hero motocorp 1.1

HumMain Hai Hero

Introduction

• Hero Motocorp Ltd, formerly Hero Honda, is an Indian motorcycle and scooter manufacturer based in New Delhi, India.

• It has three manufacturing facilities based at in Haryana and Uttarakhand.

• It has a large sales and service network with over 3,000 dealerships and service points across India.

• It accounts for 46% of all bikes sold in India. The company exports to Africa, Asia, Eastern Europe and Latin America.

• Hero Honda has a simple vision - the vision of a mobile and an empowered India, powered by its two wheelers

Source: http://www.heromotocorp.com/en-in/

Timeline Post De-merger2012: • 1. Debut in the AMA Superbike Racing in the US• 2. Migration of all products to Brand Hero• 3. Launch of Impulse, Maestro and Ignitor

2013:1. Global Parts Centre Foundation Stone laid2. 50 Million cumulative 2 wheelers production3. Neemrana Plant Foundation Stone laidSource: http://www.heromotocorp.com/en-in/

Dec.2010,Termination of joint venture

Only 26% stake for Hero Group in Hero

Honda JV.

Hero Group could not export to international but termination meant

export. Heavy reliance on Honda for Japanese

technology

Demerger


Reasons for the Split.

Actions Taken.

Issues that Arose after the Demerger


Key Personnel

Dr. Brijmohan Lall Munjal- Founder Director and Chairman of the Company and the $3.2 billion Hero Group

- Past President of (a) Confederation of Indian Industry (CII) (b) Society of Indian Automobile Manufacturers

(SIAM)

- Member of the Board of the Country's Central Bank (Reserve Bank of India).


Mr. Pradeep Dinodia

Gen. (Retd.)V. P.

Mr. Suman Kant Munjal

Mr. Paul Edgerly

Board Of Directors

Board Of Directors

Mr. M Damodaran

Dr. Pritam Singh

Mr. Ravi NathMr. Pawan Munjal

Shareholding PatternHolder's Name No of Shares % Share Holding

Promoters 79712482 39.92%

Foreign Institutions 60658982 30.38%

Foreign OCB 24547008 12.29%

Financial Institutions

13504113 6.76%

General Public 12721316 6.37%

Banks Mutual Funds

4023499 2.01%

Other Companies 3189393 1.6%

Others 1108136 0.55%

Foreign NRI 222571 0.11%

Products And Services

• The company sells a range of products in motorcycles and scooters (2-wheeler category).

• It also produces and sells spare parts for its 2-wheelers.


Motorcycles

It has 17 models of motorcycles across the 100 cc, 125 cc, 150 cc, 225 cc categories.

Key products : • Splendor• Passion• Glamour • CBZ X-treme • Hunk, • Ignitor


Scooters

It has 2 models in scooters:

• Pleasure• Maestro


90%

10%

Motorbikes

Scootors

Sales Volume Contribution (%)

Exports

• Hero MotoCorp as of now exports only to Latin and Central America and Africa

• They aiming to sell one million units across the world by 2016-2017

• The Hero motorcycles to be sold in these markets

include a mix of models from the 100cc and 125cc range.

• For the fiscal 2013-14, Hero MotoCorp has earmarked Rs 1,100 crore as capital expenditure

• Exports grew 24% during the year 2011-2012, as they exported 164,570 two-wheelers

Achievements

• Green Pioneer award

• Best value for money bike maker

• Life achievement awards from TERI, E&Y, AIMA and ET.

• The Brand Trust Report published by Trust Research Advisory ranked Hero Honda in the 13th position.

• Forbes 200 ‘Most Respected’ companies

• Indian Automotive Hall of Pride by Overdrive Source: http://www.heromotocorp.com/en-in/

Abridged Annual Statements of

Past 5 years

• Balance Sheet (March 2009-2013)

• Profit and Loss (March 2009-2013)

Source: www.moneycontrol.com

SOURCES OF FUNDS Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

Total Share Capital 39.94 39.94 39.94 39.94 39.94

Equity Share Capital 39.94 39.94 39.94 39.94 39.94

Share Application Money

0.00 0.00 0.00 0.00 0.00

Preference Share Capital

0.00 0.00 0.00 0.00 0.00

Reserves 4,966.30 4,249.89 2,916.12 3,425.08 3,760.81

Revaluation Reserves

0.00 0.00 0.00 0.00 0.00

Networth 5,006.24 4,289.83 2,956.06 3,465.02 3,800.75

Secured Loans 302.16 994.85 1,458.45 0.00 0.00

Unsecured Loans 0.00 0.00 32.71 66.03 78.49

Total Debt 302.16 994.85 1,491.16 66.03 78.49

TOTAL LIABILITIES

5,308.40 5,284.68 4,447.22 3,531.05 3,879.24

Balance Sheet

APPLICATION OF FUNDS

Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

Gross Block 4,427.29 6,308.26 5,538.46 2,750.98 2,516.27

Less: Accum. Depreciation

1,356.31 2,522.75 1,458.18 1,092.20 942.56

Net Block 3,070.98 3,785.51 4,080.28 1,658.78 1,573.71

Capital Work in Progress

62.09 193.95 125.14 48.14 120.54

Investments 3,623.83 3,964.26 5,128.75 3,925.71 3,368.75

Inventories 636.76 675.57 524.93 436.40 326.83

Sundry Debtors 665.00 272.31 130.59 108.39 149.94

Cash and Bank Balance

181.04 56.10 47.75 1,863.48 217.49

Total Current Assets 1,482.80 1,003.98 703.27 2,408.27 694.26

Loans and Advances 1,401.95 926.99 783.48 438.46 325.80

Fixed Deposits 0.00 20.72 23.77 43.73 2.08

Total CA, Loans & Advances

2,884.75 1,951.69 1,510.52 2,890.46 1,022.14

Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 2,893.39 3,520.66 5,316.40 3,965.69 1,678.93

Provisions 1,439.86 1,090.07 1,081.07 1,026.35 526.97

Total CL & Provisions 4,333.25 4,610.73 6,397.47 4,992.04 2,205.90

Net Current Assets -1,448.50 -2,659.04 -4,886.95 -2,101.58 -1,183.76

Miscellaneous Expenses

0.00 0.00 0.00 0.00 0.00

TOTAL ASSETS 5,308.40 5,284.68 4,447.22 3,531.05 3,879.24

Financial Performance Analysis of Consolidated

Balance Sheet

Net Worth

Total Debt

Total current assets and loans and advances

5006

295634

65

3800

4289

Net Worth

Total Assets and Total Asset Turnover ratio

2008-09 2009-10 2010-11 2011-12 2012-13

3879.243531.05

4447.22

5284.68 5308.4

Total Assets Rs. in cr.

2008-09 2009-10 2010-11 2011-12 2012-130

5000

10000

15000

20000

25000

30000

Sales Rs. in cr.

2008-09 2009-10 2010-11 2011-12 2012-130123456 Total Asset Turnover Ratio

Announced an investment of Rs 2,575 crore in expanding capacity at its three existing plants

The company will make initial investment of Rs.400 crore in the Neemrana facility.

Hero MotoCorp has also signed a state support agreement (SSA) with the Gujarat government to set up a new plant in the site.

Current Investments


INCOME

Sales Turnover23,768.

1125,252.

9820,787.

2716,856.

4313,553.

23

Excise Duty 0.001,666.1

81,420.3

01,016.8

51,227.8

5

Net Sales23,768.

1123,586.

8019,366.

9715,839.

5812,325.

38

Other Income 398.38 347.46 238.27 290.69 222.14

Stock Adjustments 0.00 94.03 27.00 -11.54 22.09

TOTAL INCOME24,166.

4924,028.

2919,632.

2416,118.

7312,569.

61

EXPENDITURE

Raw Materials17,470.

7317,485.

6514,236.

4510,822.

998,842.1

4

Power & Fuel Cost 129.18 112.66 100.47 81.05 73.70

Employee Cost 820.92 735.52 618.95 560.32 448.65

Other Manufacturing Expenses

0.00 51.62 409.89 454.36 354.08

Selling and Admin Expenses 0.001,257.8

41,090.7

2885.03 669.98

Miscellaneous Expenses2,025.3

3389.52 340.42 280.64 205.90

Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00

TOTAL EXPENSES20,446.

1620,032.

8116,796.

9013,084.

3910,594.

45

Profit And Loss Statement


Operating Profit 3,321.95 3,648.02 2,597.07 2,743.65 1,753.02

PBDIT 3,720.33 3,995.48 2,835.34 3,034.34 1,975.16

Interest 11.91 33.43 28.20 11.14 13.04

PBDT 3,708.42 3,962.05 2,807.14 3,023.20 1,962.12

Depreciation 1,141.75 1,097.34 402.38 191.47 180.66

Other Written Off 0.00 0.00 0.00 0.00 0.00

Profit Before Tax 2,566.67 2,864.71 2,404.76 2,831.73 1,781.46

Extra-ordinary items 0.00 0.00 0.00 0.00 0.00

PBT (Post Extra-ord Items) 2,566.67 2,864.71 2,404.76 2,831.73 1,781.46

Tax 411.04 486.58 476.86 599.90 499.70

Reported Net Profit 2,118.18 2,378.13 1,927.90 2,231.83 1,281.76

Total Value Addition 2,975.43 2,547.16 2,560.45 2,261.40 1,752.31

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 1,198.13 898.59 2,096.72 2,196.56 399.38

Corporate Dividend Tax 203.62 145.77 340.14 371.00 67.87

Per share data (annualised)

Shares in issue (lakhs) 1,996.88 1,996.88 1,996.88 1,996.88 1,996.88

Earning Per Share (Rs) 106.07 119.09 96.55 111.77 64.19

Equity Dividend (%) 3,000.00 2,250.00 5,250.00 5,500.00 1,000.00

Book Value (Rs) 250.70 214.83 148.03 173.52 190.33

Financial Performance Analysis Of Consolidated

Profit & LossNet Sales

Operating Profit

Earning Per Share

ROCE

EBITDA

PBT

PAT

Net Sales

1583

9

2358

6

1936

6

1232

5

2376

3

Source: http://www.moneycontrol.com/india/stockpricequote/auto-23-wheelers/hero-honda-motors/HHM

Operating ProfitSource: http://www.moneycontrol.com/india/stockpricequote/auto-23-wheelers/hero-honda-motors/HHM

Earning Per Share

2008-09 2009-10 2010-11 2011-12 2012-130

20

40

60

80

100

120

140

64.19

111.77

96.55

119.09

106.07

EPS


ROCE

48.5

7

52.1

3

49.8

3

75.0

5

43.3

3


Ebitda

3720

3995

2835

3034

1975


PBT

2566

2864

2404

2831

1781


PAT

2118

2231

1281

2378

2007


Key Indicators of Profitability (%)

2012-13 2011-12 2011-10

Return on Capital Employed 48.57 49.83 52.13

Profit After Tax/ Income from Operations 92.57 100.7 101.9

Profit Before Tax/ Income from Operations 112.1 121.3 127.2

Profit Before Interest and Tax/ Income from Operations 136.40 122.81 106.33

Operating Profit before Tax/ Income from Operations 145.1 154.5 137.3

Operating Profit Before Depreciation, Interest And Tax/

Income from Operations162.5 169.3 149.9

Ratio Analysis

Turnover Ratio

Mar '11Mar '12

Mar '13

0

5

10

15

20

25

30

35

4.674.77

4.67

4.58 6.11 7.53

31.95

29.5132.11

Total Assets Turnover Ratio

Fixed Assets Turnover Ratio

Inventory Turnover Ratio

Source-Moneycontrol.com

Liquidity Ratio

Mar '11Mar '12

Mar '13

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.132

0.285

0.512

0.231

0.477

0.733000000000001

Quick RatioCurrent Ratio


Profitability Ratio

Mar '11 Mar '12 Mar '130

2

4

6

8

10

12

14

16

11.3310.81

9.17

13.4

15.46

13.97

9.89

10.04

8.76Gross Profit Margin(%)Operating Profit Margin(%)Net Profit Margin(%)


Leverage Ratio

Mar '11

Mar '12

Mar '13

0 50 100 150 200 250 300

100.544

119.518

312.37

85.275

85.693

215.505

0.335

0.188

0.057

Debt Equity RatioInterest CoverFinancial Charges Cov-erage Ratio


Creditor’s Payment Period Calculation

Year Creditors’ Days

2010-11 45.126

2011-12 41.979

2012-13 33.442

Peer Group Analysis

Source: www.moneycontrol.com www.money.livemint.com

http://www.moneycontrol.com/

Top 5 Listed Competitors

Bajaj Auto Limited LML Maharashtra Scooters

TVS Motor Company Limited

Kinetic Motors

46%

20%

17%

10%

4%2%

1%

Current market Share

Hero Moto CorpBajaj AutoHondaTVSYamahaSuzukiMahindra

Sales Growth Trend Analysis

Companies Average of past 5 years

Hero Motorcorp 8.158

Bajaj Auto 14.566

LML -30.364

Maharashtra Scooters Ltd. -18.7

TVS Motors 1.154

Kinetic Motors -45.14

2008-09 2009-10 2010-11 2011-12 2012-13

-140

-120

-100

-80

-60

-40

-20

0

20

40

Sales Margin

Hero Motocorp Bajaj Auto LMLMaharashtra Scooters Ltd. TVS Motors Kinetic Motors

Sales Margin of past 5 years

EBIDTA (in Cr.)

ROCE (in %)

Hero MotoCor

p

Bajaj Auto LML Maharashtr

a Scooters TVS Kinetic

3,111.8 13,136.722 -11.44 14.69 362.79

6 -7.82

Hero MotoCor

p

Bajaj Auto LML Maharashtr

a Scooters TVS Kinetic

53.786 56.04 35.87 a11.38 10.61 379.886

ROE (in %)

PAT (in Cr.)

Hero MotoCor

p

Bajaj Auto LML

Maharashtra

ScootersTVS Kinetic

54.092 59.532 0.00 8.008 13.84 0.00

Hero MotoCor

p

Bajaj Auto LML

Maharashtra

ScootersTVS Kinetic

19,875.56

23,494.92 -62.89 16.55 84.40 -22.36

Net Sales

Company Name

Last Price Change % Change Net Sales(Rs. cr)

Hero Motocorp 2,265.25 18.75 0.83 23,768.11

Bajaj Auto 2,078.95 23.00 1.12 19,997.25

TVS Motor 96.00 0.30 0.31 7,065.00

LML 5.20 -0.01 -0.19 245.39

Mah Scooters 463.75 0.00 0.00 6.70

Kinetic Eng 40.35 0.00 0.00 80.22

Comparison between

Source: www.money.livemint.com

BAJAJ AUTOHERO

MOTOCORP

Dividend Payout Ratio (%) 41.6 56.6 73.5%

Dividend Payout Ratio

Market Cap

(Rs. Cr)

Revenue (Rs. Cr)

Net Profit (Rs. Cr)

Net Margin (%)

