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Company history hero motocorp Company history hero motocorp Document Transcript

  • Company History - Hero MotoCorp1983 - Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed1984- The Company was incorporated on 19th January, at New Delhi. The Company Manufacturemotor cycles up to 100 cc capacity. The Company was promoted by Hero Cycles (P) Ltd.(HCPL).- The Company entered into a technical-cum-financial collaboration agreement with HondaMotor Co. Ltd., Japan (HML). As per this collaboration agreement, HML was to furnishcomplete technical information and know-how and trade secrets and other relevant data.- Hero Honda CD-100 is the first four stroke motorcycle to be introduced in India in 100ccrange. Its most attractive features are fuel efficiency and its light weight. CD-100 will beequipped with electronic ignition system, illuminated speedometer, 4 speed gear box, neutraland flasher indicators, etc.- 15 No. of equity shares subscribed for by the promoters, etc. In November, 119,99,985 No.of equity shares issued at par of which 71,99,985 shares reserved for allotment as under:- (i) 31,19,998 shares to Hero Cycles (P) Ltd., Hero Investments (P) Ltd., and Bahadur ChandInvestments (P) Ltd.- (ii) 31, 20,000 shares to Honda Motor Co. Ltd., Japan and- (iii) 9, 59,987 shares to friends and association of promoters. Out of the balance 48, 00,000shares, 2, 40,000 shares were reserved for subscription by the employees of the Company and96,000 shares by business associates. The remaining 44, 64,000 shares were offered at par forpublic subscription during November.1985- The Company embarked on its 2nd phase of expansion of increasing its installed capacityfrom 1, 20,000 to 1, 50,000 vehicles per annum by the addition of several critical aluminiumand steel components.1986- 36, 00,000 rights equity shares issued at par in prop. 3:10.1987
  • - The Company offered 6,00,000 - 15% secured redeemable non-convertible debentures of Rs100 each for cash at par on rights basis in the proportion 1 debenture: 18 equity shares.- Another 3, 00,000 - 15% debentures were allotted to retain oversubscription. The debentureswere to be redeemed at a premium of Rs 5 per debenture on the expiry of the 7th year fromthe date of allotment of the debentures.- 3, 75,000 rights equity shares issued at par in prop. 3:10.1989- The Company introduced a new model "Sleek" during July.- 850 No. of equity shares forfeited.1990- The Company was planning to launch a new model motor cycle-CD 100 SS suitable tosemi-rural conditions. In the domestic market the Company was reported to have a marketshare of 46%.- 850 forfeited shares reissued.1994- The Company proposed to expand the capacity of existing plant at Dharuhera to 2, 40,000nos. per annum. Another plant with an installed capacity of 1, 50,000 nos. per annum atGurgaon Industrial Estate was being set up.- The Company issued 39, 79,500 bonus shares to the existing shareholders in the ratio of 1:4.The Company also issued 28,557 number of fractional coupons representing 14,250 sharesagainst which shares shall be allotted to presenting the same for consolidation and allotment.- The Companys production and turnover increased to 1, 83,490 motorcycles and Rs.483.85crores respectively due to growth in demand for two wheelers and declining inflation.1995- 14,420 bonus shares issued by way of consolidation of fractional coupons. - A newTechnical Collaboration Agreement has been signed with Honda Motor Co. Ltd., Japan forthe period up to the year 2004 which includes technology related to models of higher Enginedisplacement.- The Company allotted 39,79,500 No. of Equity Shares of Rs. 10/- each as Bonus shares on7th February, by way of capitalisation of General Reserves.
  • - The Company had issued 28557 No. of Fractional Coupons representing 14.250 sharesagainst which the Shares shall be allotted on presenting the same for consolidation andallotment.1997- Hero Honda Motors has launched its newest motorcycle, the Street, a 100 cc bike designedfor use in congested urban traffic conditions.- Hero Honda Motors Ltd (HHML) has set up a new motorcycle plant in Gurgaon, near Delhifor the manufacture of the Honda Super Cub 100 cc Steptoe bike.- Hero Honda has set up a new state-of-the-art plant, heralding a new phase of developmentof motorcycle industry in India, to provide the most modern and technologically advancedproduction facilities.- Hero Motors of the Rs.1, 600 crore Hero group, as part of its globalisation plan, has set up aplant in Brazil for manufacturing hero winner scooters.- A new step thru model `Street-100 with unique feature was launched on 24th January.1998- The company proposes to increase the share capital to 5 crore equity shares of Rs. 10 each,4 lakh cumulative redeemable preference shares of Rs. 100 each and 4 lakh cumulativeconvertible preference shares of Rs. 100 each with power to increase or reduce it from time totime.- The company further proposes to capitalise Rs. 19, 96, 87,500 from general reserve to sharecapital through issue and allotment of bonus shares. Altogether, 1,99,68,750 fully paid bonusshares will be allotted and distributed to members of the company holding equity shares ofthe company in the proportion of one bonus share for every fully paid equity shares of Rs.10each.- Motorcycles major Hero Honda is considering entry into scooters in collaboration withpartners, Honda Motors, after the Japanese company decided to walk out of Kinetic Honda,their scooter venture with the Firodias of Pune.- Honda Motors recently pulled out of its joint venture with the Firodias in which it held a 51per cent equity stake.- Honda Motor Company Ltd of Japan (Honda) and Kinetic Honda Motor Ltd (KHML) havesigned a five-year licence and technical assistance agreement under which KHML willcontinue to receive the technical knowhow, critical vehicle parts and access to Hondasmarkets even after the sale of Honda stake in KHML to Kinetic Engineering Ltd (KEL).
