.

FINANCIAL ANALYSIS OF HONDA

( WORKING CAPITAL MANAGEMENT )
Project Report

Submitted in the partial fulfillment of the requirements

for the Award of the degree of
BACHELOR’S OF BUSINESS
ADMINISTRATION

Submitted by
Priya Verma
Enrollment No. HU/341/18017047
Roll No. 34118017047
BBA 6th semester

Guided by
Ms. Ayesha Khan
(Faculty of commerce and management)

Session : Aug 2021

Submitted to:

FACULTY OF COMMERCE AND MANAGEMENT

BHILAI (CHHATTISGARH) INDIA

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 .

Declaration by the Candidate

This is to declare that I have written this report. No part of the report is plagiarized
from other sources. All information included from other sources has been duly
acknowledged. I aver that if any part of the report is found to be plagiarized. I shall
take full responsibility for it .

Name of the Candidate: Priya Verma Signature of the candidate

Enroll Number : Date :

HU/341/18017047

Roll Number :
34118017047

2
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Acknowledgement

The project title “financial analysis on Honda has been

conducted by me from 25th June to 22th July 2021 at HONDA. I
have completed this project, based on the primary research
under the guidance of Mr. Boby Deshlahare (Finance) .
I owe enormous intellectual debt towards my guides
Ms. Neha Soni (HOD), who have augmented my knowledge.
They have helped me learn about the process and giving me
valuable insight to understand how I can suggest new and
innovative ways. They have provided me a true learning
platform, and have been the perfect mentors, in giving me
the necessary guidance regarding my project.
I would like to thank all the respondents without whose co-
operation my project would not have been complete.
I feel indebted to all those persons and organizations that
have provided help directly or indirectly in successful
completion of this study.
At the end, HONDA, was a great experience to work in,
where I feel, the dedication of its employees is one of the
vital factors of its success.

3
 TABLE OF CONTENT

Acknowledgement .

Introduction

Company Profile

Research Methodology

Financial Analysis

Limitations of the Study

Suggestion

Conclusion of the Study

Bibliography
 FINANCIAL MANAGEMENT

Finance is the life of any business. No business can run

properly unless it maintains its cash. Blood is essential for
human being alive. In case of business finance take the
position of blood. Now the question arises what is finance.
Simply finance is known as cash and monetary terms but
finance means more of it. Finance means measure the
financial requirement and allocate cash in different heads for
proper working of each department.

The word management refers to manage-men-t. It

means manage the men tactfully. Here the word men mean
all those person who are working in the organization.

“Financial management is that managerial activity which

is concerned with the planning and controlling of the
firm’s financial resources”

According to Howard & Upton “ Financial Management is

the application of planning and controlling function to the
finance function”.
Thus financial management means manage the financial
activity of the company. There are different approaches
regarding financial management.

Traditional Approach
Under this approach financial management refers to
rising of funds through various sources according to current
need of the company. This approach is mainly concentrate on
rising of fund. Through different sector in this approach the
main thing is raising of capital.

Transactional Approach
Under this approach financial management refers to inflow
and outflow of cash in operating activity. Operating
activity means purchase and sale of material.

Modern Approach
Modern approach is rising of funds through different
sources and utilizes them effectively. Capital budgeting and
cost of capital must be kept in mind while raising the funds.
Capital budgeting means the investment in capital goods in
such a way so that we can get back our invested money
easily and quickly. Cost of capital means what is the cost of
raising capital. The return demanded by preference
shareholders, the interest rates demanded by debenture
holders, dividend requirement of equity capital holders is
considered as cost of capital.

Utilization of funds means effective utilization of funds in inflow-

outflow; allocate the cash to different department in such a way so that
business can run successfully. Thus financial management means rising of
funds through different sources and utilizes them effectively.

SIGNIFICANT ACCOUNTING POLICIES

1. Basis of Preparation of Financial Statements

The Financial statements have been prepared under the
historical cost convention, in accordance with applicable
Accounting Standards and provisions of the companies
Act, 1956 as adopted consistently by the Company.

2. Recognition of Income/Expenditure
All incomes & expenditures having a material bearing
on the financial statement are accounted for on an
accrual basis and provision is made fore all known
losses and liabilities.
3. Fixed Assets

Fixed assets are stated at cost, net of Modvat/Cenvat/Vat,

less accumulated depreciation. Cost of fixed assets
comprises purchase price, duties, levies borrowing cost,
net charges on forward exchange contracts and exchange
rate variations and any directly attributable cost of
bringing the assets to its working condition for the
intended use.

Machinery spares that can be used only in connection with

an item of fixed asset and their use is expected to be
irregular are capitalized. Replacement of such spares is
charged to revenue.

Intangible assets acquired on or after 1st April 2003

satisfying the qualifying conditions prescribed under
Accounting Standard 26- Intangible assets, issued by
Institute of Chartered Accountants of India are capitalized.

4. Capital Work in Progress

Advance paid towards acquisition of fixed assets and the

cost of assets not ready to put to use before the year end,
are disclosed under capital work in progress.
5. Inventories

Inventories are valued at lower of cost and net realizable

value. The cost of raw material is determined by using
First-In-First Out (FIFO) method. However, scrap is
valued at Net realizable value. Cost of finished goods and
work in progress includes cost of conversion and other
cost incurred in brining the inventories to their present
location and condition.

