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Managerial Economics Assignment

Company Anaylsis

   

Jimit Shah Sujatha Menon Jenny Parekh Vivek Mehta Ashwin Widge

– 01 – 02 – 03 – 04 – 05

Sr. No.



Company Profile


Marketing & Branding Strategies


Financial Statements


Fundamental Analysis


Future Prospects


Bibliography & Webliography

.Company’s Profile Chairman “Hero” is the brand name used by the Munjal family for their company. company's new identity. setting benchmarks in technology. powered by its two wheelers. It will continue its focus on value creation and enduring relationships with its partners. By 1975 Hero cycles became largest bicycle manufacturer in India and still continue to be one of the top sellers of cycles. . The company will provide an engaging environment for its people to perform to their true potential. Stepping stone to the formation of the flagship company “Hero Cycles”. Mission Hero MotoCorp‟s mission is to become a global enterprise fulfilling its customers' needs and aspirations for mobility. Hero MotoCorp Ltd.the vision of a mobile and an empowered India. The business story of this company started in the year 1956 in Ludhiana where Brijmohan Lall Munjal and his brothers set up a company that provided people with basic transport – cycle. reflects its commitment towards providing world class mobility solutions with renewed focus on expanding company's footprint in the global arena. styling and quality so that it converts its customers into its brand advocates. Vision The story of Hero Honda began with a simple vision .

Incorporated with their Headquarters at New Delhi. 225 cc and scooter categories . 150 cc. from cycles to two wheelers were a natural step and the Hero Group came into being.There was no stopping to this dream. Their tagline being „Dhak Dhak Go‟ The company offers one of the widest ranges of two. 125 cc.wheelers with over 19 different products across the 100 cc. Japan and in 1984 Hero Honda Motors Ltd. Ltd. India. In 1983 Hero Group joint Collaboration Agreement with Honda Motor Co.


A slot . The third and the latest manufacturing plant is based at Haridwar. Two of these are based at Gurgaon and Dharuhera which are located in the state of Haryana in northern It aspires to be seen as a global player. and it generated a lot of following for the company in its promotional campaigns during events such as the Cricket World Cup and built up strong emotional patriotic associations for it. These associations have just been weakened if not broken by the new „Hero MotoCorp‟ as it launched itself internationally in London. 2011 the end of relationship with Honda and soon after that the new logo and corporate identity. The detailed reasons would be explained by my colleagues in the future presentation. Marketing and current strategies Hero MotoCorp Chairman Brijmohan Lall formally announced on July 29. and tagline „Hum Main Hai Hero‟ Area of Operations: Hero MotoCorp two wheelers are manufactured across 3 globally benchmarked manufacturing facilities. Hero group rebuilt their brand with the name change to Hero MotoCorp. in the hill state of Uttrakhand. This strategic change may have a detrimental effect on the company‟s fortunes in the Indian market. (Source: http://www. with the taglines “Hum mein hai Hero”. But what the caterpillar calls the end the rest of the world calls a butterfly – the commitment towards its vision and mission of a mobile and an empowered India. was launched and communicated through different media including the commercial ) The old tagline of „Hero Honda‟ was „Desh Ki Dhadkan‟ (Hindi to English translation: Heart of the [Indian] Nation OR Pace of the [Indian] Nation). the board of directors of the Hero Honda Group has decided to terminate the joint venture between Hero Group of India and Honda of Japan due to the rising difference between the two partners.But in December 2010. This was clearly India focused. Not just Indian.

change and confidence. creating a familiarity with the brand very quickly. This did two important things for Hero Moto Corp. Later radio channels and online social media were focused. it gave viewers same feeling of watching a Hero Honda ad. fabulous Rehman music got viewers hooked on to Hero Moto Corp‟s brand. Music coupled with “hero” would be used in a manner. But they have also used it to depict continuity. A 120s TVC and a full page print ad were the branding strategy planned and executed. the word “hero” was again used with music to evoke emotional appeal in its viewers. and one of t he best times for growth with in India.  Research Target Group and Sample size  Males and females  Age group: 20 – 35  Sample size: 53  Method used: Convenience Sampling . memorable. And music was always mainstay of their ads. Two. Differentiating factor this time was very touching and hummable music of A R Rehman. But this time. Post demerger. Also now is not the best time for global expansion. Branding Factors  The Logo Change The new logo of „Hero MotoCorp‟ is a stylized 3D „H‟ using the colours red. the emotional appeal was shifted towards generating a feeling of 'pride in oneself' alone. The lettering consists of „Hero‟ in red in a much cleaner and simpler font. Finally what you have in front of audience is Hero Moto Corp in the same light as before. Red has been a „Hero Honda‟ staple color and is strongly associated with it. It‟s a simple logo. The first priority was given to the TV ads and print media. and quite classy.just opened up for any other Indian motorbike company such as TVS Motor Company to position itself in the minds of people as „India‟s Biking Pride‟. One. which would generate an emotional appeal of 'nationalism' and 'pride in oneself'.  Rebranding The word “Hero” was often used in ad campaigns of Hero Honda prior to demerger. black and white.

