A PROJECT REPORT

ON

A COMPARATIVE STUDY ON FINANCIAL STATEMENT

ANALYSIS OF HERO MOTOCORP & TVS MOTORS
Submitted in partial fulfilment of the requirement for the award of the degree of

BACHELOR OF COMMERCE (HONORS)

BATCH: 2021-2024

Submitted By:
Student Name: DEEP PATEL
B.Com. (Hons) Semester: VI
Enrollment No: 211633100036

Under the Guidance of:

Name Of Guide: MRS. KOMAL KEWALRAMANI
Designation of Guide: Assistant Professor

FACULTY OF COMMERCE
PARUL INSTITUTE OF COMMERCE
P.O. Limda, Tal. Waghodia
District: Vadodara – 391760
Gujarat
I
 Certificate of Originality

This is to certify that the project report entitled “A COMPARATIVE STUDY ON

FINANCIAL STATEMENT ANALYSIS OF HERO MOTOCORP & TVS MOTORS”
Submitted to Parul University, Vadodara in partial fulfillment of the requirement for the award
of the degree of B.COM (Bachelor in Commerce) is an original work carried out by DEEP
PATEL, under the guidance of MRS. KOMAL KEWALRAMANI & DR. AJAY TRIVEDI
(Dean - PIC). The matter embodied in this Project Report is a genuine work done by her to
the best of my knowledge and belief and has not been submitted before, neither to this
University nor to any other University for the fulfillment of the requirement of any course of
study.

We are thankful to Faculty of Commerce, Parul University for allowing our student to undergo
project work.

SIGNATURE OF GUIDE SIGNATURE OF DEAN

FOC

Date:

II
 DECLARATION

This is to certify that I have completed the project titled “A COMPARATIVE STUDY ON
FINANCIAL STATEMENT ANALYSIS OF HERO MOTOCORP & TVS MOTORS” under
the guidance of MRS. KOMAL KEWALRAMANI in the partial fulfilment of the requirement
for the award of the degree of Bachelor of Commerce from Faculty of Commerce, Parul
University, Vadodara.

This is an original work and has not been submitted anywhere else.

Name of Student: DEEP PATEL

Enrollment Number: 211633100036

Course: B.COM. (Hons.) SEMESTER VI

Batch: 2023 - 2024

Sign:

Date

III
 ACKNOWLEDGEMENT

The satiation and euphoria that accompanies the successful completion of the project would
be incomplete without the mention of the people who made it possible.

I would like to take the opportunity to thank and express my deep sense of gratitude to my
Institute Dean - PIC, Prof. DR. AJAY TRIVEDI and my Faculty Mentor MRS.KOMAL
KEWALRAMANI. I am greatly indebted to both of them for providing their valuable
guidance at all stages of the study, their advice, constructive suggestions, positive and
supportive attitude and continuous encouragement, without which it would have not been
possible to complete the project.

I would also like to thank DR. UDIT VARSHNEY (Project Work Coordinator - PIC) who has
co-operated with me continuously and indeed, his valuable contribution and guidance have
been certainly indispensable for my project work.

I hope that I can build upon the experience and knowledge that I have gained and make a
valuable contribution towards industry and society in future.

(Signature of Student)
DEEP PATEL

IV
 PREFACE

I am very excited and pleased to submit this research project, which is called "A Comparative
Study on Hero Motors and TVS Motors." The present study explores the competitive and
dynamic automobile sector, with a particular emphasis on two notable players, Hero Motors
and TVS Motors. A crucial component of the global economy, the automotive industry is
always changing in response to consumer tastes, market trends, and technology breakthroughs.
Investors, stakeholders, researchers, and enthusiasts can all benefit from knowing the subtleties
of this sector and examining major players like Hero Motors and TVS Motors.

The objective of this project is to provide a thorough comparative analysis of TVS Motors and
Hero Motors in a number of areas, such as customer satisfaction, technical innovation, market
share, financial performance, and product portfolio. By looking at these factors, we want to
learn more about each company's advantages, disadvantages, opportunities, and dangers. This
will help us understand how they compete in the market. Researching and putting this project
together has been a rewarding and demanding experience. This project has involved a thorough
evaluation of the literature as well as the collecting, analysis, and interpretation of data.
Throughout this process, my colleagues, instructors, and industry professionals have provided
me with invaluable insight, support, and encouragement for which I am incredibly thankful.

Additionally, I would like to sincerely thank Hero Motors and TVS Motors for their insightful
and useful information, which greatly enhanced the scope and caliber of this study. In addition
to being a worthwhile academic endeavor, my goal is for this research to significantly advance
the body of information already known in the subject of business management, especially as it
relates to the automobile sector. I cordially encourage visitors to peruse the pages that ensue
and dig into the fascinating realms of Hero Motors and TVS Motors via a comparison
perspective.

