A

PROJECT REPORT

ON

“A STUDY ON FINANCIAL STATEMENT ANALYSIS WITH

SPECIAL REFERENCE OF HERO MOTOCORP”

A PROJECT SUBMITTED TO UNIVERSITY OF MUMBAI FOR PARTIAL

COMPLETION OF THE DEGREE OF

BACHELOR IN COMMERCE (ACCOUNTING & FINANCE)

BY

MISS. VIDYA ANIL SOMVANSHI

TYBAF-B Semester VI

Roll no. – 187915

UNDER THE GUIDANCE OF

MRS . JYOTI KHAIRE

RayatShikshanSanstha’s

KarmaveerBhauraoPatil CollegeVashi, Navi Mumbai 400 705

(Autonomous)

Academic year 2018-19

1
 CERTIFICATE

UNIVERSITY OF MUMBAI

KARMAVEER BHAURAO PATIL COLLEGE

VAHI NAVI MUMBAI- 400703

This is to verify that MS.VIDYA ANIL SOMVANSHI student of BACHELOR IN

COMMERCE (ACCOUNTING AND FINANCE) of Semester VI has completed
his Project on “A STUDY ON FINANCIAL STATEMENT ANALYSIS WITH
SPECIAL REFERENCE OF HERO MOTOCORP”has submitted a satisfactory
reportunder the guidance of MRS.JYOTI KHAIRE of fulfilment of BCOM
(ACOOUNTING AND FINANCE) course of University of Mumbai in the
Academic year 2018-19.

MRS.JYOTI KHAIRE DR VIVEK BHOIR Dr. V. S. SHIVANKAR

Project Guide Co-Ordinator Principal

University Examiner

2
 DECLARATION BY LEARNER

I the undersigned Miss. Vidya Anil Somvanshi here by, declare that the work
embodied in this project work titled “A Study on Financial Statement Analysis
with special reference of Hero Motocorp Ltd.”, forms my own contribution to the
research work carried out under the guidance of Mrs. Jyoti khaire is a result of my
own research work and has not been previously submitted to any other University for
any other Degree/Diploma to this or any other University.

Wherever reference has been made to previous work of others, it has been clearly
indicated as such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

Vidya Anil Somvanshi

Name & Signature of the learner

Certify by

Name & Signature of the Guiding Teacher

3
 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the depth
is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do
this project.

I would like to thank my Principal, Dr. V. S. Shivankar for providing the necessary
facilities required for completion of this project.

I take this opportunity to thank our coordinator Dr.VivekBhoir for her moral support
and guidance.

I would also like to express my sincere gratitude towards my project guide Mrs.Jyoti
Khaire whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference
books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially My Parents and Peers who supported
me throughout my project.

4
 INDEX

Chapters No. Content Page no.

1 Introduction 8-26

1.1 Abstract 9
1.2 Introduction of Hero MotoCorp 10-12

1.3 Analysis of financial statement 12

12
1.4 Formation of Hero MotoCorp
13-14
1.5 Advantage &Disadvantage of financial
statement
15-23
1.6 Corporate profile
24-26
1.7 History of hero motor
2 Research Methodology 27-31

2.1 Research methodology 29

2.2 Objectives of the study 30

2.3 Need of the study 30

30
2.4 Limitation of the study
31
2.5 Scope of the study
31
2.6 Importance of the study
3 Review of literature 32-36

4 Data analysis &Interpretation 37-59

4.1 Profit & Loss a/c 38-39

4.2 Balance sheet 40-41

a)comparative statement 2017-18 42-47

48-49
b)common size statement 2017-18
50-51
c)Trend analysis 2017-18
52-59
4.3 Ratio Analysis 2012-17
5 Conclusion & Suggestions 60-64

Finding 61
Suggestion 62
Conclusion 63
Bibilography 64

5
 Title of the project
“A Study On Financial Statement Analysis Of Hero
MotoCorp Ltd.”

6
7
Chapter 1
Introduction

8
CHAPTER 1.INTRODUCTION

1.1 ABSTRACT

Hero motor ltd. Is the world‘s largest manufacturer of two wheelers, based in India. ―Hero‖ is
the brand name used by the Munjal brothers for their flagship company Hero Cycles Ltd. A
joint venture between the Hero Group and Honda Motor Company was established in 1984 as
the Hero Honda Motors Limited at Dharuhera India. Munjal family and Honda group both
own 26% stake in the Company. In 2010, it was reported that Honda planned to sell its stake
in the venture to the Munjal family. Hero MotoCorp Ltd., formally Hero Honda Motor Ltd is
the world‘s largest manufacturer of two wheeler based in India. In 2001 the company
achieved the coveted position of being the largest two wheeler manufacturer in India and also
the world‘s No.1 two wheeler company in terms of unit volume sales in a calendar year.
Company continues to lead the domestic motor cycle market with 54.6% share.

9
1.2. INTRODUCTION

Financial statement are prepared primarily for decision making. They play
a dominant role in setting the framework of managerial decisions. But the information
provided in the financial statements is not an end itself as no meaningful conclusions
can be drawn from these statements alone. However, the information provided in the
financial statement is of immense use in making decisions through analysis and
interpretation of financial statements. Financial analysis ‗the process of identifying
the financial strengths and weaknesses of the firm by properly establishing
relationship between the items of the balance sheet and the profit and loss account‘
there are various methods or techniques used in analysing financial statement
financial are an important source of information for evaluating the performance and
prospects of firm, if properly analysed and interpreted these statement can provide
valuable insights into firms performance. Analysis of financial statement is if interest
to lenders, investors, security analyst, manager and others.

Financial statement analysis may be done for a variety of purposes, which

may range from simple analysis of the short term liquidity position of the form to a
comprehensive assessment of the strengths and weakness of the firm in various areas,
it is helpful in assessing corporate excellence , judging credit worthiness forecasting
bond rating, evaluating intrinsic value of equity shares predicting bankruptcy and
assessing market risk.

Hero MotoCorp Ltd., formerly Hero Honda, is an

Indian motorcycle and scooter manufacturer based in New Delhi, India. The company
is the largest two-wheeler manufacturer in the world, and also in India, where it has a
market share of about 46% in the two-wheeler category. The 2006 Forbes list of the
200 World's Most Respected Companies has Hero Honda Motors ranked at 108. On
31 March 2013, the market capitalisation of the company was ₹30,800
crore (US$4.3 billion).

10
Hero Honda started its operations in 1984 as a joint venture between Hero
Cycles (sometimes called Hero Group, not to be confused with the Hero Group food
company of Switzerland) of India and Honda of Japan. In 2010, when Honda decided
to move out of the joint venture, Hero Group bought the shares held by Honda.
In June 2012, Hero MotoCorp approved a proposal to merge the investment arm of its
parent Hero Investment Pvt. Ltd. with the automaker. This decision came 18 months
after its split from Hero Honda.

"Hero" is the brand name used by the Munjal brothers for their flagship company,
Hero Cycles Ltd. A joint venture between the Hero Group and Honda Motor
Company was established in 1984 as the Hero Honda Motors Limited at Dharuhera,
India. Munjal family and Honda group both owned 26% stake in the Company.

