of
data collected and reduces biasness Research has got a very specific objective and clear-cut
data requirements. In this type of researcher had to use fact and information that already
available. Though, company’s financial statement of previous years is used for the critical
evaluation. Hence by making the type of the research conducted to be both Descriptive and
Analytical in nature.

3.6 DATA COLLECTION METHOD

Annual Reports of company and some websites are used for the collection of the data. So,
used data is secondary in nature.

20
3.6.1 SECONDARY DATA

It is the information which is already collected by somebody else. Researcher has got to analyze
the information and interprets the results. It’s always been important for the completion of any
report. It provides reliable, suitable, adequate and specific knowledge. This data is already
available and no special efforts are required to collect it. Collection of data from the balance
sheet and Profit/loss statement of Bajaj Finserv limited.

Tools used:

3.7 Financial Ratio

Financial ratios are mainly divided in four parts which are very helpful for management
to know company performance.

3.7.1 Short-term Solvency or Liquidity Ratios

Short-term Solvency Ratios is used to measure to company ability to meet is financial obligation.
In other words, we can say that these are to determine the ability of a firm to avoid financial
distress in the short-run. Current and Quick ratios two most important Short-term Solvency
Ratios

[Link] Current Ratio

Calculation of current ratio is done when current assets divided by current liabilities. Current
Assets are those assets that the firm expectation in upcoming year to convert them into cash and
Current Liabilities represent the liabilities which have to be paid in cash in upcoming time. The
real value for this ratio depends on the characteristics of the firm's industry and the addition of its
Current Assets. However, at a minimum value of this is more than one.
Current Assets
Current Ratio=
Current Liabilities

21
[Link] Quick Ratio
This ratio is used to recognizes, for many firms, Inventories can be rather liquid. If a firm sold
his Inventories in a hurry to meet an obligation then he might have difficulty in finding a buyer
and the inventory items would likely have to be sold at a substantial discount from their fair
market value. This ratio is used to measure how much ability in a firm to meet its obligations
relying solely to find its liquidity. Current Asset accounts such as Cash and Accounts
Receivable. This ratio is calculated by dividing Current Assets minus Inventories by Current
Liabilities.
Total current assets−Inventory
Quick Ratio=
Total current liabilities

3.7.2 Debt Management Ratios

Debt Management Ratios are also known as Long-Term Solvency Ratios. These ratios are used
to measure how much a firm's Financially Leverage and ability to avoid financial distress in the
long term. Debt is called Financial Leverage.

[Link] Debt Ratio, Debt-Equity Ratio

The Debt Ratio and Debt-Equity Ratio are essentially two ways of looking at the same thing: the
firm's use of debt to finance its assets. The Debt Ratio is calculated by
'
Total Debt Total Assets−Total Owne rs Equity
Debt ¿ Equity= '
= '
Total Owner s Equity Total Owner s Equity

3.7.3 Asset Management Ratios

These ratios attempt to know how much successful a firm in managing its assets to generate
Revenue. Ratios can provide full insight of company.

22
[Link] Fixed Assets Turnover
The Fixed Assets Turnover Ratio measures how productive a firms its Fixed Assets to Revenue.
Sales
¿ Assets Turnover= Assets ¿
Net ¿

3.7.3.2Total Assets Turnover

Management all of its assets to generate Sales by a firm is usually measured by this ratio. This
ratio is calculated by
Sales
Total Assets Turnover=
Total Assets

3.7.4 Profitability Ratios

Profitability Ratios attempt to measure how much successful a firm in generating income. These
ratios show combined effects of the firm's asset and debt management.

[Link] Profit Margin

The Profit Margin indicates income that the firm earns on total sales. This ratio is calculated by
Net income
Profit Margin=
Sales

[Link] Return on Assets and Return on Equity

The Return on Assets Ratio indicates the income earned by the firm on its assets and the Return
on Equity Ratio indicates the income earned by the firm on its shareholders' equity. But one
thing both ratios are based on accounting book value not any link with market.
Net income
Returnon Assets=
Total Assets
Net income
Returnon Equity= '
Total Owner s Equity

3.8 LIMITATIONS OF STUDY

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 Face some difficulty in data collection.