Can Hero now produce higher quality products without Honda? .

The combined annual installed capacity is approx.90 million units. 150 cc.000+ villages.  Enhancing reach We have one of the most extensive customer reaches with 5. 225 cc and scooter categories. 125 cc.wheelers with over 19 different products across the 100 cc.00. .800+ panIndia touch points with deepening presence across 1. Price and Mileage important while buying  Product basket We offer one of the widest ranges of two.Findings     The reach of the ad was considerably good Most of the respondents like the concept of the ad But half of them failed to recall the new logo Majority of them knew the purpose behind launching the new ad campaign  More than half of them agree that hero can manufacture same quality without Honda  Service. Brand. Uttarakhand (India). 6.  Operating locations Two of our manufacturing plants are based at Gurgaon and Dharuhera in Haryana (India) and one manufacturing plant is located at Haridwar.

 Hero warranty We are India‟s first company to offer a 5-year warranty on all our two-wheelers*. Product Sales .800 people. which will further strengthen our market position. backed by strong R&D and excellent manufacturing capabilities. Central & Latin America and Africa. This is also an expression of our confidence in the quality of our products. This initiative has resulted in strong customer commitment and trust.  Human capital We have highly motivated and experienced team of over 5.We are consistently expanding our footprint across Asia.

Leap runs primarily on battery in urban conditions and will use range extender gasoline engine for long runs. gaskets and other assembly parts.000 Standard Cubic Meter (SCM) of natural gas and thereby. workshops.based parts. prevent 2. We also recycled paint sludge from its
paint processes. which enabled us to reduce 400 
 TR (340 KW) of electrical energy. .GOING GREEN (CSR) Hero has proactively restricted the use of mercury and cadmium in painting and rubber compounding processes. they have now been replaced with non-asbestos based parts. However. Concept hybrid scooter Hero‟s concept Hybrid Scooter – Leap was unveiled in the 2012 Auto Expo in Delhi. As a part of this initiative. They have also installed a waste heat recovery system to utilize waste heat from its gas generator.600 tons of CO2 emissions. They also installed a vapor absorption machine. lead was replaced by lead-free materials. create awareness and raise environmental consciousness in youth.5 lakh students across 2000 schools. banners and displays. Hero‟s products once used to rely on asbestos. The concept of Series Hybrid is fuel productive and eco-friendly. which is 5-10% of the total volumes of paint sludge generated. Similarly. which facilitates easy recyclability at the end of a vehicle‟s life cycle. which include brake liners. Hazardous chemicals like hexavalent chromium were substituted in the plating process. we reached 2. All plastic parts at our facilities come in a molded form. The product is at the pre-launch stage and will be launched in the near future. spreading the message of green in the form of green Olympiad examination. Hero Terra Quiz aims to inculcate green practices. thereby saving 524 tons of CO2 emissions annually. This enabled us to save 4.

Profit & Loss Statement .

08 13146.02 16171. (millions) 24027.69 19742.39 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 Financial Year Total income includes sales revenue and other incomes. Total Expenditure Total Income Amount Rs.14 20043.94 20577. There has also been increase in excise duty by 1 % percentage point when compare to march 2012.8% when compared to last year. This is because the selling price of the bikes has been increased.There has been decrease in number of units sold in 2012-13 when compared with 2011-12 by 3% in line with downtrend in entire industry. The main reason for increase in expenditure is 11% increase in employee cost which includes salaries and wages. However in value terms there have been a marginal rise of 0. .06 12655. The company has seen an increase of 1% in income while it has experience an increase of 3% in expenditure.99 24259.67 10691.71 16839. The difference between these is called profit after depreciation and interest.