During the 1980s, the company introduced motorcycles that were popular in India for
their fuel economy and low cost. A popular advertising campaign based on the slogan
'Fill it – Shut it – Forget it' that emphasised the motorcycle's fuel efficiency helped the
company grow at a double-digit pace since inception. In 2001, the company became
the second largest two-wheeler manufacturing company in India and globally. It
maintains global industry leadership to date. The technology in the bikes of Hero
Motocorp (earlier Hero Honda) for almost 26 years (1984–2010) has come from the
Japanese counterpart Honda. Hero MotoCorp Ltd., formally Hero Honda Motor Ltd is
the world‘s largest manufacturer of two wheeler based in India. In 2001 the company
achieved the coveted position of being the largest two wheeler manufacturer in India
and also the world‘s No.1 two wheeler company in terms of unit volume sales in a
calendar year. Company continues to lead the domestic motor cycle market with
54.6% share.

During the fiscal year 2008-09 the company sold 3.7 million bikes, a growth of 12%
over last year. In the same year, the company had a market share of 57% in the Indian
market. Hero Honda sells more two wheelers than the second, third and fourth placed
two wheeler companies put together .hero Hondas bike hero Honda splendor sells
more than one million units per year. On 1st June 2012, hero MotoCorp reported its
highest every monthly sales at 5,56, 644 units in May, registered a growth of 11.28%.

During the fiscal year 2008-09, the company sold 3.7 million bikes, a growth of 12%
over last year. In the same year, the company had a market share of 57% in the Indian

11
market. Hero Honda sells more two wheelers than the second, third and fourth placed
two-wheeler companies put together. Hero Honda's bike Hero Honda Splendor sells
more than one million units per year. On 1st June 2012, Hero MotoCorp reported its
highest ever monthly sales at 5,56,644 units in May, registering a growth of 11.28.

1.3 ANALYSIS OF FINANCIAL STATEMENT

Analysis refers to the process of critical examination of the financial information

contained in the financial statement in order to understand and make decision
regarding the operations of the firm. The analysis is basically study of the
relationship among various financial facts and figure as given in a set of financial
statement. Complex figure as given in this statement are dissected broken up into
simple and variable element and significant relationship are established between
the elements of the same statements are different financial statement.

This process of dis section, establishing and identifying the financial weaknesses, and
strengths of the firm. It is indicative of two aspects of a firm i.e. the profitability and
the financial position and it are what are known as the objectives of the analysis is the
main stream to study about the Hero MotoCorp Limited.

1.4. FORMATION OF HERO MOTOCORP

The name of the company was changed from Hero Honda Motors Limited to Hero
MotoCorp Limited on 29 July 2011. The new brand identity and logo of Hero
MotoCorp were developed by the British firm. The logo was revealed on 9 August
2011 in London, to coincide with the third team match between England and India.

Hero MotoCorp can now export to Latin America, Africa and West Asia. Hero is free
to use any vendor for its components instead of just Honda-approved vendors.

On 21 April 2014, Hero MotoCorp announced their plan on a ₹254

crore (US$35 million) joint venture with Bangladesh's NitolNiloy Group in the next
five years to set up manufacturing plant in Bangladesh. The plant started production

12
in 2017. Hero MotoCorp owns the 55% of the manufacturing plant and rest 45% is
owned by Niloy Motors (A subsidiary of Nitol-Niloy Group) also hero updated its
100cc engine range in 2014 for 110cc bikes except hero dawn.

1.5. ADVANTAGES OF FINANCIAL STATEMENT

The different advantages of financial statement analysis are listed below

 The most important benefit if financial statement analysis is that it provides an

ideas to the investors about deciding on investing their funds in a specific
company.
 Merits of financial ratio analysis is another advantages of financial statement
analysis is that regulatory authorities can ensure the company following the
required accounting standard or not.
 Financial statement an analysis is helpful to the government agencies in
analysing the taxation owed to the firm.
 Financial statement analysis can help the government agencies to analyse the
taxation due to the company.
 Above all, company can analyse its own perform over the period through
financial statement analysis. Through financial statement analysis you can
determine and identify financial strengths, weaknesses and relationships that
exists in a company.
 Comparing the financial statement analysis is numbers overtime to spot trends
and changes that affect company business.

Limitation of financial statement analysis

Although financial statement analysis is highly useful tool, it has two limitation. these
two limitation invoice the comparability of financial data between companies and the
need to look beyond ratios.

 Different companies operate in different industries each having different

environment conditions such as regulation, market structure, etc. such factor

13
 are so significant that comparison of two companies from different industries
might be misleading.
 Financial accounting information is affected by estimates and assumptions.
Accounting standards of different accounting policies, which impairs
comparability and hence ratio analysis is less useful in such situations.
 Ratio analysis explains relationship between past inform action while users are
more concerned about current future information.

14
1.6.CORPORATE PROFILE

About company

Hero Motocorp Ltd. Formerly Hero Honda is an Indian motorcycle and scooter
manufacturer based in New Delhi,India. Hero Honda started in 1984 as a joint venture
between Hero cycle of india and Honda of japan. The company is the largest two
wheelers manufacturer in india. The 2006 forbes 200 most respected companies list
has Hero Honda Motors ranked at 108.

In 2010, when Honda decided to move out of the joint venture, Hero Group bought
the shares held by Honda. Subsequently ,in August 2011 the company was renamed
Hero Motocorp with a new corporate identity. On 4thjune 2012 Hero Motocorp
approved a proposal to merge the investment arm of its parent hero investment pvt ltd
into the automaker. The decision comes after 18 months of its split from Honda
Motor.

Company profile

―Hero‖ is the brnd name used by the munjal brothers for their flagship company hero
cycles ltd. A joint venture between the Hero Group and Honda Motor Compnay was
established in 1984 as the Hero Honda Motors Limited AtDharuheraindia.

15
Munjalfamily and Honda Group both own 26% stake in the company. In 2010, it was
reported that Honda planned to sell its stake in the venture to the munjal family.

During the 1980s, the company introduced motorcycles that were popular in india for
their fuel economy and low cost. A popular advertising campaign based on the slogan
‗Fill it – Shut it- Forget it‘ that emphasised the motorcycles‘s fuel efficiency help the
company grow at a double- digit pace since inception. The technology in the bikes of
Hero Honda for almost 26 years (1984-2010)has come from the japanese counterpart
Honda.

Hero MotoCorp has three manufacturing facilities base at Dharuhera, Gurgaon in

Haryana and at Haridwar in Uttarkhand . These plants together are capable of
churning out 3 million bikes per year . Hero MotoCorp has a large sales and service
nework with over 3000 dealerships and sevice points across india. Hero Honda has a
customer loyalty program since 2000, called the hero Honda passport program.

The company has a stated aim of achieving revenues of $10 billion and volumes of 10
million two wheelers by 2016-17. This is conjunction with new countries where they
can now market their two wheelers following the disengagement from Honda
,HeroMotoCorp hopes to achieve 10 per cent of their revenues from international
markets, and they expected to launch sales in Nigeria by end-2011 or early -2012. In
addition , to cope with the new demand over the coming half decades, the company
was going to build their fourth factory in South India and their fifth factory in western
india. There is no confirmation where the factories would be built.