6. Sales

Sales are recognized on dispatch of goods from the

factory and are net of discounts but exclude sales tax.
WORKING CAPITAL MANAGMENT

Introduction
Every business needs funds for two purposes for its
establishment and to carry out day-to-day operations. Long
term funds are required to create production facilities
through purchase of fixed assets such as plant and
machinery, land building, furniture etc. investment in these
assets represent that part of firm’s capital, which is
blocked on a permanent or fixed basis is called fixed
capital.

Funds are also needed for short-term purposes of raw

materials, payment of wages and other day-to-day expenses
etc. these funds are known as working capital.

. MEANING OF WORKING CAPITAL

Working capital refers to that part of firm’s capital, which is

required for financing short term or current assets such as
cash, marketable securities, debtors and inventories.
DEFINITIONS OF WORKING CAPITAL

In the words of Shubin, “working capital is the amount of

funds necessary to cover the cost of operating the
enterprise.”

According to Genestenberg “ Circulating capital means

current assets of a company that are changed in ordinary
course of business from one form to another as for example,
from cash to inventories, inventories to receivables,
receivables into cash”.

NATURE OF WORKING CAPITAL

Working Capital management is concerned with the

problems that arise in attempting to manage the current
assets, the current liabilities and the inter- relationship
that exists between them. The term current assets refer to
these assets which in the ordinary course of business can
be, or will be, Converted into cash within one year
without undergoing the diminution in value and without
disrupting the operating of the firm, whereas the current
liabilities are those liabilities which are
intended, at there inception, to be paid in the ordinary
course of business, within a year out of current assets or
earning of the concern. Thus the goal of working capital
management is to manage the firm’s assets and liabilities
in such a way that a satisfactory level of working capital
is maintained. The interaction between current assets
and liabilities in such a way that optimum level of
current assets, the trade off between profitability and
risk which is associated with the level of current liabilities
and assets, better financing mix strategies and other
short term goals are attained.

There are two concepts of working capital: Gross and Net

1. The term gross working capital, also referred to as

working capital, means the total current assets.

2. The term net working can be defined in two ways.

Difference between current assets and current liabilities.

The task of the financial manager in managing working

Capital efficiency is to ensure efficiency liquidity in the
operations of the enterprise. The basic three measures of
a firm’s overall liquidity are: Current ratios, Acid
test ratio, Net Working
Capital. For the purpose of working capital management

Therefore, NWC Can be said to measure the liquidity of the

firm. In other words, the goal of working capital
management is to manage the current assets and liabilities
in such a way that an acceptable level of NWC is
maintained.

IMPORTANCE OF ADEQUATE WORKING CAPITAL

Working Capital is very essential to maintained the

smooth running of the business. It is lifeblood and
nerve center of a business. No business can run
successfully with out adequate amounts of working
capital.

1. Adequate working capital helps in maintaining

solvency of the business by providing uninterrupted
flow of production.
2. It also enables a concern to avail each discount on the
purchases and hence it reduces casts.
3. Sufficient working capital enables a business to make
prompt payments and helps in creating and
maintaining goodwill.
4. A concern having adequate working capital enables
and high solvency can average loans from banks and
others on easy and favorable terms.
5. Adequate working capital ensures regular supply of
raw materials.
6. A concern can also pay quick and regular dividends to
its investors, as there may not be much pressure to
plough back profits because of adequacy of working
capital.
7. Sufficiency of working capital creates an environment
of security, confidence, and high morale and creates
overall efficiency of a business.

Adequacy of working capital also enables a firm to

make regular payments of salaries, wages and other day-
to-day commitments, which raises the morale of its
employees, increase their efficiency reduces wastages and
costs and enhances production and profits.
 WORKING CAPITAL REQUIREMENT

“WORKING CAPITAL IS THE LIFE BLOOD AND

CONTROLLING NERVE CENTRE OF A BUSINESS.” No
business can be successfully run without an adequate
amount of working capital. To avoid the shortage of
working capital at once, an estimate of working capital
requirements is not an easy task and a large number of
factors have to be considered before starting this exercise.
The following factors have to be considered for this: -

1. The length of sales cycles during which inventory is

to be kept waiting for sales.
2. The average period of credit allowed to
customers.
3. The amount of cash required paying day-to-day
expenses.
4. The average amount of cash required making
advance payments, if any.

5. The average credit period expected to be allowed by

suppliers.
6. Time lag in payment in wages and in other
expenses.
 From the total amount blocked in current assets
estimated on the basis of first for items given above, the
total current liabilities i.e. the last two items is deducted.
In order to provide for contingencies, some extra amount
calculated as a fixed percentage of WC may be added as
safety margin.

NEED OF WORKING CAPITAL

The need for the working capital (gross) or current assets

cannot be over emphasized. Given the objectives of financial
decision making to maximize the shareholder’s wealth, it is
necessary to generate sufficient profits. The extent to which
profits can be earned will naturally depend, among other
things. Open the magnitude of sales. A successful sales
program is necessary for earning profits by any business
enterprise. There is a need of working capital in firm of
current assets to deal with the problem arising out of the

lack of immediate realization of cash against goods sold.

