A STUDY ON FINANCIAL PERFORMANCE OF AUTOMOBILE INDUSTRY WITH

SPECIAL REFERENCE HERO MOTORCORP LIMITED

Submitted in partial fulfillment of the requirements for the award of

Master of Business Administration

by

NIVETHA M
Register No. 39410141

SCHOOL OF BUSINESS ADMINISTRATION

SATHYABAMA
INSTITUTE OF SCIENCE AND TECHNOLOGY
(DEEMED TO BE UNIVERSITY)
Accredited with Grade “A” by NAAC I 12B Status by UGC I Approved by AICTE
Jeppiaar Nagar, RAJIV GANDHI SALAI, CHENNAI - 600 119

April - 2021
 SATHYABAMA
INSTITUTE OF SCIENCE AND TECHNOLOGY
(DEEMED TO BE UNIVERSITY)
Accredited with “A” grade by NAAC I 12B Status by UGC I Approved by AICTE
Jeppiaar Nagar, Rajiv Gandhi Salai, Chennai – 600 119
www.sathyabama.ac.in

SCHOOL OF BUSINESS ADMINISTRATION

BONAFIDE CERTIFICATE

This is to certify that this Project Report is the bonafide work of NIVETHA M 39410141
who have done the Project work entitled A STUDY ON FINANCIAL
PERFORMANCE OF AUTOMOBILE INDUSTRY WITH SPECIAL REFERENCE
HERO MOTORCORP LIMITED under my supervision from January 2021 to April
2021..

Dr. R.THAMILSELVAN
Internal Guide External Guide

Dr. BHUVANESWARI G.
Dean – School of Business Administration

Submitted for Viva voce Examination held on _______________.

Internal Examiner External Examiner

 DECLARATION

I NIVETHA M 39410141 hereby declare that the Project Report entitled A STUDY
ON FINANCIAL PERFORMANCE OF AUTOMOBILE INDUSTRY WITH SPECIAL
REFERENCE HERO MOTORCORP LIMITED done by me under the guidance of
Dr.R.THAMILSELVAN, M.com., MBA., M.Phil., Ph.D. Associate professor,
Department of management studies at SATHYABAMA INSTITUTE OF SCIENCE
AND TECHNOLOGY, CHENNAI is submitted in partial fulfillment of the
requirements for the award of Master of Business Administration degree.

DATE:

PLACE: NIVETHA M
 ACKNOWLEDGEMENT

I am pleased to acknowledge my sincere thanks to Board of Management of

SATHYABAMA for their kind encouragement in doing this project and for completing it

successfully. I am grateful to them.

I convey my sincere thanks to Dr. BHUVANESWARI G., Dean, School of Business

Administration and Dr. PALANI A., Head, School of Business Administration for

providing me necessary support and details at the right time during the progressive

reviews.

I would like to express my sincere and deep sense of gratitude to my Project Guide

Dr.R.THAMILSELVAN, M.Com., M.B.A., M.Phil., Ph.D. Associate professor,

Department of management studies for his valuable guidance, suggestions and

constant encouragement paved way for the successful completion of my project work.

I wish to express my thanks to all Teaching and Non-teaching staff members of the

School of Business Administration who were helpful in many ways for the completion of

the project.

NIVETHA M
 TABLE OF CONTENTS

CHAPTER NO CONTENTS PAGE NO

ABSTRACT i
LIST OF TABLES ii
LIST OF FIGURES iii
CHAPTER 1 1.1 INTRODUCTION 1
1.2 INDUSTRY PROFILE 2
1.3 COMPANY PROFILE 9
1.4 NEED FOR THE STUDY 15
1.5 STATEMENT OF THE PROBLEM 16
1.6 OBJECTIVES OF THE STUDY 17
1.7 SCOPE OF THE STUDY 17
1.8 LIMITATIONS OF THE STUDY 18
CHAPTER -2 2.1 REVIEW OF LITERATURE 19
2.2 THEORTICAL STUDY 25
CHAPTER -3 3.1 RESEARCH METHODOLOGY 32
3.2 RESEARCH DESIGN 21
3.3 METHODS OF DATA COLLECTION 21
3.4 PERIOD OF THE STUDY 21
3.5 STATISTICAL TOOLS 21
CHAPTER-4 4.1 DATA ANALYSIS AND INTERPRETATION 33
4.2 TREND ANALYSIS RATIO 47
4.3 COMPARATIVE BALANCE SHEET 51
CHAPTER -5 5.1 FINDINGS OF THE STUDY 60
5.2 SUGGESTIONS 61
5.3 CONCLUSION 61
REFERENCES 62
APPENDIX 65
BALANCE SHEET

i
ABSTRACT:

This aim of this project is to analysis the liquidity and profitability position of the
company using the financial tools.

This study is based on financial statements such as Ratio Analysis, Comparative

balance sheet. By using this tools combined it enables to determine in an effective
manner.

The study is made to evaluate the financial position, the operational results as well as
financial progress of a business concern. It explains the ways in which ratio analysis
can be of assistance in long-rang planning, budgeting and asset management to
strengthen financial performance and help avoid financial difficulties.

i
 LIST OF TABLES

TABLE NO PARTICULARS PAGE NO

4.1 Table shows current Ratio for the period of 33

2016 - 2020

Table shows quick Ratio for the period of 34

4.2 2016 - 2020

4.3 Table shows cash Ratio for the period of 35

2016 - 2020

4.4 Table shows working capital ratio for the period of 36

2016 - 2020

37
4.5 Table shows gross profit ratio for the period of
2016 - 2020

4.6 Table shows net profit ratio for the period of 38

2016 - 2020

4.7 Table shows fixed assets turnover ratio for the period of 39
2016 - 2020

4.8 Table shows current assets turnover ratio for the period 40
of 2016 - 2020

4.9 Table shows proprietor’s for the period of 41

2016 - 2020

ii
TABLE NO PARTICULARS PAGE NO

4.10 Table shows Debt Equity Ratio for the period of 42

2016 - 2020

Table shows Inventory Position for the period of 43

4.11 2016 - 2020

4.12 Table shows Inventory Turnover Ratio for the period of 44

2016 - 2020

4.13 Table shows Debtor Turnover ratio for the period of 45

2016 - 2020

4.14 Table shows Creditor Turnover ratio for the period of 46

2016 - 2020

4.15 Table shows Trend Analysis for Current Asset for the 47
period of 2016 - 2020

4.16 Table shows Trend Analysis for Current Liabilities for 48

the period of 2016 - 2020

4.17 Table shows Trend Analysis for Sale for the period of 49
2016 - 2020

4.18 Table shows Trend Analysis for Net Profit for the period 50
of 2016 - 2020

iii
 LIST OF FIGURES

FIGURE NO PARTICULARS PAGE NO

1.3 Figure refers to company logo 6

4.1 Figure shows current Ratio for the period of 33

2016 - 2020
34
4.2 Figure shows quick Ratio for the period of 2016 - 2020

4.3 Figure shows cash Ratio for the period of 2016 - 2020 35

4.4 Figure shows working capital ratio for the period of 36

2016 - 2020
37
4.5 Figure shows gross profit ratio for the period of
2016 - 2020

4.6 Figure shows net profit ratio for the period of 38

2016 - 2020

4.7 Figure shows fixed assets turnover ratio for the period 39
of 2016 - 2020

4.8 Figure shows current assets turnover ratio for the 40

period of 2016 - 2020

4.9 Figure shows proprietor’s for the period of 41

2016 - 2020

iv
 LIST OF FIGURES

4.10 Figure shows Debt Equity Ratio for the period of 42

2016 - 2020

Figure shows Inventory Position for the period of 43

4.11 2016 - 2020

4.12 Figure shows Inventory Turnover Ratio for the period 44

of
2016 - 2020

4.13 Figure shows Debtor Turnover ratio for the period of 45

2016 - 2020

4.14 Figure shows Creditor Turnover ratio for the period of 46

2016 - 2020

4.15 Figure shows Trend Analysis for Current Asset for the 47
period of 2016 - 2020

4.16 Figure shows Trend Analysis for Current Liabilities for 48

the period of 2016 - 2020

4.17 Figure shows Trend Analysis for Sale for the period of 49
2016 - 2020

4.18 Figure shows Trend Analysis for Net Profit for the 50
period of 2016 – 2020

v
CHAPTER – I
1.1 INTRODUCTION:

Financial position, defined as the status of financial well-being regarding a company,

isImportant to every single business. The status of the assets, liabilities, and owner’s
equity (and their interrelationship) of an organization, as reflected in its financial
statement.
The Financial Position of a company is measured by the performance it takes in
company financial statement:
• A positive and growing cash flow statement
• Growing profits in the profit & loss statement
• A balance of assets, liabilities & owner’s equity in the balance sheet

It explained as the leverage, solvency, and cash standing of a company which ultimately
leads to the ability of the business to survive, is an important factor in large and small
businesses alike. Overall, financial position summary forms the most basic aspects of
accounting Assets, Liabilities and owner’s equity.
These three factors sum the essence of the financial position of any business. This is so
important that a statement of financial position has become one of the most Important
reports in a business.
When it comes to assets, companies have a lot to balance. They must maintain proper
amount of cash, equipment, and more.
When it comes to liabilities, a company does not want to outpace itself. Owner’s equity
is an investment that made by owners in a company or Organization.
The structure of the statement of financial position is similar to the basic accounting
equation.
For a corporation the format will be:
Assets = liabilities + stakeholder’s equity

1
1.2 INDUSTRY PROFILE:

India became the fourth largest auto market in 2019 displacing Germany with
about 3.99 million units sold in the passenger and commercial vehicles categories. India
is expected to displace Japan as the third largest auto market by 2021.
The two wheelers segment dominates the market in terms of volume owing to a growing
middle class and a young population. Moreover, the growing interest of the companies
in exploring the rural markets further aided the growth of the sector.
India is also a prominent auto exporter and has strong export growth expectations for
the near future. In addition, several initiatives by the Government of India and major
automobile players in the Indian market is expected to make India a leader in the two-
wheeler and four-wheeler market in the world by 2020.
The Indian automotive industry consists of five segments: commercial vehicles;
multi-utility vehicles & passenger cars; two-wheelers; three-wheelers; and tractors. With
7,822,963 units sold in the domestic market and 753,591 units exported during the first
nine months of FY2007, the industry (excluding tractors) marked a growth of 43% over
the corresponding previous. The two-wheeler sales have witnessed a spectacular
growth trend since the mid-nineties. India is the second largest producer and
manufacturer of two-wheelers in the world. Indian two-wheeler industry has got
spectacular growth in the last few years. Indian two-wheeler pg. 9 industry had a small
beginning in the early 50's. The Automobile Products of India (API) started
manufacturing scooters in the country. Bikes are a major segment of Indian two wheeler
industry, the other two being scooters and mopeds. Indian companies are among the
largest two-wheeler manufacturers in the world. Hero MotoCorp and Bajaj Auto are two
of the Indian companies that top the list of world companies manufacturing two-
wheelers. The two-wheeler market was opened to foreign companies in the mid 1980s.
The openness of Indian market to foreign companies lead to the arrival of new models
of two-wheelers into India. Easy availability of loans from the banks, relatively low rate
of interest and the discount of prices offered by the dealers and manufacturers lead to
the increasing demand for two-wheeler vehicles in India. This lead to the strong growth
of Indian automobile industry.