16
HISTORY

Hero MotoCorpwasstarted in 1984 as Hero Honda Motors Ltd.

 1956-Formation of Hero cycles in Ludhiana(majestic auto limited)

 1975-Hero cycles becomes largest bicycle manufacturer in india .
 1983-Joint Collaboration Agreement with Honda Motors Co. Ltd.Japan signed
shareholders agreement signed.
 1984-Hero Honda Motors Ltd, incorporated
 1985-Hero Honda Motorcycles CD 100 launched.
 1989-Hero Honda motorcycle sleek launched.
 1991-Hero Honda motorcycle CD 100 SS launched.
 1994-Hero Honda motorcycle Splendor launched
 1997-Hero Honda motorcycle street launched.
 1999-Hero Honda motorcycle CBZ launched.
 2001-Hero Honda motorcycle Passion and Hero Honda Joy launched
 2002-Hero Honda motorcycle Dawn and Hero Honda motorcycle Ambition
launched.
 2003-Hero Honda motorcycle CD Dawn , Hero Honda motorcycle Splendor
,Hero Honda motorcycle Passion Plus and hero Honda motorcycle Karizma
launched
 2004-Hero Honda motorcycle Ambition 135 and Hero Honda motorcycle
CBZ* launched.
 2005-Hero Honda motorcycle Super Splendor, Hero Honda motorcycle CD
Deluxe , Hero Honda motorcycle Glamour, Hero Honda motorcycle achiever
and Hero Honda Scooter Pleasure.
 2007-New models of hero Honda motorcycle Splendor NXG, New Models of
Hero Honda motorcycle CD Deluxe, New Models of Hero Honda motocycle
Passion Plus and Hero Honda motorcycle Hunk launched.
 2008-New Models of Hero Honda Motocycles pleasure, CBZ Xtreme ,
Glamour, Glamour Fi, nad Hero Honda motorcycle Passion Pro launched .
 2009-New Models of Hero Honda motorcycle Karizma; Karizma-ZMR and
limited edition of Hero Honda motorcycle Hunk launched.

17
  2010-New Models of Hero Honda motorcycles Splendor Pro and New Hero
Honda motorcycle Hunk nd new Hero Honda motorcycle Super Splendor
launched.
 2011-New Models of Hero Honda motorcycles Glamour , Glamour FI, CBZ
Xtreme, Karizma launched. New licensing arrangement signed between Hero
and Honda . In August Hero and Honda parted company ,thus forming hero
motocorp and Honda moving out of the Hero Honda joint venture. In
November, Hero launched its first ever Off Road Bike Named Hero
―Impulse‖.
 2012-New Models Of HeroMotoCorp Maestro the masculine scooter and
ignitor the young generation bike are launched.

Termination of Honda joint venture

Main article : Hero Honda Split

In December 2010, the Board of Directors of the Hero Honda Group have decided to
terminate the joint venture between Hero Group of india and Honda of japan in a
phased manner. The Hero Group would buy out the 26% stake of the Honda in JV
Hero Honda. Under the joint venture Hero Group could not export to
internationmarkets(except srilanka) and the termination would mean that Hero Group
can noe export. Since the beginning, the Hero Group relied on their Japanese partner
Honda for the technology in their bikes. So there are concerns that the Hero Groups
might not be sustain the performance of the joint venture alone.

Hero Motocorp

The new brand identity and loho , Hero MotoCorp, was developed by the londan firm
Wolff Olins. The logo was revealed on 9 August 2011 in London, the day before the
third test match between England and India.

Hero Motocorp can now export to latinAmerica , Africa and West Asia .Hero is free
to use any vendors for its components instead of just Honda-approved vendors.

18
Company performance

During the fiscal year 2008-09, the company sold 3.7 million bikes, a growth of 12%
over last year. In the same year, the company had a market share of 57% in the Indian
market. Hero Honda sells more two wheelers than the second , third and fourth placed
two-wheelers companies put together. Hero Honda‘s bike Hero Honda Splendor sells
more than one million units per year. On 1stjune 2012,HeroMotocorpReorted its
highest ever monthly sales at 556644 units in may, registering a growth of 11.28%

New Delhi: The two-wheeler manufacturer Hero MotoCorp, which is riding on robust
demand for its popular range of two-wheelers, capped-off the calendar year (January-
December 2017) with yet another global benchmark.
Hero MotoCorp sold 472,731 units in December 2017, against 330,202 units in the
corresponding month (Dec 2016), registering a strong growth of 43%.
Hero MotoCorp surpassed the landmark 7 million units in cumulative sales in a
calendar year. The company sold a record 7,207,363 units of two-wheelers in 2017.

19
RECOGNITION

Logo of Hero Honda , as the company was known till Aug 2011

The Brand Trust Report published by Trust Research Advisory has ranked Hero
Honda in the 13th position among the brands in india.

Motorcycle models

See also : Category Hero Honda motorcycle

 Sleek
 Street
 Ambition 133, Ambition 135
 CBZ, CBZ Star, CBZ Xtreme
 CD 100,CD 100 SS,Hero Honda Joy , CD Dawn, CD Deluxe, CD
Deluxe ( Self start)
 Glamour ,Glamour FI
 Hunk
 Karizma , KarizmaR,Karizma ZMR FI
 Passion, Passion plus, Passion pro
 Splendor,Splendor+, Splendor+(Limited Edition), Super Splendor,
Splendor NXG, Splendor PRO
 Hero Impulse launched in 2011 after the separation of hero and Honda
its india‘s first off road and on road bike.

20
SUPPLIERS

It is reported Hero Honda has five joint ventures or associate companies.

MunjalShowa,AG industries, Sunbean Auto , Rockman industries and satyam auto
components, that supply a majority of its components.

Type Public

Traded as
 BSE: 500182
 NSE: HEROMOTOCO
 BSE SENSEX Constituent

Industry Automotive

Founded 19 January 1984; 35 years ago

Founder Dr.BrijmohanLallMunjal

Headquarters New Delhi, India

Key people  Dr.Brij Mohan LallMunjal(Chairman Emeritus)

(Deceased)

 PawanMunjal (Chairman, MD & CEO)[1]

Products Motorcycles, Scooters

Revenue ₹31,480 crore(US$4.4 billion) (2017)[2]

Operating income ₹4,885 crore(US$680 million) (2017)[2]

Net income ₹3,546 crore(US$490 million) (2017)[3]

Total assets ₹5,308 crore(US$740 million) (2013)

Number of 5,842[3]

21
employees

Website www.heromotocorp.com

22
BOARD OF DIRECTORS

1. Mr M Damodaran (non-executive & independent director).

2. Dr.Anand C. Burman (non-executive & independent director).
3. Mr PradeepDinodia (non-executive & independent director).
4. Mr Ravi Nath (non-executive & independent director).
5. Gen. V. P. Malik (non-executive & independent director).
6. Mr PawanMunjal (Chairman, Managing Director & CEO).
7. Ms ShobhanaKamineni (non-executive & independent director).
8. Mr VikramKasebekar (Executive Director Operation).
9. Mr SunamkantMunjal (non-executive & independent director).
10.Dr Pritam Singh (non-executive & independent director).
11.Mr. Paul B Edgerley(non-executive & independent director).