  • - The Company changed the paradigm in two-wheelers by launching the most powerful andfast bike- CBZ(ee) with a unique feature of Transient Power Fuel Control (TPEC) system.- 23,962,500 bonus shares issued in prop. 1:1.1999- Hero Honda Motors Ltd (HHML) and 20th Century Finance Corporation Ltd have signed aMemorandum of Understanding (MoU) for financing of Hero Honda motorcycles.- The company, a joint venture between Honda Motor Company of Japan and Hero group ofIndia to produce four-stroke motorcycles, also aims to increase its share by 1 per cent to 38.6per cent during the current fiscal.- Leading two-wheelers manufacturer Hero Motors has formed a joint venture with BriggsStratton of US to develop and manufacture four-stroke engines for mopeds and scooters inIndia, a top company.- Honda Motor Company of Japan has decided to re-enter the scooter market in India as alsoforay into three-wheelers in a joint initiative with its existing joint venture company HeroHonda Motors Ltd.2000- Hero Honda Motors Ltd. and Tata Finance Ltd. have signed a national tie-up agreement.The Company is the largest manufacturer of motorcycles in the country.- The Company will relaunch its stepthru Stree Smart on Baisakhi 13th April.- Hero Honda Motors Ltd (HHML), has launched an upgraded version of the existing step-through motorcycle - the Hero Honda Street.- The Company was ranked as the 9th Highest Value Creator among 12 industry groupswithin the Bombay Stock Exchange top 100 companies over a five year period (1994-99).2001- Hero Honda Motors Ltd. has launched a new 100cc motorcycle named `Passion.- The Company has secured shareholders approval for splitting one equity share of Rs 10each into five equity shares of Rs 2 each in the ratio of 1:5.- Hero Honda Motors Ltd. has become the largest seller of motorcycles amongst all Hondacompanies and ventures in the world by selling one million motorcycles during the currentfinancial year.
  • - Credit rating Agency Crisil has reaffirmed outstanding `AAA rating assigned to theproposed Rs 15 crore non-convertible debenture issue, Rs 16 crore commercial paperprogramme and fixed deposit programme of Hero Honda Motors.- Promoter-Chairman of the country’s largest motorcycle manufacturing company, HeroHonda Ltd, Brijmohan Lall Munjal has bagged the prestigious Ernst & Young Entrepreneurof the Year (EOY) award here on September 27.2002-Company included in the 30 companies Bombay Stock Exchange index (Sensex)-Becomes the worlds largest two wheeler company by selling 1.3 million vehicles in 2001-Japanese automaker Honda Motor for the first time decides to source motorcycles from itsIndian joint venture Hero Honda to sell as Honda brandname in Vietnam-Royalty to the Japanese parent, Honda Motor Co, hiked to Rs 630 per vehicle as comparedto the flat royalty of Rs 200 on existing models like Splendour and Passion.-Approves Foreign Institutional Investors (FIIs) to increase their stake from the present 24per cent to 40 per cent-Comes out as the most profitable two-wheeler company in the country during the trailingfour quarters by overtaking second-largest player, Bajaj Auto-Launches Ambition, a 133 cc 11 BHP vehicle-Unveils Smart, a 75 cc step-thru-Comes out with a free insurance scheme worth Rs 1,000 for all its bikes-Bajaj Auto goes ahead of Hero Honda in market capitalisation (m-cap) growth in the lastfifteen months2003-Achieves a landmark sales turnover of over Rs 5,000 crore during 2002-03-Launches its cheapest 100cc motorbike CD Dawn-Hikes production capacity at two of its manufacturing facilities to three lakh units-Hero Honda and SBI Cards launch co-branded credit card for Hero Hondas customers-Achieves milestone by producing five million bikes from its Dharuhera plant in Haryana
  • -Launches its new 223-cc, 16.8 BHP Karizma at Rs 79,000-Joins hands with Small Industries Service Institute (SISI) to train the unemployed youth whohave finished diplomas-Initiates a new dealer credit system which will bring down its receivable levels to aroundseven days and save the company Rs 100 crore-Introduces Passion Plus, new version of Passion motorcycle-Forges marketing pact with Aprilia, the Italian bike maker, to introduce its range of Motoscooters and top-end motorcycles in India-The company has bagged two Total Customer Satisfaction (TCS) Awards.