POM-II PROJECT REPORT

FORECASTIN
G,
CORRELATIO
N &
REGRESSION
OF THE SALES
AND PROFIT
OF BAJAJ
AUTO LTD.
SUBMITTED BY:
SIDHARTH SMRUTI(19202042)
SUBHAJIT PATTANAIK(19202051)
SECTION-A MBA-1

INTRODUCTION
In the report submitted earlier regarding the forecasting, we took the sales and
profit data of Bajaj Auto Ltd. from Money Control. We have done the
forecasting to know how the sales and profit figure of the company is going to
perform in the upcoming years by taking the past data into consideration. Using
the concept of forecasting we have shown the data of Bajaj Auto Ltd from 2014
to 2019 and then we have forecasted the data for the coming 5 years. After
forecasting we have calculated the correlation value between sales and profit.
By the help of the value we can analyse that how much one variable is
dependent on the other variable. Then after finding the correlation value we
have calculated the regression value for each half of sales and profit separately.
Regression is one of the methods which is used in business forecasting. The
regression analysis is generally based on developing a definite model with the
help of which it is possible to forecast the changes in revenues. The conclusions
are made with references to the relationship reflected in the developed statistical
model which is the result of the regression analysis. We have used it to analyse
the data and to know how the two parameters are related to each other.

SALES DATA OF BAJAJ AUTO LTD FROM 2014 TO 2019:

NET SALES 1st HALF 2nd HALF

2014 9847.42 10960.22
2015 10143.71 11453.62
2016 10767.09 11592.93
2017 9780.59 11803.26
2018 12897.04 15098.98
2019 14468.27 15064.22

BAR GRAPH OF NET SALES FOR BAJAJ AUTO LTD:

 NET SALES
16000
14000
12000
10000
8000
6000
4000
2000
0
2014 2015 2016 2017 2018 2019

1st Half 2nd Half

FORECASTING OF SALES DATA FOR THE NEXT 5 YEARS:

Sales Forecasting for 5 years

16000
f(x) = 904.75 x − 1811775.39
14000 R² = 0.8
f(x) = 867.94 x − 1738874.44
R² = 0.71
12000

10000

8000

6000

4000

2000

0
2013 2014 2015 2016 2017 2018 2019 2020

1st Half Linear (1st Half)

2nd Half Linear (2nd Half)

So by analysing we can see that how the actual data of sales has performed and
how the forecasted data is going to perform. The blue line shows the graph for
the first half of each year and the orange line shows the graph for the second
half. The dotted ones are the forecasted sales for both the halves. So by this we
can see that there is a positive growth in sales of both the halves when it is
forecasted without the signs of any slowdown in the growth.
PROFIT DATA FOR BAJAJ AUTO LTD FROM 2014 TO 2019:
 NET PROFIT 1st HALF 2nd HALF
2014 1668.48 1330.88
2015 1482.86 2009.73
2016 1704.55 2101.12
2017 1726.44 2035.79
2018 2032.31 2267.71
2019 2407.47 2528.09

BAR GRAPH OF NET PROFIT FOR BAJAJ AUTO LTD:

NET PROFIT
3000

2500

2000

1500

1000

500

0
2014 2015 2016 2017 2018 2019

1st Half 2nd Half

FORECASTING OF PROFIT DATA FOR THE NEXT 5

YEARS:

Profit Forecasting for 5 years

3000

2500 f(x) = 191.28 x − 383662.5

R² = 0.8
f(x) = 153.29 x − 307274.57
2000 R² = 0.75

1500

1000

500

0
2013 2014 2015 2016 2017 2018 2019 2020

1st Half Linear (1st Half)

2nd Half Linear (2nd Half)
CORRELATION BETWEEN SALES AND PROFIT DATA OF
BAJAJ AUTO LTD:
We have calculated the correlation value of Bajaj Auto Ltd by doing the
calculation in the excel sheet. For the calculation we have taken the net profit
data as the dependent variable(y) and the sales data as the independent
variable(x). The calculated correlation value is 0.859196. It means that the
profit is 85.9% dependent on sales. It is a positive correlation which means if
the sales increases, the profit also increases and if the sales decreases then the
profit will decrease.

REGRESSION VALUE FOR EACH OF FIRST HALF OF

SALES AND PROFIT FOR BAJAJ AUTO LTD:
SUMMARY OUTPUT              
                 
Regression Statistics              
Multiple R 0.943535              
R Square 0.890258              
Adjusted R
Square 0.862822   1st Half          
Standard Error 122.5223              
Observations 6              
                 
ANOVA                
Significanc
  df SS MS F eF      
487115.
Regression 1 487115.8 8 32.449033 0.004692      
15011.7
Residual 4 60046.88 2          
Total 5 547162.7            
                 
Coefficient Standard Upper Lower Upp
  s Error t Stat P-value Lower 95% 95% 95.0% 95.0
0.02097 0.9842706 909.609
Intercept 6.820032 325.1603 4 7 -895.97 9 -895.97 909.6
5.69640 0.0046924 0.24053
X Variable 1 0.161716 0.028389 5 8 0.082895 7 0.082895 0.240

Here the value of R square denotes the regression value for the first half for
sales and profit which is 0.89. It means for the first half the profit will be 89%
of sales.
REGRESSION VALUE FOR EACH OF SECOND HALF OF
SALES AND PROFIT FOR BAJAJ AUTO LTD:
SUMMARY OUTPUT              
                 
Regression Statistics              
Multiple R 0.768989              
R Square 0.591345              
Adjusted R 2nd
Square 0.489181   half          
Standard
Error 285.425              
Observatio
ns 6              
                 
ANOVA                
Significan
  df SS MS F ce F      
471549. 471549 5.7881
Regression 1 7 .7 98 0.073885      
325869. 81467.
Residual 4 8 44          
797419.
Total 5 5            
                 
Coefficie Standar Lower Upper Lower Upper
  nts d Error t Stat P-value 95% 95% 95.0% 95.0%
- -
861.052 0.0080 0.9939 2383.6 2397.6 2383.6
Intercept -6.96886 8 9 3 -2397.63 97 3 97
-
X Variable 0.06737 2.4058 0.0738 0.3491 0.0249 0.3491
1 0.162098 6 67 85 -0.02497 65 7 65

Here the value of R square denotes the regression value for the second half for
sales and profit which is 0.591. It means for the second half the profit will be
59.1% of sales. Therefore, if the sales is of Rs.100/-, then the profit will be
Rs.59.1/-.
 CONCLUSION:
First of all we took the actual data of net sales and net profit for the Bajaj Auto
Ltd from the Money Control. Then we found the bar graph for both the sales
and profit. Then we did forecasting where we found how the company would
perform in the next 5 years. There we saw the positive growth without any sign
of slowdown in the growth. Then we found the correlation value of the
company which was 0.859196. It was found to be a positive correlation which
indicated that if the sales increases then the profit will also increase and if the
sales decreases then the profit will also decrease. Then we found R square value
for each of first and second half of sales and profit for the company.