23
1.7.HISTORY OF HERO MOTOR

Hero motocorp is the world's single largest two–wheeler motorcycle company. Honda
motor company of japan and the hero group entered a joint venture to setup hero
honda motors limited in 1984. The joint venture between india's hero group andhonda
motor company, japan has not only created the world's single largest two wheeler
company but also one of the most successful joint ventures worldwide.

During the 80s, Hero Honda became the first company in India to prove that it was
possible to drive a vehicle without polluting the roads. The company introduced new
generation motorcycles that set industry benchmarks for fuel thrift and low emission.
A legendary 'Fill it – Shut it – Forget it' campaign captured the imagination of
commuters across India, and Hero Honda sold millions of bikes purely on the
commitment of increased mileage.

Over 20 million Hero Honda two wheelers tread Indian roads today. These are almost
as many as the number of people in Finland, Ireland and Sweden put together. Hero
Honda has consistently grown at double digits since inception; and today, every
second motorcycle sold in the country is a Hero Honda. Every 30 seconds, someone
in India buys Hero Honda's top –selling motorcycle – Splendor. This festive season,
the company sold half a million two wheelers in a single month—a feat unparalleled
in global automotive history.

Hero Honda became the first company in the country to introduce four–stroke
motorcycles and set the standards for fuel efficiency, pollution control and quality. It
has an excellent distribution and service network spread throughout the country.

Hero Honda bikes currently roll out from its three globally benchmarked
manufacturing facilities. Two of these are based at Dharuhera and Gurgaon in
Haryana and the third state of the art manufacturing facility was inaugurated at
Haridwar, Uttrakhand in April this year. These plants together are capable of
producing out 4.4 million units per year.

24
Having reached an unassailable pole position in the Indian two wheeler market, Hero
Honda is constantly working towards consolidating its position in the market place.
The company believes that changing demographic profile of India, increasing
urbanization and the empowerment of rural India will add millions of new families to
the economic mainstream. This would provide the growth ballast that would sustain
Hero Honda in the years to come. As BrijmohanLallMunjal, the Chairman, Hero
Honda Motors succinctly points out, 'We pioneered India's motorcycle industry, and
it's our responsibility now to take the industry to the next level. We'll do all it takes to
reach there.''

25
 NEW PRODUCTS

 Hero Splendor Plus

 Hero HF Deluxe
 Hero Super Splendor
 Hero Glamour
 Hero Passion Pro
 Hero Xtreme 200R
 Hero Pleasure
 Hero Karizma ZMR
 Hero HF Dawn
 Hero Splendorismart 110

26
 CHAPTER 2
RESEARCH
METHODOLOGY

27
28
2.1.RESEARCH METHODOLOGY

Research can be defined as ―A Scientific and Systemic Search for pertinent

information on a specific topic‖. Therefore , research could be understood as an
organised activity with specific objectives on a problem or issues supported by
compilation of related data and facts , involving application of relevant tools of
analysis and deriving logically on originality .

RESEARCH DESIGN

Research Design is the arrangement of condition for collection and analysis of data in
manner that aims to combine relevance to the research purpose with the economy in
procedure. Research Design is important primarily because of the increased
complexity in the market as well as marketing approaches available to the researchers.
A research design specifics the methods and procedure for conducting a particular
study.

SOURCE OF DATA

SECONDARY DATA

Secondary Data refers to the information or facts already collected such data are
collected with the objective of understanding the past status of any variable or the
data collected and reported by some sources in accessed and used for the objective of
a study . Normally in research , the scholars collect published data , journal , annual ,
reports and websites.

29
2.2. OBJECTIVES OF THE STUDY

 To study the financial performance of ―Hero MotoCorp ltd.‖

 To know the financial strength of hero motor company.
 To know the Profitability of the company.
 To make comparative study with other year performance

2.3.NEED OF THE STUDY:

―Hero‖ is the brand name used by the Munjal brothers for their flagship company
Hero Cycles Ltd. A joint venture between the Hero Group and Honda Motor
Company was established in 1984 as the Hero Honda Motors Limited at Dharuhera
India. Munjal family and Honda group both own 26% stake in the Company. In 2010,
it was reported that Honda planned to sell its stake in the venture to the Munjal family

The company has a stated aim of achieving revenues of $10 billion and volumes of 10
million two-wheelers by 2016-17. Now market their two-wheelers following the
disengagement from Honda, Hero MotoCorp hopes to achieve 10 per cent of their
revenues from international markets, and they expected to launch sales in Nigeria by
end-2011 or early-2012. This is the main stream to study about the Hero MotoCorp
Limited.

2.4.LIMITATION OF THE STUDY

 It is only a study of interim reports.

 Financial analysis is based upon only monetary information and non
monetary factors are ignored.
 Different people may interpret the same analysis in different ways.
 It does not consider the changes in prices level
 Changes in accounting procedure by the firm may often make financial
analysis misleading.

30
2.5.SCOPE OF THE STUDY

The study is based on the accounting information of the FINANCIAL ANALYSIS

OF HERO MOTOCORP LTD,. The study covers the period of 2015-2018 for
analysing the financial statement such as income statement and balance sheet.

The scope of the study involves the various factors that affects the financial
efficiency of the company. To increase the profit and sales growth of the company.
This study finds out the operational efficiency of the organization and allocation of
resources to improve the efficiency of the organization.

The data of the past three-four years are taken into account for the study . The
performance is compared within those periods. This study finds out the areas where
Hero MotoCorp Ltd. Can improve to increase the efficiency of its assets and funds
employed.

2.6IMPORTANCE OF THE STUDY:

 Financial analyst analyses the financial statements with various tools of
analysis before commanding upon the financial health of the firm.
 Essential to bring out the history of Hero Moto Corp Ltd. (Formerly Hero
Honda Motors Ltd)
 Significance and meaning of the financial statements.

31
CHAPTER 3
REVIEW OF
LITERATURE

32
REVIEW OF LITRATURE

Literature Review was done by referring previous studies , articles

and books to know the areas of study and analyse the gap and study not
done so far. There are various studies were conducted relating to
operational performance of the company from which most relevant
literatures were reviewed.

Pai, Vadivel& Kamala (1995) have studied about the diversified companies and
financial performance. Main purpose of research was found out the relationship
between diversified firms and their financial performance. For the purpose of
research, they have selected seven large firms and analysed those firm which having
different products-both related and otherwise-in their portfolio and operating in
diverse industries. In this study, a set of performance measures / ratios was employed
to determine the level of financial performance and variation in performance from one
firm to another has been observed and statistically established. They revealed that the
diversified firms studied have been healthy financial performance.

Samuel &Vanniarajan (2007) discussed about financial performance of bank by

applying Du-Pont analysis. They concluded that the liberalization of the finance
sector in India has divulged Indian banks to a new economic environment that is
considered by increased competition and new regulatory requirements. They also
revealed that Indian and foreign banks need to explore development opportunities in
India by initiating new products for different customer segment, and many of which
were not conservatively viewed as customer for the banking industry. They suggested
all banks should to evaluate their performance and compare with the others. In the last
they depicted from the analysis the performance of the banks may be viewed on the
base of three dimensions like structural, functioning and efficiency factors which was
suggested by the India Bank Association.

