ROE = Return on Equity = Net Profit ÷ Shareholders' equity. It answers: for every ₹100 shareholders have parked, how much profit did the company make this year?
ROCE = Return on Capital Employed = EBIT ÷ (Equity + Debt). ROCE also accounts for money borrowed. It's usually the fairer view for capital-heavy businesses.
Rough Indian benchmarks: ROE above 15% and ROCE above 20% is very good for a large business. Below 10% for either usually means the company is not creating much value.
Danger sign: ROE that's high only because the company has taken on huge debt. Always check both ROE and ROCE together.