Project on financial statement analysis of hero moto corp ltd.

Under the Esteemed Guidance of:-Dr. Brajabandhu Padihari

Department of commerce,Prananath (Autonomous) college,

KhordhaSubmitted By:-

CHIRANJIBI BISOI+3 final year, commerce

Accounting Hons.Exam. Roll No. 8103U131036

College Roll No. BC13-264

This is certify that the project work entitled A Project report on “Financial Statement Analysis of HERO MotoCorp Ldt.” is carried out by Chiranjibi Bisoi bearing Exam. Roll No. 8103U13036 a student of +3 Final year Commerce (Accounting Hons) Under my supervision and guidance.

I confirm that I have seen a final copy of the project work and the presentation meets and requirement of Bachelor of Commerce in Accounting (Hons.)

To the best of my knowledge and belief this project work has not been submitted to any other college, Institute or University for award of any other Degree or Diploma.

Dr. Brajabandhu PadihariDepartment of commerce,

Prananath (autonomous) college,Khordha

DECLARATION

I, Chiranjibi Bisoi Bearing Roll No. 8103U13036, A Student Of +3 Final Year Commerce, (Accounting Hons.) Prananath (Autonomous) College Khordha, Do Hereby Declare That This Project Work Entitled A Project Report On “Financial Statement Analysis Of HERO MotoCorp Ltd.” Under The Guidance Of Dr. Brajabandhu Padihari, Department Of Commerce, Represents My Own Work, Except Where Due Acknowledgement Is Made, And That I Was Not Been Previously Included In A Thesis, Dissertation Or Report Submitted To This University Or To Any Other College And Institution For A Degree, Diploma Or Other Qualification.

Chiranjibi Bisoi+3 final year, commerce

Accounting Hons.Roll no. 8103U131036

Acknowledgment

With Much Pride And Delight I Acknowledge My Heartfelt Sense Of Gratitude And Indebtedness Of My Guide Dr. Brajabandhu Padihari, Department Of Commerce, Prananath (Autonomous) College, Khordha For His Invaluable Guidance Supervision And Insuperable Encouragement. He Has Spared Most Of His Invaluable Times For Discussion Pertaining To Various Aspects Of The Study. In Brief, Without His Kind Help, Encouragement And Supervision This Study Report Could Not Have Been Completed.

I Am Also Thankful To Dr. K D K, HOD, Department Of Commerce, Prananath College, Khurdha And Other Faculty Members Of The Department For Their Help, Insightful Comments And Helpful Research Materials.

I Am Equally Thankful To My Friends For Their Help, Cooperation And Encouragement.

I Am Deeply Indented To My Parents For Their Support, Guidance And Encouragement, Which Enable

To Carry Out This Study.

Chiranjibi Bisoi+3 final year, commerce

Accounting Hons.Roll no. 8103U13036

Sl.

No

.

CONTENTS

1 Introduction

2 Objectives of study

3 Methodology

4 Company profi le

5 Milestone

6 Financial statement analysis

a) Profit and loss account

b) Balance sheet

c) Comparative income statement

d) Comparative balance sheet

e) Common size income statement

f) Common size balance sheet

g) Common size balance sheet (Capital Employed)

h) Ratio analysis

i) Cash f low statement

7 Finding

8 Conclusion

9 Bibliography

Introduction: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. Hero MotoCorp Ltd. continues to maintain this position till

date.

Company continues to lead the domestic motor cycle market with 54.6% market

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.[18] Hero Honda sells more two wheelers than the second, third and fourth placed

two-wheeler companies put together.[11] Hero Honda's bike Hero Honda Splendor sells more

than one million units per year.[19]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%.[20]

Vision :-The story of Hero Honda began with a simple vision - the vision of a mobile

and an empowered India, powered by its bikes. Hero MotoCorp Ltd., company's new

identity, reflects its commitment towards providing world class mobility solutions with

renewed focus on expanding company's footprint in the global arena.

