Hero Motors Annual Report, Balance Sheet & Revenue

Hero Motors Limited Balance Sheet (Rs in Lakhs)

Particulars	31-03-2023	31-03-2022
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment	23,529.08	16,419.80
Right-of-use assets	1486.98	-
Capital work-in-progress	6787.21	1944.33
Other intangible assets	334.92	75.84
Goodwill	797.25
Investment	113.40	-
Loans	252.32	4.72
Other financial assets	397.14	775.22
Non current tax assets (net)	88.76	-
Other non-current assets	1046.78	818.16
CURRENT ASSETS
Inventories	19,159.75	14,147.30
Investment	1,530.27	2,446.52
Trade receivables	24,101.40	19,058.91
Cash and cash equivalents	755.79	5035.46
Bank balances other than Cash and cash equivalents	8555.18	-
Loans	33.57	12.92
Other financial assets	4094.56	2805.84
Other current assets	1897.37	3765.62
Total assets	94,961.73	67,310.64
EQUITY AND LIABILITIES
Equity
Equity share capital	35357.84	3459.71
Other equity	-401.87	12215.06
Non-controllable Interest	-1131.41	-
Liabilities
Non-current liabilities
Borrowings	6,063.85	5,833.33
Lease Liabilities	882.47	-
Other financial liabilities	413.40	385.30
Other Non-current liabilities	-	13.11
Provisions	6780.13	780.63
Deferred tax liabilities (net)	362.54	1128.08
Current liabilities
Borrowings	18236.89	19170.93
Lease Liabilities	347.29	-
Trade payables
total outstanding dues of micro and small enterprises	1591.76	1898.22
total outstanding dues other than above	21,956.62	17,870.90
Other financial liabilities	2,720.68	3,711.21
Other current liabilities	1472.37	589.45
Provisions	309.17	195.10
Current Tax liabilities	-	59.58
Total equity and liabilities	94,961.73	67,310.64

Hero Motors Limited Profit & Loss Statement (Rs in Lakhs)

Particulars	31-03-2023	31-03-2022
Revenue from operations	1,05,194.54	90,397.88
Other income	1495.53	636.69
Total income	1,06,690.07	91,034.57
Cost of materials consumed	71,862.81	52,044.41
Purchases of stock-in-trade	402.83	13,236.88
Changes in inventories of finished goods, work-in-progress and stock-in-trade	-578.69	-2698.52
Employee benefit expense	9,118.81	5,479.83
Finance costs	2560.07	1432.76
Depreciation and amortisation expense	1756.33	1590.26
Other expenses	15,734.47	12,942.97
Total expenses	1,00,856.63	84,028.59
Profit /(Loss) before share of net profit/ (loss) of associates, exceptional items and tax	5,833.44	7,005.98
Add: Share of Net Profit/ (loss) of associates	-162.48	-
Profit /(Loss) before exceptional items and tax	5,670.96	7,005.98
Exceptional Items	-	6,574.05
Profit /(Loss) before tax	5,670.96	13,580.03
Current tax	1,737.13	2,688.43
Deferred tax	-603.52	1,119.56
Profit /(Loss) for the year	4,537.35	9,772.04
Other comprehensive income / (expenses)
Items that will not be reclassified to profit or (loss)
Re -measurement gains /(losses)on defined benefit plans	-643.77	33.84
Share of gains /(losses )related to associate	-531.49	-
Income tax on items that will not be reclassified to profit or loss	162.02	-8.52
Items that will be reclassified to of profit or loss
Exchange differences in translating the financial statements of foreign operations	256.52	-
Other comprehensive Income for the year, net of tax	-756.72	25.32
Total comprehensive income/ (loss) for the year	3,780.63	9,797.36
Earning Per Equity Share
Basic	3.64	28.25
Diluted	3.42	28.25

Hero Motors Limited Consolidated Cash Flow Statement (Rs in Lakhs)