 In the early stages of this project have limited knowledge about the Bajaj Finserv
limited.

 All the analysis and interpretation in this study is based upon the secondary data which is
published in the annual reports of the Bajaj Finserv limited.

 Time frame used in the study is period of 5 years (2017-2021) because of limited time.

 Good or bad financial condition of the company.

 Comparison between the inter firm was not possible because of non availability of data.

 To know about the financial condition of the firm is the primary purpose of this study and
not sure about the financial image of the Bajaj Finserv limited.

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Chapter 4

DATA ANALYSIS
AND INTERPERTATION

25
RATIO ANALYSIS

4.1 CURRENT RATIO:

Current Ratio shows a company's ability to create enough cash to disburse off all its debts once
they turn into due and is used across the businesses to evaluate a company's short-
term liquidity with respect to its existing assets and awaiting liabilities. A Current ratio of 2:1
and more is considered adequate for a business. If the current ratio is high ratio then company
has lager amount of money available to current liabilities. Thus this can measure margin of
safety of creditors.
Current Assets
Current Ratio=
Current Liabilities

Table no: - 4.1

CURRENT RATIO

Year Current Assets Current Liabilities Current Ratio

2017 48.2 1.5

72.9

2018 87.2 47 1.8

2019 174.7 58 3.0

2020 65 1.57
101.7

2021 212.7 68 3.15

*Source =Annexure Table no.

Figure No: - 4.1

26
Current Ratio

3.01 3.15

1.86
1.52 1.57

2017 2018 2019 2020 2021

*Source = Current ratio (Table no. 4.1)

Interpretation:
Solvency is 2 and above is considered ideal. In the solvency ratio of 2 is also known as safe
margin. In above graph some years it’s below 2 but in current year it is more than 3 which is a
good thing so company have to maintain same current assets for the safety margin. Here
company ratio is very good way more higher than the ideal solvency ratio.

4.2 LIQUID RATIO:

Assets considered to find liquid ratio are quick assets. Quick assets are those who are easily
convertible in cash .Current assets like stocks, prepaid expenses and premium paid earlier are
considered as quick assets. This ratio also known as “Quick Ratio” or “Acid test Ratio”
Total current assets−Inventory
Quick Ratio=
Total current liabilities

Table No: - 4.2

LIQUID RATIO

27
Year Total Quick Assets Current Liabilities Quick Ratio

2017 72.92 48.11 1.52

2018 78.92 46.98 1.68
2019 166.43 57.99 2.87
2020 93.84 64.73 1.45
2021 212.71 67.61 3.15
*Source: - Annexure Table no. 5.1

Figure No: - 4.2

Quick Ratio
3.5

2.5

1.5

0.5

0
2017 2018 2019 2020 2021

*Source = Quick ratio (Table no. 4.2)

Interpretation:
Quick ratio of 1:1 is considered very ideal for the firm. If we see in the above graph and table
there is liquid ratio of company in 2016-17 is 1.5 and from there is gradually rising can be seen
till 2018-19 but fall in 2019-20 it is due quick assets are decrease in that particular year but last
year there is very good quick ratio. Therefore, we can say that there is good managing its current
assets and liabilities very well.

4.3 DEBT-EQUITY RATIO:

28
Company’s financial control assessment can be measured using this ratio. The Debt/Equity ratio
is a vital tool used in corporate finance. It is used to do evaluation a firm financing its operation
through liability and their own funds. More particularly, it shows the capability of shareholder
equity to cover all outstanding debts in the happening of a business downturn. A ratio of 2:1 or
below is considered adequate for the business.