THANKYOU
DEEP PATEL

V
 INDEX

Sr. No. Particulars Page No

1 CERTIFICATE OF ORIGINALITY II
2 DECLARATION III
3 ACKNOWLEDGEMENT IV
4 PREFACE V
CHAPTER-1 INTRODUCTION 1
1.1 INDUSTRY OVERVIEW 2
1.2 COMPANY OVERVIEW 3
1.3 BACKGROUND OF THE STUDY 5
CHAPTER-2 REVIEW OF LITERATURE 6-10
CHAPTER-3 RESEARCH METHODOLOGY 11
3.1 RESEARCH OBJECTIVES 11
3.2 RESEARCH HYPOTHESIS 11
3.3 SIGNIFICANCE OF THE RESEARCH 12
3.4 RESEARCH GAP/STATEMENT OF PROBLEM 12
3.5 RESEARCH DESIGN 13
3.6 DATA SOURCES 13
3.7 DATA TOOLS & TECHNIQUES/RESEARCH TESTS 13
3.8 LIMITATIONS OF THE PROJECT 14
CHAPTER- 4 DATA ANALYSIS AND INTERPRETATION 15
4.1 FINANCIAL STATEMENT ANALYSIS 16
4.2 STATISTICAL ANALYSIS 32

VI
CHAPTER - 5 MAJOR FINDINGS 37
CHAPTER - 6 CONCLUSIONS AND RECOMMENDATIONS 38
CHAPTER – 7 REFERENCES 40
ANNEXURE 1 41
ANNEXURE 2 43

VII
 CHAPTER 1
INTRODUCTION

1
1.1 INDUSTRY OVERVIEW

One of the largest industries in the global market is the automobile. As the leader in process
and product technology in the manufacturing industry, it has been identified as one of the
factors causing economic expansion. Over the past ten years, deliberate attempts have been
made to give vehicle insurance a fresh look in order to determine the industry's overall potential
for the economy. The car lending companies' aggressive marketing and promotion campaigns
have also greatly increased demand for cars, particularly among people in the middle income
bracket.

A country's transportation system is often used to identify its financial system. A highly
developed and interconnected transportation system is essential for the quick and rapid
expansion of the financial system. The Indian automobile industry is expanding along with the
country's distribution network, which is expanding quickly. Additionally, the automotive
industry offers employment to a significant portion of the population due to its strong to and
from links. As a result, the automobile industry may have a crucial role in the Indian financial
system. The Automobile Industry assists in the manufacturing of many types of cars. The
Indian Automobile Industry manufactures two-wheelers, lorries, buses, passenger cars, and
defense vehicles.

Companies like as TVS, Hero Honda, Yamaha, Bajaj, Honda Motorcycle and Scooter India
(Pvt.) Ltd., and so on are the leaders in the vehicle manufacturing industry. In terms of the
business opportunities it presents, the country's automobile industry is among the most
important sectors of the economy. The company directly employs close to 0.2 million people,
while it indirectly employs over 10 million people. Additionally, the business's prospects are
focused on the auto-segment industry, which employs 0.25 million people and is a sizable
sector of the Indian economy.

2
1.2 INTRODUCTION TO THE COMPANY

TVS MOTORS

TVS Motor Company, with an income over ₹18,217 crore (about US$2.9 billion), is the third
largest two-wheeler company in India. It has an annual cap of more than 4.95 million
automobiles and an offer of more than 3 million units. With exports to more than 60 countries,
TVS Motor is also India's second-largest exporter. a member of the TVS Group, which is the
largest company in the group in terms of both size and turnover.

The widest range of two-wheelers is produced by TVS Motor, which offers everything from
mopeds to bikes, suburbanite bikes, and stylish bicycles like the RR310 and Apache
configuration. We have a prerequisite for everyone, no matter what it may be.

TVS Motor's strength comes in its wide range of innovative activities, producing products that
lead the industry in terms of advancement. TVS demonstrates unwavering customer devotion
by anticipating customer needs and introducing high-quality vehicles at the ideal moment and
price.

TVS has always stood for imaginative, easy-to-work-with, and climate-friendly products,
supported by strong customer service. To date, more than 44 million people have bought TVS
products. TVS merchandise just makes you happy!

The company operates four assembly plants: one in Karawang, Indonesia, and three in India
(Hosur, Tamil Nadu; Mysore, Karnataka; Nalagarh, Himachal Pradesh).

3
HERO MOTORS

MotoCorp Limited, previously Hero Honda, is an Indian global motorcycle and cruiser
producer situated in New Delhi, India. The organization is the biggest two-wheeler maker on
the planet, and furthermore in India, where it has a piece of the pie of about 46% in the bike
classification. Starting at 31 December 2020, the market capitalization of the organization was
₹68,474 crore (US$9.6 billion).

With advancement at the centre of its way of thinking, the New Delhi (India) settled Hero
MotoCorp has been at the forefront of planning and growing innovatively progressed bikes and
bikes for clients all throughout the planet. It turned into the world's biggest two-wheeler maker
in 2001, as far as unit volume deals in a schedule year, and has kept up the pined for title for as
long as 20 successive years.

With over 100 million satisfied clients worldwide, it continues to promote and enhance the
financial industry with its range of products and services.

Under the leadership of Hero MotoCorp Chairman Dr. Pawan Munjal, the company has
expanded quickly, reaching 40 countries in South and Central America, Africa, Asia, and
Africa. Legend MotoCorp is a truly global enterprise, employing people from India,
Bangladesh, Colombia, Germany, Austria, Japan, and France among other ethnic groups.

With more than half of the offerings in the domestic motorcycle market, MotoCorp is the
leading market pioneer in India, the largest two-wheeler industry globally.

4
1.3 BACKGROUND OF THE STUDY

The study's main goal is to analyze the TVS Motors and Hero Motors financial statements in
order to assess how well they performed in terms of asset utilization and profitability.
Additionally, it ascertains, projects, and assesses the best possible economic circumstances as
well as the future performance of the organization. a thorough explanation of the research
methods applied to the study, which examined TVS Motors' and Hero Motors' performance in
the past and present.

Financial statement analysis is crucial for satisfying the needs of stakeholders and countless
other parties as well as for adhering to business rules and regulations. Financial statement
analysis has several advantages for organizations. It provides information to internal and
external stakeholders so they may decide on investments with knowledge. Lending institutions
can employ financial statement analysis to get an objective view of a company's financial health
when deciding which loans to approve.