2
1.2.1 Market Size

Domestic automobiles production increased at 2.36% CAGR between FY16-20 with

26.36 million vehicles being manufactured in the country in FY20. Overall, domestic
automobiles sales increased at 1.29% CAGR between FY16-FY20 with 21.55 million
vehicles being sold in FY20.
Two wheelers and passenger vehicles dominate the domestic Indian auto market.
Passenger car sales are dominated by small and mid-sized cars. Two wheelers and
passenger cars accounted for 80.8% and 12.9% market share, respectively, accounting
for a combined sale of over 20.1 million vehicles in FY20.
Overall, automobile export reached 4.77 million vehicles in FY20, growing at a CAGR of
6.94% during FY16-FY20. Two wheelers made up 73.9% of the vehicles exported,
followed by passenger vehicles at 14.2%, three wheelers at 10.5% and commercial
vehicles at 1.3%.
EV sales, excluding E-rickshaws, in India witnessed a growth of 20% and reached 1.56
lakh units in FY20 driven by two wheelers.
Premium motorbike sales in India recorded seven-fold jump in domestic sales, reaching
13,982 units during April-September 2019. The sale of luxury cars stood between
15,000 to 17,000 in the first six months of 2019.

1.2.2 Investments

In order to keep up with the growing demand, several auto makers have started
investing heavily in various segments of the industry during the last few months. The
industry has attracted Foreign Direct Investment (FDI) worth US$ 24.5 billion between
April 2000 and June 2020, according to the data released by Department for Promotion
of Industry and Internal Trade (DPIIT).
Some of the recent/planned investments and developments in the automobile sector in
India are as follows:
❖ In October 2020, MG Motors announced its interest in investing Rs. 1,000 crore
(US$ million) to launch new models and expand operations in spite of the anti-
China sentiments.

3
❖ In October 2020, Ultra Automotive, a manufacturer of electric motorcycle in
India, raised a disclosed amount in a series B investment from Go Frugal
Technologies, a software company.

❖ In September 2020, Toyota Kirloskar Motors announced investments of more

than Rs 2,000 crore (US$ 272.81 million) in India directed towards electric
components and technology for domestic customers and exports

❖ During early September 2020, Mahindra & Mahindra singed a MoU with Israel-
based REE Automotive to collaborate and develop commercial electric vehicles

❖ Volkswagen announced merger of its three entities in India, the new entity will be
called Skoda Auto Volkswagen India Private Limited.

❖ In April 2020, TVS Motor Company bought UK’s iconic sporting motorcycle
brand, Norton, for a sum of about Rs. 153 crore (US$ 21.89 million), making its
entry into the top end (above 850cc) segment of the superbike market.

❖ As of May 2019, Jaguar Land Rover (JLR) launched its locally assembled Range
Rover Velar, making JLR cars more affordable by quite some margin.

❖ In March 2020, Lithium Urban Technologies partnered with renewable energy

solutions provider, Fourth Partner Energy, to build charging infrastructure across
the country.

❖ In January 2020, Tata Auto Company Systems, the auto-components arm of

Tata Group entered a joint venture with Beijing-based Prestolite Electric to enter
the electric vehicle (EV) components market.

❖ In December 2019, Force Motors planned to invest Rs. 600 crore (US$ 85.85
million) to develop two new models over the next two years.

❖ In December 2019, Morris Garages (MG), a British automobile brand, announced

plans to invest an additional Rs. 3,000 crore (US$ 429.25 million) in India.

4
 ❖ Audi India planned to launch nine all-new models including Sedans and SUVs
along with futuristic Electron EV by end of 2019.

❖ MG Motor India planned to launch MG ZS EV electric SUV in early 2020 and

have plans to launch affordable EV in the next 3-4 years.

❖ BYD Tata Motors and Ashok Leyland will supply 5,500 electric buses for different
state departments.

1.2.3 Government Initiatives

The Government of India encourages foreign investment in the automobile sector and
has allowed 100% foreign direct investment (FDI) under the automatic route.
Some of the recent initiatives taken by the Government of India are -
❖ Under Union Budget 2019-20, the Government announced to provide additional
income tax deduction of Rs. 1.5 lakh (US$ 2,146) on the interest paid on the
loans taken to purchase EVs.

❖ The Government aims to develop India as a global manufacturing centre and a

Research and Development (R&D) hub.

❖ Under NATRIP, the Government of India is planning to set up R&D centres at a

total cost of US$ 388.5 million to enable the industry to be on par with global
standards

❖ The Ministry of Heavy Industries, Government of India has shortlisted 11 cities in

the country for introduction of EVs in their public transport systems under the
FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles in
India) scheme. The Government will also set up incubation centre for start-ups
working in the EVs space.

❖ In February 2019, the Government of India approved FAME-II scheme with a

fund requirement of Rs. 10,000 crore (US$ 1.39 billion) for FY20-22.

5
1.2.4 Achievements

Following are the achievements of the Government in the last four years:
❖ In H12019, automobile manufacturers invested US$ 501 million in India’s auto-
tech start-ups according to Venture intelligence.
❖ Investment flow into EV start-ups in 2019 (till end of November) increased nearly
170% to reach US$ 397 million.
❖ On 29 July 2019, Inter-ministerial panel sanctioned 5,645 electric buses for 65
th

cities.
❖ NATRIP’s proposal for “Grant-In-Aid for test facility infrastructure for EV
performance Certification from NATRIP Implementation Society” under the FAME
Scheme was approved by Project Implementation and Sanctioning Committee
(PISC) on 3rd January 2019.
❖ Under NATRIP, following testing and research centers have been established in
the country since 2015
• International Centre for Automotive Technology (ICAT), Manesar
• National Institute for Automotive Inspection, Maintenance & Training
(NIAIMT), Sachar
• National Automotive Testing Tracks (NATRAX), Indore
• Automotive Research Association of India (ARAI), Pune
• Global Automotive Research Centre (GARC), Chennai
SAMARTH Udyog - Industry 4.0 centers: ‘Demo cum experience’ centers are being set
up in the country for promoting smart and advanced manufacturing helping SMEs to
implement Industry 4.0 (automation and data exchange in manufacturing technology).
1.2.5 Road Ahead

The automobile industry is supported by various factors such as availability of skilled

labor at low cost, robust R&D centers, and low-cost steel production. The industry also
provides great opportunities for investment and direct and indirect employment to skilled
and unskilled labor.
Indian automotive industry (including component manufacturing) is expected to reach
Rs. 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026.

6
1.2.6 MOTORCYLE

A motorcycle, often called a motorbike, bike, or cycle, is a two- or three-wheeled

motor vehicle. Motorcycle design varies greatly to suit a range of different
purposes: long-distance travel, commuting, cruising, sport, including racing, and
off-road riding. Motorcycling is riding a motorcycle and being involved in other
related social activity such as joining a motorcycle club and attending motorcycle
rallies.

The 1885 Daimler Reitwagen made by Gottlieb Daimler and Wilhelm Maybach in
Germany was the first internal combustion, petroleum-fueled motorcycle. In 1894,
Hildebrand & Wolfmüller became the first series production motorcycle.

In 2014, the three top motorcycle producers globally by volume were Honda
(28%), Yamaha (17%) (both from Japan), and Hero MotoCorp (India). In
developing countries, motorcycles are considered utilitarian due to lower prices
and greater fuel economy. Of all the motorcycles in the world, 58% are in the Asia-
Pacific and Southern and Eastern Asia regions, excluding car-centric Japan.

According to the US Department of Transportation, the number of fatalities per

vehicle mile traveled was 37 times higher for motorcycles than for cars.

There are many systems for classifying types of motorcycles, describing how the
motorcycles are put to use, or the designer's intent, or some combination of the
two. Six main categories are widely recognized: cruiser, sport, touring, standard,
dual purpose, and dirt bike. Sometimes sport touring motorcycles are recognized
as a seventh category. Strong lines are sometimes drawn between motorcycles
and their smaller cousins, mopeds, scooters, and under bones, but other
classification schemes include these as types of motorcycles.

There is no universal system for classifying all types of motorcycles. There are
strict classification systems enforced by competitive motorcycle sport sanctioning
bodies, or legal definitions of a motorcycle established by certain legal jurisdictions

7
for motorcycle registration, emissions, road traffic safety rules or motorcyclist
licensing.

There are also informal classifications or nicknames used by manufacturers, riders,

and the motorcycling media. Some experts do not recognize sub-types, like naked
bike, that "purport to be classified" outside the six usual classes, because they fit
within one of the main types and are recognizable only by cosmetic changes.

There are three major types of motorcycle: street, off-road, and dual purpose.
Within these types, there are many sub-types of motorcycles for different purposes.
There is often a racing counterpart to each type, such as road racing and street
bikes, or motocross including dirt bikes.

Street bikes include cruisers, sport bikes, scooters and mopeds, and many other
types. Off-road motorcycles include many types designed for dirt-oriented racing
classes such as motocross and are not street legal in most areas. Dual purpose
machines like the dual-sport style are made to go off-road but include features to
make them legal and comfortable on the street as well.

Each configuration offers either specialized advantage or broad capability, and

each design creates a different riding posture. In some countries the use of pillions
(rear seats) is restricted.

