Professional Documents
Culture Documents
On
Hyundai Motor India Limited (HMIL) "
Preface
As a part of our MBA curriculum we are assigned various projects under
different subjects to impart practical know-how of the industry.
This report is a study of Hyundai Motor India Limited (HMIL) under the
subject Financial Management.
INDEX
Chapter
Topic
Page No.
Preface
02
03
Introduction
1.1 History
05
08
3.
Ratio analysis
11
11
13
14
16
18
3.6 Du Pont
19
4.
Conclusion
20
5.
Annexure
21
6.
Bibliography
23
Chapter 1.
INTRODUCTION
Hyundai Motor India Limited is a wholly owned subsidiary of the Hyundai
Motor Company in India. It is the 2nd largest automobile manufacturer in India.
Hyundai/Atos Prime is made only by Hyundai Motor India Limited.
Hyundai Motor India Limited was formed in 6 May 1996 by the Hyundai Motor
Company of South Korea. When Hyundai Motor Company entered the Indian
Automobile Market in 1996 the Hyundai brand was almost unknown throughout
India. During the entry of Hyundai in 1996, there were only five major
automobile manufacturers in India, i.e. Maruti, Hindustan, Premier, Tata and
Mahindra. Daewoo had entered the Indian automobile market with cielo just
three years back while Ford, Opel and Honda had entered less than a year back.
For more than a decade till Hyundai arrived, Maruti Suzuki had a near
monopoly over the passenger cars segment because TELCO and M&M were
solely utility and commercial vehicle manufacturers, while Hindustan and
Premier both built outdated and uncompetitive products.
1.1 History
HMIL's first car, the Hyundai Santro was launched in 23 September 1998 and
was a runaway success. Within a few months of its inception HMIL became the
second largest automobile manufacturer and the largest automobile exporter in
India. Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of
Hyundai Motor Company (HMC), South Korea and is the largest passenger car
exporter and the second largest car manufacturer in India. HMIL presently
markets 10 models - Eon, Santro, i10, Grand i10, Xcent, i20, Verna, Elantra,
Sonata and Santa Fe.
HMILs manufacturing plant near Chennai claims to have the most advanced
production, quality and testing capabilities in the country. To cater to rising
demand, HMIL commissioned its second plant in February 2008, which
produces an additional 300,000 units per annum, raising HMILs total
production capacity to 600,000 units per annum.
CHAPTER 2.
DATA ANALYSIS AND INTERPRETATION
2.1Financial Analysis
Financial analysis is the process of identifying the financial strengths and
weaknesses of the firm by properly establishing relationships between the items
of the balance sheet and the profit & loss account / Income statement.
Financial statement:
A financial statement is an organized collection of data according to
logical and consistent accounting procedures. Its purpose is to convey an
understanding of some financial aspects of a business firm. It may show a
position at a moment of time as in the case of a balance sheet, or may reveal a
series of activities over a given period of time, as in the case of an income
statement.
Thus, the term financial statement generally refers to the basis statements;
1.
2.
3.
4.
amount
Net Profit
900
800
700
600
500
400
300
200
100
0
year
Interpretation:
The net profit after tax increased in the initial years but came down in
year 2009 and 2010 because of booming in the economy. The companys
profit fell to almost its half in years because of slowdown in economy
across the globe. The company reached to its pick in year 2011 because
of recovery of economy.
10
Chapter- 3
The Ratio analysis
Ratio analysis is a powerful tool for the interpretation of the financial statement.
A ratio can be defined as the indicated quotient of two mathematical
expressions in financial analysis the ratio is used as the benchmark for
evaluating the financial position and performance of a firm.
The relation between two accounting figures, expressed mathematically, is
known as financial ratios.
The types of ratios
1. Liquidity Ratios Measure the firms ability to meet current obligations.
2. Leverage Ratios Measure the proportion of debt and equity in financing
the assets.
3. Activity Ratios Measure the firms efficiency in utilizing its assets.
4.
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
Current ratio
1.45
1.42
1.48
1.16
0.99
1.36
1.27
1.14
1.25
1.67
Quick ratio
2.09
2.17
1.61
2.03
1.86
2.37
2.26
2.55
2.34
1.69
times
Current Ratio
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Current Ratio
current ratio
Figure 3.1: current ratio (source: capita line database)
Quick ratio
3
2.5
times
2
1.5
1
Quick ratio
0.5
0
quick ratio
Figure 3.2: Quick ratio
Interpretation:
The current ratio is considered to be satisfactory if it is 2:1. But it differs from
the industry to industry. The current ratio represents the margin of safety. The
greater the current ratio, the greater is the ability of the firm to meet its current
obligations. The current ratio of the Hyundai Motor India Ltd reflects the
satisfactory current position of the firm.