5
 CHAPTER 2

REVIEW OF LITERATURE

6
1. Hero Moto Corp Ltd is reportedly concentrating on a technology revamp, as reported
by Raj (2012). The company has opted not to run its current brands on Honda engines,
and as a result, it has partnered with Austrian engine maker AVL and US-based EBR
racing. The ultimate goal of these moves is to extend arm in R&D.

2. According to Virupaxi Bagodi and Biswajit Mahanty (2008), the two-wheeler industry
is experiencing a period of great customer satisfaction, and the traditional strategies
used by service firms to draw in new clients on a long-term basis are frequently
insufficient.

3. According to (Virupaxi Bagodi, Biswajit Mahanty, 2006), two-wheeler companies in

countries like India can gain a competitive edge through after-sales service. This is
necessary for them to survive in fiercely competitive markets. Additionally, in order to
maintain customer satisfaction, two-wheeler companies must continuously upgrade
their capacity, hire skilled workers, and concentrate on CRM.

4. In response to Hero Motocorp's decision to replace all Honda products rather than just
brand names, Sabarad, M. (2012) argues that Hero Motocorp will suffer from any
product flaws as Indian customers are apt to pick up on differences between the
motorcycles they purchase now and in the past. The researcher concurs as well.

5. According to Oyama (2012), Honda Motors plans to rank first in the Indian market by
2020 and is also gearing up for 30% of its global sales to originate from its Indian
operations. The author thinks that this vision can be realized if they can resolve the
production-related problems from the past, which resulted in the longest wait times for
the majority of the company's 83 products in the Indian market. This has a noticeable
impact on the company's lower market share in rural areas, which currently stands at
less than a third of Hero Moto Corp.

6. Wheels India Limited-Chennai's financial performance was the subject of a 2017 study
by Sheela Christina. The study uses a secondary data gathering strategy to address
analytical research design. In order to accomplish this, the researcher used data from
the previous five years and verified its authenticity and dependability prior to

7
 conducting the study. The researcher employed statistical methods like trend analysis
and correlation in addition to the following financial tools: ratio analysis, comparative
balance sheet, and DuPont analysis. According to profitability ratios, the amount of
profit, working capital, and fixed asset utilization were all lower in the previous fiscal
year. As a result, the business can take the required actions to increase sales and profit.
Lastly, the analysis shows that the financial results are satisfactory.

7. Neha Mittal (2018) investigates how the chosen Indian sectors determine their capital
structure. The primary goal is to find out if and how much the main structural theories
can account for Indian enterprises' capital structure decisions. It used data from 2009 to
2017 to apply several regression models to the chosen industries. The study looks at the
significance of capital structure in a few Indian businesses using data from a regression
analysis. The study suggests that agency cost, assets structure, non-debt tax shield, and
size are the primary factors influencing the capital structure of Indian enterprises. At
the 1% and 5% levels, the coefficients of these variables are significant.

8. Y. Hari Prasad Reddy and T.S. Reddy If these weren't subjected to data analysis, a lot
of incorrect inferences about the enterprise's financial health might be made. Creditors,
investors, and other users of financial statements analyze financial statements to
ascertain an entity's creditworthiness and earning potential.

9. According to Susan Ward (2008), financial analysis that makes use of ratios between
important values can assist investors in managing the enormous volume of data
included in corporate financial statements. For instance, they can figure out what
proportion of net profit a business is making from the money it has invested. If all else
stays the same, an investment is better made in a company that makes a larger
percentage of profit than other companies.

10. According to M Y Khan & P K Jain (2011), the financial statements offer a condensed
picture of a company's operations and financial status. Therefore, a thorough analysis
of a company's financial statements—which are priceless records and performance
reports—may reveal a great deal about the business. Thus, examining financial
statements is crucial.

8
11. The effects of size, solvency, liquidity, equity capital, and leverage on the profitability
of select life insurance businesses were examined by Sumninder and Samiya. Multiple
linear regression analysis was used in the study to quantify the impact of the given
variables on the firms' profitability over a five-year period. One state and seventeen
private Indian life insurers made up the study's sample. The study's findings showed
that, whereas equity capital had the opposite effect on a company's profitability, life
insurers' size and liquidity had a favorable impact. There was no correlation found
between insurance leverage and solvency and profitability. One notable void in the
work relates to the limited number of variables deployed as indicators of the
profitability of insurance companies.

12. Bhunia et al. conducted study on the financial standing of a few Indian public sector
pharmaceutical and medicine companies. The study's objectives included evaluating
solvency over the short and long terms, changes in profitability and liquidity, the
effectiveness of financial procedures, and the factors that influence profitability and
liquidity behaviors. The multiple regression technique was applied in order to assess
the combined impact of the selected ratios on the firms' profitability and financial
standing. Two publicly traded companies in the pharmaceutical and drug industries that
were listed on the Bombay Stock Exchange were the subjects of the study. Solvency,
profitability, efficiency, financial stability, operating efficiency, and liquidity ratios
were among the performance measures used. It was discovered that both businesses had
favorable liquidity conditions. The two companies' financial stability likewise showed
a trend of steadily diminishing.

13. Mona J Fitzsimmons (2010) has concluded that the profitability of automobile
manufacturers depends on exploiting value-added services for instance automobile
manufacturers have discovered that financing and after sales service can achieve
significant profits.

14. In their research paper "Markets and Consumers Consumer Behaviour Towards
Showroom Services of Two-wheeler with reference to Cuddalore District," Saravan,

9
 Panchanathan, and Pragdeeswaran (2009) found that while age is a significant factor in
choosing a bike brand, all consumers give consideration to all factors related to
purchasing a vehicle. Additionally, they found that employees and students are more
satisfied with showroom services.