Particulars	31-03-2023	31-03-2022
Cash flow from operating activities
Profit / (Loss) before income tax	5670.96	13580.03
Adjustments for:
Depreciation and amortization	1756.33	1590.26
Interest Paid	1841.33	1301.65
Other borrowing Cost	718.78	131.11
Foreign currency translation reserve	256.52	-
Provision/ sundry balances written off	1.94	0.37
Loss/ (Profit) on sale of property plant and equipment	17.89	-6572.58
Employee stock option	1334.99	-
Rental Income	-6.06	-6.41
Other non-operating income	-136.02	-
Share in profit/ loss of associates	-693.97	-
Interest Income	-681.51	-130.10
Operating Profit before working capital changes	10081.18	9894.33
Working capital adjustments
Adjustments for Increase/ (decrease) in operating assets:
Trade receivables	-2309.21	-3,800.88
Inventories	-1716.60	-3,647.37
Other financial assets -non current	345.11	-508.49
Other financial assets -current	-1212.26	-965.64
Other assets- non current	51.12	-377.59
Other assets-current	2035.87	-1617.80
Adjustments for Increase/ (decrease) in operating liabilities:
Trade Payables	1011.99	6792.78
Other financial liabilities -non current	28.10	25.15
Other financial liabilities -current	-945.58	2464.73
Provisions -non current	-284.56	17.99
Provisions -current	-1.66	11.43
Other liabilities -non current	-13.11	-
Other liabilities -current	51.96	65.14
Cash generated from operations	7,122.35	8,353.78
Income taxes paid (net of refunds received)	-1885.47	-2246.66
Net cash inflow from operating activities	5,236.88	6,107.12
Cash flows from investing activities
Capital Expenditure on PPE (including capital advances)	-13187.74	-4120.13
Proceeds from sale of property, plant and equipment	127.58	9368.20
Investment in debenture	-113.40	-
Sale of mutual fund	1043.74	-2446.52
Loan granted	-247.60	-4.72
Loan and advances to employee	-20.65	-12.32
Interest received	646.56	130.10
Rent received	6.06	6.41
Bank balance not considered as cash & cash equivalents	-8555.18	-
Net cash outflow from investing activities	-20300.63	2921.02
Cash flows from financing activities
Proceeds / repayments from long-term borrowings	230.52	-6925.93
Proceeds / repayments from short-term borrowings	-1012.57	2852.41
Proceeds from issue non-cumulative compulsory convertible Preference shares	14500.00	-
Share issue expenses	-345.07	-
Other borrowing Cost	-718.78	-131.11
Interest Paid	-1950.63	-1301.65
Net cash inflow (outflow) from financing activities	10,703.47	-5506.28
Net increase (decrease) in cash and cash equivalents	-4,360.28	3,521.86
Cash and cash equivalents at the beginning of the financial year	5035.46	1514.40
Cash of subsidiary i.e., HEL acquired during the year	80.61	-
Cash and cash equivalents at the end of the year	755.79	5,035.46

Here is a summary of the Cash Flow Statement for the years 2023 and 2022:

Cash Flow from Operating Activities

Profit / (Loss) before Income Tax:

2023: ₹5670.96 million

2022: ₹13580.03 million

There was a significant decrease in profit before tax, which indicates a substantial decline in profitability.

Adjustments for:

Depreciation and Amortization:

2023: ₹1756.33 million

2022: ₹1590.26 million

Depreciation and amortization expenses increased, reflecting higher capital expenditures or changes in asset depreciation rates.

Interest Paid:

2023: ₹1841.33 million

2022: ₹1301.65 million

Interest expenses increased, indicating higher borrowing costs.

Other Borrowing Cost:

2023: ₹718.78 million

2022: ₹131.11 million

Other borrowing costs increased significantly, showing additional costs related to borrowing.

Foreign Currency Translation Reserve:

2023: ₹256.52 million

2022: ₹0 million

This new item indicates the impact of currency translation on foreign operations.