-Hero Honda Karizma bags BBC Bike of the Yr Award2004-Hero Honda retreats Ambition-Hero Honda unveils new version of Ambition-Hero Hondas Dawn emerges as largest entry-level bike-Hero Motors introduces Sting new 4-stroke bike-Hero Motors has announced a licensing agreement with Austria-based Bombardier-Rotaxthat will provide 125cc-175cc engines for the upcoming `Hero Aprilia range of scooters.-Hero Honda renews alliance with Honda Motor-Two-wheeler major Hero Honda and SBI Card, the credit card arm of State Bank of India,have joined hands to launch Indias first co-branded credit card in the two-wheeler industry2005-New product launches widen HHMLs product portfolio-Two-wheeler major Hero Honda on October 5 announced launch of its first scooter Pleasure-Hero Honda rolls out 150-cc motorcycle Achiever
  • 2006-Hero Honda launches CBZ variant X-treme-Hero Honda announced the launch of two new variants the new Glamour and Passion Pluslimited edition. - Hero Honda is the World No. 1 for the 5th year in a row- 15 million production milestone achieved2007-Hero Honda Motors Ltd. has appointed Mr. Yutaka Kudo as Director and Whole-timeDirector of the Company in the category of Executive Director w.e.f. April 1, 2007.- Hero Honda is the World No. 1 for the 6th year in a row- New Splendor NXG launched- New CD Deluxe launched- New Passion Plus launched- New motorcycle model Hunk launched- 20 million production milestone achieved2008- Hero Honda Motors Ltd has informed that Mr. Arun Nath Maira. Has been appointed as anAdditional Director in the category of Non-Executive and Independent Director w.e.f.December 20, 2008 by the Board of Directors by way of passing a resolution by circulation.- Hero Honda Haridwar Plant inauguration- New Pleasure launched- Splendor NXG launched with power start feature- New motorcycle model Passion Pro launched- New CBZ Xtreme launched- 25 million production milestone achieved- CD Deluxe launched with power start feature
  • - New Glamour launched- New Glamour Fi launched2009- Hero Honda Motors Ltd has appointed Mr Ravi Nath as an Additional Director in thecategory of Non-Executive and Independent Director w.e.f. October 14, 2009 by the Board ofDirectors by way of Passing a resolution by circulation on October 14, 2009.- Hunk (Limited Edition) launched- Splendor completed 11 million production landmark- New motorcycle model Karizma - ZMR launched- Silver jubilee celebrationsRegistered & Corporate Office34, Community Centre,Basant Lok,Vasant ViharCity:New DelhiState:DelhiPincode:110057Email ID:ilam.kamboj@heromotocorp.comWeb Url:http://www.heromotocorp.comFactory/plantDharuhera Plant,69 KM Stone,Delhi-Jaipur Highway,City:Rewari DistrictState:HaryanaPincode:122100Gurgaon Plant,37 KM Stone,Delhi-Jaipur Highway,
  • City:GurgaonState:HaryanaPincode:122001Haridwar Plant:Plot No. 3, Sector - 10,Ranipur, I.I.E., SIDCUL,City:HaridwarState:UttaranchalPincode:249403
  • Parent Company Hero GroupCategory Motorcycles, ScootersSector Two-WheelersTagline/ Slogan Hum mei hai Hero; Desh ki Dhadkan (HeroHonda) Wide product variety, excellent brand equity & high customerUSP loyaltySTPSegment Young boys looking for fast sporty bikes for Indian roadsTarget Group Young boys in the age 18-30 middle classPositioning Every person has a hero and a winner within one’s selfProduct Portfolio 1. CBZ 2. Karizma 3. Passion 4. PleasureBrands 5. Splendor 6. ImpulseSWOT Analysis 1. Huge brand equity and one of the biggest players in the two wheelers Indian market 2. Excellent R&D, and wide variety of products in every segment. 3. Excellent distribution, over 3000 dealerships and service centres. 4. Good advertising and excellent rebranding from Hero Honda toStrength Hero Moto Corp. 1. Absence in the premium bike segment. 2.High imports for its spare parts i.e. over 30% imports. 3. Most of the products have similar features and low on designWeakness and innovation. 1.Two-wheeler segment is one of the most growing industries.Opportunity 2.Export of bikes is limited i.e. untapped international markets. 1. Strong competition from Indian as well as international brands 2. Dependence on government policies and rising fuel pricesThreats 3. Better public transport will affect two-wheeler sales
  • Competition 1. Yamaha 2. Bajaj Auto 3.TVS 4.Suzuki 5. Harley Davidson 6. Royal EnfieldCompetitors 7. Ducati