Thus sufficient working capital is necessary to sustain sales
activity. Technically, this is referred to as the operating or
cash cycle.
 CONCEPT OF WORKING CAPITAL
There are two concepts of working capital:

1. Gross working capital: In the broad sense, the term

working capital refers to the gross working capital and
represents the amount of funds invested in current assets.
Thus, gross working capital is the capital invested in the total
current assets of the enterprise. Current assets are those
assets, which in the ordinary course of business can be
converted in to cash with in a short period of normally one
accounting year. Constitutes of current assets are:
 Current Assets

SR. No. Constitute of current Assets

1. Cash in hand
2. Cash at bank
3. Bills receivables
4. Sundry Debtors (less pro. For bad
debts)
5. Short term loans and advances
6. Inventories of stocks:
(a) Raw materials
(b) Work in process
(c) Stores and spares
(d) Finished goods
7. Temporary investments of surplus
funds
8. Prepaid expenses
9. Accrued incomes
2. Net working capital: In a narrow sense, the term working
capital refers to the net working capital. Net working capital
is the excess of current assets over current liabilities. So,

Net working capital = current assets-current liabilities -

Net working capital may be positive or negative. When the
current assets exceed the current liabilities the working
capital is positive and the negative working capital results
when the current liabilities are more than current assets

Current Liabilities

SR. Constitutes of current liabilities

NO.
1. Bills payable
2. Sundry creditors or accounts payable
3. Accrued or outstanding expenses
4. Short term loans, advances and deposits
5. Dividend payable
6. Bank overdraft
7. Provision for taxation
 On the basis of concept:

On the basis of concept working capital may be divided into

two parts i.e.

A) Gross working capital: Gross working capital is the

capital invested in total current assets of the enterprise.

B) Net working capital: Net working capital is the excess

of current assets over current liabilities, so,

Net working capital = current assets –current liabilities

Importance or advantages of adequate working capital

1. Solvency of business.
2. Goodwill.
3. Easy loans.
4. Cash discounts.
5. Regular supply of raw material.
6. Regular payment of salaries, wages and other day-to-day
commitments.
7. Exploitation of favorable market conditions.
8. Ability to face crisis.
9. Quick and regular return on investment
Sources of Working Capital

1) Long- term sources: -

a) Issue of shares

b) Issue of debentures
c) Long –term loans

d) Retained earning

e) Sale of any old asset

2) Short –Term Sources: -

a) Internal sources: -
i) Provision for tax

ii) Depreciation funds

iii) Outstanding expanses

b) External sources: -

i) Normal trade credit

ii) Bills payable
iii) Overdraft
iv) Public deposit
v) Advance from customers
 WORKING CAPITAL TURNOVER RATIO

Working capital of a concern is directly related to sales.

Working capital turnover ratio indicates the velocity of the
utilization of net working capital.

Cost of good sold

Working Capital Turnover Ratio =

Working Capital
Formula:

Working Capital Turnover Ratio

YEAR
PARTICULARS S
2019 2021
1272904 1058448
Cost of good sold 9 4

1366170 1863634
Working Capital

Ratio (In Times) 9.3 5.6

 INTERPRETATION

This ratio measures efficiency with which the working capital is being
used by a firm. A higher ratio indicates efficient utilization of working
capital and a low ratio indicates otherwise. Working capital increase in 2011
as compare to last year. It shows the efficiency of the company to doing day-
to-day activities.

OPERATING CYCLE &WORKING CAPITAL NEEDS

As for as the requirement of working capital is concern

we can say that this amount is completely depends upon
the nature of business as well as the size of business. Here
we discuss only about two types of firms:

1) Trading firms

2) Manufacturing firms
FACTORES AFFECTING THE REQUIREMENT OF WORKING CAPITAL

1) Size of business: This is very clear that if there is any big concern
means it need maximum of working capital to run the business
smoothly but the requirement of working capital will be reduced
if we will reduced the size of business as we do not have the
sufficient long operating cycle to invest the higher rate of
working capital.

2) Nature of business: Here we will discuss on the major part of

firms – a) The manufacturing unit
b) The trading unit
Means we can easily understand that in case of
manufacturing unit the firm required maximum working
capital to complete its operating cycle.

3) Seasonal operation: The seasonal operation also effect the

requirement of working capital because the sale can be
increased or decreased if they is any concern which is
manufacturing the seasonal goods.

Example: If any manufacturing unit which is producing garments

requires less amount of working capital during the summer season
but on the other hand in the winters they require more working
capital to produce the woolen clothes.

4) Credit policy: This policy normally takes an important place

 to impact on the requirement of working capital means any
company having a good credit policy for a shorter period may
required the less working capital on the other hand the lenient
credit policy may generate the risk of doubtful debts. In this
case the company requires more working capital during this
period this takes place to convert the credit into cash.

5) Marketable competition: As per the present synerio of the

market we can find the toughest competition between every two
company which are dealing with the same time of product to
reduce the competitiveness and to win the gain the company
gives or provides the some special offers to the buyer and to the
seller and these offers are not related with the operating cycle of
the company so the company needs exist amount of working
capital to manage the amount of these offers.
.

Concept of Gross Working Capital

Let us Analyze the gross

working capital

Current 2019 2020

Assets

Stock 284737 229977

The above
18 80
figure
indicates Sundry 552017 429847
that the Debtor 83 56
Liabilities 2011 2010
gross Cash 158147 130894

&
working SbuanndkrybaClr. 537045 313452
edi2tors 2
capital 14 74
Advances 115059 290995
Current 2216625 765063
Working
Liabilitie 56 4
C3a4pital 702014
s (Rs.)
Borrowings 12304 4 95109
Total
Interest

ac9c6r7u6e2d9
but not due 07

Other Liabilities Int.

409052
sales
3
Provisions Total
319840
2
Vehicle Loan 174428
 .

390787
390833
9
3
360099
8708066
8
0
419847

900000

4791974
4
2
1
.