RoE (%) Price to Book

Price to Earnings

Hero Motocorp

44,818.86 24,908.26 2,128.88 8.40 45.57 6.83 21.05

Bajaj Auto 59,945.27 19,963.70 3,245.16 15.66 43.66 5.83 18.47

Past 1 year comparison

Source: www.money.livemint.com

Source: www.economictimes.com

Stock Price Comparison–Top 5

Company Name 1 Year 9 Month 6 Month 3 Month 1 Month 2 Week 1 Week Last Price

Bajaj Auto 1794.9015.94%

1917.458.53%

1988.204.67%

1900.409.50%

1942.707.12%

1968.405.72%

1977.905.21% 2,081.00

Hero Motocorp 1541.9047.46%

1662.2536.78%

2008.8013.18%

2067.509.97%

1965.1015.70%

2100.608.24%

2066.9010.00% 2,273.65

Kinetic Eng 54.85-26.44%

52.00-22.40%

68.00-40.66%

39.003.46%

38.754.13%

38.704.26%

39.053.33% 40.35

LML 5.102.94%

5.102.94%

5.40-2.78%

6.69-21.52%

5.191.16%

5.151.94%

5.063.75% 5.25

Mah Scooters 369.1025.98%

410.0013.41%

393.4518.19%

405.8014.59%

516.20-9.92%

468.55-0.76%

471.10-1.29% 465.00

TVS Motor 32.45196.15%

32.80192.99%

36.80161.14%

78.9521.72%

85.9011.87%

86.2011.48%

96.40-0.31% 96.10

Source: www.moneycontrol.com

http://www.moneycontrol.com/india/stockpricequote/auto23wheelers/bajajauto/BA10

http://www.moneycontrol.com/india/stockpricequote/auto23wheelers/heromotocorp/HHM

http://www.moneycontrol.com/india/stockpricequote/auto23wheelers/kineticengineering/KE

http://www.moneycontrol.com/india/stockpricequote/auto23wheelers/lml/LML

http://www.moneycontrol.com/india/stockpricequote/auto23wheelers/maharashtrascooters/MS01

http://www.moneycontrol.com/india/stockpricequote/auto23wheelers/tvsmotorcompany/TVS

Growing working

population

Middle class population

expanding by 3mn a year

Fast paced urbanization

Lack of good public

transport

Increasing city limits

Reasons for Growth

Future Growth• The company aims of achieving revenues of

$10billion and volumes of 10 million two-wheelers by 2016-17

• Hero MotoCorp hopes to achieve 10 per cent of their revenues from international markets

• Hero Motocorp achieved a turnover of 24,000 crore in the last year and it plans on achieving a turnover of 60,000 crores by 2020.

• Launching as many as 12 new products by April 2014.

• Entering new markets by 2050 the country is expected to top the world with approximately 611million vehicles on the nation’s road.

Upcoming Projects

• Setting up a fourth plant at Neemrana in Rajasthan

• Setting up a fifth plant at Halol in Gujarat

• Setting up a new state-of-the-art integrated R&D centre at Kukas, Rajasthan

• Setting up a Global Parts Centre (GPC) at Neemrana, Rajasthan


Bibliography

• http://autocarpro.in/contents/technologyDetails.aspx?

TechnologyID=122

• http://www.wheelsunplugged.com/news/hero-motocorp-plans-go-

abroad-new-models-year/1236

• http://en.wikipedia.org/wiki/Hero_MotoCorp#cite_note-livemint1-20

• http://www.thehindubusinessline.com/companies/hero-motocorp-q1-

net-down-11-at-rs-549-cr/article4948658.ece

• http://www.moneycontrol.com/india/stockpricequote/auto-23-

wheelers/hero-honda-motors/HHM

• http://www.heromotocorp.com/en-in/

Group Members • Abhishek Shinde -13002

• Divya Gandhi -13021

• Imad Sirkhot -13032

• Karen D’Souza -13037

• Ketaki Misra -13038

• Kirk Coutinho -13040

hero motocorp 1.1

Education