Professional Documents
Culture Documents
Of
Hero MotorCorp Ltd.
Submitted
Sudhanshu Jain.
PGMF- 1449.
PGDM- Marketing.
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Jaipuria Institute Of
Management, Noida.
Certificate
This is to certify that the project report on the topic Financial Analysis Of
Hero MotorCorp Ltd. submitted by Sudhanshu Jain in fulfillment of the
requirements of the academics structure for PGDM-Marketing degree is a
bonafide record of the work done by all of us under the guidance of Dr.
Shikha Bhatia.
Submitted To:-
Signature:-
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Acknowledgement
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Table Of Contents
S.No.
1.
2.
3.
4.
5.
6.
7.
Contents
Automobile Industry Overview
Companys
Competitive
Position
Page No.
5
And
Its
9
11
15
17
18
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Introduction:The Indian automobile sector is one of its most vibrant industries. The
industry accounts for 22 per cent of the country's manufacturing gross
domestic product (GDP). It comprises passenger cars, two-wheelers, threewheelers and commercial vehicles and is currently the seventh-largest in the
world with an average annual production of 17.5 million vehicles, of which
2.3 million are exported. The Indian auto market has the potential to dominate
the global auto industry, provided a conducive environment is created for
potential innovators to come up with new pilot projects.
The next few years are projected to show solid but cautious growth due to
improved affordability, rising incomes and untapped markets. All these open
up an opportunity for automobile manufactures in India.
In addition, with the government's backing and a special focus on exports of
small cars, multi-utility vehicles (MUVs), two and three-wheelers and auto
components, the automotive sector's contribution to the GDP is expected to
double, reaching a turnover of US$ 145 billion in 2016, according to the
Automotive Mission Plan (AMP) 2006-2016.
Market Size:-
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Two-wheeler sales registered growth of 11.67 percent in April 2014 over April
2013. Within this segment, scooters, motorcycles and mopeds grew by 26.08
percent, 8.06 percent and 0.23 percent respectively.
In April 2014, passenger car sales stood at 1,786,899 units while utility
vehicles sales stood at 525,942 units, as per data from Society of Indian
Mobile Manufacturers (SIAM).
Fuel economy and demand for greater fuel efficiency is a major factor
that affects consumer purchase decision that will bring leading companies
across two-wheeler and four-wheeler segment to focus on delivering
performance-oriented products.
Sturdy legal and banking infrastructure.
Increased affordability, heightened demand in the small car segment
and the surging income of the Indian population.
India is the third largest investor base in the world.
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Name
Last Price
Market Cap.
(Rs. cr.)
Sales Turnover
Net Profit
Total Assets
Bajaj Auto
2,348.80
67,966.53
20,149.51
3,243.32
9,665.76
Hero Motocorp
2,874.85
57,407.16
25,275.47
2,109.08
5,599.87
TVS Motor
222.95
10,592.07
7,961.85
261.63
1,891.16
Mah Scooters
917.40
1,048.46
4.18
47.60
238.75
Atul Auto
353.25
800.11
430.14
29.80
94.48
LML
9.05
74.20
262.35
-72.83
-497.92
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Between April 2013 and February 2014, Heros share in the domestic
motorcycle market declined marginally to 52 per cent, from 53.3 per cent in
the year-ago.
Bajaj Autos share (in the domestic market) is down to 20.2 per cent from
24.5 in the previous year. Honda has increased its market share from 11.6 per
cent last year to 15.4 per cent.
Clearly, Hondas growth has done more damage to Bajaj than to Hero.
Between FY11 and FY14, Hero has lost 2.6 per cent market share, while
Bajaj Auto has lost 6.5 per cent.
Surjit Arora of Prabhudas Lilladher believes Heros volumes will grow nine
per cent in FY15, given the strong distribution reach and wider product
portfolio, thereby maintaining its turf in the motorcycle segment, with a
market share of 52.5 per cent.
Given the flat growth this year, a nine per cent growth target might seem big,
but Hero has a number of new product launches ready for this year.
In April, the company is slated to launch Hero Xtreme, based on the CBZ
Xtreme, but with different styling. By the end of the year, it will launch Hero
Leap, a hybrid scooter, and Hero Dash, a 111cc scooter.
According to IIFL, customers of Hero will have a wide variety to choose from
in the years to come and this will help the company cater to the demand of
niche segments as well.
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While research and development costs might increase, the growth in volumes
will give it leverage.
The companys also doing a lot to improve efficiency. Hero is working on
consolidating the vendor base and importing components from China to cut
costs. It is also controlling the spending on advertisement.
However, this is a long-term vision, believe analysts, and will take a year or
so to play out.
The Street expects Heros earnings growth to average 30 per cent annually
between FY14 and FY16. Factoring this in its FY16 price-to-earnings ratio of
11.2 is for the long-term investor.
The stock has moved up nearly 10 per cent in the past month; therefore, the
near-term return would be capped.
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CD Dawn.
CD Deluxe.
Splendor Plus.
Splenor NXG.
Passion.
Hunk.
Karizma.
Xtreme.
Impulse.
Super Splendor.
Passion Plus.
Hero MotoCorp Limited was incorporated in the year 1984 with the name
Hero Honda Motors Ltd. The company was established as a joint venture
company between Honda Motor Company of Japan and Hero 1983; they
signed a joint collaboration agreement and formed the company.
The joint venture between India's Hero Group and Honda Motor Company,
Japan, has not only created the worlds single largest two wheeler company
but also one of the most successful joint ventures worldwide.
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In February 2012, the company entered into a strategic partnership with Erik
Buell Racing (EBR) Of USA for contemporary technology and design inputs
to enable the company to launch high end bikes for the domestic and
international markets.