Net Working Capital

Let us Analyze the net Working

Capital (Rs)

Year 2019 2021

Current Assets 7347294 7579091

(A)

Current 5981124 5715457

Liabilities (B)

Net Working 1366170 1863634

Capital (A-B)

WORKING CAPITAL FINANCING

The financing of working capital are done by from different
sources of financial distribution here we will discuss about
the short term sources of finance which are directly related
to business or the finance policy of Indian commercial bank.
Every financial managers has to analyses the situation and
create the funds accordingly. Every firms the action which is
easily available and normally do not increase the long term
liabilities of the company from the above we can explain the
financing for working capital into two parts: -

1) Direct sources of financing working capital

30
2) Role of commercial bank in financing of working
capital

1) Direct sources of financing working capital: here the

direct source means any option for credit which is related to
the business and do not impact on the liabilities of the
business for long term that’s why these are treated as trade
liabilities and current liabilities.

There are two direct sources in relation of any

business: -

a) Trade credit: Trade credit means any credit, which is

directly related to the goods or the services, which is use, by
the firm.

Example: a supplier of raw material can provide you the

raw material today and you may request for the payment of
these goods after sometime. The gap between the
purchasing and the payment can be treated as trade credit.
In trade credit normally there is no factor of interest and this
is very easily available and helps the firm to maintain its
operating cycle.

There are two types of trade credit normally used

in India, which are as follows:
i) Open account: in open account the credit facility
provided by the seller on the basis of mutual understanding
with the buyer. In this process there is not legal obligation to
sign or to promise for the repayment of the credit amount.
That’s why the credit limit in open account depends upon the
goodwill and healthy relationship between the buyer and
seller.

ii) Bills payable: bills payable normally related with the

negotiable instrument as described in Negotiable
Instrument Act .It is the kind of promissory note. In bills
payable the buyer or the seller provides some terms and
conditions from the payment. In this case the buyer has to
sign on the bill and has to repay the amount to the seller on
the date of maturity.

b) Accrued expanses: In routine life of business we can

find the different expanses of these types of expenses.
Normally the accrued expenses are those expanses for which
we have available the service or goods from the persons or
supplier and has to pay the amount for the service after a
fixed period.

Example: The salaries of the employees.

 In case of salaries the employees works for the firm for
a fixed period say one month and after the completion of this
period the firm will pay this amount to the employees.

Other example: Post paid connection etc.

2) Role of commercial banks in working capital

financing: In India most of the commercial banks provide
the credit facilities to the firm to meet the working capital
requirement. The commercial banks are important source of
short term financing. The commercial banks provides credit
to the extend limit and is known as “Credit Limits”. The
bank can finance the working capital by the following ways:

i) Cash credit / Overdraft

ii) Loans
iii) Letter of credit
iv) Purchasing and discounting of bills

CASH CREDIT / OVERDRAFT: This is basic facility of credit

provided by the commercial banks of India. In overdraft
facilities the current account holder can withdraw the moreover
and axis of available balance in its current account. The
bank will fix the limit for this credit one time at starting and the
account holder can use the credit till its limit. The advantage
of overdraft or cash credit is the firm
has to pay only the interest to the bank for the period for
which we cash over drawn.

PURCHASING AND DISCOUNTING OF BILLS: Now days

most of the firms wants to increase the sale so that they do a
liner credit. In this process the buyer or the seller makes an
advance bills and promise to pay the amount as mentioned in
bill account to the maturity of the order. In this case the seller
firm may required some amount to complete this order, so
the contact to there bank and ask for the required money on
the basis of the available bill which they have to handover to
the bank as guarantee of security. If the bank provide the
total amount after deducting the charges, commissions, fees
etc. is known as “purchasing of bills”. In other hand if the
bank provides some percentage (%) of the total amount of
the bill then the banks has to wait till its maturity date to get
the payment from the buyer and when the bank collects the
payment from the buyer and deduct the amount which has
been already paid to seller fir and deduct other expenses.
Which has been born by the bank for collection of the
payment and the remaining amount deposited in the seller’s
current account and this process is known as “discounting of
bills”.
GEOGRAPHICAL DISTRIBUTION

Honda is headquartered in Tokyo, Japan. American Honda

Motor Co. is based in Torrance, California. Honda Canada Inc.
is headquartered in the Scarborough district of Toronto,
Ontario, and is building new corporate headquarters in
Markham, Ontario, scheduled to relocate in 2011. Hero
Honda, a joint venture

between India's Hero Group and Honda, is the largest

manufacturer of two wheelers in the world. Honda of Canada
Manufacturing is based in Alliston, Ontario. Honda has also
created joint ventures around the world, such as Honda Siel
Cars India Ltd, Hero Honda Motorcycles India Ltd, Guangzhou
Honda and Dongfeng Honda Automobile Company in China
and Honda Atlas Cars Pakistan

LISTED STOCK EXCHANGES

Honda is headquartered in Tokyo, Japan. Their shares

trade on the Tokyo Stock Exchange and the New York Stock
Exchange, as well as exchanges in Osaka, Nagoya, Sapporo,
Kyoto, Fukuoka, London, Paris and Switzerland.
 FINANCIAL STANCE

Revenue 13170519 (2021)

Net income 657425 (2021)

Total assets 21921030 (2021)

Total equity 9372839 (2021)

Fiscal year ends March

 WORLD’S FIRSTS BY HONDA

Although a relatively small manufacturer compared to the other

Japanese automakers, Honda is the largest engine maker in the world.
Honda has a number of firsts in many categories, including the first
engine to meet the 1970 US Clean Air Act (1975 CVCC), the first
luxury Japanese car (1985 Legend)
and motorcycle (2006 Gold Wing bikes) equipped with an airbag, as
well as the first mid-size pickup truck with independent rear
suspension (2006 Ridgeline)

Honda has also pioneered new technology in its HA-420 HondaJet

that allows new levels of reduced drag, increased aerodynamics and
fuel efficiency thus reducing operating costs.

