Atlas Honda Limited Presentation

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'07 Jun'08 Gross Profit Margin 7.50% Net Profit Margin 3.40% Return on Asset 6.89% 8.08% Return on Common Equity 18.60% 20.70%

Jun'04

Jun'05

Jun'06

12.41%

9.52%

9.36%

9.42%

5.48%

4.46%

3.89%

3.33%

13.25%

36.50%

10.35%

30.34%

8.87%

25.94%

Income Statement (Rs '000) 

Jun'07 • • • • • • • • • • • •

Jun' 08

Total Revenue 16,608,413

20,855,53

Cost of Goods Sold 15,044,640 19,298,994

Jun'04

Jun'05

9,948,094 14,120,847 17,420,263

8,713,899 12,776,676 15,790,546

General & Administrative Expenses 241,651 302,252 209,261 227,759 Selling and Distribution Expenses 371,569 267,48

Jun'06

119,986

Operating Profit (EBIT) 1,072,852 1,256,291

872,558

Financial Charges

19,309

143,018

343,087

185,232

898,901 1,101,398

68,050

151,611

Balance Sheet (Rs '000) •

Balance Sheet (Rs '000) Jun'08

Jun'04

Jun'05

Jun'06

Jun'07

144,582

226,540

379,380

407,730

1,285,043

1,567,530

1,937,675

227,094

1,432,363

682,088

• •

Stores & Spares 417,564

• •

Stock in Trade 1,580,925

1,862,069

• •

Cash & Bank Balances 504,138

919,623

• •

Total Current Assets 5,285,687

2,691,557

Total Non Current Assets 3,418,964

1,420,381

4,165,911 3,974,218

4,364,786

• •

1,925,417 3,655,946

3,671,859

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'07 Jun'08

Jun'04

Jun'05

Jun'06

Debt to Asset(%) 62.97 60.89

63.7

65.88

65.81

Debt/Equity (Times) 1.7 1.56

1.76

1.93

1.92

Times Interest Earned (Times) 3.98 4.98 Long Term Debt to Equity(%) 56.08 37.3

47.81

37.45

14.8

54.35

7.91

77.03

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'07 Jun'08

Jun'04

Jun'05

Jun'06

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'07 Jun'08 • • Earning per share 19.92 14.90 • • Price earning ratio 11.1 14.1 • • Dividend per share 8.5 6.50 • • Book value 72.95 83.21

Jun'04

Jun'05

Jun'06

26.66

24.68

18.92

2.63

2.31

3.73

10

7.5

10

52.68

58.42

81.35

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.