On the other hand the quick ratio shows the liquidity position of the company.
This ratio is considered to be favourable if it is approximately 1:1. The quick
12
ratio shows the test of the quality of the current assets while the current ratio
shows merely the test of quantity of the current assets. The quick ratio of the
Hyundai Motor India Ltd shows the favourable liquidity condition.
3.2 Leverage ratios
Leverage is a factor which can be used to magnify the income of the owner i.e.
Equity shareholder of the company. This is done through introduction of debt or
fixed interest bearing capital in to the capital structure of the company. On the
other hand the financial leverage becomes burden when the company is not able
to earn the rate of return on the capital employed which is equal to the rate of
interest on the debt.
The leverage ratios of the Hyundai Motor India Ltd is as follows
Formulas:
1. Long term debt equity ratio = long term debt /net worth
2. Total debt equity ratio = total debt /net worth
Ratios
2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Long term debt /
Equity
1.67
1.71
Total debt/equity
1.67
1.71
Interest coverage
ratio
13.69 27.71
Table 2: Leverage ratios
1.68
1.68
2.38
2.38
2.02
2.02
1.75
1.72
1.25
1.22
1.27
1.29
1.47
1.53
1.56
1.64
6.82
2.35
5.47
39.89
16.29
Net Worth
2.5
2
1.5
1
0.5
0
13
Interpretation:
The above ratios show that in the year 2012, the proportion of debt is less than
the proportion of the equity in the capital structure of the company. Company is
conservative in nature and hence do not apply debt in business. This reduces
burden of external debt but simultaneously company loses tax shield benefit.
Company has to pay higher tax.
3.3 Activity Ratios
Activity ratios are employed to evaluate the efficiency with which the firm
manages and utilizes its assets. These ratios are also called turnover ratios
because they indicate the speed with which assets are being converted or turned
over into sales. Activity ratios, thus, involve a relationship between sales and
assets. A proper balance between sales and assets generally reflects that assets
are managed well.
The activity ratios of Hyundai Motor India Ltd. are as follows:
Formulas:
1. Inventory Turn Over Ratio
2012
13.93
2011
16.17
2010
15.51
2009
7.29
2008
6.60
2007
6.84
2006
9.89
2005
9.94
2004
10.28
2003
12.14
27.78
14.62
10.44
12.04
17.83
30.23
31.82
34.92
67.4
50.7
2.89
2.71
2.73
2.52
2.5
3.01
2.88
2.77
2.55
2.18
3.52
3.44
3.25
2.48
2.15
2.84
3.74
3.86
3.31
2.36
1.45
1.42
Table 3: Activity Ratios
1.48
1.16
0.99
1.36
1.27
1.14
1.25
1.67
Inventory Turn
Over Ratio
Debtors Turn
Over Ratio
Fixed Assets
Turn Over Ratio
Total Assets
Turn Over Ratio
Current Assets
Turn Over Ratio
14
Turnover ratios
80
70
times
60
50
40
30
20
10
0
20120 20110 20100 20090 20080 20070 20060 20050 20040 20030
3
3
3
3
3
3
3
3
3
3
Fixed Assets
2.89
2.71
2.73
Inventory
17.36
17.06
12.25
9.07
Debtors
27.78
14.62
10.44
12.04
2.52
2.5
3.01
2.88
2.77
2.55
2.18
8.08
9.81
12.29
13.35
15.85
15.55
17.83
30.23
31.82
34.92
67.4
50.7
Interpretation:
The figure 3.4 highlights the activity ratios in which, Assets turnover ratio
measures how efficiently assets are used to maximize sales. A firms ability to
produce a large volume of sales for a given amount of net assets is the most
important aspect of its operating performance. The net assets turnover should be
interpreted cautiously. The net assets in the denominator of the ratio include
fixed assets net of depreciation. Thus old assets with lower book values may
create a misleading impression of high turnover without any improvement in
sales. For Hyundai Motor India Ltd., the asset turnover ratio is increasing
uniformly over the period from 2008. The assets of the company are properly
used for generating sales.