Bhunia, Mukhuti& Roy (2011) have discussed about ―Financial Performance

Analysis-A Case Study‖. The main aim of study was to identify the financial strengths
and weaknesses by covering two public sector drug & pharmaceutical enterprises

33
listed on BSE. For study purpose, they have been selected twelve years from 1997- 98
to 2008-09. They analysed the data by using ratios, and statistical tools like A.M.,
S.D., C.V., linear multiple regression analysis and test of hypothesis t-test. They used
SWOT analysis to overcome the weakness and grab the opportunities available in
public sector drug & pharmaceutical enterprises in consideration of strengths and
threats. They concluded that growth during last decade was noteworthy and market
trend was growing at a faster rate. They suggested that the opportunities can be
grabbed through the diversification of export basket in untouched foreign
destinations. They also revealed that strict quality standards, services and use of latest
technology can provide an edge over competitors across the globe.

Bhunia, Mukhuti& Roy (2011) ―Financial Performance Analysis-A Case Study‖

Current Research Journal of Social Sciences 3(3): 269-275, 2011.

Dr Pratibha Jain & Prof. Megha Mehta (2013)In their study on financial
performance of automobile companies finds that Hero Honda company performed
well because of its usage of latest technology and Tata A Study On Finanacial
Analysis Of Hero Motocorp Limited. DOI: 10.9790/0837-2301053237
www.iosrjournals.org motors weak performance due to increased manufacturing
overheads and company‘s inability to face competition

Tariq Zafar& Khalid (2012) have discussed about ―A Comparative Evaluation of

Financial Performance and Market Value of Maruti& Tata Company‖. For the
purpose of analysis, they have been selected two most preferred companies like
Maruti Suzuki Ltd. and Tata Motors Ltd., and for the using period of 2006-2010.
They tried to analyse qualitative and quantitative performance of both companies and
to investigated their risk and returns factors, their market position, their collective
impact on profitability and to come up with the best and worst performing company
by using modern performance evaluating techniques and later ranking them according
to their achieved performance. They concluded from the ratio analysis there was a
lack authenticity in data, in calculation which may manipulating presentation by the
promoters. They have also found that different firms follow different accounting
policies like depreciation allowance; valuation of inventory etc. and often
management ignore these differences while making inter-firm comparison. They

34
revealed that the change in price levels due to inflation is also not properly considered
by management.

Abhijeet Singh and Brijesh Kumar (2011) has mentioned that Hero Honda Motors
Ltd, is running a program called Good life Passport to Relationship Reward, with an
objective to create an innovative environment for interaction between Hero Honda
and its customers. Members of this program are given a magnetic card in which all
information is stored and this card is swiped when using any service at a showroom or
workshop and it works like a loyalty benefit card.

Amrit Raj (2012) has reported that Hero Moto Corp Ltd is a focusing on technology
revamp by having tie ups with US based EBR racing and with Austria based engine
maker AVL these moves are with an ultimate aim to extend arm in R&D as the
company has decided not to run the existing brands on Honda engines. According to
ArvindSaxena (2010), no company in automobile sector can fight competition on
price. Companies need to have the right product, distribution, CRM and after sales
servicenetwork to grow.

"Motorcycle, n.”Oxford English Dictionary Oxford University Press. March

2005. "1. A two-wheeled motor-driven road vehicle, resembling a bicycle but
powered by an internal-combustion engine; (now) spec. one with an engine capacity,
top speed, or weight greater than that of a moped."

MohdAltaf Khan (211) the author has concluded that some businesses outperform
their rivals in offering superior relational value to their target customer and convert
these advantages into superior performance because the company focuses on their
customer relating capability , which acts as important source of advantage and has 3
interrelated components like orientation , which reveals the organizations priorities
towards customer relationship , information , which includes customer information
systems and the configuration, which reflects the alignment of organization structures,
accountability and incentives for customer retention.

Morris M, Pitt L & Honeycutt E (2001) has quoted that the view of marketing (as
selling) changed by the end of 1990. Today marketing is much more complicated and
has instead became equivalent with a set of value-creating activities and organizations
must make fundamental decisions regarding how to approach different market
segments and individual customers. The conventional wisdom is that the marketer is

35
no longer interested in making a sale or achieving a transaction, but instead must
focus on relationship marketing.

Christopher Lovelock &JayantaChatterjee (2007) has concluded that with the

growth of the service economy and emphasis on adding value enhancing services to
manufactured goods, the line between services and manufacturing sometimes
becomes blurred and many manufacturing firms from auto manufacturers Ford and
Fiat to Rolls Royce are moving aggressively into service business.

36
CHAPTER 4
DATA ANALYSIS AND
INTREPRETATION

37
 FINANCIAL ANALYSIS OF HERO MOTOR

Financial position

Profit and loss a/c

PROFIT & LOSS ACCOUNT OF HERO MOTOCORP ------------------- in Rs. Cr. -------------------

Mar '18 Mar '17 Mar '16 Mar '15 Mar '14

12 mths 12 mths 12 mths 12 mths 12 mths

Income

Sales Turnover 32,871.82 30,871.59 30,857.48 29,302.94 27,155.82

Excise Duty 641.33 2,371.13 2,258.18 1,717.64 1,880.35

Net Sales 32,230.49 28,500.46 28,599.30 27,585.30 25,275.47

Other Income 521.11 508.35 391.12 337.70 446.38

Stock Adjustments 23.15 -63.17 6.82 29.97 -8.36

Total Income 32,774.75 28,945.64 28,997.24 27,952.97 25,713.49

Expenditure

Raw Materials 21,966.25 19,064.85 19,424.80 19,890.84 18,320.46

Power & Fuel Cost 138.77 112.62 122.13 158.47 137.46

Employee Cost 1,540.13 1,396.01 1,319.56 1,172.87 930.04

Selling and Admin Expenses 837.65 767.45 725.40 0.00 0.00

Miscellaneous Expenses 2,490.65 2,461.55 2,567.22 2,850.91 2,339.09

Total Expenses 26,973.45 23,802.48 24,159.11 24,073.09 21,727.05

Mar '18 Mar '17 Mar '16 Mar '15 Mar '14

38
 12 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit 5,280.19 4,634.81 4,447.01 3,542.18 3,540.06

PBDIT 5,801.30 5,143.16 4,838.13 3,879.88 3,986.44

Interest 6.25 6.05 2.15 11.09 11.82

PBDT 5,795.05 5,137.11 4,835.98 3,868.79 3,974.62

Depreciation 555.60 492.73 441.40 539.97 1,107.37

Profit Before Tax 5,239.45 4,644.38 4,394.58 3,328.82 2,867.25

PBT (Post Extra-ord Items) 5,239.45 4,644.38 4,394.58 3,328.82 2,867.25

Tax 1,546.80 1,281.34 1,262.21 943.18 758.17

Reported Net Profit 3,697.36 3,377.12 3,132.37 2,385.64 2,109.08

Total Value Addition 5,007.20 4,737.63 4,734.31 4,182.25 3,406.59

Equity Dividend 1,697.50 1,737.34 1,437.75 1,198.12 1,299.13

Corporate Dividend Tax 345.57 353.69 292.69 223.76 220.79

Per share data (annualised)