15. In the paper "Automotive after Sales 2015," Gissler, A. (2008) noted that the profit
margins of new car sales have decreased since the industry is eroding and high revenues
are no longer synonymous with big profitability. As a result, the after-sales industry is
generating more than half of the profit in Germany, where there is a simultaneous
increase in revenue.

10
 CHAPTER 3
RESEARCH METHODOLOGY

11
3.1 OBJECTIVES OF THE STUDY

• The primary objective of the study is to use Comparative Financial Ratio research to
understand the financial strengths and weaknesses of TVS Motors and Hero MotoCorp.

• To evaluate the business's performance by gauging productivity via ratios.

• To learn more about the companies' profitability, liquidity, and

• To evaluate and investigate many facets of a business's financial performance.

• To assess the financial strength of TVS Motors Company and Hero Motors by looking over
the various parts of their financial statements for the previous three years.

3.2RESEARCH HYPOTHESIS

The chosen two-wheeler company's financial performance does not change significantly.

3.3 SCOPE OF THE STUDY

The scope of the current research is incredibly extensive. This report's scope is limited to the
following areas: profitability analysis, liquidity analysis, working capital management analysis
for short-term financial strength, and solvency ratio analysis for long-term financial strength.
Particularly, financial concerns are the subject of the present study. Non-monetary elements
that could directly affect the financial output of the two-wheeler sector and some two-wheeler
enterprises were not covered in this study. This paper does not address other financial concerns,
such as capital budgeting, the impact of trade and industry regulations on government policies,
the influence of social, economic, and political factors on the two-wheeler industry, and so on.

12
3.4 RESEARCH DESIGN

The present study has an extraordinarily broad scope. The examination of profitability,
liquidity, working capital management for short-term financial strength, and solvency ratio
analysis for long-term financial strength are the only areas covered in this research. This study
focuses specifically on financial worries. This study did not address non-monetary factors that
could have a direct impact on the financial output of the two-wheeler industry and some two-
wheeler businesses. This article does not examine additional financial difficulties, such as
capital budgeting, the impact of trade and industry laws on government policies, the influence
of social, economic, and political factors on the two-wheeler industry, and so on.

3.4.1 Name of the companies:

• TVS Motors

• Hero Motors

3.4.2 No. of years taken for study:

3.4.3 Ratios used are:

• Profitability Ratio- Net Profit Ratio, EPS, Assets Turnover Ratio

• Liquidity Ratio- Current Ratio, Liquid Ratio, Dividend Payout Ratio

13
3.5 Limitation for the study:

• Have not accepted any other business.

• I haven't used any ratios for computation except from those listed above.

14
 CHAPTER 4
DATA PRESENTATION AND ANALYSIS

15
4.1 DATA REPRESENTATION AND INTERPRETATION:

FINANCIAL ANALYSIS

• PROFITABILITY RATIOS- The earnings power of an organization is calculated by

this ratio. They demonstrate how effectively an organization uses its assets to generate
profit and value for its shareholders.

A. Net Profit Ratio: It determines the relationship between a company's net profit and
revenue. A good margin varies by industry, but a 10% net profit margin is considered
average, a 20% margin is considered high, and a 5% margin is considered low. Its
formula is:

Net Profit Ratio= Net Profit*100/Net sales

Significance:

• The amount of net income generated as a percentage of total sales is known as the net profit
margin.

• The net profit margin helps investors assess if management of a firm is making enough money
from its sales and whether overhead and operating costs are being kept in check.

• Net profit margin is one of the most important measures of a company's overall financial
health.

16
 TABLE 1 - NET PROFIT
MARGIN (%)
HERO TVS
YEAR MOTORS MOTORS
Mar-
23 8.6 5.65
Mar-
22 8.45 4.29
Mar-
21 9.62 3.65

12

10

0
Jan-21 Jan-22 Jan-23

TABLE 1 - NET PROFIT MARGIN (%) HERO MOTORS

TABLE 1 - NET PROFIT MARGIN (%) TVS MOTORS

INTERPRETATION: Hero Motors demonstrated superior profitability as evidenced by the fact

that during the three-year period from March 2021 to March 2023, it consistently maintained a
larger net profit margin than TVS Motors. Hero Motors' net profit margin experienced a minor
decrease in March 2022, but by March 2023, it had somewhat recovered. Conversely, TVS
Motors saw a decrease in March 2023 after seeing an increase in net profit margin from March
2021 to March 2022. The alterations in net profit margins are indicative of shifts in revenue,
operating expenses, cost control, and overall financial performance. Investors and analysts
would constantly monitor these shifts to evaluate the companies' sound financial standing and
effective operational management.

17
B. EPS - EPS stands for Earnings Per Share. It is a key financial metric used to measure a
company's profitability on a per-share basis. EPS is calculated by dividing the company's net
earnings (profits) by the total number of outstanding shares of its common stock.

Computation: EPS = Net Earnings / No. of Outstanding Shares

Significance of EPS:

EPS indicates the company's profitability by showing how much money a business makes for
each share of its stock.

TABLE 2 - BASIC EPS

YEAR HERO MOTORS TVS MOTORS
Mar-
23 145.66 31.38
Mar-
22 123.78 18.81
Mar-
21 148.39 12.88

160

140

120

100

80

60

40

20

0
Jan-21 Jan-22 Jan-23

TABLE 2 - BASIC EPS HERO MOTORS TABLE 2 - BASIC EPS TVS MOTORS

18
INTERPRETATION: The basic earnings per share (EPS) for Hero Motors and TVS Motors
during a three-year period are shown in Table 2. Hero Motors has demonstrated a consistent
ability to maintain a greater basic profits per share (EPS) in comparison to TVS Motors. Hero
Motors' EPS saw a minor decrease in March 2022, but it bounced back by March 2023. On the
other hand, TVS Motors' EPS significantly increased between March 2021 and March 2023.
These shifts are a reflection of fluctuations in financial performance and profitability, which
analysts and investors keep a careful eye on to evaluate the companies' prospects for expansion
and general financial stability.