07% 54% 37. This is a bad sign for the company.25% -7. Due to increase in % expenditure over % income in last two years. .50% In 2011-12 the company had seen a good amount of operating profit because of good sales and lower expenses. PAT has dropped by 11% when compared with last year. PAT (Rs) 25000 22318 20000 15000 12817 10000 5000 0 2008-09 2009-10 2010-11 2011-12 2012-13 PAT (Rs) 19279 23781 21181 A major fall in PAT in 2010-2011 is because of exceptional expenses of Rs 798 Cr which was given to buy 26% of Honda‟s stake.Operating profit 5000 4000 3000 2000 1000 0 2008-09 2009-10 2010-11 2011-12 2012-13 Operating profit -4. In 2012-13 comapany has witness a fall in its operating profit by 7.5% due to heavy expenses incurred.

There has been increase of 10% in other incomes in 2012-13.Other Income Other Income Amount Rs.3 4918.3 2008-2009 2009-2010 2010-2011 Financial Year 2011-2012 2012-2013 Income that is generated from sources other than a company's normal business operations is known as other income. . dividend income from investments in other companies and other non operating incomes like sale of assets. Main sources of other incomes are interest income from investments .1 3442.1 4480. (Cr) 3365.5 4135.

Balance sheet .

28. For the last 5 years the current assets are in negative. 95.1 96. Fundamental Analysis Market Capitalization: As on date Hero MotoCorp Ltd.03. 3.2 119.7000 6000 5000 4000 Current Liabilities 3000 Current Assets 2000 1000 0 2008-09 2009-10 2010-11 2011-12 2012-13 The position of the company with respect to current assets is not healthy.97.2 . Earnings Per Share: The portion of a company's profit allocated to each outstanding share of common stock. of Equity Shares Earnings Per Sahre Earnings Per Sahre 150 Rupess 100 50 0 2008-2009 2009-2010 2010-2011 Financial Year 2011-2012 2012-2013 64. In 2012-13 the total current assets has been improved when compared with last year. Earnings per share serve as an indicator of a Hero MotoCorp's profitability.125*.8 64. Calculated as: Earnings available for Equity shareholders No. has the market capital of Rs.5 111.

Price – Earnings Ratio: A valuation ratio of a Hero MotoCorp's current share price compared to its per-share earnings. Hero MotoCorp Ltd provides their shareholders with 19. Currently Hero MotoCorp Ltd.30 times earnings per share.Earnings per share are generally considered to be the single most important variable in determining a share's price. Dividends are a form of profit distribution to the Hero MotoCorp Ltd shareholders. 102. over an entire year (including interim dividends but not including special dividends) divided by the number of outstanding ordinary shares issued. facilitates Rs. Dividend Per Share Dividend per share (DPS) is the total dividends paid out by HMC Ltd. Of Equity Shares . Calculated as: Equity Dividend No. Calculated as: Market price per share Earnings Per Share Price-Earning Price-Earning 18 16 14 12 2008-2009 2009-2010 2010-2011 Financial Year 2011-2012 2012-2013 According to the stats. 72 earnings per share.

Calculated as: Profit After Tax Shareholder’s Fund x 100 . Calculated as: Earnings Before interest and Tax x 100 Capital Employed Return on Net Worth/ Equity: Return on equity measures “Hero MotoCorp Ltd” profitability by revealing how much profit a company generates with the money shareholders have invested. or to compare the efficiency of a number of different investments.Dividend Per share Dividend Per share R u p e e s 110 20 2008-2009 2009-2010 105 45 2010-2011 Financial Year 2011-2012 60 2012-2013 Return on Investment/ Capital Employed: A performance measure used to evaluate the efficiency of an investment in Hero MotoCorp Ltd.

64 Debt .57 40 30 20 10 0 2008-2009 2009-2010 2010-2011 Financial Year 2011-2012 2012-2013 37.Equity Ratio: It indicates what proportion of equity and debt the company is using to finance its assets.43 60.) 4000 3000 2000 1000 0 2008-2009 2009-2010 2010-2011 Financial Year 2011-2012 2012-2013 Equity Debt .05 65.77 61. Calculated as: Borrowed Funds Shareholders Fund 6000 5000 Amount (Rs.Return On Net Worth Return On Net Worth 70 60 50 Per Cent 45.

