A

SUMMER TRAINING PROJECT REPORT

Analysis the Financial Performance through
Ratio Analysis

TO BE SUBMITTED TO SUBMITTED TO DR. APJ ABDUL

KALAM TECHNICAL UNIVERSITY, LUCKNOW
IN THE PARTIAL FULFILLMENT OF THE REQUIREMENT
FOR THE DEGREE
OF

MASTER OF BUSINESS ADMINISTRATION

Batch 2014-16
External Supervision of :
Mr. Hariom Gautam
(Accountant, Bajaj Allianz Dairy)

Internal Supervision of :
Mr. TUSHAR KUMAR
(Faculty, MBA Deptt.)

MOHSIN KHAN
MBA-III SEM
ROLL NO.1431170026

DEWAN VS. INSTITUTE OF ENGINEERING &

TECHNOLOGY
Meerut, By-pass Road, Partapur, Meerut.

STUDENT DECLARATION
I am MOSHIN KHAN student MBA- III SEM here by declared that the
research

report

entitled

ANALYSIS

THE

FINANCIAL

PERFORMANCE THROUGH RATIO ANALYSIS is completed and

submitted under the guidance of Mr. Tushar Kumar Faculty of
Management, DVSIT, Meerut is my original work.

The imperial finding in this report is based on the data collected by me. I
have not submitted this Summer Training report to submitted to DR. APJ
ABDUL KALAM TECHNICAL UNIVERSITY, LUCKNOW or not any
other University for the purpose of compliance of any requirement of any
examination or degree.
MOHSIN KHAN
MBA-III SEM
ROLL NO.1431170026

PLACE:

ACKNOWLEDGEMENT
Behind every study their stands a myriad of people whose help and
contribution make it successful. Since such a list will be a
prohibitively long, I may be excused for important omissions.
The

guidance,

help

and

co-operation

of

my

supervisor

Mr. Hariom Gautam (Accountant, Bajaj Allianz Dairy), is gratefully

acknowledged with profound gratitude.
I have been benefited from discussion with Mr. Tushar Kumar
Faculty of Management, DVSIT, Meerut I am also thankful to all
others in Finance Department, Bajaj Allianz, who provided me with
all the required information for my project.
MOHSIN KHAN
MBA-III SEM
ROLL NO.1431170026

PREFACE
This project has been undertaken in the partial fulfillment of our summer
training requirement during the pursuance of MBA (finance) from
DEWAN VS. INSTITUTE OF ENGINEERING & TECHNOLOGY
Practical training is an essential part of every professional program. It is very
helpful in proving knowledge for the practical aspects of academic studies. It
is also helpful to go through the actual procedures at the work place.
In the project, title Analysis the Financial Performance through Ratio
Analysis, the area covered includes tools and techniques for analysis and
interpretation of financial statements like common size statements,
comparative analysis and ratio analysis.
It has been my endeavor to bring out the procedure regarding efficient
collection of information, its presentation and also the decision making
process arising theyre from.

CONTENTS

Guidelines for tables and graphs

Introduction
Company profile
Tools of analysis

8
7-9
10-25
26-54

Total capital turnover ratio

55-93

Research methodology

93-94

Data analysis
Limitation
Suggestion
Conclusion
Bibliography

95-119
120
121
122
123

GUIDELINES FOR TABLE AND GRAPHS

1. Focused Group Networks
5

2. Data Analysis
(i)

Current Ratio

(ii)

Quick Ratio

(iii)

Working Capital Ratio

(iv)

Total Capital Turnover

(v)

Working Capital Turnover

(vi)

Fixed Assets Turnover

(vii) Debtors Turnover

(viii) Gross Profit Ratio
(ix)

Creditors Turnover

(x)

Net Profit Ratio

(xi)

Labour Cost Ratio

(xii) Administration Expenses Ratio

(xiii) Factory Expenses Ratio
(xiv) Operating Ratio
(xv) Selling & Distributing Ratio
(xvi) Return & Investment

INTRODUCTION
As my project in Bajaj Allianz, I worked on the analysis of the financial
position of the company. For this the main tool, which is used, is Ratio
Analysis. Financial analysis is the process of identifying the financial
strengths and weaknesses of the firm by properly establishing relationship
between the items of the balance sheet and profit and loss account.
The science of financial analysis. Says Navin Chandra Joshi is
assuming art increasingly important role for appraising the real worth of a
going concern.
An analysis of several financial tools provides all-important basis for
valuing securities and appraising managerial programs. Financial analysis
is a vital apparatus for the interpretation of financial statement.
Financial statements of a company include Trading and Profit and Loss
account, profit and Loss Appropriation and Balance sheet.

These statements may be fruitfully used if they (statements) are analyzed

and interpreted to have an insight into the strengths and weakness of the
firm.
UTILITY OF FINANCIAL ANALYSIS:
Financial analysis seeks to spotlight the significant facts and relationships
concerning managerial performance, corporate efficiency, financial
strengths and weakness and credit worthiness of the company.
7

Financial analysis can be undertaken by management of the firm, or by

parties outside the firm, viz. owners, creditors, investors and others to form
firm. In other word it can be said that financial statements are of much
interest to a number of different groups like:
1. OWNERS
Owners can evaluate the efficiency of the firm to know about how efficient
business is going on. And knowing the liquidity and financial position of
the firm.
2. SHAREHOLDERS
Shareholders can evaluate the efficiency of the management and determine
whether to buy, sell or hold the shares.
3. CREDITORS
Creditors can find out the financial strength and capacity of a borrower, the
value of a floating share on the assets held as security and the value of
unquoted shares.
4. MANAGEMENT
The top management can measure the success or otherwise of a
companys operations, determine the relative efficiency of various
departments, processes and products appraise the individual
performance and evaluate the system of internal control.
5. LABOUR UNION

The labor union assesses whether the company presently

affords a wage increase.
6. ECONOMISTS
The economists analyze the financial statement with a view to
studying the prevailing business and economic condition.

COMPANY
PROFILE

10

COMPANY PROFILE
Bajaj Allianz Life Insurance Company Limited
Bajaj Allianz Life Insurance Co. Ltd. is a joint venture between two leading
conglomerates- , Bajaj Auto, one of the biggest 2 and 3 wheeler
manufacturers in the world and Allianz AG, one of the world's largest
insurance companies.

Bajaj Allianz Life Insurance

Is the fastest growing private life insurance company in India

Currently has over 4,40,000 satisfied customers

We have a presence in more than 550 locations with 60,000

Insurance Consultant providing the finest customer service.

One of India's leading private life insurance companies

Bajaj Allianz General Insurance Company Limited

Bajaj Allianz General Insurance Company Limited is a joint venture between
Bajaj Auto Limited and Allianz AG of Germany. Both enjoy a reputation of
expertise, stability and strength.
Bajaj Allianz General Insurance received the Insurance Regulatory and
Development Authority (IRDA) certificate of Registration (R3) on May 2nd,
2001 to conduct General Insurance business (including Health Insurance
11

business) in India. The Company has an authorized and paid up capital of Rs

110 crores. Bajaj Auto holds 74% and the remaining 26% is held by Allianz,
AG, Germany.
In its first year of operations, the company has acquired the No. 1 status
among the private non-life insurers. As on 31st March 2003, Bajaj Allianz
General Insurance maintained its leadership position by garnering a premium
income of Rs.300 Crores. Bajaj Allianz also became one of the few
companies to make a profit in its first full year of operations. Bajaj Allianz
made a profit after tax of Rs.9.6 crores.
Bajaj Allianz today has a network of 42 offices spread across the length and
breadth of the country. From Surat to Siliguri and Jammu to
Thiruvananthapuram, all the offices are interconnected with the Head Office
at Pune.
In the first half of the current financial year, 2004-05, Bajaj Allianz garnered
a premium income of Rs. 405 crores, achieving a growth of 84% and
registered a 52% growth in Net profits of Rs.20 Crores over the last year for
the same period. In the financial year 2003-04, the premium earned was
Rs.480 Crores, which is a jump of 60% and the profit zoomed by 125% to
Rs. 21.6 Crores

Vision
To be the first choice insurer for customers

12

To be the preferred employer for staff in the insurance industry.