• TURNOVER RATIOS- The sum of assets or liabilities that a business substitutes in

relation to its revenue is represented by this ratio.

A. Stock Turnover Ratio: The amount of times inventory is sold or consumed in a given
time span is measured by inventory turnover. For most industries, a healthy inventory
turnover ratio is between 5 and 10, indicating that you sell and restock your inventory
every 1-2 months. This ratio strikes a good balance between keeping enough stock on
hand and not having to reorder too much. Its formula is:

Stock Turnover Ratio= Cost of goods sold/Average Stock or Inventory

Significance:

• It assesses the soundness of a retailer's inventory procedures.

• It also reveals a lack of inventory preparation and management strategies.

• A retailer can easily improve his profitability by bringing less inventories by improving
Inventory Turnover.

• Inventory Turnover provides a useful comparison and keeps the retailer up to date with
current trends.

19
 TABLE 3 - ASSET TURNOVER
RATIO(%)
YEAR HERO MOTORS TVS MOTORS
Mar-
23 1.5 2.04
Mar-
22 1.33 1.89
Mar-
21 138.98 1.71

160
140
120
100
80
60
40
20
0
Jan-21 Jan-22 Jan-23

TABLE 3 - ASSET TURNOVER RATIO(%) HERO MOTORS

TABLE 3 - ASSET TURNOVER RATIO(%) TVS MOTORS

INTERPRETATION: Over a three-year period, the asset turnover ratio data for TVS Motors
and Hero Motors is presented in Table 3. Hero Motors experienced a data anomaly that resulted
in an abnormally high asset turnover ratio in March 2021. However, the ratio reverted to a more
typical range in the following years, showing sustained asset usage. By March 2023, TVS
Motors had kept its asset turnover ratio within a reasonable level and had even slightly
improved its asset utilization. Higher ratios indicate better efficiency. The asset turnover ratio
measures how well businesses use their assets to create income. This ratio is used by analysts
and investors to evaluate a company's asset management plans and operational efficacy.

20
LIQUIDITY RATIO: A business's ability to maintain liquidity is essential. A company needs
liquidity in order to pay its short-term debts. A greater liquidity ratio indicates a very cash-rich
corporation.

The speed at which a business may convert its assets and use them to pay off outstanding debts
is measured by its liquidity ratio. The easier it is to pay off debts and stay out of default, the
greater the ratio.

Before giving short-term loans to a business, creditors look at this crucial condition. Failure to
pay bills on time has an effect on an organization's creditworthiness and lowers the company's
credit rating.

A. Current Ratio: The current ratio assesses a firm's ability to meet short-term
commitments, such as those due within a year. A healthy current ratio is between 1.2 and 2,
indicating that the company has 2 times more current assets than liabilities to offset its
liabilities. Its formula is:

Current Ratio= Current Assets/Current Liabilities

Significance:

• This financial measure aids in determining a company's current financial position.

• A higher ratio usually means more liquidity and stability.

• It also aids in determining a company's ability to handle creditors.

21
• The financial instrument aids in a better understanding of a company's working capital
requirements.

• This ratio can also be used to determine a company's operating cycle and its ability to
generate sales.

TABLE 4 - CURRENT RATIO

YEAR HERO MOTORS TVS MOTORS
Mar-
23 1.61 0.61
Mar-
22 1.99 0.65
Mar-
21 1.79 0.75

2.5

1.5

0.5

0
Jan-21 Jan-22 Jan-23

TABLE 4 - CURRENT RATIO HERO MOTORS TABLE 4 - CURRENT RATIO TVS MOTORS

22
 INTERPRETATION: Over a three-year period, Hero Motors and TVS Motors' liquidity
positions are shown by the current ratio statistics presented in Table 4. Hero Motors typically
kept its current ratio over 1, which denotes sound liquidity and an adequate amount of current
assets to meet short-term obligations. But from March 2022 to March 2023, Hero Motors'
liquidity somewhat decreased. TVS Motors, on the other hand, continuously maintained a
current ratio below 1, indicating a tighter liquidity situation and the requirement for more
efficient short-term obligation management. Despite improvements over time, TVS Motors'
current ratio is still below 1, indicating persistent difficulties with managing liquidity that
analysts and investors should be aware of.

B. Liquid Ratio: A liquidity ratio is a financial ratio that is used to assess a company's ability to
meet its short-term debt obligations. The ideal sound fast ratio is 1:1, and the construction
industry follows this norm. Its formula is:

Liquid Ratio= Liquid Assets/Current Liabilities

Significance: The fast ratio is important to lenders because it indicates the percentage of a
company's debts that could be paid off rapidly by turning assets into cash. Lenders also consider
this ratio because the more liquid a company's assets are, the better suited it is to respond to
changing market conditions.