Inventory turnover ratio measures the efficiency of inventory management.
Therefore ideally an increasing trend is expected. Inventory turnover ratio is
more stabilize one with less fluctuation over a period of time which indicates
effective inventory management. The chart reflects there is declining trend till
2008. We can see an improvement in ratio in 2012 which is 17.36 which
indicates better management of inventories. Hence we can say that inventory is
converted into sales at a faster pace from previous year.
15
Debtors turnover ratio and collection period measure the speed with which the
accounts receivable are collected. A reduction in collection period would mean
faster conversion of debtors into cash and so the company can meet its working
capital requirement in a better manner. The chart shows slowly fluctuating trend
of Hyundai Motor India Ltd. debtor turnover ratio up to 2012.
16
profitablity ratio
40
Percentage
35
30
25
20
15
10
5
0
201203
201103
201003
200903
200803
200703
200603
200503
200403
200303
ROCE (%)
19.66
20.55
10.33
7.94
7.87
20.86
35.72
32.8
34.01
16.35
RONW (%)
20.53
21.99
11.85
6.43
8.63
20.4
29.29
29.15
33.19
15.23
Interpretation:
Figure 3.5 indicates that profitability ratios in which, Return on equity is
calculated to see the profitability of owners investment. RONW indicates how
well the firm has used the resources of owners. Here we can see that the RONW
has decreased from 2006 to 2008, at 2012 its recovered profitability level, so
which is a good indication for the company and the overall profitability ratios
we can see that the profitability of the company is increasing.
Return on capital employed is obtained by dividing EBIT (1-tax rate) by capital
employed. Capital employed represents pool of funds supplied by shareholders
and lenders. This ratio therefore measures what actually a firm has earned in
comparison to the investments made. The movement of this ratio is almost
similar to the trend of return on net worth ratio.
17
Payout (%)
80
70
Percentage
60
50
40
30
20
10
0
Payout (%)
201203 201103 201003 200903 200803 200703 200603 200503 200403 200303
64.39
15.74
34.3
69.68
31.26
33.58
73.98
Interpretation:
In the figure 3.6, the payout ratio shows how much rupees available to
shareholders from net profit. From chart we can interpret that payout ratio has a
decreasing trend from 2003 to 2005 and company not paid dividend in year
2006, 2007 and 2008 then after paid in 2009. it has showed decreasing trend
2010to2011. And again it increasing in 2012, so we can say the company is not
paying regular dividend to its shareholders.
18
2012
2011
20010
2009
2008
2007
2006
2005
2004
2003
PBIDT/Sales (%)
38.52
49.54
43.33
43.54
39.94
44.38
44.45
49.93
43.35
43.85
Sales/Net Assets
0.56
0.55
0.58
0.59
0.68
0.73
0.74
0.73
0.83
0.63
PBDIT/Net Assets
0.22
0.27
0.25
0.25
0.27
0.32
0.33
0.36
0.36
0.28
PAT/PBIDT (%)
65.21
65.95
63.62
63.96
63.14
62.58
61.83
59.91
64.12
60.75
1.19
1.23
1.22
1.18
1.2
1.17
1.24
1.23
1.2
1.27
ROE (%)
17.63
23.87
20.48
20.2
21.59
25.2
27
28.63
29.71
22.72
19
CONCLUSION:
From financial analysis we can conclude that Hyundai Motor India Ltd. is
having a poor financial capacity. From all the interpretation from Current ratios,
activity ratios, liquidity ratios, profitability ratios, EPS, Dividend payout,
DuPont analysis and leverage analysis it is clear that Hyundai Motor India Ltd.
is financially poor financial capacity. Therefore, it is advised not to invest in
this company because this company not giving regular dividend to its
shareholders.