Shares in issue (lakhs) 1,997.11 1,996.97 1,996.90 1,996.88 1,996.88

Earning Per Share (Rs) 185.14 169.11 156.86 119.47 105.62

Equity Dividend (%) 4,750.00 4,250.00 3,600.00 3,000.00 3,250.00

Book Value (Rs) 589.29 506.33 397.85 327.58 280.43

39
 B) Balance Sheet

Financial position

------------------- in Rs. Cr. -----------------

BALANCE SHEET OF HERO MOTOCORP
--

Mar '18 Mar '17 Mar '16 Mar '15

12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 39.94 39.94 39.94 39.94

Equity Share Capital 39.94 39.94 39.94 39.94

Reserves 11,931.52 10,275.57 8,794.17 6,500.06

Networth 11,971.46 10,315.51 8,834.11 6,540.00

Secured Loans 10.21 68.03 145.98 0.00

Unsecured Loans 214.79 179.95 84.06 100.00

Total Debt 225.00 247.98 230.04 100.00

Minority Interest 93.21 67.38 54.63 18.54

Total Liabilities 12,289.67 10,630.87 9,118.78 6,658.54

Mar '18 Mar '17 Mar '16 Mar '15

12 mths 12 mths 12 mths 12 mths

Application Of Funds

Gross Block 7,910.76 7,074.89 5,863.12 4,737.85

Less: Accum. Depreciation 2,949.80 2,476.04 2,079.41 1,785.57

Net Block 4,960.96 4,598.85 3,783.71 2,952.28

40
Capital Work in Progress 355.48 580.96 653.37 719.20

Investments 7,669.24 6,066.37 4,501.08 3,118.50

Inventories 962.68 708.58 761.99 861.39

Sundry Debtors 1,426.97 1,551.75 1,282.07 1,371.82

Cash and Bank Balance 237.57 195.39 179.09 215.78

Total Current Assets 2,627.22 2,455.72 2,223.15 2,448.99

Loans and Advances 1,783.83 1,610.10 1,734.50 1,415.38

Total CA, Loans &

4,411.05 4,065.82 3,957.65 3,864.37
Advances

Current Liabilities 4,927.59 4,562.94 3,679.43 3,195.16

Provisions 179.47 118.19 97.60 800.65

Total CL & Provisions 5,107.06 4,681.13 3,777.03 3,995.81

Net Current Assets -696.01 -615.31 180.62 -131.44

Total Assets 12,289.67 10,630.87 9,118.78 6,658.54

Contingent Liabilities 444.05 514.39 694.50 826.22

Book Value (Rs) 599.44 516.56 442.39 327.51

41
 a)COMPARATIVE STATEMENT ANALYSIS 2018 OF HERO
MOTOCORP.LTD

BALANCE SHEET OF HERO MOTOCORP

MAR 18 MAR 17 ABSOLUTE CHANG
INC/DEC E IN %
RS. CR 12 Mths 12 mths
Sources of funds
Total share capital 39.94 39.94 0 0
Equity share capital 39.94 39.94 0 0
Share application money 0 0 0 0
Preference share capital 0 0 0 0
Reserves 11,728.94 10,071.35 1657.59 14.13%
Revaluation 0 0 0 0
Networth 11768.88 10111.29 1657.59 14.08%
Secured loans 10.21 68.03 -57.82 -566.30%
Unsecured loans 214.79 179.95 34.84 16.22%
Total debt 225.00 247.98 -22.98 -10.21%
Total liabilities 12289.67 10630.87 1658.8 13.50%
Mar 18 Mar 17

12 mths 12 mths
Application of funds
Gross Block 7910.76 7074.89 835.87 10.57%
Less: accum depreciation 2949.80 2476.04 473.76 16.06%
Net block 4960.96 4598.85 362.11 7.30%
Capital work in progress 355.48 580.96 -225.48 -63.43%
Investment 7669.24 6066.37 1602.87 20.90%
Inventories 962.68 708.58 254.1 26.40%
Sundry debtors 1426.97 1551.75 -124.78 -8.74%
Cash and bank balance 237.57 195.39 42.18 17.75%
Total current assets 2627.22 2455.72 171.5 6.52%
Loans and advances 1783.83 1610.10 173.73 9.74%

42
Fixed deposits 0 0 0 0
Total CA, Loans&Adv 4411.05 4065.82 345.23 7.83%
Deffered credit 0 0 0 0
Current liabilities 4927.59 4562.94 364.65 7.40%
Provisions 179.47 118.19 61.28 34.14%
Total CL& Provision 5107.06 4681.13 425.93 8.34%
Net current Assets -696.01 -615.31 80.7 -11.59%
Miscellaneous expenses 0 0 0 0
12,289.67 10,630.87 1658.8 13.50%

43
Table no. 1

Total sources of funds

Year Amt (in cr.)
2017 10111.29
2018 11768.88

Graph no. 1

total sorces of funds

12000

11500

11000

10500 total sorces of funds

10000

9500

9000
17-Mar 18-Mar

INTERPRETATION :-

The above graph shows the total sources of fund of Hero Motocorp Ltd. The
total sources of fund during the financial year 2017 it is 10111.29 and it
increased in 2018 by 11768.88.

44
Table no. 2

Total application funds

Years Amt (in cr)

2017 10630.87
2018 12289.67

Graph no. 2

total application of funds

12500

12000

11500

11000
total application of funds
10500

10000

9500
2017 2018

INTERPRETATION :-

The above graph shows the total application of fund of Hero Motocorp Ltd.
The total application of fund during the financial year 2017 it is 10630.87 and
it increased in 2018 12289.67.

45
Table no. 3

Net Current Assets

Year Amt (in cr)

2017 -615.31
2018 -696.01

Graph no. 3

Net Current Assets

-560
2017 2018
-580

-600

-620

-640 Net Current Assets

-660

-680

-700

-720

INTERPRETATION:-

The above graph shows the Net Current assets of Hero Motocorp Ltd. Net
current assets are Decreased by -11.59% from 2017 to 2018.

46
Table no. 4

Sundry debtors

Years Amt (in cr.)

2017 1551.75
2018 1426.97.

Graph no. 4

sundry debtors
1580
1560
1540
1520
1500
1480
1460 sundry debtors
1440
1420
1400
1380
1360
17-Mar 18-Mar

INTERPRETATION:-

The above graph shows the sundry debtors of Hero Motocorp Ltd. The
sundry debtors during the financial year 2017 it is 1551.75 and it decreased
in 2018 1426.97. Debtors are Decreased by -8.74% .

