A Project Report On Cost Analysis and Control

CHAPTER-I
INTRODUCTION
INTRODUCTION
COST:
Cost is essential in every walk of our life national, domestic and Business. A cost is
prepared to have effective utilization of funds and for the realization of objective as
efficiently as possible. Costing is a powerful tool to the management for performing its
functions i.e., formulation plans, coordination activities and controlling operations etc.,
efficiently. For efficient and effective management planning and control are tow highly
essential functions. Costing and cost control provide a set of basic techniques for planning
and control.
A cost fixes a target in terms of rupees or quantities against which the actual performance is
measured. A cost is closely related to both the management function as well as the
accounting function of an organization.
As the size of the organization increases, the need for costing is correspondingly more
because a cost is an effective tool of planning and control. Cost is helpful in coordinating the
various activities (such as production, sales, purchase etc) of the organization with result that
all the activities precede according to the objective. Costs are means of communication.
Ideas of the top management are given the practical shape. As the activities of various
department heads are coordinated at the much needed for the very success of an
organization. Cost is necessary to future to motivate the staff associated, to coordinate the
activities of different departments and to control the performance of various persons
operating at different levels.
Costs may be divided into two basic classes. Capital and operating costs. Capital cost is
directed towards proposed expenditure for new projects and often require special financing.
The operating costs are directed towards achieving short-term operational goals of the
organization for instance, production or profit goals in a business firm. Operating costs may
be sub-divided into various departmental of functional costs.
Definition of 'Cost-Benefit Analysis'

A process by which business decisions are analyzed. The benefits of a given situation or
business-related action are summed and then the costs associated with taking that action are
subtracted. Some consultants or analysts also build the model to put a dollar value on
intangible items, such as the benefits and costs associated with living in a certain town. Most
analysts will also factor opportunity cost into such equations.
You may have been intensely creative in generating solutions to a problem, and rigorous in
your selection of the best one available. This solution may still not be worth implementing,
as you may invest a lot of time and money in solving a problem that is not worthy of this
effort.
Cost Benefit Analysis or cba is a relatively simple and widely used technique for deciding
whether to make a change. As its name suggests, to use the technique simply add up the
value of the benefits of a course of action, and subtract the costs associated with it.
Costs are either one-off, or may be ongoing. Benefits are most often received over time. We
build this effect of time into our analysis by calculating a payback period. This is the time it
takes for the benefits of a change to repay its costs. Many companies look for payback over
a specified period of time e.g. three years.
In its simple form, cost-benefit analysis is carried out using only financial costs and financial
benefits. For example, a simple cost/benefit analysis of a road scheme would measure the
cost of building the road, and subtract this from the economic benefit of improving transport
links. It would not measure either the cost of environmental damage or the benefit of quicker
and easier travel to work.
NEED OF THE STUDY:

The importance of cost reduction programs within a company cannot be overstated.
Companies that are losing money, need to increase profits, or must become more
competitive need to cut expenses in order to succeed. Knowing how to implement effective
cost reduction strategies can be the determining factor in the survival of a business.
When a company must generate more cash as fast as possible, management will have to
decide which costs can be most effectively reduced. If the reduction is needed quickly,
expenses cut first will normally be those that are not fixed or directly tied to production. It is
not a good idea to drastically reduce expenses that produce the company product or service
without careful evaluation.
If your company understands the importance of cost reduction as a tool to increase
profitability, the company will have a much better chance of remaining profitable no matter
what stage of the economic cycle is occurring. That is because cost reduction is an effective
tool that can be responsive to a company's need. Managing expenses is just as important as
managing revenue.
Keeping the competitive edge means keeping the company razor sharp. There is no room for
laxness which dulls the ability of a company to be responsive to market trends. Changes can
occur rapidly, and a company that cannot respond with new methods, new material usage,
service efficiency changes, or technological adaptability will be quickly outperformed by
other businesses. The importance of cost reduction strategies lies in its contribution to a
company's honing of performance.
SCOPE OF THE STUDY:

Since it will not be possible to conduct a micro level study of all type industries in Andhra
Pradesh, the study is restricted to Hero Moto Corp Ltd. (Formerly Hero Honda Motors Ltd.)
(Phoenix Motors Pvt. Ltd).only.
OBJECTIVES OF STUDY
THE STUDY HAS THE FOLLOWING:
To provide the material frame work of cost and Cost Control Analysis
To describe the profit of the organization as a backdrop for undertaking a study of
Cost Benefit Analysis.
To analyze the cost system in practice in Hero Moto Corp Ltd. (Formerly Hero
Honda Motors Ltd.) (Phoenix Motors Pvt. Ltd)with particular reference to their
objectives and phases of organizational and re-appropriation.
In addition to the analysis of the conventional cost system in practice in Hero Moto
Corp Ltd. (Formerly Hero Honda Motors Ltd.) (Phoenix Motors Pvt. Ltd) The study
aims at evaluation and modification to the current cost system with reference to the
various types of costs. The scope in the formulation of performance cost is also
studied.
SOURCES OF DATA:
The data of Hero Moto Corp Ltd have been collected mainly from secondary sources viz.,
Form the concerned officers of the Hero Moto Corp Ltd
Hero Moto Corp Ltd journals.
Accounting books, records.
Key books of concerned title.
Statistical records
Hero Moto Corp Ltd library.
METHODOLOGY:
The proposed study is carried with the help of both primary and secondary sources of data.
PRIMARY DATA:
The primary data is collected by interacting with the finance manager and other concerned
executives at the administrative office of the company.
SECONDARY DATA:
All the secondary data used for the study has been extracted from the annual reports,
manuals and other published material of the company.
LIMITATIONS:
Estimates are used as basis for cost plan and estimates are based mostly on available
facts and best managerial judgment
Cost control cannot reduce the managerial function to a formula. It is only a

managerial.
Tool which increase effectiveness of managerial control.
The use of cost may be to restricted use of resources. Costs an often taken as limits.
Efforts may therefore not be made to exceed the performance beyond the cost
targets.
Frequent changes may be called for in costs due to first changing industrial climate.
In order that a system may be successful, adequate costs education should be

imparted at least through the formative period. Sufficient training programs should
be arranged to make employees give positive response to cost activities.
The study is the limited up to the date and information provided by Hero Moto Corp
Ltd and its annual reports.
REVIEW OF LITARETURE
INTRODUCION TO COST & COST CONTROL
The management is efficient if it is able to accomplish the objective of the enterprise. It is
effective when it accomplishes the objectives with minimum effort and cost in order to attain
long-range efficiency and effectiveness management must chat out its course in advance. A
systematic approach to facilitate effective management performance is profit planning and
control or costing. Costing is therefore an integral part of management in a way, a cost
control system has been described as a historical combination of a goal setting machine for
increasing an enterprises profits and a goal achieving machine for facilitating organizational
co ordination and planning while achieving the costed targets.
MEANING OF COST:
It is a financial and quantitative statement, prepared and approved prior to a defined period
of time of policy to be pursued during that period for purpose of attaining a given objective.
It may include income, expenditure and employment capital.
In other words is a pre-determined detailed plan of action developed and distributed as a
guide to current operations and as a partial basis for the subsequent evaluation of
performance.
MEANING OF COSTING:
The process of planning all flows of financial resources into within and from an entity
during some specified future period. It includes providing for the detailed allocation of
expected available future resources to projects, functions, responsibilities and time
periods.From above definition it is clear that costing is the actual act of preparing the cost. It
is the process of evolving the final statement. Cost is the end product of costing.
MEANING OF COSTORY CONTROL:

It is the process of establishing of departmental costs relating the responsibilities of
executives to the requirements of a policy, and the continuous comparison of actual with
costed results, either to secure by individual action the objectives of the policy a firm basis
for its revision.
First of all costs are prepared and then actual results are the comparison of costed and actual
figures will enable the management to find out discrepancies and take remedial measures at
a proper time. The cost control is continuous process, which helps in planning and co
ordination. It provides a method of control too. A cost is a means and cost control is the end
result.
In the word of J.A Solt cost control is the system of management control and accounting in
which all operations are forecast and so as possible planned ahead and actual results
compared with the forecast and the planned ones.
ESSENTIALS OF COST CONTROL:

Costing, or the process of preparing the cost, is the starting point for cost controlDistribution
of costs pertaining to each function to all the relevant section within organization.
Collection of actual data pertaining to till costed activities.Continuous comparison of actual
performance with costed performance. Initiation of corrective action to ensure that actual
performance is in line with costed performanceRevision of costed if it is felt that the costs
prepared are no longer relevant on account of unforeseen developments.
OBJECTIVES OF COST CONTROL:

The primary objective of cost controls to help the management is systematic planning and
in controlling the operations of the enterprise. The primary objective can be met only of
there is proper communication and coordination amongst different within the organization.
Thus the objectives can be stated as:
1. PLANNING:
Businesses require planning to ensure efficient and maximum use of their resources. The
first step in planning is to define the broad aims and objectives of the business. Then,
strategies to achieve the desired goals are formulated and tentative schedule of eh proposed
combinations of the various factors of production, which is the most profitable for the
defined period. Cost influences strategies that need to be followed by the originations. It
cultivates forced planning aiming managers.
2. CO-ORDINATION:
Co-ordination is managerial functions under which all factors of production and all
departmental activities are balanced and integrated achieve the objectives of the
organization. Costing provides the basis for individual in all department to exchange ides on
how best the organizations objectives can be realized. Executives are forced ot think of the
relationship between their department and the company as a whole. This removes
unconscious bases against other departments. It also helps to identify weaknesses in the
organization structure.
3. COMMUNICATIONS:
All people in the organization must know the objectives, policies and performances of the
organizations. They must have a clear understanding of their part in the organizations goals.
This is made possible by ensuring their participation in the costing process.
4. CONTROLS AND PERFORMANCE EVALUTION:

Control ensures control by continuous comparison of actual performance with the costed
performance. Variances are highlighted and corrective action can be initiated. Costs also
from the basis of performance evaluation in an organization as they reflect realistic estimates
of acceptable and expected performance.
COST, COSTING AND COST CONTROL:

A cost is BLUE PRINT of a plan expressed in a quantitative terms. Costing is a technique
for formulating costs. Cost control relates to the principles, procedures, and practice of
achieving given objectives thorough costs.
From the above definitions we can differentiated the three terms as costs are the individuals
objectives of a department, etc, where ascosting may be said to be the act of building cost.
Cost control embraces all and in addition includes the science of planning the costs to effect
on overall management tool for the business planning and control.
ESSENTIALS OF COST CONTROL:

The proper organization is essential for the successful preparation, maintenance and
administration of costs. A cost committee is formed which comprises the departmental heads
of various departments. All the functional heads are entrusted with the responsibility if
ensuring proper implementation of their respective departmental costs.
The chief executive is the overall in charge of cost system. He constitutes a cost committee
for preparing realistic costs. A cost officer is the convener of the cost committee who coordinates the costs of different departments. The managers of different departments are made
responsible for their departmental costs.
COST OFFICER:
The chief executive appoints cost officer. Such cost officer also called as cost controller or
cost director. His rank should be equal to other functional managers.
The cost officer does not have the direct responsibility of preparing the costs. The various
functional managers prepare the costs. His role is that of a supervisor. The cost officer has
the specific duty of administering the cost. He is responsible for timely completion of
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costing activity by various departments and for co-ordination between them so the t there is
a proper link between them. He is empowered to scrutinize the costs prepared by different
functional heads and to make changes in them. If the situation so demands.
The cost officer works as a coordinator among different department. He continuously
monitors the actual performance of different departments. He determines the deviations in
the costs and takes necessary steps to rectify the deficiencies, if any. He also informs the top
management about the performance of different department.
The cost officer will be able to carry out his work only if is conversant with the working of
all the departments he must have technical knowledge of the business and should also
possess accounting knowledge.
3. COST COMMITTEE:
A cost committee is formed to assist the cost officer. The heads of the entire important
departments are made members of this committee. The committee is responsible for
preparation and execution of costs. The members of this committee put up the case of their
respective departments and help the committee to take collective decisions, if necessary. The
cost committee is responsible for reviewing the costs prepared by various functional heads.
Co ordinate all the costs and approve the final costs, the cost officer acts as coordinator of
this committee. All the functional heads are entrusted with the responsibility of ensuring
proper of ensuring proper implementation of their respective final departmental costs.
4. COSTS CENTERS:
A cost centers is that part of the organization for which the cost is prepared. A cost center
may be a department, section of a department or any other part of the department. Ideally,
the head of every center should be a member of the cost committee. However, it must be
ensured that each cost center at least has an indirect representation in the cost committee.
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The establishment of cost centers is essential for covering all parts of the organization
becomes easy. When different centers are establishment. The cost centers are also necessary
for cost control purposes.
5. COST MANUAL:
a) A cost manual is a document that spells out the duties and responsible of the various
executives concerned it specifies among various functional areas. A cost manual
covers the following matters.
b) A cost manual clearly defines the objectives of cost control system. It also gives the
benefits and principles of this system.
c) The duties and responsibilities of various persons dealing with preparation and exec
ton of costs are also given in a cost manual. It enables the management to know the
persons dealing with various aspects to costs and provides clarity on their duties and
responsibilities,
d) It gives information about the sanctioning authorities of various costs. The financial
powers of different managers are given in the manual for enabling he spending
amount on various expenses.
e) A proper table for costs including the sending of performance reports is drawn so
that every work starts in time and systematic control is exercise.
f) The specimen forms and number of copies to be listed for cost repots is also stated.
Cost involved should be clearly stated.
g) The length of various cost periods and control points is clearly given.
h) The procedure to the followed in the entire system is clearly stated.
i) A method of accounting to be used for various expenditures is also stated in the
manual.
The cost manual helps in documentation the role of every employee, his duties,
responsibilities the ways of undertaking various tasks etc. thus it also in reducing ambiguity
at any point of time.
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6. COST PERIOD:
A cost period is the length of time for which a cost is prepared. It depends upon a number of
factors. The choice of a cost period depends upon the following considerations. The types of
cost (long/short)
The nature of demand for the products.
The timings for the availability of the finance.
The economic situations of the cycles.
All the above mentioned factors are taken into account while fixing the period of costs. In
this costing process the financial manager has to take the financial decision on the costs.
The financial manager usually responsible for organizing this cost, he must perform the
following functions.
To decide the general policies and guidelines.
To officer technical advice
To suggest changes
To receive and review individual cost estimates
To reconcile divergent views
To co-ordinate costing activities.
To approve costs with or without revisions.
To scrutinize control reports later on
To scrutinize cost repots later on
To disseminate these guide lines.
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CONTINUOUS COSTING SYSTEM:

A continuous costing system is a method of having two different cost periods with in the
same cost. The purpose of having this system is to have greater control in terms of
operational activities without losing sight is to have greater control in terms of it results in
incorporating the effect of changes in the short term on the long-term targets of the
organization.
DETERMINATION OF KEY FACTOR:

The costs are prepared for all functional areas. These costs are interring dependent and interrelated. A proper co-ordination among different costs in necessary for cost control to be
successful. The constraints on some costs may have an effect on other costs too. A factor
which influences all other costs is known as key factor or principal factor.
The key factor may not necessity remain the same. The raw materials supply may be limited
at one time but it may be easily available at another time. Similarly, other factors may also
improve at different times. The key factor highlights are limitations of the enterprise. This
will enable the management to improve the working of these departments where scope for
improvement exists.
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REQUISITES FOR A SUCCESSFUL COST

CONTROL SYSTEM
For making a cost control system successful requisites are required.
1. CLARIFYING OBJECTIVES:
The costs are used to realize objectives of the business. The objective must be clearly spelt
out to that costs are properly prepared. In the absence of clear goals, the costs will also be
unrealistic.
2. PROPER DELEGATION OF AUTHORITY AND RESPONSIBILITY:
Cost preparation and control is done are every level of management. Even though costs are
finalized at top level but involvement of persons from lower levels of management is
essential for their success. This necessitates proper delegation of authority and
responsibility.
3. PROPER COMMUNICATION SYSTEM:

An effective system of communication is required for a successful cost control. The flow of
information regarding costs should be quick so that these are implemented. The upward
communication will help in knowing the difficulties in implementation of costs. The
performance reports of various levels will help top management in cost control.
4. COST EDUCATION:
The employees should be educated about the benefit of costing system. They should be the
benefits of costing system they should be educating about their roles in the success of this
system. Cost control may not be taken only as a control device by the employees but it
should be used as a tool to improve their efficiency.
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5. FLEXIBILITY:
Flexibility in costs is required to make them suitable under changed circumstances. Costs
are prepared for the future, which is always uncertain, even though costs are prepared by
considering the future possibilities but still some adjustment. Flexibility makes the costs
more appropriate and realistic.
6. MOTIVATION:
Costs are to be implemented by human beings. Their successful implementation will depend
upon the interest shown by the employees. All persons should be motivated to improve their
working so that costing is successful. A proper system of motivation should be introduced
for making this system a success.
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TYPES OF COSTS:
LONGTERM
COST
INTERI
M
COSTS
TYPES
OF
COST
S
SHORTTERM
COST
CURRE
NT
COST
1. LONG -TERM COSTS:
The long-term costs prepared for a long period of five to ten years. They are concerned with
planning the operations of a firm over a considerably long period of time. The financial
controller exclusively for the top management usually prepares long-term costs. These
costs are very useful in terms of physical units (i.e. quantities) or percentages, since accrued
values may be difficult to forecast over such long-period. Capital expenditure, research and
development costs, etc, are examples of long-term costs.
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2. SHORT TERM COSTS:

Short-term costs are costs prepared for a short period of one to two year. They are prepared
for those activities the trend in which cannot be for seen easily over long periods. These
costs are very useful in case of consumer goods industries such as sugar, cotton, textiles, etc.
they are generally prepared in terms of physical units (i.e. quantities) as well as monetary
units (i.e. values) materials cost. Each costetc, are example of short-term cost. They are
useful to lower level of management for control purpose.
3. CURRENT COSTS:
Current cost is a cost, which is established for use over a short period of time and is related
to current conditions. Thus current costs are essentially short term costs adjusted to current
(i.e., present or prevailing) condition or circumstances. They are prepared for a very short
period. Say, a quarter or a month. They related to current activities of the costs.
4. INTERIM COSTS:
Interim costs are costs, which are prepared in between two cost periods. These costs may get
integrated with the cost of the following period.
CLASSIFICATION OF COSTS ACCORDING TO CONTENT:

Costs may be classified into costs in physical terms and into costs in monetary terms.
A) COSTS IN PHYSICAL TERMS:

Costs in physical terms are cost in terms quantities only. They do not include corresponding
rupee value. Long-term costs are usually prepared in physical terms. Examples of such costs
are production costs, material cost etc
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B) COSTS IN MONETARY TERMS:

Costs in monetary terms are costs that cost in terms of quantities as well as their
corresponding rupee value, sales cost, purchase cost, etc are example of such costs. Costs
such as cash cost, capital expenditure cost, etc that may not have physical quantities also
from part of costs in monetary terms.
CLASSIFICATION OF COSTS ACCORDING TO FUNCTION:

Costs can be classified into:
1. operating costs
2. financial costs
3. master costs
1) OPERATING COST:
These costs relate to different activities or operations of a firm. The number of such costs
depends upon the size and nature of the business, the commonly used operating costs are:
1) Sales costs
2) Purchase costs
3) Raw material costs
4) Labor costs
5) Factory utilization cost
6) Manufacturing expenses or works overhead cost
7) Administrative and selling expenses cost etc.
The operating cost for a firm may be constructed in terms of programmers or responsibility
areas, and hence may consist of:
Programmed cost
Responsibility cost
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A) PROGRAMME COST:
It consists of expected revenues and costs of various products or projects that are Termed as
the major programmers of the firm, such a cost can be prepared for each product line or
project showing revenues, cost and the relative profitability of the various in locating areas
where efforts may be required to reduce costs and increase revenues. They are also useful in
determining imbalance and inadequacies in programmers so that corrective action may be
taken in future.
B) RESPONSIBILITY COSTS:
Where the operating cost of a firm is constructed in terms of responsibility
Areas, such a cost show the plan in terms of persons responsible for achieving them. It is
used by the management as a control them. It is used by the management as a control device
to evaluate the performance of executives who are in charge of various cost centers. Their
performance is compared to the targets (costs), set for them and proper action is taken for
adverse results.
Responsibility areas may be classified under three broad categories:
Cost /expense center
Profit center
Investment center
2) FINANACIAL COSTS:
Financial costs are concerned with cash receipts and disbursements, working Capital,
financial position and results of business operations. The commonly used financial costs
include cash cost, working capital cost and income statement cost, statement of retained
earnings cost, costed balance sheet or position statement cost.
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3) MASTER COSTS:
The master cost is the summary cost incorporating its functional costs. All The operational
and financial costs are integrated into the master cost. The cost officer for the benefit of the
top level management prepares this cost. This cost is used to coordinate the activities of
various functional departments. It is also used as an effective control device.
CLASSIFICATION ON THE BASIS OF FLEXIBILITY:

A) FIXED COST:
According to ICMA London a fixed cost is a cost which is designed to
Remain unchanged irrespective of the level of activity actually attained it is based on a fixed
volume of activity and shows one volume of output and related cost. It is not adjusted
according to the actual level of activity attained.
A fixed cost is useful only when the actual level of activity corresponds with the costed level
of activity. But this generally does not happen as such a fixed costs is not useful for
managerial purposes.
B) FLEXIBILE VARIABLE SLIDING SCALE OR CONTROL TYPECOSTS:
According to ICMA London a flexible cost is a cost which is designed to Change in
accordance with the level of activity actually attained. Thus a flexible cost changes
according to the change in the level of activity. In other words it provides the costed costs at
any level of activity.Business activity cannot be accurately predicted on account of
uncertainties of Businessenvironment. A flexible cost contains several estimates for different
assumed circumstances instead of just one estimate, it provides for automatic adjustments
with changes in the volume of activity. Hence, a situations operating in an unpredictable
environment.
Cost Output and Relationship:

Short run cost curve is divided into total fixed cost and total variable cost. So, we can
indicate it as:
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TC = TFC+TVC
TC = Total Cost
TFC = Total Fixed Cost
TVC = Total Variable Cost
TVC is known as the total variable cost which changes directly with the change in output. It
refers cost of labour, raw material, power etc.
We can show it in a figure:
Total Fixed Cost Curve

There is another diagram which will show the curve of Total Variable Cost:
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Total Variable Cost Curve
We can show the diagram to put all the curves also:
The TC, TVC and TFC Curves

At last, we can say that costs are very important in decision making because though all the
units are sold in the same price but the cost of production of these units are not same.
Marginal cost and incremental cost are relevant in decision making whereas sunk cost are
irrelevant.
COST AND COST SYSTEM IN Hero Moto Corp Ltd
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The costing process is used in the performance costing for the construction of phase. Which
includes pre-commission activities. Besides meeting the essential requirements of
managerial control. The costing exercise also covers the long-term capital costing, which is
presented in the form of annual plan.
OBJECTIVES OF THE COST SYSTEM:

To prepare annual costs in such a manner those managers at various levels in the
organization carry out periodical exercise in respect of each contact or responsibility
center for physical planning and matching resources broke up into monthly targets or
cash flows.
To introduce and operate responsible for achievement of specified targets with the
resources allocated for the purpose.
To bring about effective co-ordination of all activities of the organization of all
activities of the organization and to gear up service divisions to meet effectively the
requirement of projects.
COST PERIOD AND PHASING:

The cost period or annual costs should correspond with the financial year. The cost should
be drawn up for the ensuring financial year in the form of cost estimates financial year in the
form of Revised Estimates (R.E) in addition, the cost are to be reviewed on monthly basis by
project review teams, in the light of actual expenditure and projections in the cost period.
Costs should indicate monthly phasing of expenditure and targets for the first and quarterly
phasing for the second half of the year. At the time of review of the cost estimates to frame
revised estimates the quarterly phasing should be broken up into monthly phasing.
While drawing up the actual cost in October every year, the long-term capital cost for
ongoing and new schemes should be formulated as a part of the exercise for preparation of
Annual plan. The long term capital cost should indicate for a period of six years following
the cost period project wise annual phasing of the capital expenditure and physical schedules
resource based network.
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COST HEADS:
For uniform accounting, it is essential that costs are collected for each system of the factory
tough this may involve splitting up of payments against contracts which embrace more than
one system. Allocation of the cost as system wise affords a sound basis for cost accounting,
inter-firm comparisons and provides valuable inputs to data bank. Cost provisions are
related to project estimated and monitoring of actual expenditure where as control cables for
part control and instrumentation system.Factory piping which include pipelines, for ash
water mains, compressed air system and civil works piping.
Auxiliary pumps for water treatment plant and civil works system. If there are, any contracts
not covered in the cost heads provision for such contracts should be shown against the
appropriate system head by adding code number.
5 TYPES OF COSTS IN HERO MOTOCORP LTD (HMIL):

According to the nature expenditure cost are classified as under
Direct capital outlay on works
Technical consultancy
Incident expenditure during construction
Employee cost
Other establishment expenses:

Training and recruitment
Preliminary expenses
Misc. brought-out assets
Township cost
BRIEF
EXPLANATION
TO
THE
NATURE
INCLUDED IN EACH COST INDICATED BELOW:
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OF
EXPENDITURE
These comprises of salaries, wages, allowance, contribution to PF and other funds and
welfare expenses such as LIC, Medical reimbursement, canteen subsidy etc., and provision
for areas of salary/D.A.
OFFICE AND OTHER EXPENSES:

Expenses incidental to construction and capital works not traceable directly to incidental
expenditure, during contribution equipments, vehicle running expense, office rent. Cost of
drawings, traveling expenses, printing & stationery, communication expenses, advertisement
for tenders etc., are major items in this category.
TRIANING
RECRUITMENT
&
OTHER
DEFFERED
REVENUE
EXPENDITURE:
The first part of the cost consist of expenses for training executives, and non-executive
trainees, rent for training halls and expenses for management development courses. The
second part consists of expenses for recruitment such as advertisement for recruitment,
interview expenses for to candidate etc., the third part combines preliminary expenses
including share registration lees and research and development expenses.
MISCELLANEOUS BOUGHT OUT PASSESS:

Vehicles, furniture and fixtures equipments, hospital and medical equipment, miscellaneous
assesses town ship figure in this cost.
REVIEW OF PROJECT COST:

MONTHLY REVIEW:
At monthly intervals, the costs should be reviewed by project review committee (PRC).
Project cost should report actual expenditure against cost heads. Works heads and corporate
cost by the 7th of the month following the reporting month. The monthly review should be
examined by project review team (PRT), who should record reasons for any aviations and
action proposed for expending works in the minutes of the meetings reasons for any
variations in the case of cost heads exceeding 10% of the cost estimates revised estimates or
whichever is lower Rs.5 lakhs should be analyzed and reported upon.
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QUATERLY REVIEW:
PRT should conduct a quarterly cost review with a view to projecting anticipated
expenditure during the year against approved cost estimates/ revised estimates. As time is
essence of such review, only a quick estimate of anticipated expenditure for individual cost
heads involving provisions exceeding for individual cost heads involving provisions
exceeding Rs 50 lakhs in each case should be made and reported upon in minutes of PRT.
For this purpose, project cost should furnish all the relevant data to general manager
(project) and planning and systems by the 10th of the month following the quarter project
cost committee should review the actual expenditure and assess anticipated expenditure
contract co ordination/engineers in charge the assessments of anticipated expenditure should
be furnished by the project cost committee to general manager (project) by the 30 th of the
month following the quarter under review.
COST OF SERVICE DIVISION / CORPORATE COSTS:

A review of costs of service and corporate divisions should be conducted at quarterly
intervals by corporate cost committee (CSC). for this purpose, corporate accounts should
report actual expenditure up to the end of the quarter by the 10th of the month following
quarter to corporate cost and cost co-ordination of the remaining period of the year should
be sent to corporate cost should be sent to corporate cost should put up a consolidated report
division wise and project wise to corporate cost committee (CBC) by the 15 th of the may,
August, November and February every year.
OBJECTIVES OF THE CURRENT COST CONTROL SYSTEM IN

Hero MotoCorp Ltd.
In current to corporate cost control system operating phase has been compiled to achieve
the following objectives.
To control actual performance with reference to standards / norms adopted in the
cost, ascertain the deviations analyze and establish the reasons.
27
To identify constraints in generation and tamely action for estimation of constraints.

To monitor the generation of internal resources so as to ensure availability of
adequate funds.
To prepare revenue cost so as to forecasting the periodical profitability of the
organization.
To develop standards / norms of performance in the various areas of operation and
maintenance based on the experience.
To involve managers at various in the process of developing performance cost so as
to introduce the concept of responsibility accounting and participate management.
To ensure effective co-ordinate planning of all activities so the all the inputs and
services necessary for achieving the physical targets are available at appropriate
time.
To create cost consciousness among the managers responsible for decision making.
To provide data regarding operational norms and costs for the purpose of formulating
tariff.
SCOPE OF THE PERFORMANCE COST:

The cost for operation and maintenance activities will be called performance cost operation.
This, in effect means that all financial targets in the cost will be based on performance
targets in physical terms.
The current cost control system operation phase envisages generation and transmission line
projects as independents investment centers. It becomes applicable to a project in the year in
which it plans to commercialize its first generation unit. However, the costing for expenses
(net of revenue) from the date of synchronization to the date of commercial generation (i.e.
during trail run) is to be taken case of in the capital cost of the respective project. Similarly,
in the case of transmission line project, the system becomes applicable from the year in the
date commercial generation of the first unit of generating project, with which this line is
associated, whichever is later. For subsequent lines, the O & M will be prepared from the
energisation.
28
The sum totals of costs of the cost centers will be the cost for the investment center.
However, the cost for the profit center will be worked out by apportioning the revenue and
cost of various cost centers to individuals profits centers bases on specified norms.
The performance cost operation will consists of following costs along with the supporting
schedules
A. Cost balance sheet
B. Cost profit and loss account
C. Revenue cost
In addition, separate costs for revenue activities other than operation for research and
development consultancy contracts etc.
The expenses in respect of developmental expenditure for improvements, additions,
replaautomobile, renewals, balancing facilities etc., are of capital nature and will be costed
for in the construction cost of cost control system construction phase.
To facilitate management control the system also envisages, phasing of these costs into
monthly/quarterly targets. The actual performance then will be reasons for variations will be
analyzed and established for taking corrective remedial actions. The scope also includes
projections of internal resources for a period ranging from 5 to 15 years and updating of
5years plan as well as perspective plan of the company.
STAGES IN THE FORMULATION OF PERFORMANCE COST:

The system provides for a two stages formulation for performance cost-operation the
stages are given below.
INITIAL PROPOSAL:
In the initial proposal, the project is required to indicate yearly targets. In he addition, to
furnishing basic information like synchronization and commercial generation dates
29
Constraints on coal operation at less than the designed specification, calorific value of raw
material and lime stone, material consumption in physical terms for items whose
consumption value in Rs.5 lakhs or more, planned shut down for a maintenance and
overhauling and norm for various operation parameters provided for design specification
and in the tariff agreements to the corporate cost committee.
In the initial proposals is planned to be submitted after considering these factors and keeping
in view the perspective plan of the organization, fixes as well as norms for various operating
parameters. These targets and norms are then communicated to all stations and transmissions
line offices in the last week of July to be used for formulating detailed cost in the firm of
final proposal.
FINAL PROPOSAL:
Costed balance sheet, costed profit & loss account and costs in the form of cash cost along
with the proposal will consist of detailed supporting schedules for each of the investment
center / cost center. This final proposal needs to be submitted to corporate center with in 3
weeks of receiving approval for initial proposal.
The final proposal, after approval by board, will become the basis of monitoring
performance for cost centers and investment centers.
The frequency and extent review and monitoring will be done is under:
i.
The monitoring of actual performance against costed targets for investment center /
profit center on monthly basis and for cost centers on quarterly for remedial /
corrective actions.
ii.
The review of performance cost on quarterly basis to assess the anticipated

profitability.
The first step in the preparation of performance cost, O & M is formulation of maintenance
and overhauling schedules for Boiler and to which generation, then considering the grid
demand, the availability or inputs and factory problems.
NEXT GENERATION:
The sales value will be determined from quantum of net generation (i.e. gross generation
aux. Consumption)
30
AUXILIARY CONSUMPTION / CONSUMPTION BY UTILITES:

The automobile consumption by each of the cost centers for individuals unit auxiliaries,
station auxiliaries as well as transformer losses are to be estimated separately based on
designed specifications and added in order to workout total auxiliary consumption rather
than fixing a overall percentage. Similarly consumption by utilities will also need to be
indicated by concerned cost centers / departments like township and construction
department. This will be valued at cost net generation to arrive at the sales values for owns
consumptions.
CHEMICAL CONSUMPTION:
The chemical are used by many cost centers for treatment of water. The consumption of
chemicals will be correlated with volume of water treated and certain norms will have to be
developed for different type of chemicals and different types of treatment.Based on these
norms, each of the cost centers will indicate consumption of chemical in quantitative as well
as financial terms. The cost center wise requirement will be consolidated to arrive at total
chemicals consumption to be charged to profit and loss account. The valuation of chemical
will be done at current prices only.
EMPLOYEE COST:
The basis employee cost will be approved manpower cost effective for respective years of
cost period. The estimation of employee cost is to be done for each grade considering midpoint of the scale as basis pay and after adding various allowance like D.A., H.R.A., C.C.A
project allowance etc., as admissible in respective grades. This is to be worked 49 out or
each of the cost period based on existing strength (at the time of estimation) in each grade
and additions during each quarter (taking 70% satisfaction for additions).
The provisions for LTC, medical reimbursement, PF and other welfare expenses are to be
made based on trend of expenses in previous years and taking into account polices changes,
if any. The details of welfare expenses like liveries and uniforms, safety expenses, accident
31
compensation, games & sports, canteen subsidy etc., are to list out as per chart of account.
The provisions for incentive, bonus and payments of one time nature are to be shown
separately based on total employee cost for executives, supervisors and non-supervisors and
total man power in these categories, separate rates of cost per employee will be worked out
for each of these categories as under.
1. Salaries and allowance
2. Contribution to PF and other funds
3. Welfare expenses
The cost center of employee cost will be worked out based on these rates separately for
executives, supervisors and non-supervisors. This will again be consolidated separately for
operations. Maintenance and common service function. The employee cost of common
function will be appropriated between construction and O & M costs in the ratio of capital
expenditure and sales during the respective years.
REPAIRS & MAINTANANCE:

In line, with costing system following three activities can represent major classification of
repairs and maintenance.
1. Major overhaul
2. Preventive maintenance
3. Break down maintenance
Normally costing will be done for the former two: under each activity separate estimates
will be prepared for consumption of materials and maintenance jobs. This estimation will be
done at each of the sub cost center wise details are required to be mentioned.
The consumption material for repairs and maintenance will be classified into spares,
lubricants, loose tools and plants, consumables and others.
32
The cost center wise total separately for three activities will be added to arrive at summary
of material consumption and maintenance jobs, which will be reflected in the profit & loss
account.
The material consumption especially of spares can be estimated based on the expected life
of various consumption / spears in the installed equipment the frequency of breakdowns in
the past and the requirement for prevented maintenance and major overhauls. The actual life
of components may be different from that indicated in the manufacturers specification.
Therefore, it is very difficult t estimate requirements of spares. But this new station it will be
advisable to collect such information from old stations that have gained experience in this
field.
Normally maintenance of equipment through contractors should be avoided. But in certain

areas, if the expertise and in house capability or sufficient man power is not available,
maintenance jobs can be got done through contractors. Such contracts will need to be listed
out separately. If any owner supply items are covered in such contracts the cost of these
items will be included in the material cost.
FACTORY & GENERAL OVERHEADS:

All the items of expenditures under this head will be estimated based on past trend with due
adjustment for policy changes. The estimates will be given by cost center needs for items
identified with respective cost centers. The total administrative cost of service cost centers
will be allocated between construction and O & M in the ration of capital expenditure and
sales during the respective years.
DEPRECIATION:
This is to be charged as per ES act from the year following the year in which assets have
been capitalized. This will be done separately by each of the cost centers on the basis of
33
capitalized value and rates of depreciation furnished by site finance and account for different
categories of assets. Cost center-wise depreciation will be added at total depreciation for the
investment center.
INTEREST ON FIXED CAPITAL:

As per existing accounting policy, the interest is to be charged to profit & loss account based
on the loan content in the capitalized assets restricted to total accrued interest on the actual
loans.
For costing purposes, interest will be worked on equated loan content or equated loan which
ever is less.
INDUSTRY PROFILE&COMPANY PROFILE

Automobile industry in India
The automobile industry in India is the ninth largest in the world with an annual production
of over 2.3 million units in 2013 In 2014, India emerged as Asia's fourth largest exporter of
automobiles, behind Japan, South Korea and Thailand.
Following economic liberalization in India in 1991, the Indian automotive industry has
demonstrated sustained growth as a result of increased competitiveness and relaxed
restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki
and Mahindra and Mahindra, expanded their domestic and international operations. India's
robust economic growth led to the further expansion of its domestic automobile market
which attracted significant India-specific investment by multinational automobile
manufacturers. In February 2009, monthly sales of passenger cars in India exceeded 100,000
units.
34
Bryonic automotive industry emerged in India in the 1940s. Following the independence, in
1947, the Government of India and the private sector launched efforts to create an
automotive component manufacturing industry to supply to the automobile industry.
However, the growth was relatively slow in the 1950s and 1960s due to nationalization and
the license raj which hampered the Indian private sector. After 1970, the automotive industry
started to grow, but the growth was mainly driven by tractors, commercial vehicles and
scooters. Cars were still a major luxury. Japanese manufacturers entered the Indian market
ultimately leading to the establishment of MarutiUdyog. A number of foreign firms initiated
joint ventures with Indian companies.
In the 1980s, a number of Japanese manufacturers launched joint-ventures for building
motorcycles and light commercial-vehicles. It was at this time that the Indian government
chose Suzuki for its joint-venture to manufacture small cars. Following the economic
liberalization in 1991 and the gradual weakening of the license raj, a number of Indian and
multi-national car companies launched operations. Since then, automotive component and
automobile manufacturing growth has accelerated to meet domestic and export demands.
HISTORY OF THE TWO WHEELERS:

The Britannica Encyclopedia a motorcycle as a bike or tricycle propelled by an internal
combustion engine (or, less often by an electric engine). The automobile was the reply to
the 19th century reams of self-propelling the horse-drawn bikeriage.
Similarly, the
invention of the motorcycle created the self propelling bicycle. The first commercial
design was three-wheeler built by Edward Butler in Great Britain in 1884. This employed a
horizontal single-cylinder gasoline engine mounted between two steer able front wheels and
connected by a drive chain to the rear wheel. The 1900s saw the conversion of many
bicycles or pedal cycles by adding small, centrally mounted spark ignition engine engines.
There was then felt the need for reliable constructions. This led to road trial tests and
competition between manufacturers. Tourist Trophy (TT) races were held on the Isle of
main in 1907 as reliability or endurance races. Such were the proving ground for many new
ideas from early two-stroke-cycle designs to supercharged multivalent engines mounted on
aerodynamic, bikebon fiber reinforced bodywork.
35
INVENTION OF TWO WHEELERS:

The invention of two wheelers is a much-debated issue.
Who invented the first
motorcycle? May seem like a simple question, safety, bicycle, i.e., bicycle with front
and rear wheels of the same size, with a pedal crank mechanism to drive the rear wheel.
Those bicycles in turn described from high-wheel bicycles. The high wheelers descended
from an early type of pushbike, without pedals, propelled by the riders feet pushing against
the ground. These appeared around 1800, used iron banded wagon wheels, and were called
bone-crushers, both for their jarring ride, and their tendency to toss their riders. Gottiieb
Daimler (who credited with the building the first motorcycle in 1885, one wheel in the front
and one in the back, although it had a smaller spring-loaded outrigger wheel on each side. It
was constructed mostly of wood, the wheels were of the iron-banded wooden-spooked
wagon-type and it definitely had a bone-crusher chassis!
FURTHER DEVELOPMENTS:
Most of the developments during the early phase concentrated on three and four-wheeled
design since it was complex enough to get the machines running with out having to worry
about them falling over. The next notable two-wheeler though was the Hildebrand & Wolf
Mueller, patented in Munich in 1894. In 1895, the French firm of DeDion-button built and
engine that was to make the mass production and common use of motorcycle possible. The
first motorcycle with electric start and a fully modem electrical system; the Hence special
from the Indian Motorcycle Company astounded the industry in 1931. Before World War 1,
IMC was the largest motorcycle manufacturer in the world producing over 20000 bikes per
year.
INCREASING POPULARITY:
The popularity of the vehicle grew especially after 1910, in 1916; the Indian motorcycle
company introduced the model H racer, and placed it on sale. During World War 1, all
branches of the armed forces in Europe used motorcycles principally for dispatching. After
the war, it enjoyed a sport vogue until the Great Depression began in motorcycles lasted into
the late 20th century; weight the vehicle beingused for high-speed touring and sport
36
competitions. The more sophisticated of a 125cc model. Since then, an increasing number
of powerful bikes have blazed the roads.
HISTORICAL INDUSTRY DEVELOPMENTS:

Indian is the second largest manufacturer and producer to two wheelers in the World. It
stands next only to Japan and China in terms of the number of V produced and domestic
sales respectively. This destination was achieved due to variety of reason like restrictive
policy followed by the government of India towards the passenger bike industry, rising
demand for personal transport, inefficiency in the public transportation system etc. The
Indian two-wheelers industry made a small beginning in the early 50s when Automobile
products of India (API) started manufacturing scooters in the country. Until 1958, API and
Enfield were the sole producers.
The two wheelers market was opened were opened to foreign competition in the mid-80s.
And the then market leaders-Escorts and Enfield were caught unaware by the onslaught of
the 100cc bikes of the four Indo- Japanese joint ventures. With the availability of fuelefficiency low power bikes, demand swelled, resulting in Hero Honda then the only
producer of four stroke bikes (100cc category), gaining a top slot.
The first Japanese motorcycles were introduced in the early eighties. TVS Suzuki and Hero
Honda brought in the first two-stroke and four-stroke engine motorcycles respectively.
These two players initially started with assembly of CKD Kits, and later on progressed to
indigenous manufacturing.
The industry had a smooth ride in the 50s, 60s and 70s when government prohibited new
entries and strictly controlled capacity expansion. The industry saw a sudden growth in the
80s. The industry witnessed a steady of 14% leading to a peak volume of 1.9 mn vehicles in
1990.
In 1990 the entire automobile industry saw a drastic fall in demand. This resulted in a
decline of 15% in 1991 and 8% in 1992, resulting in a production loss of 0.4mn vehicles.
37
Barring Hero Honda, all the major producers suffered from recession in FY93 and FY94.
Hero Honda showed a marginal decline in 1992.
The reason for recession in the sector were the incessant rise in fuel prices, high input costs
and reduced purchasing power due to significant like increased production in 1992, due to
new entrants coupled with recession in the industry resulted in companies either reporting
losses or a fall in profits.
CONCLUSION:
The two-wheelers market has hada perceptible shift from a buyers market to a sellers
market with a variety of choice, players will have compete on various fronts viz. pricing,
technology product design, productivity after sale service, marketing and distribution. In the
short term, market shares of individual manufacturers are going to be sensitive to capacity,
product acceptance, pricing and competitive pressures from other manufacturers.
As incomes grow and people grow and people feel the need to own a private means of
transport, sales of two-wheelers will rise.
Penetration is expected to increase to
approximately to more than 25% by 2005.

The motorcycle segment will continue to lead the demand for two-wheelers in the coming
years. Motorcycle sale is expected to increase by 20% yoy as compared to 1% growth in the
scooter market and 3% by moped sales respectively for the next two years.
The four-stroke scooters will add new dimension to the two-wheeler segment in the coming
future.
The Asian continent is that largest user of the two-wheelers in the world. This is due to poor
road infrastructure and low per capita income, restrictive policy on bike industry. This is
due to oligopoly between top five players in the segment, compared to thirsty manufacturers
in the bike industry.
Hero Honda motors LTd., is one of the leading companies in the two-wheeler industry. At
present it is the market leader in the motorcycle segment with around 47% the market share
during FY 2000 01. During the year, company posted a 41.15% yoy rise in turnover to
Rs.31, 686.5mn in motorcycles which driven by a 35.17% yoy rise in Motorcycle sales
38
volumes. The company has emerged as one of the most successful players, much ahead of its
competitions an account of its superior and reliable product quality complemented with
excellent marketing techniques. The company has been consistently addressing the growing
demand for motorcycles and has been cumulative customer base of over 4 million
customers, which is expected to reach 5min mark with rural and semi-urban segment being
the new class of consumers.
COMPANY PROFILE
CORPORATE PROFILE
Hero Moto Corp Ltd. (Formerly Hero Honda Motors Ltd.) is the
world's largest manufacturer of two - wheelers, based in India.
In 2001, the company achieved the coveted position of being the
largest two-wheeler manufacturing company in India and also, the
'World 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.
Today, every second motorcycle sold in the country is a Hero Honda
bike. Every 30 seconds, someone in India buys Hero Honda's top39
selling motorcycle Splendor.

Vision
The Hero Honda story began with a simple vision the vision of a
mobile and an empowered India, powered by Hero Honda. This
vision was driven by Hero Hondas commitment to customer, quality
and excellence, and while doing so, maintaining the highest
standards of ethics and societal responsibilities. Hero Honda believes
that the fastest way to turn that dream into a reality is by remaining
focused on that vision.
Strategy
Hero Hondas key strategy has been driven by innovation in every

sphere of activity building a robust product portfolio across
categories, exploring new markets, aggressively expanding the
network and continuing to invest in brand building activities.
Manufacturing
Hero Honda bikes are manufactured across three globally

benchmarked manufacturing facilities. Two of these are based at
Gurgaon and Dharuhera which are located in the state of Haryana in
northern India. The third and the latest manufacturing plant is based
at Haridwar, in the hill state of Uttrakhand.
40
Technology
In the 1980s Hero Honda pioneered the introduction of fuelefficient, environment friendly four-stroke motorcycles in the
country. Today, Hero Honda continues to be technology pioneer. It
became the first company to launch the Fuel Injection (FI)
technology in Indian motorcycles, with the launch of the Glamour FI
in June 2006.
Products
Hero Honda's product range includes variety of motorcycles that

have set the industry standards across all the market segments. The
company also started manufacturing scooter in 2006. Hero Honda
offers large no. of products and caters to wide variety of requirements
across all the segments.
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 Honda's extensive sales and service network
now spans close to 4500 customer touch points. These comprise a
mix of authorized dealerships, Service & Spare Parts outlets, and
dealer-appointed outlets across the country.
Brand
41
The company has been continuously investing in brand building

utilizing not only the new product launch and new campaign launch
opportunities but also through innovative marketing initiatives
revolving around cricket, entertainment and ground- level activation.
Hero Honda has been actively promoting various sports such as
hockey, cricket and golf. Hero Honda was the title sponsor of the
Hero Honda FIH Hockey World Cup that was played in Delhi during
Feb-March 2010. Hero Honda also partners the Commonwealth
Games Delhi 2010.
2015-16 Performance
Total unit sales of 54,02,444 two-wheelers, growth of 17.44 per cent

Total net operating income of Rs. 19401.15 Crores, growth of 22.32
per cent
Net profit after tax at Rs. 1927.90 Crores
Total dividend of 5250% or Rs. 105 per share including Interin
Dividend of Rs. 70 per share on face value of each share of Rs. 2
each
EBIDTA margin for the year 13.49 per cent
EPS of Rs. 96.54
2014-15 Performance
42
Total unit sales of 46,00,130 two-wheelers, growth of 23.6 per cent

Total net operating income of Rs. 15860.51 Crores, growth of 28.1
per cent
Net profit after tax at Rs. 2231.83 Crores, growth of 74.1 per cent
Final dividend of 1500% or Rs. 30 per share on face value of each
share of Rs. 2
EBIDTA margin for the year 17.4 per cent
EPS of Rs. 111.77, growth of 74.1 per cent
HERO HONDA'S MISSION
Hero Hondas mission is to strive for synergy between technology,

systems and human resources, to produce products and services that
meet the quality, performance and price aspirations of its customers.
At the same time maintain the highest standards of ethics and social
responsibilities.
This mission is what drives Hero Honda to new heights in excellence
and helps the organization forge a unique and mutually beneficial
relationship with all its stake holders.
HERO HONDA'S MANDATE
Hero Honda is a world leader because of its excellent manpower,

proven management, extensive dealer network, efficient supply chain
43
and world-class products with cutting edge technology from Honda

Motor Company, Japan. The teamwork and commitment are
manifested in the highest level of customer satisfaction, and this goes
a long way towards reinforcing its leadership status
BOARD OF DIRECTORS
No. Name of the Directors
1 Mr. PawanMunjall
Designation
Chairman & Whole-time
2
3
4
5
6
7
8
Mr. Toshiaki Nakagawa

Mr. Sumihisa Fukuda
Mr. Sunil Kant Munjal
Mr. Suman Kant Munjal
Mr. Takashi Nagai
Mr. Yuji Shiga
Mr. PradeepDinodia
Director
Joint Managing Director
Technical Director
Non-Executive Director
Non-executive &
Gen. (Retd.) V. P. Malik
Independent Director
Non-executive &
Non-executive &
10 Mr. Analjit Singh
44
11 Dr. Pritam Singh
Non-executive &
12 Ms. ShobhanaBhartia
Non-executive &
13. Mr. M. Damodaran
Non-executive &
14. Mr. Ravi Nath
Non-executive &
15. Dr. Anand C. Burman
Non-executive &
BRIEF PROFILE OF DIRECTORS

Mr. Munjal is the Chairman, Managing Director & CEO of the Company. He is responsible
for growth and strategic planning for the entire Group. A graduate in Mechanical
Engineering, Mr. Munjal has been instrumental in bringing about technological and
managerial excellence in the Company's operations. He has been the Chairman of several
Committees of CII.
He is also on the board of Indian Institute of Management, Lucknow and Indian School of
Business. An avid golfer, Mr. Munjal is Past Chairman of the Asian PGA Tour Board of
Directors and the Past President of Professional Golfers Association of India (PGAI). Under
45
his guidance, Hero MotoCorp launched the Hero Indian Sports Academy (HISA) in
collaboration with Laureus Foundation to provide equal opportunities in sports to various
communities and to reward talent in the country.
Mr. Suman
Kant Munjal
Non Executive Director
Mr. Munjal was appointed as an Additional Director on the Board of the Company on July
29, 2010. Mr. Munjal is the Managing Director of Rockman Industries Ltd., one of the
leading suppliers of Aluminum Die Casting, Machined and Painted Assemblies to Hero
MotoCorp Ltd. Mr. Munjal, a graduate in Commerce, possesses rich experience and
expertise in business management and thus has been instrumental in elevating Rockman
Industries Ltd. to its current status.
No. Name of Company