Mission :-Hero MotoCorp's mission is to become a global enterprise fulfilling its

customers' needs and aspirations for mobility, setting benchmarks in technology, styling and

quality so that it converts its customers into its brand advocates. The company will provide an

engaging environment for its people to perform to their true potential. It will continue its

focus on value creation and enduring relationships with its partners.

Statergy:- Hero MotoCorp's key strategies are to build a robust product portfolio

across categories, explore growth opportunities globally, continuously improve its

operational efficiency, aggressively expand its reach to customers, continue to invest in brand

building activities and ensure customer and shareholder delight.

Objective of the Study:The project report is prepared considering the following objectives:

1. To study the financial performance of “HERO Motocorp Ldt.”

2. To know the financial strength of the company

3. To know the solvency of the company.

4. To make comparative study with other year performance.

5. To know the capability of payment of dividend and interest.

6. To know the managerial capacity.

7.To know the profitability of the company in the form of ratios.

Methodology:It is well known fact that the most important step in marking

research process is to define the problem. Choose for investigation because a problem well defined is half solved. That was the reason that at most care was taken while defining various parameters of the problem. After giving through brain storming session, objectives were selected and the set on the base of these objectives. A questionnaire was designed major emphasis of which was gathering new ideas or insight so as to determine and bind out solution to the problems.

Sources:

The investigation replied on books, documents, annual report, financial assessment, literature, files and personal observation to have an idea about the organizational setup, function of financial department and other groups.

Company profile:“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.

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. 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 based at Dharuhera, Gurgaon in Haryana

and at Haridwar in Uttarakhand. These plants together are capable of churning out 3 million bikes per

year. Hero MotoCorp has a large sales and service network with over 3,000 dealerships and service

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 in conjunction with new countries where they can 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. In addition, to cope with the new demand over the coming half decade, 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.

Industry Automotive Type Public Company Founded 19-Jan-84Founder(s) Brijmohan Lall Munjal Headquarters New Delhi, India Area served India, Sri Lanka Key people Deya Varadh Sens (Chairman)

Pawan Munjal (MD & CEO) Products Motorcycles, scooters, three-wheeler vehicles

Milestone:-Hero Moto Corp was started 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 Motor Co. Ltd. Japan signed

• Shareholders Agreement signed

• 1984—Hero Honda Motors Ltd. incorporated

• 1985—Hero Honda motorcycle 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 motorcycle Passion Plus and Hero Honda motorcycle Hunk launched.

• 2008—New Models of Hero Honda motorcycles Pleasure, CBZ Xtreme, Glamour, Glamour Fi and 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

• 2010—New Models of Hero Honda motorcycle Splendor Pro and New Hero Honda motorcycle Hunk and 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 Hero Motocorp Maestro the masculine scooter and

ignitor the young generation bike are lunched.

• 2013- Hero Motocorp unveiled lineup of 15 updates products including

Karizma R, ZMR, Xtreme, Pleasure, Splendor Pro, Delux eco, passion

pro, Glamour etc. It also introduced three new technology engine

immobilizer in new Xtreme, Integrated braking system (IBS) in New

Pleasure and i3s (Idel Stop and Start system) in new splendor ismart.

• 2014 -Hero Motocorp Lunched Splendor Pro Classic, Xtreme Sports, And

New Model of Karizma ZMR, Karizma R, Maestro and Pleasure.

Financial Statement Analysis:Tools Used For of Analysis Financial Statement:

The numbers given in the financial statement are not much of use to the decision maker. These numbers are to be analyzed over a period of time or relation to other numbers so that significant conclusions could be drawn regarding the strengths and weakness of a business enterprise. The tools of financial analysis help in this regard. These tools include:

Comparative statement;

Common size statements

Ratio analysis

Cash flow statements

Change in financial position

In this project we show or discuss:

1. Comparative statement2. Common size statements3. Ratio analysis of “ HERO MotoCorp Ltd. ”4. Cash flow statements

BALANCE SHEET of Hero MotoCorp

Rs. In Corers

Particulars

As at

31st March, 2015

I Equity and Liabilities

1 Shareholders' funds

(a) Share capital 39.94

(b) Reserves and surplus 6,501.39

2 Non-current liabilities

(a) Long term liabilities 31.33

(b) Long-term provisions 65.62

3 Current liabilities

(a) Trade payables 2,841.87

(b) Other current liabilities 307.49

(c) Short-term provisions 734.06

TOTAL 10,521.70

II Assets

1 Non - current assets

(a) Fixed assets

(i) Tangible assets 2,818.29

(ii) Intangible assets 94.4

(iii) Capital work-in-progress 712.55

(b) Non-current investments 863.78

(c) Deferred tax assets (Net) 73.54

(d) Long-term loans and advances 616.82

(e) Other non-current assets 60.19

2 Current assets

(a) Current investments 2,290.33

(b) Inventories 815.49

(c) Trade receivables 1,389.59

(d) Cash and cash equivalents 159.25

(e) Short - term loans and advances 567.66

(f) Other current assets 59.81

TOTAL 10,521.70

COMPARATIVE BALANCE SHEET of Hero MotoCorp

Rs. In Corers

Particulars

As at As atIncrease/Decrease31st March,

2015 31st March, 2014

Equity and Liabilities Absolute Rs. % Change


(a) Share capital 39.94 39.94 0 0.00

(b) Reserves and surplus 6,501.39 5,559.93 941.46 16.93


(a) Long term liabilities 31.33 24.45 6.88 28.14

(b) Long-term provisions 65.62 49.98 15.64 31.29


(a) Trade payables 2,841.87 2,290.59 551.28 24.07

(b) Other current liabilities 307.49 588.08 -280.59 -47.71

(c) Short-term provisions 734.06 1,544.33 -810.27 -52.47

3883.42 4423 -539.58 -76.11

TOTAL 10,521.70 10,097.30 424.4 4.20

Assets Absolute Rs. % Change


(a) Fixed assets

(i) Tangible assets 2,818.29 1,897.27 921.02 48.54

(ii) Intangible assets 94.4 345.98 -251.58 -72.72

(iii) Capital work-in-progress 712.55 854.11 -141.56 -16.57

(b) Non-current investments 863.78 812.88 50.9 6.26

(c) Deferred tax assets (Net) 73.54 105.98 -32.44 -30.61

(d) Long-term loans and advances 616.82 477.39 139.43 29.21

(e) Other non-current assets 60.19 47.81 12.38 25.89

2 Current assets

(a) Current investments 2,290.33 3,275.89 -985.56 -30.09

(b) Inventories 815.49 669.55 145.94 21.80

(c) Trade receivables 1,389.59 920.58 469.01 50.95

(d) Cash and cash equivalents 159.25 117.5 41.75 35.53

(e) Short - term loans and advances 567.66 550.31 17.35 3.15

(f) Other current assets 59.81 22.05 37.76 171.25

786.72 2279.99 -273.75 -4.93

TOTAL 10,521.70 10,097.30 424.4 4.20

Statement Of Profit And Loss account of Hero MotoCorp

Rs. In Corers

Particulars

For the year ended

March 31, 2015

I Revenue from operations

(a) Gross sales of products 29,068.24

Less: Excise duty 1,717.64

27,350.60

(b) Sale of services and other operating revenue 234.7

Net revenue from operations 27,585.30

II Other income 492.74

III Total Revenue (I + II) 28,078.04

IV Expenses:

(a) Cost of materials consumed 19,783.88

(b) Changes in inventories of finished goods and work-in-progress -29.97

(c) Employee benefits expenses 1,172.87

(d) Finance costs 11.09

(e) Depreciation and amortization expenses 539.97

(f) Other expenses 3,116.34

Total Expenses 24,594.18

V Profit before exceptional item and tax (III - IV) 3,483.86

VI Exceptional item - Provision for diminution in

155.04

value of non current investment (refer note no. 39)

VII Profit before tax after exceptional item (V -VI) 3,328.82

VIII Tax expenses:

(a) Current tax 898.91

(b) Minimum alternate tax relating to earlier years -

(c) Minimum alternate tax credit utilized -

Net current tax 898.91

Deferred tax 44.27

943.18

IX Profit for the year (VII-VIII) 2,385.64

X Basic and diluted earnings per equity share (of ` 2 each):