Table No: - 4.3

DEBT-EQUITY RATIO
Year
Debt Equity Debt Equity Ratio

2017 19 2766 0.01

2018 31.59 2880 0.01
2019 28.88 3161 0.01
2020 30.11 3535.45 0.01
2021 33.50 3800.93 0.01
*Source: - Annexure Table no. 5.1 *Debt and Equity (Rs in Crore)

Interpretation:-
The ratio shows the company’s borrowing for long term. As we can see in above chart the Debt-
Equity ratio of company from 2016-17 to 20210-21 is nearly 0.01 this show that the company is
rely on the internal source of capital rarely borrow funds from outside sources which is very
good.

4.4 RETURN ON CAPITAL EMPLOYED:

This ratio shows the overall efficiency and profitability of a firm to the capital employed in the
business. This ratio is calculated when net profit before the interest and tax is divided by capital
employed. It indicates percentage of return given by the company in particular year on the capital
employed. From this ratio comparison of one unit to another or previous year performance of an
entity can be done easily.

Earnings Before Interest ∧Taxes(EBIT )

Returnon Capital Employed=
Capital Employed

Table No: - 4.4

29
RETURN ON CAPITAL EMPLOYED

Year Net Profit Before Return On Capital

Capital Employed
Interest And Tax Employed (in %)

2017 104 27.8 3.73

2018 167.2 29.1 5.74

2019 325.99 31.9 10.21

2020 681.88 35.66 19.12

2021 245.1 38.4 6.39

*Source: - Annexure Table no. 5.2 *EBIT and Capital Employed (Rs in Crores)

Figure no: - 4.4

ROCE
25.00

20.00
19.12

15.00

10.00
10.21

5.00 5.74 6.39

3.73

0.00
2016-17 2017-18 2018-19 2019-20 2020-21

30
*Source = Return on Capital Employed (Table no. 4.4)

Interpretation:

The above table we see that the return on capital employed ratio of the company. There in is
good growth in return on the capital employed from 2017 to 2020 but there is huge fall in ROCE
ration in 2021. After seeing above graph company is well managing their capital but fall could be
due to covid-19.

4.5 FIXED ASSETS TURNOVER:

It is calculated as follow:
Sales
¿ Assets Turnover= Assets ¿
Net ¿
It shows revenue generated by the company on its existing fixed assets. If the fixed assets
turnover ratio is higher than company is utilizing its fixed assets very well. If the ratio is low
then the company underutilizing its assets. This ratio plays very important for a firm to know
where the investment in the fixed assets is very high and profitability so the utilization of these
assets can be done.

Table no: - 4.5

FIXED ASSETS TURNOVER
Year Sales Net Fixed Assets Fixed Assets
(Rs. In crores) (Rs. In crores) Turnover Ratio

2016-17 154 69.25 2.22

2017-18 239.75 81.35 2.94

2018-19 423.05 106.75 3.96

2019-20 779.85 158.28 4.29
2020-21 323.72 160.85 2.01
*Source: - Annexure Table no. 5.1

Figure 4.5

31
5
4.5
4
3.5
3
2.5
4.29
2 3.96
1.5 2.94
1 2.22 2.01

0.5
0
2016-17 2017-18 2018-19 2019-20 2020-21

*Source = Fixed Assets Turnover Ratio (Table no. 4.5)

Interpretation:
Here the fixed assets employed in the business shows an increasing trend every year and fixed
assets turnover ratio has been consistently increasing except 2021. In last there is some fall in
fixed asset turnover ratio of the company because there is huge fall in sales of company but
somehow they manage to increase in fixed assets which is good thing. So, company effectively
using their fixed assets without blocking the capital.