1
Hero Honda Motors
Nature of Office
Chairman and Whole-time
46
Limited
Hero Honda Finlease
Director
Chairman and Director
3
4
5
Limited
Munjal Showa Limited
Easy Bill Limited
Rockman Industries
Chairman and Director

Director
Director
Limited
ShivamAutotech Limited
Director
KEY MILESTONES OF HERO HONDA

Year
Event
198 Joint Collaboration Agreement with Honda Motor Co. Ltd.
3
Japan signed
Shareholders Agreement signed
198
Hero Honda Motors Ltd. incorporated

4
198 First motorcycle "CD 100" rolled out
5
198 100,000th motorcycle produced
7
198 New motorcycle model - "Sleek" introduced
9
199 New motorcycle model - "CD 100 SS" introduced
1 500,000th motorcycle produced
199 Raman MunjalVidyaMandir inaugurated - A School in the
47
2 memory of founder Managing Director, Mr. Raman Kant

Munjal
199 New motorcycle model - "Splendor" introduced
4 1,000,000th motorcycle produced
199 New motorcycle model - "Street" introduced
7 Hero Honda's 2nd manufacturing plant at Gurgaon inaugurated
8
199 New motorcycle model - "CBZ" introduced
9 Environment Management System of Dharuhera Plant certified
with ISO-14001 by DNV Holland
Raman Munjal Memorial Hospital inaugurated - A Hospital in
the memory of founder Managing Director, Mr. Raman Kant
Munjal
0
Environment Management System of Gurgaon Plant certified

ISO-14001 by DNV Holland
Splendor declared 'World No. 1' - largest selling single twowheeler model
"Hero Honda Passport Programme" - CRM Programme
launched
200 New motorcycle model - "Passion" introduced
1 One million production in one single year
New motorcycle model - "Joy" introduced
48
5,000,000th motorcycle produced

200 New motorcycle model - "Dawn" introduced
2 New motorcycle model - "Ambition" introduced
Appointed VirenderSehwag, Mohammad Kaif, Yuvraj Singh,
Harbhajan Singh and Zaheer Khan as Brand Ambassadors
200 Becomes the first Indian Company to cross the cumulative 7
3 million sales mark
Splendor has emerged as the World's largest selling model for
the third calendar year in a row (2000, 2001, 2002)
New motorcycle model - "CD Dawn" introduced
New motorcycle model - "Splendor +" introduced
New motorcycle model - "Passion Plus" introduced
New motorcycle model - "Karizma" introduced
200 New motorcycle model - "Ambition 135" introduced
4 Hero Honda became the World No. 1 Company for the third
consecutive year.
Crossed sales of over 2 million units in a single year, a global
record.
Splendor - World's largest selling motorcycle crossed the 5
million mark
New motorcycle model - "CBZ*" introduced
Joint Technical Agreement renewed
Total sales crossed a record of 10 million motorcycles
49
200 Hero Honda is the World No. 1 for the 4th year in a row
5 New motorcycle model - "Super Splendor" introduced
New motorcycle model - "CD Deluxe" introduced
New motorcycle model - "Glamour" introduced
New motorcycle model - "Achiever" introduced
First Scooter model from Hero Honda - "Pleasure" introduced
6
15 million production milestone achieved
7 New 'Splendor NXG' launched
New 'CD Deluxe' launched
New 'Passion Plus' launched
New motorcycle model 'Hunk' launched
200 Hero Honda Haridwar Plant inauguration
8 New 'Pleasure' launched
Splendor NXG lauched with power start feature
New motorcycle model 'Passion Pro' launched
New 'CBZ Xtreme' launched
CD Deluxe lauched with power start feature
New 'Glamour' launched
50
200
9
Hunk' (Limited Edition) launched

Splendor completed 11 million production landmark
New motorcycle model 'Karizma - ZMR' launched
201
Silver jubilee celebrations
0 New model Splendor Pro launched

Launch of new Super Splendor and New Hunk
201
1
New licensing arrangement signed between Hero and Honda

Launch of new refreshed versions of Glamour, Glamour FI,
CBZ Xtreme, Karizma
Crosses the landmark figure of 5 million cumulative sales in a
single year
201
2
Migration of all products to Brand Hero, Strategic

partnership with Erik Buell Racing (EBR) of USA, Launch
of Impulse, Maestro and Ignitor
201
3
Neemrana Plant Foundation Stone laid, Global Parts

Centre Foundation Stone laid
50 Million cumulative 2 wheelers production
201
4
201
Neemrana Plant Inauguration, Global Parts Centre

Inauguration
60 Million cumulative 2 wheelers production
51
PROMINENT AWARDS TO THE COMPANY

Year Awards & Recognitions
Two-wheeler Manufacturer of the Year award by Bike India
magazine.
1
Adjudged the "Bike Manufacturer of the Year" at the Economic
Times ZigWheels Car and Bike Awards.
- CNBC Awaaz - Storyboard special commendation for
"Effective rebranding of a new corporate entity" by CNBC
Awaaz Consumer Awards
- "Most Recommended Two-Wheeler Brand of the Year"
award by CNBC Awaaz Consumer Awards
- Colloquy Loyalty Awards "Innovation in Loyalty Marketing
International 2011" for Hero GoodLife
- "Best Activity Generating Short or Long-Term Brand
Loyalty" by the Promotion Marketing Award of Asia Order of
201
Merit for Hero GoodLife
0
- Ranked No 1 brand in the Auto (Two-Wheelers) category in
the Brand Equity "Most Trusted Brand" 2011 survey
201
Company of the Year awarded by Economic Times Awards for

Corporate Excellence 2008-09.
CNBC TV18 Overdrive Awards 2010 'Hall of Fame' to
Splendor
NDTV Profit Car & Bike Awards 2010 52
Two-wheeler Manufacturer of the Year
CnB Viewers' Choice Two-wheeler of the Year (Karizma

ZMR)
Bike Maker of the Year by ET-ZigWheels Car & Bike of the

Year Awards 2009
200 'Two-wheeler Manufacturer of the Year' by NDTV Profit Car
9
& Bike Awards 2009 and Passion Pro adjudged as CNB

Viewers' Choice two-wheeler
Top Indian Company under the 'Automobile - Two-wheelers'
sector by the Dun & Bradstreet-Rolta Corporate Awards
Won Gold in the Reader's Digest Trusted Brand 2009 in the
'Motorcycles' category
NDTV Profit Business Leadership Awards 2009 - two-wheeler
category
53
200 NDTV Profit Business Leadership Award 2008 - Hero Honda

8
Wins the Coveted "NDTV Profit Business Leadership Award

2008"
TopGear Design Awards 2008 - Hunk Bike of the Year Award
NDTV Profit Car India & Bike India Awards - NDTV
Viewers Choice Award to Hunk in Bike category
IndiaTimes Mindscape and Savile Row ( A Forbes Group
Venture ) Loyalty Awards - Customer and Brand Loyalty
Award in Automobile (two-wheeler) sector
Asian Retail Congress Award for Retail Excellence (Strategies
and Solutions of business innovation and transformation) Best Customer Loyalty Program in Automobile category
NDTV Profit Car India & Bike India Awards - Bike
Manufacturer of the year
Overdrive Magazine - Bike Manufacturer of the year
TNS Voice of the Customer Awards:
No.1 executive motorcycle Splendor NXG
No.1 standard motorcycle CD Deluxe
No. premium motorcycle CBZ Xtreme
200 The NDTV Profit Car India & Bike India Awards 2007 in the
7
following category:
Overall "Bike of the Year" - CBZ X-treme
"Bike of the Year" - CBZ X-treme (up to 150 cc

54
category)
"Bike Technology of the Year" - Glamout PGM FI
"Auto Tech of the Year" - Glamout PGM FI by Overdrive

Magazine.
"Bike of the Year" - CBZ X-treme by Overdrive Magazine.
Ranked CBZ X-treme "Bike of the Year" - by B S Motoring
Magazine
Most Trusted Company , by TNS Voice of the Customer
Awards 2006.
CD Deluxe rated as "No 1 standard motorcycle" by TNS Voice
of the Customer Awards 2006.
200 Adjudged 7th Top Indian Company by Wallstreet Journal Asia
6
(Top Indian Two Wheeler Company).

One of the 8 Indian companies to enter the Forbes top 200 list
of worlds most reputed companies.
No. 1 in automobile industry by TNS Corporate Social
Responsibility Award.
Best in its class awards for each category by TNS Total
Customer Satisfaction Awards 2006:
Splendor Plus (Executive)
55
201
CD Deluxe (Entry)
'Two-wheeler Manufacturer of the Year' by NDTV
Profit Car & Bike Awards 2009 and Passion Pro
201
adjudged as Car and Bike Viewers' Choice two-
wheeler
Rated as Top Indian Company in Automobile - Two
201
Wheelers sector by Dun & Bradstreet - Rolta
Corporate Awards 2009

Business Leader in Automobiles (two-wheelers) at
201
the NDTV Profit Business Leadership Awards 2012
(Conferred upon Mr. Pawan Munjal)

Green Pioneer Award 2013
201
4
Motorbeam - Bike Manufacturer of the year,

Zigwheels - Entry-Level Bike of the year: Hero
201
Splendor iSmart
Overdrive - Scooter of the Year - Hero Maestro

Edge,
.
Overdrive - 'Viewers' Choice Scooter of the Year -
Hero Maestro Edge

56
The NDTV Profit Car India & Bike India Awards 2006 in the
following category:
Bike Maker of the Year
Bike of the Year - Achiever
Bike of the Year - Achiever (up to 150 cc category)
Bike of the Year - Glamour (up to 125 cc category)
NDTV Viewers' Choice Award to Glamour in the bike

category
CORPORATE SOCIAL RESPONSIBILITY (CSR)
STAKEHOLDER TIES AT THE GRASSROOTS

Hero Honda Motors takes considerable pride in its stakeholder
relationships, especially ones developed at the grassroots. The
Company believes it has managed to bring an economically and
socially backward region in Dharuhera, Haryana, into the national
economic mainstream.
An Integrated Rural Development Centre has been set up on 40 acres
of land along the Delhi-Jaipur Highway. The Centre-complete with
wide approach roads, clean water, and education facilities for both
57
adults and children-now nurtures a vibrant, educated and healthy

community.
The Foundation has adopted various villages located within vicinity
of the Hero Honda factory at Dharuhera for integrated rural
development. This includes:
Installation of deep bore hand pumps to provide clean drinking

water.
Constructing metalled roads and connecting these villages to

the National Highway (NH -8).
Renovating primary school buildings and providing hygienic

water and toilet facilities.
Ensuring a proper drainage system at each of these villages to

prevent water-logging.
Promoting non-conventional sources of energy by providing a