TABLE 5 - QUICK RATIO

YEAR HERO MOTORS TVS MOTORS
Mar-
23 1.35 0.4
Mar-
22 1.77 0.43
Mar-
21 1.55 0.5

23
 2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Jan-21 Jan-22 Jan-23

TABLE 5 - QUICK RATIO HERO MOTORS TABLE 5 - QUICK RATIO TVS MOTORS

INTERPRETATION: The fast ratio data in Table 5 sheds light on TVS Motors' and Hero
Motors' liquidity positions over a three-year period. Hero Motors typically kept its fast ratio
over 1, which denotes strong liquidity and sufficient quick assets to meet short-term
obligations. Hero Motors' fast ratio did, however, slightly decrease between March 2022 and
March 2023. Conversely, TVS Motors has continuously maintained a quick ratio below 1,
indicating a tighter liquidity situation and continued difficulties in properly managing short-
term liabilities. TVS Motors' fast ratio improved over time, but it remained below 1, indicating
that more work needs to be done to improve liquidity management.

C. Dividend Payout Ratio (%): the dividend payout ratio is a financial metric used to
measure the proportion of earnings that a company distributes to its shareholders in the form
of dividends. It is calculated by dividing the total dividends paid out by the company by its net
income.

Computation: Dividend Payout Ratio = Total Dividends Paid/Net Income x 100

24
Significance of Dividend Payout Ratio: The dividend payout ratio evaluates the percentage of
profits earned that a company pays out to its shareholders.

TABLE 6 - DIVIDEND PAYOUT

RATIO (%)
YEAR HERO MOTORS TVS MOTORS
Mar-
23 56.01 15.93
Mar-
22 60.78 19.93
Mar-
21 52.12 27.16

70

60

50

40

30

20

10

0
Jan-21 Jan-22 Jan-23

TABLE 6 - DIVIDEND PAYOUT RATIO (%) HERO MOTORS

TABLE 6 - DIVIDEND PAYOUT RATIO (%) TVS MOTORS

INTERPRETATION: The dividend distribution trends for Hero Motors and TVS Motors over
a three-year period are shown by the dividend payout ratio statistics in Table 6. In comparison
to TVS Motors, Hero Motors has continuously maintained a higher dividend payout ratio,
which suggests a larger percentage of earnings went toward payouts. Hero Motors' ratio
remained reasonably high even if it dipped somewhat between March 2022 and March 2023.
On the other hand, TVS Motors has a more conservative dividend distribution strategy, as seen
by its lower dividend payout ratios and declining tendency over time. Dividend payout ratios
are a common metric used by investors to assess a company's commitment to paying out profits
to shareholders as well as the sustainability of its dividend.

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STATISTICAL ANALYSIS (T-test)

1. NET PROFIT MARGIN

(%) ANALYSIS:

HERO TVS
MOTORS MOTORS
Mean 8.89 4.53
Variance 0.4053 1.0432
Observations 3 3
-
Pearson Correlation 0.662527033
Hypothesized Mean Difference 0
df 2
t Stat 4.96857359
P(T<=t) one-tail 0.019100747
t Critical one-tail 2.91998558
P(T<=t) two-tail 0.038201493
t Critical two-tail 4.30265273

INTERPRETATION: Several significant findings are revealed by the examination of the net
profit margin data. Initially, we saw that Variable 1's mean net profit margin (8.89%) is greater
than Variable 2's (4.53%). Potential differences in profitability between the two variables are
suggested by this initial mean difference. Additionally, Variable 2's net profit margin
variability (1.0432) is higher than Variable 1's (0.4053), according to the variance analysis,
suggesting that Variable 2 has a broader range of profit margins.

There is a strong inverse association between the two variables, as indicated by the Pearson
correlation coefficient of -0.6625. According to this negative correlation, Variable 2's net profit
margin tends to fall as Variable 1's net profit margin rises and vice versa. The interdependence
or competitive dynamics between the variables are highlighted by the strong negative
correlation, which suggests that increases in one variable's profitability could come at the
expense of another.

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The outcomes of the hypothesis testing are quite remarkable. With a low one-tailed p-value of
0.0191 and a two-tailed p-value of 0.0382, the computed t statistic of 4.9686 suggests that there
is a statistically significant difference between Variable 1 and Variable 2's mean net profit
margins. In order to confirm that there is a substantial difference between the mean net profit
margins of the two variables, we reject the null hypothesis that there is no mean difference.

2. EARNING PER SHARE

ANALYSIS:

HERO TVS
MOTORS MOTORS
Mean 139.2766667 21.02333333
Variance 181.9732333 89.23663333
Observations 3 3
Pearson Correlation 0.102786677
Hypothesized Mean Difference 0
df 2
t Stat 13.08516101
P(T<=t) one-tail 0.002894859
t Critical one-tail 2.91998558
P(T<=t) two-tail 0.005789718
t Critical two-tail 4.30265273

INTERPRETATION: In order to provide important statistical indicators for comparison, the

analysis dives into the earnings per share (EPS) figures for Variables 1 and 2. Interestingly,
Variable 1 has a mean EPS of 139.2766667, which is significantly greater than Variable 2's
EPS of 21.02333333. There appears to be a notable distinction in the earnings performance of
the two variables, as indicated by the large variance in mean EPS.

A closer look at the data reveals that Variable 1 has a higher variance in EPS (181.9732333)
than Variable 2 (89.23663333), indicating that Variable 1's profits are more variable.
Nevertheless, a weak positive association between the EPS of Variable 1 and Variable 2 is
indicated by the Pearson correlation coefficient of 0.1028. This implies that there may be a
slight tendency for their EPS levels to move together.

27
The findings of the hypothesis test are very impressive, showing a computed t statistic of
13.0852 and extremely low p-values for the two-tailed (0.0058) and one-tailed (0.0029) tests.
The null hypothesis is rejected since these values are significantly smaller than the critical t-
values at a significance level of 0.05. This rejection suggests that Variables 1 and 2 have
statistically significant differences in EPS.

