Company Analysis Report

Of

HERO HONDA
LOGO
COMPANY PROFILE & INTRODUCTION:

 “Hero” is the brand name used by the

Munjal brothers in the year 1956 with the
flagship company Hero Cycles.
 The joint venture between India's Hero
Group and Honda Motor Company, they
are related to Jagdish Lal Munjal.
 During the 80s, Hero Honda became the
first company in India to prove that it was
possible to drive a vehicle without
polluting the roads.
 As Brijmohan Lall Munjal, the Chairman,
Hero Honda Motors succinctly points out.
 'Fill it - Shut it - Forget it‘.
 Over 20 million Hero Honda two wheelers
tread Indian roads today. These are almost
as many as the number of people in Finland,
Ireland and Sweden put together!.

Hero Honda has consistently grown at

double digits since inception; and today,
every second motorcycle sold in the country
is a Hero Honda. Every 30 seconds, someone
in India buys Hero Honda's top -selling
motorcycle – Splendor.

Hero Honda bikes currently roll out from its

three globally benchmarked manufacturing
facilities. Two of these are based at
Dharuhera and Gurgaon in Haryana and the
These plants together are capable of
churning out 3.9 million bikes per
year.

Hero Honda is worlds third largest

two wheeler maker.

By 2002 Hero Group had sold 86

million bicycles producing 16000
bicycles a day.

Today Hero Honda has an assembly

line of nine different models of
motorcycles available. It holds the
record for most popular bike in the
world by sales for Its Splendor model.
PRODUCTS:

HERO HONDA
CD DAWN

HERO HONDA JOY

HERO HONDA CD100

 HERO HONDA SLPENDOR PLUS
HERO HONDA SLPENDOR

HERO HONDA PASSION PLUS

HERO HONDA PASSION
 CBZ
CBZ
EXTREME

KARIZMA
RATIO ANALYSIS
Liquidity Ratio’s.

1)CURRENT RATIO:

CURRENT ASSETS
CURRENT LIABILITIES

2005 2006 2007 2008

0.31 0.51 0.62 0.57

Interpretation:
The ideal ratio 2:1 . The liquidity position of the company is not
satisfactory because it is not reached the ideal ratio 2:1 . The
company should increase the current assets and decrease the
current liabilities.
Quick Ratio:

Current assets –inventories.

Current liabilities
2005 2006 2007 2008

0.11 0.30 0.36 0.33

Interpretation:
the liquidity position of the company is not satisfactory
because the ratio is decrease and not reached the ideal ratio
1:1 the company should increase quick assets such as cash
and bank balance and decrease the current liabilities.
 LEVERAGE RATIO’S:

1)Debt equity Ratio

2)Proprietary Ratio

3)Fixed Asset Ratio

4)Interest Coverage RatiO

 Debt Equity Ratio:

Long term debts/Equity share holder funds.

2005 2006 2007 2008

0.14 0.09 0.07 0.04

Interpretation:
Interpretation

The Ideal Ratio is 2:1.The solvency position of the

company is satisfactory but it should decrease the
loans such as secured and unsecured. It should
increase the reserves and share capital also.
Proprietary Ratio:

Net Worth /Total Assets

2005 2006 2007 2008

0.83 0.87 0.89 0.92

Interpretation:
These ratio is the indicative of strong
financial position of business . The higher the
ratio , the better it is. but the company
Should increase the shareholders funds.
Fixed Assets Ratio:

Fixed Assets
Net worth

2005 2006 2007 2008

0.42 0.45 0.51 0.50

Interpretation:
This ratio is satisfactory and the ideal ratio is
0.67 and it will never be more than 1 , the long
term funds are used to buy or acquire the
fixed assets.
Interest coverage Ratio:

PBIT/Fixed Interest Charges

2005 2006 2007 2008

117.74 231.38 55.20 40.38

Interpretation:
The ideal ratio is 6. This Ratio indicates whether a
business is earning sufficient profits to pay the interest
charges. This ratio is not satisfactory and company
should increase the sales and profits , to pay the
interest charges for the long term debts.
Turn Over Ratios

1)inventory holding periods

2)working capital turnover

3)inventory turnover ratio

4)fixed assets turnover ratio

Inventory Holding Period:
No . Of Days In Years/S.T.R

2005 2006 2007 2008

11.38days 10.58 10.42 11.93

Interpretation:
The Inventory turnover ratio also be
expressed in terms of no. of days (or) months it takes
for the stock to get converted into sales. Here the
company is satisfactory and company has to work
hard to have more sales
 Working Capital TurnOver Ratio

Net Sales/Working
Capital
2005 2006 2007 2008

-7.85 -11.75 -17.49 -11.64

Interpretation:
The Company should increase the sales and
also increase the working capital i.e., increase
the current assets and decrease current
liabilities .
Inventory TurnOver Ratio:

CGS/Avg. Inventory
2005 2006 2007 2008

31.80 34.02 34.56 30.17

Interpretation:
The ideal ratio is 8. the company should control the cost
of goods sold expenses and increase the sales in order
to increase the ratio.
Fixed Assets Turn Over Ratio:

TurnOver/ Fixed Assets

2005 2006 2007 2008

10.38 8.77 7.30 6.67

Interpretation:
The ideal ratio is 5. the ratio is decreasing from year to year
and we should increase the sales up to the maximum level and
we should use the fixed assets up to full 100% capacity.
Profitability Ratio’s:

1)Gross Profit Ratio

2)Operating Ratio

3)Earning per share

 EARNING PER SHARE:

PAT-Preference
dividends
No. of Equity
shares
2005 2006 2007 2008
RS.40.59 RS.48.64 RS.42.96 RS.48.47

Interpretation : The profits of the company are

increasing slightly and we should increase the
sales and we should decrease the cost of goods
sold , operating expenses. The shareholders
returns on their investment is increasing year to
year
 Gross profit ratio:

gross profit X 100

Sales
2005 2006 2007 2008

15.91% 15.91% 12.34% 13.46%

Interpretation:
The profitability position of the company is
satisfactory because of the Gross profit ratio is
increasing from year to year but it is not enough
the company should control the cost of goods sold
expenses and increase the sales.
Operating Ratio:

CGS + Operating Exp X 100

Net Sales

2005 2006 2007 2008

85.30% 85.40% 89.07% 88.09%

Interpretation:
The company had controlled the operating expenses that’s why
the ratio is decreased ,the lower the ratio the better it is, the
company should continue this performance in the future also. It
is satisfactory .