Provision/Sundry Balances Written Off:

2023: ₹1.94 million

2022: ₹0.37 million

Small increase in provision for doubtful debts or sundry balances written off.

Loss / (Profit) on Sale of Property Plant and Equipment:

2023: ₹17.89 million

2022: ₹-6572.58 million

The loss in 2023 contrasts with a significant profit in 2022, indicating a change in the asset disposal strategy or market conditions.

Employee Stock Option:

2023: ₹1334.99 million

2022: ₹0 million

Introduction of employee stock options as a cost in 2023.

Rental Income:

2023: ₹-6.06 million

2022: ₹-6.41 million

Slight decrease in rental income.

Other Non-Operating Income:

2023: ₹-136.02 million

2022: ₹0 million

New non-operating income source in 2023.

Share in Profit / Loss of Associates:

2023: ₹-693.97 million

2022: ₹0 million

Loss from associates introduced in 2023.

Interest Income:

2023: ₹-681.51 million

2022: ₹-130.10 million

Significant increase in interest income.

Operating Profit before Working Capital Changes:

2023: ₹10081.18 million

2022: ₹9894.33 million

Operating profit before working capital changes increased slightly, indicating stable core business performance.

Cash Generated from Operations:

2023: ₹7122.35 million

2022: ₹8353.78 million

Decrease in cash generated from operations, indicating lower operating cash flow.

Income Taxes Paid (Net of Refunds Received):

2023: ₹-1885.47 million

2022: ₹-2246.66 million

Decrease in taxes paid, indicating lower tax obligations.

Net Cash Inflow from Operating Activities:

2023: ₹5236.88 million

2022: ₹6107.12 million

Decrease in net cash inflow from operating activities, reflecting lower overall operating performance.

Cash Flows from Investing Activities

Capital Expenditure on PPE (Including Capital Advances):

2023: ₹-13187.74 million

2022: ₹-4120.13 million

Significant increase in capital expenditure on property, plant, and equipment.

Proceeds from Sale of Property, Plant, and Equipment:

2023: ₹127.58 million

2022: ₹9368.20 million

Significant decrease in proceeds from the sale of assets.

Investment in Debenture:

2023: ₹-113.40 million

No investments recorded in 2022.

Sale of Mutual Fund:

2023: ₹1043.74 million

2022: ₹-2446.52 million

Increase in proceeds from the sale of mutual funds.

Loan Granted:

2023: ₹-247.60 million

2022: ₹-4.72 million

Increase in loans granted.

Loan and Advances to Employee:

2023: ₹-20.65 million

2022: ₹-12.32 million

Increase in loans and advances to employees.

Interest Received:

2023: ₹646.56 million

2022: ₹130.10 million

Significant increase in interest received.

Rent Received:

2023: ₹6.06 million

2022: ₹6.41 million

Slight decrease in rent received.

Bank Balance Not Considered as Cash & Cash Equivalents:

2023: ₹-8555.18 million

No changes recorded in 2022.

Net Cash Outflow from Investing Activities:

2023: ₹-20300.63 million

2022: ₹2921.02 million

Significant outflow, indicating heavy investments in PPE and other assets.

Cash Flows from Financing Activities

Proceeds / Repayments from Long-Term Borrowings:

2023: ₹230.52 million

2022: ₹-6925.93 million

Positive inflow in 2023 versus a significant outflow in 2022.

Proceeds / Repayments from Short-Term Borrowings:

2023: ₹-1012.57 million

2022: ₹2852.41 million

Net outflow in 2023 versus a net inflow in 2022.

Proceeds from Issue of Non-Cumulative Compulsory Convertible Preference Shares:

2023: ₹14500.00 million

No changes recorded in 2022.

Share Issue Expenses:

2023: ₹-345.07 million

No expenses recorded in 2022.

Other Borrowing Cost:

2023: ₹-718.78 million

2022: ₹-131.11 million

Increase in other borrowing costs.

Interest Paid:

2023: ₹-1950.63 million

2022: ₹-1301.65 million

Increase in interest paid.