3. ASSET TURNOVER
RATIO ANALYSIS:

HERO TVS
MOTORS MOTORS
Mean 47.27 1.88
Variance 6308.0503 0.0273
Observations 3 3
-
Pearson Correlation 0.890555808
Hypothesized Mean Difference 0
df 2
t Stat 0.988027855
P(T<=t) one-tail 0.213642735
t Critical one-tail 2.91998558
P(T<=t) two-tail 0.427285469
t Critical two-tail 4.30265273

INTERPRETATION: The asset utilization and operational efficiency of Variables 1 and 2 are
fascinatingly shown by the asset turnover ratio study. Variable 1's mean asset turnover ratio is
significantly larger than Variable 2's, at 47.27 versus 1.88, indicating a significant difference
in the two variables' approaches to using assets to produce revenue. The variance numbers
highlight this contrast even more, with Variable 1 showing substantially more variability
(6308.0503) in asset turnover ratios than Variable 2, which has essentially minimal variance
(0.0273).

The study reveals an impressive finding: there is a significant negative correlation (-0.8906)
between Variable 1 and Variable 2's asset turnover rates. This suggests a strong inverse
relationship in which increases in the asset turnover of one variable typically correspond with
decreases in the asset turnover of the other variable, and vice versa. This kind of association

28
implies that there are significant differences between the two variables in terms of factors
influencing revenue generating methods and asset utilization, which may be due to differences
in business models, industry dynamics, or operational efficiencies.

The outcomes of the hypothesis testing, however, offer a more nuanced viewpoint. When
combined with p-values of 0.2136 for one-tailed tests and 0.4273 for two-tailed testing, the
computed t statistic of 0.9880 is not more than the crucial t-values at the 0.05 significance level.
Therefore, the null hypothesis—that there is no mean difference in asset turnover ratios
between Variable 1 and Variable 2—is not sufficiently supported by the available data. This
suggests that even though there is a substantial negative connection, there is no statistically
significant difference between the two variables' average asset turnover performances.

4. CURRENT RATIO
ANALYSIS:

HERO TVS
MOTORS MOTORS
Mean 1.796666667 0.67
Variance 0.036133333 0.0052
Observations 3 3
Pearson Correlation 0.248040862
Hypothesized Mean Difference 0
df 2
t Stat 10.50114905
P(T<=t) one-tail 0.004473397
t Critical one-tail 2.91998558
P(T<=t) two-tail 0.008946794
t Critical two-tail 4.30265273

INTERPRETATION: The supplied data provides information on the current ratio analysis of
Variables 1 and 2. Variable 1 has a mean current ratio of 1.796666667, which is much greater
than Variable 2's mean current ratio of 0.67. This disparity suggests that the entities these
variables represent have significantly different liquidity positions. Additionally, the variance
statistics highlight the difference even more: Variable 1 has a bigger variance (0.036133333)
than Variable 2 (0.0052), indicating that Variable 1's present ratios are more variable.

29
There is a weak positive link in the current ratios of Variables 1 and 2, as indicated by the
Pearson correlation value of 0.2480. Although this implies some degree of resemblance in the
current ratio trends, there is not enough correlation to infer a direct relationship between
Variable 1 and Variable 2's liquidity positions. Current ratio changes in one variable could not
always result in proportionate changes in the current ratios of the other variable.
.

With a computed t statistic of 10.5011 and low p-values of 0.0045 for one-tailed tests and
0.0089 for two-tailed tests, the findings of the hypothesis testing are especially noteworthy. At
a significance level of 0.05, these values are greater than the crucial t-values, which results in
the null hypothesis being rejected. This suggests that Variables 1 and 2 have statistically
significant differences in current ratios, indicating that the entities these variables reflect have
different liquidity profiles or levels of financial soundness.

5. QUICK RATIO
ANALYSIS:

HERO TVS
MOTORS MOTORS
Mean 1.556666667 0.443333333
Variance 0.044133333 0.002633333
Observations 3 3
Pearson Correlation 0.265913823
Hypothesized Mean Difference 0
df 2
t Stat 9.519572381
P(T<=t) one-tail 0.005427731
t Critical one-tail 2.91998558
P(T<=t) two-tail 0.010855461
t Critical two-tail 4.30265273

INTERPRETATION The fast ratio analysis sheds important light on Variables 1 and 2's
liquidity positions. Variable 1's mean fast ratio is significantly higher—at 1.556666667—than
Variable 2's mean—0.443333333—signaling a significant disparity in their capacity to satisfy
short-term obligations using liquid assets. The variance results highlight this discrepancy even

30
further, with Variable 1 showing greater variability (0.044133333) in quick ratios than Variable
2 (0.002633333), indicating possible liquidity swings within Variable 1.

There appears to be a weak linear link in the fast ratios of Variables 1 and 2, as indicated by
the positive correlation coefficient of 0.2659 between them. The connection between the fast
ratio trends of Variable 1 and Variable 2 is not strong enough to demonstrate a direct
dependency between them, even though it does show some degree of closeness. It's possible
that modifications in the quick ratios of one variable won't always have a proportionate impact
on those of the other.

With a computed t statistic of 9.5196 and low p-values of 0.0054 for one-tailed tests and 0.0109
for two-tailed tests, the results of the hypothesis test are especially noteworthy. At a
significance level of 0.05, these values are greater than the crucial t-values, which results in the
null hypothesis being rejected. The fast ratios between Variable 1 and Variable 2 show a
statistically significant difference, suggesting that the entities these variables reflect have
different liquidity profiles or levels of financial soundness.