1.2.7. Introduction to Indian Two-wheeler Sector:

The Indian automotive industry consists of five segments: commercial vehicles;

multi-utility vehicles & passenger cars; two-wheelers; three-wheelers; and tractors.
With 7,822,963 units sold in the domestic market and 753,591 units exported
during the first nine months of FY2007, the industry (excluding tractors) marked a
growth of 43% over the corresponding previous. The two-wheeler sales have
witnessed a spectacular growth trend since the mid-nineties. India is the second
largest producer and manufacturer of two-wheelers in the world. Indian two-
wheeler industry has got spectacular growth in the last few years. Indian two-

8
 wheeler pg. 9 industry had a small beginning in the early 50's. The Automobile
Products of India (API) started manufacturing scooters in the country. Bikes are a
major segment of Indian two wheeler industry, the other two being scooters and
mopeds. Indian companies are among the largest two-wheeler manufacturers in
the world. Hero Motocorp and Bajaj Auto are two of the Indian companies that top
the list of world companies manufacturing two-wheelers. The two-wheeler market
was opened to foreign companies in the mid 1980s. The openness of Indian
market to foreign companies lead to the arrival of new models of two-wheelers into
India. Easy availability of loans from the banks, relatively low rate of interest and
the discount of prices offered by the dealers and manufacturers lead to the
increasing demand for two-wheeler vehicles in India. This lead to the strong growth
of Indian automobile industry.

1.3 COMPANY PROFILE:

FIGURE 1.3 REFER TO COMPANY LOGO

Hero MotoCorp 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.

9
1.3.1 HISTORY:

Hero started its operations in 1984 as a joint venture between Hero Cycles (sometimes
called Hero Group, not to be confused with the Hero Group food company of
Switzerland) of India and Honda of Japan. In June 2012, Hero MotoCorp approved a
proposal to merge the investment arm of its parent Hero Investment Pvt. Ltd. with the
automaker. This decision came 18 months after its split from Hero Honda.

"Hero" is the brand name used by the Munjal brothers for their flagship company, Hero
Cycles Ltd. A joint venture between the Hero Group and Honda Motor Company was
established in 1984 as the Hero Honda Motors Limited at Dharuhera, India. Munjal
family and Honda group both owned 26% stake in the Company.

During the 1980s, the company introduced motorcycles that were popular in India for
their fuel economy and low cost. A popular advertising campaign based on the slogan
'Fill it – Shut it – Forget it' that emphasised the motorcycle's fuel efficiency helped the
company grow at a double-digit pace since inception. In 2001, the company became the
second largest two-wheeler manufacturing company in India and globally. It maintains
global industry leadership to date. The technology in the bikes of Hero Motocorp (earlier
Hero Honda) for almost 26 years (1984–2010) has come from the Japanese counterpart
Honda.

Hero MotoCorp was started in 1984 as Hero Motocorp Motors Ltd. 1956 -- Formation of
Hero Cycles in Ludhiana(majestic auto limited)

• 1975 -- Hero Cycles becomes largest bicycle manufacturer in India.

• 1983 -- Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed
Shareholders Agreement signed

• 1984 -- Hero MotoCorp Motors Ltd. incorporated

• 1985 -- Hero MotoCorp motorcycle CD 100 launched.

• 1989 -- Hero MotoCorp motorcycle Sleek launched.

10
• 1991 -- Hero MotoCorp motorcycle CD 100 SS launched.

• 1994 -- Hero MotoCorp motorcycle Splendor launched.

• 1997 -- Hero MotoCorp motorcycle Street launched.

• 1999 -- Hero MotoCorp motorcycle CBZ launched.

• 2001 -- Hero MotoCorp motorcycle Passion and Hero Motocorp Joy launched.

• 2002 -- Hero MotoCorp motorcycle Dawn and Hero Motocorp motorcycle Ambition
launched. • 2003 -- Hero MotoCorp motorcycle CD Dawn, Hero Motocorp motorcycle
Splendor, Hero MotoCorp motorcycle Passion Plus and Hero Motocorp motorcycle
Karizma launched.

• 2004 -- Hero MotoCorp motorcycle Ambition 135 and Hero Motocorp motorcycle
CBZ* launched.

• 2005 -- Hero MotoCorp motorcycle Super Splendor, Hero MotoCorp motorcycle CD

Deluxe, Hero MotoCorp motorcycle Glamour, Hero MotoCorp motorcycle Achiever and
Hero Motocorp Scooter Pleasure.

• 2007 -- New Models of Hero Motocorp motorcycle Splendor NXG, New Models of
Hero Motocorp motorcycle CD Deluxe, New Models of Hero Motocorp motorcycle
Passion Plus and Hero Motocorp motorcycle Hunk launched.

• 2008 -- New Models of Hero Motocorp motorcycles Pleasure, CBZ Xtreme, Glamour,
Glamour Fi and Hero Motocorp motorcycle Passion Pro launched.

• 2009 -- New Models of Hero Motocorp motorcycle Karizma: Karizma - ZMR and
limited edition of Hero Motocorp motorcycle Hunk launched

• 2010 -- New Models of Hero Motocorp motorcycle Splendor Pro and New Hero
Motocorp motorcycle Hunk and New Hero Motocorp Motorcycle Super Splendor
launched.

• 2011 -- New Models of Hero Motocorp motorcycles Glamour, Glamour FI, CBZ
Xtreme, Karizma launched. New licensing arrangement signed between Hero and
Honda. August-- Hero and Honda part company, thus forming Hero MotoCorp and

11
Honda moving out of the Hero Motocorp joint venture. November-- Hero launched its
first ever Off Road Bike Named Hero "Impulse".

1.3.2. VISION:
The story began with a simple vision – the vision of a mobile and an empowered India,
powered by its bikes. Hero MotoCorp Ltd., company’s new identity, reflects its
commitment towards providing world class mobility solutions with renewed focus on
expanding company’s footprint in the global arena.

1.3.3. MISSION:
Hero MotoCorp’s mission is to become a global enterprise fulfilling its customers’ needs
and aspirations formobility, setting benchmarks in technology, styling and quality so that
it converts its customers into its brandadvocates. The Company will provide an
engaging environment for its people to perform to their true potential. Itwill continue its
focus on value creation and enduring relationships with its partners.

1.3.4. STRATEGY:
Hero MotoCorp’s key strategies are to build a robust product portfolio across categories,
explore growth opportunities globally, continuously improve its operational efficiency,
aggressively expand its reach to customers, continue to invest in brand building
activities and ensure customer and shareholder delight.

1.3.5 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 Uttarakhand.

12
1.3.6. TECHNOLOGY:

In the 1980’s the Company pioneered the introduction of fuel-efficient, environment

friendly four-stroke motorcycles in the country. 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.
Its plants use world class equipment and processes and have become a benchmark in
leanness and productivity.
Hero MotoCorp, in its endeavor to remain technology pioneer, will continue to innovate
and develop cutting edge products and processes.

1.3.7 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 2005. Hero Honda offers large no. of products and caters to wide variety of
requirements across all the segments.

1.3.8 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 MotoCorp’s
extensive sales and service network now spans over to5000 customer touch points.
These comprise a mix of authorized dealerships, Service & Spare Parts outlets, and
dealer-appointed outlets across the country.

1.3.9 .BRAND:

The new Hero is rising and is poised to shine on the global arena. Company’s new
identity “Hero MotoCorp Ltd.” Istruly reflective of its vision to strengthen focus on
mobility and technology and creating global footprint. Buildingand promoting new brand

13
identity will be central to all its initiatives, utilizing every opportunity and leveraging
itsstrong presence across sports, entertainment and ground- level activation.

“Hero” is the brand name used by the Munjal brothers for their flagship company Hero
Cycles Ltd. A joint venture between the Hero Group and Honda Motor Company was
established in 1984 as the Hero Motocorp Motors Limited At Dharuhera India. Munjal
family and Honda group both own 26% stake in the Company. In 2010, it was reported
that Honda planned to sell its stake in the venture to the Munjal family. During the
1980s, the company introduced motorcycles that were popular in India for their fuel
economy and low cost. A popular advertising campaign based on the slogan 'Fill it -
Shut it - Forget it' that emphasised the motorcycle's fuel efficiency helped the company
grow at a double-digit pace since inception. The technology in the bikes of Hero
Motocorp for almost 26 years (1984–2010) has come from the Japanese counterpart
Honda Hero MotoCorp has three manufacturing facilities based at Dharuhera, Gurgaon
in Haryana and at Hardware in Uttarakhand. These plants together are capable of
churning out 3 million bikes per year. Hero MotoCorp has a large sales and service
network with over 3,000 dealerships and service points across India. Hero Motocorp
has a customer loyalty program since 2000, called the Hero Motocorp Passport
Program. The company has a stated aim of achieving revenues of $10 billion and
volumes of 10 million two-wheelers by 2016-17. This in conjunction with new countries
where they can now market their two-wheelers following the disengagement from
Honda, Hero MotoCorp hopes to achieve 10 per cent of their revenues from
international markets, and they expected to launch sales in Nigeria by end-2011 or
early-2012. In addition, to cope with the new demand over the coming half decade, the
company was going to build their fourth factory in South India and their fifth factory in
Western India. There is no confirmation where the factories would be build.

14
1.4 NEED FOR THE STUDY:

❖ Financial analysis is the starting point for making plans, before using any
forecasting and planning procedure.
❖ Every company should know its financial performance. By knowing the
financial performance, they can able to analysis whether the company
attains satisfactory level or not. They can able to know the liquidity
position, profitability position and the solvency position.
❖ The financial performance is done whether the funds of the company is
utilized in an effective manner or not. So, in order to understand the
financial position of Hero MotocropLimtied.
❖ By analysis of financial performance of Hero Motocrop Limited. ltd it would
be able to get a fair picture of the financial positions of the company.
❖ Whether the financial condition of the firm is sound.

❖ By showing the financial performance to various lenders and creditors it is

possible to get credit in easy terms if good financial condition is
maintained in the company within assets out weighting the liabilities.
❖ This study suggests possible solution to overcome working capital problem.

1.5 STATEMENT OF PROBLEM:

Industries are providing one of the most basic needs of people to maintain sustained
growth for improving the standard of life. It has a unique position as a self-reliant
industry, from the production of raw materials to the delivery of finished products, with
substantial value-addition at each stage of the process. It is a major contribution to the
country's economy. Business concerns are facing severe competition in the present
world of a liberalized economy. The survival, growth and organizational success greatly
depend on the efficient management of its finance. Company form of organization is
followed in the economic development of a nation like India. Even though the industry is
the biggest in the country and performing well, many textile mills are being closed every
year due to various reasons

15
So the present topic entitled," An evaluation of the financial performance analysis of the
HERO MOTORCORP LIMITED” has been undertaken to highlight the importance of
efficient financial management of the company under study.

1.6 OBJECTIVES OF STUDY:

Primary objective:

1. To Study the Financial Performance of Automobile Industry (Two-wheeler)

Secondary objectives:

1. To Evaluate the Liquidity Position of the Company Under Study

2. To Evaluate the Profitability Position of the Company Under Study.

3. To Evaluate the Turnover Position of the Company Under Study.

4. To Study the Performance of the Company through Comparative Analysis

and Common Size Statement.