4.6 TOTAL ASSETS TURNOVER:

Total Asset turnover ratio is calculated by dividing a company’s sales or revenues to the value of
its assets. It indicates the efficiency of company producing revenue by deploying its assets. Thus,
total asset turnover ratio can be a determinant of a company’s performance.
Sales× 100
Total Assets Turnover=
Total Assets
32
Table no: - 4.6
TOTAL ASSETS TURNOVER

Year Total Assets

Sales Total Assets
Turnover Ratio (%)

2016-17 153.9 2814.12 5.46

2017-18 239.76 2926.74 8.26

2018-19 423.1 3218.9 13.14

2019-20 779.86 3600.15 21.6

2020-21 323.73 3868.52 8.36

*Source: - Annexure Table no. 5.2 *Sales and Total assets (Rs in crores)

Figure no: - 4.6

Total Assets Turnover Ratio

25

20

15

10

5.46 8.26 13.14 21.6 8.36000000000001

0
2016-17 2017-18 2018-19 2019-20 2020-21

*Source = Total Assets Turnover Ratio (Table no. 4.6)

33
Interpretation:
When a firm has low assets turnover ratio suggests that the company how well a company
generating revenue from its assets. If a company have low assets turnover ratio there is some
problem with their management or could have less productive capacity. Looking at the company
asset turnover which is very good from last few years defiantly there is slightly decay in last year
but have to go for better results

4.7 NET PROFIT RATIO:

It is calculated as follows:

Net profit × 100

Net profit ratio=
Net sales

This ratio helps in determining how much profit is generated by the company on their revenues.
Net profit is deduction of cost of goods sold form the revenue or net sales. If there is increase in
the net profit margin as compared to the previous years then the company is making good
income for the company operations. This ratio is good for measuring the profitability of the
business.

Table no: - 4.7

Year
Net profit Net sales Net profit margin (%)

2016-17 70.02 153.9 45.49

2017-18 141.34 239.76 58.54

2018-19 307.17 423.05 72.6

2019-20 666.86 779.86 85.51

2020-21 178.78 323.73 55.22

*Source: - Annexure Table no. 5.2 *Net profit and net sales (Rs in crores)

34
Figure no: - 4.7

Net profit margin (%)

90

80 85.51

70 72.6
60
58.54
50 55.22

40 45.49

30

20

10

0
2016-17 2017-18 2018-19 2019-20 2020-21

*Source = Net profit margin (Table no. 4.7)

Interpretation:
From the above table the net profit margin increasing from last few years except 2020-21 it could
because of covid-19. When we see remaining years in gradually increasing which is a good
thing.

4.8 OPERATING PROFIT RATIO:

This ratio is calculated as follows:

Operating profit ×100
Operating Profit Ratio=
Net sales

Operating profit ratio is calculated by operating profit by net sales. When we subtract operating
expenses, depreciation and any other Amortization Expenses from the gross income we get
operating profit which is also known as earnings before income and taxes. It will help a company
to look over all expenses and how much revenue they had left after paying the operating
expenses.

Table no: - 4.8

35
Year Operating profit
Operating profit Net sales
margin (in %)

2016-17 94.36 153.9 61.31

2017-18 155.67 239.76 65.40

2018-19 302.03 423.05 71.39

2019-20 649.48 779.86 83.28

2020-21 181.48 323.73 56.05

*Source: - Annexure Table no. 5.2

Figure no: - 4.8

Operating profit margin (%)

90
83.28
80
71.39
70 65.4
61.31
60 56.05

50

40

30

20

10

0
2016-17 2017-18 2018-19 2019-20 2020-21

*Source = Operating profit margin (Table no. 4.8)

Interpretation:
36
From year 2016-17 to year 2019-20 the operating profit ratio is gradually increasing with small
gain. In 2020-21 there is huge fall in operating profit. This may be due to that company sales
decreased more as compared to the operating expenses. Therefore company should have look on
unnecessary operating expenses and also make decisions regarding how sales to increased.

4.9 GROSS PROFIT RATIO:

This ratio is calculated as follow
Gross profit margin× 100
Gross profit Ratio=
Sales

The gross profit margin is calculated by subtracting the costs of direct material, direct labour and
overheads from the sales and divided by the sales. Indication given by the gross profit ratio that a
company can make a good profit on sales in future, as long as it also helps in keeping overhead
costs in control.