In Takanezawa, Japan, on June 16, 2011, Honda Motors produced the

first assembly-line FCX Clarity. More efficient than a hybrid vehicle,
the FCX Clarity combines hydrogen and oxygen from ordinary air to
make electricity. The vehicle does not emit any pollutants and its
only byproducts are heat and water. The FCX Clarity also has an
advantage over hybrids in that it does not require a rechargeable
battery and the use of electricity.
HONDA ROBOTICS

ASIMO is the part of Honda's Research & Development

robotics program. It is the eleventh in a line of successive
builds starting in 1986 with Honda E0 moving through the
ensuing Honda E series and the Honda P series. Weighing 54
kilograms and standing 130 centimeters tall, ASIMO
resembles a small astronaut wearing a backpack, and can
walk on two feet in a manner resembling human locomotion,
at up to 6 km/h. It is the world's only humanoid robot able to
ascend and descend stairs independently.

COMPETITOR ANALYSIS

Honda Motor Co., Ltd. operates in the Motor vehicles and

car bodies sector. This analysis compares Honda Motor Co.,
Ltd. with another company in this sector in Japan: Mitsubishi
Motors Corporation (2011 sales of 2.68 trillion Japanese Yen
[US$25.32 billion] of which 99% was Automobile).
3.5.1 An Overview:
3.5.1(a)HONDA WORLDWIDE:

The history of the Honda Motor Company began with the vision of one man - Soichiro
Honda. His dream was personal mobility for everyone.

Soichiro Honda founded the Honda Motor Company in 1948. In the same year, he designed
and engineered the first product of this company - a 50 cc motorised bike on a bicycle
frame - in his small shed at Hamamatsu.

Soichiro's vision was international in character. His desire was to lead the world in
technology, and make a significant contribution to the creation of a better society. As a
result, most of the products that Honda developed started out by making a difference.
Whether it was the CVCC engine in the sixties or the solar powered car of the nineties,
they all sought to challenge and overcome conventional wisdom.

3.5.1(b) PRINCIPLES OF HONDA:

Honda Motor Co., Ltd. operates under the basic principles of "Respect for the
Individual" and "The Three Joys" — commonly expressed as The Joy of Buying, The
Joy of Selling and The Joy of Creating. "Respect for the Individual" reflects our desire to
respect the unique character and ability of each individual person, trusting each other as
equal partners in order to do our best in every situation.

3.5.1(c) Honda in India:

Honda Siel Cars India Ltd., (HSCI) was incorporated in December 1995 as a joint
venture between Honda Motor Co. Ltd., Japan and Siel Limited, a Siddharth Shriram
Group company, with a commitment to providing Honda’s latest passenger car models
and technologies, to the Indian customers. The Honda City, its first offering introduced in
1997, revolutionized the Indian passenger car market and has ever since been recognized
as an engineering marvel in the Indian automobile industry. The success of City as well
as all its other models has led HSCI to become the leading premium car manufacturer in
India. The total investment made by the company in India till date is Rs. 1620 crores,
further
investment of RS. 1000 crore is planned and being currently invested for the coming
second plant in Rajasthan. The company has a capacity of manufacturing 100,000 cars.

7HSCI’s state-of-the-art manufacturing unit was set up in 1997 at Greater Noida, U.P
with an investment of Rs. 450 crore. The green-field project is spread across 150 acres of
land (over 6,00,000 sq. m.).

The initial installed capacity of the plant was 30,000 cars per annum, which was
thereafter increased to 50,000 cars on a two-shift basis. The capacity has further been
enhanced to 1,00,000 units annually in February 2011 . The capacity expansion was
necessitated by the excellent performance of all the Honda models, particularly the
growing demand for City in India. Several modifications were done by the company with
the objective of offering higher quality products to its customers, faster and quicker. The
expansion process also included expansion of the covered area in the plant, from 1,07,000
sq. m. to 1,31,794 sq. m.

HSCI currently produces the newly launched Honda Jazz, All New City, Civic and
Accord models in India and the premium SUV, CR-V is sold as a fully imported unit
from Japan.

The company operates under the stringent standards of ISO 9001 for quality management
and ISO 14001 for environment management.

3.6 About the Car:

3.6.1 The all new Honda City:

The third generation of the concept design “arrow-shot” or arrows, make All New
Honda City looks very different from the generation predecessor. Overall view All New
Honda City more impressive. With exterior design changes so that the overall look
sporty luxury at a time.

All New Honda City is a perfect evolution of a mini-class sedan. The latest generation of
Honda City will continue success in the automotive market. Honda City has this
revolutionary view, and the more luxurious for a mini-class sedan.
Design front bumper and spoiler made refers to the cars racing to the level of
Aerodynamics can be maximum. In addition, also made a whole big enough air on the
spoiler to reduce barriers when its winds, also as Feed of fresh air to the engine room.
The larger size of the headlight to make Honda call it “The Eagle Eye”.

Behind, All New City is designed according to “tail” arrows. An effect of arrows is
established by design decks high and the trunk cut off, which also contribute to the
smooth flow of air to the rear body. In addition, the form of bumper diffuser also added
to create the effect HANDICAP style press and the road surface in order to maintain
stability when the car was on high speed.

