Hero MotoCorp Ltd

Hum Mein Hain Hero

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CONTENTS 1 Introduction and Overview 3 Ratio Analysis 4 Summary and Questions .

 Dr.  Hero MotoCorp Ltd. Pawan Munjal.  It is a public company. Chairman. based in India.  1983—Joint Collaboration Agreement with Honda Motor Co.wheelers. Hero MotoCorp Ltd.) is the world's largest manufacturer of two . Japan signed Shareholders Agreement signed and incorporated in 1984. (Formerly Hero Honda Motors Ltd.. Mr. reflects its commitment towards providing world class mobility solutions with renewed focus on expanding company's footprint in the global arena. listed on BSE and NSE . Ltd. Managing Director & Chief Executive Officer. Brijmohan Lall. company's new identity.INTRODUCTION  Hero MotoCorp Ltd.

. IPG of Companies now comprises of HIPL and BCIPL owned and controlled by Munjall Family.BRAND REALIGNMENT In 2010. Indian Promoter Group Of Company Re-aligned Shareholdings Of Company HIPL and BCIPL • As a result of • Hero Investment private limited (HIPL) • Bahadur Chand Investment Private Limited (BCIPL) • Hero Cycle Ltd. • Hero Cycles transferred all its shareholdings to HIPL on 28 May’10 these transactions.

” . But no one badmouthed the erstwhile spouse(Honda). this one too. the car and the kids. brimming with optimism about the future. Instead. That may be because Hero got a true sweetheart deal. Honda was fondly remembered. it got to keep the house.BUSINESS INDIA ON THE SEPARATION OF HERO AND HONDA “As divorce parties (Hero and Honda)go. was a bit over the top.

Entire share holding of 26% transferred to Hero.479. bringing an end to the Joint Venture.. Manufacture. Selling.33 Crore for Assembly. . Hero Honda (1984 – 2010) Hero MotoCorp Ltd Honda Paid `2.THE SPLIT. Distribution and Exports Licenses. which have been Amortized over a period of 42 months upto 30 June’14 Entered into a share transfer agreement on 22 Jan’11 .

with respect to a few parameters Fuelled by its landmark sales of over 62.35.928 crores in 2010-11 to `2.35% increase in PAT 2011-12.55% increase in Operations The Company’s Profit after Tax (PAT) increased from `1. 15.378 crores in 23.02. 21.444 units for the last financial.579 crores in 2011-12.205 units in this financial year compared to 54.12 . Net Income from Operations of the Company grew from `19.OVERVIEW  A Brief Overview of Hero MotoCorp Ltd.41% growth in Sales *Data from Annual Report 2011 .398 crores to `23.

135.730.03 17.41 15.962.500 1942.8 465.55 5.17 2.41 3.18 10.36 19.31 2.42 2.64 1.49 768.842.500 1586.11 1.90 199.83 199.58 4.14 1.17 NIL 1.93 14.687.622.96 129.66 3.882.05 2.41 3.108.579.378.687.540.55 567.927.023.687.163.24 Average Debtors Average Creditors .65 201.500 2030.397.45 2183.00 23.831.323.55 644.365.20 2.YEAR (` Crores) Total Current Assets Total Current Liabilities Net Sales ( FROM P/L Account) Purchases (FROM P/L Account) Gross Profit ( FROM P/L Account) Net Profit (FROM P/L Account) Profit After Tax (PAT-FROM P/L Account) Number of Equity Shares Market Price Per Share(MPS) Average Inventory Mar-10 Mar-11 Mar-12 2.10 199.758.807.

00% 10.00% Mar 10 Mar 11 Gross Profit Ratio Mar 12 The gross profit ratio shows the proportion of profits generated by the sale of products or services.00% 19. .00% 20. namely. There is a dip in the gross profit in the year 2010-11 due to increase in prices of raw materials. Aluminium and Nickel.18% 16.00% 0.GROSS PROFIT RATIO 25. Steel.80% 14.47%  Gross Profit Ratio : (Gross Profit/Net Sales)*100 15. before selling and administrative expenses.00% 5.

00% 4. . Even after steady increase in sales.NET PROFIT RATIO 14. the company saw a fall in net profit in 2011 and 2012 because of establishment of two new plants and introduction of 5 new bikes in the market.00%  Net Profit Ratio : (Net Profit/Net Sales)*100 9. and income taxes recognized.18% 10.00% 8.00% 6.00% 0.21% 12.00% 13. new emission laws were implemented in that year.00% 2. Also.50% 9. amounting to more indirect expenses.00% Mar 10 Mar 11 Net Profit Ratio Mar 12 It reveals the remaining profit after all costs of production and administration have been deducted from sales.