47
Interpretation

b)Common size statement analysis 2018 of hero motocorp .ltd

Mar Change Mar Change

2018 in % 2017 in %

SOURCES OF FUNDS
Shareholders funds
Total Share capital 39.94 0.32% 39.94 0.38%

Equity share capital 39.94 0.32% 39.94 0.38%

Share application money 0 0 0 0

Preference share capital 0 0 0 0

Reserve 11,728.94 95.44% 10,071.35 94.73%

Revaluation reserve 0 0 0 0
Net worth 11768.88 95.76% 10111.29 95.11%

Secured loan 10.21 0.083% 68.03 0.63%

Unsecured loan 214.79 1.74% 179.95 1.69%

Total debt 225.00 1.83% 247.98 2.33%

Total liabilities 12289.67 100% 10630.87 100%

APPLICATION OF Mar 18 Mar 17

FUNDS
12 mths 12 mths
Gross block 7910.76 64.37% 7074.89 66.55%

Less – accum. 2949.80 24.00% 2476.04 23.29%

Depreciation
Net block 4960.96 40.37% 4598.85 43.26%
Capital W.I.P 355.48 2.89% 580.96 5.46%
Investment 7669.24 62.40% 6066.37 57.06%
Inventories 962.68 7.83% 708.58 6.64%
Sundry debtors 1426.97 11.61% 1551.75 14.60%
Cash & bank bal 237.57 1.93% 195.39 1.84%
Total current assets 2627.22 21.38% 2455.72 23.10%

48
Loans and advances 1783.83 14.51% 1610.10 15.15%
Fixed deposits 0 0 0 0
Total CA, Loans &adv 4411.05 35.89% 4065.82 38.25%
Deffered credit 0 0 0 0
Current lia 4927.59 40.09% 4562.94 42.92%
Provision 179.47 1.46% 118.19 1.11%
Total CL & provision 5107.06 41.56% 4681.13 44.03%
Net Current Assets -696.01 -5.66% -615.31 -0.06%
Miscellaneous exp 0 0 0 0
Total Assets 12289.67 100% 10,630.87 100%

Interpretation

1. There is no change in share capital.

2. In 2017 reserve & surplus was 94.73% but in 2018 it was decreased to
95.44%.
3. Unsecured loan are decreased from 1.74% to 1.69% 2017 to 2018.
4. In 2017 inventories was 7.83% and it has increased to 6.64% in 2018.
5. Sundry debtors in 2017 were 14.64% and it increased 11.64% in 2018.
6. Loans and advances in 2017 was 15.15% but in 2018 it was decreased
to 14.51%.

49
c)Trend analysis

Balance sheet of hero motocorp ltd of 2018

2017 2018 2017 2018

Sources of funds
Total share capital 39.94 39.94 100% 100%
Equity share capital 39.94 39.94 100% 100%
Share application 0 0 100% 0
money
Preference share 0 0 100% 0
capital
Reserves 10,071.35 11,728.94 100% 116.46%
Revaluation 0 0 100% 0
Networth 10111.29 11768.88 100% 116.39%
Secured loans 68.03 10.21 100% 15.00%
Unsecured loans 179.95 214.79 100% 119.36%
Total debt 247.98 225.00 100% 90.73%
Total liabilities 10630.87 12289.67 100% 115.60%

Application of
funds
Gross Block 7074.89 7910.76 100% 111.81%
Less: accum 2476.04 2949.80 100% 119.13%
depreciation
Net block 4598.85 4960.96 100% 107.87%
Capital work in 580.96 355.48 100% 61.19%
progress
Investment 6066.37 7669.24 100% 126.42%
Inventories 708.58 962.68 100% 135.86%
Sundry debtors 1551.75 1426.97 100% 91.95%
Cash and bank 195.39 237.57 100% 121.59%
balance
Total current assets 2455.72 2627.22 100% 106.98%
50
Loans and advances 1610.10 1783.83 100% 110.79%
Fixed deposits 0 0 100% 0
Total CA, 4065.82 4411.05 100% 108.49%
Loans&Adv
Deffered credit 0 0 100% 0
Current liabilities 4562.94 4927.59 100% 107.99%
Provisions 118.19 179.47 100% 151.85%
Total CL& 4681.13 5107.06 100% 109.10%
Provision
Net current Assets -615.31 -696.01 100% 113.11%
Miscellaneous 0 0 100% 0
expenses
10,630.87 12,289.67 100% 115.60%

51
C)Ratios analysis

a) Profitability ratio

Return on Equity (ROE): The ROE for the company declined and down at 31.1%
during FY18, from 34.4% during FY18. The ROE measures the ability of a firm to
generate profits from its shareholders capital in the company.
Return on Capital Employed (ROCE): The ROCE for the company declined and
down at 43.9% during FY18, from 46.7% during FY17. The ROCE measures the
ability of a firm to generate profits from its total capital (shareholder capital plus debt
capital) employed in the company.
Return on Assets (ROA): The ROA of the company declined and down at 21.6%
during FY18, from 23.3% during FY17. The ROA measures how efficiently the
company uses its assets to generate earnings.
KEY RATIO ANALYSIS

No. of Mths Year Ending 12 Mar-17* 12 Mar-18*

Current ratio x 1.8 2.0

Debtors‘ Days Days 20 16

Interest coverage x 168.5 171.2

Debt to equity ratio x 0.0 0.0

Return on assets % 23.3 21.6

Return on equity % 34.4 31.1

Return on capital employed % 46.7 43.9

The Profitability ratios measures the overall performance and effectiveness of the firm.

b)Gross profit ratio:Gross profit ratio is the ratio of gross profit to net sales i.e.
sales less sales returns. The ratio thus reflects the margin of profit that a concern is
able to earn on its trading and manufacturing activity.

52
1]GROSS PROFIT RATIO

Gross profit/(net sales x 100)

Year Gross profit Sales Ratios

2012-13 3284.48% 23768.11 13.81
2013-14 3540.06% 25275.47 14.07
2014-15 3542.18% 27585.30 12.84
2015-16 4447.10% 28599.30 15.54
2016-17 4634.81% 28474.99 16.27

GROSS PROFIT RATIO

Series 1
18

16

14

12

10

8 Series 1

0
2012-13 2013-14 2014-15 2015-16 2016-17

INFERENCE:
The above table shows the Gross Profit Ratio position of the Hero MotoCorp
Ltd., The Gross Profit Ratio was ranges from 13.81 to 16.27 during the study
period 2012-13 to 2016-17.

53
 1) NET PROFIT RATIO :
Net profit ratio(NP ratio) expresses the relationship between net profit after
taxes and sales. The ratio indicates what portion of the net sales is left for the
owners after all expenses have been met.

Net profit = net profit/sales x100

Year Net profit Sales Ratio

2012-13 2118.16 23768.11 8.91
2013-14 2109.08 25275.47 8.34
2014-15 2385.64 27585.30 8.64
2015-16 3132.37 28599.30 10.95
2016-17 3377.12 28474.99 11.85

NET PROFIT RATIO

Series 1
14

12

10

8
Series 1
6

0
2012-13 2013-14 2014-15 2015-16 2016-17

INFERENCE :
The above table shows the Net Profit Ratio of the Hero Motocorp Ltd., The
Net Profit ratio was ranges from 8.91 to 11.85 during the study period 2012-13
to 2016-17.

54
2) PROPRIETARY RATIO:
The proprietary ratio( also known as the equity ratio)is the proportion of
shareholders equity to total assets, and such provides a rough estimate of the
amount of capitalization currently used to support a business.