  • Hero MotoCorp formerly Hero Honda is a motorcycle and scooter manufacturerbased in India. Hero Honda started in 1984 as a joint venture between Hero Cycles ofIndia and Honda of Japan. The company is the largest two wheeler manufacturer inIndia. The 2006 Forbes 200 Most Respected companies list has Hero Honda Motorsranked at 108. “Hero” is the brand name used by the Munjal brothers for their flagship companyHero Cycles Ltd. A joint venture between the Hero Group and Honda MotorCompany was established in 1984 as the Hero Honda Motors Limited At DharuheraIndia. Hero MotoCorp has three manufacturing facilities based at Dharuhera,Gurgaon in Haryana and at Haridwar in Uttarakhand. These plants together arecapable of churning out 3 million bikes per year. 1956 -Formation of Hero Cycles in Ludhiana(majestic auto limited) 1983-JointCollaboration Agreement with Honda Motor Co. Ltd. Japan Shareholders Agreementsigned. 1985- CD 100 launched. 1994 -Splendor launched. 1999 -CBZlaunched. 2003 -Karizma launched. August 2011 -Hero and Honda part company,thus forming Hero MotoCorp and Honda moving out of the Hero Honda joint venture. In December 2010, the Board of Directors of the Hero Honda Group have decided toterminate the joint venture between Hero Group and Honda in a phased manner. TheHero Group would buy out the 26% stake of the Honda in JV Hero Honda. Under thejoint venture Hero Group could not export to international markets (except Sri Lanka)and the termination would mean that Hero Group can now export. Since thebeginning, the Hero Group relied on their Japanese partner Honda for the technologyin their bikes. So there are concerns that the Hero Group might not be able to sustainthe performance of the Joint Venture alone During the fiscal year 2008-09, the company sold 3.7 million bikes, a growth of 12%over last year. In the same year, the company had a market share of 57% in the Indianmarket. Hero Hondas bike Hero Honda Splendor sells more than one million unitsper year. The company sold record 6,117,599 units of two-wheelers in the periodJanuary-December 2011, a growth of 19.2% over the calendar year of 2010 when ithad sold 5,134,549 two- wheelers. The demand of hero motocorp products are increasing day by day. Demand is morethen the production capacity. There is a waiting period of over 2-3 months forselected bikes. Even though the termination of the venture with Hero Motocorpthere is absolutely no change in demand.The company has a stated aim of achieving revenues of $10 billion and volumes of 10million two- wheelers by 2016-17. This in conjunction with new countries wherethey can now market their two-wheelers following the disengagement from Honda,Hero MotoCorp hopes to achieve 10 per cent of their revenues from internationalmarkets. to cope with the new demand the company was going to build their fourthfactory in South India and their fifth factory in Western India.
  • COMPOSITION OF REVENUE IN 2011-12` ` in crores %1 MATERIALS 17,281.57 67.512 OPERATIONS AND OTHER EXPENSES 1,943.16 7.593 TAXES AND DUTIES 2,142.57 8.374 EMPLOYEES 735.52 2.875 INTEREST 21.30 0.086 DEPRECIATION 1,097.34 4.297 SHAREHOLDERS AND RESERVES & SURPLUS 2,378.139.29TOTAL 25,599.59 100.00COMPOSITION OF REVENUE IN 2011-12` in crores %1 MATERIALS17,281.57 67.512 OPERATIONS AND OTHER EXPENSES 1,943.16 7.593 TAXES AND DUTIES 2,142.57 8.374 EMPLOYEES 735.522.875 INTEREST 21.30 0.086 DEPRECIATION 1,097.34 4.297 SHAREHOLDERS AND RESERVES & SURPLUS2,378.139.29TOTAL 25,599.59 100.00
  • SLEW OF LAUNCHES Launched three new models, including variants of existing models successfully. Launched ‘Impulse’ (150cc), India’s only dual-purpose on-road-off-road bike; launched the Company’s first motorcycle under the ‘Hero’ brand name. Launched a new 110cc scooter ‘Maestro’, strengthening a steadily growing presence in the gearless scooter segment. Launched a thrilling new 125cc ‘Ignitor’ bike. Showcased a concept Hybrid scooter – ‘Leap’, unveiled an all-new 110cc Passion X Pro during the Auto Expo in Delhi.UNMATCHED PERFORMANCEIn its first full year of operations under its new avatar, Hero’s two-wheeler sales grew 15% from 5.4million in 2010-11 to 6.23 million in 2011-12. Recorded over 0.65 million unit retail sales of two-wheelers in October 2011, the highest-ever in a month. Surpassed the previous record of over 0.60million sales in October 2008.VISIBILITYSponsored the men’s and women’s hockey qualifying events for the London Olympics 2012; theevent, titled ‘Hero FIH Road to London’ and held in Delhi, witnessed the Indian men’s hockey teamqualifying for the London Olympics.Celebrated