FINANCIAL MANAGEMENT AT BAJAJ AUTO

By:-

Virendra MahawarM.B.A.

FINANCIAL MANAGEMENT• Bajaj earned bulk of its revenue from the

automotive business.• In 2002-03 Bajaj achieved a turnover of

Rs.5071 crore & EBITDA of Rs.817 crore.• Return on operating capital, which had dipped

to a low of 14% in 2000-01, increased to 60% in 2002-03.

• Return on operating capital was also huge increased from 14% to 60%.

WORKING CAPITAL

Debtors declined from Rs. 198 crores on 31st march 2002, to Rs.167 crore on 31st march 2003-reduction of 16%.

Reducing inventory level s by using of direct online delivery.

Inventory of raw materials and components declined from 7 days to 6 days.

COST STRUCTURE

value eng and good relation with vendor.Material cost was reduced from 63.3%

from 62% in 2003Despite a 16.5% increase in net sales &

other operating income –factory & administration costs had come down from 5.3% of net sales & operating income to 4.3%.

INVESTMENTS

Bajaj reduced its equity investment and paid attention more on the G-Sec and Bond mrk.

During 2002-03 , Bajaj provided Rs.26.7 million towards impairment in the carrying costs of its investment portfolio.

Return on capital employed was 60% and overall 31% which was far lower than hero Honda’s 95%.

RETURN ON CAPITAL

a free cash reserve of Rs.2700 crore.Bajaj invested its surplus fund in secured

and fixed investmentsecurities like G-Sec, T-Bills etc.

Bajaj had a capital employed of Rs. 4000 crore, of which only 1,300 crore was deployed in its two-wheeler operation.

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