FINANCIAL ANALYSIS OF

MANUFACTURING
VS
IT COMPANY

BY
ANITA MISHRA(29)
ARCHIT KHARE (33)
HARSH VARDHAN (39)
VIKRANT GARG(66)
 COMPANIES


HCL TECHNOLOGIES VS
 BAJAJ
AUTO
 HCL
Current ly ranked t hird in India and
wit h revenue of over INR 63.84
croreand it has it s presence all over
t he world. It provides IT and
consult ing services.
HCL Technologies est ablished in 1976
current ly w orks work under Vineet  Group was founded in 1926,
Nayar is headquart ered in Noida and
as on 30 sept 2009 has 54443
workers.
HCL Technologies offerings span
business and t echnology consult ing,
applicat ion services, syst em s
int egrat ion, product engineering,
cust om soft ware developm ent ,
m aint enance, re-engineering,
independent t est ing and validat ion
services, IT infrast ruct ure services
and business process out sourcing.
BAJAJ
 Bajaj group's flagship
company, Bajaj Auto, is
ranked as the world's fourth
largest two- and three-
wheeler manufacturer

at the height of India's
movement for independence
from the British, the group
has an illustrious history
n
n The present Chairman of the
group, Rahul Bajaj, took
charge of the business in
1965. Under his leadership,
the turnover of the Bajaj
Auto the flagship company
has gone up from Rs.72
million to Rs.46.16 billion
(USD 936 million), its
product portfolio has
Major functions of HCL
HCL Global Footprint
 Bajaj Auto Global Presence
Bajaj is present in over 50
count ries all over t he globe

Dom inant presence in

Africa and Lat in Am erica
wit h increasing m arket
share every year

Market leader in 2-
wheelers in Sri Lanka,
Bangladesh , Colom bia and
Cent ral Am erica
772,519 unit s export ed in
2008-09, an increase of
over 25% over t he
previous year

Largest export er of t hree

wheelers in t he world:
 Plants
n Bajaj Auto's has in all three plants, two at Waluj and Chakan in
Maharashtra and one plant at Pant Nagar in Uttranchal,
western India.
n Waluj(Aurangabad ) Bajaj range of motorcycles and three-
wheelers
Chakan (Pune) Bajaj range of motorcycles
Pant Nagar(Uttaranchal) Bajaj range of motorcycles
n


 1. Preparation of Financial
Statements



 The financial
 The financial statements have been
statements have been prepared and
prepared to comply presented under the
with the accounting historical cost
standards prescribed convention on accrual
in the Generally basis of accounting to
Accepted Accounting comply with the
Principles (GAAP) accounting standards
prescribed in the
Companies
(Accounting
Standards) Rules,2006
and with the relevant
provisions of the
 3. Short Term Investments

All investments either


 As the norm in
trade or non trade are most manufacturing
made for long term. companies APL has
made a lot of short
term investments (29)
– Interval Funds, Fixed
maturity plans,
Portfolio funds
scheme.
 4. Tax benefit




 Income from  Sales tax

operations in software deferment benefits
tech parks exempted claimed for expansion
for 10 yrs of plant capacity.


 Income from
operations in SEZs
exempted for 1st 5 yrs
and 50% for next 5
yrs.
 5. Loans and Advances

 - To wholly owned
 Advances mainly subsidiaries.
comprise of prepaid - Balances with customs
travel and per diem and central excise
expenses and - Advance to employees
advances for vendors. - Advances against
capital expenditure.
- Others

6. Goodwill and Brand Valuation

- Goodwill is accounted - Consolidated Goodwill

for in Fixed Assets accounted for in

Application of funds
under Cash Flow
- Statement.
- Considers intangible -
assets to have a
significant role in -
defining growth. - Not mentioned
- Methodology: Brand
Earnings multiple
models by Michael
Berkin.(Pg 131)
-
7. Raw materials and Inventory

- Computer - Packaging material,

equipments, fixed goods, stores,
furniture spares and
consumables.
-
- Accounting for
opening and closing
stock of inventories
under WC changes
- Detailed analysis of
raw materials used
in manufacturing
-
 Other differences

- Goodwill is accounted - Consolidated Goodwill

for in Fixed Assets accounted for in
Application of funds
- under Cash Flow
- Statement.
- -
- -
- Considers intangible - Not mentioned
assets to have a
significant role in
defining growth.
- Methodology: Brand
Earnings multiple
models by Michael
Berkin.
 Other Differences

- CLs also include Mark to - Creditors (Micro and

market losses on small enterprises)
forward and option -
contracts
-
- 

- - Unclaimed dividend,
- Matured deposits and
bonus shares (IEPF)
- ESOPs given to
employees
- Specific mention of
deposits in scheduled
and non scheduled
banks in foreign and
Indian currencies.
- Provisions include post
sales client support
 Balance Sheet
Sources of funds
Loan funds
Application of funds
Fixed Assets
PROFITABILITY RATIOS
n Bajaj has seen a low operating profit margin on account of
high raw material costs .
n Bajaj has seen higher expenses due to raw materials ,
Excise duty ,etc
n HCL has seen higher costs due to employee costs , selling
and admin expenses
n Bajaj has a lower net profit margin
n Bajaj has paid higher taxes compared to HCL . IT industry
enjoys higher tax benefits and holidays .
n Return on equity of Bajaj is more because of lower networth
as compared to HCL (reserves)
n

n
CURRENT RATIOS
n HCL has higher current assets – sundry
debtors , fixed deposits .
n HCL has higher receivables from
subsidiaries
n Quick ratio decreases for bajaj due to
higher inventories
n High Debt to equity ratio for Bajaj auto due
to high unsecured loans
n The high debt is on account of deferred
sales tax liability .
TURNOVER RATIOS
n Inventory turnover is higher for HCL
on account of lower inventory
n

n Debtors turnover is high for HCL

n Large number of receivables from
foreign clients and subsidiaries
n


PAYOUT RATIOS
n Earning per share is lower for HCL
because of higher number of
shares
n
Stock Movement