6. DIVIDEND PAYOUT
RATIO ANALYSIS:

HERO TVS
MOTORS MOTORS
Mean 56.30333333 21.00666667
Variance 18.81343333 32.39763333
Observations 3 3
-
Pearson Correlation 0.588784992
Hypothesized Mean Difference 0
df 2
t Stat 6.823102468
P(T<=t) one-tail 0.010405942
t Critical one-tail 2.91998558
P(T<=t) two-tail 0.020811884
t Critical two-tail 4.30265273

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INTERPRETATION: The analysis of the dividend payout ratio sheds important light on
Variables 1 and 2's dividend distribution practices. The percentage of earnings dispersed as
dividends differs significantly between Variables 1 and 2, with Variable 1's mean dividend
payout ratio being significantly higher at 56.30333333 and Variable 2's mean at 21.00666667.
The variance numbers highlight this difference even further, with Variable 1 showing less
variability (18.81343333) in dividend payout ratios than Variable 2 (32.39763333), indicating
possible variations in Variable 2's dividend policies.

Variables 1 and 2 have a negative correlation coefficient of -0.5888, which suggests that their
dividend payout ratios are inversely related. This suggests that the dividend payout ratio of one
variable tends to drop when its dividend payout ratio increases, and vice versa, for the other
variable. Such a link points to possible distinctions between Variable 1 and Variable 2's
dividend policies in terms of financial performance, strategies for distributing dividends, or
market conditions.

The findings of the hypothesis test, which included a computed t statistic of 6.8231 and low p-
values of 0.0104 for one-tailed and 0.0208 for two-tailed tests, further emphasized these
discrepancies. At a significance level of 0.05, these values are greater than the crucial t-values,
which results in the null hypothesis being rejected. This suggests that the dividend payout ratios
differ in a statistically meaningful way.

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 CHAPTER 5
MAJOR FINDINGS

33
5.1 Major Findings:

• Based on the company's accomplishments and financial report, Hero Motors is developing
into a consultancy firm in the automotive sector.

• Hero Motors' net profit ratio exceeds the recommended threshold of 80%. It displays the
company's strong financial standing.

• The operational ratios of TVS Motors and Hero Motors are both higher than 80%. This
implies that both businesses will need to work to lower their operational expenses.

• Hero Motors and TVS Motors both have stock turnover ratios over the desirable range of 5–
10, which indicates that a company's future prospects are better the greater its inventory
turnover ratio is in any given year.

• Six is said to be the best debtor turnover ratio. However, in this case, the ratios for both TVS
Motors and Hero Motors are less than 6.

• TVS Motors' working capital turnover ratio is below the optimal ratio of 2, which indicates
that there may be possible problems with liquidity.

• Hero Motors The corporation has more current assets than liabilities to balance its liabilities,
as seen by the current ratio being higher than the optimal ratio. However, TVS Motors' current
ratio is still below the acceptable level, therefore the company needs to work hard to cut its
current liabilities in order to maintain liquid capital at an ideal rate.

• The optimal liquid ratio is thought to be 1:1. Hero Motors' ratio is more than one throughout
the board, indicating the company's liquidity and ease of meeting its short-term obligations.

• A debt-to-equity ratio of two is seen to be optimal, and both TVS Motors and Hero Motors
have ratios below two, which is positive for both businesses.

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• TVS Motors is generating more cash flow through asset sales as shown by ratios exceeding
2.5, which is deemed robust for fixed asset turnover ratios of 2.5 or higher.

35
 CHAPTER 6

RECOMMENDATIONS AND CONCLUSION

36
6.1 RECOMMENDATIONS

• Given that TVS Motors benefits from a higher ideal norm for the fixed assets turnover ratio,
it is recommended that the company maintain its current fixed assets turnover ratio.

• It is recommended that TVS Motors and Hero Motors maintain the same levels of debt-to-
equity and stock turnover, as these metrics meet desirable norms and are advantageous to both
businesses.

Hero Motors is advised to sincerely try to increase sales in order to enhance its fixed assets
ratio.

• By increasing sales and lowering liabilities through loan repayment, TVS Motors is advised
to really endeavor to increase its net profit ratio, current ratio, liquid ratio, and working capital
turnover ratio.

• By increasing sales profits and debtor collections, Hero Motors and TVS Motors are advised
to really endeavor to lower operating profit and enhance the debtor turnover ratio.

6.2 Conclusion:

A five-year comparative analysis of TVS Motors' and Hero Motors' financial performance was
the focus of the study. Based on the analysis, it was found that Hero Motors' financial
performance was better than TVS Motors' because the former strives to boost both net profit
and production. Thus, investors have the freedom to choose whether to fund Hero Motors
Company.

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➢ Raj, A. (2012, Sep 06). livemint. Retrieved from livemint.com:

https://www.livemint.com/Industry/nCEYu2qHxPJAKxgcLcGJbN/Hero-to-replace-
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➢ Singhi, H. (2020). trade brains. Retrieved from trade brains: https://tradebrains.in/2-

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➢ Virupaxi Bagodi, Biswajit Mahanty. (2006). Unfolding the learning disabilities using
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➢ Virupaxi Bagodi, Biswajit Mahanty. (2008). Two‐wheeler service sector in India:

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Websites: -

https://www.heromotocorp.com/en-in/

https://en.wikipedia.org/wiki/Hero_MotoCorp

https://www.tvsmotor.com/

https://ajmjournal.com/HTMLPaper.aspx?Journal

https://www.bartleby.com/essay/Literature-Review-Of-Financial-Statement-PJ5X4ZQ9N6

Others: Books and Magazines: - Management Accounting by Dr. S.P. Gupta and Dr. K.L.
Gupta, Sahitya Bhawan Publications

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ANNEXURE 1

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ANNEXURE 2

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