(a) before exceptional items 127.23

(b) after exceptional items 119.46

Comparative Income Statement or Profit and Loss Account of Hero MotoCorps

Rs. In Crores

Particulars

as at as at Absolute Changes

Rs.% of

changesMarch 31, 2015

March 31, 2014

I Revenue from operations (a) Gross sales of products 29,068.24 27,005.26 2,062.98 7.64 Less: Excise duty 1,717.64 1,880.35 -162.71 -8.65 27,350.60 25,124.91 2,225.69 8.86 (b) Sale of services and other operating revenue 234.7 150.56 84.14 55.88 Net revenue from operations 27,585.30 25,275.47 2,309.83 9.14II Other income 492.74 446.38 46.36 10.39III Total Revenue (I + II) 28,078.04 25,721.85 2,356.19 9.16IV Expenses: (a) Cost of materials consumed 19,783.88 18,221.53 1,562.35 8.57

(b) Changes in inventories of finished goods and work-in-progress -29.97 8.36 -38.33 -458.49 (c) Employee benefits expenses 1,172.87 930.04 242.83 26.11 (d) Finance costs 11.09 11.82 -0.73 -6.18 (e) Depreciation and amortization expenses 539.97 1,107.37 -567.40 -51.24 (f) Other expenses 3,116.34 2,575.48 540.86 21.00 Total Expenses 24,594.18 22,854.60 1,739.58 7.61V Profit before exceptional item and tax (III - IV) 3,483.86 2,867.25 616.61 21.51

VI Exceptional item - Provision for diminution in

155.04 - 0.00 value of non current investmentVII Profit before tax after exceptional item (V -VI) 3,328.82 2,867.25 461.57 16.10VIII Tax expenses: (a) Current tax 898.91 828.21 70.70 8.54 (b) Minimum alternate tax relating to earlier years - -28.02 0.00 (c) Minimum alternate tax credit utilised - 196.37 0.00 Net current tax 898.91 996.56 -97.65 -9.80 Deferred tax 44.27 -238.39 282.66 -118.57 943.18 758.17 185.01 24.40IX Profit for the year (VII-VIII) 2,385.64 2,109.08 276.56 13.11X Basic and diluted earnings per equity share (of ` 2 each): (a) before exceptional items 127.23 105.61 21.62 20.47 (b) after exceptional items 119.46 105.6 13.86 13.13