1.7 SCOPE OF THE STUDY:

❖ The scope of the study is to have an idea about financial performance analysis
of Hero Motocorp Limited.
❖ The project is pertained to the company’s data available for past 10
years.
❖ Their report starts with the outline of the organization in focus, presenting
the mission and vision of the organization.

16
 ❖ Those who looking information about financial performance analysis of
India Motocorp Limited. They might get help from this report.

1.8 LIMITATIONS OF THE STUDY:

❖ Financial statements are generally based on historical book cost.

❖ The ratio analysis does not predict the future. It shows the historical data.
❖ The financial position disclosed by balance sheet can’t be exact hence they
have interim reports.
❖ The period of study is a short one and in-depth study was not possible.
❖ To have a better analysis it is advisable to base the study on the monthly or
quarterly operational data of the organization. Data of this type are not available
for outsiders. So, the study has to bare these limitations.

17
 CHAPTER –2

2.1 REVIEW OF LITERATURE:

1. Kennedy and Muller (2012), has explained that “The analysis and interpretation
of financial statements are an attempt to determine the significance and meaning
of financial statements data so that the forecast may be made of the prospects
for future earnings, ability to pay interest and debt maturines (both current and
long term) and profitability and sound dividend policy.”

2. Kaur Harpreet (2016) the author tries to examine the qualities & quantities
performer of maruti Suzuki co. & how had both impact on its market share in
India, For this study secondary data has been collected from annual reports,
journals, report automobile sites. Result shows that MSL has been successfully
leading automobile sector in India for last few years.
3. Kumar Mohan M.S, Vasu. V. and Narayana T. (2016) the study has been made
through using different ratios, mean, standard deviation and Altman’s Z score
approach to study the financial health of the company. The study reveals there is
a positive correlation between liquidity and profitability ratios except return on
total assets as well as Z score value indicate good health of the company.
4. Ravichandran, M. &Subramaniam M Venkata (2016) the main idea behind this
study is to assessment of viability, stability and profitability of Force motors
limited. Operating position of the company can be measured by using various
financial tools such as profitability ratio, solvency ratio, comparative statement &
graphs etc. This study finds that company has got enough funds to meet its debts
& liabilities. Company can further improve financial performance by reducing the
administrative, selling & operating expenses.
5. Jothi, K. &Geetha Lakshmi, A. (2016) this study tries to evaluate the profitability
& financial position of selected companies of Indian automobile industry using
statistical tools like, ratio analysis, mean, standard deviation, correlation. The
study reveals the positive relationship between profitability, short term and long-
term capital.

18
6. Maheshwari, V. (2016) made an attempt to analyse the financial soundness of
the Hero Honda motors limited have identified three factors, namely liquidity
position, solvency position and profitability position based on the study of period
2010 to 2016 using ratio analysis and Altman’s Z score model.

7. Agarwal, Nidhi (2015) the study focus on the comparative financial performance
of Maruti Suzuki and Tata motors ltd. The financial data and information required
for the study are drawn from the various annual reports of companies. The
liquidity and leverage analysis of both the firms are done. To analyze the
leverage position four ratios are considered namely, capital gearing, debt-equity,
total debt and proprietary ratio. The result shows that Tata motors ltd has to
increase the portion of proprietor’s fund in business to improve long term
solvency position.

8. Krishnaveni, M. & Vidya, R. (2015) find that Indian automobile industry is a high
flying sector these days and emerging as an export hub in wake of liberalisation
and globalization. This paper revises the category wise production, sales and
exports of automobile industry in India. Industry growth can be viewed in term of
pre and post liberalization. As government allows 100 percent FDI, increase 15%
in customs duty on cars and MUVs to encourage local manufacturer and
concessional import duty on specified parts of hybrid vehicles.

9. Sarwade Walmik Kachru (2015) analyzed the effects of liberalization,

government de-licensing and liberal trade policies on the growth of Indian auto
mobile industry .The study recommends that investing four- wheeler is going to
be smart potion not only in India but all around the world.

10. Becker Dieter (2015) the report shows about the current state and future
prospects of the worldwide automobile industry. This survey report the
manufacturer, executive and consumer views about four aspects, mobility
culture, technological fit, business model readiness and market share.

11. Surekha B. & Krishnalah K.Rama (2015) this study reveals the prosperity of
Tata motors company. It can be concluded that inner strength of company is

19
 remarkable. Company can further improve its profitability by optimum capital
gearing, reduction in administration and financial expenses for the growth of
company.

12. Anu B. (2015) made an attempt to examine the relationship between capital
structure indicators, market price per shares and also to test relationship
between debt-equity and market price per share of selected companies in
industry. The study concludes that all three companies support the hypothesis
that there is relation between debt-equity and MPS.
13. Takeh Ata &NavaprabhaJubiliy (2015) Author has made conceptual model to
outline the impact of capital structure on the financial performance i.e. capital
structure is independent variable that value is measured by using four ratios
namely, financial debt, total debt equity, total asset debt and interest coverage
ratio whereas financial performance is dependent variable that value is
measured by using four ratios as return on assets, return on equity , operating
profit margin and return on capital employed. Researcher has selected 13 major
steel industries and applied various statistical tools like standard deviation,
correlation matrix, anova etc are employed for testing hypothesis with help of
SPSS22.

14. Moses Joshua Daniel (2016) in his study “A Study on Financial Status of TATA
Motors Ltd” stated the main objectives to analyzing the overall financial status of
the TATA Motors Ltd by using various financial tools. In order to analyze
financial status in terms of Profitability, Solvency, Activity and Financial stability
various accounting ratios have been used. It is cleared from the study that 37
the company’s financial performance is satisfactory. The company has stable
growth and it shows a greater status in all the areas it works. The company has
been suggested to reduce the expenditure as it increases every year. Decrease
in expenses will increase the profitability.

20
15. Huda Salhe Meften & Manish Roy Tirkey (2014) have studied the financial
analysis of Hindustan petroleum corporation ltd. The study is based on
secondary data. The company has got excellent gross profit ratio and trend is
rising in with is appreciable indicating efficiency in production cost. The net profit
for the year 2010-11 is excellent & it is 8 times past year indicating reduction in
operating reduction in operating expenses and large proportion of net sales
available to the shareholders of company.

16. Srivastava Anubha (2014) Data analysis has been done using the top down
approach ,i.e. Economic analysis, industry analysis, company and technical
analysis to find relationship between automobile sector index with market index.
Mahindra and Mahindra have a great position on the stock market and will attract
investor and this could lead to expansion and growth. Thus Tata motors and
Maruti Suzuki need to take care of their stock and expansion.

17. Sarangi Pradeepta K et al (2014) undertook a study to forecast the future trend
of automobile industry. The study highlighted the six different experiments have
been carried out for period of 12 years data to estimate values for next 3 years.
In each experiment graph has been plotted using spreadsheet and then linear
trend has been drawn and expanded to calculate future values.

18. Kumar Sumesh & Kaur Gurbachan (2014) Automobile sector is the dominant
player in economy of world. After liberalization Indian automobile industry has
emerged as a major contributor to India’s GDP. The study identified that there is
no significant in the means score of various financial ratios of Maruti Suzuki and
Tata motors but in meeting their longterm obligations and efficacy of utilizing the
assets show the significant difference in the effective of the Firm.

19. Dharmaraj and Kathirvel (2013) in their study related to “Analyzing the
Financial Performance of Selected Indian Automobile Companies”, suggested
that the financial performance of Atul Auto Ltd, Ashok Leyland, HMT Ltd, Tata
Motors Ltd, and SML ISUZU Ltd are highly improved as compared to the group
average value for all ratios. In India there is a huge scope for automobile

21
 companies. They are financially strong and they are growing at the rate of 17 per
cent per annum and contributing to the Indian economy reasonably. Finally, the
study provides companies with understanding of the activities that would
enhance their financial performances. The results of this study imply that it might
be necessary for all Companies to take all required decisions to enhance their
financial position.

20. Hotwani Rakhi (2013) the author examines the profitability position and growth
of company in light of sales and profitability of Tata Motors for past ten years.
Data is analyzedthrough rations, standard deviations and coefficient of variance.
The study reveals that there not exists a strong relationship between sales &
profitability of company.

21. Daniel A. Moses Joshunar (2013) the study has been conducted to identify the
financial strength and weakness of the Tata motors Ltd. using past 5year
financial statements. Trend analysis & ratio analysis used to comment of financial
status of company. Financial performance of company is satisfactory and also
suggested to increase the loan levels of company for the better performance.

22. Kavitha and Palanivelu (2013) main objectives of their study is known about the
financial health of the steel industries and to analyze and compare the financial
performances of NSE listed steel industries based on ratio analysis and Z Score
(Altman’s model). They suggested that the companies‟ try to increase production
and sales get maximize profit to strengthen financial position of the NSE listed
companies. The management may utilize maximum production capacity and
reduce interest burden increase profit. The policy of borrowed financing in
selected steel group of companies under study was not proper.

22
23. Hari Govinda Rao & et al. (2013) in their study entitled “An Empirical Analysis
on Financial Performance of Public Sector Housing Corporation in India: A Case
Study of HUDCO”, stated that the main concept of their study is Profitability and
liquidity management is of crucial importance in financial management decision.
The most favourable financial performance could be achieved by a company that
can trade between profitability and liquidity performance indicators. The purpose
of this study is to find out the financial position of and know the significance of
them. Descriptive statistics discloses that performance of the selected unit in
terms of liquidity, solvency and profitability position is very satisfactory and
relatively efficient financial position is found in 36 all the cases. They suggested
that both the institutions under the study should concentrate on financial
profitability, especially unexplained variables in purpose of creating shareholders‟
wealth.

24. Venkataramana and Ramakrishnan (2012) evaluate the profitability and

financial position of selected cement companies in India through various financial
ratio and applied correlation, mean, standard deviation and variance. The study
uses liquidity and profitability ratios for assessment of impact of liquidity ratios on
profitability performance of selected cement companies.

25. Hima Bindu and Subrahmanyam (2012) in their study dealt with the evaluation
of earning power, analysis of operating efficiency, analysis of financial efficiency
and measurement of financial health of Dairy Industry in Andhra Pradesh using Z
score analysis. The financial health of Amrit Corp Limited, GSKCH Limited,
Heritage Foods India Limited and NDDB differs and these companies fall under
too healthy zone. The financial health of Ravi Leela Dairy Products Limited is in
danger and the unit is considered to be in bankruptcy zone. Its failure is certain
and it would occur probably within a period of two years.