To be the number one insurer for creating shareholder value

Mission
As a responsible, customer focused market leader, we will strive to
understand the insurance needs of the consumers and translate it into
affordable products that deliver value for money.

Allianz Group
Allianz Group is one of the world's leading insurers and financial services
providers.
Founded in 1890 in Berlin, Allianz is now present in over 70 countries with
almost 174,000 employees. At the top of the international group is the
holding company, Allianz AG, with its head office in Munich.
Allianz Group provides its more than 60 million customers worldwide with a
comprehensive range of services in the areas of:
Property and Casualty Insurance,
Life and Health Insurance,
Asset Management and Banking.
Easy access and reach across the country

13

Bajaj Allianz Life has offices now in over 510 towns across the country
enabling customer to buy our products and get quality efficient service
almost anywhere across the country

ALLIANZ AG- A GLOBAL FINANCIAL POWERHOUSE

Worldwide 2nd by Gross Written Premiums - Rs.4,46,654 cr.
3rd largest Assets under Management (AUM) & largest amongst
Insurance cos. - AUM of Rs.51, 96,959 cr.
12th largest corporation in the world
49.8 % of global business from Life Insurance
Established in 1890, 110 yrs of Insurance expertise
70 countries, 173,750 employees worldwide

Bajaj Group
Bajaj Auto Ltd, the flagship company of the Rs. 8000 crore Bajaj group is
the largest manufacturer of two-wheelers and three-wheelers in India and
one of the largest in the world.
A household name in India, Bajaj Auto has a strong brand image & brand
loyalty synonymous with quality & customer focus.

14

A STRONG INDIAN BRAND- HAMARA BAJAJ

One of the largest 2 & 3 wheeler manufacturer in the world

21 million+ vehicles on the roads across the globe

Managing funds of over Rs 4000 cr.

Bajaj Auto finance one of the largest auto finance cos. in India

Rs. 4,744 Cr. Turnover & Profits of 538 Cr. in 2002-03

It has joined hands with Allianz to provide the Indian consumers with a
distinct option in terms of life insurance products.

As a promoter of Bajaj Allianz Life Insurance Co. Ltd., Bajaj Auto has
the following to offer -

Financial strength and stability to support the Insurance Business.

A strong brand-equity.

A good market reputation as a world class organization.

An extensive distribution network.

Adequate experience of running a large organization.

Bajaj Allianz Life Insurance Company has developed insurance solutions

that cater to every segment and age-income profiles. For companies it
15

provides comprehensive 'Employee Benefit Solutions' (Group Term Life,

EDLI, Gratuity, Superannuation, Keyman Insurance and more); for the
individual Invest Gain (a unique life insurance plan where sustenance of
income is combined in the same plan that also pays a lump sum), Cash Gain
(Money Back), Child Gain (Children's plan), Risk Care (Pure Term),
Lifetime Care (whole life), Term Care (term with return of premium),
Swarna Vishranti (Retirement Plan), Protector (Mortgage term insurance
plan), Unit Gain (Unit Linked Plan), Unit Gain Single Premium, Unit Gain
Plus, Unit Gain Plus SP, Lifelong Gain Plan, Unit Gain Single Pension &
Unit Gain Easy Pension Plans.
LIC loses grip on market, share down to 71%
The state-owned life insurance behemoth Life Insurance Corporation
(LIC) despite having a record breaking performance in 2005-06 has lost
over seven per cent of its market share in 2005-06. The LICs market
share

has

fallen

to

71.04

from

78.07%

in

2004-05.

The Bajaj Allianz Life Insurance with a market share of 26.5 % in the
private sector life insurance segment has emerged as the No 1 private
sector life insurance company in 2005 -06 as per IRDA results, leading
by Rs 78 crore in the new business. The total new premium of the Bajaj
Allianz

Life

Insurance

is

estimated

at

Rs

2715

crore.

It is also the no 1 private sector life insurance co. for individual life
business (retail) as per IRDA results leading by Rs 339 cr. in the new
16

business. The company has grown by 216 % for the FY 05- 06.
The former no 1 private sector life insurance company ICICI Prudential
has a market share of 25.7% in the private sector life insurance sector.
The total new premium of the company is at Rs 2637 crore.
The gross premium income of HDFC Standard Life Insurance Company
Limited (HDFC-SL) for the year ended March 31, 2006 was Rs. 1,570
crores as compared to Rs. 687 crores in the previous year a growth of
129%. New business premium income amounted to Rs. 1,026 crores as
compared to Rs. 486 crores last year. The cumulative sum assured stood
at

Rs.

47,730

crores.

For the year ended March 31, 2006 reported a profit after tax of Rs. 4.41
crores as against a loss of Rs. 7.98 crores in the previous year.
The gross written premium for the year stood at Rs 206 crores as
compared to Rs 184 crores in the previous year. The total new premium
of Reliance Life Insurance which bought over the business of AMP
Sanmar is estimated at Rs 193 crore. The Bajaj Allianz General Insurance
with a total new premium of around Rs 1500 crore is reported to have
made a profit of Rs 50 crore in 2006-07.
The ICICI Lombard with a new premium of over Rs 1500 crore in 200607.The private sector life insurance industry has recorded a growth of 84
% in 2006-07.The Tata Aig has posted a total new premium of Rs 463
17

crore while SBI Life has grown by Rs 828 crore during the year. Aviva
Life has increased its premium by Rs 407 crore while Birla Sunlife has
grown its premium by Rs 678 crore in 2006-07
Why Bajaj Allianz?

The Bajaj Allianz Difference

Business strategy aligned to clients' needs and trends in Indian and global
economy / industry
Internationally experienced core team, majority with local background
Fast, decentralized decision making
Long-term commitment to market and clients
Trust
At Bajaj Allianz, we realize that you seek an insurer whom you can trust. Bajaj
Auto Limited is trusted name for over 55 years in the Indian market and Allianz
AG has over 110 years of global experience in financial services.
Underwriting Philosophy
Our underwriting philosophy focuses on :

Understanding the customer's needs

Underwriting what we understand

Meeting the customer's requirements

Ensuring optimal coverage at lowest cost

18

Claims Philosophy
The Bajaj Allianz team follows a service that aims at taking the anxiety out of claims
processing. We pride ourselves on a friendly and open approach. We are focused towards
providing you a hassle free and speedy claims processing.
Our claims philosophy is to :
Be flexible and settle fast
Ensure no claim file to be seen by more than 3 people
Check processes regularly against the global Allianz OPEX (Operational Excellence)
methodology
Sold over 1 million since inception.
Customer Orientation
At Bajaj Allianz, our guiding principles are customer service and client satisfaction. All our
efforts are directed towards understanding the culture, social environment and individual
insurance requirements - so that we can cater to all your varied needs.
Experienced and Expert Servicing Team
We are driven by a team of experienced people who understand Indian risks and
are supported by the necessary international expertise required to analyse and
assess them.
Superior Technology

In order to ensure speedy and accurate processing of your needs, we have established
world class technology, with renowned insurance software, which networks all our
19

offices and intermediaries

Using the Web, policies can be issued from any office across the country for retail
products

Unique, user friendly software developed to make the process of issue of policies
and claims settlement simpler (e.g. online insurance of marine policy certificate)

Unique Forms of Risk Cover

Special PA cover for Amaranth Yatris

Film insurance

Event management cover

Sports & Entertainment Insurance Package

Risk Management- Our Expertise
Our service methodology is tried, tested and Proven the world over and involves:

Risk identification: Inspections

Risk analysis: Portfolio review and gap analysis

Risk retention

Risk Transfer: To an insurer as well as reinsurer (as required)

Creation of need based products

Ongoing dialogue and proactivity

20

Focused group network

Bajaj Allianz Life Insurance

Agency Channel

Bancassurance

Group and Alternate Channel

Branches
Standard Chartered
Bank

Satellite
Satellite

Syndicate Bank

Satellite

Group Employee
Benefit
Corporate Agency
Franchisee

Centurion Bank
Brokers
Cosmos Bank
Jankalyan Sahakari Bank
Jijamata Sahakari
Co-op Bank

21

Hana Bank
Grand
Commercial

Allianz Group - Global

Banc assurance Experience
Ta Chong
Bank
Taipei Bank
Asia
Kore
a
Taiwa
n

Mala
ysia
Thail
and

Eu
ro
pe
Ge
rm
an
y

Union Bank
Alliance
Bank
Bank of
Ayudhya

Fr
an
ce
Ital
y

Bradesco
Banco Bice
BanCrecer

Sout
h
Amer
ica
Brasil

Sp
ain
Po
rtu
gal

22

Dresdner Bank
Hypo Vereins bank
Raiffeisen bank
Credit Lyonnais
Unicredito Italiano
Rolo Banca
Casa di Risparmio
Banco di Scicilia
Banco Antoniana
Popolare
Banco Regionale
Europea
Banco Popular
BPI-SGPS
Bawag
Ergo Bank
Bank of Piraeus
Zagre backa Bank
Bulbank
Pekao S.A.

TOOLS OF ANALYSIS
Trading and profit and loss account, balance sheet and various schedules
prepared at the end of the year do not always convey to the reader the real
significance of operating results financial health of the business. And
rarely can satisfactory diagnosis be reached on the basis of such
information alone.
The analysis of the facts and related data was considered to be important
and a number of techniques were developed and the most important
techniques are given below:

I) RATIO ANALYSIS:
An analysis of financial statements on the basis of ratio is known as ratio
analysis. A ratio is a mathematical relationship between two or more
related items taken from financial statements. Ratio analysis is very
helpful to outsiders as well as to the management.

II) FUNDS FLOW ANALYSIS:

Fund Flow statement is a statement, which depicts the source from which
funds are obtained and tile, uses for which they are being put. This
statement is always accompanied by a schedule of working capital

23

changes. This statement as tool of financial analysis provides of

explanations regarding the financial condition of the business concern.

III) CASH FLOW ANALYSIS:

This analysis based on a statement depicting inflow and out flow of cash.
Cash flow statement is deigned to highlight upon the causes, which bring
changes in cash position between balance sheet dates. A business unit
should always try to keep sufficient cash, neither more nor less.
IV. COMPARATIVE STATEMENT:
These statement are those which summaries and present related accounting
data for a number of years incorporating therein the changes in individual
items of financial statements. Comparative statements can be prepared for
income statement well as position statement or balance sheet.
V. TREND ANALYSIS:
Trend analysis is carried out by calculating trend ratio (percentages) and /
or by plotting the accounting data on the graph paper or chart. Trend
analysis of business facts is very significant from the point of view of
forecasting or budgeting. It discloses the changes in the financial and
operating data between specific periods.

24

RATIO ANALYSIS
An analysis of the financial statements with the help of ratio may be
termed as Ratio Analysis. It involves the process of computing,
determine and presenting the relationship of items of financial
statements and comparison and interpretation of these ratios and uses
them for future projections.
MEANING OF RATIO:
A ratio is a mathematical relation ship between two related items
expressed in quantitative firm. This quantitative relationship may be
expressed in either of the following ways:

a) In proportion: In this form the amounts if two items are being

expressed in a common denomination.
b) In rate or times or co-efficient: when ratio is expressed in this
c) Form, it is called as turn over and is written in times.
d) In percentage: a special type of rate, which expressed the relation
in hundredth.

25

OBJECTIVE:
The objective of ratio analysis is to help management in analyzing
and interpreting the financial statement, to get adequate information
useful for the performance of various function like planning
coordination, control, communication and forecasting etc. Some
general utility of ratio analysis is given below:

a) Trends in cost, sales, profit and other facts are related by the past
ratios and the future events can be forecasted on the basis of such
trends.
b) Ideal ratios may be constructed and the relation found between
strategic ratios may be used for achieving desired coordination.
c) Ratios may be used as instrument of management control
particularly in the areas of sales and costs.
d) Ratios are also facilitating the function of communication.
e) Ratios also may be used as a measure of efficiency.
f) It helps to make profitable investments.

26

NEEDS FOR RATIO ANALYSIS:

The need or significance of ratio analysis arises due to the following
facts:
a) Business facts shown in financial statement do carry any
importance individually. Their importance lies in the fact that
they are interrelated and any correct or accurate conclusion is to
be drawn by their uses.
b) Ratio analysis as a tool for their interpretation of financial
statements is also significant because ratios help the analysis to
have a deep peep into the data given in statements. Ratios provide
power to speak.
The uses of ratio analysis have increased considerably. It is now
being used as a device to diagnose the financial health of a concern.
Ratio analysis may highlight upon the few phases of the business
operation in which the outsiders are most interested. In financial
analysis, a ratio is used as a benchmark for evaluating the financial
position and performance of the firm.
Thus ratio analysis is a powerful tool for both external and internal
analysis.
STAGES FOR RATIO ANALYSIS:
The following procedure is generally followed, while analyzing the
financial statements through ratio analysis:
27

STEP I: Selection of the relevant data from the financial statements

depending upon the objective of the analysis.
STEP II: Calculation of appropriate ratios from the above data.
STEP III: Comparison of the calculated ratio with the ratios of the
same from in the past, or the ratios developed from projected
financial statements or the Ratios of some other, firm or the
comparison with the ratio of the industry to which the firm belongs.

STEP IV: Interpretation of ratios.

a) Balance sheet ratio: i.e., ratios calculated on the basis of tile
figures of the balance sheet only.
b) Profit and loss account ratios: i.e., ratios calculated on the basis of
the figures of profit and loss account only.
c) Combined ratio: i.e., ratios based on figure of profit and loss
account as well as balance sheet.

STANDARD OF COMPARSION:
The ratio involved comparison for a useful interpretation of the
financial statements. A single ratio in itself does not indicate
favorable or unfavorable condition. It should be compared with
some standard. Standards of comparison ma consists of:

28

a) Past ratios, i.e., ratios calculated from the past financial statement
of the same firm;
b) Competitors ratios, i.e., ratios of some selected firms, especially
the most progressive and successful competitor , at the same
point in time;
c) Industry ratios , i.e., ratio of the industry to which the firm
belongs;
And
d) Projected ratios, i.e., ratios developed using the projected, or
Performa, financial statements of the same firm.

29

ADVANTAGES OF RATIO ANALYSIS

a) The detailed ideas of he working of a concern are found out.
b) The efficiency of a concern becomes evident when analysis is
based on accounting ratios.
c) Comparison can be made on the basis of the ratio over a number
of years to measure profitability.
d) Accounting ratios reveal the financial position of a company that
in turn make lending and investment decision easier.
e) If the accounting ratios are prepared for a number of years, then a
trend is established which helps in preparation of plans for the future.
f) Weakness in financial structure on account of incorrect policies in
the past or present is revealed through these accounting ratios.
g) Comparison can also be made between one department of a firm
and another department of the same firm to find out the performance
o the various departments in the firm.