Net Cash Inflow (Outflow) from Financing Activities:

2023: ₹10703.47 million

2022: ₹-5506.28 million

Significant positive inflow in 2023 versus a substantial outflow in 2022.

Net Increase / Decrease in Cash & Cash Equivalents

Net Increase (Decrease):

2023: ₹-4360.28 million

2022: ₹3521.86 million

Significant net decrease in cash and cash equivalents.

Cash and Cash Equivalents at the Beginning of the Financial Year:

2023: ₹5035.46 million

2022: ₹1514.40 million

The opening balance increased, reflecting the prior year’s closing balance.

Cash of Subsidiary (HEL) Acquired during the Year:

2023: ₹80.61 million

No acquisitions recorded in 2022.

Cash and Cash Equivalents at the End of the Year:

2023: ₹755.79 million

2022: ₹5035.46 million

The closing balance decreased significantly, indicating a lower cash reserve.

Financial Ratios of Hero Motors Limited

Particulars	2023	2022
Current Ratio	1.29	1.13
Debt-Equity Ratio	0.72	1.60
Debt Service Coverage Ratio,	4.56	5.02
Return on Equity Ratio	18.33%	90.68%
Inventory turnover ratio	6.32	6.32
Trade Receivables turnover ratio	4.87	5.27
Trade payables turnover ratio	3.37	3.24
Net capital turnover ratio	7.80	14.43
Net profit ratio	4.31%	10.81%
Return on Capital employed	14.18%	20.70%

Here is a summary of the financial and operational metrics for Hero Motors Limited for the year 2023 & 2022:

Current Ratio

2023: 1.29

2022: 1.13

Insight: The current ratio has improved slightly from 1.13 to 1.29, indicating a better liquidity position. The company has more current assets relative to its current liabilities compared to the previous year, enhancing its ability to cover short-term obligations.

Debt-Equity Ratio

2023: 0.72

2022: 1.60

Insight: The debt-equity ratio has significantly decreased from 1.60 to 0.72. This indicates that the company has reduced its debt levels relative to its equity, resulting in a lower financial risk and improved financial stability.

Debt Service Coverage Ratio

2023: 4.56

2022: 5.02

Insight: The debt service coverage ratio has decreased slightly from 5.02 to 4.56. Although there is a reduction, the ratio still indicates a strong ability to cover debt obligations from operating income.

Return on Equity (ROE)

2023: 18.33%

2022: 90.68%

Insight: The return on equity has drastically decreased from 90.68% to 18.33%. This significant drop suggests a considerable decline in the company’s profitability relative to shareholders ' equity.

Inventory Turnover Ratio

2023: 6.32

2022: 6.32

Insight: The inventory turnover ratio has remained constant at 6.32. This indicates that the company 's efficiency in managing and selling its inventory has remained stable year-over-year.

Trade Receivables Turnover Ratio

2023: 4.87

2022: 5.27

Insight: The trade receivables turnover ratio has decreased from 5.27 to 4.87, suggesting that the company is taking longer to collect its receivables compared to the previous year.

Trade Payables Turnover Ratio

2023: 3.37

2022: 3.24

Insight: The trade payables turnover ratio has increased slightly from 3.24 to 3.37, indicating that the company is paying off its suppliers at a slightly faster rate than before.

Net Capital Turnover Ratio

2023: 7.80

2022: 14.43

Insight: The net capital turnover ratio has decreased significantly from 14.43 to 7.80. This suggests a reduction in the efficiency with which the company is using its working capital to generate sales.

Net Profit Ratio

2023: 4.31%

2022: 10.81%

Insight: The net profit ratio has decreased from 10.81% to 4.31%, indicating a decline in the company’s ability to convert revenue into profit.

Return on Capital Employed (ROCE)

2023: 14.18%

2022: 20.70%

Insight: The return on capital employed has decreased from 20.70% to 14.18%. This indicates a reduction in the efficiency and profitability of the company’s capital investments.