26. Mistry Dharmendra S. (2012) understood a study to analyze the effect of

various determinants on the profitability of the selected companies. It concluded
that debt equity ratio, inventory ratio, total assets were important determinants

23
 which effect positive or negative effect on the profitability. It suggerted to improve
solvency as to reduce fixed financial burden on the company profit & give the
benefit of trading on equity to the shareholders.

27. FoziaMehtab and Arun Kr. Kaushik (2012) its objective is to find out about the
historical performance and current financial condition of Wipro limited with the
help of various ratios and thereby offers appropriate suggestions for the better
performance of the organization. The information and data are collected through
rough formal and informal discussion with the officers of accounts department of
the company on the basis of needs. Most of the calculations are made on the
financial statements of the company provided statements like published annual
reports, financial reports, company’s websites etc. The data analysis is done
using various activity, solvency, profitability and turnover ratios. After analyzing
the financial statements of the company it can be concluded though the financial
position of the 60 company is found quite satisfactory as the company’s sales is
rising continuously, yet it should take some steps to decrease its expenses
because the net profit has not increased much. It concludes the company should
try to increase its profit after tax.

28. Prasanta Paul (2011) reported that “Financial Performance Evaluation - A

Comparative Study of Some Selected NBFCs”. In this study, five listed NBFCs
32 have been considered for analyzingcomparative financial performance.
Different statistical tools like, Arithmetic mean, Standard Deviation, Coefficient of
Variance, Correlation and Analysis of Variance have been used extensively.
Arithmetic Mean (AM) is an ideal measure of central tendency, which is rigidly
defined, easy to calculate, based on all observations and affected least by
fluctuations of sampling has been applied in this study. It has been used to get a
stable average and it is easy to understand the results of the study

29. Sharma Nishi (2011) studied the financial performance of passenger and
commercial vehicle segment of the automobile industry in the terms of four
financial parameters namely liquidity, profitability, leverage and managerial

24
 efficiency analysis for the period of decade from 2001- 02 to 2010-11. The study
concludes that profitability and managerial efficiency of Tata motors as well as
Mahindra & Mahindra ltd are satisfactory but their liquidity position is
not satisfactory. The liquidity position of commercial vehicle is much better than
passenger vehicle segment.

30. Shinde Govind P. & Dubey Manisha (2011) the study has been conducted
considering the segments such as passenger vehicle, commercial vehicle, utility
vehicle, two and three wheeler vehicle of key players performance and also
analyze SWOT analysis and key factors influencing growth of automobile
industry.

2.2 THEORTICAL STUDY:

LIQUIDITY RATIO:
It shows ability of the business to pay its short-term liabilities. Inability to pay-off short-
term liabilities affects its credibility as well as its credit rating. Continues default on the
part of the business leads to commercial bankruptcy.

2.2.1 CURRENT RATIO:

Current ratio may be defined as the relationship between current assets and
current liabilities it is the most common ratio for measuring liquidity. It is calculated by
dividing current assets and current liabilities. Current assets are those, the amount of
which can be realized with in a period of one year. Current liabilities are those amounts
which are payable with in a period of one year.
To know whether the business has sufficient current assets to meet its current
liabilities with margin for possible losses in current assets.
Current Ratio = Current Asset \Current Liability

25
2.2.2 LIQUID RATIO:
A measure of company liquidity and ability to meet its obligations. Quick ratio, often
referred to as acid-test ratio, is obtained by subtracting inventories from current assets
and then dividing by current liabilities.
Liquid ratio = Liquid assets / current liabilities

2.2.3 CASH RATIO:

The Cash Ratio, Sometimes Referred to as the Cash Asset Ratio, is a Liquidity Metric
that Indicates a Company’s Capacity to Pay off SHORT TERM DEBT OBLIGATION
with its cash and cash Equivalents. Compared to Other Liquidity Ratio Such as the
CURRENT RATIO and QUICK RATIO, the Cash Ratio is a Stricter, More Conservative
Measure Because Only Cash and Cash Equivalents – a Company’s Most Liquid Assets
– are Used in the Calculation.
Cash ratio = Cash & Cash equivalents / Current liabilities

2.2.4 PROFITABILITY RATIO:

Profit making is the main objective of business. Aim of every business concern is to
earn maximum profits in absolute term and also in relative terms i.e. profit is to be
maximum in term of risk undertaken.
Profitability Ratio =Profit after tax / Sales

2.2.5 GROSS PROFIT RATIO:

Gross profit ratio establishes the relationship between gross profit and net sales.
It also reveals the amount of gross profit for each rupee of sale. This ratio is calculated
by dividing the gross profit by Net sales. It is usually indicated as a percentage.
Gross Profit Ratio = Gross Profit / Net sales * 100

2.2.6 NET PROFIT RATIO:

Net profit ratio is also termed as sales margin ratio or profit margin ratio or net profit to
sales ratio. This ratio reveals the firms overall efficiency in operating the business. Net
profit ratio is used to measure the relationship between net profit (either before or after

26
taxes) and sales.
Net Profit Ratio = Net Profit / Net Sales * 100

2.2.7 OPERATING RATIO:

Operating ratio represent the different between the cost of goods sold and sales.
Operating ratio measures the amount of expenditure incurred in production, sales and
distribution of output. It indicates operational efficiency of the concern.
Operating Ratio= Cost of goods sold + Operating expenses / Net sales *100

2.2.8 RETURN ON INVESTMENT:

It is the percentage of return on funds invested in the business by its owners. This ratio
tells the owner whether or not all the effort put into the business has been worthwhile.
Return on Investment = EBIT / Investment * 100

2.2.9 RETURN ON ASSETS (ROA):

It is measured in terms of relationship between net profits and assets employed to earn
that profit. This ratio measures the profitability of the firm in terms of assets employed in
the firm.
Return on assets = EAT / Total Assets

2.2.10 RETURN ON EQUITY (ROE):

It measures the profitability of equity funds invested in the firm. This ratio reveals how
profitably of the owner’s funds have been utilized by the firm. It also measures the
percentage return generated to equity shareholders.
Return on equity = EBIT / Shareholder’s Equity

2.2.11 DEBTOR TURNOVER RATIO:

It represents how quickly the debtors are converted into cash. This ratio is used to
measure thefirm liquidity position. This ratio establishes the relationship between
receivables and credit sales.
Debtor turnover ratio = Net sales / Average debtors.

27
2.2.12 FIXED TURNOVER RATIO:
Fixed-asset turnover is the ratio of sales to the value of fixed assets. It indicates
how well the business is using its fixed assets to generate sales. This ratio measures
the efficiency with which a firm is utilizing its fixed assets in generating sales.
Fixed assets turnover ratio = Net sales / Fixed assets

2.2.13 CURRENT ASSETS TURNOVER RATIO:

Current assets turnover ratio is the relationship between sales or cost of
goods sold and current assets employed in the business. This ratio measures the
efficiency with which a firm is utilizing its current assets in generating sales
Current assets turnover ratio = Net sales / Current Asset

2.2.14 PROPRIETARY RATIO:

This ratio is also termed as capital ratio or net worth to total asset ratio. This is one of
the variant of dept equity ratio. This shows the relationship between shareholders funds
and total assets
Proprietary ratio = Net worth / Total Assets

2.2.15 WORKING CAPITAL TURNOVER RATIO:

To show the flow of cash and it should be a positive number. Bankers look at net
working capital over time to determine a company’s ability to financial crises. Loans are
often tied to minimum working capital requirements
Working capital = Current asset – Current liabilities
A measure comparing the depletion of working capital to the generation of sales over a
given period. This provides some useful information as to how effectively a company is
using its working capital to generate sales.

Working capital turnover ratio = Net sales / Working Capital

28
2.2.16 INVENTORY TURNOVER RATIO:

Inventory turnover is a financial ratio showing how many times a company has sold and
replaced inventory during a given period. A company can then divide the days in the
period by the inventory turnover formula to calculate the days it takes to sell
the inventory on hand.

Inventory turnover ratio =cost of goods sold/Average inventory

2.2.17 DEBT-EQUITY RATIO:

The Debt to Equity ratio (also called the “debt-equity ratio”, “risk ratio”, or “gearing”), is
a leverage ratio that calculates the weight of total debt and financial liabilities against
total shareholders’ equity. Unlike the debt-assets ratio which uses total assets as a
denominator, the D/E Ratio uses total equity. This ratio highlights how a company’s capital
structure is tilted either toward debt or equity financing

Debt equity ratio=Total long term debt/Shareholder fund

2.2.18 DEBTOR TURNOVER RATIO:

The receivables turnover ratio is an accounting measure used to quantify a company's

effectiveness in collecting its accounts receivable, or the money owed to it by its
customers or clients. This ratio measures how well a company uses and manages the
credit it extends to customers and how quickly that short-term debt is collected or is
paid.

A firm that is very good at collecting on its payments due will have a higher accounts
receivable turnover ratio. It is useful to compare a firm's ratio with that of its peers in the
same industry to gauge whether it is on par with its competitors

Debtor turnover ratio = Sales/ Trade Receivables

29
COMPARATIVE BALANCE SHEET:

The comparative balance sheet is a balance sheet which provides financial figures
of Assets, Liability and equity for the ―two or more period of the same company‖
or ―two or more than two company of same industry or ―two or more subsidiaries
of same company‖ at the same page format so that this can be easily
understandable and easy to analysis.

The comparative balance sheet has two-column of amount against each balance
sheet items; one column shows the current year financial position, whereas
another column will show the previous year’s financial position so that investors or
other stakeholders can easily understand and analyze the company‘s financial
performance against last year.

Comparative Financial Statements is the most commonly used technique for

analyzing financial statements. This technique determines the profitability and
financial position of a business by comparing financial statements for two or more
time periods. Hence, this technique is also termed as Horizontal Analysis.
Typically, the income statements and balance sheets are prepared in a
comparative form to undertake such an analysis.

Furthermore, there is a provision attached to comparing the financial data

showcased by such statements. This relates to making use of the same accounting
principles for preparing each of the comparative statements. In case the same
accounting principles are not followed to prepare such statements, then the
difference must be disclosed in the footnote below
A comparative balance sheet showcases:

• Assets and liabilities of business for the previous year as well as the
current year.
• Changes (increase or decrease) in such assets and liabilities over the year both
in absolute and relative terms.

30
Thus, a comparative balance sheet not only gives a picture of the assets and
liabilities in different accounting periods. It also reveals the extent to which the
assets and liabilities have changed during such periods.

Furthermore, such a statement helps managers and business owners to identify

trends in the various performance indicators of the underlying business.

Steps To Prepare a Comparative Balance Sheet.