50 per cent subsidy on biogas plants.
The Raman MunjalVidyaMandirbegan with three classes (up to class

II) and 55 students from nearby areas. It has now grown into a
modern Senior Secondary, CBSE affiliated co-educational school
with over 1200 students and 61 teachers. The school has a spacious
58
playground, an ultra-modern laboratory, a well-equipped audio visual

room, an activity room, a well-stocked library and a computer centre.
The Raman Munjal Sports Complex has basketball courts, volleyball
courts, and hockey and football grounds are used by the local
villagers. In the near future, sports academies are planned for volley
ball and basket ball, in collaboration with National Sports Authority
of India.
Vocational Training Centre
In order to help local rural people, especially women, Hero Honda

has set up a Vocational Training Centre. So far 26 batches comprising
of nearly 625 women have been trained in tailoring, embroidery and
knitting. The Company has helped women trained at this centre to set
up a production unit to stitch uniforms for Hero Honda employees.
Interestingly, most of the women are now self-employed.
Adult Literacy Mission
This Scheme was launched on 21st September, 1999, covering the

nearby villages of Malpura, Kapriwas and Sidhrawali. The project
started with a modest enrolment of 36 adults. Hero Honda is now in
the process of imparting Adult Literacy Capsules to another 100
adults by getting village heads and other prominent villagers to
motivate illiterate adults.
59
Marriages of underprivileged girls
Marriages are organized from time to time, particularly for girls from
backward classes, by the Foundation by providing financial help and
other support to the families.
Rural Health Care
Besides setting up a modern hospital, the Foundation also regularly

provides doorstep health care services to the local community. Free
health care and medical camps are now a regular feature in the Hero
Group's community outreach program
KEY POLICIES
AN ENVIRONMENTALLY AND SOCIALLY, AWARE
COMPANY
At Hero Honda, our goal is not only to sell you a bike, but also to
help you every step of the way in making your world a better place to
live in. Besides its will to provide a high-quality service to all of its
customers, Hero Honda takes a stand as a socially responsible
enterprise respectful of its environment and respectful of the
important issues.
Hero Honda has been strongly committed not only to environmental
conservation programmers but also expresses the increasingly
inseparable balance between the economic concerns and the
environmental and social issues faced by a business. A business must
60
not grow at the expense of mankind and man's future but rather must
serve mankind.
"We must do something for the community from whose land we
generate our wealth."
A famous quote from our Worthy Chairman
Mr.BrijmohanLallMunjal.
Environment Policy
We at Hero Honda are committed to demonstrate excellence in our
environmental performance on a continual basis, as an intrinsic
element of our corporate philosophy.
To achieve this we commit ourselves to:
Integrate environmental attributes and cleaner production in all

our business processes and practices with specific consideration
to substitution of hazardous chemicals, where viable and
strengthen the greening of supply chain.
Continue product innovations to improve environmental

compatibility.
Comply with all applicable environmental legislation and also

controlling our environmental discharges through the principles
of "alara" (as low as reasonably achievable).
61
Institutionalise resource conservation, in particular, in the areas

of oil, water, electrical energy, paints and chemicals.
Enhance environmental awareness of our employees and

dealers / vendors, while promoting their involvement in
ensuring sound environmental management.
Quality Policy
Excellence in quality is the core value of Hero Honda's philosophy.

We are committed at all levels to achieve high quality in whatever we
do, particularly in our products and services which will meet and
exceed customer's growing aspirations through:
Innovation in products, processes and services.
Continuous improvement in our total quality management

systems.
Teamwork and responsibility.
Safety Policy
Hero Honda is committed to safety and health of its employees and
other persons who may be affected by its operations. We believe that
the safe work practices lead to better business performance,
62
motivated workforce and higher productivity.

We shall create a safety culture in the organization by:
Integrating safety and health matters in all our activities.
Ensuring compliance with all applicable legislative

requirements.
Empowering employees to ensure safety in their respective

work places.
Promoting safety and health awareness amongst employees,

suppliers and contractors.
Continuous improvements in safety performance through

precautions besides participation and training of employees.
INTRODUCTION ABOUT PHOENIX DEALER PROFILE (PHOENIX

MOTORS)
PHOENIX MOTORS PVT LTD is dealership type of business.

PHOENIX MOTORS PVT LTD. is established on 21st march 2003.
The business is running by only one man. The owner name is ch
.madhumathi the firm is located at habsiguda in Hyderabad.
63
Generally the sale will be either on cash basis or on institutional

basis. Bank like ICICI, HDFC and CENTURION are providing loans
to customers.
Advertising strategy of phoenix motors:
They are giving the ads through newspapers, wall paintings,
hoardings and field staff. They are upgrading sales by introducing the
schemes, group bookings, institutional sales and customer door-todoor activities.
Categorization of Staff members:
Staff members are categorized for technicians, 25 members are

allotted for field staff, 5 members are recruited for sales for persons,
5 persons are placed for evaluating for spare parts, 5 members are
allotted for managerial accounts and another 3 persons for cash
transaction and other members are allotted for remaining work.
Customer relationship:
They entertain the showroom providing a customers huge having

pool game, internet facility and television with home there system.
They provide bile maintenance programs on every week.
64
According to other dealers PHOENIX motors in first in sales and

best in service. They treat customer, is the very important person at
PHOENIX motors customer satisfaction is their motto, why because,
they will satisfied customer is the best advertisement. They provide
better value for the customers and as well as employees also. At
PHOENIX motors the customer is the boss.
SALES STRATEGY OF PHOENIX MOTORS:
Average they are selling 25 vehicles per day. PHOENIX motors PVT
L.T.D is the A.P s NO.1 dealership in sales and other activities? It is a
QLAD (qualify leader through quality dealer). At PHOENIX motor
they gave the quality service to the customers why because the cost
is long forgotten but the quality is remembered for ever. They treat
quality has a...
Q
Quest for excellence
Understanding customers needs
Action to achieve customers appreciation.
Leadership determined to be a leader
involving all the people

65
Team spirit to work for a common goal
Yard sticks to measure programs.
WARRANTY ON PROPRIETARY ITEMS:
Warranty on proprietary items like Tyros, Tubes and Battery etc, will
be directly handled by the respective original manufactures (OEMs)
except AMCO for batteries and Dunlop and Falcon tires and Tubes.
In case of any defect in proprietary items, other than the above two
mentioned OEMS the dealers must approach the Brach office dealer
of the respective manufacture. For AMCO batteries and Dunlop and
falcon tires, tubes claims will be accepted at our authorized
dealerships per the mutually agreed terms and conditions between
HERO HONDA and of these two OEMs in case the claim is not
accepted for invalid reasons. Then the claim along with the refusal
note form the OEM can be sent to the warranty section at gorgon
plan after due to recommendation of the area service engineer. If any
other six services or subsequent paid services is not availed as per the
66
recommended schedule given in the owners manual. If HERO

HONDA recommended engine oil is not used. To normal wear & tear
components like bulbs, electric wiring, filters, spark plug, clutch
plates, braded shoes, fasteners, shim washers, oil seals, gaskets,
rubber parts (other than tyre and tube) plastic components, chain$
sprockets and in case of wheel rim misalignment or bend.
If there is any damage due o modification or fittings of accessories
other than ones recommended by HERO HONDA. If the motor has
been used in any competitive events like tracking races or rallies. If
there is any damage to the painted surface due to industrial pollution
or other extraneous factors. For clams made for any consequential
damage due to any previous malfunction. For normal phenomenon
like noise, vibration, oil seepage, which do not affect the
performance of the motorcycles.
SOCIAL SERVICE ACTIVITIES
PHOENIX motors participate and conduct social service activities.

Recently the phoenix motors organized a BLOOD DONATION
67
CAMP for the trust on 21st January 2006.they motivated on the

consumers to participated in this camp and also provide certificate
for the customer
THE MARKETED LATEST BIKES OF PHOENIX (All Hero Moto Corp.)
68
K
ARIZMA
IMPULSE
69
MAESTRO EDGE
SPLENDOR PRO CLASSIC

70
XTREME SPORTS
IGNITOR
71
CUSTOMER RELATIONSHIP:
To entertain the customers the showroom providing a customers huge
having pool game, Internet facility and television with home theatre
system. They provide bike maintenance programs on every
week. According to other dealers PHOENIX motors in first in sales
and best in service. They treat customer, is the very important person
at PHOENIX motors customer satisfaction is their motto, why
because, the well satisfied customer is the best advertisement. They
provide better value for the customers and as well as employees also.
At PHONIX motors the customer is the boss.
72
DATA ANALYSIS AND INTERPRETATION

HERO MOTOCORP LTD
ESTIMATED COST IN SALES
TABLE-I
SL.NO
PARTICULAR
(Rs in corers)
Coasted estimated
for the 2015-16
Actual for the year

2015-16
Sales
Fixed cost recovery
724
72.4
618
61.8
Variable cost recovery
840
84.0
740
74.0
Fuel price adjustment recovery
820
82.0
863
86.3
Own consumption
132
13.2
148
14.8
Total of 1
2516
251.6
2369
236.9
Average intensives
102
10.2
98
9.8
Other income
56
5.6
49
4.9
2674
267.4
2516
251.6
GRAND TOTAL (1+2+3)
73
INTERPRETATION
The data pertaining to the generation and consumption have been obtained from the year
2015-16 and represented in table -1. The aspect included are total generation in (croresRs)
and utilization for auxiliary consumption respectively.
During the year 2015-16 the sales, fixed costs, variable cost , own Consumption was
decreased. When the estimated costed so sales consumption is 267% respectively.
During the year 2015-16 the average intensive are decreased 9.8% the other Income also
decreased 7% respectively.
Finally with regard to the result in revenue cost of Hero Moto Corp Ltd
totally decreased 251.6% in the year 2015-16 respectively.
74
Hero Moto Corp Ltd