Common Size Balance Sheet of Hero MotoCorps

Rs. In Crores

Particulars

As atCOMMON

SIZE %

As atCOMMON

SIZE %31st March, 2015

31st March, 2014

I Equity and Liabilities


(a) Share capital 39.94 0.38 39.94 0.40

(b) Reserves and surplus 6,501.39 61.79 5,559.93 55.06


(a) Long term liabilities 31.33 0.30 24.45 0.24

(b) Long-term provisions 65.62 0.62 49.98 0.49


(a) Trade payables 2,841.87 27.01 2,290.59 22.69

(b) Other current liabilities 307.49 2.92 588.08 5.82

(c) Short-term provisions 734.06 6.98 1,544.33 15.29

TOTAL 10,521.70 100.00 10,097.30 100.00

II Assets


(a) Fixed assets 1,897.27 18.79

(i) Tangible assets 2,818.29 26.79 345.98 3.43

(ii) Intangible assets 94.4 0.90 854.11 8.46

(iii) Capital work-in-progress 712.55 6.77 812.88 8.05

(b) Non-current investments 863.78 8.21 105.98 1.05

(c) Deferred tax assets (Net) 73.54 0.70 477.39 4.73

(d) Long-term loans and advances 616.82 5.86 47.81 0.47

(e) Other non-current assets 60.19 0.57

2 Current assets3,275.89 32.44

(a) Current investments 2,290.33 21.77 669.55 6.63

(b) Inventories 815.49 7.75 920.58 9.12

(c) Trade receivables 1,389.59 13.21 117.5 1.16

(d) Cash and cash equivalents 159.25 1.51 550.31 5.45

(e) Short - term loans and advances 567.66 5.40 22.05 0.22

(f) Other current assets 59.81 0.57

TOTAL 10,521.70 100.00 10,097.30 100.00

Common Size Balance Sheet (Capital employed) Of Hero Motocorps

Rs. In Crores Rs. In Crores

Particulars

As at % of Capital

Employed

As at % of Capital

Employed% Of

changes31st March, 2015

31st March, 2014

I Equity and Liabilities 1 Shareholders' funds (a) Share capital 39.94 0.60 39.94 0.70 -0.10 (b) Reserves and surplus 6,501.39 97.94 5,559.93 97.98 -0.05 2 Non-current liabilities

(a) Long term liabilities 31.33 0.47 24.45 0.43 0.04 (b) Long-term provisions 65.62 0.99 49.98 0.88 0.11Capital Employed 6,638.28 100.00 5,674.30 100.00 0.00 3 Current liabilities 3,883.42 58.50 4,423.00 77.95 -19.45

(a) Trade payables 2,841.87 42.81 2,290.59 40.37 2.44

(b) Other current liabilities 307.49 4.63 588.08 10.36 -5.73 (c) Short-term provisions 734.06 11.06 1,544.33 27.22 -16.16TOTAL Sources of Funds 10,521.70 158.50 10,097.30 177.95 -19.45

II Assets 1 Non - current assets (a) Fixed assets 3,625.24 54.61 3,097.36 54.59 0.03 (i) Tangible assets 2,818.29 42.46 1,897.27 33.44 9.02 (ii) Intangible assets 94.4 1.42 345.98 6.10 -4.68 (iii) Capital work-in-progress 712.55 10.73 854.11 15.05 -4.32 (b) Non-current investments 863.78 13.01 812.88 14.33 -1.31 (c) Deferred tax assets (Net) 73.54 1.11 105.98 1.87 -0.76 (d) Long-term loans and advances 616.82 9.29 477.39 8.41 0.88 (e) Other non-current assets 60.19 0.91 47.81 0.84 0.06 2 Current assets 5,282.13 79.57 5,555.88 97.91 -18.34 (a) Current investments 2,290.33 34.50 3,275.89 57.73 -23.23

(b) Inventories 815.49 12.28 669.55 11.80 0.48 (c) Trade receivables 1,389.59 20.93 920.58 16.22 4.71 (d) Cash and cash equivalents 159.25 2.40 117.5 2.07 0.33

(e) Short - term loans and advances 567.66 8.55 550.31 9.70 -1.15 (f) Other current assets 59.81 0.90 22.05 0.39 0.51TOTAL Application of Fund 10,521.70 158.50 10,097.30 177.95 -19.45

Common Size Income Statement or Profit and Loss Of HERO Motocorps

Rs. In Crores

Rs. In Crores

Particulars as atCOMMON

SIZE %

as atCOMMON

SIZE % March 31, 2015

March 31, 2014

I Revenue from operations (a) Gross sales of products 29,068.24 100.00 27,005.26 100.00 Less: Excise duty 1,717.64 5.91 1,880.35 6.96Net Sale 27,350.60 94.09 25,124.91 93.04 (b) Sale of services and other operating revenue 234.7 0.81 150.56 0.56 Net revenue from operations 27,585.30 94.90 25,275.47 93.59II Other income 492.74 1.70 446.38 1.65III Total Revenue (I + II) 28,078.04 96.59 25,721.85 95.25IV Expenses: 0.00 0.00 (a) Cost of materials consumed 19,783.88 68.06 18,221.53 67.47 0.00 0.00 (b) Changes in inventories of finished goods and work-in-progress -29.97 -0.10 8.36 0.03 (c) Employee benefits expenses 1,172.87 4.03 930.04 3.44 (d) Finance costs 11.09 0.04 11.82 0.04 (e) Depreciation and amortization expenses 539.97 1.86 1,107.37 4.10 (f) Other expenses 3,116.34 10.72 2,575.48 9.54 Total Expenses 24,594.18 84.61 22,854.60 84.63V Profit before exceptional item and tax (III - IV) 3,483.86 11.99 2,867.25 10.62VI Exceptional item - Provision for diminution in value of non current investment 155.04 0.53 0 0.00VII Profit before tax after exceptional item (V -VI) 3,328.82 11.45 2,867.25 10.62VIII Tax expenses: (a) Current tax 898.91 3.09 828.21 3.07 (b) Minimum alternate tax relating to earlier years 0 0.00 -28.02 -0.10 (c) Minimum alternate tax credit utilized 0 0.00 196.37 0.73 Net current tax 898.91 3.09 996.56 3.69 Deferred tax 44.27 0.15 -238.39 -0.88 943.18 3.24 758.17 2.81