PROPRIETARY RATIO

Proprietary ratio = shareholders fund / total tangible assets

Year Shareholders Total tangible Ratio

funds assets
2012-13 5308.40 3070.98 1.73
2013-14 5599.87 2243.25 2.50
2014-15 6541.33 2912.69 2.25
2015-16 7944.75 3836.74 2.07
2016-17 10111.29 4395.59 2.30

PROPRIETARY RATIO

Series 1
3
2.5
2
1.5
Series 1
1
0.5
0
2012-13 2013-14 2014-15 2015-16 2016-17

55
INFERENCE :
The above table shows the proprietary ratio position of the hero motocorp ltd.
The proprietary ratio was range from 1.73 to 2.30 during the study period
2012-13 to 2016-17.

LIQUIDITY RATIO

4)CURRENT RATIO:
The current ratio is a measure of the firms short term solvency. It indicates the
availability of current assets in rupees for every one rupee of current liability

CURRENT RATIO = Current assets / Current liabilities

Year Current assets Current Ratio
liabilities
2012-13 2884.75 4333.25 0.66
2013-14 2911.17 4497.43 0.64
2014-15 3742.35 3980.37 0.94
2015-16 3632.18 4395.74 0.82
2016-17 3943.77 4582.97 0.86

CURRENT RATIO

Series 1
1
0.9
0.8
0.7
0.6
0.5
Series 1
0.4
0.3
0.2
0.1
0
2012-13 2012-14 2012-15 2012-16 2012-17

56
INFERENCE:
The above table shows the current ratio position of the hero motocorp ltd., The
proprietary ratio was ranges from 0.66 to 0.86 during the study period 2012-13
to 2016-17.

57
Key Financial Ratio Analysis Of Hero Motocorp Ltd

CONSOLIDATED KEY FINANCIAL RATIOS OF HERO ------------------- in Rs. Cr. -------------------

MOTOCORP

Mar 18 Mar 17 Mar 16 Mar 15 Mar 14

Per Share Ratios

Basic EPS (Rs.) 186.30 179.49 157.34 118.41 105.29

Diluted EPS (Rs.) 186.29 179.49 157.34 118.41 105.29

Cash EPS (Rs.) 212.69 186.86 176.32 144.66 160.91

Book Value[ExclRevalReserve]/Share (Rs.) 604.14 519.92 445.10 328.42 281.60

Book Value[InclRevalReserve]/Share (Rs.) 604.14 519.92 445.10 328.42 281.60

Revenue from Operations/Share (Rs.) 1,625.36 1,432.67 1,424.99 1,378.97 1,265.67

PBDIT/Share (Rs.) 292.85 255.28 240.89 199.74 199.46

PBIT/Share (Rs.) 264.06 230.13 218.69 172.68 144.01

PBT/Share (Rs.) 262.52 228.76 217.96 164.85 143.42

Net Profit/Share (Rs.) 183.90 161.71 154.13 117.60 105.45

NP After MI And SOA / Share (Rs.) 186.30 179.48 157.34 118.41 105.29

Profitability Ratios

PBDIT Margin (%) 18.01 17.81 16.90 14.48 15.75

PBIT Margin (%) 16.24 16.06 15.34 12.52 11.37

PBT Margin (%) 16.15 15.96 15.29 11.95 11.33

Net Profit Margin (%) 11.31 11.28 10.81 8.52 8.33

NP After MI And SOA Margin (%) 11.46 12.52 11.04 8.58 8.31

Return on Net worth/Equity (%) 31.07 34.74 35.56 36.15 37.39

Return on Capital Employed (%) 40.82 41.27 33.69 35.46 36.90

58
Return on Assets (%) 21.38 23.40 24.36 22.19 20.77

Total Debt/Equity (X) 0.02 0.02 0.03 0.02 0.00

Asset Turnover Ratio (%) 186.57 186.84 220.66 258.46 249.71

Liquidity Ratios

Current Ratio (X) 2.01 1.81 1.76 1.35 1.26

Quick Ratio (X) 1.79 1.64 1.55 1.13 1.11

Inventory Turnover Ratio (X) 33.72 40.38 37.35 31.97 37.75

Dividend Payout Ratio (NP) (%) 45.62 48.47 44.48 50.66 61.78

Dividend Payout Ratio (CP) (%) 39.51 42.51 38.98 41.24 40.47

Earnings Retention Ratio (%) 54.38 51.53 55.52 49.34 38.22

Cash Earnings Retention Ratio (%) 60.49 57.49 61.02 58.76 59.53

Coverage Ratios

Interest Coverage Ratios (%) 171.21 168.46 298.92 294.73 243.31

Interest Coverage Ratios (Post Tax) (%) 171.21 168.46 298.92 294.73 243.31

Valuation Ratios

Enterprise Value (Cr.) 70,884.28 64,500.25 58,885.28 52,675.48 45,269.83

EV/Net Operating Revenue (X) 2.18 2.25 2.07 1.91 1.79

EV/EBITDA (X) 12.12 12.65 12.24 13.21 11.36

Market Cap/Net Operating Revenue (X) 2.18 2.25 2.07 1.92 1.80

Retention Ratios (%) 54.37 51.52 55.51 49.33 38.21

Price/BV (X) 5.91 6.24 6.65 8.07 8.07

Price/Net Operating Revenue 2.18 2.25 2.07 1.92 1.80

Earnings Yield 0.05 0.06 0.05 0.04 0.05

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Chapter 5- Conclusion
and Suggestion

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 FINDINGS

 The Gross Profit Ratio Shown that increased in sales has

maintained the company‘s profit level. In the year2014-15, the
percentages shown 12.84 it has been increased during the year
2016-17 16.27.
 The Net Profit Ratio has been increased to 11.85 during the
financial year 2016-17 and decreased 8.34 in the year 2013-14.
 Proprietary ratio has been increased to 2.30 during the financial
year 2016-17 and decreased 1.73 in the year 2012-13
 Current ratio during the financial year 2012-13 it was 0.66 and
it increased 0.86 during the year 2016-17
 The comparative balance sheet 2018 has increased. Total share
holders fund are decreased by 13.50% in 2017 to 2018.

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 Suggestions

 1. Company may look into increasing various forms of current assets and
decreasing current liabilities to effective manage working capital requirement.
 2. company may maintain current gross profit in the coming financial years.
 3. To meet the short term requirement the company has to raise short term as
well as long terms loans.
 4. To attract to the new customers the company has to adapt new product and
new technology.
 In order to further strength this company‘s position as India premier
integrated two wheelers vehicles company.

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 Conclusion

Even though company is utilising its own funds there is very need that
company should improve its liquidity position, debtors collection period
and proper management of its current assets and current liabilities .

The external debt of the company decreased gradually. This is mainly due
to repayment of a portion of term loans .another reason for decreased in
external debt is due to increase in reserve and surplus.

The year that indicates there is possible growth of the company in the
market during year 2017

Hero motocorp ltd has under taken research program , modernization and
technology up gradation, for the above said expansion programs it has
made use of surplus funds only and did not go for outsider debts , which is
one of the good term financial policy of hero motorcorp ltd.

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 BIBLIOGRAPHY

 Journal of Accounts, Economics & Business Management,

 www.Moneycontrol.com.
 Financial Management – I.M.Pandey
 www.google.com
 www.hero motocorp.com
 www.slideshare.net

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