TREND ANALYSIS:

Trend analysis is an analysis of the trend of the company by comparing its

financial statements to analyze the trend of market or analysis of the future on the
basis of results of past performance and it‘s an attempt to make the best decisions
on the basis of results of the analysis done.

Trend analysis involves the collection of information from multiple time periods and
plotting the information on a horizontal line for further review. The intent of this
analysis is to spot actionable patterns in the presented information.

When trend analysis is being used to predict the future, keep in mind that the
factors formerly impacting a data point may no longer be doing so to the same
extent. This means that an extrapolation of a historical time series will not
necessarily yield a valid prediction of the future. Thus, a considerable amount of
additional research should accompany trend analysis when using it to make
predictions.

Procedure for Calculating Trends:

(i) One year is taken as a base year. Generally, the first or the last is taken as base
year.

(ii) The figures of base year are taken as 100.

31
 (iii) Trend percentages are calculated in relation to base year. If a figure in other
year is less than the figure in base year the trend percentage will be less than 100
and it will be more than 100 if figure is more than base year figure. Each year‘s
figure is divided by the base year‘s figure.

CHAPTER-3

3.1 RESEARCH METHODOLOGY:

The Research Design Applied for the Study is described as ‘Descriptive
Research’ Study.

3.2 RESEARCH DESIGN:

Secondary data has been collected from Records, Journals, Annual Reports of
the company etc. This Project is based on Secondary Information Collected through five
Years Annual Report of the company, Supported by Various books and interest Sides.

3.3 OF PERIOD OF THE STUDY:

The research study was conducted for 3 months.

3.4 STATISTICAL TOOLS:

The statistical tools applied for the study may include

3.5 TOOLS USED FOR THE STUDY

FINANCIAL TOOLS
▪ Ratio analysis
▪ Statement of changes in working capital
▪ Comparative Balance Sheet
▪ Trend analysis

32
 CHAPTER– 4
DATA ANALYSIS AND INTERPRETATION

Table 4.1 Current Ratio for the period of 2016 – 2020 (Rs. In Cr.)

YEAR CURRENT CURRENT RATIO

ASSETS LIABILITIES (Times)

2016 5,935.09 4,048,82 1.465

2017 7,453,18 4,093.33 1.820

2018 8,848.18 4,343.32 2.037

2019 8,115.64 4,130.36 1.964

2020 8,280.56 3,976.06 2.084

SOURCE: SECONDARY DATA

INTERPRETATION:
The above table shows that the current ratio in the year 2016 was 0.86 and 0.146 and
then it Increase to 1.820 in the year 2017, further move downwards to 2.037 in the year
2018. The Current Ratio of all the above three years is above the Standard, So the
Society can meet its short term Obligation. The Company is able to Generate enough
from operations to pay for its Current Obligations With Current Assets

2.5

1.5

0.5

0
2016 2017 2018 2019 2020

Figure 4.1 current Ratio for the period of 2016 - 2020

33
Table 4.2 Quick Ratio for the period of 2016 – 2020 (Rs. In Cr.)

YEAR QUICK ASSETS QUICK LIABILITIES RATIO

(Times)

2016 5,262.11 4,048,82 1.299

2017 6,796.87 4,093.33 1.660

2018 8,024.06 4,343.32 1.847

2019 7,043.27 4,130.36 1.705

2020 7,188.59 3,976.06 1.807

SOURCE: SECONDARY DATA

INTERPRETATION:
The Chart Shows that Liquid Ratio in 2016 is Below 1.5, in 2017- 2020 is
Above 1.5. The Quick Ratio of all the Above Five Years is Above the Standard, So the
Society can meet its Short term Obligation. The Company is Able to Generate Enough
from Operations to Pay for its Current Obligation with Current Assets.

1.5

0.5

0
2016 2017 2018 2019 2020

Figure 4.2 Quick Ratio for the period of 2016 - 2020

34
 Table 4.3 Cash Ratio for the period of 2016 – 2020 (Rs. In Cr.)
YEAR CASH & CASH CURRENT RATIO
EQUIVALENTS LIABILITIES (Times)
2016 131.36 4,048,82 0.0324

2017 136.73 4,093.33 0.0334

2018 141.34 4,343.32 0.0325

2019 136.46 4,130.36 0.0330

2020 241.86 3,976.06 0.0608

SOURCE: SECONDARY DATA

INTERPRETATION:
The above table shows that the cash ratio from 2016 to 2020. The Cash Ratio of
all the Above Five Years is Above the Standard. In the year of 2018 and 2019 the cash
ratio goes down and the year of 2019, it goes up. In 2020, the company having 0.060%
of cash to pay its current liability

0.07

0.06

0.05

0.04

0.03

0.02

0.01

0
2016 2017 2018 2019 2020

Figure 4.3 Cash Ratio for the period of 2016 – 2020

35
Table 4.4 Working Capital Ratio for the period of 2016 – 2020 (Rs. In Cr.)
YEAR WORKING CAPITAL TOTAL SALE RATIO
(Times)
2016 1,886.27 28,442.70 6.63

2017 3.359.85 28,474.99 11.79

2018 4,504.86 32,230.49 13.97

2019 3,985.28 33,650.54 11.84

2020 4,304.50 28,836.09 14.92

SOURCE: SECONDARY DATA

INTERPRETATION:
That Chart Shows that Working Capital in 2016 is 6.63. It Further Increases up to 11.79
and In 2020 the Working Capital is 14.92.
The Company Working Capital is Rising Up.

16
14
12
10
8
6
4
2
0
2016 2017 2018 2019 2020

Figure 4.4 Working Capital Ratio for the period of 2016 – 2020

36
 Table 4.5 Gross Profit Ratio for the period of 2016 – 2020 (Rs. In Cr.)
YEAR GROSSS PROFIT SALE RATIO(%)

2016 4,434.87 28,442.70 15.609

2017 4,658.46 28,474.99 16.381

2018 5,244.16 32,230.49 16.290

2019 5,010.73 33,650.54 14.890

2020 3,896.32 28,836.09 13.588

SOURCE: SECONDARY DATA

INTERPRETATION:
The ratio indicates the efficiency of production or trading operations. In 2014
the gross profit margin was 15.6%. In 2015 and 2016, the gross profit margin was
16.38% and 0.34 used

18

16

14

12

10

0
2016 2017 2018 2019 2020

Figure 4.5 Gross Profit Ratio for the period of 2016 – 2020

37
 Table 4.6 Net Profit Ratio for the period of 2016 – 2020 (Rs. In Cr.)

YEAR NET PROFIT SALE RATIO(%)

2016 3,160.19 28,442.70 11.11%

2017 3,377.12 28,474.99 11.84%

2018 3,697.36 32,230.49 11.47%

2019 3,384.87 33,650.54 10.05%

2020 3,633.26 28,836.09 12.59%

SOURCE: SECONDARY DATA

INTERPRETATION:
In 2016, the company having 10.95% of net profit. In 2017 and 2018, the company
having 11.84% and 11.47% of Net Profit. In 2017, The Company Profit Decrease in
2019 and The company profit increase in 2020.

14
12
10
8
6
4
2
0
2016 2017 2018 2019 2020

Figure 4.6 Gross Profit Ratio for the period of 2016 – 2020

38
Table 4. 7 Fixed Assets Turnover Ratio for the period of 2016 – 2020 (Rs. In Cr.)

YEAR NET SALE FIXED ASSETS RATIO

(Times)
2016 28,442.70 4442.14 15.617

2017 28,474.99 4860.64 17.069

2018 32,230.49 4972.93 15.429

2019 33,650.54 5160.44 15.335

2020 28,836.09 6458.35 22.390

SOURCE: SECONDARY DATA

INTERPRETATION:
A higher Fixed-asset turnover ratio is more favorable compared with a lower ratio.
Analysis of fixed assets turnover ratio reveals that it is increasing in the last year
signifying that there is an improvement in the utilization of resources.

25

20

15

10

0
2016 2017 2018 2019 2020

Figure 4.7 Fixed Assets Turnover Ratio for the period of 2016 – 2020

39
Table 4.8 Current Assets Turnover Ratio for the period of 2016 – 2020 (Rs. In Cr.)

YEAR NET SALE CURRENT RATIO

ASSET (Times)

2016 28,442.70 5,935.09 15.617

2017 28,474.99 7,453,18 17.069

2018 32,230.49 8,848.18 15.429

2019 33,650.54 8,115.64 15.335

2020 28,836.09 8,280.56 22.390

SOURCE: SECONDARY DATA

INTERPRETATION:
Analysis of current assets turnover ratio reveals that it is increasing during 2018 to
2019. A higher ratio is always more favorable. Higher turnover ratios mean the company
is using its assets more efficiently. This chart shows that the company isn't using its
assets efficiently.

5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2016 2017 2018 2019 2020

Figure 4.8 Current Assets Turnover Ratio for the period of 2016 – 2020

40
Table 4.9 Proprietor’s Ratio for the period of 2016 – 2020 (Rs. In Cr.)
YEAR SHAREHOLDER’S TOTAL ASSETS RATIO
FUNDS (Times)
2016 7,944.75 12,340.69 0.643

2017 10,111.29 10,111.29 0.688

2018 11,768.88 11,768.88 0.703

2019 12,857.12 12,857.12 0.878

2020 14,136.40 14,136.40 0.753

SOURCE: SECONDARY DATA

INTERPRETATION:
It shows that proprietary ratio was high in the year 2019 with 0.878 and low in the
year 2016 with 0.643. Thus, it can be said that the company is maintaining the long term
solvency. The current year (2020) proprietary ratio is found to be 0.0753 it is in a
decreasing position compare to 2019. The Proprietary ratio which shows the
relationship between the shareholders’ funds to total tangible assets. The ratio is in the
decreasing manner due to the fluctuation in the total assets.

0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2016 2017 2018 2019 2020

Figure 4.9 Proprietor’s Ratio for the period of 2016 – 2020

41
 Table 4.10 Debt Equity Ratio for the period of 2016 – 2020 (Rs. In Cr.)

YEAR DEBT SHAREHOLDER’S RATIO

EQUITY (Times)
2016 347.12 7944.75 0.044

2017 489.64 10,111.29 0.048

2018 626.60 11,768.88 0.053

2019 653.71 12,857.12 0.050

2020 636.87 14,136.40 0.045

SOURCE: SECONDARY DATA

INTERPRETATION:
From the above chart, in 2016 to 2020 it is in positive value. In 2018, the debt -
equity ratio is increased 0.053.

