8/4/2019 Company Analysis of Hero

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Company analysis

Hero Honda Motors Limited is an India-based company engaged in the manufacture of motorcycles. The

Company is engaged in manufacturing of two wheelers. Hero Honda bikes are manufactured across

three manufacturing facilities. Two of these are based at Gurgaon and Dharuhera, which are located in

the state of Haryana in northern India. The third manufacturing plant is based at Haridwar, in the hill state

of Uttrakhand. The Company is a joint venture between India’s Hero Group and Japan’s Hond a Motor Co.

The Company offers a range of bikes starting from CD Dawn, CD Deluxe, Splendor Plus, Splendor NXG,

Passion and Passion Pro. The 125 cubic centimeter segment offers Glamour, Super Splendor and

Glamour F1. It also has an offering called Achiever in 135 cubic centimeter segment. In the 150 cubic cm

and above the Company offers brands like Hunk, CBZ X-treme, Karizma and the Karizma ZMR. It also

offers a 100 cubic cm scooter, Pleasure.

Key highlights of the company are-

Economic times awards for corporate excellence (2008-09), CNBC TV 18 overdrive awards 2010

‘HALL OF FAME’ to splendor, biker maker of the year.  

The company has adopted various policies including the environmental, quality and safety and

security policies (for employees and contractors and dealers). The company is committed to the

environmental legislations that include- clearer production in all processes, greening supply

chain, product innovations to improve environment, institutionlise resource conservation like oil,

paints, chemicals and spreading awareness amongst employees and dealers etc.

Significant landmark of recording total cumulative sales of 30 million two- wheelers, with the

milestone surpassed in the month of March, 2010. Also, the Company recorded a million units

sales in each quarter of fiscal 10, capping the year with the highest-ever quarter sales of 11,

86,536 two-wheelers in the fourth quarter.

Market share- The company had a market share of 41.35% in the year 2008-2009 and over a 25

year span it has crossed the 15 million unit milestone. Hero Honda sells more two wheelers than

the second, third and fourth placed two-wheeler companies put together. 

The market share ofIndia’s largest two-wheeler manufacturer. Amid talk of a possible exit by its Japanese partner

Honda Motor Co. from the joint venture, the company’s market share in the motorcycle segment

dropped to 52.9% at the end of the September quarter from 60.4% a year earlier, according to

data from the Society of Indian Automobile Manufacturers. 

Business risk- The company has enough cash balance to meet all its operating expenses and

activities as the net cash flow from operating activities has increased from rs.

1359.03crores(2009) to rs.2686.64crores(2010).

Financial risk-The company’s debt has decreased from rs.78.49crores(2009) to

rs.66.03crores(2010) and the interest expenses have also reduced from rs.13.04crores to

rs.11.14crores which reduces the financial risk of the company. Also the interest coverage ratio

has increased from 664.40 times(2009) to 1262.36 times (2010) which shows the ability of the

company to cover its interest expenses out of the operating profit.

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