young achievers as Brand Ambassadors; Hero roped in popular Bollywood star RanbirKapoor.ROBUST STRATEGYHero MotoCorp’s key strategies focus on building a steady and robust product portfolio acrosscategories, explore growth opportunities globally, continuously improve its operational efficiency,aggressively expand its reach to customers, invest in brand-building activities and ensure customerand shareholder delight.STATE-OF-THE-ART FACILITIESTwo manufacturing plants are based at Gurgaon and Dharuhera in Haryana (India)One manufacturing plant is located at Haridwar, Uttarakhand (India)BENCHMARKED CERTIFICATIONSEnvironmental Management Systems as per ISO 14001Occupational Health and Safety Management Systems as per OHSAS 18001Quality Management Systems as per ISO 9001
  • INCREASING PROXIMITYPan-India footprint with 5,100+ customer touch-points100,000+ villages covered through extensive rural India presenceGlobal footprint across several nationsROADMAP FOR FUTURE GROWTHINVESTMENT ` crores OPERATIONAL Approximately Approximately4th plant at Neemrana, Rajasthan 400 First quarter, FY20145th plant in Gujarat 1,100 Second quarter, FY2014Integrated R&D Centre at Kukas, Rajasthan 400 Second quarter, FY2014Capacity expansion at existing plants 500Other investments 1754,570GLOBALLY PREFERRED Exports grew 24% during the year under review, as we exported 164,570 two-wheelers.CORPORATE OVERVIEWSTATUTORY REPORTSFINANCIAL STATEMENTS
  • 19 ANNUAL REPORT 2011-12We are sprucing up our sales network in the export markets. All exports to international markets willbe made under the brand name ‘Hero’.More emphasis is being laid on existing export markets:Sri Lanka: An aggressive sales campaign was carried out, which helped us double sales in thescooter segment.Bangladesh: Mileage contests and exchange melas were held to increase brand resilience andvisibility.TRANSCONTINENTAL PRESENCEAs we plan to enter Central & Latin America and Africa, marketingand brand-building exercises will commence shortly in select markets across these locations. A newInternational Business Organisation structure is currently being implemented to drive this initiativeand growth.Several countries have been identified in Africa, Latin and Central America as potential internationalmarkets. Clearly, our focus will continue to be on markets, where volumes are large and products canbe exported with no/ minimum changes.We remain fully committed to emerge as a market leader and manufacturer of two-wheelers withfuturistic technology. Our R&D team comprises 200 technically qualified experts, along with state-of-the- art infrastructure. We entered into a strategic partnership with Eric Buell Racing (EBR) of USA. Through thispartnership, we plan to receive support in terms of cutting-edge technology and design to developfuture models. This alliance is in line with our objective of further developing in-house R&Dcapabilities by leveraging strategic international alliances.We forged an alliance with AVL, Austria, a global leader in engine design and development, todevelop different categories of engines. We sent our engineers to AVL to enable them to learn andexecute engine development projects independently in the future.During 2011-12, we took several initiatives to strengthen our R&D capabilities. Several R&Dengineers specialising in the field of designing, simulation, Finite Element Analysis (FEA), Computer-aided Engineering (CAE), prototyping, component testing and vehicle testing, among others, havebeen inducted to further strengthen the R&D team.
  • SALESNOS. 1,677,537 2,070,147 2,621,400 3,000,751 3,336,756 3,337,142 3,722,000 4,600,130 5,402,4446,235,205GROWTH (%) 17.7 23.4 26.6 14.5 11.2 0.01 11.5 23.6 17.4 15.45-YEAR CAGR (%) 18.5 14.7 12.4 11.9 12.5 13.3TOTAL INCOME(` crores) 5,195 5,997 7,559 8,870 10,090 10,517 12,565 16,099 19,688 23,944GROWTH (%) 14.4 15.5 26.0 17.4 13.7 4.2 19.5 28.1 22.3 21.65-YEAR CAGR (%) 17.3 15.2 15.9 16.3 17.3 18.9NET SALES(` crores) 5,102 5,832 7,422 8,714 9,900 10,332 12,319 15,758 19,245 23,368GROWTH (%) 14.2 14.3 27.2 17.4 13.6 4.4 19.2 27.9 22.1 21.45-YEAR CAGR (%) 17.3 15.2 16.1 16.3 17.2 18.7PROFIT BEFORE TAX(` crores) 885 1,072 1,217 1,412 1,246 1,410 1,781 2,832 2,405 2,865GROWTH (%) 27.4 21.2 13.5 16.0 -11.8 13.2 26.3 59.0 -15.1 19.15-YEAR CAGR (%) 12.4 9.8 10.7 18.4 11.2 18.1PROFIT AFTER TAX(` crores) 581 728 810 971 858 968 1,282 2,232 1,928 2,378GROWTH (%) 25.5 25.4 11.3 19.8 -11.7 12.8 32.4 74.1 -13.6 23.45-YEAR CAGR (%) 13.1 10.8 12.0 22.5 14.7 22.6OPERASALESNOS. 1,677,537 2,070,147 2,621,400 3,000,751 3,336,756 3,337,142 3,722,000 4,600,130 5,402,4446,235,205GROWTH (%) 17.7 23.4 26.6 14.5 11.2 0.01 11.5 23.6 17.4 15.45-YEAR CAGR (%) 18.5 14.7 12.4 11.9 12.5 13.3TOTAL INCOME(` crores) 5,195 5,997 7,559 8,870 10,090 10,517 12,565 16,099 19,688 23,944GROWTH (%) 14.4 15.5 26.0 17.4 13.7 4.2 19.5 28.1 22.3 21.65-YEAR CAGR (%) 17.3 15.2 15.9 16.3 17.3 18.9NET SALES
  • (` crores) 5,102 5,832 7,422 8,714 9,900 10,332 12,319 15,758 19,245 23,368GROWTH (%) 14.2 14.3 27.2 17.4 13.6 4.4 19.2 27.9 22.1 21.45-YEAR CAGR (%) 17.3 15.2 16.1 16.3 17.2 18.7PROFIT BEFORE TAX(` crores) 885 1,072 1,217 1,412 1,246 1,410 1,781 2,832 2,405 2,865GROWTH (%) 27.4 21.2 13.5 16.0 -11.8 13.2 26.3 59.0 -15.1 19.15-YEAR CAGR (%) 12.4 9.8 10.7 18.4 11.2 18.1PROFIT AFTER TAX(` crores) 581 728 810 971 858 968 1,282 2,232 1,928 2,378GROWTH (%) 25.5 25.4 11.3 19.8 -11.7 12.8 32.4 74.1 -13.6 23.45-YEAR CAGR (%) 13.1 10.8 12.0 22.5 14.7 22.6OPERATING MARGIN(%) 15.5 15.6 14.6 14.6 10.8 11.8 12.7 16.2 11.4 10.7OPBDIT MARGIN(%) 16.7 16.8 15.7 16.0 12.2 13.3 14.1 17.4 13.5 15.3EARNINGS PER SHARE(`) 29.1 36.5 40.6 48.6 43.0 48.5 64.2 111.8 96.5 119.1DIVIDEND PER SHARE(`) 18 20 20 20 17 19 20 110 105 45DIVIDEND(%) 900 1,000 1,000 1,000 850 950 1,000 5,500 5,250 2,250 TING MARGIN(%) 15.5 15.6 14.6 14.6 10.8 11.8 12.7 16.2 11.4 10.7OPBDIT MARGIN(%) 16.7 16.8 15.7 16.0 12.2 13.3 14.1 17.4 13.5 15.3EARNINGS PER SHARE(`) 29.1 36.5 40.6 48.6 43.0 48.5 64.2 111.8 96.5 119.1DIVIDEND PER SHARE(`) 18 20 20 20 17 19 20 110 105 45DIVIDEND(%) 900 1,000 1,000 1,000 850 950 1,000 5,500 5,250 2,250
  • lance Sheet of Hero Motocorp Mar 12 Mar 11 Mar 10 Mar 09 Mar 08 12 mths 12 mths 12 mths 12 mths 12 mths ces Of Funds Share Capital 39.94 39.94 39.94 39.94 39.94 ty Share Capital 39.94 39.94 39.94 39.94 39.94 e Application Money 0.00 0.00 0.00 0.00 0.00 rence Share Capital 0.00 0.00 0.00 0.00 0.00 rves 4,249.89 2,916.12 3,425.08 3,760.81 2,946.30 luation Reserves 0.00 0.00 0.00 0.00 0.00worth 4,289.83 2,956.06 3,465.02 3,800.75 2,986.24 red Loans 994.85 1,458.45 0.00 0.00 0.00 cured Loans 0.00 32.71 66.03 78.49 132.00 Debt 994.85 1,491.16 66.03 78.49 132.00 Liabilities 5,284.68 4,447.22 3,531.05 3,879.24 3,118.24 Mar 12 Mar 11 Mar 10 Mar 09 Mar 08 12 mths 12 mths 12 mths 12 mths 12 mths ication Of Fundss Block 6,308.26 5,538.46 2,750.98 2,516.27 1,938.78 ------------- Accum. Depreciation 2,522.75 1,458.18 1,092.20 942.56 782.52 in Rs. Cr.Block 3,785.51 4,080.28 1,658.78 1,573.71 1,156.26 -----------tal Work in Progress 193.95 125.14 48.14 120.54 408.49stments 3,964.26 5,128.75 3,925.71 3,368.75 2,566.82ntories 675.57 524.93 436.40 326.83 317.10 ry Debtors 272.31 130.59 108.39 149.94 297.44 and Bank Balance 56.10 47.75 1,863.48 217.49 130.58 Current Assets 1,003.98 703.27 2,408.27 694.26 745.12 s and Advances 926.99 783.48 438.46 325.80 196.37d Deposits 20.72 23.77 43.73 2.08 0.51 CA, Loans & Advances 1,951.69 1,510.52 2,890.46 1,022.14 942.00ered Credit 0.00 0.00 0.00 0.00 0.00ent Liabilities 3,520.66 5,316.40 3,965.69 1,678.93 1,455.57isions 1,090.07 1,081.07 1,026.35 526.97 499.76 CL & Provisions 4,610.73 6,397.47 4,992.04 2,205.90 1,955.33 -Current Assets -4,886.95 -2,101.58 -1,183.76 -1,013.33 2,659.04 ellaneous Expenses 0.00 0.00 0.00 0.00 0.00 Assets 5,284.68 4,447.22 3,531.05 3,879.24 3,118.24 ingent Liabilities 252.62 131.90 73.04 100.54 56.37k Value (Rs) 214.83 148.03 173.52 190.33 149.55 ce : Dion Global Solutions Limited
  • Name Last Price Market Cap. Sales Net Profit Total Assets (Rs. cr.) TurnoverBajaj Auto 2,080.00 60,188.34 19,528.98 3,004.05 6,138.55Hero Motocorp 1,764.90 35,242.85 23,579.03 2,378.13 5,284.68TVS Motor 43.05 2,045.25 7,126.20 249.07 1,884.76Mah Scooters 517.50 591.43 6.68 -6.49 202.50LML 7.25 59.44 311.49 -45.20 -358.24Kinetic Motor 10.45 28.79 5.67 1.48 58.54 Competition Balance Sheet ------------------- in Rs. Cr. ------------------- Hero Bajaj Auto TVS Motor Mah Scooters Atul Auto Motocorp Mar 12 Mar 12 Mar 12 Mar 12 Mar 12 Sources Of Funds Total Share Capital 39.94 289.37 47.51 11.43 7.55 Equity Share Capital 39.94 289.37 47.51 11.43 7.55 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 4,249.89 5,751.70 1,121.79 191.07 48.54 Revaluation Reserves 0.00 0.00 0.00 0.00 0.00 Networth 4,289.83 6,041.07 1,169.30 202.50 56.09 Secured Loans 994.85 0.00 356.70 0.00 3.89 Unsecured Loans 0.00 97.48 358.76 0.00 0.00 Total Debt 994.85 97.48 715.46 0.00 3.89 Total Liabilities 5,284.68 1,884.76 202.50 59.98 Hero Bajaj Auto TVS Motor Mah Scooters Atul Auto Motocorp