Table no: - 4.9

GROSS PROFIT RATIO

Year Gross profit Margin Net sales Gross profit Ratio

(Rs. In crores) (Rs. In crores) (%)

2016-17 92.90 153.9 60.36

2017-18 154.31 239.76 64.84

2018-19 300.48 423.05 71.02

2019-20 646.58 779.86 82.90

2020-21 176.81 323.73 54.61

*Source: - Annexure Table no. 5.2

Figure no: - 4.9

37
Gross Profit margin (%)
82.9
71.02
64.84
60.36
54.61

2016-17 2017-18 2018-19 2019-20 2020-21

*Source = Gross Profit margin (Table no. 4.9)

Interpretation:
Gross profit margin of the company continuously increasing from year 2017 to 2020 with good
growth rate but there is a decay in the profit margin ratio of the company in 2021. The main
reason behind this decay is sales i.e. company sales are comparatively low as compared to the
last year but hopefully it will increase in upcoming years.

Chapter 5

38
FINDINGS, SUGGESTION &
CONCLUSION

39
FINDINGS

 Capital of company each financial year is same there is no change.

 Reserves and surplus increased by 4.2% in 2017-18 ,10% in 2018-19 , 12% in 2019-20

and 7% in 2020-21

 Loan and advances of company increased 54% in year 2018-19 then decreased by 12%

in 2019-20 and 9% in 2020-21

 Current Ratio for the year 2016-17 is 7.57, in 2017-18 is 46.20 , in 2018-19 is 30.82, in

2019-20 is 98.41 and in 2020-21 is 107.24

 Debt-to-Equity Ratio of the company from the year 2016-17 to 2020-21 is nearly equal to

0.001

 Quick Ratio for the year 2016-17 is 7.57, in 2017-18 is 46.20 , in 2018-19 is 30.82, in

2019-20 is 98.41 and in 2020-21 is 107.24

 There is huge fluctuation in the income of company decreased by 58% in 2020-21 while

it is gradually increasing every year which increased in 2017-18 by 55% , in 2018-19

increased by 76% and in 2019-20 by 84%

 Company consistently increasing their fixed assets with the small investment but in 2019-

20 it is increased by 110%

 Profit before tax for the FY2021 and FY2020 was Rs. crores 245.10 and 681.88

respectively

 The investments are also increasing but with lower rates compared to the preceding years

40
 The Gross profit ratio shows the good result towards the growth of the company, the sales

of the company increased constantly since 2017-2021 and gross profit of the company is

also be increased same and also increased in the current year also, so it explain that the

company is in the good position.

 The Net profit ratio shows the good improvement in previous years. The net profit ratio is

increasing form 2017-2020 but there is slight decay in last year but company will survive

quickly.

 The Return on assets ratio shows how the company uses his assets towards the growth of

the company and they get return from the asset used for the company. The ratio has

increased frequently during the year2017-2021 it shows the utilization of the assets for

the company it has been very good.

Conclusion:-

Financial statement analysis generally begins with a set of financial ratios designed to reveal a

company’s strength and weakness as compared to other companies in the same industry and to

show whether its financial position has been improving or deteriorating over time. Form current

and quick ratio we can say that company’s liquidity position is very good and assets have

majority over liabilities. Profitability ratios showing company is in good position. Company is

nearly debt free which is showing good opportunity of growth. Assets management form the

company is very well. So, investment form the company is fixed and current assets are equip-

balance, it is conclude that the overall profitability and liquidity position is good and show some

aspect of better future growth.

41
SUGGESTIONS

 After the analysis of Financial Statements, the company status is better, because total
reserves and surplus are increasing every year.

 The company profits are growing rapidly from except the last year there is a huge decay
in the profits.

 The company is utilizing the fixed assets, which major help to the growth of the
organization. The company should maintain that perfectly.

 The investment of the company is very good and increasing year by year and it helps the
growth of the organization and it maintains the same that shows the efficient of the
company.

