Efficiency on capital employed in automobile sector

1. BUSINESS FINANCE
EFFICIENCY OF CAPITAL EMPLOYED
Created By
Dipanway Bhabuk
Roll- D15
PGDM IV

2. AUTOMOBILE SECTOR (2 Wheeler)
 Automobile sector contributes around 4% to the GDP of India.
 It contributes 5% to India’s Industrial Production.
 The two-wheeler market in India is the biggest contributor to the
automobile industry with a size of Rs.100,000 million

3. WHAT IS CAPITAL EMPLOYED ?
 The funds used or invested in business to run the organization and to earn
the profit is known as capital employed.
 Capital employed consists of Equity capital, preference capital, Reserves,
P/L, Long-term loans, Debenture and any other long-term borrowings.

4. RETURN ON CAPITAL EMPLOYED
 Return on Capital Employed is a profitability ratio that measures the profits that a
business is achieving from its capital employed, usually expressed in percentage
terms.
 ROCE indicates the efficiency and profitability of a company's capital investments.
 A higher ROCE indicates more efficient use of capital. ROCE should be higher than
the company’s capital cost; otherwise it indicates that the company is not employing
its capital effectively and is not generating shareholder value.
 ROI

5. RETURN ON CAPITAL EMPLOYED
EBIT
CAPITAL EMPLOYED
TOTAL REVENUE
CAPITAL EMPLOYED
CAPITAL TURNOVER RATIO =
ROCE =

6. Companies taken for Comparison

7. Market Share

8. RETURN ON CAPITAL EMPLOYED
COMPANIES 2014 (%) 2013 (%) 2012 (%)
Hero Moto Corp. 48.56 42.46 51.81
Bajaj Auto 52.47 51.28 59.08
Honda Motorcycle &Scooter 38.88 36.43 29.03
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9. CAPITAL TURNOVER RATIO
COMPANIES 2014 (%) 2013 (%) 2012 (%)
Hero Moto Corp. 0.76 0.65 0.59
Bajaj Auto 0.74 0.68 0.54
Honda Motorcycle & Scooter 0.41 0.38 0.35
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10. Presented By
Dipanway Bhabuk