TABLE-II
SL.NO
PARTICULAR
(Rs in corers)
Costed estimated for

the 2014-15
Actual for the year

2014-15
Sales
Fixed cost recovery
702
70.2
598
59.8
802
80.2
680
68.0
adjustment recovery
790
79.0
852
85.2
Own consumption
121
12.1
122
12.2
Total of 1
2398
239.8
2168
216.8
Average intensives
96
9.6
84
8.4
Other income
51
5.1
40
4.0
2545
254.5
2292
229.2
GRAND TOTAL (1+2+3)
75
INTERPRETATION
During the year 2013-14 the sales, fixed costs, variable cost,own Consumption was
decreased. When the estimated costed so sales consumption is 254.5% respectively.
During the year 2013-14 the average intensive are decreased 13% the other Income also
decreased11% respectively.
Finally with regard to the result in revenue cost of HERO MOTOCORP LTD
76
HERO MOTOCORP LTD

TABLE-III
SL.NO
PARTICULAR
(Rs in corers)

the 2012-13
Sales
Actual for the year

2012-13
Fixed cost recovery
657
65.7
565
56.5
762
76.2
563
56.3
adjustment recovery
750
75.0
798
79.8
Own consumption
121
12.1
102
10.2
Total of 1
2290
229.0
2028
202.8
Average intensives
89
8.9
84
8.4
Other income
51
5.1
40
4.0
2430
243.0
2152
215.2
GRAND TOTAL (1+2+3)
77
INTERPRETATION
78
HERO MOTOCORP LTD

TABLE-IV
SL.NO
PARTICULAR
(Rs in corers)

the 2011-12
Sales
Actual for the year

2011-12
Fixed cost recovery
680
68.0
569
56.9
789
78.9
623
62.3
adjustment recovery
695
69.5
812
81.2
Own consumption
121
12.1
122
12.2
Total of 1
2285
228.5
2126
212.6
Average intensives
96
9.6
84
8.4
Other income
51
5.1
40
4.0
2432
243.2
2250
225.0
GRAND TOTAL (1+2+3)
79
INTERPRETATION
80
HERO MOTOCORP LTD

Operational Expenditure Cost for the Year 2014-15
TABLE I
Rs in corers
SL.
NO
1
2
3
PARTICULAR
VARIABLE COST
OPERATIVE
COSTED ESTIMATED
FOR THE 2014-15
ACTUAL FOR THE

YEAR
AMOUNT
RS/MT
AMOUNT
897
89.7
856
2014-15
S/MT
85.6
254
25.4
215
21.5
Deprecation
42
4.2
15
1.5
Interest on fixed capital
18
1.8
20
2.0
Total of 3
60
6.0
35
3.5
1211
121.1
1106
110.6
MAINTENANCE COST
FINANCE CHARGES
GRAND TOTAL (1+2+3)
INTERPRETATION
Observed from the above table that the operational expenditure cost of Hero MotoCorp Ltd
in the year 2014-15.Maintenance, employee cost, stationary & general expenses, rebate and
share of other expenses is all are fluctuating with the expenses of the year 2014-15.
However the total operating maintenance costs are 25.4% decreasing respectively.
In finance charges depreciation and interest on fixed capital, has been included
The total finance charges recording decreasing of 9.5% in the year 2014-15 respectively.
The overall costs results of Hero MotoCorp Ltdare earning more profits.
81
HERO MOTOCORP LTD

TABLE II
Rs in corers
SL.
NO
1
2
3
PARTICULAR
VARIABLE COST
OPERATIVE
COSTED ESTIMATED
FOR THE 2013-14
ACTUAL FOR THE

YEAR
AMOUNT
RS/MT
AMOUNT
841
84.1
822
2013-14
S/MT
82.2
247
24.7
201
20.1
Deprecation
39
3.9
12
1.2
15
1.5
18
1.8
Total of 3
54
5.4
30
3.0
1142
114.2
1053
105.3
MAINTENANCE COST
FINANCE CHARGES
GRAND TOTAL (1+2+3)
INTERPRETATION
The total finance charges recording decreasing of 2.4% in the year 2013-14respectively.
82
HERO MOTOCORP LTD

TABLE III
Rs in corers
SL.
NO
1
2
3
PARTICULAR
VARIABLE COST
OPERATIVE
COSTED ESTIMATED
FOR THE 2012-13
ACTUAL FOR THE

YEAR
AMOUNT
RS/MT
AMOUNT
811
81.1
798
2012-13
S/MT
79.8
214
21.4
157
15.7
Deprecation
36
3.6
11
1.1
15
1.5
18
1.8
Total of 3
51
5.1
29
2.9
1076
107.6
984
98.4
MAINTENANCE COST
FINANCE CHARGES
GRAND TOTAL (1+2+3)
INTERPRETATION
83
HERO MOTOCORP LTD

TABLE IV
Rs in corers
SL.
NO
1
2
3
PARTICULAR
VARIABLE COST
OPERATIVE
COSTED ESTIMATED
FOR THE 2011-12
ACTUAL FOR THE

YEAR
AMOUNT
RS/MT
AMOUNT
754
75.4
658
2011-12
S/MT
65.8
198
19.8
135
13.5
Deprecation
29
2.9
0.9
15
1.5
18
1.8
Total of 3
44
4.4
27
2.7
GRAND TOTAL (1+2+3)
996
99.6
820
82.0
MAINTENANCE COST
FINANCE CHARGES
INTERPRETATION
Observed from the above table that the operational expenditure cost ofHero MotoCorp Ltd
share of other expenses is all are fluctuating with the expenses of the year 2011-12. However
the total operating maintenance costs are 19.8% decreasing respectively.
84
CHAPTER-V
FINDINGS & CONCLUSIONS

SUGGESTIONS
BIBLIOGRAPHY
85
FINDINGS & CONCLUSIONS

Every organization has pre-determined set of objectives and goals, but reaching those
objectives and goals only by proper planning and executing of the plans economically.
The Hero MotoCorp Ltdis objectives of planning promoting and organizing an integrated
development of cement Company.
The corporation mission of Hero MotoCorp Ltdis to make available and quality service in
increasingly large quantities, the company will spear head the process of accelerated
development of banking sector by expeditiously.
The organization needs the capable personalities as management to lead the organization
successfully, the management makes the plans and implement of these plans are expressed in
terms of cost and cost control.
The Hero MotoCorp Ltdhas cost process in two stages. One is the capital expenditure cost
and another is operating maintenance cost, the capital expenditure cost shows the list of
capital projects selected for investment along with their estimated cost, operating &
maintenance cost refers to the repairs & maintenance costs, the special costs are rarely used
in the organization like long-term costs, research & development cost and cost for
consultancy.
It Is to make available and quality work efficient resources and implementation of
sophisticated technology and cement generation and also creating ambience of collective
working of its employees.
86
SUGGESTIONS
Planning has become the primary function of management most of the planning relates to
individual and individual proposals. Costs are nothing but his expressions, largely in
financial terms, cost control has, therefore become and essential tool of management for
controlling and maximizing profits.
The company objectives of the organization and how they can be achieved through
cost control
Time tables for all stages of costing follow
Reports, statements, forms and other record to be maintained
Continuous comparison of actual performance with coasted performance.
87
BIBLIOGRAPHY
FINANCIAL ACCOUNTING
RP TRIVEDI
FINANCIAL MANAGEMENT
I.M. PANDEY
ANNUAL REPORT OF HERO MOTOCORP LTD

FUNDAMENTAL OF FINANCIAL MANAGEMENT
PRASANNA CHANDRA
DETAILED PROJECT REPORT OF Hero MotoCorp Ltd
www.google.com
www.hero.com
www.costcontrolinindia.com
www.yahoofinance.com
88

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CHAPTER-I

Definition of 'Cost-Benefit Analysis'

NEED OF THE STUDY:

SCOPE OF THE STUDY:

Form the concerned officers of the Hero Moto Corp Ltd

Hero Moto Corp Ltd journals.

Accounting books, records.

Key books of concerned title.

Hero Moto Corp Ltd library.

Cost control cannot reduce the managerial function to a formula. It is only a

Tool which increase effectiveness of managerial control.

In order that a system may be successful, adequate costs education should be

MEANING OF COSTORY CONTROL:

ESSENTIALS OF COST CONTROL:

OBJECTIVES OF COST CONTROL:

4. CONTROLS AND PERFORMANCE EVALUTION:

COST, COSTING AND COST CONTROL:

ESSENTIALS OF COST CONTROL:

The nature of demand for the products.

The timings for the availability of the finance.

The economic situations of the cycles.

CONTINUOUS COSTING SYSTEM:

DETERMINATION OF KEY FACTOR:

REQUISITES FOR A SUCCESSFUL COST

2. PROPER DELEGATION OF AUTHORITY AND RESPONSIBILITY:

3. PROPER COMMUNICATION SYSTEM:

2. SHORT TERM COSTS:

CLASSIFICATION OF COSTS ACCORDING TO CONTENT:

A) COSTS IN PHYSICAL TERMS:

B) COSTS IN MONETARY TERMS:

CLASSIFICATION OF COSTS ACCORDING TO FUNCTION:

CLASSIFICATION ON THE BASIS OF FLEXIBILITY:

Cost Output and Relationship:

We can show it in a figure:

Total Fixed Cost Curve

Total Variable Cost Curve

We can show the diagram to put all the curves also:

The TC, TVC and TFC Curves

COST AND COST SYSTEM IN Hero Moto Corp Ltd

OBJECTIVES OF THE COST SYSTEM:

COST PERIOD AND PHASING:

5 TYPES OF COSTS IN HERO MOTOCORP LTD (HMIL):

Other establishment expenses:

INCLUDED IN EACH COST INDICATED BELOW:

OFFICE AND OTHER EXPENSES:

MISCELLANEOUS BOUGHT OUT PASSESS:

REVIEW OF PROJECT COST:

COST OF SERVICE DIVISION / CORPORATE COSTS:

OBJECTIVES OF THE CURRENT COST CONTROL SYSTEM IN

To identify constraints in generation and tamely action for estimation of constraints.

SCOPE OF THE PERFORMANCE COST:

STAGES IN THE FORMULATION OF PERFORMANCE COST:

The review of performance cost on quarterly basis to assess the anticipated

AUXILIARY CONSUMPTION / CONSUMPTION BY UTILITES:

REPAIRS & MAINTANANCE:

Normally maintenance of equipment through contractors should be avoided. But in certain

FACTORY & GENERAL OVERHEADS:

INTEREST ON FIXED CAPITAL:

INDUSTRY PROFILE&COMPANY PROFILE

HISTORY OF THE TWO WHEELERS:

INVENTION OF TWO WHEELERS:

Who invented the first

HISTORICAL INDUSTRY DEVELOPMENTS: