CHAPTER-IINTRODUCTION 1 INTRODUCTION: Financial statements are prepared primarily for decision making. They play a dominant role in setting the framework of managerial decisions. But the information provided in the financial statements is not an end in itself as no meaningful conclusions can be drawn from these statements alone. However, the information provided in the financial statements is of immense use in making decisions through analysis and interpretation of financial statements. Financial analysis ‘the process of identifying the financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account’ There are various methods or techniques used in analyzing financial statements financial statements are an important source of information for evaluating the performance and prospects of firm, if properly analyzed and interpreted these statements can provide valuable insights into firm’s performance. Analysis of financial statements is if interest to lenders, investors, security analyst, manager and others. Financial statements analysis may be done for a variety of purposes, which may range from simple analysis of short term liquidity position of the form to a comprehensive assessment of the strengths and weakness of the firm in various areas, it is helpful in assessing corporate excellence, judging credit worthiness forecasting bond rating, evaluating intrinsic value of equity shares predicting bankruptcy and assessing market risk. Financial statements: Managers, shareholders, creditors and other interested groups seek answer to the following question about firm: What is the financial position of the firm at a given point of time? How has the firm performed financially over a given period of time? What have been the sources an d uses of cash over a given period? 2 To answer these questions, accountant prepares two principle statements, the Balance sheet and the profit and loss account, ancillary statement, the Cash Flow statement. Analysis of financial statement Analysis refers to the process of critical examination of the financial information contained in the financial statement in order to understand and make decisions regarding the operations of the firm. The analysis is basically study of the relationship among various financial facts and figure as given in a set of financial statements. Complex figure as given in this statements are dissected\broken up into simple and variable element and significant relationship are established between the elements of the same statements are different financial statements. This process of dis section, establishing and identifying the financial weaknesses and strengths of the firm. It is indicative of two aspects of a firm i.e. the profitability and the financial position and it are what are known as the objectives of the analysis. Procedure of Financial Statements Analysis Broadly speaking there are three steps involved in the analysis of financial statements. There are: Selection, Classification, Interpretation. The first step involves selection of information (data). The second step involved is the methodical classification of the data and the third step includes drawing of internees and conclusions. The following procedure is adopted for the analysis and Interpretation of financial 3 statements: The analyst should acquaint himself with the principles and postulates of accounting. The extent of analysis should be determined so that the sphere of work may be decided. The financial data given in the statements should be re-organized and re-arranged. A relationship is established among financial statements with the help of tools and techniques of analysis such as ratios, trends, common size, funds flow etc. The information is interpreted in a simple and understandable way. The significance and utility of financial data is explained for helping decision-taking. The conclusions drawn from interpretation are presented to the management in the form of reports. Objectives of the study: To analysis the financial statements and present its financial positions. To assess and evaluate the performance of the company. To determine the efficiency of operations as reflected in the financial statements. To offer appropriate suggestions for better performance of the company. Need and importance of the study: Financial analyst analyses the financial statements with various tools of analysis before commanding upon the financial health of the firm. Essential to bring out the history of Hero Moto Corp Ltd. (Formerly Hero Honda Motors Ltd.). 4 Common-size financial statements. when. the following are some the techniques of the AFS: Comparative financial statements. Research methodology: Research design This is a systematic way to solve the research problem and it is important component for the study without which researches may not be able to obtain the format. Trend percentage analysis. Scope of the study: Analysis of financial statement can be undertaken by different persons and for different purposes. Statement of changes in financial position. decision regarding what. Cost-volume-profit relations. the scope of the AFS may be varying from one situation to another. by what means concerning an inquiry of a research study constitute a research design. therefore. However. popularly known as the research design. Meaning of research design The formidable problem that follows the task of defining the research problem is the preparation of design of the research project. and Ratio analysis and others. A research design is the arrangement of 5 . A research design is the arrangement of conditions for collection and analysis of data in a manager that aims to combine for collection and analysis of data relevance to the research purpose with economy in procedure. Significance and meaning of the financial statements. where. how much. It includes data gathered from the annual reports of Hero Moto Corp Ltd Articles are collected from official website of Hero Moto Corp Ltd. and thus happen to be original in character. 6 . through magazines. Primary data Secondary data Primary data: The Primary data are those information’s. Secondary Data: The Secondary data are those which have already been collected by some other agency and which have already been processed. Sources of data The process of research work done the present project work is “financial statement analysis” in this project the methodology adopted is the two steps. Data collection Data analysis Data collection:- Data means the information regarding the topic so researched this can be done using two sources. browsing Internet.conditions for collection and analysis of data in a manager that aims to combine for collection and analysis of data relevance to the research purpose with economy in procedure. which are collected afresh and for the first time. The sources of Secondary data are Annual Reports. Data analysis:- Data analysis is the time series analysis where tables and graphs have been used to analysis the data the following tools has been applied. Statement of changes in financial position. Different people may interpret the same analysis in different ways. It does not consider the changes in prices level. Trend percentage analysis. and Ratio analysis and others. Comparative financial statements. Limitation of the study: It is only a study of interim reports. Cost-volume-profit relations. Financial analysis is based upon only monetary information and non monetary factors are ignored. 7 . Changes in accounting procedure by firm may often make financial analysis misleading. Common-size financial statements. CHAPTER-II REVIEW OF LITERATURE 8 . The analysis and interpretation of financial statements is essential to bring out the mystery behind the figures in financial statements. Before making his conclusion regarding the illness and before giving his treatment. etc. Financial statements analysis is an attempt to determine the significance and meaning of the financial statement data so that forecast may be made of the future earnings. profit and loss account and other operative data.Financial Statement Analysis Introduction: The term ‘financial analysis also known as analysis and interpretation of financial statements’ . blood pressure. OBJECTIVES OF FINANCIAL STATEMENT 9 . a financial analyst analysis the financial statements with various tools of analysis before commenting upon the financial health or weaknesses of an enterprise. ability to pay interest and debt maturities (both current and long term) and profitability of a sound divided policy. “Analyzing financial statements” by Metcalf and Titard “Financial analysis is a process of evaluating the relationship between component parts of a financial statement to obtain a better understanding of a firms position and performance” by Myers The purpose of financial analysis is to diagnose the information contained in financial statements so as to Jude the profitability and financial soundness of the firm. refers to the process of determining financial strength and weaknesses of the firm by establishing strategic relationship between the items of the balance sheet . Just like a doctor examines his patient by recording his body temperature. solvency and other indicators to assess its operating efficiency. financial position and performance. To identify the reasons for change in the profitability\financial position of the firm. To find out the relative importance of different components of the financial position of the firm. profitability. Department-wise efficiency can also be judged from the available data. This will enable the management to locate weak spots of the business and take necessary remedial action. Significance of financial analysis Analysis of financial statement is carried out to measure the enterprise’s liquidity.Broadly the objective of the Analysis of Financial statement is to understand the information contained in the financial statement with a view to the weakness and strengths of the firm and to make forecast about the future prospects of the firm and their by enabling the financial analyst to take different decision regarding the operation of the firm. To assess the short-term as well as the long-term liquidity position of the firm. To know the operational efficiency of the business: The financial analysis enables the management to find out the overall efficiency of the firm. Financial Analysis serves the following purpose. 10 . To find out the ability of the firm to meet its current obligations. To examine the solvency of the firm. The objectives of the analysis can be identified as: To assess the present profitability and operating efficiency of the firm as a whole as well as for its different departments. Inter-firm comparison: The financial analysis makes easy to inter-firm comparison. Various financial characteristics like profitability. It should satisfy itself that its current resources are sufficient to meet its current liabilities. Comparison of past and present results: Financial statement of the previous years can be compared and the trend regarding various expenses. the capacity of the business to repay their loans. proprietary and fixed assets ratios. Through Financial statement it is possible to known: Whether current assets are sufficient to meet current liabilities. Help in measuring the profitability: Financial statements show the gross profit. values of assets and liabilities can be compared and the future prospects of the business can be indicated. 11 . Proportion of liquid assets to current assets. purchases. The cost of goods sold. the long term financial position can be measured by calculated debt equity. and other expenses. This is possible through the calculations of liquid ratios. Thus. This comparison can also be made for various time periods.e. Futures prospects of the business. The relationship of these items can be established with sales by calculating operating ratios. solvency of different firms can be compared. On the other hand. the financial analysis helps the decision makers in taking appropriate decisions for strengthening the shortterm as well as long-term solvency of the firm. sales gross profit can be ascertained. Helpful in measuring the solvency of the firm: The firm must know its financial soundness. Helps in judging the solvency of the undertaking: creditors are always interested in knowing the solvency i. net profit. liquidity. This type of analysis helps the managers in taking certain decisions for improving the profitability or reducing the losses of the firm. Capital budgets are prepared after taking into account the profitability of various alternative proposals. Types of financial analysis:Financial analysis into different categories depending upon The material used and The method of operation followed in the analysis or the modus operandi of analysis 12 . Helps in forecasting: The financial analysis will help in assessing future development by making forecasts and preparing budgets. Whether debentures and other loans are secured or not. Financial statement analysis accomplishes this through the evaluation of solvency position. Bankruptcy and failure: Financial statement analysis is a significant tool in predicting the bankruptcy and failure of the business enterprises. Managerial efficiency of the company. The trend shown by financial analysis will pave way for the future. potential investors . financial analysis can be of two types External analysis Internal analysis External analysis:This analysis is done by outsiders who do not have access to the detailed internal outsiders include investors.Types of financial analysis On the basis of material used on the basis of modus operandi External Internal Horizontal Vertical Analysis Analysis Analysis Analysis On the basis of material used: According to material used. Credit agencies and General Public for financial analysis. Potential Creditors. these external parties to the firm depend almost entirely on the published financial statements. Government Agencies . Creditors. Internal analysis:The analysis conducted by persons who have access to the internal 13 . Parties interested in financial analysis: Financial Executives:14 . The figures of the various years are compared with standard or base year a base year is year chosen as beginning point. The horizontal analysis makes it possible to focus attention on items that have changed significantly during the period under view Vertical analysis:Vertical analysis refers to the study of relationship of the various items in the financial statements of one accounting period in this types of analysis the figures from financial statement of a year are compared with a base selected from the same years statement. On the basis of modus operandi: According to the modus operandi financial analysis can also be of two types Horizontal analysis Vertical analysis Horizontal analysis:Horizontal analysis refers to the comparison of financial data of a company for several years. The figures for this type of analysis are presented horizontally over a number of columns. This type of analysis is also called ‘dynamic analysis’ as it is based on the data from year to year rather than on data of any one year.accounting records of a business firm is known as internal analysis. soundness of the financial structure. As such. Every investor has the tendency to get fair return on his or her investment. profitability of the operations. Investors have been increased concerned with the cash generation capability of an enterprise primarily in terms of the flexibility availability to such enterprises to acquire other business and new assets on an advantageous basis. Some of the aspects of enterprise operations that are of interested of the creditors are liquidity of funds. which help in future decisions making. effectiveness of working capital management etc. The bankers and trade creditors of a business enterprise are interested in its cash generation and credit worthiness. are interested in the business in the measurements of earning capital of securities.The first party interested in the financial analysis in the financial department of the business concern who have a deep insight into the financial condition of the enterprise and view of the past performance. Creditors:- Creditors also evaluate the financial statements and on the basis of these financial statements they come about the credit worthiness of the business enterprise and chosen to extend. Creditors will be interested to give credit for those business enterprises having sound financial position and having capable of being repayments of their credit. Management:- The management of the concern is also interested in the analysis of the statements because it helps them in reaching conclusion regarding the overall operation of the business. maintain of restrict credit. Investors:- Investors present as well as prospective. The get all this information from the analysis of balance sheet and income statement of the company. return on analysis is very important for them. They want to assess whether the enterprise will be as interested payments due as per agreed schedules. The management is interested in every aspects of the financial analysis it is there overall responsibility to see that the resources of the firm are used effectively and efficiently and the firm’s financial position is sound. For 15 . Procedures for financial analysis: The following is the procedure to be followed by the interested parties in analyzing the financial statements. The nature of analysis will differ depending on the purpose of the analysis. confidence to the evaluation of the firm’s liquidity position. The bankers will analysis the balance sheet to determine financial strength of the concern and profit and loss account will also be studied to find out earning position. investors. The information provided by the analysis and interpretation of various financial statements is important and useful to those groups also that are interested in working of the business due to one or other motive. who have invested their money in long-term debt. Their analyses will. For example. Determination of nature and extent of analysis: First of all. Similarly. The suppliers of interested in knowing its ability to generate cash to be able to pay interest and return their claims. Bankers:- The banker is interested to see that the loan amount is secure and the customer is also able to take the interest regularly. The government studies economic situation of the country from these statements enable the government to find out whether business is following various rules and regulations or not. on the other hand. trade creditors and bankers are interested in knowing whether the firm can pay back their debt in short period. the depth. are interested in the firms 16 . Government:- The financial statements are used to assess the tax liability of the business enterprise. object and extent of analysis is to be determined by the financial analyst. therefore.this purpose each cash flow analysis and funds flow analysis are very useful. profitability over time. re-classification of consolidation of items etc. The approximation of figures. They are the firm’s shares. This includes any other information not being revealed from the published financial statements. Limitations of financial analysis : Historical data: Analysis of the financial statements indicates about the performance of the business in the processing period or periods. Methods of analysis: Now the financial analyst may use one or multiple methods of financial analysis. management of the firm would be interest red in every aspect of the financial analysis. is done in this step. cash flow statements and cost volume profit analysis (CVP analysis). Financial statements are prepared on historical facts and do not throw light on the current and present position of the business. Rearrangement of financial data: Before making actual analysis and interpretation. As such. ratio analysis. it is necessary for the analyst to go through the various financial statements of the firm. common size statements. Interpretation and presentation: After analyzing the statements the interpretation is to be made. trend analysis. It does not indicate the present position of the business. funds flow statements.. Finally. 17 . The interference drawn from the analysis are presented in the scope of reports to the management. The methods of financial analysis are: comparative statements. the analyst must rearrange the data provided by these statements in useful manner. are most concerned about the firms earnings. Vertical of the financial statements: Before analyzing and preparing any statement or composing financial ratios. they concentrate on the analysis of the firms financial position to the extent it influences the firms earnings ability. Collection of necessary statements: The analyst should collect other useful information from the management useful for analysis. if the prices of commodities are different. there is sufficient possibility of manipulation and the financial statements have to suffer.000 to Rs. Interest may be charged on different rates. where as actual efficiency may not improve. Lack of standard terminology: Accounting is not an exact science. It does not universally accepted terminology. 18 .400 crores. if price level changes have not been accounted for. the analysis of one firm reveals that the increase in profits from Rs.20. Change in price affects cost of production. Different meanings are given to a particular term. Affects of prices level changes: The results shown by financial statements may be misleading. It completely ignores human resources. In this way. It means that analysis of financial statements measures only one sided performance of the business. As a consequence financial analysis also proves to be defective. As such. in the recent past the international accounting board is taking interest and taking measures for standardizing the accounting terminology as well as bringing standards for being uniformity in accounting system. For example.000 shows that the profit has increased by four times. sales and value of assets and as a consequent comparability of ratios also suffers. technical know how and the efficiency of its employees and managers. Misleading results: Results shown by financial analysis may be misleading in the absence of absolute date. The ratio may improve with the increase in price. showing four fold increases. But this analysis ignored the size of the firms. It is the quantitative measurement of the performance. the results may mislead.100 crores toRs.80. Non-consideration qualitative aspect: financial analysis does not measure the qualitative aspects of the business it does not show the skill. There are different methods of providing depreciation. In case of another firm the analysis reveals that the profit of this firm als increased from Rs. However. Ratios of the two years will not be meaningful for comparison. Methods of financial analysis:The following methods of analysis are generally used: Comparative Statements.e. Common-Size Statements. Trend Analysis. Cash Analysis Ratio Analysis Cost-volume-Profit Analysis COMPARATIVE STATEMENTS:The comparative financial statements are statements of the financial position at different periods of time . Generally two financial statements (balance sheet and income statement) are prepared in comparative form for financial analysis. 19 . THE COMPARATIVE STATEMENT MAY SHOW: Absolute figures (rupee amounts) Changes in absolute figures i. Funds flow Analysis.the elements of financial position are show in a comparative Statement provides an idea of financial position at two or more periods. increase or decrease in absolute figures. COMPARATIVE BALANCE SHEET:Comparative balance sheet as on two or more different dates can be used for comparing assets and liabilities and finding out any increase or decrease on those items. However. it is ordinary desired that the balance sheet. Trend percentages are more useful in such cases. Comparative financial statements can be prepared for more than 2 periods or on more than two dates. In any one year. it is on change in the comparative balance sheet. the income statement and surplus statement be give for 1 or more proceeding year as well as for the current year”. The change in periodic balance sheet items reflect the conduct of a business the change can be observed by comparison of the balance sheet at 20 . and Income statement. group of items and computed items in two or more balance sheets of the same business enterprise on different dates. THE TWO COMPARATIVE STATEMENTS ARE: Comparative balance sheet. while in a single balance sheet the emphasis is on present position. Increase or decrease in terms of percentages. Such presentation emphasis the fact that statements for series of periods are far more significant than those of a single period and that the accounts of 1 period are but an installment of what is essentially a continuous history. Thus. it becomes very cumbersome to study the trend with more than 2 periods data. Such a balance sheet is very useful in studying the trends in an enterprise. The comparative balance sheet analysis is the study of the trend of the same items. Acc to American institute of certified public accountant “the presentation of comparative financial statements in annual and other reports enhances the usefulness of such reports and brings out more clearly the nature and trend of current changes affecting the enterprise. Absolute data in terms of percentages. total liabilities and total sales. The total assets are taken as 100 and different assets are expressed as a percentage of the total similarly. COMMON SIZE BALANCE SHEET:A statement in which balance sheet items are expressed as the ratio of each asset to total assets and the ratio of each liability is expressed as a ratio of total liabilities is called common size balance. The common size balance sheet can be used to compare companies of differing size. COMMON SIZE STATEMENT:The common-size statements. The trends of figures from year to year may not be studied and even they may not give proper results. Guide lines for interpretation of comparative balance sheet:While interpreting comparative balance sheet the interpreter is expected to study the following aspects: Current financial position and liquidity position Long-term financial position Profitability of the concern. 21 . The figures are shown as percentages of total assets.the beginning and at the end of a period and these changes can help in forming an opinion about the progress of an enterprise. It is not possible to establish standard norms for various assets. The comparison of figures in different periods is not useful because total figures may be affected by a number of factors. various liabilities are taken as a part of total liabilities. balance sheet and income statement are show in analytical percentages. Common size balance sheet is prepared by stating the total assets as 100 and reducing individual assets into % of the total. be carried further and extended to the study of what portion of a sub-group. it may be of interest to know not only what proportion of total assets are inventories. An analysis of the pattern of distribution of liability reveals the debt--equity position of the company too large a % of liabilities. A closer scrutiny of the common size balance sheet discloses that this statement focuses on two important aspects. Comparison of common size statement of single enterprise over the year’s valuable in that reveals the changing proportions of components within groups of assets and liabilities. The trend figure are index figures giving a bird’s eye view of 22 . Thus. in assessing the liquidity of current assets. of course. the problem of actual comparability between them is a matter to be resolved by the analyst judgment. long-term liabilities and equity capital. the common size balance sheet percentage shows the relation the of each asset item to total assets and of each liability and owner’s equity. And a relatively low margin of safety for creditors. fixed assets and others. individual liability items are expressed as percentage of the total liabilities. rather than the total. Distribution pattern of assets as between current assets. Thus. However. While common size statements do not focus light on the relative sizes of individual companies which are compared. Trend analysis : Trend analysis depicts behavior of the ratios over a period of time and the trends in the operation of the enterprise. Likewise. an item is. but also what proportion of current assets is represented by this asset. care must exercise in interpreting such changes and the trend which discloses. Distribution pattern of liabilities as between current liabilities. A study of common size statement of the company with that of a competitive company or the industry would show whether or not the company is the managing assets efficiently. The common size balance sheet analysis can. By studding the trend analysis of each item we can known the direction of changes and based upon the direction of changes. RATIO ANALYSIS INTRODUCTION: 23 . Trend = Absolute Value of item in the statement understudy *100 Absolute Value of same item in the base statement Fund flow statements Cash flow analysis is a valuable aid to the financial executive and creditors for evaluating the uses of funds by the firm and in determining how these uses were financed.the comparative data by presenting it’s over a period of time. Their method of analysis is one of ‘direction’. They are important tools for communication and very helpful for financial executives in planning the intermediate and long-term financing of the firm. Under this form of analysis. It is a dynamic analysis depicting the changes over a stated period. TREND ANALYSIS OF BALANCE SHEET:Trend analysis is Very important tool of horizontal financial analysis. often called as pyramid method of ratio analysis. Thus is horizontal analysis of financial statement. A cash flow statement indicates where funds came from and where it was used during the period under review. the options can be changed.a guide to yearly changes. This analysis enables to known the change in the financial function and operating efficiency in between the time period chosen. generally financial ratios are studied for a specified number if years. Ratio analysis is most widely used and powerful tool or technique of financial analysis. Financial analysis is undertaken by the management of the firm or by parties outside to it viz. IMPORTANCE OF RATIO ANALYSIS 24 . efficiency and profitability can be assessed. no purpose will be served by comparing two sets of figures which are not at all connected with each other. owners. a better understanding of the financial condition and performance of the firm than what he could have obtained only through a perusal of financial statements. MEANING OF RATIOS: Ratios are relationships expressed in mathematical terms between figures which are connected with each other in some manner.Ratio analysis is one of the techniques of financial analysis where ratios are used as a yardstick for evaluating the financial condition and performance of a firm. Percentage Fraction Proportion A study of the trend of strategic ratios helps the management in planning. It helps in identifying specific work areas. the firm’s solvency. cash flow analysis and ratio analysis. Moreover. etc. common size statements. though the technique of ratio analysis. The term ratio refers to the numerical quantitative relationship between two variables. Obviously. funds flow analysis. absolute figures are also unfit for comparison. Analysis and interpretation of various accounting ratios gives skilled and experienced analysis. Comparative statements. which can be expressed in three ways. It shows arithmetical relationship between two figures. There are various techniques or models for analyzing information contained in the financial statements viz. trend percentages. creditors. In short. forecasting and decision – making. investors. “ratios can assist management in its basic function of forecasting. If relationship changes in firm’s data over different time periods. control and communication”. Ratio analysis also makes possible comparison of the performance of the different divisions of the firm. over – valued and under – valued firms. It helps in assessing the financial strength and weakness of the firm and this enhances the value of the financial statements. They also reveal strong firms and weak firms. Comparative study of the ratios between the competing firms helps to know the efficiency of the firm. Ratio analysis helps in simplifying the financial statement for easy understanding. The ratios are helpful in deciding about their efficiency or otherwise in the past and likely performance in the future. Thus. Over a period of time a firm or industry develops certain norms that may include future success or failure. Ratio analysis helps in planning and forecasting. Ratio analysis provides data for inter-firm comparison. planning. coordination. Ratio analysis helps the employees interested in wage increase and fringe benefits that are related the volume of profits earned by the concern. Ratios highlight the factors associated with successful and unsuccessful firms. 25 . the ratios may provide clues on trends and future problems. It helps the investor to assess the financial position of the concern in which he is going to invest. It helps in drawing out meaningful conclusion from the information provided in the financial statements which is useful for decision making and framing sound policies for business in future. Change in accounting procedure may be misleading for ratio analysis. which may lead to confusion to the analyst in making any meaningful conclusion. change in inventory valuation methods from LIFO to FIFO may also influence in the analysis. which may not necessarily true indicators of the future. Ratio analysis considers only quantitative aspects. Ratio analysis when interpreted by different people in different way may encounter with the personal bias or prejudice of the analyst. For example.LIMITATIONS OF RATIO ANALYSIS Ratios are of limited use and thus single ratio may not be useful. Ratios are classified as: liquidity ratios leverage ratios coverage ratios activity ratios (or) turnover ratios profitability ratios LIQUIDITY RATIOS: 26 . Better interpretation is possible with the calculation of number of ratios. Ratios are calculated on the basis of past results. Ratio analysis may give misleading results If the effects of price level changes are not considered. if the business policies are constantly changing. but not qualitative factors. The firm’s funds will be unnecessarily locked up in current assets. These ratios are used to measure the firm’s ability to meet short – term obligations. The long-term creditors are more concerned with the firm’s long-term financial position. The creditors of the firm are primarily interested in the short – term solvency of the firm. current ratio (or) working capital ratio quick ratio (or) acid test ratio cash position ratio (or) super stock quick ratio LEVERAGE RATIO: These ratios are also known as capital structure ratios or solvency ratios or capital gearing ratios. Commonly used liquidity ratios include. Low liquidity implies the firm’s inability to meet its maturing obligations. A very high liquidity position is also bad. They judge the financial soundness of the firm in the firm in term of the ability to pay interest promptly as well as making repayment of the principal. They compare short-term obligation to short term (or current) resources available to meet these obligations. It means that the firm’s current assets are too high in proportion to maturing obligations. and indicate the extent of a firm’s liquidity. The ratios. This will result in bad credit rating. which if. A firm’s liquidity should be neither too high nor too low but adequate.A liquidity ratio is also known as short-term solvency. released can be used to generate profits to the firm. The long-term solvency of the firm can be examined with the help of leverage ratios. Idle assets earn nothing to the firm. much insight can be obtained into the present cash solvency of the firm and firm’s ability to remain solvent in the event of adversity. are known as liquidity ratios or short-term solvency ratios. ultimately leading to the closure of the firm. They measure the funds supplied by owners as compared with the financial provided only a small 27 . loss of creditor’s confidence or even technical insolvency. From these ratios. which measure. proportion of total financing, the risks of the business are borne mainly by the creditors. Firm with low leverage have less risk of loss, but they also have lower expected returns. Conversely, firm with high leverage ratios have the risk of large losses but also have a chance of earning huge profits. Therefore, before deciding whether a firm should have debt, it must balance higher expected returns against increased risks. The most commonly examined leverage: ratios are debt equity ratio proprietor ratio debt to capital ratio gross fixed assets to shareholders funds fixed assets ratio COVERAGE RATIOS: These ratios indicate the extent to which the interest of the persons entitled to get a fixed return (i.e. interest or dividend) or a scheduled repayment as per agreed terms is safe. The higher the cover the better it is. Under this category the following ratios are calculated. fixed interest coverage ratio fixed dividend coverage ratio debt service coverage ratio ACTIVITY RATIO (OR) TURNOVER RATIO: The finances obtained by the firm from its owners and creditors will be inverted in assets, 28 which the firm uses to generate sales and profits. The amount of sales generated and the profit earned depend on the effective and efficient management of these assets by the firm. Activity ratios measure the efficiency with which the firm manages and uses its assets. That is why activity ratios are known as efficiency ratios, because these ratios are converted or turned over in to sales. Thus the turnover or activity ratios measure the relationship between sales on one side and various assets on the other side. Higher the turnover ratio, the better the profitability and use of capital. Many activity ratios can be calculated to measure the efficiency of assets utilization. Following are some of the important activity ratios. total assets turnover ratio capital employed turnover ratio fixed assets turnover ratio current assets turnover ratio working capital turnover ratio stock turnover ratio debtors turnover ratio creditors turnover ratio PROFITABILITY RATIOS: Profitability is the ability to make profits. Every firm should earn adequate profits in order to survive in the immediate present and grow in future. In fact, profit is what makes the business run. Profitability is the net results of large number of policies and decisions. Profitability ratios give final answers about how efficiency the firm is managed. The 29 profitability ratio relates profits earned by a firm by its parameters like sales, capital employed and net worth. But while making ratio analysis relating to profits, it should be remembered that there are different concepts of profit such as concepts of profit such as contribution, gross profits, net profits, EBIT, operating profits, profits before depreciation and before tax etc. Profitability ratios are important for a concern. These ratios are calculated to enlighten the end results of business activities, which is the sole criterion of the overall efficiency of a business concern. The following are the important profitability ratio, which are based on. Sales Investment gross profit ratio operating ratio operating profit ratio net profit ratio return on capital employed return on shareholder’s equity return on total assets earnings per share dividend payout ratio 30 CHAPTER-III INDUSTRY PROFILE 31 After 1970. Maruti Suzuki and Mahindra and Mahindra.000 units. A number of foreign firms initiated joint ventures with Indian companies. the growth was relatively slow in the 1950s and 1960s due to nationalization and the license raj which hampered the Indian private sector. In February 2009. a number of 32 . the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions. Following the economic liberalization in 1991 and the gradual weakening of the license raj. In the 1980s. Following economic liberalization in India in 1991. Following the independence. However. Bryonic automotive industry emerged in India in the 1940s. Cars were still a major luxury. India's robust economic growth led to the further expansion of its domestic automobile market which attracted significant India-specific investment by multinational automobile manufacturers. behind Japan. Japanese manufacturers entered the Indian market ultimately leading to the establishment of Maruti Udyog. the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry. expanded their domestic and international operations. It was at this time that the Indian government chose Suzuki for its joint-venture to manufacture small cars. Several Indian automobile manufacturers such as Tata Motors. the automotive industry started to grow.3 million units in 2008 In 2009. in 1947.Automobile industry in India The automobile industry in India is the ninth largest in the world with an annual production of over 2. but the growth was mainly driven by tractors. commercial vehicles and scooters. monthly sales of passenger cars in India exceeded 100. South Korea and Thailand. a number of Japanese manufacturers launched joint-ventures for building motorcycles and light commercial-vehicles. India emerged as Asia's fourth largest exporter of automobiles. the wheels were of the 33 . Gottiieb Daimler (who credited with the building the first motorcycle in 1885. The first commercial design was three-wheeler built by Edward Butler in Great Britain in 1884.. History of the two wheelers: The Britannica Encyclopedia a motorcycle as a bike or tricycle propelled by an internal – combustion engine (or. “Who invented the first motorcycle?” May seem like a simple question. Those bicycles in turn described from high-wheel bicycles. Since then. There was then felt the need for reliable constructions. The automobile was the reply to the 19th –century reams of self-propelling the horse-drawn bikeriage. although it had a smaller spring-loaded outrigger wheel on each side. automotive component and automobile manufacturing growth has accelerated to meet domestic and export demands. used iron banded wagon wheels. less often by an electric engine). and their tendency to toss their riders.Indian and multi-national car companies launched operations. The 1900s saw the conversion of many bicycles or pedal cycles by adding small. Tourist Trophy (TT) races were held on the Isle of main in 1907 as reliability or endurance races. i. bike bon fiber reinforced bodywork. bicycle. and were called “bone-crushers”. bicycle with front and rear wheels of the same size. propelled by the rider’s feet pushing against the ground. without pedals. both for their jarring ride.e. It was constructed mostly of wood. The high –wheelers descended from an early type of pushbike. Invention of two wheelers: The invention of two wheelers is a much-debated issue. Such were the proving ground for many new ideas from early two-stroke-cycle designs to supercharged multivalent engines mounted on aerodynamic. This led to road trial tests and competition between manufacturers. one wheel in the front and one in the back. “safety”. This employed a horizontal single-cylinder gasoline engine mounted between two steer able front wheels and connected by a drive chain to the rear wheel. with a pedal crank mechanism to drive the rear wheel. Similarly. the invention of the motorcycle created the self –propelling bicycle. centrally mounted spark ignition engine engines. These appeared around 1800. all branches of the armed forces in Europe used motorcycles principally for dispatching. it enjoyed a sport vogue until the Great Depression began in motorcycles lasted into the late 20th century. inefficiency in the public transportation 34 . The next notable two-wheeler though was the Hildebrand & Wolf Mueller. During World War 1. This destination was achieved due to variety of reason like restrictive policy followed by the government of India towards the passenger bike industry. Increasing popularity: The popularity of the vehicle grew especially after 1910. patented in Munich in 1894. IMC was the largest motorcycle manufacturer in the world producing over 20000 bikes per year. weight the vehicle being used for high-speed touring and sport competitions. an increasing number of powerful bikes have blazed the roads. It stands next only to Japan and China in terms of the number of V produced and domestic sales respectively. the French firm of DeDion-button built and engine that was to make the mass production and common use of motorcycle possible. in 1916. After the war. the Hence special from the Indian Motorcycle Company astounded the industry in 1931. the Indian motorcycle company introduced the model H racer. Before World War 1. rising demand for personal transport.iron-banded wooden-spooked wagon-type and it definitely had a “bone-crusher” chassis! Further developments: Most of the developments during the early phase concentrated on three and fourwheeled design since it was complex enough to get the machines running with out having to worry about them falling over. The more sophisticated of a 125cc model. Since then. The first motorcycle with electric start and a fully modem electrical system. In 1895. and placed it on sale. Historical industry developments: Indian is the second largest manufacturer and producer to two wheelers in the World. CONCLUSION: The two-wheelers market has had a perceptible shift from a buyers market to a 35 . And the then market leaders-Escorts and Enfield – were caught unaware by the onslaught of the 100cc bikes of the four Indo. With the availability of fuel-efficiency low power bikes. API and Enfield were the sole producers. These two players initially started with assembly of CKD Kits. In 1990 the entire automobile industry saw a drastic fall in demand.9 mn vehicles in 1990. all the major producers suffered from recession in FY93 and FY94. The industry saw a sudden growth in the 80s. gaining a top slot. This resulted in a decline of 15% in 1991 and 8% in 1992. The industry witnessed a steady of 14% leading to a peak volume of 1. TVS Suzuki and Hero Honda brought in the first two-stroke and four-stroke engine motorcycles respectively. Barring Hero Honda. resulting in Hero Honda –then the only producer of four stroke bikes (100cc category). resulting in a production loss of 0.4mn vehicles. and later on progressed to indigenous manufacturing. The Indian two-wheelers industry made a small beginning in the early 50s when Automobile products of India (API) started manufacturing scooters in the country. The industry had a smooth ride in the 50s. Until 1958. The first Japanese motorcycles were introduced in the early eighties.system etc. 60s and 70s when government prohibited new entries and strictly controlled capacity expansion. high input costs and reduced purchasing power due to significant like increased production in 1992.Japanese joint ventures. Hero Honda showed a marginal decline in 1992. The reason for recession in the sector were the incessant rise in fuel prices. The two –wheelers market was opened were opened to foreign competition in the mid-80s. demand swelled. due to new entrants coupled with recession in the industry resulted in companies either reporting losses or a fall in profits. is one of the leading companies in the two-wheeler industry. players will have compete on various fronts viz. Hero Honda motors LTd. productivity after sale service. company posted a 41.sellers market with a variety of choice.. In the short term. marketing and distribution.31.15% yoy rise in turnover to Rs. During the year. The four-stroke scooters will add new dimension to the two-wheeler segment in the coming future. compared to thirsty manufacturers in the bike industry. 36 . pricing. At present it is the market leader in the motorcycle segment with around 47% the market share during FY 2000 –01. The company has been consistently addressing the growing demand for motorcycles and has been cumulative customer base of over 4 million customers. This is due to oligopoly between top five players in the segment.5mn in motorcycles which driven by a 35. product acceptance.17% yoy rise in Motorcycle sales volumes. sales of two-wheelers will rise. technology product design. As incomes grow and people grow and people feel the need to own a private means of transport. The motorcycle segment will continue to lead the demand for two-wheelers in the coming years. Penetration is expected to increase to approximately to more than 25% by 2005. 686. Motorcycle sale is expected to increase by 20% yoy as compared to 1% growth in the scooter market and 3% by moped sales respectively for the next two years. which is expected to reach 5min mark with rural and semi-urban segment being the new class of consumers. restrictive policy on bike industry. market shares of individual manufacturers are going to be sensitive to capacity. This is due to poor road infrastructure and low per capita income. pricing and competitive pressures from other manufacturers. The company has emerged as one of the most successful players. much ahead of its competitions an account of its superior and reliable product quality complemented with excellent marketing techniques. The Asian continent is that largest user of the two-wheelers in the world. CHAPTER-IV COMPANY PROFILE 37 . In 2010.[8] Subsequently. the company introduced motorcycles that were popular in India for their fuel economy and low cost.Forget it' that emphasised the motorcycle's fuel efficiency helped the 38 . [10] Company profile “Hero” is the brand name used by the Munjal brothers for their flagship company Hero Cycles Ltd. Munjal family and Honda group both own 26% stake in the Company. Hero Honda started in 1984 as a joint venture between Hero Cycles of India and Honda of Japan. it was reported that Honda planned to sell its stake in the venture to the Munjal family. (BSE: 500182.The decision comes after 18 months of its split from Honda Motor. India. Ltd.Hero Motocorp approved a proposal to merge the investment arm of its parent-Hero Investment Pvt. During the 1980s. When Honda decided to move out of the joint venture. NSE: HEROMOTOCO) formerly Hero Honda is an Indian motorcycle and scooter manufacturer based in New Delhi.Shut it .[7] Hero Group bought the shares held by Honda. into the automaker.[6] In 2010. in August 2011 the company was renamed Hero MotoCorp with a new corporate identity. A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda Motors Limited At Dharuhera India. A popular advertising campaign based on the slogan 'Fill it .CORPORATE PROFILE About Company Hero Motocorp Ltd.[4] The company is the largest two wheeler manufacturer in India. [5] The 2006 Forbes 200 Most Respected companies list has Hero Honda Motors ranked at 108.[9] On 4th June 2012. Hero Honda has a customer loyalty program since 2000.[4] 1956—Formation of Hero Cycles in Ludhiana(majestic auto limited) 1975—Hero Cycles becomes largest bicycle manufacturer in India.[14] HISTORY Hero MotoCorp was started in 1984 as Hero Honda Motors Ltd. 1991—Hero Honda motorcycle CD 100 SS launched. 1997—Hero Honda motorcycle Street launched. The technology in the bikes of Hero Honda for almost 26 years (1984–2010) has come from the Japanese counterpart Honda [11] Hero MotoCorp has three manufacturing facilities based at Dharuhera. 39 .company grow at a double-digit pace since inception. Gurgaon in Haryana and at Haridwar in Uttarakhand. to cope with the new demand over the coming half decade. These plants together are capable of churning out 3 million bikes per year. 1989—Hero Honda motorcycle Sleek launched. The company has a stated aim of achieving revenues of $10 billion and volumes of 10 million two-wheelers by 2016-17. 1994 -.Hero Honda motorcycle Splendor launched. This in conjunction with new countries where they can now market their two-wheelers following the disengagement from Honda.000 dealerships and service points across India. There is no confirmation where the factories would be built. Hero MotoCorp hopes to achieve 10 per cent of their revenues from international markets. 1983—Joint Collaboration Agreement with Honda Motor Co. incorporated 1985—Hero Honda motorcycle CD 100 launched. In addition. Japan signed Shareholders Agreement signed 1984—Hero Honda Motors Ltd. and they expected to launch sales in Nigeria by end-2011 or early-2012.[13] called the Hero Honda Passport Program. the company was going to build their fourth factory in South India and their fifth factory in Western India.[12] Hero MotoCorp has a large sales and service network with over 3. Ltd. 2001 -. In November. Hero Honda motorcycle Passion Plus and Hero Honda motorcycle Karizma launched.Hero Honda motorcycle Passion and Hero Honda Joy launched. Hero Honda motorcycle CD Deluxe. 2009—New Models of Hero Honda motorcycle Karizma:Karizma . 2007—New Models of Hero Honda motorcycle Splendor NXG. 2005—Hero Honda motorcycle Super Splendor. Glamour Fi and Hero Honda motorcycle Passion Pro launched. 2011—New Models of Hero Honda motorcycles Glamour. Hero Honda motorcycle Achiever and Hero Honda Scooter Pleasure.ZMR and limited edition of Hero Honda motorcycle Hunk launched 2010—New Models of Hero Honda motorcycle Splendor Pro and New Hero Honda motorcycle Hunk and New Hero Honda Motorcycle Super Splendor launched. 2004—Hero Honda motorcycle Ambition 135 and Hero Honda motorcycle CBZ* launched. Glamour FI. New Models of Hero Honda motorcycle CD Deluxe. CBZ Xtreme. Hero launched its first ever Off Road Bike Named Hero "Impulse". New Models of Hero Honda motorcycle Passion Plus and Hero Honda motorcycle Hunk launched. 2008—New Models of Hero Honda motorcycles Pleasure. 40 . In August Hero and Honda parted company. Hero Honda motorcycle Splendor. 2003—Hero Honda motorcycle CD Dawn. Glamour. Hero Honda motorcycle Glamour. thus forming Hero MotoCorp and Honda moving out of the Hero Honda joint venture. 2002—Hero Honda motorcycle Dawn and Hero Honda motorcycle Ambition launched. CBZ Xtreme.Hero Honda motorcycle CBZ launched. 1999 -. Karizma launched. New licensing arrangement signed between Hero and Honda. 2012-New Models of Hero Motocorp Maestro the Musculine scooter and Ignitor the young generation bike are launched. [17] Company performance During the fiscal year 2008-09.[17] Hero is free to use any vendors for its components instead of just Honda-approved vendors.[16] Hero MotoCorp The new brand identity and logo. In the same year. Africa and West Asia.[18] Hero Honda sells more two wheelers than the second. Hero MotoCorp.[17] The logo was revealed on 9 August 2011 in London. the day before the third test match between England and India. the Hero Group relied on their Japanese partner Honda for the technology in their bikes. [15] Under the joint venture Hero Group could not export to international markets (except Sri Lanka) and the termination would mean that Hero Group can now export.7 million bikes.[11] Hero Honda's bike Hero Honda Splendor sells 41 . Since the beginning.Termination of Honda joint venture Main article: Hero Honda split In December 2010. The Hero Group would buy out the 26% stake of the Honda in JV Hero Honda. the company had a market share of 57% in the Indian market. third and fourth placed two-wheeler companies put together. was developed by the London firm Wolff Olins. the Board of Directors of the Hero Honda Group have decided to terminate the joint venture between Hero Group of India and Honda of Japan in a phased manner. the company sold 3.[17] Hero MotoCorp can now export to Latin America. a growth of 12% over last year. So there are concerns that the Hero Group might not be able to sustain the performance of the Joint Venture alone. Karizma ZMR FI Passion. CD Deluxe.more than one million units per year. 2011 The Brand Trust Report [21] published by Trust Research Advisory has ranked Hero Honda in the 13th position among the brands in India.56.I Hunk Karizma. Motorcycle models See also: Category:Hero Honda motorcycles Sleek Street Ambition 133. Passion Pro Splendor. Hero MotoCorp reported its highest ever monthly sales at 5. registering a growth of 11. Karizma R. Its India's first off-road and on road Bike. CD Deluxe (Self Start) Glamour.644 units in May. CD Dawn. as the company was known till Aug.[20] RECOGNITION Logo of Hero Honda. CBZ Star. Hero Honda Joy. 42 . Splendor NXG. Splendor+. CBZ Xtreme CD 100. CD 100 SS. Glamour F. Splendor+ (Limited Edition).[19] On 1st June 2012. Super Splendor.Splendor PRO Hero Impulse launched in 2011 after the separation of hero and Honda. Ambition 135 CBZ.28%. Passion Plus. scooters.com SUPPLY CHAIN 43 .579. three-wheeler vehicles and spare parts 23.597. India Brijmohan Lall Munjal (Chairman) Pawan Munjal (MD & CEO)[1] Motorcycles. AG Industries. Munjal Showa.heromotocorp.03 crore (US$4.[22 Type Traded as Industry Founded Founder(s) Headquarters Key people Products Revenue Operating income Net income Parent Website Public company BSE: 500182 NSE: HEROMOTOCO BSE SENSEX Constituent Automotive 19 January 1984 (Gurgaon) Brijmohan Lall Munjal New Delhi. Sunbeam Auto.378.13 crore (US$430. that supply a majority of its components.Suppliers It is reported Hero Honda has five joint ventures or associate companies. Rockman Industries and Satyam Auto Components.07 million) (FY 2010-2011) 2.07 crore (US$470.27 billion) [2] 2.44 [3] million) (2011) Hero Cycles www. Waste minimization. We at Hero MotoCorp are continuously striving for synergy between technology. Substitution of hazardous chemical and Environmental compliance management. Green Vendor Development Programme refers to the way in which organizational innovations in industrial supply chain management may be considered in the context of the environment. We understand that environmental protection is our responsibility towards our future generations and thus while providing our customers with supreme quality of products and services it is important for us to ensure that environmental considerations are given 44 . Prevention of Pollution. system and human resources. We believe that our vendors and dealers are key stakeholders and partners to work towards the goal of sustainable development. Green Vendor Development Programme (GVDP) encourages a collaborative effort between Hero MotoCorp and its suppliers to achieve Hero MotoCorp's overall corporate environmental goal. This platform lays the foundation for a mutually beneficial eco-future. Six pillars have been assigned to GVDP model which are Energy management. GVDP calls for partner companies to demonstrate their commitment towards improved environmental performance and striving for continual improvement. But such developments pose. Therefore the people and governments have come forward to dealt with environmental threats and also to explore many opportunities so as to address the environmental issues and also to create a sustainable environmental future for all. to meet the aspiration of our valued customers that too. demonstrating our "WE CARE" philosophy. constantly innovate the products and process and work in partnership with our supply vendors to take the organization to new excellences. While doing so. unprecedented challenges to human society in term of climatic and environmental degradation. we maintain the highest standards of ethics and societal responsibility. Organizations which act proactively not only to identified but also to implement actions in process / operation so as to address environmental issues. The objective of this meet is to share success stories on environmental improvements that can be replicated at other vendor facilities. Water management. to provide products and services.(An Initiative of Hero MotoCorp for protecting and preservation of Environment) Rapid industrialization and advanced technological changes have put Indian economy on fast growth. The programme works on PDCA approach. HMCL also endeavors to provide a platform on which the vendors can share their environment achievements and problems encountered during implementation of the green vendor program. Partner vendors are given specific training on all six pillars of GVDP and mapping of processes/equipments is carried out based on logical analysis so as to identify the gaps or significant environmental aspect and accordingly improvements projects are undertaken for implementation. NEW PRODUCTS Hero NXG MotoCorp Splendor Hero Plus MotoCorp Splendor Hero Plus MotoCorp Passion Hero Motorcorp Karizma R Hero MotoCorp Glamour Hero MotoCorp CD Delux Hero Honda Hunk Hero Moto Corp Impulse Hero Honda Karizma ZMR Contract us: Registered Address 45 . We will continue taking initiatives towards environmental protection and base all our business decisions on environmental considerations.utmost importance. Vittal Rao Nagar.com Website: http://www. Community Centre.Vasant Vihar New Delhi Delhi 110057 Tel: 011-46044100 011-26142451 Fax: 011-26143321/26143198 Email: ilam.com Group: Hero Group Registrars Karvy Computershare Private Ltd. 17-24.34.kamboj@heromotocorp. Basant Lok.heromotocorp. Madhapur.karvy. Plot No. Email:
[email protected] Website: http://www.com Management .Hero Motocorp Name Brijmohan Lall Munjal Designation Chairman / Chair Person 46 .. 00 0.94 0.Independent Director Non Executive Director Non.Exe. ------------------Mar '12 Mar '11 Mar '10 Mar '09 Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Mar '08 12 mths 12 mths 12 mths 12 mths 12 mths 39.00 47 .Independent Director Non.Exe.Exe.94 39.94 0.Independent Director Designation Managing Director & CEO Non.00 39.00 39.94 0.Exe.94 39.in Rs.Exe.94 0.Independent Director Non.94 0.Independent Director Joint Managing Director Non.94 39. Cr.00 39.94 39.Independent Director Non.00 0.00 0.00 0.Anand C Burman Analjit Singh Sunil Kant Munjal Pradeep Dinodia Ravi Nath Name Pawan Munjal Pritam Singh Suman Kant Munjal V P Malik Meleveetil Damodaran Paul Edgerley Non.94 39.Exe.Independent Director Non Executive Director FINANCIAL POSITION Balance Sheet of Hero Motocorp ------------------.00 0.Exe.00 39. 566.78 48.07 4.49 3.30 0.26 675.55 Source : Dion Global Solutions Limited 48 .71 120.00 3.00 3.18 4.52 1.46 1.284.93 130.73 2.205.03 3.026.916.678.27 438.12 0.27 783.965.00 2.284.95 3.00 3.02 0.00 132.45 32.85 0.71 436.00 132.98 926.863.00 1.07 6.013.879. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA.531.46 43.964.986.27 942.89 0.308.22 Mar '11 3.879.75 326.94 217.68 5.090.93 526.658.368.49 78.81 0.95 0.458.82 317.57 499.26 408.316.081.925.00 994.289.00 3.573.00 5.33 0.14 5.458.08 0.68 Mar '12 2.785.24 Mar '09 2.78 782.447.20 1.00 0.00 66.890.538.800.12 196.447.57 272.44 130.03 66.85 5.58 0.24 0.40 108.48 23.156.62 214. Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets 6.465.76 1.98 1.00 3.83 149.00 4.75 0.72 1.58 745.33 56.06 1.003.101.71 1.33 -1.51 193.39 1.28 125.52 0.455.00 3.00 3.08 1.080.73 -2.26 2.05 Mar '10 3.31 56.35 4.05 2.69 0.99 20.10 297.37 149.00 78.37 0.992.510.022.610.425.75 524.Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 4.956.14 0.56 1.522.128.04 173.90 -1.951.49 2.97 2.76 0.249.04 -2.83 994.54 3.16 4.520.760.03 73.531.52 100.408.14 3.092.22 2.955.04 0.48 2.66 1.118.75 3.69 1.516.659.54 190.397.59 47.83 131.51 942.46 0.90 148.75 703.118.00 5.40 1.47 -4.750.26 325.00 3.00 4.10 1.00 2.491.886.24 Mar '08 12 mths 12 mths 12 mths 12 mths 12 mths Application Of Funds Gross Block Less: Accum.183.80 2.946.938.77 1.24 1.49 694.00 1.24 Contingent Liabilities Book Value (Rs) 252. CHAPTER-V DATA ANALYSIS AND 49 . 74 0.45 32.12 -31.85 5.12 0 2.77 0 1333.83 .89 0 4.249.94 0 0 2.INTERPRETATION COMPARATIVE STATEMENT ANALYSIS 2012 OF HERO MOTO CORP.956.77 -463.94 39.284.00 45.46 CHANGE IN % 0 0 0 0 45.447.28 18.16 4.68 Mar '12 39.71 -496.31 837.458.491.85 0 994.06 1.22 Mar '11 12 mths 12 mths 50 ABSOLUTE INCREASE/ DECREAES 0 0 0 0 1333.916. LTD Balance Sheet of Hero Motocorp Rs.71 1. Cr Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities Mar '12 Mar '11 12 mths 12 mths 39.00 -33.94 0 0 4.83 994.79 -100.94 39.6 -32.289. 72 8.17 0 -1795.458.74 2227. It points towards expanding business operations.316.48 23.04 0 5.70 108.35 300.66 1.52 % and loans & advances are also increased by 18.83 % in 2011 to 2012.659.83 29. Fixed assets are Decreased by -12.59 47.538.46 18.080.47 -4.78 0. 3.22 54.18 4. 