IX Profit for the year (VII-VIII) 2,385.64 8.21 2,109.08 7.81X Basic and diluted earnings per equity share (of ` 2 each): (a) before exceptional items 127.23 0.44 105.61 0.39 (b) after exceptional items 119.46 0.41 105.6 0.39

Ratio Analysis of Hero MotoCorp Ltd.

Rs. in corers

Particular 31st Mar '15 31st Mar '14

Investment Valuation Ratios

Face Value 2 2

Dividend Per Share -- --

Operating Profit Per Share (Rs) 175.11 177.23

Net Operating Profit Per Share (Rs) 1,379.06 1,265.75

Free Reserves Per Share (Rs) -- --

Bonus in Equity Capital 59.98 59.98

Profitability Ratios

Operating Profit Margin(%) 12.69 14

Profit Before Interest And Tax Margin(%) 10.54 9.45

Gross Profit Margin(%) 10.73 9.62

Cash Profit Margin(%) 10.82 12.49

Adjusted Cash Margin(%) 10.82 12.49

Net Profit Margin(%) 8.58 8.31

Adjusted Net Profit Margin(%) 8.43 8.17

Return On Capital Employed(%) 51.93 51.14

Return On Net Worth(%) 36.15 37.39

Adjusted Return on Net Worth(%) 38.12 37.45

Return on Assets Excluding Revaluations 327.51 281.57

Return on Assets Including Revaluations 327.51 281.57

Return on Long Term Funds(%) 52.63 51.14

Liquidity And Solvency Ratios

Common Size Income Statement or Profit and Loss

Rs. In Crores

Rs. In Crores

Particulars

as atCOMMON

SIZE %

as atCOMMON

SIZE %%

ChangesMarch 31, 2015

March 31, 2014

Gross Sale or Income From operation 29,068.24 100.00 27,005.26 100.00 0.00

(-) Operarting Expenses 22,644.42 82.42 21,040.28 83.22 -0.80

Exice Duty 1,717.64 5.91 1,880.35 6.96 -1.05

Cost of materials consumed 19,783.88 72.33 18,221.53 72.52 -0.19

Changes in inventories of finished goods and work-in-progress -29.97 -0.11 8.36 0.03 -0.14

Employee benefits expenses 1,172.87 4.29 930.04 3.70 0.59

operating profit 6,423.82 17.58 5,964.98 16.78 0.80(-) Non Operating Expenses 3,127.43 11.43 2,587.30 10.30 1.14

Finance costs 11.09 0.04 11.82 0.05 -0.01

Other expenses 3,116.34 11.39 2,575.48 10.25 1.14

(+) Non Operating Income 727.44 2.66 596.94 2.38 0.28

Sale of services and other operating revenue 234.7 0.86 150.56 0.60 0.26

Other income 492.74 1.80 446.38 1.78 0.02

Net Profit Before Tax and Depriciation 4,023.83 8.80 3,974.62 8.86 -0.05

(-) Depreciation and amortization expenses 539.97 1.97 1,107.37 4.41 -2.43

Net Profit Before Tax And Exceptional Item 3,483.86 6.83 2,867.25 4.45 2.38(-)Exceptional item - Provision for diminution in value of non current investment 155.04 0.57 0 0.00 0.57