30

LIMITATIONS OF RATIO ANALYSIS:

a) False results:
Ratios are based upon the financial statements. In case financial
statements are combined or the data upon which the ratios are
based is in combined, ratios calculated will be also be false and
defective.
b) Limited Comparability:
The ratio of the one firm cannot always be compared with the
performance of other firm, if they do not adopt uniform
accounting policies.
c) Absence of standard university accepted technology.
d) Price level changes affect ratios:
Changes in price level often make comparison of figure for
various years difficult.
e) Ignore Qualitative Factors:
Ratio analysis is the qualitative measurement of the performance
of the business. It ignores the qualitative aspect of the firm, how
so ever important it may be. It shows that ratio is only one-sided
approach to measure the efficiency of the business.
f) No single standard ratio:
There is not a single standard ratio, which can indicate the true
performance of the business at all time and in all circumstances.
31

Every firm has to work in different situations and circumstances:

so a particular ratio can be not been supposed to be standard for
every one.

g) Ratios may be worked out for insignificant and unrelated

figures:
Accounting ratios may be worked out for any two figures even if
they are not significantly related.

32

CARE IN USE OF RATIOS:

Ratio analysis is useful for financial analysis but to get better result
ratio analysis is required to done with care as several factors affect
the efficiency of ratios. These factors are discussed below:
a) Type of business under consideration affects the ratios and
conclusions drawn from them.
b) Seasonal character of the business affects the ratio for a particular
type of industry or business enterprise.
c) Quality of assets also affects the ratio analysis and gives different
interpretation to different business enterprises.
d) Adequacy of data is another considers ratio for comparison of
particular factors with each other.
e) Modification of ratios reflects only the past performance and
must be modified by future trends of business.
f) Interpretation of ratios should not be relied upon in isolated and
should

be

considered

with

accounting

document

for

interpretation.
g) Non financial data ratios based on financial data of firm should
be considered with non- financial data to supplement the
financial ratios and give better interpretation.

33

TYPES OF RATIOS
Ratio can be classified for the purpose of exposition into four broad
groups:
Liquidity ratio
Leverage ratio
Profitability ratio
Activity ratio

LIQUIDITYRATIO:
Liquidity ratio s measures the short term solvency or the short
term financial soundness of the business. It is extremely essential for
a firm to be able to meet its obligations they become due.
Liquidity Ratios measure the ratio ability of the firm to meet his
current obligation, this ratio is also an effective source to ascertain
whether the working capital has been effectively utilizes.
Liquidity in the ratio means ability to repays loans. In fact analysis of
liquidity needs the preparation of cash budget and cash and fund
flow statements but Liquidity ratio by establishing a relation ship
between cash and other current assets to current obligation, provide a
quick measure of liquidity.
The failure of company to meet its obligation, due to lack sufficient
liquidity, will result in bad credit image; loss of creditors
34

confidence, or even in lawsuits resulting in the closure of the

company.
A very high degree of liquidity is also bad. Idle assets earn nothing.
The firms funds will be unnecessarily tied up in current assets.
Therefore, it is necessary to strike a proper balance between liquidity
and lack of liquidity.
The ratios calculated for Bajaj allianz who indicates the extent of
liquidity are:

CURRENT RATIO
QUICK RATIO
CASH RATIO
NET WORKING CAPITAL RATIO

LEVERAGE RATIOS
A firm should have a short-term as well as long term financial
position. To judge the long term financial leverage or capital
structure. In other word, it can be said that this financial ratios
through light on the long-term solvency of a firm as reflected in its
ability to assure the long-term creditors with regard to:
(a) Periodic payment of interest during the period of the loan.
(b) Repayment of principal on maturity.
35

As a general rule; there should be an appropriate mix of debt and

owners equity in financing the firms assets, the manner in which
assets are financed has the number of implications.
The process of magnifying the shareholders return through the
employment of debt is called financial leverage or trading on
equity.
If the cost of debt is higher than the firms overall rate of return, the
earning of shareholders will be reduced an addition there is a threat
of insolvency of the firm is actually liquidated for non-payment of
debt holders dues the worst sufferers will be shareholders the
residual owners.
OBJECTIVES OF LIQUIDITY RATIOS:
Solvency refer to the financial capability of the enterprises in
honoring their long term commitments (obligations) these ratios
serve our following purposes:
(a) Ascertaining capability to honor long term obligation, such as
repayment of loan and interest; there on.
(b) Ensuring long-term financial stability of the business.
(c) Measuring relationship between internal and external equity.
b (d) Leverage ratios may be calculated to determine the proportion of
debt in total financing.
Those calculated for these studies are:
36

 DEBT EQUITY RATIO

TOTAL DEBT RATIO
INTEREST COVERAGE RATIO
FIXED ASSETS RATIO
DEBT TO TOTAL FUNDS
RESERVE TO CAPITAL RATIO
CAPITAL GEARING RATIO
PROPRIETORY RATIO
TURNOVER RATIOS:
Turnover means sales , so turnover ratio is related to sales. It is an
accepted fact that sales have direct relationship with the performance
of the business. Higher sales means better performance which really
means of the business. Fund are invested in various assets in
business to make sales and to earn profit .the efficiency with which
assets are managed directly effects the volume of sales.
The better the management of assets, the larger is the amount of
sales and profits.
This ratio indicates the speed with which assets are converted or
turned over into sales.
Depending upon the purpose, a number of turnover ratios can be
calculated.
37

Activity ratios involve a relationship between sales and assets .A

proper balance between sales and assets generally reflects that assets
are managed well. Several activity ratios can be calculated to judge
the effectiveness of assets utilization.

Those calculations for this study are:

TOTAL CAPITAL TURNOVER RATIO

WORKING CAPITAL TURNOVER RATIO
FIXED ASSETS TURNOVER RATIO
DEBTORS TURNOVER RATIO
CREDITORS TURNOVER RATIO

38

PROFITABILITY RATIOS:
It is fact that sufficient profit must be earned to sustain the operations
of the business to be able to obtain funds from investors for
expansion and growth and to contribute towards the social overheads
for the welfare of the society.
Profit is the difference between revenue and expenses over a period
of times.
Profit is the ultimate output of the company; it will have no, future if
it fails to make sufficient profit.
Therefore the profit ability ratios are calculated to measure the
operating efficiency of the company.
Generally, the major types of profitability ratios are:
Profitability in relation to sales
Profitability in relation to investment
A company should be able to produce adequate profit on each rupee
of sales .The profitability of the company should also be evaluated in
term of firms investment in assets and in term of capital contribution
b creditors and owners.
If the company profit has to be examined from the point of view of
all investors. He appropriate measure of profit is operating profit.
Operating profit is equivalent of earning before interest and tax.

39

When the firm does not have non-operating in company. This

measure of profit shows earning arising directly from the
commercial operation of the business without the effect of financing.
Those calculations for this study are:

GROSS PROFIT RATIO

NET PROFIT RATIO
EXPENSE RATIO:
1. SELING AND DISTRIBUTION EXPENSES RATIO
2. OFFICE EXPENES RATIO
3. RATIO OF MATERIAL CONSUMED
4. RATIO OF DIRECT LABOUR
5. RATIO OF FACTORY EXPENSES
OPERATING EXPENES RATIO
RETURN ON INVESTMENT RATIO

40

LIQUIDITY RATIOS
CURRENT RATIO:

Current ratio may be defined as the relationship between current

assets and current liabilities.
The ratio indicates the short-term financial soundness of the
company. It judge whether the current assets are sufficient to meet
the current obligation out of the current assets.
This ratio known as working capital ratio, is a measure of general
liquidity and is most widely used make the analysis of short term
financial position or liquidity of a firm .It is calculated by dividing
the total of current assets by the total of current liabilities.
Current assets are those assets, which are converted into cash with in
one year, and current liabilities are those liabilities, which are to be
paid within a year.

Objective and significance:

This ratio is an indicator of the firms ability to promptly meet its
short-term liability. It is used to assets the short-term financial
position.