  • Mar 12 Mar 12 Mar 12 Mar 12 Mar 12Application Of FundsGross Block 6,308.26 3,425.94 2,142.43 26.73 59.99Less: Accum. Depreciation 2,522.75 1,914.33 1,116.86 19.52 20.02Net Block 3,785.51 1,511.61 1,025.57 7.21 39.97Capital Work in Progress 193.95 343.15 52.51 0.00 1.57Investments 3,964.26 4,882.81 930.92 205.60 7.75Inventories 675.57 678.53 584.56 0.27 29.82Sundry Debtors 272.31 423.20 234.07 1.59 6.08Cash and Bank Balance 56.10 446.49 13.03 2.42 4.74Total Current Assets 1,003.98 1,548.22 831.66 4.28 40.64Loans and Advances 926.99 1,744.82 299.84 17.63 6.65Fixed Deposits 20.72 1,208.36 0.00 5.00 0.05Total CA, Loans & Advances 1,951.69 4,501.40 1,131.50 26.91 47.34Deffered Credit 0.00 0.00 0.00 0.00 0.00Current Liabilities 3,520.66 2,925.53 1,149.47 35.29 28.51Provisions 1,090.07 2,174.89 106.27 1.93 8.14Total CL & Provisions 4,610.73 5,100.42 1,255.74 37.22 36.65Net Current Assets -2,659.04 -599.02 -124.24 -10.31 10.69Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00Total Assets 5,284.68 6,138.55 1,884.76 202.50 59.98Contingent Liabilities 252.62 1,445.67 212.51 4.09 21.09Book Value (Rs) 214.83 208.77 24.61 177.19 76.68Source : Dion Global Solutions Limited
  • Key Financial Ratios ofHero Motocorp Mar 12 Mar 11 Mar 10 Mar 09Investment Valuation RatiosFace Value 2.00 2.00 2.00 2.00Dividend Per Share 45.00 105.00 110.00 20.00Operating Profit Per Share (Rs) 182.69 130.06 137.40 87.79Net Operating Profit Per Share (Rs) 1,181.19 969.86 793.22 617.23Free Reserves Per Share (Rs) 212.83 146.03 171.52 188.33Bonus in Equity Capital 59.98 59.98 59.98 59.98
  • Key Financial Ratios of
  • Hero Motocorp Mar 12 Mar 11 Mar 10 Mar 09 Mar 08Investment Valuation RatiosFace Value 2.00 2.00 2.00 2.00 2.00Dividend Per Share 45.00 105.00 110.00 20.00 19.00Operating Profit Per Share (Rs) 182.69 130.06 137.40 87.79 68.50Net Operating Profit Per Share (Rs) 1,181.19 969.86 793.22 617.23 518.06Free Reserves Per Share (Rs) 212.83 146.03 171.52 188.33 147.55Bonus in Equity Capital 59.98 59.98 59.98 59.98 59.98 The two industry leaders in the two-wheelers segment, Bajaj Auto and Hero MotoCorp, seem geared up to log a good performance in the coming times. Both the companies make a good option for your portfolio, say Vidrum Mehta and Shrikant Akolkar. The auto sector is not going through a very good time presently. From inventory pile-ups to slower demand due to higher interest rates and labour unrests, nothing seems to be going the right way for this sector. With the economy in a lower gear, these companies are finding it difficult to step up their speed of growth. Many companies in the sector have started resorting to production cuts due to the slowing demand. This has led the apex industry body, Society of Indian Automobile Manufacturers (SIAM), to cut the sales growth guidance for the sector from the lower double digits to single digits in the current fiscal. Petrol price hikes and talks of deregulating diesel prices have acted as further speed breakers for the growth of the sector. A weaker monsoon may worsen the situation even more. Amid all these negatives, what is the outlook for the sector? Is there any company whose stock can be bought with better returns in mind? Or should one just wait it out for some time with regard to this sector? Broadly speaking, the auto industry is divided into the two- and four-wheeler segments. SIAM has brought down the growth guidance for the four-wheeler segment, but has retained the earlier projected growth of around 11 to 13 per cent for the two-wheelers segment. Further, according to SIAM reports, as at the end of FY11, the domestic two-wheeler market accounts for 76 per cent of the total number of vehicles that are sold. Within the twowheelers segment, two companies, viz. Hero MotoCorp (HMCL) and Bajaj Auto (BAL), have a total of around 65 per cent of the market share between themselves. In the motorcycles segment, both these companies have a combined share of around 80 per cent. Since these two companies form the mainstay of the domestic two-wheeler market, we have analysed both of them on various parameters that will help our readers to decide on which of them should ideally form a part of their portfolio.