The shape of the rear lights also changed, now mica lamp made in two colors, red and
white three-dimensional. Interior also participate improvement, Honda wants to apply the
concept of “cozy Lounge” in the car cabin. This is possible with the dimensions of space
that is longer and more widely each 5mm from the previous generation (4.395mm and
16.95mm) and less than 15mm (1.470mm).

There are also features reclining seat, which allows rear seat passengers could be laid
down sitting position to get more comfortable. This technology may be applied first in a
sedan, usually because the rear seat passengers with what is required baggage.

3.6.2 Importance of the all new Honda City for the Company:

According to the management of HSCI, Honda City has been the most important car in
the Honda line up. HSCI claims to sell around 60,000 cars every year. Out of these 2/3rd
of the cars sold are City i.e. Honda sells 40,000 City every year.

The City has been the star performer for HSCI since the time it was launched. However
now it is taking the position of a cash cow for the company. i.e. it is generating the
maximum sales for the company despite its small & stagnant market share.
 RESEARCH METHODOLOGY:
There were several methodologies of research that the researcher could have
utilized to collect information regarding customer satisfaction. Some of the
more commonly used strategies. However factors such as information need,
resources, accessibility to customers, sample to be used, time etc. had to be
considered prior to selection of a methodology.

4.1 Research Method:

For this particular study, the method of acquiring information from the
customer needed to be both easy to use and understand. Therefore the
researcher decided to use the FINANCIAL STATEMENT. Under this
method, the information was collected from the customers using a research..

4.2 Data Source:

The research makes use of Secondary Data.

a. Secondary Data: use of secondary data was also made in the research.
The purpose was to gather information as to who is a customer, what is
customer satisfaction, information pertaining to four-wheelers market,
company profile & research papers on customer satisfaction. This secondary
data was collected from various websites, Magazines & broachers,
management books and articles.
4.3 Target population & Sampling plan:

The target population consisted of all the working Capital Management of Honda City
and the research area was Lucknow.

4.5 Data processing:

The data collected from the respondents, through the questionnaire, was
recorded in an excel sheet which was then converted into SPSS database for
analysis procedure. This data has been displayed in the report using
graphical presentations (pie-charts, bar diagrams, histograms etc.) and
tabulations.
II A. FINANCIAL ANALYSIS

SALES ANALYSIS

Honda Motor Co., Ltd. reported sales of ¥12.00 trillion

(US$113.31 billion) for the fiscal year ending March of
2011. This represents an increase of 8.3% versus 2007, when
the company's sales were ¥11.09

trillion. Sales at Honda Motor Co., Ltd. have increased

during each of the previous five years. Honda Motor Co.,
Ltd. also saw significant increases in sales in Motorcycle
Business (up 13.7% to ¥1.56 trillion).

Sales Comparisons (Fiscal

Year ending 2021)

Sale
s Sales Sales/
(trln Grow Emp
Company s) th (US$) Largest Region

Honda Motor Co., 1317 North America

0519 - 633,140
Ltd. 11.79 (50.8%)
%

Recent Sales at Honda

Motor Co.,
Just over half of the company's 2011 sales were in North America: in
2011, this region's sales were ¥6.09 trillion, which is equivalent to
50.8% of total sales. In 2011, sales in Rest of the World were up at a
rate that was much higher than the company as a whole. Honda
Motor Co., Ltd. also experienced significant increases in sales in
Europe (up 22.3% to ¥1.50 trillion) and Asia (up 27.6% to ¥1.31
trillion).

DIVIDEND ANALYSIS

During the 12 months ending 30/6/2011, Honda Motor

Co., Ltd. paid dividends totaling ¥88.00 per share. Since
the stock is currently trading at ¥3,340.00, this implies a
dividend yield of 2.6%. Honda Motor Co., Ltd. has
increased its dividend during each of the past 5 fiscal
years, in 2003, the dividends were ¥16.00 per share. During
the same 12 month period ended 6/30/2011, the Company
reported earnings of ¥338.02 per share. Thus, the company
paid 26.0% of its profits as dividends.
PROFITIBILITY ANALYSIS

On the ¥12.00 trillion in sales reported by the company in

2011, the cost of goods sold totaled ¥8.02 trillion, or 66.9%
of sales i.e., the gross profit was 33.1% of sales which is
better than in comparison as achieved in 2007, when cost of
goods sold totaled 67.6% of sales. This profit margin is lower
than the level the company achieved in 2007, when the
profit margin was 5.3% of sales. The company's return on
equity in 2011 was 13.4%. This was a decline in performance
from the 14.4% return that the company achieved in 2007.

Profitability
Comparison

Company Yea Gross EBIT Earn

r Profit DA s bef.
Marg Margi extr
in n
 a

Honda Motor Co., 201

33.1% 12.3% 5.0%
Ltd. 1

Honda Motor Co., 200

32.4% 11.0% 5.3%
Ltd. 7

Honda Motor Co., Ltd. reports profits by product line.

During 2011, the itemized operating profits at all divisions
were ¥953.11 billion, which is equal to 7.9% of total sales.
Of all the product lines, Financial Services had the highest
operating profits in 2011, with operating profits equal to
22.1% of sales. Power Products and Other Businesses had
the lowest operating profit margin in 2011, with the
operating profit equal to only 5.3% of sales. However, in
2007, Automobile Business had the lowest profit margin.