41

This ratio is calculated as follow:

CURRENT RATIO =

CURRENT ASSETS
CURRENTLIABILITIES

Where,

Year

2013

2014
(lacs)

A)

2015
(lacs)

(lacs)

Current assets:

Inventories

348.86

275.38

297.10

Sundry Debtors

397.44

362.49

369.20

129.19

98.62

156.47

0.44

0.54

0.46

Loans & Advances

65.39

59.09

65.76

Total (A)

941.32

796.12

227.03

249.60

311.88

52.88

26.56

31.10

Cash in hand and

Bank
Accrued Interest

B)

888.99

Current Liabilities:

Sundry Creditors
Other Liabilities

42

 Pro. for Leave

Encashment
Total (B)
Then the Ratio is:
Remarks:

73.33

84.26

93.44

353.24

360.42

436.42

2.66

2.21

2.03

A relatively high current ratio is an indication that the firm is liquid and has
the ability to pay its current obligation in time as when they become due,
vise versa. As a convention the minimum two to one ratio e.g. 2:1 is referred
as a banks rule of thumb.
QUICK RATIO:
Quick ratio establishes a relationship between quick assets or liquid assets
and current liabilities.
An asset is liquid if it can be converted into cash immediately or reasonably
soon without a loss of value.
Cash is considered most liquid assets.
OBJECTIVE AND SIGNIFICANCE:
This ratio is also an indicator of short term solvency of the firm .It is used to
test the short-term liquidity of the firm in its correct form.
This is calculated as by dividing of liquid assets by current liabilities.
QUICK RATIO =
INVENTORIES

CURRENT ASSETS

43

CURRENT LIABILITIES
Where,
Year

2013

2014

(lacs)
A)

2015

(lacs)

(lacs)

Current assets:

Inventories

348.86

275.38

297.10

Sundry Debtors

397.44

362.49

369.20

Cash in hand and

Bank

129.19

Accrued Interest

0.44

Loans & Advances

Total (A)

98.62
0.54

65.39

0.46
59.09

941.32

156.47

65.76

796.12

888.99

227.03

249.60

311.88

52.88

26.56

31.10

73.33

84.26

93.44

353.24

360.42

436.42

1.68

1.44

1.36

B) Current Liabilities:
Sundry Creditors
Other Liabilities
Pro. for Leave
Encashment
Total (B)
Then ratio is:

Remarks:

44

Usually high quick ratio is an indication that the firm is liquid and has the
ability to meet its current liabilities in time .As a rule of thumb or as a
convention quick ratio of one to one i.e., 1: 1 is considered satisfactory.

CASH RATIO:
Since cash is the most liquid assets be examined cash ratio and its equivalent
to current liabilities.

Trade investment or marketable securities are equivalent of cash; therefore,

they may be included in the computation of cash ratio.

CASH RATIO
SECURITIES

CASH + MARKETABLE

CURRENT LIABILITIES
Year

2013

2014

(lacs)

(lacs)

2015
(lacs)

NET WORKING CAPITAL RATIO:

The difference between current assets and liabilities is called Net Working
Capital Ratio.

45

Net Working Capital used as a measure of a firms liquidity. It is considered

as that between two firms the one having the larger Net Working Capital
has the greater ability to meet its current obligation.

Net Working Capital measures the firms potential reserveror of funds. It can
be related to net assets or capital employed.

NET WORKING CAPITAL=

NET WORKINGCAPITAL
NET ASSETS

Net Working Capital:

Year

2013

2014
(lacs)

2015
(lacs)

(lacs)
Current assets

Less :current

941.32

796.12

liabilities

353.24

888.99

360.42

436.42

588.08
452.57

NET ASSETS:
46

435.70

Year

2013

2014

2015

(lacs)

(lacs)

(lacs)

FIXED ASSETS
(LESS DEPRICATION)

114.25

115.53

113.03

ADD: NET CURRENT

ASSETS (CA-CL)

588.08

435.70

702.33

Then the ratio is:

0.80

Remarks:
Higher the ratio higher the liquidity.

47

452.57

551.23

565.60

0.79

0.80

Table 1)
LIQUIDITY RATIOS

2013

2014

2015

YEAR
2.66

2.21

2.03

1.68

1.44

1.36

0.36

0.27

0.36

0.80

0.79

0.80

CURRENTRATIO
QUICK RATIO
CASH RATIO
WORKING CAPITAL
RATIO

48

COMMENT:
In the above calculation of liquidity ratio, the entire ratios are good but
above the standard ratio limit of the liquidity except the cash ratio.
In the current ratio of the company in year the 2006, 2007, 2008 the ratio is
2.66, 2.21, and 2.03 respectively.
These ratios of liquidity indicate the over capitalization of current assets.
In quick ratio, the ratios shows the company enjoy the high liquidity
position, it is good however too much liquidity is not beneficial for the
company future and the quick ratios is also more than the standard ratio.
The cash ratio of the company, the ratios is well below the standard, it means
that the company does not keep sufficient cash.
Working capital ratio shows the liquidity position of the company is good.
So overall liquidity position of the company is satisfactory except the cash
poor performance and the Current ratio and Quick ratio shows over the
standard ratio.

49

LEVERAGE RATIO:
Bajaj allianz is one of the units of the Gangol Sahakari Dugdh Utpadak
Sangh limited.
So it is hard to calculate the Leverage Ratio as a separately because its shares
are jointly issued and in-group the debts are taken.
So calculation is separately not possible because separate datas are not
available.

50

ACTIVITY RATIO

A) CAPITAL TURNOVER RATIO:

Turnover here indicates the speed or rate with which capital employed is
rotated in the process of doing business. Efficient rotation of capital would to
higher profitability. The resulted raw would show the number of times and
capital has been in the process of during business.

OBJECTIVE AND SIGNIFICANCE:

Capital turnover ratio establishes the relationship between sales and capital
employed.
The objective of working out this ratio is to determine how efficiently the
capital employed is being used and this in turn shows the promises of
profitability and efficiency of management.
It is calculated as Capital Turnover Ratio.

CAPITAL TURNOVER RATIO =

NET SALES

CAPITAL EMPLOYED:

51

NET FIXED ASSETS

114.25

115.53

113.03
Add. WORKING
CAPITAL

TOTAL

588.08

435.70

702.33

452.57

551.23

565.60

WORKING CAPITAL:
YEAR

CURRENT ASSETS

2006

2007

2008

(lacs)

(lacs)

(lacs)

941.32

796.12

888.99

360.42

436.42

435.70

452.57

Less. CURRENT
LIABILITIES

TOTAL

353.24

588.08

52

YEAR

SALES

Then ratio is:

2013

2014

1914.66

2142.51

2.72

3.89

2015

2699.31

4.77

Remarks:

Higher the ratio the better it is. However too high a ratio may indicate over
trading resulting in paucity of funds.

B) WORKING CAPITAL TURNOVER RATIO:

Working capital of a concern is directly related to sales the current assets

like debtors, bill receivable, cash, stock etc. change with the increase or
decrease of sales. The working Capital is taken as:
Working capital = Current Assets Current Liabilities

Working Capital turnover ratio indicates the velocity of the Utilization of net
working capital. This ratio indicates the number of times the working capital
is turn over in the course of a year.

53

This ratio can be calculated as under:

WORKING CAPITAL TURNOVER =

SALES
WORKING CAPITAL

Where,
Year

2013

2014
(lacs)

Sales

1914.66

2015
(lacs)

(lacs)

2142.51

2699.31

941.32

796.12

888.99

353.24

360.42

436.42

Working Capital:
Current assets
Less:Current
Liabilities

Total

Then ratio is:

588.08

435.70

3.26

4.92

Remarks:
A higher the ratio indicates efficient utilization of working capital.

54

452.57

5.96

C) FIXED ASSETS TURNOVER RATIO:

Fixed assets are used in the business for producing goods to be sold.
The effective utilization of fixed assets will result in increased production
and reduced cost.
It also ensures whether investment in the assets have been judicious or not.