20
4. Annexure:
4.1 Balance Sheet of Hyundai Motor India Ltd.
2.3 FINANCE - BALANCE SHEET - Hyundai Motor India Ltd (Curr: Rs in Cr.) As on 25-04-2014
0CmbCommonsize0
201203
201103
201003
200903
200803
200703
200603
200503
200403
200303
SOURCES OF FUNDS :
Share Capital
Reserves Total
Equity Share Warrants
Equity Application Money
Total Shareholders' Funds
Secured Loans
Unsecured Loans
Total Debt
Other Liabilities
812.54
3395.12
0
0
4207.66
48.27
2458.14
2506.41
318.37
812.54
3125.17
0
0
3937.71
48.27
2508.75
2557.02
242.88
812.54
2472.54
0
0
3285.08
0
2220.18
2220.18
0
812.54
2239.13
0
0
3051.67
0
4222.92
4222.92
0
812.54
2219.85
0
0
3032.39
0
3104.72
3104.72
0
812.54
1709.22
0
0
2521.76
0
1889.67
1889.67
0
812.54
1242.48
0
0
2055.02
0
521.95
521.95
0
812.54
717.38
0
0
1529.92
0
418.09
418.09
0
812.54
449.43
0
0
1261.97
0
596.33
596.33
0
812.54
208.39
0
0
1020.93
0
571.54
571.54
0
Total Liabilities
7032.44
6737.61
5505.26
7274.59
6137.11
4411.43
2576.97
1948.01
1858.3
1592.47
8887.67
5031.32
0
3856.35
0
457.69
0
138.01
7896.93
4272.64
0
3624.29
0
480.27
0
138.01
7649.93
3586.69
0
4063.24
0
79.42
0
138
7560.52
2844.16
0
4716.36
0
172.1
0
134.96
5619.19
2178.69
0
3440.5
0
1241.17
0
63.16
3470.53
1721.9
0
1748.63
0
1809.4
0
19.5
3107.57
1371.42
0
1736.15
0
167.21
0
0
2759.27
1079.03
0
1680.24
0
14.67
0
0
2548.84
839
0
1709.84
0
0
0
11.73
1926.18
662.55
0
1263.63
0
0
0
11.9
1586.54
928.38
1906
1947.98
6368.9
1203.73
815.3
1811.27
1550.8
5381.1
1264.66
2064.8
450.42
1179.78
4959.66
2126.47
1915.04
561.94
1141.31
5744.76
1532.24
842.99
661.6
862.67
3899.5
1280.59
431.06
240.29
1287.99
3239.93
741.54
224.88
535.1
949.21
2450.73
634.15
306.34
146.32
788.45
1875.26
466.9
114.76
543.92
163.36
1288.94
253.98
54.79
548.51
85.71
942.99
3038.36
737.84
3776.2
2592.7
2475.01
273.37
2748.38
2632.72
3070.64
445.54
3516.18
1443.48
2821.44
387.11
3208.55
2536.21
2090.68
173.03
2263.71
1635.79
1365.13
883.22
2248.35
991.58
959.62
630.87
1590.49
860.24
798.14
595.93
1394.07
481.19
760.49
223.06
983.55
305.39
416.16
38.09
454.25
488.74
0
28.24
203.73
-175.49
163.18
0
16.43
213.84
-197.41
59.73
0
18.8
237.68
-218.88
0
0
21.77
306.81
-285.04
0
0
15.31
258.82
-243.51
0
0
13.14
170.82
-157.68
0
0
18.19
204.82
-186.63
0
0
14.83
242.92
-228.09
0
0
17.6
186.26
-168.66
0
0
0.91
172.71
-171.8
0
Total Assets
7032.44
6737.61
5505.26
7274.59
6137.11
4411.43
2576.97
1948.01
1858.3
1592.47
Contingent Liabilities
377.24
235.64
81.66
120.57
88.7
69.35
74.07
49.96
115.45
APPLICATION OF FUNDS :
Gross Block
Less : Accumulated Depreciation
Less: Impairment of Assets
Net Block
Lease Adjustment
Capital Work in Progress
Producing Properties
Investments
Current Assets, Loans & Advances
Inventories
Sundry Debtors
Cash and Bank
Loans and Advances
Total Current Assets
Less : Current Liabilities and
Provisions
Current Liabilities
Provisions
Total Current Liabilities
Net Current Assets
Miscellaneous Expenses not
written off
Deferred Tax Assets
Deferred Tax Liability
Net Deferred Tax
Other Assets
21
4.2 FINANCE - PROFIT AND LOSS - Hyundai Motor India Ltd (curr: Rs in cr.) as on 25-04-2014
COMPANY/FINANCE/PROFIT AND LOSS/16486/ 0CmbAnnual0
