Atlas Honda Limited

AUTO INDUSTRY
• the year under review witnesses a
growth in motorcycle sales.
•
• REASONS:
• competitive pricing, coupled with rising inflation and
weakening rupee, led the cost to pass on to the
consumer.
• the industry is being held back by certain factors:
• 1) avoiding taxes and government's levies are posing unfair
competition.
• 2)the ever-increasing cost of inputs is pushing up
production costs exponentially. This may be a hindrance
to the industry's aspiration to become export-oriented.
•
•
 PROFITABILITY
• PROFITABILITY (%) Jun'04 Jun'05 Jun'06
Jun'07 Jun'08
•
• Gross Profit Margin 12.41% 9.52% 9.36% 9.42%
7.50%
•
• Net Profit Margin 5.48% 4.46% 3.89% 3.33%
3.40%
•
• Return on Asset 13.25% 10.35% 8.87%
6.89% 8.08%
•
• Return on Common Equity 36.50% 30.34% 25.94%
18.60% 20.70%

 Income Statement (Rs '000)

 Jun'04 Jun'05 Jun'06

Jun'07 Jun' 08
•
• Total Revenue 9,948,094 14,120,847 17,420,263
16,608,413 20,855,53
•
• Cost of Goods Sold 8,713,899 12,776,676 15,790,546
15,044,640 19,298,994
•
• General & Administrative Expenses 241,651 302,252 343,087
209,261 227,759
•
• Selling and Distribution Expenses 119,986 143,018 185,232
371,569 267,48
•
• Operating Profit (EBIT) 872,558 898,901 1,101,398
1,072,852 1,256,291
•
• Financial Charges 19,309 68,050 151,611
 Balance Sheet (Rs '000)
• Balance Sheet (Rs '000) Jun'04 Jun'05 Jun'06 Jun'07
Jun'08

•
• Stores & Spares 144,582 226,540 379,380 407,730
417,564

•
• Stock in Trade 1,285,043 1,567,530 1,937,675
1,580,925 1,862,069

•
• Cash & Bank Balances 227,094 1,432,363 682,088 919,623
504,138

•
• Total Current Assets 2,691,557 4,165,911 3,974,218 4,364,786
5,285,687

•
• Total Non Current Assets 1,420,381 1,925,417 3,655,946 3,671,859
3,418,964
 PRODUCTION
• year 2008 witnessed an
unprecedented increase in material
prices internationally coupled with
an unfavourable exchange rate and
a quantum jump in the commodity
prices locally. Atlas Honda,
however, was able to absorb most
of the cost impact by focusing on
improved efficiency and process
optimization.
• there was a reduction in cost, which
helped to offset to an extent the
 SALES PERFORMANCE
• the industry expanded with a capacity
to 2.3 million units during 2006-07.
The motorcycle sector experienced an
overall growth in sales of around 30
percent over the last year
• The sales this year increased by 25.6%
from 332,036 to 453,341 units this
year. And the company's sales in
terms of revenue increased from Rs
16.6 billion to Rs 20.8 billion this year.
 PROFITABILITY
• cost of the goods increased from Rs 15 to Rs
19.3 billion.
• Administrative expenses increased by 8.8%
from Rs 209.2 million in 2007 to Rs 227.7
million in 2008.
• Other income increased from Rs 150.6 million
to Rs 263.8 million as a result of increase in
income, among others, from treasury
operations as well as manufacturing
operations.
• One important reason for this increase in
profitability is the improved efficiency in
serving the customer through an
encompassing approach of sales, service and
spare parts.
 DEBT MANAGEMENT
• Debt to equity ratio has decreased implies an
efficient debt management by the company.
• total assets kept as liabilities have also been
maintained consistently throughout. Overall,
the low ratios indicate proficient use of debt
by the company and signal a better solvency
picture.
• the TIE ratio has improved in 2008 indicating
that it has become easier for the company to
make its future payments.
• investments in deposits that provide an edge
against interest rate risk may protect the
company in this regard.

•
 DEBT MANAGEMENT
• DEBT MANAGEMENT Jun'04 Jun'05 Jun'06
Jun'07 Jun'08
•
• Debt to Asset(%) 63.7 65.88 65.81
62.97 60.89
•
• Debt/Equity (Times) 1.76 1.93 1.92
1.7 1.56
•
• Times Interest Earned (Times) 47.81 14.8 7.91
3.98 4.98
•
• Long Term Debt to Equity(%) 37.45 54.35 77.03
56.08 37.3
•
 LIQUIDITY
• The liquidity of the company improved
this year and the current ratio
increased from 1.29 in 2007 to 1.31 in
the year ended 2008. The quick ratio
increased from 0.70 in 2007 to 0.75 in
2008.
• In order to increase its current and
quick ratio further, the company
needs to use its resources in more
efficient manner to produce more
cost-effectively.
• LIQUIDITY RATIO Jun'04 Jun'05 Jun'06
Jun'07 Jun'08
 MARKET VALUE
• the dividend paid per share has
increased from the previous year,
as in the last year the company
paid a cash dividend of Rs 6.0 per
share (60%).
• Owing to the dividend policy and a
good performance of the company
this year, the market price per
share has increased from 2007.

•
 ASSET MANAGEMENT
RATIOS
• PER SHARE Jun'04 Jun'05 Jun'06
Jun'07 Jun'08
•
• Earning per share 26.66 24.68 18.92
19.92 14.90
•
• Price earning ratio 2.63 2.31 3.73
11.1 14.1
•
• Dividend per share 10 10 7.5
8.5 6.50
•
• Book value 52.68 58.42 81.35
72.95 83.21
 FUTURE OUTLOOK
• The major tool to fight the price
escalation effect is to improve
efficiency in serving the customer
through an all-encompassing
approach of sales, service and
spare parts.