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Mar '14
Mar '13
Mar '12
Mar '11
Mar
2.00
2.00
2.00
2.00
2.00
65.05
60.00
45.00
105.00
110
177.28
166.36
182.69
130.06
137
1,265.75
1,190.27
1,181.19
969.86
793
--
--
212.83
146.03
171
59.98
59.98
59.98
59.98
59.9
14.00
13.97
15.46
13.40
17.3
9.45
9.02
10.77
11.26
16.0
9.62
9.17
10.81
11.33
16.1
12.50
13.64
13.56
11.36
14.0
12.50
13.64
13.56
11.36
14.0
8.19
8.76
10.04
9.89
14.0
8.19
8.76
10.04
9.89
14.0
51.41
48.57
49.83
52.13
75.0
37.66
42.31
55.43
65.21
64.4
37.66
43.05
49.27
61.34
58.8
280.43
250.70
214.83
148.03
173
280.43
250.70
214.83
148.03
173
51.41
48.57
49.83
52.13
75.0
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0.65
0.67
0.42
0.24
0.58
Quick Ratio
0.47
0.52
0.28
0.15
0.49
--
0.06
0.23
0.50
0.02
--
0.06
0.23
0.50
0.02
123.65
146.73
1,26
0.23
0.50
0.02
243.58
--
216.51
0.06
337.26
312.37
111.61
96.48
255
273.12
274.71
104.96
83.63
218
37.75
37.33
40.84
43.88
42.8
31.88
50.72
117.09
162.08
122
37.75
37.33
40.84
43.88
42.8
7.40
7.32
4.05
3.70
6.29
4.81
5.76
4.91
4.68
4.80
4.63
4.49
4.85
4.85
4.28
--
--
8.81
9.53
10.7
--
--
2.84
1.52
1.22
-25.44
-21.24
-40.58
-90.84
-47
72.48
73.50
74.13
73.50
68.3
55.76
5.79
3.92
4.22
1.66
--
--
4.08
4.47
4.80
1.85
2.62
2.54
2.29
2.13
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61.59
56.56
37.78
108.75
98.4
40.39
36.75
25.85
89.97
90.6
38.41
44.42
57.49
-15.62
-7.6
59.61
63.67
72.02
5.37
1.57
--
0.09
0.31
0.67
0.03
Mar '12
Mar '11
Mar
Mar '14
Mar13
105.62
106.07
119.09
96.55
111
Book Value
280.43
250.70
214.83
148.03
173
The total current assets of the company is increasing year by year after demerger with the
Honda also the company is holding a very good current assets with that current liabilities als
decreasing from year to year during 2011 it was very high but during 2012 onwards its keep
on reducing its current liabilities.
We have analyzed the companys financial position with respect to its competitors taking int
consideration the important parameters as per industrial practices.
The main objective of a business is to maximize the owners economy welfare. This objectiv
can be achieved by:
Profit/EPS maximization.
Wealth maximization.
Profit /EPS maximization: Profit /EPS earning is the main aim of every economic activity. A
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being an economic institution must earn profit to cover its costs and provide funds
for growth.
Comparisons:Current ratio:- This ration measure the companys ability to satisfy its current liability
with its current assets .We can see from the graph Bajaj Auto able to maintain current ratio
to 1.32 which is much higher than Hero MotoCorp. So Bajaj can easily generate cash for to
meet its need and can go for aggressive investment comfortably.
EPS of both the companies is approximately the same but salient point is for year 2011-12,
EPS has increased by almost by 18% after demerger. Hero has proven in the market that eve
without Honda it has very good growth potential.
Findings: Hero MotoCorp is the market leader which is having highest sales when compared to
its competitors.
The Hero MotoCorp is not so successful in premium segment bikes.
There is a high growth opportunity in the two wheeler segment.
A good and established brand name can be used to get the new customers.
Reduced current liabilities from 2011.
Increasing current assets from year to year even after the demerger.
No. 1 in the market most of the people prefer the brand first.
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Strategy:Hero MotoCorps 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.
Brand:The new Hero is rising and is poised to shine on the global arena. Company's
new identity "Hero MotoCorp Ltd." is truly reflective of its vision to
strengthen focus on mobility and technology and creating global footprint.
Building and promoting new brand identity will be central to all its initiatives,
utilizing every opportunity and leveraging its strong presence across sports,
entertainment, and ground-level activation.
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Distribution:The Company's growth in the two wheeler market in India is the result of an
intrinsic ability to increase reach in new geographies and growth markets.
Hero MotoCorps extensive sales and service network now spans over to 6000
customer touch points.
These comprise a mix of authorized dealerships, service & spare parts outlets,
and dealer-appointed outlets across the country.
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Conclusion
1. Financially and operationally, Bajaj Auto Ltd has revived its
competitive advantage.
2. Hero MotoCorp, an already established company, nonetheless, is
facing stiff competition from Bajaj and other such companies like
Honda and TVS.
3. To maintain its position as the leader, it should Leverage on its brand
equity and customer loyalty.
4. After de-merging from Honda, it should build upon its R&D facility
and innovate products to sustain in the competitive environment.
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Bibliography
The sources from where the relevant data is been collected is mentioned as
under: http://www.ibef.org/industry/india-automobiles.aspx
http://info.shine.com/industry/automobiles-auto-ancillaries/3.html
http://www.moneycontrol.com/competition/heromotocorp/comparis
on/HHM
http://www.business-standard.com/article/opinion/hero-motocorpholds-on-to-market-share-in-fy14-114032000510_1.html
http://profit.ndtv.com/stock/hero-motocorpltd_heromotoco/financials-ratio
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