OBJECTIVE AND SIGNIFICANCE:

Fixed assets turnover ratio indicates how efficiently or other wise the fixed
assets are used
The following formula is used for measurement of the ratio:

FIXED ASSETS TURNOVER =

NET SALES

FIXED ASSETS
Where,
Year

Sales

2006

2007

2008

(lacs)

(lacs)

(lacs)

1914.66

2142.51

2699.31

Net FIXED ASSETS :

114.25

115.53

113.03

Then the ratio is:

16.76

18.55

23.88

Remarks:

55

Higher the ratio is it better of the business. An increasing trend shows that
financial Assets are utilized efficiently to achieve higher sales.

D) DEBTORS TURNOVER RATIO:

This ratio establishes the relationship between net credit sales and averages
of debtors of the year.

OBJECTIVE AND SIGNIFICANCE:

This ratio indicates the efficiency with which debts are collected .It will be in
the interest of business, if the ratio is higher which will indicate the debts are
collected quickly.
This ratio is calculated as by the following formula:

DEBTORS TURNOVER RATIO =

TOTAL SALES

ACCOUNT RECEIVABLE

56

YEAR

2013

2014

2015

(lacs)

(lacs)

(lacs)

1914.66

2142.51

2699.31

TOTAL DEBTOR

458.24

410.57

422.48

Then the ratio is

4.18

5.22

6.39

TOTAL SALES

Remarks:

Higher the ratio indicates economy and efficiency in the collection of

amount due. It shows that collection performance of BAJAJ ALLIANZ is
improving year by year. Credit period has been reduced to 3 months to 2
months in 2006.

E)

CREDITORS TURNOVER RATIO:

Creditors turnover ratio indicates the velocity with which the payment for
credit purchase is made to creditors.
OBJECTIVE AND SIGNIFICANCE:

Creditors turnover ratio is the debt payment enjoyed with indicates whether
the firm is enjoying actually the credit premised by suppliers.

This ratio of Bajaj allianz is calculated as follows:

57

CREDITORS TURNOVER RATIO =

TOTAL PURCHASE
ACCOUNT PAYABLE

YEAR

TOTALPURCHASES

TOTAL PAYABLE

Then the ratio is:

2013

2014

(lacs)

(lacs)

(lacs)

634.31

797.74

1140.73

227.03

249.60

2.79

3.20

2015

311.88

3.66

Remarks:
Higher creditors turnover ratio indicates that company ii increasing trend
prompt in paying its creditor which enhance its creditworthiness but it also
signify that company is taking full advantages of credit facilities provide by
creditors period is beneficial for the company.

58

Table2)
ACTIVITY RATIOS

YEAR
TOTALCAPITAL

2.61

3.89

4.77

3.26

4.92

5.96

16.76

18.55

23.88

4.18

5.22

6.39

2 .79

3.20

3.66

TURNOVER
WORKING CAPITAL
TURNOVER
FIXEDASSESTS
TURNOVER

DEBTORSTURNOVER
CREDITORS TURNOVER

COMMENT:

59

In the above calculation of turnover ratio of the company, the ratio of these
shows that the performance of business is better and all the available
resources are well utilized.

The total capital turnover ratio shows good sign of increasing trend. Which
indicate the efficient used of the employed capital in sales.

The working capital ratio, it shows the better utilization of the working
capital incurred in the operation.

The above fixed assets turnover ratio shows a good sign and indicates that
company utilized its fixed assets in good manner in conversion of its net
assets to the sales.

The debtors turnover ratio shows of increases trend year by year that means
the company provide its credit payment period to its customers, which
indicate the liberal debt collection policy of the company.

The calculated creditors turnover ratio indicates the company enjoys good
credit payment period from its creditors.

60

So, overall the turnover ratio of the company is good except the debtors
turnover ratio, which shows the liberal collection policy, and more credit
collection period given to its customers, which is not beneficial of company
growth.

PROFITABILITY RATIOS
61

A)

GROSS PROFIT RATIO:

Gross profit equal the difference between net sales revenue and the cost of
goods sold.

The gross profit margin reflects the efficiency with which management
produces the each unit of product.

This ratio indicates the average speed between the cost of goods sold and the
sales revenue.

It is calculated by dividing gross profit by sales.

OBJCTIVEAND SIGNIFICANCE:
Gross profit ratio is a reliable guide to the adequacy of selling prices and
efficiency of stock control.

The help of following formula calculates it:

62

GROSS PROFIT RATIO =

GROSS PROFIT

100

NET SALES

OR
Sales cost of goods sold

100

Net sales

Where,
Year

GROSS PROFIT:

NET SALES:

Then the ratio is:

2013

2014

2015

(lacs)

(lacs)

(lacs)

770.00

825.41

1957.38

1914.66

2142.51

40%

39%

Remarks:
Higher the ratio better is the result.

63

2699.31

72%

B) NET PROFIT RATIO:

A commonly used measure is return on sales after termed net profit margin.

This ratio establishes a relationship between net profit and sales and
indicates management efficiency in manufacturing, administrating, and
selling the product.

This ratio is the overall measure of the firms ability to turn each rupee sales
into net profit.

If the net margin is inadequate firm will fail to achieve the satisfactory return
on owners equity.
OBJECTIVE AND SIGNIFICANCE:
Net profit ratio helps in determining the efficiency of the business.
Objective of working net profit ratio is to determine whether operating cost
is with in the desired parameters or not.
This ratio of Bajaj allianz is calculated from the following formula:

NET PROFIT RATIO =

NET PROFIT

NET SALES

64

100

Year

2013

2014

(lacs)

Net profit:

Net sales

Then the ratio is:

(lacs)

49.99

71.68

1914.66

2142.51

3%

3%

2015
(lacs)

130.88

2699.31

5%

Remarks:

Higher the ratio is better is the profitable.

A)

EXPENSES RATIOS:

Expense ratios are calculated to ascertain the relationship that exists between
operating expenses and volume of sales.

These ratios are calculated by dividing the sales into each individual
operating expenses.
65

It indicates the portion of sales, which is consumed by the various operating

expenses.

OBJECTIVEAND SIGNIFICANCE:
These ratios are valuable in comparing various firms in the same industry of
operating data from year to year for the same firm.

The expense ratios are calculated as by the following formula:

a)

RAW-MATERIAL USED =

MATERIAL COST

100

NET SALES
YEAR

2013

2014

(lacs)
RAW- MATERIAL
NET SALES
Then the ratio is

(lacs)

673.10

812.20

2015
(lacs)
1113.95

1914.66

2142.51

2699.31

35%

38%

41%

RATIO OF DIRECT LABOUR:

66

DIRECT LABOUR COST

100

NET SALES
YEAR

2013

2014

(lacs)
DIRECT LABOUR
NET SALES

(lacs)

66.78

(lacs)

70.82

1914.66

Then the ratio is

2015

140.74

2142.51

2699.31

3%

5%

3%

c) RATIO OF FACTORY EXPENCES:

FACTORY EXPENCES

100

NET SALES
Where,
YEAR

2013
(lacs)

2014
(lacs)

FACTORY EXP.

169.49

NET SALES

1914.66

2142.51

9%

9%

Then the ratio is:

183.59

d) RATIO OF OFFICE EXPENSES:

67

2015
(lacs)
246.74
2699.31
9%

OFFICE EXPENSES

100

NET SALES
Where,
YEAR

2013

2014

(Lacs)

OFFICE EXPENSES
NET SALES
Then the ratio is:

2015

(Lacs)

142.43

(Lacs)

120.70

1914.66

2142.51

7%

6%

135.68
2699.31
5%

E) SELLING AND DISTRIBUTION EXPENSES RATIO:

SELLING AND DISTRIBUTION
EXPENSES
X

100

NET SALES
YEAR

2013

2014

(Lacs)

(Lacs)

265.93

296.26

2015
(Lacs)

Selling & Dist.