Net Profit Before Tax 3,328.82 6.26 2,867.25 4.45 1.81

Current Ratio 0.95 0.65

Quick Ratio 0.73 0.48

Debt Equity Ratio 0.02 --

Long Term Debt Equity Ratio -- --Debt Coverage Ratios

Interest Cover 294.73 243.31

Total Debt to Owners Fund 0.02 --

Financial Charges Coverage Ratio 340.93 337

Financial Charges Coverage Ratio Post Tax 249.3 272.58

Management Efficiency Ratios

Inventory Turnover Ratio 33.96 40.56

Debtors Turnover Ratio 24.03 --

Investments Turnover Ratio 33.96 40.56

Fixed Assets Turnover Ratio 5.94 7.4

Total Assets Turnover Ratio 4.2 4.79

Asset Turnover Ratio 4.48 --

Average Raw Material Holding -- --

Average Finished Goods Held -- --

Number of Days In Working Capital -4.31 -25.4

Profit & Loss Account Ratios

Material Cost Composition 75.36 75.36

Imported Composition of Raw Materials Consumed -- --

Selling Distribution Cost Composition -- --

Expenses as Composition of Total Sales -- --

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit 60.12 72.28

Dividend Payout Ratio Cash Profit 48.94 47.34

Earning Retention Ratio 42.98 27.83

Cash Earning Retention Ratio 53.14 52.7

AdjustedCash Flow Times 0.03 --

Cash Flow Statement of Hero MotoCorps

Rs. In corers

ParticularsAs at As at

March 31, 2015 March 31, 2014

A. Cash Flow from Operating Activities Net Profit Before Tax 3,328.82 2,867.25Adjustments for: Add: Depreciation and amortisation 539.97 1,107.37Loss on fixed assets sold/discarded 22.84 13.98Loss on sale of non-trade current investments 0.21 1.26Provision for diminution in value of investment: Exceptional item: Long term trade investment - Non Current 155.04 -Long term non trade investment 0.72 0.45Finance cost 11.09 11.09Provision for doubtful debts 0.7 0.85 730.57 1,135.73Less: Interest on long term and current non-trade investments 50.37 53.1Interest on loans, deposits etc. 98.86 90.27Profit on sale of fixed assets 0.68 0.68Exchange differences -0.03 -3.02Dividend income: On current Investments - Non-Trade 1.5 0.69On long-term investments-Trade and Non trade 2.25 2.25Profit on sale of non-trade current investments 320.08 300.65 473.71 444.62Operating profit before working capital changes 3,585.68 3,558.36Changes in working capital: Adjustment for (increase)/decrease in operating assets:Add: Inventories -145.94 -32.79Trade receivables -469.74 -259.46Short-term loans and advances -237.35 -16.76Long-term loans and advances -23 -131.92Other current assets -30.78 - -906.81 -440.93Adjustment for increase/(decrease) in operating liabilities: Less: Trade payables 551.96 417.25Other current liabilities -6.53 52.74Other long-term liabilities 6.88 3.47Short-term provisions 2.95 2.15

Long-term provisions 15.64 19.82 570.9 495.43Cash generated from operations 3,249.77 3,612.86Less: Direct taxes paid 999.77 649.45Net cash from operating activities 2,250.00 2,963.41

B. Cash Flow from Investing Activities Proceeds from sale of fixed assets 2.71 4.05Sale / (Purchase) of investments (net) 1,354.16 -8.66Investment in Associates -167.9 -0.16Investment in Subsidiaries -87.49 -157.18Inter corporate deposits received back 515 625Inter corporate deposits paid -295 -605Interest received on long term and current non-trade investments 31.01 51.58Interest received on loans, deposits etc. 98.86 90.27Dividend income On current Investments - Non-Trade 1.5 0.69On long-term investments-Trade and Non trade 2.25 2.25Capital expenditure on fixed assets, including capital advances -1,155.68 -936.8Payment of deferred credits -287.34 -685.36Net cash (used) in investing activities 12.08 -1,619.32C Cash Flow from Financing Activities Interest paid -11.09 -11.82Dividends paid -1,897.03 -1,199.29Tax on dividend -322.4 -203.82Net cash (used) in financing activities (2,230.52) -1,414.93