INVENTORY ANALYSIS

As of March 2011, the value of the company's inventory

totaled ¥1.20 trillion. Since the cost of goods sold was ¥8.02
trillion for the year, the company had 55 days of inventory on
hand. In terms of inventory turnover, this is an improvement
over March 2007, when the company's
inventory was ¥1.18 trillion, equivalent to 58 days in
inventory.

FINANCIAL POSITION

As of March 2011, the company's long term debt was

¥1.84 trillion and total liabilities (i.e., all money owed) were
¥7.75 trillion. The long term debt to equity ratio of the
company is 0.39. As of March 2011, the accounts receivable
for the company were ¥2.36 trillion, which is equivalent to
72 days of sales. This is an improvement over the end of
2007, when Honda Motor Co., Ltd. had 82 days of sales in
accounts receivable.

Financial Positions Honda

Motors Pvt., Ltd.

R&D
LT Day Day / Sale
Yea Debt/ s AR s s
Company r Equity Inv.

Honda Motor Co., 201

0.39 72 55 4.9%
Ltd. 1
II B. RATIO ANALYSIS

a. CURRENT RATIO:

Current Ratio shows a firm’s ability to meet current

liabilities with its current assets.

Computation:

Current Ratio = Current Assets/ Current Liabilities

2018 (for Honda) 2018 (for

Mitsubishi)

Current Ratio = 6925288/ 5624099= 1.23 times Current

Ratio = 1059633/1110874

Current Ratio = 1.21 times. Current

Ratio = 0.95 times

2021 (for Honda) 2021 (for

Mitsubishi)

Current Ratio =7579091/ 5715457=1.33 times Current

Ratio = 964133/1030913

Current Ratio = 1.11 times. Current

Ratio = 0.93 times
 Curre
Yea nt
Company r Ratio

Honda Motor Co., 201

8 1.23
Ltd.

202
1 1.33

Mitsubishi 201
8 0.95
Motor Co., Ltd.

202
1 0.93

Analysis:

The current ratio is lower in 2018 as compared to

2021.There is an increase in all the current assets except
other receivables which decreased in 2018. The net current
assets increased by 653803 million in 2021 and at the
same time the net current liabilities increased by
91358 million in 2021.

b. ACID TEST RATIO:

 Acid Test Ratio or Quick Ratio shows a firm’s ability to
meet current liabilities with its most liquid assets.

Computation:

Quick ratio = (Current Assets-Inventory)/Current

Liabilities.

2021 (for Honda) 2021(for

Mitsubishi)

Quick ratio = (7579091-1545600) / 5715457

Quick ratio = (

Quick ratio = 1.06 times.

Quick ratio =
1.63 times

2018 (for Honda) 2018 (for

Mitsubishi)

Quick ratio = (6925288-1523455) / 5624099

Quick ratio = (

Quick ratio = 0.96 times

Quick ratio= times

Yea Quick
Company r Ratio

Honda Motor Co., 202 1.06

1
Ltd. 1

201
8 0.96

Mitsubishi 202
1 0.64
Motor Co., Ltd.

201
8 0.63

Analysis:

We have seen that the company had a lower current ratio

in 2021 and was unable to meet its short term obligations as
compared to 2018. Where as the quick ratio identifies the
role played by the inventories in this context. Therefore the
ratio shows that in year 2021 it has decreased as compared to
2018 due to the fact that the investment in inventories is
increased by ¥16144 million only and current liabilities
have increased by ¥391023 million.

ASSET MANAGEMENT RATIOS.

c. INVENTORY TURNOVER RATIO

Computation:

Inventory Turnover Ratio = Sales/Inventory

2018 (for Honda) 2018 (for
Mitsubishi)

Inventory Turnover Ratio =15361146/ 1523455 =

10.08 times
Inventory Turnover Ratio =2202869/351991

Inventory Turnover Ratio = 6.25 times

2021 (for Honda) 2021 (for

Mitsubishi)

Inventory Turnover Ratio = 13170519/ 1545600=8.52

Inventory Turnover Ratio =2682103/299644

InventoryTurnover Ratio = 8.95 times

Invento
ry
Yea Turnov
Company r er Ratio

Honda Motor Co., 202

1 8.52
Ltd.

201
8 10.08

Mitsubishi Motor 202 8.95

1
 Analysis:

The inventory turnover ratio in the year 2018 was

10.08 which indicate that 10.08 times in a year the inventory of
the firm is converted into receivables or cash. However, in 2021,
the inventory turnover ratio slightly decreased to 8.52.

d. FIXED ASSETS TURNOVER RATIO

This ratio measures the extent of turnover or volume of

gross income generated by the fixed assets of a company or
in other words the efficiency in their utilization.

Computation:

Fixed Assets Turnover Ratio = Sales/Fixed Assets

2018 (for Honda) 2018 (for

Mitsubishi)

Fixed assets Turnover Ratio = 1536114 / 7150566= 2.14

times.

Fixed assets Turnover Ratio = 2202869/555994 =

1.23 times
2021 (for Honda) 2021 (for
Mitsubishi)

Fixed assets Turnover Ratio = 13170519 / 7941430= 1.65 times

Fixed assets Turnover Ratio = 2682103/485278= 4.40

times

Fixed Asset
Yea Turnover Ratio
Company r

Honda Motor Co., 202

1 1.65
Ltd.

201
8 2.14

Mitsubishi 202
1 4.40
Motor Co., Ltd.