DEBT EQUITY RATIO

0.06

0.05

0.04

0.03

0.02

0.01

Figure 4.10 Debt Equity Turnover Ratio for the period of 2016 – 2020

42
Table 4.11 Inventory Position for the Period 2016 – 2020 (Rs. In Cr.)

YEAR 2016 2017 2018 2019 2020

Raw
Material 375.16 395.02 512.98 615.99 567.65

Goods in
Transit of 13.57 27.43 150.70 38.25 48.82
Raw Material

Working in
Process 27.91 31.89 31.60 31.37 50.13

Finished
Goods

Two
Wheelers 111.25 55.85 103.37 113.21 263.33

Spare Parts 54.66 42.91 44.21 37.60 38.50

Stores and
Spares 70.70 82.32 63.92 98.91 97.98

Loose Tools
19.73 20.89 18.40 24.59 25.52

TOTAL 672.98 656.31 823.58 1,072.37 1,091.97

43
Table 4.12 Inventory Turnover Ratio for the period of 2016 – 2020 (Rs. In Cr)

YEAR SALE Average RATIO

Inventory
(Times)
2016 28,442.70 10821.17 26.41

2017 28,474.99 947.97 31.38

2018 32,230.49 739.94 39.13

2019 33,650.54 644.64 43.39

2020 28,836.09 744.33 42.50

SOURCE: SECONDARY DATA

INTERPRETATION:
The chart shows that inventory turnover ratio in 2016 it is 26.41, in 2017 it is
increases to 31.38 and in 2018 again it is increased and reached to 39.13 and in 2019
and 2020 again it is increasing more than 40.

INVENTORY TURNOVER RATIO

45
40
35
30
25
20
15
10
5
0
2016 2017 2018 2019 2020

Figure 4.12 Inventory Turnover Ratio for the period of 2016 – 2020.Table

44
4.13 Debtor Turnover Ratio for the period of 2016 – 2020 (Rs. In Cr)

YEAR SALE TRADE RECEIVABLE RATIO

(Times)
2016 28,442.70 1282.80 22.17

2017 28,474.99 1561.87 18.23

2018 32,230.49 1520.18 21.20

2019 33,650.54 2821.57 11.92

2020 28,836.09 1603.14 17.98

SOURCE: SECONDARY DATA

INTERPRETATION:
The chart shows that debtor turnover ratio in 2016 it is 22.17, in 2017 it is
decreases to 0.44 and in 2018 again it is increase and reached to 7.6 and in 2019 again
it increases to 10 and in 2020 it is decreased and reached to 9.5

DEBTOR TURNOVER RATIO

25

20

15

10

0
2016 2017 2018 2019 2020

Figure 4.13 Debtor Turnover Ratio for the period of 2016 – 2020.

45
 Table 4.14 Creditor Turnover Ratio for the period of 2016 – 2020 (Rs in Cr)

YEAR SALE TRADE PAYABLE RATIO

(Times)
2016 28,442.70 2766.88 10.27

2017 28,474.99 3247.27 8.76

2018 32,230.49 3318.81 9.71

2019 33,650.54 3355.28 10.03

2020 28,836.09 3030.51 9.5

SOURCE: SECONDARY DATA

INTERPRETATION:
The chart shows that Creditor Turnover ratio in 2016 it is 10.27, in 2017 it is decreases
to 8.76 and in 2018 again it is increase and reached to 9.71 and in 2019 again it
increases to 10 and in 2020 it is decreased and reached to 9.5

CREDITOR TURNOVER RATIO

10.5

10

9.5

8.5

8
2016 2017 2018 2019 2020

Figure 4.14 Debtor Turnover Ratio for the period of 2016 – 2020.

46
TREND ANALSIS RATIO:

Table 4.15 Trend analysis for current assets for the period 2016-2020 (Rs. In Cr)
YEAR CURRENT ASSETS TREND
ANALYSIS
2016 5,935.09 100

2017 7,453,18 125.5

2018 8,848.18 149

2019 8,115.64 137.7

2020 8,280.56 139.5

SOURCE: SECONDARY DATA

INTERPRETATION:
From the above trend analysis showing, it is inferred as base year 2016. Current asset has
been Increasing during the year 2016 and 2017. The current year 2020 trend percentage for
current asset is 139.5.

160

140

120

100

80

60

40

20

0
2016 2017 2018 2019 2020

Figure 4.2.1 Trend analysis for current assets for the period of 2016-2020

47
Table 4.16 Trend analysis for current liability for the period 2016-2020 (Rs. In Cr)

YEAR CURRENT LIABILTIES TREND

ANALYSIS

2016 4,048,82 100

2017 4,093.33 101

2018 4,343.32 107

2019 4,130.36 102

2020 3,976.06 98

SOURCE: SECONDARY DATA

INTERPRETATION:
From the above trend analysis showing, it is inferred as base year 2016. Current
Liabilities has been Increasing during the year 2016 and 2017. The current year 2020
trend percentage for current asset is 98.
108

106

104

102

100

98

96

94

92
2016 2017 2019 2020

Figure 4.16 Trend analysis for current liability for the period of 2016-2020

48
Table 4.17 Trend analysis for sale for the period of 2016-2020 (Rs. In Cr)

YEAR SALE TREND

ANALYSIS
2016 28,442.70 100

2017 28,474.99 100

2018 32,230.49 113

2019 33,650.54 118

2020 28,836.09 101

SOURCE: SECONDARY DATA

INTERPRETATION:
The sales have continuously increased in all the years up to 2019, though in
different proportions. The percentage in 2018 is 101% as compared to 100 in 2020. The
increase in sales is quite satisfactory.

120

115

110

105

100

95

90
2016 2017 2018 2019 2020

Figure 4.17 Trend analysis for sale for the period of 2016-2020

49
Table 4.18 Trend analysis for Net profit for the period of 2016-2020 (Rs. In Cr)

YEAR NET PROFIT TREND ANALYSIS

2016 3,160.19 100

2017 3,377.12 93.57

2018 3,697.36 116.9

2019 3,384.87 107

2020 3,633.26 114.9

SOURCE: SECONDARY DATA

INTERPRETATION:
The Net Profit have continuously increased in all the years up to 2020, though in
different proportions. The percentage in 2017 is 93.57% as compared to 114.9 in 2020.
The increase in Net Profit is quite satisfactory

140

120

100

80

60

40

20

0
2016 2017 2018 2019 2020

Figure 4.18Trend analysis for net profit for the period of 2016-2020

50
 4.3 COMPARATIVE BALANCE SHEET
TABLE 4.3.1 COMPARATIVE BALANCE SHEET OF 2016-2017 (Rs. In Cr)
PARTICULARS 2016 2017 AMT CHANGES
(2016-2017)
ASSETS

Tangible Assets 3,717.85 4,310.73 592.88

Intangible Assets 118.89 84.86 34.03
Capital Work in 288.34 270.72 17.62
Progress
FIXED ASSETS 4,442.14 4,860.64 418.5
Non-Current 1,019.36 1,349.00 329.64
Investments
Long Term Loans 870.42 48.36 - 822.06
And Advances
Other Non-Current 73.68 983.08 909.4
Assets
TOTAL NON- 6,405.60 7,241.08 835.48
CURRENT
ASSETS
CURRENT
ASSETS
Current 3,247.01 4,540.85 1293.84
Investments
Trade Receivable 1,282.80 1,561.87 279.07
Cash and Cash 136.73
Equivalents
Short Term 521.46 24.18 -497.28
LoansAnd
Advances
Other Current 79.48 533.24 453.76
Assets

51
TOTAL CURRENT 5,935.09 7,453.18 1518.09
ASSETS
TOTAL ASSETS 14,694.26 16,738.80 2,044.54
LIABILITIES

Equity Share 39.94 39.94 -

Capital

TOTAL SHARE 39.94 39.94 -

CAPITAL

Reserves and 7,904.81 10,071.35 2166.54

Surplus

TOTAL 7,944.75 10,111.29 2166.54

SHAREHOLERS
FUNDS

NON-CURRENT
LIABILITIES

LONG TERM 0.00 0.00 -

BORROWINGS

DEFERRED TAX 227.79 414.34 186.55

LIABILITIES

Other LongTerm
Liabilities 0.00 34.89 34.89

Long Term
Provisions 84.44 75.30 -9.14

TOTAL NON-
CURRENT 347.12 489.64 142.52
LIABILITIES

CURRENT
LIABILITIES

Trade Payables 2,766.88 3,247.27 480.39

Other Current 483.19 807.05 323.86

Liabilities

52
Short Term 798.75 39.01 -759.74
Provisions

TOTAL CURRENT
LIABILITIES 4,048.82 4,093.33 44.51

TABLE 4.3.2 COMPARATIVE BALANCE SHEET OF 2017-2018 (Rs. In Cr)

PARTICULARS 2017 2018 AMT CHANGES
(2017-2018)
ASSETS

Tangible Assets 4,310.73 4,485.89 175.16

Intangible Assets 84.86 168.65 83.79

Capital Work in 270.72 203.78 -66.94

Progress

FIXED ASSETS 4,860.64 4,972.93 112.29

Non-Current 1,349.00 1,934.08 585.08

Investments

Long Term Loans 48.36 45.68 -2.68

And Advances

Other Non-Current 983.08 937.93 -45.15

Assets

TOTAL NON- 7,241.08 7,890.62 649.54

CURRENT
ASSETS

CURRENT
ASSETS
Current 4,540.85 5,591.12 1,050.27
Investments

Trade Receivables 1,561.87 823.58 -738.29

53
Cash and Cash
Equivalents 136.73 141.34 4.61

Short Term Loans

And Advances 24.18 27.56 3.38

Other Current
Assets 533.24 744.40 211.16

TOTAL
CURRENT 7,453.18 8,848.18 1395
ASSETS

TOTAL ASSETS 14,694.26 16,738.80 2,044.54

LIABILITIES

Equity Share
Capital 39.94 39.94 -

TOTAL SHARE
CAPITAL 39.94 39.94 -

Reserves and 10,071.35 11,728.94 1,657.59

Surplus

TOTAL 10,111.29 11,768.88 1,657.59

SHAREHOLERS
FUNDS

NON-CURRENT
LIABILITIES

DEFERRED TAX 414.34 511.66 97.32

LIABILITIES

Other Long Term

Liabilities 34.89 0.00 -34.89

Long Term
Provisions 75.30 114.94 39.64

TOTAL NON-
CURRENT 489.64 626.60 136.96
LIABILITIES

54
 CURRENT
LIABILITIES

Trade Payables 3,247.27 3,318.81 71.54

Other Current 807.05 964.72 157.67

Liabilities

Short Term 39.01 59.79 20.78

Provisions

TOTAL CURRENT 4,093.33 4,343.32 249.99

LIABILITIES

TOTAL CAPITAL 14,694.26 16,738.80 2044.54

AND LIABILITIES

TABLE 4.3.2 COMPARATIVE BALANCE SHEET OF 2018-2019 ( Rs. In Cr)