4 0.Equity 0.6 0.3 0.Debt . India‟s largest two wheeler maker Hero Motor Corp has announced that it aims to sell as much as ten lakh units in the overseas markets in the next .2 0.non operating expenses/incomes + interest on long term debt Debt installments = interest on long term debt + long term installments repayable Future Vision Export Potential in International Waters Hero Motor Corp is now completely free from all the export restrictions that it was facing in the earlier days which we remember to be the days of Hero Honda from its ex – promoter from Japan – Honda. including sinking fund payments.Equity Debt . Calculated as: Earnings Available for Debt Debt installments Earnings available for debt = net profit after tax + non-cash expenses (depreciation) +/.5 0.1 0 2008-2009 2009-2012 2010-2011 Financial year 2011-2012 2012-2013 Debt Service Coverage Ratio: It is the amount of cash flow available to meet annual interest and principal payments on debt.

the company‟s production capacity will cross more than 6. .000 units.000 crore.15 million units in the month of April 2010.000 crore to set up two new manufacturing facilities besides expanding the output of three of its existing plants. By the year 2020. and expects to generate nearly 10 per cent of the company‟s total revenue from exports in the next five years. starting September. Hero Motor Corp also plans to enter 50 new markets by 2020 with a target of 20 manufacturing facilities across the globe and an overall annual turnover of Rs 60. The plant will provide direct employment to 1. The company has also prepared a list of markets which it has decided to enter and later to dominate. Hero Motor Corp is infusing substantial investments of ` 500 crore at their existing facilities at Dharuhera. Gurgaon and Haridwar in order to expand our capacities. Estimated Turnover To mention its plans for the domestic front. Rajasthan. The company plans to launch twelve new models in the next two quarters.5-6 years. This will come from 20 assembly lines inside the country and outside the country. and will have an annual installed capacity of 750. which merely stood at 6.5 million units per annum from its three plants. HMC is looking forward to invest a whooping sum of INR 1. Hero Motor Corp is currently eying new markets in Africa. Nemrana Plant (4th Plant) Hero Motor Corp has planned to construct a fourth plant at Neemrana. Southeast Asia and of course the Latin America.000-plus people. with an initial ` 400-crore investment. Hero Motor Corp is looking at an exponential increase in export numbers. Hero Motor Corp will have annual production of 12 million motorcycles and scooters every year. Also.

will have all the requisite infrastructure facilities including labs for components. engine and complete vehicle testing.8 million in the next phase. The plant aims to provide direct employment to 2.Hero Motor Corp endeavours to build the brand equity globally by sponsoring international motor sports. Rajasthan. A large number of designers and engineers across specialist domains have been inducted into R&D over the past year. Hero Motor Corp is setting up a new state-of-the-art integrated R&D centre at Kukas. Austria Hero has also tied up with AVL. the plant will possess an annual installed capacity of 1. which will grow to 1. Built over an area of 250 acres. EBR. Hero Motor Corp has signed a State Support Agreement (SSA) with the Gujarat government to set up their fifth plant in the state.100 crore. Our engineers are also gaining deeper insights and knowledge on product design and engine development capabilities from the US motor biking firm. which is coming up at Jaipur. Research & Development Centre (Diversification) A plan to set up one of India‟s largest Auto Industr y Technology & Integrated R&D Centre is being executed. This new facility. this will be the largest two-wheeler R&D centre in India and will employ 500-plus engineers. Austria. With an investment of ` 1. emulating the actual road conditions prevailing in India and other parts of the world. . with an initial investment of 400 crore. This will also have a design studio with the most up-to-date software for design and simulation. to develop different categories of engines.000-plus people. Tie Up With Avl. a global leader in engine design and development. The facility will have a wide variety of test tracks. State Support Agreement.2 million in the initial phase.

Hero Motor Corp is launching a Green Vendor Development Program (GVDP) in collaboration with its business partners.GREEN VENDOR DEVELOPMENT PROGRAM (GVDP) In an effort to expand the horizons of its environmental practices. The Company is keen that vendors undertake the following actions and demonstrate continual improvement in their environmental performance:  Establish an environmental footprint of their operations  Develop green management policies to promote conservation of natural resources  Institutionalize an effective Compliance Management Tool within the business strategy .

com       Others  Economic times  Business Today  Forbes India  AutoCar India  Bike India  Overdrive .com   www.rediff.Bibliography Websites  www.