Expenses

68

348.31

NET SALES

1914.66

Then the ratio is:

14%

2142.51

2699.31

14%

13%

D) OPERATING EXPENSES RATIO:

This ratio measures the extent of cost incurred for making the sales.
This ratio matches cost of goods sold plus other operating expenses on the
one hand with net sales other hand

OBJECTIVE AND SIGNIFICANCE:

Operating profit is the test of the operational efficiency of the business. It

shows the percentages of sales that are absorbed by the cost of sales and
operating expenses.

This ratio of Bajaj allianz as calculated as follows:

OPERATING EXPENSES RATIO =

COST OF GOODS SOLD + OTHER

OPERATING EXPENSES
100

NET SALES
69

YEAR

2013

2014

2015

(Lacs)

(Lacs)

(Lacs)

1144.65

1317.10

741.93

COST OF GOODS
SOLD

Add.OPERATING
EXPENSES

TOTAL:

Then the ratio is:

690.75

757.13

869.09

1835.40

2074.23

1611.02

97%

60%

96%

Remarks:
Lower the ratio of the net operating expenses is beneficial for the company.

RETURN ON INYESTMENT:

70

The term investment may refer to total assets or net assets. The funds
employed in the net assets are known as capital employed.

The conventional approach of calculating return on investment (ROI) is to

divide profit after tax by investment.

In vestment represents tool of funds supplied by shareholders and lenders,

while profit after tax represents residue income of shareholder, therefore, it is
conceptually unsound to use profit after tax in the calculation of ROI. It is
calculated as under:

Return on Investment =

EBIT

100

Net assets
Where,
Year

EBIT

2013

2014

2015

(lacs)

(lacs)

(lacs)

45.25

68.74

127.86

CAPITAL EMPLOYED

71

FIXED ASSETS

114.25

115.53

113.03

Add. WORKING
CAPITAL

588.08

435.70

452.57

TOTAL

702.33

Then, the ratio is:

551.23

6%

565.60

12%

23%

Remarks:
Higher the ratio better is the results.
Table 3)

PROFITABILITY RATIOS
YEAR

2013
(%)
40

GROSS PRIFIT RATIO

72

2014
(%)
39

2015
(%)
72

NET PROFIT RATIO

MATURIAL COST
LABOUR COST
FACTORY EXPENSES
ADMINISRATION

3
35
3
9
7

3
38
3
9
6

5
41
5
9
5

EXPENSES
SELLIND& DISTRIBUTION

14

14

13

EXPENSES
OPERATING EXPENSES
RETURN ON INVESTMENT

96
6

97
12

60
23

COMMENT:
In the above-calculated ratio of the profitability ratio of the company, the
entire ratio shows a good sign of except the increases in the expense ratio.
The gross profit ratio indicates the good sign but not satisfactory in the year
2006, 2007 the ratio is 40%, 39% respectively. But in year 2008 it shows
good sign which is 72%. Which indicates the efficiency in stock control and
an adequence of the selling price.

The Net Profit ratio shows good and increasing trend sign, which indicate
the operation expenses, is in desired parameters.

The factory expenses ratio, administration ratio, selling and distribution ratio
indicates in under controlled.

73

Material and labor cost shows slightly increase, it is due to increase in sale
and high cost of raw material.
The operating ratio of this year is too much high in comparison to other
years.
Return on investment ratio is good and satisfactory in year 2008the ratio is
23%.
Which indicate the better performance of the company.

So, over all profitability position of the company is good except the
increasing percentages in the operating expense and expenses ratio.

74

RESEARCH METHODOLOGY
Marketing Research is a key to evaluation of successful marketing strategy
and programmes. It is an important tool to study buyer behavior, changes in
consumer life style and consumption patterns brand loyalty and analysis the
competitors products positioning M.R. is also useful to help create and
enhance equity.

RESEARCH OBJECTIVE
What to researcher want to achieve is objective.
Objectives of research are

To analyze the financial performance through ratio analysis.

75

RESEARCH DESIGN
A specific frame work used for data collection of scientifically6 conducted
project is known research design. There are three types of research design.
A.

Exploratory

B.

Descriptive

C.

Causative

EXPLORATORY RESEARCH :
Exploratory research is done to know why & how certain phenomenon
occurs, how consumer evaluate quality, tangible features, replacement policy
warranty.
DESCRIPTIVE RESEARCH :
Descriptive research is carried out to describe a market characteristics Exp.
To understand the consumer buyer behavior.
CAUSATIVE :
Causative research is done to establish cause and effect relationship. Exp.
The influence of income and life style on purchase decision.

76

SOURCES OF DATA
Usually, the information needed to solve the problem can not be found in
internal of published external records. The research must be depend on
primary data. Which are collected scientifically for the study.
Data are mainly types :Primary Data :Primary sources refers to data collected directly from the market place like
customer, traders & suppliers. They are often reliable data sources & help in
overcoming limitations of secondary data.
Primary data is again mainly of two types
-

Census &

Sample

Census :
Refers to collecting of data from the entire population. The most common
from of census is the Indian population census or compilation of voters list in
an area. It takes along time & hence is not suitable for market researcher.
The primary data is colleted from Annual balance sheet of Bajaj allianz
Dairy.

77

SECONDARY DATA
Secondary data means data that are already available i.e., they refer the data,
which have already been collected and analyzed by someone else. When the
researcher utilizes secondary data, then he has to look into various sources
from where he can obtain them, IN this case he is certainly not confronted
with the problems that are usually associated with the collection of original
data. Secondary data may either be published data or unpublished data.
Usually published data are available in:
1 Various publications of the central, state and local governments;
2 Various publications of foreign government or of international bodies and
their subsidiary organization;
3 Technical and trade journals:
4 Books, magazines and newspapers;
Reports and publications of various associations connected with business
and industry, banks, stock, exchanges etc.;
Reports prepared by research scholars, universities, economists etc.

In

different fields, and

Public records and statistics, historical documents, and other sources of
published information. The sources of unpublished data are many; they
May be found in diaries, letters, unpublished biographies and
autobiographies and also may be available with scholars and research
workers, trade associations, labor bureaus and other public/private
78

individuals and organizations.

OBJECTIVES

To assess the significance of the financial ratios. By selecting a few

parameters such as liquidity, turnover and profitability.
To make the ratio as simple as for the every part of the aspect and
find out those facts which are directly used.
To study the financial position for the BAJAJ ALLIANZ,
PARTAPUR, MEERUT.
Give suggestion towards the company factors to increase the
efficiencys

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SWOT ANALYSIS
STRENGTHS

Biggest sourcing base for insurance and insurance products in India.

Indias best-known local Brand across all categories.

27% market share in the national Insurance market.

Presence of a well-established distribution and delivery network for

dairy products.

Penetration pricing strategy Bajaj allianz is the price warrior in the

Insurance market and currently has a very wide range to offer for all price
points.

Normally consumers in India prefer Dairy Insurance rather than

frozen desserts and Bajaj allianz has a wide portfolio in the dairy Insurance
segment.

Bajaj allianzs main rival, has 8% market share, the second largest

share in the organized sector now is trying to extend its cold chain in many
cities and towns Whereas Bajaj allianz has presence in almost all towns
because of its already existing butter lines.

Customer is most comfortable buying Insurance in the Value for

Money segment and Bajaj allianz is well present in this segment.

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Bajaj allianz has built up a formidable image as a brand in which

generations of consumers have placed their trust. This can be used to its
advantage while introduction of Insurances.

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WEAKNESS

Bajaj allianzs Advertising has low profile. Mother dairy and amul on

the other hand is into heavy advertising and consequently, is going to be

popular.

A major entry barrier with Bajaj allianz are their some non flexible

policies. If bajaj allianz makes their policies bit flexible than this will be
beneficial for them.

Retailers want a credible Replacement policy of the Insurance .They

would be willing to make further investments only for that brand which
offers replacement facilities. Bajaj allianz has no replacement policy.