  • Business & Past PerformanceOne interesting fact that investors should take note of is that HMCL and BAL collectively have2.99 per cent weight in the Sensex. At Rs 45189 crore, the market cap of BAL is higher than thatof HMCL, which stands at Rs 40569 crore.HMCL’s past performance in terms of volumes and revenues has been better than that of BAL.HMCL’s volumes have grown at a CAGR of 13 per cent over the past five years, outpacing theindustry average of 11 per cent during the same period. BAL’s volumes, on the other hand, havegone up at a CAGR of 10 per cent over the same period. On the revenue front, HMCL has seenits income grow at a CAGR of 22 per cent over the past five years, while BAL’s revenues havegrown at a CAGR of 19 per cent over the same period. In terms of volumes and revenues, HMCLhas done better than BAL in the past.While HMCL and BAL are bothin the two-wheelers business, BAL also makes commercialvehicles (CV) like goods carriers and passenger vehicles. The CV segment forms about nine percent of the total volumes. BAL also derives 35 per cent of the total revenues from exports, whilethose in case of HMCL are less than five per cent.A comparison between these companies is possible on the fact that BAL derives 91 per centrevenues from two wheelers, while HMCL is entirely a two-wheeler company. Besides, both thecompanies derive a major chunk of their revenues from the rural segment, where there is astrong demand.Bajaj Auto ( Five Year Summary)Particulars 2008 2009 2010 2011 2012Total Sales (Units) 2,451,000 2,195,000 2,853,000 3,824,000 4,349,000Net Sales (Rs/Cr) 8665.92 8446.03 11543.16 15927.4 18945.52EBITDA Margin (%) 14.3 13.6 21.7 20.4 20.2Net Profit (Rs/Cr) 749.56 535.79 1597.22 3454.89 3045.4Hero MotoCorp ( Five Year Summary)Particulars 2008 2009 2010 2011 2012Total Sales (Units) 3,337,142 3,722,000 4,600,130 5,402,444 6,235,205Net Sales (Rs/Cr) 10331.8 12319.12 15758.1 19245.03 23668.05
  • Hero MotoCorp ( Five Year Summary)Particulars 2008 2009 2010 2011 2012EBITDA Margin (%) 13.33 14.13 17.45 13.47 15.35Net Profit (Rs/Cr) 968 1282 2232 1928 2378Hero Motocorp Karizma ZMRPrice : Rs. 1,03,000Mileage : 35-45 kmpl
  • Hero Motocorp HF CD DawnPrice : Rs. 38,000Mileage : 70-80 kmpl Hero Motocorp PleasurePrice : Rs. 42,500Mileage : 40-45 kmpl Hero Motocorp Splendor NXGPrice : Rs. 43,000Mileage : 75 kmpl Hero Motocorp HF DeluxePrice : Rs. 44,000Mileage : 70-80 kmpl
  • Hero Motocorp Splendor PlusPrice : Rs. 44,500Mileage : 65-70 kmpl Hero Motocorp Passion PlusPrice : Rs. 45,000Mileage : 65-70 kmpl Hero Motocorp Splendor ProPrice : Rs. 45000-48100Mileage : 60-65 kmpl Hero Motocorp Passion ProPrice : Rs. 49,000Mileage : 65-70 kmpl
  • Hero Motocorp MaestroPrice : Rs. 50,000Mileage : 40-45 kmpl Hero Motocorp Passion xProPrice : Rs. 51,500Mileage : 55-60 kmpl Hero Motocorp Super SplendorPrice : Rs. 51800Mileage : 65-70 kmpl Hero Motocorp GlamourPrice : Rs. 54,500Mileage : 50-55 kmpl
  • Hero Motocorp IgnitorPrice : Rs. 57,200Mileage : 55-60 kmpl Hero Motocorp AchieverPrice : Rs. 58,000Mileage : 50-55 kmpl Hero Motocorp ImpulsePrice : Rs. 69,500Mileage : 45-50 kmpl Hero Motocorp HunkPrice : Rs. 71,200Mileage : 45-50 kmpl
  • Hero Motocorp CBZ XtremePrice : Rs. 72,300Mileage : 50-55 kmplCompany Current Price Book Value P/E Ratio Market Cap (Rs. Cr.)Bajaj Auto Ltd. 2,080.00 208.77 20.04 60,188.34Maharashtra Scooters Ltd. 517.50 177.19 0.00 591.43Atul Auto Ltd. 183.60 39.51 13.34 207.93Kinetic Engineering Ltd. 98.00 26.52 0.00 101.65Majestic Auto Ltd. 49.50 76.75 2.69 51.47TVS Motor Company Ltd. 43.05 24.61 8.21 2,045.25Scooters India Ltd. 32.55 -18.25 0.00 139.94Kinetic Motor Company Ltd. 10.45 -15.78 19.43 28.79LML Ltd. 7.25 -58.42 0.00 59.44VCCL Ltd. 3.35 -28.81 0.00 1.61