4.26 675.46 1.75 524.964.Application Of Funds Gross Block Less: Accum.76 18.99 20.91 0 13.51 -3.447.51 193.83 -27.49 42.003.69 0 3. Debtors are increased by 108.31 56.71 28.72 1. Total share holders fund are decreased by 18.081.01 -7.951.07 4.74 9 -1786.27 783.12 % in 2011 to 2012.1 1.32% in 2011 to 2012. Net current assets are Decreased by -45.99 -22.93 130.510.93 -45. Reserves & surplus are decreased by 45.64 141.14 5.95 3.522.95 0 769.57 272. Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses 6.52 17.397.28 125.77 1.090.308.886.98 926.75 703.21 0 -33.22 837.26 2.77 68. Total application fund are increased by change in percentage of 18. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA. 51 .59% from 2011 to 2012.32 -12. 6.49 150.71 143.83 Interpretation:1.83%.07 6.73 -2.75 3.83% in 2011 to 2012.59 0.90 73.8 1064.05 441.785.40 1. 5.81 -1164.610.52 0 5.57 -294.00 5.520.68 4.128. It shows that company must concentrate on profitability to increase reserves.284. 2. 86 -14. LTD March 31.03 -50.69 32.956.916.COMPARATIVE STATEMENT ANALYSIS 2011 OF HERO MOTO CORP.09 1008. 2010 ABSOLUTE INCREASE/ DECREAES CHANGE IN % 39.96 -508.46 1.48 365.95 52 57.45 92.98 3041.45 252.12 2.458.94 2.18 4.72 4.20 1.96 0 -14.34 159.691.63 3.02 0 -508.08 3.538.33 33.33 27.750.465. 2011 SOURCES OF FUNDS Shareholders' funds share capital reserves and surplus Loan funds unsecured deferred payment credits deferred tax liabilities TOTAL APPLICATION OF FUNDS Fixed assets gross block less: depreciation net block capital work in progress March 31.71 1.78 48.14 2787.94 66.98 1.06 39.46 160.425.94 125.458.092.94 3.699.31 .658.68 -33.51 183.14 2.32 1458.26 5.16 77 101.699. 53 22.805.50 524.42 -1.75 4.831.18 138.144.063.83 1258.68 1.2 -1835. loans and advances inventories sundry debtors cash and bank balances other current assets loans and advances less: current liabilities and provisions current liabilities provisions Net current assets TOTAL 4.40 108.06 3465.699.948.5 -3874.41 1.Investments deferred tax assets Current assets.504.05 322.925.48 -96.58 -99.11 33.17 TOTAL SOURCES OF FUND 5000 amount 4000 2956.93 146.58 4.66 1.882.82 405.39 1.92 3.93 130.62 -1377.59 71.58 88.128.42 5.52 48.18 4.21 24.7 24.34 2691.57 436.25 96.882.35 2751.79 27.505 6.205.640.10 141.38 -98.02 3000 2000 1000 0 2010 year 53 2011 .94 3.71 7.907.948.95 1.9 -2876.6 1313.88 2498.706.29 20.08 -47.53 20.70 -24.83 1.87 728.90 79.75 5.48 5.06 2.76 2. 94 4000 amount 3000 2000 1948.08 2916.83 1000 0 2010 year 2011 RESERVES AND SURPLUS 3500 3425.12 3000 amount 2500 2000 1500 1000 500 0 2010 year 54 2011 .TOTAL APPLICATION FUND 5000 4699. 94 39.86% in 2010 to 2011. Reserves & surplus are decreased by 14. 12.83 -12.08 3.93 -335. It shows that company must concentrate on profitability to increase reserves. LTD March 31.691.49 160.45 Loan funds unsecured deferred tax liabilities TOTAL 55 .02 3.73 -8. Net current assets are increased by 138. It points towards expanding business operations.19 -15.425. 11.08 3. COMPARATIVE STATEMENT ANALYSIS 2010 OF HERO MOTO CORP.68 4. 2009 ABSOLUTE INCREASE/ DECREAES CHANGE IN % SOURCES OF FUNDS Shareholders' funds share capital reserves and surplus 39.94 3. 8.32 0 0 -335.37% in 2010 to 2011. Total application fund are increased by change in percentage of 141.760. 2010 March 31.800. Fixed assets are increased by 146.53 7.55 4.3 78.465. 9.68% in 2010 to 2011.64 -8.81 3.Interpretation:7.032.101% from 2010 to 2011.73 -8.48% and loans & advances are also increased by 79. Total share holders fund are decreased by 14.67%.57% in 2010 to 2011.63 153. Debtors are increased by 20.75 66. 10.93 -340. 71 48.83 sundry debtors 108.40 326.53 -0.78 1.658.368.93 321.039.750.516.36 -286753.026.75 556.71 1687.82 Net current assets 1. loans and advances cash and bank balances less: current liabilities and provisions 56 .77 -8.83 1.14 120.882.90 109.75 7.25 3.33 TOTAL 3.56 net block 1.07 5.925.26 1.948.71 3.5 87.57 2.89 loans and advances 405.92 1.64 -8.39 149.831.65 inventories 436.48 Current assets.53 -41.504.4 -60.32 capital work in progress Investments deferred tax assets 234.39 94.06 12.76 2778.58 current liabilities 3.41 2.907.88 85.55 -27.032.35 526.57 other current assets 24.41 -72.71 9.59 135.61 18.694.21 219.68 4.51 -340.64 768.5 30.805.67 0.35 909.20 942.88 8.85 provisions 1.96 16.76 311.21 149.98 2.82 5.APPLICATION OF FUNDS Fixed assets gross block 2.38 94.48 2279.97 4.706.092.54 1.33 149.691.06 1.94 1.64 15.27 less: depreciation 1.052.57 33.573.525.43 -99.37 499. 83 2000 amount 1500 1000 1039.TOTAL SOURCES OF FUND 4000 4032.33 500 0 2009 year 57 2010 .32 3691.68 3500 3000 amount 2500 2000 1500 1000 500 0 2009 2010 year NET CURRENT ASSETS 1948. 36% in 2009 to 2010.50% in 2009 to 2010. It shows that company must concentrate on profitability to increase reserves.92% in 2009 to 2010. 5.44% in 2009 to 2010. Debtors are decreased by 27. Net current assets are increased by 87.SUNDRY DEBTORS 160 149.74% in fixed assets from 2009 to 2010. Total application fund increased by 8. Total share holders fund are decreased by 8. COMPARATIVE STATEMENT ANALYSIS 2008 OF HERO MOTO CORP LTD 58 .83% in 2009 to 2010.39 amount 100 80 60 40 20 0 2009 year 2010 Interpretation:1.94 140 120 108. There is a slight increase of 0. 6. 3. It shows that company trying to expand business operations. 2. Reserves & surplus are increased by 8.71% and loans & advances are increased by 30. 4. 49 132.75 2.70 145.22 4.89 5.573. loans and advances less: current liabilities and provisions CURRENT LIABILITIES provisions 59 .48 67.74 228.46 125.51 loans and advances 311.65 5.013.032.5 -49.82 801.26 185.44 -271.52 160.49 17.79 942.986.946.83 783.49 24.40 16.248.44 -147.05 TOTAL 4.2 3.57 131.93 31.22 3.800.16 526.27 1.82 1.94 0 0 3.59 cash and bank balances 219.94 297.March 31.156.49 29.81 2.54 392.760.71 inventories 326.94 39.032.51 27.525.83 1. 2009 March 31.65 3.49 24.21 5.516.56 782.039.50 Net current assets 1.17 investments deferred tax assets current assets.97 499.75 2.78 577.50 other current assets 5.694.26 417.32 3.37 17.04 20.248.32 3.45 1.09 88.368.07 sundry debtors 149.12 2.43 65.69 0.10 9.052.324.28 78.08 12.10 120.548.05 -100 loan funds unsecured deferred tax liabilities TOTAL APPLICATION OF FUNDS FIXED ASSETS gross block less: depreciation net block capital work in progress pre – operative expenses (pending allocation) 16.85 1.824.19 1.24 814. 2008 ABSOLUTE INCREASE/ DECREAES CHANGE IN % SOURCES OF FUNDS SHAREHOLDERS' FUNDS share capital reserves and surplus 39.8 67.00 -53.30 814.51 27..45 36.96 151.98 200.25 1.71 1.24 8.28 1.87 15.938.54 153.566.33 887.55 9.83 317.71 8.83 783.49 913.08 130.76 27.05 3.73 3.27 76.59 22.44 2.51 -40.9 -69. TOTAL SHARE HOLDER'S FUND 4000 3800.82 2000 1500 1000 500 0 2008 year 60 2009 .24 amount 2500 2000 1500 1000 500 0 2008 2009 year TOTAL INVESTMENTS 3500 3368.75 3500 3000 2986.75 3000 amount 2500 2566. 5. Fixed assets are increased by 9. It shows company efficiency in maintaining the share profits.58% and loan & advances are increased by 67. Reserves & surplus are increased by 27.11%in 2008 to 2009. Debtors are decreased by 49. It shows that company trying to expand business operations. 6. 3.83% in 2008 to 2009.27% in 2008 to 2009. 2. There is a slight increase in net current assets by 17. Total application fund are increased by 24.04% from 2008 to 2009. COMPARATIVE STATEMENT ANALYSIS 2008 OF HERO MOTO CORP. Total share holders fund are increased by 27.64% in 2008 to 2009.Interpretation:1. 4.39% in 2008 to 2009. LTD 61 . 165.58 41.45 193.92 202.38 3.44 189.21 1.041.08 130.21 1.12 516.52 635.05 2.02 17.53 -9.92 283.84 278.98 1.18 20.58 1.50 936.36 887.26 317.09 58.82 1.51 2.70 1.06 Loans And Advances 185.76 1.03 5.973.67 782.6 2.4 -66.248.27 -0.78 3.01 0.69 3.46 263.02 17.566.38 Other Current Assets 5.22 1.52 106.51 1.986.26 1.15 7.16 345.26 March 31.764.80 392.74 1.57 1.05 16.90 2.09 35.81 484.56 3.07 51.81 484.07 Sundry Debtors 297.355.548.470.31 266. 2008 CHANGE IN % Sources Of Funds Shareholders' Funds Share Capital Reserves And Surplus Loan Funds Unsecured Deferred Tax Liabilities Total Application Of Funds Fixed Assets Gross Block Less: Depreciation Net Block Capital Work In Progress Pre – Operative Expenses (Pending Allocation) 16.63 1.18 21.800.06 27.17 -20.44 335.59 129. Loans And Advances Inventories Less: Current Liabilities And Provisions Current Liabilities Provisions Net Current Assets Total 62 .06 -77. 2007 ABSOLUTE INCREASE/ DECREAES 39.18 499.94 0 0 2.24 516.94 39.764.479.479.87 592.1 275.81 -11.March31 .89 302.17 -33.96 585.25 14.83 2.25 -37.95 30.938.156.6 -29.63 138.27 23.58 23.78 913.24 2.946.06 132 165.324.16 -979.248.824.42 23.28 Cash And Bank Balances 131.51 Investments Deferred Tax Assets Current Assets.83 2.52 15.78 1.430.78 95.30 2.1 147. 25 297.81 amount 2500 2000 1500 1000 500 0 2007 year 63 2008 .SUNDRY DEBTORS 350 335.83 2764.44 300 amount 250 200 150 100 50 0 2007 year 2008 TOTAL APPLICATION FUND 3500 3000 3248. 94 0 0 64 Mar '11 Change in % 12 mths 0.94 39. Total share holder fund are increased by 20. Debtors are increased by 11. 6. Fixed assets are increased by 14. 5.90 0. 2.24% in 2007 to 2008.90 .50% in 2007 to 2008.27% and loan & advances are increased by 29. COMMON SIZE STATEMENT ANALYSIS 2012 OF HERO MOTO CORP. Net current assets are increased are increased by 51.55% in 2007 to 2008.47% in 2007 to 2008.94 39.Interpretation:1. Reserves & surplus are increased by 21. LTD Balance Sheet of Hero Motocorp Mar '12 Rs CR Sources Of Funds Change in % 12 mths Total Share Capital Equity Share Capital Share Application Money Preference Share Capital 39.76 39.25%.94 0 0 0.76 0. Total application fund are increased by 17. It shows that company expanding business operations.89% in2007 to 2008. 3. 4. It shows that company efficiency in maintaining the share profits. 520.308.66 1.53 100. Sundry debtors in 2011 were 2.458.00 2.93 130.94 1.75 703.85 0 994.284.284.39 36.37 47.00 17.99 20.956.54%.15% in 2012. 65 65.83 18.610.47 0.68 12 mths Application Of Funds Gross Block Less: Accum.78 5. 5.81 115.06 -92.47 4.68 Net Current Assets Miscellaneous Expenses Total Assets 80.46 1.85 5.080.98 926.00 124.69 0 3.659.07 6.59 47.80% in 2012.80 2.01 12.57 272.54 0. In 2011 inventories was 12.538.28 125.83 100.510.17 18.89 0 4.1 1. Loans & advances in 2011 was 14.63 3.42 81.31 56.249.397.75 3.94% and it decreased to 5.18 4.67 75.83 0.46 121.40 1.95 0 4.77 1.79 91.00 119.51 193. There is no change in share capital In 2011 reserves & surplus was 65.74 33.090.Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 4.60 20.93 66.003.74 71.316.57 66.26 2.22 Interpretation:1. Unsecured loan are increased from 0% to 0. 4.75 524. 6.16 4.63 87.15 1.081.95 3.47 32.32 0.75 2.71 1.42%.289.886.07 4.57% but in 2012 it was decreased to 80.48 23.22 12 mths 5.14 5.00 100. 2.27 783. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA.07 15.00 100.12 0 2.73 2.00 .447.72 1.951.964.04 0 5. Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions 6. 3.32 11.79 0.52 0 5.491.916.62 20.74% 2011 to 2012.447.83% but in 2012 it was increased to 17.458.128.58 100.81 14.06 1.785.83 994.78% and it has increased to 11.26 675.45 32.25 -50.522.54 32.45 28.06 19. LTD March 31. 2011 66 Change in % March 31. 2010 Change in % .COMMON SIZE STATEMENT ANALYSIS 2011 OF HERO MOTO CORP. 699.58 78.699.63 4.205.74 3.72 5.SOURCES OF FUNDS Shareholders' funds 39.750.23 5.84 2.99 1.94 1.94 100 1.66 48.94 cash and bank balances 71.40 11.58 78.08 6.06 103.06 1.82 sundry debtors 130.98 74.76 10.699.538.505 32.956.87 4.50 405.458.07 1.82 0.640.83 3691.67 loans and advances 728.14 2.71 106.88 0.66 15.93 125.68 107.03 1.916.94 100 3.70 66.18 31.00 gross block 5.48 1.465. loans and advances Less: current liabilities and provisions current liabilities provisions Net current assets TOTAL 67 100 100 .21 inventories 524.02 32.658.14 1.66 other current assets 48.93 11.52 1.30 4.06 62.59 net block 4.13 7.75 130.78 108.90 3.18 4.68 52.02 2.04 24.42 89.05 92.831.458.882.805.12 2.95 0.68 100.71 0.39 2.12 3.78 44.78 62.03 252.79 1.706.21 51.52 less: depreciation 1.34 5.52 1.20 29.59 2.092.73 1.948.41 130.75 109.38 160.504.144.86 Loan funds unsecured deferred payment credits deferred tax liabilities TOTAL APPLICATION OF FUNDS Fixed assets capital work in progress Investments deferred tax assets Current assets.85 39.01 2.79 share capital reserves and surplus 93.082 2.57 32.907.425.691.74 4.063.87 1.08 5.94 98.35 4.128.92 46.925.45 31.882.08 3.46 117.17 436.94 0. 77 80 62.04 amount 60 40 20 0 2010 year 2011 UNSECURED LOANS 1.0 0.RESERVES AND SURPLUS 100 92.8 1.4 0.8 0.6 0.0 2010 year Interpretation:68 2011 .2 1.79 1.2 0.6 1.4 amount 1.69 0. 50%.77% in 2011. 9. There is slight increase in share capital 8.93% and it decreased to 2. 11.99% but in 2011 it was increased to 15.77% but in 2011 it was decreased to 62.69% 2010 to 2011. In 2010 inventories was 11.16% in 2011. Unsecured loan are decreased from 1. In 2010 reserves & surplus was 92. Sundry debtors in 2010 were 2. COMMON SIZE STATEMENT ANALYSIS 2010 OF HERO MOTO CORP. 10. Loans & advances in 2010 was 10.7. LTD 69 .04%. 12.78% to 0.82% and it has decreased to 11. 78 44.11 sundry debtors 108.425.87 2052.026.882.760. loans and advances cash and bank balances other current assets loans and advances less: current liabilities and provisions 70 .694.March 31.368.40 less: depreciation 1.26 7. 2010 Change in % March 31.27 3.32 100 reserves and surplus Loan funds unsecured deferred tax liabilities TOTAL 100 APPLICATION OF FUNDS Fixed assets capital work in progress Investments deferred tax assets Current assets.33 25.10 1.67 5.465.72 1.07 1.27 62.82 0.34 3.56 23.691.02 3.032.3 1.45 24.80 100 gross block 2.93 1.07 4.57 40.14 1.08 92.86 3.88 0.49 1.516.98 74.40 11.92 46.25 42. 2009 Change in % SOURCES OF FUNDS Shareholders' funds share capital 1.32 3.76 2.97 13.66 219.039.02 93.30 120.78 3.24 1.948.71 39.79 1.58 71.84 provisions 1.831.91 Net current assets 1.85 37.99 3.80 526.77 TOTAL 3.63 3.94 149.48 current liabilities 3.706.35 153.71 106.94 39.21 51.82 326.08 4.76 10.83 8.750.68 4.800.092.68 100 4.52 2.95 160.26 66.80 78.21 inventories 436.75 94.35 27.99 311.54 7.57 5.805.83 52.658.032.94 0.41 130.03 48.75 83.39 2.65 0.72 1.525.691.54 2.89 0.81 93.907.20 29.504.59 942.06 103.573.925.94 3.82 50.15 405.08 39.36 net block 1.21 8. 0 amount 2.71 3.CURRENT LIABILITIES 103.0 1.5 0.0 3.0 2009 year 71 2010 .07 100 amount 80 60 40 37.5 2.0 0.5 2.84 20 0 2009 2010 year DUNDRY DEBTORS 4.5 1.93 3. 08%. Sundry debtors in 2009 were 3. Reserves & surplus in 2009 was 93.71% and in 2010 it is increased to 10. 5.99% COMMON SIZE STATEMENT ANALYSIS 2009 OF HERO MOTO CORP.Interpretations:1.79% in 2011.77%. Unsecured loan are decreased from 1. 2.71% and it is decreased to 2. LTD 72 . 6.99% and in 2010 it was increased to 1. In 2009 inventories was 8. Loans & advances in 2009 was 7. 3.93% in 2010.26% but in 2010 it was decreased to 92.10% and in 2010 it was increased to 11.82%. In 2009 share capital was 0.94% in 2009 to 1. 4. 052.17 27.52 1.94 219.99 42.83 4.49 153. 2008 Change in % 39.013.72 5.33 4.27 942.44 1548.26 392.09 35.248.032.72 25.16 326.00 130.986.94 2.98 499.08 4.26 1.69 185.18 5.46 936.71 28.Change in % March 31.38 39.84 13.33 100 73 .800.08 47.99 93.05 2. loans and advances inventories sundry debtors cash and bank balances other current assets loans and advances less: current liabilities and provisions current liabilities provisions Net current assets TOTAL March 31.89 311.68 24.45 0.23 90.75 8.59 3.24 1.78 9.525.22 79.78 782.82 1.00 16.82 5.368.760.32 1.69 91.44 131.76 9.09 5.03 0.70 59.38 56.67 0.032.95 3.27 94.32 37.16 4.83 149.07 50.03 2.06 4.78 15.25 62.938.26 39.75 0.77 100 1.30 2.2009 SOURCES OF FUNDS Shareholders' funds share capital reserves and surplus Loan funds unsecured deferred tax liabilities TOTAL APPLICATION OF FUNDS fixed assets gross block less: depreciation net block capital work in progress pre – operative expenses (pending allocation) Investments deferred tax assets Current assets.49 3.91 25.02 1.83 40.694.248.56 1.324.80 100 132.12 3.49 8.97 2.81 3.74 887.54 2.13 317.02 100 2.824.92 78.59 12.156.516.40 23.96 3.83 1.71 120.94 3.76 1.946.57 5.00 0.566.65 83.54 1.85 526.10 297.15 7.573.039. 76 8.11 amount 8 6 4 2 0 2008 year 2009 LOANS AND ADVANCES 8 7.71 amount 5 4 3 2 1 0 2008 2009 year 74 .INVENTORIES 10 9.72 7 6 5. 22% and in 2009 it is decreased to 0. 4.06% in 2008 to 1.71%.76% and in 2009 it was decreased to 8.10%.26%. COMMON SIZE STATEMENT ANALYSIS 2008 OF HERO MOTO CORP. 3.15% and it is decreased to 3.Interpretation:1. 5.71% in 2009. In 2008 inventories was 9. Loans & advances in 2008 was 5. LTD 75 .70% and in 2008 it increases to 7. Unsecured loans are decreased from 4.68% in 2008 but in 2009 it was increased to 93. In 2008 share capital was 1. Sundry debtors in 2008 were 9. 2.94% in 2009.99% Reserves & surplus was 90. 6. 30 90. 2008 Change in % March 31.92 37.09 4.16 53.98 sundry debtors 297.68 1.March 31.824.74 56.4 91.08 189.946.70 47.973.19 3.51 936.26 35.53 42.17 1.81 100 1.00 4.89 21.98 40.94 1.69 0.89 2.479.16 335.34 unsecured 132.69 2.46 5.83 913.22 0.38 0.13 782.58 9.00 1.33 585.03 share capital reserves and surplus Loan funds TOTAL APPLICATION OF FUNDS Fixed assets gross block less: depreciation net block capital work in progress pre – operative expenses (pending allocation) 0.9862.63 65.92 2.87 71. loans and advances less: current liabilities and provisions current liabilities provisions Net current assets TOTAL 76 .06 89.38 1.248.97 deferred tax liabilities 130.05 inventories 317.69 499.29 other current assets 5.83 100 2.479.59 4.10 9.76 15.16 1.430.25 12.52 24.44 12.59 1.06 165.94 1.470.69 3.50 1.49 16.13 cash and bank balances 131.13 loans and advances 185.78 28.44 2.09 635.10 22.165.78 1.02 129.60 0.355.248.67 1.78 1.83 100 2.764.92 6.96 27.03 35.71 263.87 1.78 59.05 2.50 887.566.156.764.17 5.81 100 Investments deferred tax assets Current assets.548. 2007 Change in % SOURCES OF FUNDS Shareholders' funds 39.16 392.938.44 9.12 87.16 53.39 5.58 4.041.97 1.82 79.06 9.03 1.18 3.800.27 33.76 275.23 39.45 49.324. 16 0.08 0.12 amount 0.04 0.02 0.00 2007 year 77 2008 .89 80 amount 60 40 20 0 2007 year 2008 OTHER CURRENT ASSETS 0.14 0.69 87.10 0.16 0.13 0.RESERVES AND SURPLUS 90.06 0. In 2007 inventories was 9.44% and in 2008 it decreases to 1. In 2007 reserves & surplus was 87.06% in 2008.22%. In 2007 share capital was 1.76%.68%. Sundry debtors on 2007 were 12.51% and it decreases to 5. 78 . 4. 3.89% but in 2008 it was increased to 90. 6.96% and in 2008 it was slightly decreased to 9. Unsecured loans are decreased from 5.12% but in 2008 it decreased to 9.Interpretation:1.97% in 2007 to 4. 2.15%.70% in 2008. Loans & advances in 2007 was 9. 5. So gross profit is showing an increasing trend.33% in 2007-08.79% in 2009-10 and 98.32 in 2011-12. Gross profit 63. So company should thoroughly look into increase the current assets and decreases the current liabilities.79% in 2010-11& 82.CHAPTER-VI FINDINGS SUGGESTIONS CONCLUSION FINDINGS 1. The company has turned up with a minimum profit in the years 2006-2010 and within the remaining financial years over all financial Position is satisfactory. Net working capital and negative for all the three years. 79 . The current liabilities more than current assets the working capital is negative 4. 88. 3. 86. 2.26% in 2008-09. The percentage of current liabilities to total liabilities has also decreased in 2008.Thus the proportion of current assets has decreased by 27. The percentage of current assets to total assets was increased in 2012. fixed assets increased by RS. where as decrease in the current liabilities is 30.82 %.5.36crores.54 % in the years the company liquidity position is satisfactory 80 .While long term liability from outsides (loans) has increased by 5663. The pattern of investment towards Fixed Assets reveals that long term sources of funds are utilized for fixed assets. The comparative balance sheet of the reveals that during the year 2008. 2589. 6.68crores and there is neither increase nor decrease in share capital. Hero Moto Corp ltd.CONCLUSION Even though company is utilizing its own funds there is very need that company should improve its liquidity position. modernization and technology up gradation. has under taken research program. debtors collection period and proper management of its current assets and current liabilities. This is mainly due to repayment of a portion of term loans. Another reason for decrease in external debt is due to increase in reserves and surplus. for the above said expansion programs it has made use of surplus funds only and did not go for outsider’s debts. 81 . The external debt of the company decreased gradually. which is one of the good long-term financial policy of Hero Moto Corp ltd.24crores this indicates there is possible growth of the company in the market during 2011-2012. The year was 356. Company may look into increasing various forms of currents assets and decreasing current liabilities to effective manage working capital requirement. 2. 4.SUGGESTIONS 1. To meet the short term requirements the company has to raise short term as well as long term loans. 3. To attract to the new customers the company has to adapt new products and new technology. BIBLIOGRAPHY 82 . Company may maintain current gross profit in the coming financial years. com 83 . I M Pandey.heromot corp. Ltd.L financial accounting and analysis(2001).K. Edition. Essentials of Financial Management.. Vikas Publishing House Pvt. New Delhi. Jain. 2007. kalyani publishers. New Delhi. 1995. Financial Management.com www. 2nd revised. M Y and P K Jain.herohonda. Tata McGraw-Hill Publishing Co.S. WEBSITES: www.P & Narang. Khan.