2012-03
(12)
2011-03
(12)
2010-03
(12)
2009-03
(12)
2008-03
(12)
2007-03
(12)
2006-03
(12)
INCOME :
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
24221.49
2118.01
22103.48
396.51
233.92
21050.51
1585.09
19465.42
397.32
54.1
20771.9
1149.36
19622.54
646.82
-469.68
16599.46
1076.91
15522.55
573.51
314.35
11357.33
1238.46
10118.87
777.72
67.49
9915.88
1153.39
8762.49
356.86
252.22
8450.94
1111.8
7339.14
470.49
62.99
Total Income
22733.91
19916.84
19799.68
16410.41
10964.08
9371.57
2004-03
(12)
2003-03
(12)
7351.9
1046
6305.9
349.13
97.77
5713.74
913.26
4800.48
191.87
33.96
3955.86
870.72
3085.14
104.6
-3.6
7872.62
6752.8
5026.31
3186.14
18218.61
154.16
476.2
15876.52
132.67
401.02
15897.93
121.02
344.17
13118.59
113.09
318.49
8234.49
87.89
245.04
6941.66
68.68
188.64
5678.32
63.86
161.36
4931.09
56.53
133.26
3531.86
42.2
106.83
2191.16
36.75
89.18
456.6
1004.18
455.21
939.37
394.03
1625.82
309.29
1234.37
234.68
867.06
236.97
796.48
217.43
628.62
163.89
562.12
92.71
373.96
54.99
317.02
287.59
146.09
3.95
109.86
38.57
51.28
19.79
31.58
113.37
54.99
20597.34
17950.88
18386.92
15203.69
9707.73
8283.71
6769.38
5878.47
4260.93
2744.09
2136.57
98.88
2037.69
783.2
1254.49
440.22
0
-21.93
836.2
-0.48
836.68
1965.96
45.4
1920.56
707.73
1212.83
440.2
-0.18
-21.47
794.28
-0.34
794.62
1412.76
96.79
1315.97
752.9
563.07
253.7
0
-66.16
375.53
0.11
375.42
1206.72
226.51
980.21
674.53
305.68
63.31
5.21
41.53
195.63
0.07
195.56
1256.35
75.89
1180.46
461.1
719.36
112.5
5.11
87.63
514.12
274.55
239.57
1087.86
14.06
1073.8
358.95
714.85
273.6
3.46
-28.95
466.74
-0.93
467.67
1103.24
3.35
1099.89
295.01
804.88
316.82
4.42
-41.46
525.1
0.1
525
874.33
13.21
861.12
250.01
611.11
144.75
0
59.44
406.92
-0.04
406.96
765.38
14.71
750.67
178.55
572.12
190.05
0
3.22
378.85
0.03
378.82
442.05
16.82
425.23
168.02
257.21
84.75
0
7.71
164.75
0.95
163.8
-3.49
3028.25
2415.33
2200.7
2157.45
1646.82
1180.08
654.98
407.43
0
650.23
0
181.36
0
160.9
0
152.38
0
0
0
0
0
0
0
159.37
0
378.85
0
164.75
3214.22
3028.25
2415.33
2200.7
2157.45
1646.82
1180.08
654.98
Dividend
Preference Dividend
Equity Dividend %
Dividend Per Share(Rs)
Earnings Per ShareUnit Curr
487.52
0
60
600
121.88
0
15
150
121.88
0
15
150
121.88
0
15
150
0
0
0
0
0
0
0
0
0
0
0
0
121.88
0
15
0
121.88
0
15
0
121.88
0
15
0
931.78
953.2
437.26
215.26
632.73
574.42
646.25
479.77
446.65
202.76
5178.4
4846.17
4042.98
3755.72
3731.99
3103.55
2529.13
1882.89
1553.12
1256.47
EXPENDITURE :
Raw Materials
Power & Fuel Cost
Employee Cost
Other
Manufacturing
Exp.
Selling and Admi. Exp.
Miscellaneous
Expenses
Less: Pre-operative
Expenses Capitalised
Total Expenditure
Operating Profit
Interest
Gross Profit
Depreciation
Profit Before Tax
Tax
Fringe Benefit tax
Deferred Tax
Reported Net Profit
Extraordinary Items
Adjusted Net Profit
Adjst. below Net Profit
P & L Balance brought
forward
Statutory
Appropriations
Appropriations
P & L Balance carried
down
2005-03
(12)
22
Bibliography
Financial management Book:
I.M.Pandey, Tenth edition, Vikas Publishing House Pvt. Ltd. New
Delhi 110 014
Software:
Capita line plus
Websites:
www.moneycontrol.com
www.wikipedia.com
23