Retailers now demand freezers without having to pay any deposit.

This is especially true of those retailers who already stock one or the other
Insurance brands. But bajaj allianz gives the deep freezer at lump sum
amount.

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OPPORTUNITIES

Delhi market is not restricted to monopoly outlets. There are a

significant number of retailers who are currently stocking more than two
brands. This is in Bajaj allianzs favour, as earlier it had to overcome this
problem in the Mumbai market.

There is ample scope in the low priced segment as also in other

categories where consumers presently are dissatisfied with the quantity being
provided vis a vis the price being charged.

Bajaj allianz has the opportunity to capture the more evolved young

adults and children who are open to new products provided they meet their
expectations.

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THREATS

Bajaj allianz might face threat from the local manufacturers in the low

end of the market like in the meerut.

Insurance product differentiation strategy has been very well received

by the consumers and Mother Dairy is also pushing up its advertising pitch.

Amul is also planning to double the number of push carts in Meerut.

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DATA ANALYSIS
CURRENT RATIO

Inference:
The above diagram shows that in the year 2006-07 is 2.66%, in
year 2007-08 is 2.21and in year 2008-09 is 2.03, These ratios of liquidity
indicate the over capitalization of current assets.

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QUICK RATIO

Inference:
The above data shows the quick ratio of the company in year
2006-07, 2007-08 and 2008-09 is 1.68%, 1.44% and 1.36% respectfully.
The ratios show the company enjoys the high liquidity position; it is good
however too much liquidity is not beneficial for the company

CASH RATIO

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Inference:
In the above data it shows that the cash ratio of company is in 2006,
2007 and 2008 is 0.36, 0.27 and 0.36 respectfully .It is below the standard
and it is not good for company.

WORKING CAPITAL
RATIO

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Inference:

In the above data it shows that the Working capital ratio of company
is in 2006, 2007 and 2008 is 0.80, 0.79 and 0.80 respectfully. Ratio shows
the liquidity position of the company is good.

TOTAL CAPITAL
TURNOVER

Inferences:

In the above graph it shows that the Gross Profit ratio of company is
in 2006, 2007 and 2008 is 2.73, 3.89 and 4.77 times respectfully .It shows
that the performance of business is better and all the available resources are
well utilized.

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WORKING CAPITAL
TURNOVER

Inferences:

In the above graph it shows that the working capital turnover of

company is in 2006, 2007 and 2008 is 3.26, 4.92 and 5.96 respectfully .It
shows the better utilization of the working capital incurred in the operation.

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FIXED ASSETS
TURNOVER

Inferences:

In the above graph it shows that the Fixed Assets turnover of

company is in 2006, 2007 and 2008 is 16.76, 18.55 and 23.88 times
respectfully .It shows the better utilization of the Fixed Assets, which
incurred in the operation.

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DEBATORS TURNOVER

Inferences:
In the above graph it shows that the Debtors Turnover of company is
in 2006, 2007 and 2008 is 4.18, 5.22 and 6.39 times respectfully. It shows
that the collection policy of the company is too liberal.

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GROSS PROFIT RATIO

Interfaces:
In the above graph it shows that the Gross Profit ratio of company is
in 2006, 2007 and 2008 is 40%, 39% and 72% respectfully. It shows good
sign, which is 72%. This indicates the efficiency in stock control and an
adequacy of the selling price.

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CREDITORS
TURNOVER

Inferences:

In the above graph it shows that the Gross Profit ratio of company is
in 2006, 2007 and 2008 is 2.79, 3.20 and 3.60 respectfully. It shows good
sign, which is in increasing trend, which shows that the company enjoys
good credit in market.

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NET PROFIT RATIO

Inferences:

In the above graph it shows that the Gross Profit ratio of company is
in 2006, 2007 and 2008 is 3%, 3% and 5% respectfully .It is the increasing
in trend the operation expenses, is in desired parameters.

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LABOUR COST RATIO

Inferences:

In the above graph it shows that the Gross Profit ratio of company is
in 2006, 2007 and 2008 is 3%, 3% and 5% respectfully .It is the increasing
in trend, which is not good for the company future.

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ADMINISTRATION
EXPENSES RATIO

Inferences:

In the above graph it shows that the administration expenses ratio of

company is in 2006, 2007 and 2008 is 7%, 6% and 5% respectfully .It is the
decreasing in trend, which is beneficial for the company, and ratio indicates
in under controlled.

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FACTORY EXPENSES
RATIO

Inferences:

In the above graph it shows that the Gross Profit ratio of company is
in 2006, 2007 and 2008 is 9%, 9% and 9% respectfully .It is the constant in
all the year, it shows that all the factory expenses is in the control and there
is no additional factory expenses bear in any of the year by the company
irrespective of their change in production.

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OPERATING EXPENSES

Inferences:
In the above graph it shows that the operating expenses ratio of
company is in 2006, 2007 and 2008 is 96%, 97% and 60% respectfully. It is
the decreased in trend that shows less expenses is incurred in the operation
which is in uncontrolled manner and it is not good for the company future
if it is continuously decreased like this.

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SELLING AND
DISTRIBUTION RATIO

Inferences:
In the above graph it shows that the selling and distribution expenses
of company is in 2006, 2007 and 2008 is 14%, 14% and 13% respectfully
.It shows the decreasing in trend, ratio indicates in under controlled.

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RETURN AND
INVESTMENT

Inferences:
In the above graph it shows that the Return on investment of
company is in 2006, 2007 and 2008 is 6%, 12% and 23% respectfully .It is
the increasing in trend that shows better performance of the company.

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LIMITATION
The study is limited to three years only.

Price level changes are not considered.

Time is short for deep research.

Separate records of the all units are not available.

No comparison made with other firms ratio while during the study period and
making conclusion time.

The readjusted and regroup figure slightly affects the ratio figures.

Study is limited with the one unit of Bajaj allianz.

The data is used in the project have been taken from annual report only. Hence,
grouping and sub grouping and annuliasation of data may slightly affect the results.

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SUGGESTION

Although BAJAJ ALLIANZ, PARTAPUR, MEERUT has satisfied the ratios. The
following are the suggestion being made out by me as observed during study of the
performance through ratio analysis:
Company should increase its sales of all the production units with increase in the sales
of the company that can be able to increase its financial position.
Company should decrease the operating expenses to increase its operating profit.
Maximize the production capacity.
Maintain the amount of current sales level and try to increase it.
Maximize the utilization of fixed assets and working capital.
All other management, personal and administrative suggestion to be incorporated.
To follow the strict credit collection policy.
Reduce the current assets and quick assets ratio to maintain the standard ratio.
Cash ratio performance is poor. So make policies to improve it.
Return on investment is in satisfactory position and they try to maintain it in future.
Try to start those companies, which are closed due to non-availability of funds.
Try to best utilization of the available resources.
Try to maintain the standard ratio in the financial ratios.

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CONCLUSION
If these ratios are properly followed the capital investment in the current assets is above
the standard ratio and the cash position of the company would substantially improve.
The Turnover Ratio give good sign of the success but in the debtors turnover ratio
shows that company provided more credit period of payment to its customer, which is
not beneficial for it.
The Profitability Ratio all indicates good sign but increase in the operating and financial
expenses of the company, which is not good sign for the company future.
Return on Investment ratio is satisfactory, it indicate the overall performance of the
company is good and they enjoy a good position of profitability

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BIBLOGRAPHY
M.Y.KHAN AND P.K. JAIN FINANCIAL MANAGEMENT
(Tata McGraw- Hill Publishing Company Limited, NEW DELHI)
LK NARANG AND SP JAIN FINANCIAL MANAGEMENT
(KALYANI PUBLISHERS,NEW DELHI),2000.
C.R. Kothari, Research methodlogy.
Web sites:
www.Bajajallianz.com
www.google.com

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