D Increase/(Decrease) in Cash and Cash Equivalents (A+B+C) 31.56 -70.84Cash and cash equivalents at the beginning of the year 66.41 134.95Add: on account of amalgamation (refer note 36) - 2.3Cash and cash equivalents at the end of the year Cash and bank balances 97.97 66.41Reconciliation Cash and Bank balances as per Balance Sheet 159.25 117.5Less: Unpaid dividend current account with Banks 61.28 51.09Net Cash and cash equivalents at the end of the year 97.97 66.4

Findings

Analysis of Comparative Income Statement

From the above it is evident that the turnover of the company has been increased by Rs.

2062.98 Corers which is 7.64% over the previous year. Although the other incomes have increased by

10.39%, the same in absolute terms do not have any bearing on the overall revenue. As the total

revenue has increased by 9.16% over previous year, the PBT of the company has increased by 616.61

Corers which is 21.51% over previous year. The increase in turnover has not been able to inflate the

profit as the expense of the company has been increased by 7.61% over previous year. The finance

costs have been decreased by 6.18% and other expenses have been increased by 21.00% .Employee

cost has been increased 26.11% during the year as compared to this year. The earnings per share are

increased by 20.47% over previous year. Therefore it can be said that the company has been able to

sustain the profitability of the previous year.

Analysis of Comparative Balance Sheet

From the above it is evident that the current liabilities of the company have decreased by

76.11% over previous year. The trade payables have increased by 551.28 Corers which proves that the

credibility of company has increased during the current year. The current asset of the company has

also decreased by 273.75 Corers over the previous year which is 4.93% in downward trend. The Idle

cash and cash equivalents increase by 41.75 Corers or 35.53% over previous year. Major increase was

observed under inventories by 21.80% and short term loans and advances by 3.15% over previous

year.

Analysis of Common Size Income Statement

Company has almost faired in the same way as in the previous year. The operating expense in

relation to sales has decreased by 0.80% which has resulted the increase in operating profit by 0.80%

in relation to sales of previous year. The net PBDT has decreased by 0.05%in relation to sales over

the previous year. PBT has also increased in relation to sales by 1.81%. The increase is due to the

decrease in operating expenses of the company as discussed earlier.

Analysis of Common Size Balance Sheet (capital employed)

From the above it is evident that the capital employed of the company has increased by

963.98 Corers over previous year. The non-current assets (Fixed Asset) have increased by 0.03% in

relation to capital employed over previous year. Reserved have decreased in relation to capital

employed by 0.05% over previous year. Current Assets though increased in absolute term have the

same as percentage of capital employed has decreased by 18.34% over previous year. Current

liabilities have also shown similar trend, the same decreased as a % of capital employed by 19.45%.

The financial position of the company can be therefore said to be almost the same as previous year.

Suggestion:- In order to further strengthen this company’s position as India’s premier integrated two wheeler vehicle company.

Conclusion:-The company has been able to increase its sales and profit during the year. The operation of the company has there for improved. The net profit ratio has increased which proved that the company has been able to control the cost effectively. The current Assets of the company are enough to meet the current liabilities. Hero MotoCorps Ltd. holding the highest Share in Two Wheeler’s Market. From the share holder’s point of view the company has been a profitable venture as the proposed dividend has increased. The earnings per share have also increased in comparison to previous years. On a whole the Company has been able to satisfy the needs of both the Share Holders and The customers.

Bibliography:-Reference books:

1. General Accounting

by Gupta and Agrawal

2. Fundamentals of Accounting

by S Paul

Reference News Papers:

1. Economics Time

2. Times of India

3. Business Times

Reference Websites:

1. www.google.co.in

2. www.heroMotoCorp.com

3. www.slideshare.net

4. www.moneycontrol.net

http://www.slideshare.net/

http://www.heroMotoCorp.com/

http://www.google.co.in/

Project on financial statement analysis of hero moto corp ltd.

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