201
8 1.23

Analysis:

According to the calculations above the productivity of

fixed assets in year 2018 is better than it was in the
year2021. In 2018, it was 2.14 times and now it has been
slightly
decreased to 1.65 times.

e. TOTAL ASSETS TURNOVER RATIO

Computation:

Total Assets Turnover Ratio = Sales/Total Assets

2018 (for Honda) 2018 (for

Mitsubishi)

Total Assets Turnover Ratio=15261146 / 19349164=0.79

times.

Total Assets Turnover Ratio=2202869/1778693= 1.23 times

2021 (for Honda) 2021 (for

Mitsubishi)

Total Assets Turnover Ratio=13170519 / 21921030= 0.60

times.

Total Assets Turnover Ratio=2682103/609408= 0.89 times

 Yea Total Assets Turnover
Company r Ratio

Honda Motor Co., 202

1 0.60
Ltd.

201
8 0.79

Mitsubishi 202
0.89
Motor Co., Ltd. 1

201
8 1.23

Analysis:

According to the calculations above the productivity of

assets in year 2021 is bad as it was in previous years. In
2018, it was 0.79 times and now it has been decreased to
0.60 times.
 111. COMPARATIVE ANALYSIS
112. OF CURRENT FISCAL YEAR
WITH THE PREVIOUS FISCAL YEAR.

Total assets increased by JPY 42.3 billion, to JPY 20,461.4 billion from
March 31,2019 due mainly to an increase in cash and cash equivalents, equipment
on operating leases as well as property, plant and equipment which includes right-
of use assets through the adoption of IFRS 16, despite decreased foreign currency
translation effects. Total liabilities increased by JPY 322.1 billion, to JPY 12,175.4
billion from March 31,2019 due mainly to an increase in financing liabilities as
well as other financial liabilities which includes lease liabilities through the
adoption of IFRS 16, despite decreased foreign currency translation effects. Total
equity decreased by JPY 279.7 billion, to JPY 8,286.0 billion from March 31,2019
due mainly to a decrease attributable to acquisition of the Company’s own shares
as well as foreign currency translation effects, despite an increase in retained
earnings attributable to profit for the period.
 Limitations

Following Limitations faced by me during the Study of the

Project as: -

a. Time Limitations
b. Unavailability Of Proper Material
c. Lack Of Guidance
d. Organizational Restrictions
An Explanation of the Above: -

Time Limitation

The time was a limitation during completion of the report.

The time was not enough to cover all the points about the
topic. Also it was a tough job to understand all the
recruitment and selection in this short period. It brings the
eagerness in completion of the report. The time raise as a
big difficulty in the preparation of the report. This time
limitation enables to better understanding the policies of the
company.
Unavailability Of Proper Material

The lack of proper material was also a limitation when

developing the report. There was not adequate availability of
material in developing the report. Some of the material
available was not available. The material available was not
sufficient.

Lack Of Guidance

There was lack of guidance at some of the stages. The

supervisors sometimes were not able to give proper guidance
because of his own job responsibilities and lack of time. So it
was a little lack of guidance.

Organizational Restrictions

There were restrictions on the supervisor and on the

respondents to very much clear all the policy and process. No
organization discloses all the recruitment and selection policy
to the outsides. Nobody in the organization is authorized to
disclose all the policies it is because of some

Certain principles made by the top management of the

organization.
SUGESSTIONS

After undergone training for a limited period in this

organization, I found during my training some suggestions
but these suggestions merely my own opinion. I hope these
suggestions will help at least to some extent if implemented.
Following are the suggestions that are based on my
observations of the different departments of the company:

1. Company is having huge loans which results in the

financial expenses, so proper strategies and techniques of
budgeting should be used which results in the proper
utilization of borrowed money.
2. Company should use Management Information System
(MIS) as it provides very effective information, which
ultimately helps in decision-making. This results in the
proper future projections effectively.
3. Net Profits is going low. Effective efforts should be taken
for this the company must reduce indirect expenses and to
control unnecessary costs.
4. Company should install modernized equipments and
machines in the production plants and new techniques
should also be used to produce.
5. Improve co-operation and co-ordination among the
departments.
6. Proper market survey should be conducted to know
consumers/dealers buying behavior.
7. JBES is leading company in the Indian manufacturing
industry. It has the maximum market share in domestic
market. But as far as international market is concerned,
it exports only 5% of the total production, which is
needed to increase.
8. The company needs to improve a lot in advertisements.
Advertisements are the best way to enhance the sales
and ultimately the revenues. But the company is not able
to advertise its products properly, due to which the
customer is unaware of any brand that comes from
JBES. It is a common saying that “out of sight is out of
mind”. Therefore the company must make attempts to
use proper advertising media so as to set their brands in
the minds of the consumers. It should be more consumers
oriented rather than being customer oriented.
 CONCLUSION

Finance is the basic pillar on which the structure of industrial

undertaking is based. This pillar should be properly placed. A
good working environment and attractive incentives for the
achievement of targets has obviously created ideal
conditions in Jay Bharat Exhaust Systems Ltd. for the both
management and workers. Not a single day of production has
been lost this shows efficiency in management. Moreover,
solvency position or long-term liquidity of the company was
satisfactory.

To conclude, any reduction in operation cost as a result of

effective and efficient management of finance would
improve the profitability, liquidity and solvency of the
organization.
 BIBLIOGRAPHY

I. M. Pandey - Financial Management

Vikas- 2003

Prassana chandra - Financial management Tata

McGraw Hill 2011

Philip Cotler - Marketing Management

PHI- 2003

Annual reports - Jay Bharat

Exhaust Systems Ltd.

Company website - www.jbm.com

Websites - www.google.com