 The company is having debt free as we expect to continue the scenario in the upcoming
years

 Company should make effort to make Return on investment

 It is recommended that the company should aim at achieving higher returns on

investment, by better utilization and allocation of funds employed in the business which
in return helps the company to meet its long term objectives.

 The operating income and expenses are fluctuating every year. Efficient monitoring has
to be done so that income and expenses standards can be maintained.

42
REFERENCES

43
Books:-

 Vandyck , k Charles (2009) Financial Ratio Analysis: A Handy Guidebook

 Gupta, L.C (2011) Financial Ratios for Monitoring Corporate Sickness: Towards a More
Systematic Approach. Oxford, England: Oxford publisher
 Hasanaj p. & kuqi B. (2019). Analysis of financial statements : The important of financial
indicators in enterprise
 Pandey, I.M(2005) Financial Management, Vikas publishing house, New Delhi

Reports:-

Annual report of Bajaj Finserv limited (5years)

Journals:-

 Urvashi J. (2007). An Analytical Study of Financial Performance of Refinery Industry of

India
 Bhunia A. & Roy G. (2011). Financial performance analysis: A case study
 Nayak M. & Pawar A. (2013). financial performance analysis – A case study of BSNL

Websites:-

[Link]
[Link]
[Link]
[Link]

44
ANNEXURE

Table: - 5.1

Comparative Balance Sheet of Bajaj Finserv limited from 2017-18 to 2020-21

(Rs. In crores)
PARTICULARS 2017 2018 2019 2020 2021
CAPITAL AND LIABILITS

Capital 79.57 79.57 79.57 79.57 79.57

Reserve and surplus
2686.45 2800.18 3081.34 3455.86 3721.35

Current liabilities
21.22 35.74 48.13 55.93 61.25

Provision 26.89 11.24 9.86 8.80 6.36

TOTAL CAPITAL
2814.13 2926.73 3218.9 3600.16 3868.53
AND LIABILITIES
ASSETS
Loan and advance
70.74 70.90 114.18 96.39 87.52

Cash and bank 1.55 12.40 60.27 4.96 124.67

Sundry debtors 0.63 3.96 0.29 0.43 0.52

Capital work in
1.19 8.19 33.34 00 2.29
progress

Investment 2671.96 2758.12 2937.40 3340 3494.97

Fixed assets 68.06 73.16 73.42 158.38 158.56

TOTAL ASSETS
2814.13 2926.73 3218.9 3600.16 3868.53

*source: - [Link]

45
Table: - 5.2
Profit loss statement of the Bajaj Finserv limited

Mar- Mar-
PARTICULARS Mar-2018 Mar-2020 Mar-2021
2017 2019

Net Sales/Income from operations 153.9 239.76 423.05 779.86 323.73

Other Operating Income -- -- -- -- --

Total Income From Operations 153.9 239.76 423.05 779.86 323.73

EXPENDITURE

Consumption of Raw Materials -- -- -- -- --

Employees Cost 20.35 27.31 53.53 84.72 101.88

Depreciation 1.46 1.36 1.55 2.9 4.68

Excise Duty -- -- -- -- --

Other Expenses 39.19 56.78 67.49 45.66 40.37

P/L Before Other Inc. , Int., Items &

92.9 154.31 300.48 646.58 176.8
Tax
Other Income 11.1 12.48 25.51 35.3 68.3

Interest --- -- -- -- --
104
P/L Before Tax 245.1 681.88 325.99 166.79

Tax 33.98 25.45 18.9 15.02 66.3

P/L After Tax from Ordinary
70 141.35 307.17 666.9 178.8
Activities
Prior Year Adjustment -- -- -- -- --

Net Profit/(Loss) For the Period 70 141.35 307.17 666.9 178.8

79.57
Equity Share Capital 79.57 79.57 79.57 79.57

Reserves Excluding Revaluation 2686.45 2800.18 3081.34 3455.86 3721.35

Reserves
*source: - [Link]

46