10 0.50  Current Ratio: Current Assets/Current Liabilities 0.30 0.20 0. In layman terms.CURRENT RATIO 0. There is a steep fall in the current ratio in 2010-11.60 0. because of the drastic increase in the current liabilities incurred due to the infamous split with Honda.40 0.43 0. . in order to pay off it’s immediate Liabilities.00 Mar 10 Mar 11 Current Ratio Mar 12 It signifies the liquidity of an organization.21 0.70 0. it tells us how much cash or cash equivalents a company has.60 0.

05 0.25 0. This was because of the split of the company with Honda as seen in the current ratio.10 0.34  Acid Test Ratio: Quick Assets/Current Liabilities This ratio is similar to that of the Current Ratio. Since Hero Honda was always debt free.03 0. the quick ratio was lesser than the industry average to begin with.20 0.40 0.ACID TEST RATIO(QUICK RATIO) 0. We see a steep dip in the ratio in 2010-11. 0.35 0. The only difference being.07 0.30 0.15 0. .00 Mar 10 Mar 11 Acid Test Ratio Mar 12 Acid Test ratio should ideally be 1:1. items which are highly liquid in nature are considered as a part of quick assets. Current ratio includes inventories while This does NOT include inventories.

the number of days it takes for sales to proceed.40 Mar 10 Mar 11 Inventory Turnover Ratio(Days) Mar 12 After the split with Honda.INVENTORY TURNOVER RATIO. Continual pressures on margins forced the company and its supply chain partners to find innovative and alternative ways to combat inflation.20 10.80 10.ITR( IN DAYS) 11.00 10.80 9.40 10.60 10. Also.79 10.60 10. 9. Attention was given to managing inventories in the system.00 9.67 ITR: 365*(Average Inventory/ Sales) This Ratio indicates the number of times the inventory is rotated during the relevant accounting period(365 days).98 9. This gives the number of days it takes for the stock to exhaust. This resulted in better ITRs. .

00 25. Due to the expenses incurred by Hero after separating from Honda.00 5. in the name of Assembly.00 45. It went from being a debt-free enterprise to a leveraged one.00 Mar 10 45.00 35.CREDITORS TURNOVER RATIO.00 40.89  CTR: 365*(Average Creditors/ Purchases) 19.00 20. . Selling.85 0.00 0.00 15.CTR(IN DAYS) 50. Distribution and exports licenses. Manufacture.00 10.00 Mar 11 Creditors Turnover(Days) Mar 12 This ratio implicates the number of days it would take to pay off the creditors.00 30.

25 2.00 There is a positive DTR ranging from 2-3 days.00 1. .50 3.00 2. Mar 10 Mar 11 Debtors Turnover(Days) Mar 12 0.DEBTORS TURNOVER RATIO-DTR (IN DAYS) 3.50 This ratio implicates the number of days it would take to collect the dues from debtors.50 2. This shows that the debtors are paying off and there by the working capital is rotating.50 1.00 0.99 3.12  DTR: 365*(Average Debtors/ Sales) 2.

This was because of fall in profits of the co.00 111. Holders on a per share basis i.e.IN rs.09 EPS: Profit After Tax/ No.EARNINGS PER SHARE(EPS).00 40.00 0.00 60.00 80.00 120. of Equity Shares EPS or earning per share measures the profit available to the equity sh. Higher the value of this ratio. Here we can see a decrease in the EPS of the co.00 20.55 119. ` 140.77 96. . how much net profit one share of the company is producing.00 Mar 10 Mar 11 Earnings Per Share(EPS) Mar 12 . 100. better will be the share value.

00 15.00 16. the larger the investors confidence in the firms future.50 17.00 Mar 10 Mar 11 Price Earnings Ratio Mar 12 The P/E ratio looks at the relationship between the stock price and the company’s earnings . the average P/E ratio in the market has been around 15-25.50 16. This ratio measures the amount investor are willing to pay for each Rupee Of earnings.43 16.00 PE Ratio: Market price per share/ EPS 17. Higher the P/E ratio. .31 16. Historically.50 18.50 15.17 18.PRICE EARNING RATIO (P/E RATIO) 18.

52 WEEKS.279 1 MAR’13 1.BSE.HIGH & LOW HIGH LOW AS ON DATE BSE (IN rs. `) 2 MAY’12 2.616 .

279 1 MAR’13 1.615 .NSE. `) 2 MAY’12 2.HIGH & LOW HIGH LOW AS ON DATE NSE (IN rs.52 WEEKS.