PARTICULARS 2018 2019 AMT CHANGES

(2018-2019)
ASSETS

Tangible Assets 4,485.89 4,477.53 -8.36

Intangible Assets 168.65 141.05 -27.6

Capital Work in 203.78 360.67 156.89

Progress
FIXED ASSETS 4,972.93 5,160.44 187.51

Non-Current 1,934.08 2,801.51 867.43

Investments

Long Term Loans 45.68 59.96 14.28

And Advances

Other Non-Current 937.93 1,503.64 565.71

Assets

TOTAL NON- 7,890.62 9,525.55 1,634.93

CURRENT

55
ASSETS

CURRENT
ASSETS

Current
Investments 5,591.12 3,167.10 2,423.02

Trade Receivables 1,520.18 2,821.57 1,301.39

Cash and Cash

Equivalents 141.34 136.46 -4.88

Short Term Loans

And Advances 27.56 25.03 -2.53

Other Current
Assets 744.40 893.11 148.71

TOTAL
CURRENT 8,848.18 8,115.64 -732.54
ASSETS

TOTAL ASSETS 16,738.80 17,641.19 902.39

LIABILITIES

Equity Share 39.94 39.95 0.01

Capital

TOTAL SHARE 39.94 39.95 0.01

CAPITAL

Reserves and 11,728.94 12,807.58 1,078.64

Surplus

TOTAL 11,768.88 12,809.58 1,040.7

SHAREHOLERS
FUNDS

NON-CURRENT
LIABILITIES

56
DEFERRED TAX 536.51 24.85
LIABILITIES 511.66

Other Long Term

Liabilities 0.00 0.00 -

Long Term
Provisions 114.94 117.20 2.26

TOTAL NON-
CURRENT 626.60 653.71 27.11
LIABILITIES

CURRENT
LIABILITIES

Trade Payables 3,318.81 3,355.28 36.47

Other Current 964.72 716.05 -248.67

Liabilities

Short Term 59.79 59.03 -0.76

Provisions

TOTAL CURRENT
LIABILITIES 4,343.32 4,130.36 212.96

TOTAL CAPITAL 16,738.80 17,641.19 902.39

AND LIABILITIES

TABLE 4.3.3 COMPARATIVE BALANCE SHEET OF 2019-2020 (Rs. In Cr)

PARTICULARS 2019 2020 AMT CHANGES

(2019-2020)
ASSETS

Tangible Assets 4,485.89 4,477.53 -8.36

Intangible Assets 168.65 141.05 -27.6

Capital Work in 203.78 360.67 156.89

Progress

57
Long Term Loans 45.68 59.96 14.28
And Advances

Other Non-Current 937.93 1,503.64 565.71

Assets

TOTAL NON- 7,890.62 9,525.55 1,634.93

CURRENT
ASSETS

CURRENT
ASSETS

Current 5,591.12 3,167.10 2,423.02

Investments
1,520.18 2,821.57 1,301.39
Trade Receivables

Cash and Cash 141.34 136.46 -4.88

Equivalents

Short Term Loans 27.56 25.03 -2.53

And Advances

Other Current
Assets 744.40 893.11 148.71

TOTAL 8,848.18 8,115.64 -732.54

CURRENT
ASSETS

TOTAL ASSETS 16,738.80 17,641.19 902.39

LIABILITIES

Equity Share 39.94 39.95 0.01

Capital

TOTAL SHARE 39.94 39.95 0.01

CAPITAL

Reserves and 11,728.94 12,807.58 1,078.64

Surplus

58
TOTAL 11,768.88 12,809.58 1,040.7
SHAREHOLERS
FUNDS

NON-CURRENT
LIABILITIES

DEFERRED TAX 511.66 536.51 24.85

LIABILITIES

Other Long Term

Liabilities 0.00 0.00 -

Long Term
Provisions 114.94 117.20 2.26

TOTAL NON-
CURRENT 626.60 653.71 27.11
LIABILITIES

CURRENT
LIABILITIES

Trade Payables 3,318.81 3,355.28 36.47

Other Current 964.72 716.05 -248.67

Liabilities

Short Term 59.79 59.03 -0.76

Provisions

TOTAL CURRENT
LIABILITIES 4,343.32 4,130.36 212.96

TOTAL CAPITAL 16,738.80 17,641.19 902.39

AND LIABILITIES

59
 CHAPTER 5
5.1 FINDINGS:

❖ The current year 2020 current ratio is found to be the highest 2.084 due to the
decrease in the liabilities.
❖ The Quick Ratio of all the above then Four years is above the Standard Quick
Ratio.
❖ The current year 2020 cash ratio has increased to 1.20 when compared to the
previous year 2019 with 1.17.
❖ The Fixed Assets Turnover Ratio of the firm has in 2019 the ratio is 15.335 and
it increase in the next year 2020 with 22.390.
❖ The Current Assets Turnover Ratio is Increasing during the Period of 2017 and
again decrease in the Period of 2019, and Again increase in the Next year 2020
with 22.390.
❖ Share Capital has been remained Constant.
❖ Gross profit ratio is rising which is good for the company.
❖ Net profit ratio is showing rising percentage of profit of Hero MotoCrop Limited
which show it is a growing company.
❖ It Showed that Inventory Turnover Ratio of company is in 2016 Which rises to
in 20 and increases again to
❖ The Working Capital Ratio is Increasing during the Period of 2017 and 2018
Again Decreasing in the Period of 2019, and Again Increasing in the Next Year
2020 with 14.92

5.2 SUGGESTIONS

❖ It is suggested to the company can strongly focus on cost reduction strategy that
will make a company more profitability.
❖ The company has a bright future if it concentrates more on its working capital
short term, investments, thus achieving the overall objectives of the company.

60
 ❖ Thus it is essential to avoid excessive liquidity but to maintain sufficient liquidity
to ensure smooth running of the company operation.
❖ The company has better liquidity position and has to maintain same in the future.
❖ If Company Cut Down its Unnecessary expenses then they can increase their net
Profit Which is a major Impact for Company.
❖ Company may look into the measures how to reduce the loans and Loans and
Advances in the coming periods.
❖ Company may look into maintain the current assets and current liabilities.
Current liabilities may reduce coming periods

5.3 CONCLUSION:

❖ The Company has been to increase its Sales and Profit during the Year. The Net
Profit ratio has increased which proved the company has been able to control the
cost Effectively.
❖ Financial performance can improve the financial strength of company. The
company liquidity position has to increase and it will solve future problem. The
company is maintaining the reserves and surplus better so it can face financial
stress in the future. To proper maintain of financial performance to achieve the
company goal.
❖ The Current Assets of the company are enough to meet the Current Liabilities,
Hero Moto Crops Limited Holding the Highe4st Share in Two Wheeler’s Market.
❖ The company has increasing liabilities over years. The company has also raised
its investments and reserves for future purpose.
❖ This clearly shows that the company is in the developing nature and their position
in the society is satisfactory.

61
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 APPENDIX
BALANCE SHEET OF HERO MOTOCROP LIMITED (in Rs. Cr.)

PARTICULARS MAR 20 MAR 19 MAR 18 MAR 17 MAR 16

12 mths 12 mths 12 mths 12 mths 12 mths
EQUITIES AND
LIABILITIES
SHAREHOLDER'S
FUNDS
Equity Share 39.95 39.95 39.94 39.94 39.94
Capital
TOTAL SHARE 39.95 39.95 39.94 39.94 39.94
CAPITAL
Reserves and 14,081.01 12,807.58 11,728.94 10,071.35 7,904.81
Surplus
TOTAL 14,081.01 12,807.58 11,728.94 10,071.35 7,904.81
RESERVES AND
SURPLUS
TOTAL 14,136.40 12,857.12 11,768.88 10,111.29 7,944.75
SHAREHOLDERS
FUNDS
NON-CURRENT
LIABILITIES
Long Term 0.00 0.00 0.00 0.00 0.00
Borrowings

Deferred Tax 392.83 536.51 511.66 414.34 227.79

Liabilities [Net]

Other Long Term 121.67 0.00 0.00 0.00 34.89

Liabilities

Long Term 122.37 117.20 114.94 75.30 84.44

Provisions

TOTAL NON- 636.87 653.71 626.60 489.64 347.12

CURRENT
LIABILITIES
CURRENT
LIABILITIES

65
Short Term 0.00 0.00 0.00 0.00 0.00
Borrowings

Trade Payables 3,030.51 3,355.28 3,318.81 3,247.27 2,766.88

Other Current 798.99 716.05 964.72 807.05 483.19

Liabilities

Short Term 146.56 59.03 59.79 39.01 798.75

Provisions

TOTAL CURRENT 3,976.06 4,130.36 4,343.32 4,093.33 4,048.82

LIABILITIES

TOTAL CAPITAL 18,749.33 17,641.19 16,738.80 14,694.26 12,340.69

AND LIABILITIES
ASSETS

NON-CURRENT
ASSETS
Tangible Assets 5,976.99 4,477.53 4,485.89 4,310.73 3,717.85

Intangible Assets 140.09 141.05 168.65 84.86 118.89

Capital Work-In- 160.25 360.67 203.78 270.72 288.34

Progress
Other Assets 0.00 0.00 0.00 0.00 0.00

FIXED ASSETS 6,458.35 5,160.44 4,972.93 4,860.64 4,442.14

Non-Current 3,528.17 2,801.51 1,934.08 1,349.00 1,019.36

Investments

Deferred Tax 0.00 0.00 0.00 0.00 0.00

Assets [Net]

Long Term Loans 67.27 59.96 45.68 48.36 870.42

And Advances
Other Non-Current 406.98 1,503.64 937.93 983.08 73.68
Assets

TOTAL NON- 10,460.77 9,525.55 7,890.62 7,241.08 6,405.60

CURRENT
ASSETS
CURRENT

66
ASSETS
Current 4,694.48 3,167.10 5,591.12 4,540.85 3,247.01
Investments

Cash And Cash 241.86 136.46 141.34 136.73 131.36

Equivalents

Short Term Loans 22.36 25.03 27.56 24.18 521.46

And Advances

Other Current 634.75 893.11 744.40 533.24 79.48

Assets

TOTAL CURRENT 8,288.56 8,115.64 8,848.18 7,453.18 5,935.09

ASSETS

TOTAL ASSETS 18,749.33 17,641.19 16,738.80 14,694.26 12,340.69

67