Cost Analysis Hero

CHAPTER-I
INTRODUCTION
INTRODUCTION
COST:
Cost is essential in every walk of our life national, domestic and Business. A cost is prepared to
have effective utilization of funds and for the realization of objective as efficiently as possible.
Costing is a powerful tool to the management for performing its functions i.e., formulation plans,
coordination activities and controlling operations etc., efficiently. For efficient and effective
management planning and control are tow highly essential functions. Costing and cost control
provide a set of basic techniques for planning and control.
A cost fixes a target in terms of rupees or quantities against which the actual performance is
measured. A cost is closely related to both the management function as well as the accounting
function of an organization.
As the size of the organization increases, the need for costing is correspondingly more because a
cost is an effective tool of planning and control. Cost is helpful in coordinating the various
activities (such as production, sales, purchase etc) of the organization with result that all the
activities precede according to the objective. Costs are means of communication. Ideas of the top
management are given the practical shape. As the activities of various department heads are
coordinated at the much needed for the very success of an organization. Cost is necessary to
future to motivate the staff associated, to coordinate the activities of different departments and to
control the performance of various persons operating at different levels.
Costs may be divided into two basic classes. Capital and operating costs. Capital cost is directed
towards proposed expenditure for new projects and often require special financing.
The operating costs are directed towards achieving short-term operational goals of the
organization for instance, production or profit goals in a business firm. Operating costs may be
sub-divided into various departmental of functional costs.
Definition of 'Cost-Benefit Analysis'

A process by which business decisions are analyzed. The benefits of a given situation or
business-related action are summed and then the costs associated with taking that action are
subtracted. Some consultants or analysts also build the model to put a dollar value on intangible
items, such as the benefits and costs associated with living in a certain town. Most analysts will
also factor opportunity cost into such equations.
You may have been intensely creative in generating solutions to a problem, and rigorous in your
selection of the best one available. This solution may still not be worth implementing, as you
may invest a lot of time and money in solving a problem that is not worthy of this effort.
Cost Benefit Analysis or cba is a relatively simple and widely used technique for deciding
whether to make a change. As its name suggests, to use the technique simply add up the value of
the benefits of a course of action, and subtract the costs associated with it.
Costs are either one-off, or may be ongoing. Benefits are most often received over time. We
build this effect of time into our analysis by calculating a payback period. This is the time it takes
for the benefits of a change to repay its costs. Many companies look for payback over a specified
period of time e.g. three years.
In its simple form, cost-benefit analysis is carried out using only financial costs and financial
benefits. For example, a simple cost/benefit analysis of a road scheme would measure the cost of
building the road, and subtract this from the economic benefit of improving transport links. It
would not measure either the cost of environmental damage or the benefit of quicker and easier
travel to work.
NEED OF THE STUDY:

The importance of cost reduction programs within a company cannot be overstated. Companies
that are losing money, need to increase profits, or must become more competitive need to cut
expenses in order to succeed. Knowing how to implement effective cost reduction strategies can
be the determining factor in the survival of a business.
When a company must generate more cash as fast as possible, management will have to decide
which costs can be most effectively reduced. If the reduction is needed quickly, expenses cut first
will normally be those that are not fixed or directly tied to production. It is not a good idea to
drastically reduce expenses that produce the company product or service without careful
evaluation.
If your company understands the importance of cost reduction as a tool to increase profitability,
the company will have a much better chance of remaining profitable no matter what stage of the
economic cycle is occurring. That is because cost reduction is an effective tool that can be
responsive to a company's need. Managing expenses is just as important as managing revenue.
Keeping the competitive edge means keeping the company razor sharp. There is no room for
laxness which dulls the ability of a company to be responsive to market trends. Changes can
occur rapidly, and a company that cannot respond with new methods, new material usage,
service efficiency changes, or technological adaptability will be quickly outperformed by other
businesses. The importance of cost reduction strategies lies in its contribution to a company's
honing of performance.
SCOPE OF THE STUDY:

Since it will not be possible to conduct a micro level study of all type industries in Andhra
Pradesh, the study is restricted to Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.)
(Phoenix Motors Pvt. Ltd).only.
OBJECTIVES OF STUDY
THE STUDY HAS THE FOLLOWING:
To provide the material frame work of cost and Cost Control Analysis
To describe the profit of the organization as a backdrop for undertaking a study of Cost
Benefit Analysis.
To analyze the cost system in practice in Hero MotoCorp Ltd. (Formerly Hero Honda
Motors Ltd.) (Phoenix Motors Pvt. Ltd)with particular reference to their objectives and
phases of organizational and re-appropriation.
In addition to the analysis of the conventional cost system in practice in Hero MotoCorp
Ltd. (Formerly Hero Honda Motors Ltd.) (Phoenix Motors Pvt. Ltd) The study aims
at evaluation and modification to the current cost system with reference to the various
types of costs. The scope in the formulation of performance cost is also studied.
SOURCES OF DATA:
The data of Hero MotoCorp Ltd have been collected mainly from secondary sources viz.,
Form the concerned officers of the Hero MotoCorp Ltd
Hero MotoCorp Ltd journals.
Accounting books, records.
Key books of concerned title.
Statistical records
Hero MotoCorp Ltd library.
METHODOLOGY:
The proposed study is carried with the help of both primary and secondary sources of data.
PRIMARY DATA:
The primary data is collected by interacting with the finance manager and other concerned
executives at the administrative office of the company.
SECONDARY DATA:
All the secondary data used for the study has been extracted from the annual reports, manuals
and other published material of the company.
LIMITATIONS:
Estimates are used as basis for cost plan and estimates are based mostly on available facts
and best managerial judgment
Cost control cannot reduce the managerial function to a formula. It is only a managerial.
Tool which increase effectiveness of managerial control.
The use of cost may be to restricted use of resources. Costs an often taken as limits.
Efforts may therefore not be made to exceed the performance beyond the cost targets.
Frequent changes may be called for in costs due to first changing industrial climate.
In order that a system may be successful, adequate costs education should be imparted at
least through the formative period. Sufficient training programs should be arranged to
make employees give positive response to cost activities.
The study is the limited up to the date and information provided by Hero MotoCorp
Ltdand its annual reports.
CHAPTER-II
INDUSTRY PROFILE
&
COMPANY PROFILE
Automobile industry in India

The automobile industry in India is the ninth largest in the world with an annual production of
over 2.3 million units in 2013 In 2014, India emerged as Asia's fourth largest exporter of
automobiles, behind Japan, South Korea and Thailand.
Following economic liberalization in India in 1991, the Indian automotive industry has
demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions.
Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki and Mahindra and
Mahindra, expanded their domestic and international operations. India's robust economic growth
led to the further expansion of its domestic automobile market which attracted significant Indiaspecific investment by multinational automobile manufacturers. In February 2009, monthly sales
of passenger cars in India exceeded 100,000 units.
Bryonic automotive industry emerged in India in the 1940s. Following the independence, in
1947, the Government of India and the private sector launched efforts to create an automotive
component manufacturing industry to supply to the automobile industry. However, the growth
was relatively slow in the 1950s and 1960s due to nationalization and the license raj which
hampered the Indian private sector. After 1970, the automotive industry started to grow, but the
growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major
luxury. Japanese manufacturers entered the Indian market ultimately leading to the establishment
of MarutiUdyog. A number of foreign firms initiated joint ventures with Indian companies.
In the 1980s, a number of Japanese manufacturers launched joint-ventures for building
motorcycles and light commercial-vehicles. It was at this time that the Indian government chose
Suzuki for its joint-venture to manufacture small cars. Following the economic liberalization in
1991 and the gradual weakening of the license raj, a number of Indian and multi-national car
companies launched operations. Since then, automotive component and automobile
manufacturing growth has accelerated to meet domestic and export demands.
HISTORY OF THE TWO WHEELERS:

The Britannica Encyclopedia a motorcycle as a bike or tricycle propelled by an internal
combustion engine (or, less often by an electric engine). The automobile was the reply to the 19 th
century reams of self-propelling the horse-drawn bikeriage. Similarly, the invention of the
motorcycle created the self propelling bicycle. The first commercial design was three-wheeler
built by Edward Butler in Great Britain in 1884. This employed a horizontal single-cylinder
gasoline engine mounted between two steer able front wheels and connected by a drive chain to
the rear wheel. The 1900s saw the conversion of many bicycles or pedal cycles by adding small,
centrally mounted spark ignition engine engines. There was then felt the need for reliable
constructions. This led to road trial tests and competition between manufacturers. Tourist
Trophy (TT) races were held on the Isle of main in 1907 as reliability or endurance races. Such
were the proving ground for many new ideas from early two-stroke-cycle designs to
supercharged multivalent engines mounted on aerodynamic, bikebon fiber reinforced bodywork.
INVENTION OF TWO WHEELERS:

The invention of two wheelers is a much-debated issue. Who invented the first motorcycle?
May seem like a simple question, safety, bicycle, i.e., bicycle with front and rear wheels of the
same size, with a pedal crank mechanism to drive the rear wheel. Those bicycles in turn
described from high-wheel bicycles. The high wheelers descended from an early type of
pushbike, without pedals, propelled by the riders feet pushing against the ground. These
appeared around 1800, used iron banded wagon wheels, and were called bone-crushers, both
for their jarring ride, and their tendency to toss their riders. Gottiieb Daimler (who credited with
the building the first motorcycle in 1885, one wheel in the front and one in the back, although it
had a smaller spring-loaded outrigger wheel on each side. It was constructed mostly of wood,
the wheels were of the iron-banded wooden-spooked wagon-type and it definitely had a bonecrusher chassis!
FURTHER DEVELOPMENTS:
Most of the developments during the early phase concentrated on three and four-wheeled design
since it was complex enough to get the machines running with out having to worry about them
falling over. The next notable two-wheeler though was the Hildebrand & Wolf Mueller, patented
in Munich in 1894. In 1895, the French firm of DeDion-button built and engine that was to
make the mass production and common use of motorcycle possible. The first motorcycle with
electric start and a fully modem electrical system; the Hence special from the Indian Motorcycle
Company astounded the industry in 1931. Before World War 1, IMC was the largest motorcycle
manufacturer in the world producing over 20000 bikes per year.
INCREASING POPULARITY:
The popularity of the vehicle grew especially after 1910, in 1916; the Indian motorcycle
company introduced the model H racer, and placed it on sale. During World War 1, all branches
of the armed forces in Europe used motorcycles principally for dispatching. After the war, it
enjoyed a sport vogue until the Great Depression began in motorcycles lasted into the late 20 th
century; weight the vehicle beingused for high-speed touring and sport competitions. The more
sophisticated of a 125cc model. Since then, an increasing number of powerful bikes have blazed
the roads.
HISTORICAL INDUSTRY DEVELOPMENTS:

Indian is the second largest manufacturer and producer to two wheelers in the World. It stands
next only to Japan and China in terms of the number of V produced and domestic sales
respectively. This destination was achieved due to variety of reason like restrictive policy
followed by the government of India towards the passenger bike industry, rising demand for
personal transport, inefficiency in the public transportation system etc. The Indian two-wheelers
industry made a small beginning in the early 50s when Automobile products of India (API)
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started manufacturing scooters in the country. Until 1958, API and Enfield were the sole
producers.
The two wheelers market was opened were opened to foreign competition in the mid-80s. And
the then market leaders-Escorts and Enfield were caught unaware by the onslaught of the
100cc bikes of the four Indo- Japanese joint ventures. With the availability of fuel-efficiency
low power bikes, demand swelled, resulting in Hero Honda then the only producer of four
stroke bikes (100cc category), gaining a top slot.
The first Japanese motorcycles were introduced in the early eighties. TVS Suzuki and Hero
Honda brought in the first two-stroke and four-stroke engine motorcycles respectively. These
two players initially started with assembly of CKD Kits, and later on progressed to indigenous
manufacturing.
The industry had a smooth ride in the 50s, 60s and 70s when government prohibited new entries
and strictly controlled capacity expansion. The industry saw a sudden growth in the 80s. The
industry witnessed a steady of 14% leading to a peak volume of 1.9 mn vehicles in 1990.
In 1990 the entire automobile industry saw a drastic fall in demand. This resulted in a decline of
15% in 1991 and 8% in 1992, resulting in a production loss of 0.4mn vehicles. Barring Hero
Honda, all the major producers suffered from recession in FY93 and FY94. Hero Honda showed
a marginal decline in 1992.
The reason for recession in the sector were the incessant rise in fuel prices, high input costs and
reduced purchasing power due to significant like increased production in 1992, due to new
entrants coupled with recession in the industry resulted in companies either reporting losses or a
fall in profits.
CONCLUSION:
The two-wheelers market has hada perceptible shift from a buyers market to a sellers
market with a variety of choice, players will have compete on various fronts viz. pricing,
technology product design, productivity after sale service, marketing and distribution. In the
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short term, market shares of individual manufacturers are going to be sensitive to capacity,
product acceptance, pricing and competitive pressures from other manufacturers.
As incomes grow and people grow and people feel the need to own a private means of transport,
sales of two-wheelers will rise. Penetration is expected to increase to approximately to more
than 25% by 2005.
The motorcycle segment will continue to lead the demand for two-wheelers in the coming years.
Motorcycle sale is expected to increase by 20% yoy as compared to 1% growth in the scooter
market and 3% by moped sales respectively for the next two years.
The four-stroke scooters will add new dimension to the two-wheeler segment in the coming
future.
The Asian continent is that largest user of the two-wheelers in the world. This is due to poor
road infrastructure and low per capita income, restrictive policy on bike industry. This is due to
oligopoly between top five players in the segment, compared to thirsty manufacturers in the bike
industry.
Hero Honda motors LTd., is one of the leading companies in the two-wheeler industry. At
present it is the market leader in the motorcycle segment with around 47% the market share
during FY 2000 01. During the year, company posted a 41.15% yoy rise in turnover to Rs.31,
686.5mn in motorcycles which driven by a 35.17% yoy rise in Motorcycle sales volumes. The
company has emerged as one of the most successful players, much ahead of its competitions an
account of its superior and reliable product quality complemented with excellent marketing
techniques. The company has been consistently addressing the growing demand for motorcycles
and has been cumulative customer base of over 4 million customers, which is expected to reach
5min mark with rural and semi-urban segment being the new class of consumers.
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COMPANY PROFILE
13
CORPORATE PROFILE
Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) is the world's largest manufacturer of
two - wheelers, based in India.
In 2001, the company achieved the coveted position of being the largest two-wheeler
manufacturing company in India and also, the 'World No.1' two-wheeler company in terms of
unit volume sales in a calendar year. Hero MotoCorp Ltd. continues to maintain this position till
date.
Today, every second motorcycle sold in the country is a Hero Honda bike. Every 30 seconds,
someone in India buys Hero Honda's top-selling motorcycle Splendor.
Vision
The Hero Honda story began with a simple vision the vision of a mobile and an empowered
India, powered by Hero Honda. This vision was driven by Hero Hondas commitment to
customer, quality and excellence, and while doing so, maintaining the highest standards of ethics
and societal responsibilities. Hero Honda believes that the fastest way to turn that dream into a
reality is by remaining focused on that vision.
Strategy
Hero Hondas key strategy has been driven by innovation in every sphere of activity building a
robust product portfolio across categories, exploring new markets, aggressively expanding the
network and continuing to invest in brand building activities.
Manufacturing
Hero Honda bikes are manufactured across three globally benchmarked manufacturing facilities.
Two of these are based at Gurgaon and Dharuhera which are located in the state of Haryana in
northern India. The third and the latest manufacturing plant is based at Haridwar, in the hill state
14
of Uttrakhand.
Technology
In the 1980s Hero Honda pioneered the introduction of fuel-efficient, environment friendly fourstroke motorcycles in the country. Today, Hero Honda continues to be technology pioneer. It
became the first company to launch the Fuel Injection (FI) technology in Indian motorcycles,
with the launch of the Glamour FI in June 2006.
Products
Hero Honda's product range includes variety of motorcycles that have set the industry standards
across all the market segments. The company also started manufacturing scooter in 2006. Hero
Honda offers large no. of products and caters to wide variety of requirements across all the
segments.
Distribution
The company's growth in the two wheeler market in India is the result of an intrinsic ability to
increase reach in new geographies and growth markets. Hero Honda's extensive sales and service
network now spans close to 4500 customer touch points. These comprise a mix of authorized
dealerships, Service & Spare Parts outlets, and dealer-appointed outlets across the country.
Brand
The company has been continuously investing in brand building utilizing not only the new
product launch and new campaign launch opportunities but also through innovative marketing
initiatives
revolving
around
cricket,
entertainment
and
ground-
level
activation.
Hero Honda has been actively promoting various sports such as hockey, cricket and golf. Hero
Honda was the title sponsor of the Hero Honda FIH Hockey World Cup that was played in Delhi
15
during Feb-March 2010. Hero Honda also partners the Commonwealth Games Delhi 2010.
2010-11 Performance
Total unit sales of 54,02,444 two-wheelers, growth of 17.44 per cent
Total net operating income of Rs. 19401.15 Crores, growth of 22.32 per cent
Net profit after tax at Rs. 1927.90 Crores
Total dividend of 5250% or Rs. 105 per share including Interin Dividend of Rs. 70 per share on
face value of each share of Rs. 2 each
EBIDTA margin for the year 13.49 per cent
EPS of Rs. 96.54
2009-10 Performance
Total unit sales of 46,00,130 two-wheelers, growth of 23.6 per cent
Total net operating income of Rs. 15860.51 Crores, growth of 28.1 per cent
Net profit after tax at Rs. 2231.83 Crores, growth of 74.1 per cent
Final dividend of 1500% or Rs. 30 per share on face value of each share of Rs. 2
EBIDTA margin for the year 17.4 per cent
EPS of Rs. 111.77, growth of 74.1 per cent
HERO HONDA'S MISSION

Hero Hondas mission is to strive for synergy between technology, systems and human resources,
to produce products and services that meet the quality, performance and price aspirations of its
customers. At the same time maintain the highest standards of ethics and social responsibilities.
This mission is what drives Hero Honda to new heights in excellence and helps the organization
forge a unique and mutually beneficial relationship with all its stake holders.
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HERO HONDA'S MANDATE

Hero Honda is a world leader because of its excellent manpower, proven management, extensive
dealer network, efficient supply chain and world-class products with cutting edge technology
from Honda Motor Company, Japan. The teamwork and commitment are manifested in the
highest level of customer satisfaction, and this goes a long way towards reinforcing its leadership
status
BOARD OF DIRECTORS
No.
Name of the Directors
Designation
Mr. BrijmohanLallMunjal
Chairman & Whole-time Director
Mr. PawanMunjal
Managing Director & C.E.O.
Mr. Toshiaki Nakagawa
Joint Managing Director
Mr. Sumihisa Fukuda
Technical Director
Mr. Sunil Kant Munjal
Non-Executive Director
Mr. Suman Kant Munjal
Mr. Takashi Nagai
Mr. Yuji Shiga
Mr. PradeepDinodia
Non-executive & Independent Director
10
Gen. (Retd.) V. P. Malik
11
Mr. Analjit Singh
12
Dr. Pritam Singh
13
Ms. ShobhanaBhartia
14.
Mr. M. Damodaran
15.
Mr. Ravi Nath
16.
Dr. Anand C. Burman
BRIEF PROFILE OF DIRECTORS
17
MR. BRIJMOHAN LALL MUNJAL

Mr. BrijmohanLallMunjal is the founder Director and Chairman of the Company and the $ 3.2
billion Hero Group. He is the Past President of Confederation of Indian Industry (CII), Society of
Indian Automobile Manufacturers (SIAM) and was a Member of the Board of the Country's
Central Bank (Reserve Bank of India). In recognition of his contribution to industry, Mr. Munjal
was conferred the Padma Bhushan Award by the Union Government.
Mr. BrijmohanLallMunjal is currently on the board of the following companies:
No. Name of Company
Nature of Office
Hero Honda Motors Limited
Chairman and Whole-time Director
Hero Honda Finlease Limited
Chairman and Director
Munjal Showa Limited
Chairman and Director
Easy Bill Limited
Director
Rockman Industries Limited
Director
ShivamAutotech Limited
Director
KEY MILESTONES OF HERO HONDA

Year
Event
1983 Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed
Shareholders Agreement signed
1984
Hero Honda Motors Ltd. incorporated
1985 First motorcycle "CD 100" rolled out
1987 100,000th motorcycle produced
1989 New motorcycle model - "Sleek" introduced
1991 New motorcycle model - "CD 100 SS" introduced
500,000th motorcycle produced
1992 Raman MunjalVidyaMandir inaugurated - A School in the memory of founder Managing
Director, Mr. Raman Kant Munjal
1994 New motorcycle model - "Splendor" introduced
1,000,000th motorcycle produced
1997 New motorcycle model - "Street" introduced
Hero Honda's 2nd manufacturing plant at Gurgaon inaugurated
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1998 2,000,000th motorcycle produced

1999 New motorcycle model - "CBZ" introduced
Environment Management System of Dharuhera Plant certified with ISO-14001 by DNV
Holland
Raman Munjal Memorial Hospital inaugurated - A Hospital in the memory of founder
Managing Director, Mr. Raman Kant Munjal
2000 4,000,000th motorcycle produced
Environment Management System of Gurgaon Plant certified ISO-14001 by DNV
Holland
Splendor declared 'World No. 1' - largest selling single two-wheeler model
"Hero Honda Passport Programme" - CRM Programme launched
2001 New motorcycle model - "Passion" introduced
One million production in one single year
New motorcycle model - "Joy" introduced
5,000,000th motorcycle produced
2002 New motorcycle model - "Dawn" introduced
New motorcycle model - "Ambition" introduced
Appointed VirenderSehwag, Mohammad Kaif, Yuvraj Singh, Harbhajan Singh and
Zaheer Khan as Brand Ambassadors
2003 Becomes the first Indian Company to cross the cumulative 7 million sales mark
Splendor has emerged as the World's largest selling model for the third calendar year in a
row (2000, 2001, 2002)
New motorcycle model - "CD Dawn" introduced
New motorcycle model - "Splendor +" introduced
New motorcycle model - "Passion Plus" introduced
New motorcycle model - "Karizma" introduced
2004 New motorcycle model - "Ambition 135" introduced
Hero Honda became the World No. 1 Company for the third consecutive year.
Crossed sales of over 2 million units in a single year, a global record.
Splendor - World's largest selling motorcycle crossed the 5 million mark
New motorcycle model - "CBZ*" introduced
Joint Technical Agreement renewed
19
Total sales crossed a record of 10 million motorcycles

2005 Hero Honda is the World No. 1 for the 4th year in a row
New motorcycle model - "Super Splendor" introduced
New motorcycle model - "CD Deluxe" introduced
New motorcycle model - "Glamour" introduced
New motorcycle model - "Achiever" introduced
First Scooter model from Hero Honda - "Pleasure" introduced
15 million production milestone achieved
New 'Splendor NXG' launched
New 'CD Deluxe' launched
New 'Passion Plus' launched
New motorcycle model 'Hunk' launched
2008 Hero Honda Haridwar Plant inauguration
New 'Pleasure' launched
Splendor NXG lauched with power start feature
New motorcycle model 'Passion Pro' launched
New 'CBZ Xtreme' launched
CD Deluxe lauched with power start feature
New 'Glamour' launched
2009
Hunk' (Limited Edition) launched
Splendor completed 11 million production landmark
2010
New motorcycle model 'Karizma - ZMR' launched

Silver jubilee celebrations
2011
New model Splendor Pro launched

Launch of new Super Splendor and New Hunk
20
New licensing arrangement signed between Hero and Honda

Launch of new refreshed versions of Glamour, Glamour FI, CBZ Xtreme, Karizma
Crosses the landmark figure of 5 million cumulative sales in a single year
PROMINENT AWARDS TO THE COMPANY
Year Awards & Recognitions
Two-wheeler Manufacturer of the Year award by Bike India magazine.
Adjudged the "Bike Manufacturer of the Year" at the Economic Times ZigWheels Car and
Bike Awards.
- CNBC Awaaz - Storyboard special commendation for "Effective rebranding of a new
corporate entity" by CNBC Awaaz Consumer Awards
- "Most Recommended Two-Wheeler Brand of the Year" award by CNBC Awaaz
Consumer Awards
- Colloquy Loyalty Awards "Innovation in Loyalty Marketing International 2011"
for Hero GoodLife
- "Best Activity Generating Short or Long-Term Brand Loyalty" by the Promotion
Marketing Award of Asia Order of Merit for Hero GoodLife
2010 - Ranked No 1 brand in the Auto (Two-Wheelers) category in the Brand Equity "Most
Trusted Brand" 2011 survey
2011
Company of the Year awarded by Economic Times Awards for Corporate Excellence
2008-09.
CNBC TV18 Overdrive Awards 2010 'Hall of Fame' to Splendor
NDTV Profit Car & Bike Awards 2010
Two-wheeler Manufacturer of the Year
CnB Viewers' Choice Two-wheeler of the Year (Karizma ZMR)
Bike Maker of the Year by ET-ZigWheels Car & Bike of the Year Awards 2009
2009 'Two-wheeler Manufacturer of the Year' by NDTV Profit Car & Bike Awards 2009 and
Passion Pro adjudged as CNB Viewers' Choice two-wheeler
Top Indian Company under the 'Automobile - Two-wheelers' sector by the Dun &
21
Bradstreet-Rolta Corporate Awards

Won Gold in the Reader's Digest Trusted Brand 2009 in the 'Motorcycles' category
NDTV Profit Business Leadership Awards 2009 - two-wheeler category
2008 NDTV Profit Business Leadership Award 2008 - Hero Honda Wins the Coveted
"NDTV Profit Business Leadership Award 2008"
TopGear Design Awards 2008 - Hunk Bike of the Year Award
NDTV Profit Car India & Bike India Awards - NDTV Viewers Choice Award to
Hunk in Bike category
IndiaTimes Mindscape and Savile Row ( A Forbes Group Venture ) Loyalty Awards
- Customer and Brand Loyalty Award in Automobile (two-wheeler) sector
Asian Retail Congress Award for Retail Excellence (Strategies and Solutions of
business innovation and transformation) - Best Customer Loyalty Program in
Automobile category
NDTV Profit Car India & Bike India Awards - Bike Manufacturer of the year
Overdrive Magazine - Bike Manufacturer of the year
TNS Voice of the Customer Awards:
No.1 executive motorcycle Splendor NXG
No.1 standard motorcycle CD Deluxe
No. premium motorcycle CBZ Xtreme
2007 The NDTV Profit Car India & Bike India Awards 2007 in the following category:
Overall "Bike of the Year" - CBZ X-treme
"Bike of the Year" - CBZ X-treme (up to 150 cc category)
"Bike Technology of the Year" - Glamout PGM FI
"Auto Tech of the Year" - Glamout PGM FI by Overdrive Magazine.

"Bike of the Year" - CBZ X-treme by Overdrive Magazine.
Ranked CBZ X-treme "Bike of the Year" - by B S Motoring Magazine
22
Most Trusted Company , by TNS Voice of the Customer Awards 2006.

CD Deluxe rated as "No 1 standard motorcycle" by TNS Voice of the Customer Awards
2006.
2006 Adjudged 7th Top Indian Company by Wallstreet Journal Asia (Top Indian Two Wheeler
Company).
One of the 8 Indian companies to enter the Forbes top 200 list of worlds most reputed
companies.
No. 1 in automobile industry by TNS Corporate Social Responsibility Award.
Best in its class awards for each category by TNS Total Customer Satisfaction Awards
2006:
Splendor Plus (Executive)
CD Deluxe (Entry)
Pleasure (Gearless Scooters)
Splendor & Passion - Top two models in two wheeler category by ET Brand Equity
Survey 2006.
Adjudged 7th Top Indian Company by Wallstreet Journal Asia (Top Indian Two Wheeler
Company).
Top Indian company in the Automobile - Two Wheeler sector by Dun & Bradstreet American Express Corporate Awards 2006.
Hero Honda Splendor rated as India's most preferred two-wheeler brand at the
AwaazConsumer Awards 2006.
Certificate of Export Excellence for outstanding export performance during 2003-04 for
two-wheeler & three- wheelers - Complete (Non SSI) by Engineering Export Promotion
Council.
The NDTV Profit Car India & Bike India Awards 2006 in the following category:
Bike Maker of the Year
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Bike of the Year - Achiever
Bike of the Year - Achiever (up to 150 cc category)
Bike of the Year - Glamour (up to 125 cc category)
NDTV Viewers' Choice Award to Glamour in the bike category
CORPORATE SOCIAL RESPONSIBILITY (CSR)

STAKEHOLDER TIES AT THE GRASSROOTS
Hero Honda Motors takes considerable pride in its stakeholder relationships, especially ones
developed at the grassroots. The Company believes it has managed to bring an economically and
socially backward region in Dharuhera, Haryana, into the national economic mainstream.
An Integrated Rural Development Centre has been set up on 40 acres of land along the DelhiJaipur Highway. The Centre-complete with wide approach roads, clean water, and education
facilities for both adults and children-now nurtures a vibrant, educated and healthy community.
The Foundation has adopted various villages located within vicinity of the Hero Honda factory at
Dharuhera for integrated rural development. This includes:
Installation of deep bore hand pumps to provide clean drinking water.
Constructing metalled roads and connecting these villages to the National Highway (NH
-8).
Renovating primary school buildings and providing hygienic water and toilet facilities.
Ensuring a proper drainage system at each of these villages to prevent water-logging.
24
Promoting non-conventional sources of energy by providing a 50 per cent subsidy on

biogas plants.
The Raman MunjalVidyaMandirbegan with three classes (up to class II) and 55 students from
nearby areas. It has now grown into a modern Senior Secondary, CBSE affiliated co-educational
school with over 1200 students and 61 teachers. The school has a spacious playground, an ultramodern laboratory, a well-equipped audio visual room, an activity room, a well-stocked library
and a computer centre.
The Raman Munjal Sports Complex has basketball courts, volleyball courts, and hockey and
football grounds are used by the local villagers. In the near future, sports academies are planned
for volley ball and basket ball, in collaboration with National Sports Authority of India.
Vocational Training Centre

In order to help local rural people, especially women, Hero Honda has set up a Vocational
Training Centre. So far 26 batches comprising of nearly 625 women have been trained in
tailoring, embroidery and knitting. The Company has helped women trained at this centre to set
up a production unit to stitch uniforms for Hero Honda employees. Interestingly, most of the
women are now self-employed.
Adult Literacy Mission

This Scheme was launched on 21st September, 1999, covering the nearby villages of Malpura,
Kapriwas and Sidhrawali. The project started with a modest enrolment of 36 adults. Hero Honda
is now in the process of imparting Adult Literacy Capsules to another 100 adults by getting
village heads and other prominent villagers to motivate illiterate adults.
Marriages of underprivileged girls

Marriages are organized from time to time, particularly for girls from backward classes, by the
Foundation by providing financial help and other support to the families.
25
Rural Health Care

Besides setting up a modern hospital, the Foundation also regularly provides doorstep health care
services to the local community. Free health care and medical camps are now a regular feature in
the Hero Group's community outreach program
KEY POLICIES
AN ENVIRONMENTALLY AND SOCIALLY, AWARE
COMPANY
At Hero Honda, our goal is not only to sell you a bike, but also to help you every step of the way
in making your world a better place to live in. Besides its will to provide a high-quality service to
all of its customers, Hero Honda takes a stand as a socially responsible enterprise respectful of its
environment and respectful of the important issues.
Hero Honda has been strongly committed not only to environmental conservation programmers
but also expresses the increasingly inseparable balance between the economic concerns and the
environmental and social issues faced by a business. A business must not grow at the expense of
mankind and man's future but rather must serve mankind.
"We must do something for the community from whose land we generate our wealth."
A famous quote from our Worthy Chairman Mr.BrijmohanLallMunjal.
Environment Policy
We at Hero Honda are committed to demonstrate excellence in our environmental
performance on a continual basis, as an intrinsic element of our corporate philosophy.
To achieve this we commit ourselves to:
Integrate environmental attributes and cleaner production in all our business processes
and practices with specific consideration to substitution of hazardous chemicals, where
viable and strengthen the greening of supply chain.
Continue product innovations to improve environmental compatibility.
26
Comply with all applicable environmental legislation and also controlling our
environmental discharges through the principles of "alara" (as low as reasonably
achievable).
Institutionalise resource conservation, in particular, in the areas of oil, water, electrical

energy, paints and chemicals.
Enhance environmental awareness of our employees and dealers / vendors, while

promoting their involvement in ensuring sound environmental management.
Quality Policy
Excellence in quality is the core value of Hero Honda's philosophy.
We are committed at all levels to achieve high quality in whatever we do, particularly in our
products and services which will meet and exceed customer's growing aspirations through:
Innovation in products, processes and services.
Continuous improvement in our total quality management systems.
Teamwork and responsibility.
Safety Policy
Hero Honda is committed to safety and health of its employees and other persons who may be
affected by its operations. We believe that the safe work practices lead to better business
performance, motivated workforce and higher productivity.
We shall create a safety culture in the organization by:
Integrating safety and health matters in all our activities.
Ensuring compliance with all applicable legislative requirements.
27
Empowering employees to ensure safety in their respective work places.
Promoting safety and health awareness amongst employees, suppliers and contractors.
Continuous improvements in safety performance through precautions besides

participation and training of employees.
INTRODUCTION ABOUT PHOENIX DEALER PROFILE (PHOENIX

MOTORS)
PHOENIX MOTORS PVT LTD is dealership type of business. PHOENIX MOTORS PVT
LTD. is established on 21st march 2003. The business is running by only one man. The owner
name is ch .madhumathi the firm is located at habsiguda in Hyderabad.
Generally the sale will be either on cash basis or on institutional basis. Bank like ICICI, HDFC
and CENTURION are providing loans to customers.
Advertising strategy of phoenix motors:
They are giving the ads through newspapers, wall paintings, hoardings and field staff. They are
upgrading sales by introducing the schemes, group bookings, institutional sales and customer
door-to-door activities.
Categorization of Staff members:

Staff members are categorized for technicians, 25 members are allotted for field staff, 5 members
are recruited for sales for persons, 5 persons are placed for evaluating for spare parts, 5 members
are allotted for managerial accounts and another 3 persons for cash transaction and other
members are allotted for remaining work.
28
Customer relationship:
They entertain the showroom providing a customers huge having pool game, internet facility
and television with home there system. They provide bile maintenance programs on every week.
According to other dealers PHOENIX motors in first in sales and best in service. They treat
customer, is the very important person at PHOENIX motors customer satisfaction is their motto,
why because, they will satisfied customer is the best advertisement. They provide better value for
the customers and as well as employees also. At PHOENIX motors the customer is the boss.
SALES STRATEGY OF PHOENIX MOTORS:

Average they are selling 25 vehicles per day. PHOENIX motors PVT L.T.D is the A.P s NO.1
dealership in sales and other activities? It is a QLAD (qualify leader through quality dealer). At
PHOENIX motor they gave the quality service to the customers why because the cost is long
forgotten but the quality is remembered for ever. They treat quality has a...
Q
Quest for excellence
Understanding customers needs
Action to achieve customers appreciation.
Leadership determined to be a leader
involving all the people
Team spirit to work for a common goal
Yard sticks to measure programs.
WARRANTY ON PROPRIETARY ITEMS:

Warranty on proprietary items like Tyros, Tubes and Battery etc, will be directly handled by the
respective original manufactures (OEMs) except AMCO for batteries and Dunlop and Falcon
29
tires and Tubes. In case of any defect in proprietary items, other than the above two mentioned
OEMS the dealers must approach the Brach office dealer of the respective manufacture. For
AMCO batteries and Dunlop and falcon tires, tubes claims will be accepted at our authorized
dealerships per the mutually agreed terms and conditions between HERO HONDA and of these
two OEMs in case the claim is not accepted for invalid reasons. Then the claim along with the
refusal note form the OEM can be sent to the warranty section at gorgon plan after due to
recommendation of the area service engineer. If any other six services or subsequent paid
services is not availed as per the recommended schedule given in the owners manual. If HERO
HONDA recommended engine oil is not used. To normal wear & tear components like bulbs,
electric wiring, filters, spark plug, clutch plates, braded shoes, fasteners, shim washers, oil seals,
gaskets, rubber parts (other than tyre and tube) plastic components, chain$ sprockets and in case
of wheel rim misalignment or bend.
If there is any damage due o modification or fittings of accessories other than ones recommended
by HERO HONDA. If the motor has been used in any competitive events like tracking races or
rallies. If there is any damage to the painted surface due to industrial pollution or other
extraneous factors. For clams made for any consequential damage due to any previous
malfunction. For normal phenomenon like noise, vibration, oil seepage, which do not affect the
performance of the motorcycles.
SOCIAL SERVICE ACTIVITIES
30
PHOENIX motors participate and conduct social service activities. Recently the phoenix motors
organized a BLOOD DONATION CAMP for the trust on 21 st January 2006.they motivated on
the consumers to participated in this camp and also provide certificate for the customers
THE MARKETED BIKES OF PHOENIX (All Hero Moto Corp.)
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32
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CHAPTER-III
REVIEW OF LITARETURE
35
INTRODUCION TO COST & COST CONTROL
The management is efficient if it is able to accomplish the objective of the enterprise. It is

effective when it accomplishes the objectives with minimum effort and cost in order to attain
long-range efficiency and effectiveness management must chat out its course in advance. A
systematic approach to facilitate effective management performance is profit planning and
control or costing. Costing is therefore an integral part of management in a way, a cost control
system has been described as a historical combination of a goal setting machine for increasing
an enterprises profits and a goal achieving machine for facilitating organizational co ordination
and planning while achieving the costed targets.
MEANING OF COST:
It is a financial and quantitative statement, prepared and approved prior to a defined period of
time of policy to be pursued during that period for purpose of attaining a given objective. It may
include income, expenditure and employment capital.
In other words is a pre-determined detailed plan of action developed and distributed as a guide to
current operations and as a partial basis for the subsequent evaluation of performance.
MEANING OF COSTING:
The process of planning all flows of financial resources into within and from an entity during
some specified future period. It includes providing for the detailed allocation of expected
available future resources to projects, functions, responsibilities and time periods.From above
definition it is clear that costing is the actual act of preparing the cost. It is the process of
evolving the final statement. Cost is the end product of costing.
36
MEANING OF COSTORY CONTROL:

It is the process of establishing of departmental costs relating the responsibilities of executives to
the requirements of a policy, and the continuous comparison of actual with costed results, either
to secure by individual action the objectives of the policy a firm basis for its revision.
First of all costs are prepared and then actual results are the comparison of costed and actual
figures will enable the management to find out discrepancies and take remedial measures at a
proper time. The cost control is continuous process, which helps in planning and co ordination. It
provides a method of control too. A cost is a means and cost control is the end result.
In the word of J.A Solt cost control is the system of management control and accounting in
which all operations are forecast and so as possible planned ahead and actual results compared
with the forecast and the planned ones.
ESSENTIALS OF COST CONTROL:

Costing, or the process of preparing the cost, is the starting point for cost controlDistribution of
costs pertaining to each function to all the relevant section within organization.
Collection of actual data pertaining to till costed activities.Continuous comparison of actual
performance with costed performance. Initiation of corrective action to ensure that actual
performance is in line with costed performanceRevision of costed if it is felt that the costs
prepared are no longer relevant on account of unforeseen developments.
37
OBJECTIVES OF COST CONTROL:

The primary objective of cost controls to help the management is systematic planning and in
controlling the operations of the enterprise. The primary objective can be met only of there is
proper communication and coordination amongst different within the organization. Thus the
objectives can be stated as:
1. PLANNING:
Businesses require planning to ensure efficient and maximum use of their resources. The first
step in planning is to define the broad aims and objectives of the business. Then, strategies to
achieve the desired goals are formulated and tentative schedule of eh proposed combinations of
the various factors of production, which is the most profitable for the defined period. Cost
influences strategies that need to be followed by the originations. It cultivates forced planning
aiming managers.
2. CO-ORDINATION:
Co-ordination is managerial functions under which all factors of production and all departmental
activities are balanced and integrated achieve the objectives of the organization. Costing provides
the basis for individual in all department to exchange ides on how best the organizations
objectives can be realized. Executives are forced ot think of the relationship between their
department and the company as a whole. This removes unconscious bases against other
departments. It also helps to identify weaknesses in the organization structure.
3. COMMUNICATIONS:
All people in the organization must know the objectives, policies and performances of the
organizations. They must have a clear understanding of their part in the organizations goals. This
is made possible by ensuring their participation in the costing process.
4. CONTROLS AND PERFORMANCE EVALUTION:

Control ensures control by continuous comparison of actual performance with the costed
performance. Variances are highlighted and corrective action can be initiated. Costs also from
38
the basis of performance evaluation in an organization as they reflect realistic estimates of

acceptable and expected performance.
COST, COSTING AND COST CONTROL:

A cost is BLUE PRINT of a plan expressed in a quantitative terms. Costing is a technique for
formulating costs. Cost control relates to the principles, procedures, and practice of achieving
given objectives thorough costs.
From the above definitions we can differentiated the three terms as costs are the individuals
objectives of a department, etc, where ascosting may be said to be the act of building cost. Cost
control embraces all and in addition includes the science of planning the costs to effect on overall
management tool for the business planning and control.
ESSENTIALS OF COST CONTROL:

The proper organization is essential for the successful preparation, maintenance and
administration of costs. A cost committee is formed which comprises the departmental heads of
various departments. All the functional heads are entrusted with the responsibility if ensuring
proper implementation of their respective departmental costs.
The chief executive is the overall in charge of cost system. He constitutes a cost committee for
preparing realistic costs. A cost officer is the convener of the cost committee who co-ordinates
the costs of different departments. The managers of different departments are made responsible
for their departmental costs.
COST OFFICER:
The chief executive appoints cost officer. Such cost officer also called as cost controller or cost
director. His rank should be equal to other functional managers.
39
The cost officer does not have the direct responsibility of preparing the costs. The various
functional managers prepare the costs. His role is that of a supervisor. The cost officer has the
specific duty of administering the cost. He is responsible for timely completion of costing
activity by various departments and for co-ordination between them so the t there is a proper link
between them. He is empowered to scrutinize the costs prepared by different functional heads
and to make changes in them. If the situation so demands.
The cost officer works as a coordinator among different department. He continuously monitors
the actual performance of different departments. He determines the deviations in the costs and
takes necessary steps to rectify the deficiencies, if any. He also informs the top management
about the performance of different department.
The cost officer will be able to carry out his work only if is conversant with the working of all
the departments he must have technical knowledge of the business and should also possess
accounting knowledge.
3. COST COMMITTEE:
A cost committee is formed to assist the cost officer. The heads of the entire important
departments are made members of this committee. The committee is responsible for preparation
and execution of costs. The members of this committee put up the case of their respective
departments and help the committee to take collective decisions, if necessary. The cost
committee is responsible for reviewing the costs prepared by various functional heads. Co
ordinate all the costs and approve the final costs, the cost officer acts as coordinator of this
committee. All the functional heads are entrusted with the responsibility of ensuring proper of
ensuring proper implementation of their respective final departmental costs.
4. COSTS CENTERS:
A cost centers is that part of the organization for which the cost is prepared. A cost center may be
a department, section of a department or any other part of the department. Ideally, the head of
40
every center should be a member of the cost committee. However, it must be ensured that each
cost center at least has an indirect representation in the cost committee.
The establishment of cost centers is essential for covering all parts of the organization becomes
easy. When different centers are establishment. The cost centers are also necessary for cost
control purposes.
5. COST MANUAL:
a) A cost manual is a document that spells out the duties and responsible of the various
executives concerned it specifies among various functional areas. A cost manual covers
the following matters.
b) A cost manual clearly defines the objectives of cost control system. It also gives the
benefits and principles of this system.
c) The duties and responsibilities of various persons dealing with preparation and exec ton
of costs are also given in a cost manual. It enables the management to know the persons
dealing with various aspects to costs and provides clarity on their duties and
responsibilities,
d) It gives information about the sanctioning authorities of various costs. The financial
powers of different managers are given in the manual for enabling he spending amount
on various expenses.
e) A proper table for costs including the sending of performance reports is drawn so that
every work starts in time and systematic control is exercise.
f) The specimen forms and number of copies to be listed for cost repots is also stated. Cost
involved should be clearly stated.
g) The length of various cost periods and control points is clearly given.
h) The procedure to the followed in the entire system is clearly stated.
i) A method of accounting to be used for various expenditures is also stated in the manual.
The cost manual helps in documentation the role of every employee, his duties, responsibilities
the ways of undertaking various tasks etc. thus it also in reducing ambiguity at any point of time.
41
6. COST PERIOD:
A cost period is the length of time for which a cost is prepared. It depends upon a number of
factors. The choice of a cost period depends upon the following considerations. The types of cost
(long/short)
The nature of demand for the products.
The timings for the availability of the finance.
The economic situations of the cycles.
All the above mentioned factors are taken into account while fixing the period of costs. In this
costing process the financial manager has to take the financial decision on the costs.
The financial manager usually responsible for organizing this cost, he must perform the
following functions.
To decide the general policies and guidelines.
To officer technical advice
To suggest changes
To receive and review individual cost estimates
To reconcile divergent views
To co-ordinate costing activities.
To approve costs with or without revisions.
To scrutinize control reports later on
To scrutinize cost repots later on
To disseminate these guide lines.
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CONTINUOUS COSTING SYSTEM:

A continuous costing system is a method of having two different cost periods with in the same
cost. The purpose of having this system is to have greater control in terms of operational
activities without losing sight is to have greater control in terms of it results in incorporating the
effect of changes in the short term on the long-term targets of the organization.
DETERMINATION OF KEY FACTOR:

The costs are prepared for all functional areas. These costs are interring dependent and interrelated. A proper co-ordination among different costs in necessary for cost control to be
successful. The constraints on some costs may have an effect on other costs too. A factor which
influences all other costs is known as key factor or principal factor.
The key factor may not necessity remain the same. The raw materials supply may be limited at
one time but it may be easily available at another time. Similarly, other factors may also improve
at different times. The key factor highlights are limitations of the enterprise. This will enable the
management to improve the working of these departments where scope for improvement exists.
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REQUISITES FOR A SUCCESSFUL COST

CONTROL SYSTEM
For making a cost control system successful requisites are required.
1. CLARIFYING OBJECTIVES:
The costs are used to realize objectives of the business. The objective must be clearly spelt out to
that costs are properly prepared. In the absence of clear goals, the costs will also be unrealistic.
2. PROPER DELEGATION OF AUTHORITY AND RESPONSIBILITY:
Cost preparation and control is done are every level of management. Even though costs are
finalized at top level but involvement of persons from lower levels of management is essential
for their success. This necessitates proper delegation of authority and responsibility.
3. PROPER COMMUNICATION SYSTEM:

An effective system of communication is required for a successful cost control. The flow of
information regarding costs should be quick so that these are implemented. The upward
communication will help in knowing the difficulties in implementation of costs. The
performance reports of various levels will help top management in cost control.
4. COST EDUCATION:
The employees should be educated about the benefit of costing system. They should be the
benefits of costing system they should be educating about their roles in the success of this
system. Cost control may not be taken only as a control device by the employees but it should be
used as a tool to improve their efficiency.
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5. FLEXIBILITY:
Flexibility in costs is required to make them suitable under changed circumstances. Costs are
prepared for the future, which is always uncertain, even though costs are prepared by considering
the future possibilities but still some adjustment. Flexibility makes the costs more appropriate
and realistic.
6. MOTIVATION:
Costs are to be implemented by human beings. Their successful implementation will depend
upon the interest shown by the employees. All persons should be motivated to improve their
working so that costing is successful. A proper system of motivation should be introduced for
making this system a success.
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TYPES OF COSTS:
LONGTERM
COST
INTERI
M
COSTS
TYPES
OF
COST
S
SHORTTERM
COST
CURRE
NT
COST
1. LONG -TERM COSTS:
The long-term costs prepared for a long period of five to ten years. They are concerned with
planning the operations of a firm over a considerably long period of time. The financial
controller exclusively for the top management usually prepares long-term costs. These costs
are very useful in terms of physical units (i.e. quantities) or percentages, since accrued values
46
may be difficult to forecast over such long-period. Capital expenditure, research and
development costs, etc, are examples of long-term costs.
2. SHORT TERM COSTS:

Short-term costs are costs prepared for a short period of one to two year. They are prepared for
those activities the trend in which cannot be for seen easily over long periods. These costs are
very useful in case of consumer goods industries such as sugar, cotton, textiles, etc. they are
generally prepared in terms of physical units (i.e. quantities) as well as monetary units (i.e.
values) materials cost. Each costetc, are example of short-term cost. They are useful to lower
level of management for control purpose.
3. CURRENT COSTS:
Current cost is a cost, which is established for use over a short period of time and is related to
current conditions. Thus current costs are essentially short term costs adjusted to current (i.e.,
present or prevailing) condition or circumstances. They are prepared for a very short period. Say,
a quarter or a month. They related to current activities of the costs.
4. INTERIM COSTS:
Interim costs are costs, which are prepared in between two cost periods. These costs may get
integrated with the cost of the following period.
CLASSIFICATION OF COSTS ACCORDING TO CONTENT:

Costs may be classified into costs in physical terms and into costs in monetary terms.
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A) COSTS IN PHYSICAL TERMS:

Costs in physical terms are cost in terms quantities only. They do not include corresponding
rupee value. Long-term costs are usually prepared in physical terms. Examples of such costs are
production costs, material cost etc
B) COSTS IN MONETARY TERMS:

Costs in monetary terms are costs that cost in terms of quantities as well as their corresponding
rupee value, sales cost, purchase cost, etc are example of such costs. Costs such as cash cost,
capital expenditure cost, etc that may not have physical quantities also from part of costs in
monetary terms.
CLASSIFICATION OF COSTS ACCORDING TO FUNCTION:

Costs can be classified into:
1. operating costs
2. financial costs
3. master costs
1) OPERATING COST:
These costs relate to different activities or operations of a firm. The number of such costs
depends upon the size and nature of the business, the commonly used operating costs are:
1) Sales costs
2) Purchase costs
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3) Raw material costs

4) Labor costs
5) Factory utilization cost
6) Manufacturing expenses or works overhead cost
7) Administrative and selling expenses cost etc.
The operating cost for a firm may be constructed in terms of programmers or responsibility
areas, and hence may consist of:
Programmed cost
Responsibility cost
A) PROGRAMME COST:
It consists of expected revenues and costs of various products or projects that are Termed as the
major programmers of the firm, such a cost can be prepared for each product line or project
showing revenues, cost and the relative profitability of the various in locating areas where efforts
may be required to reduce costs and increase revenues. They are also useful in determining
imbalance and inadequacies in programmers so that corrective action may be taken in future.
B) RESPONSIBILITY COSTS:
Where the operating cost of a firm is constructed in terms of responsibility
Areas, such a cost show the plan in terms of persons responsible for achieving them. It is used by
the management as a control them. It is used by the management as a control device to evaluate
the performance of executives who are in charge of various cost centers. Their performance is
compared to the targets (costs), set for them and proper action is taken for adverse results.
Responsibility areas may be classified under three broad categories:
Cost /expense center
Profit center
Investment center
2) FINANACIAL COSTS:
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Financial costs are concerned with cash receipts and disbursements, working Capital, financial
position and results of business operations. The commonly used financial costs include cash cost,
working capital cost and income statement cost, statement of retained earnings cost, costed
balance sheet or position statement cost.
3) MASTER COSTS:
The master cost is the summary cost incorporating its functional costs. All The operational and
financial costs are integrated into the master cost. The cost officer for the benefit of the top level
management prepares this cost. This cost is used to coordinate the activities of various functional
departments. It is also used as an effective control device.
CLASSIFICATION ON THE BASIS OF FLEXIBILITY:

A) FIXED COST:
According to ICMA London a fixed cost is a cost which is designed to
Remain unchanged irrespective of the level of activity actually attained it is based on a fixed
volume of activity and shows one volume of output and related cost. It is not adjusted according
to the actual level of activity attained.
A fixed cost is useful only when the actual level of activity corresponds with the costed level of
activity. But this generally does not happen as such a fixed costs is not useful for managerial
purposes.
B) FLEXIBILE VARIABLE SLIDING SCALE OR CONTROL TYPECOSTS:
According to ICMA London a flexible cost is a cost which is designed to Change in accordance
with the level of activity actually attained. Thus a flexible cost changes according to the change
in the level of activity. In other words it provides the costed costs at any level of activity.Business
activity cannot be accurately predicted on account of uncertainties of Businessenvironment. A
flexible cost contains several estimates for different assumed circumstances instead of just one
50
estimate, it provides for automatic adjustments with changes in the volume of activity. Hence, a
situations operating in an unpredictable environment.
Cost Output and Relationship:

Short run cost curve is divided into total fixed cost and total variable cost. So, we can indicate it
as:
TC = TFC+TVC
TC = Total Cost
TFC = Total Fixed Cost
TVC = Total Variable Cost
TVC is known as the total variable cost which changes directly with the change in output. It
refers cost of labour, raw material, power etc.
We can show it in a figure:
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Total Fixed Cost Curve

There is another diagram which will show the curve of Total Variable Cost:
Total Variable Cost Curve

We can show the diagram to put all the curves also:
52
The TC, TVC and TFC Curves

At last, we can say that costs are very important in decision making because though all the units
are sold in the same price but the cost of production of these units are not same. Marginal cost
and incremental cost are relevant in decision making whereas sunk cost are irrelevant.
COST AND COST SYSTEM IN Hero MotoCorp Ltd

The costing process is used in the performance costing for the construction of phase. Which
includes pre-commission activities. Besides meeting the essential requirements of managerial
control. The costing exercise also covers the long-term capital costing, which is presented in the
form of annual plan.
OBJECTIVES OF THE COST SYSTEM:

To prepare annual costs in such a manner those managers at various levels in the
organization carry out periodical exercise in respect of each contact or responsibility
center for physical planning and matching resources broke up into monthly targets or
cash flows.
To introduce and operate responsible for achievement of specified targets with the
resources allocated for the purpose.
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To bring about effective co-ordination of all activities of the organization of all activities
of the organization and to gear up service divisions to meet effectively the requirement of
projects.
COST PERIOD AND PHASING:

The cost period or annual costs should correspond with the financial year. The cost should be
drawn up for the ensuring financial year in the form of cost estimates financial year in the form
of Revised Estimates (R.E) in addition, the cost are to be reviewed on monthly basis by project
review teams, in the light of actual expenditure and projections in the cost period. Costs should
indicate monthly phasing of expenditure and targets for the first and quarterly phasing for the
second half of the year. At the time of review of the cost estimates to frame revised estimates the
quarterly phasing should be broken up into monthly phasing.
While drawing up the actual cost in October every year, the long-term capital cost for ongoing
and new schemes should be formulated as a part of the exercise for preparation of Annual plan.
The long term capital cost should indicate for a period of six years following the cost period
project wise annual phasing of the capital expenditure and physical schedules resource based
network.
COST HEADS:
For uniform accounting, it is essential that costs are collected for each system of the factory
tough this may involve splitting up of payments against contracts which embrace more than one
system. Allocation of the cost as system wise affords a sound basis for cost accounting, inter-firm
comparisons and provides valuable inputs to data bank. Cost provisions are related to project
estimated and monitoring of actual expenditure where as control cables for part control and
instrumentation system.Factory piping which include pipelines, for ash water mains, compressed
air system and civil works piping.
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Auxiliary pumps for water treatment plant and civil works system. If there are, any contracts not
covered in the cost heads provision for such contracts should be shown against the appropriate
system head by adding code number.
5 TYPES OF COSTS IN HERO MOTOCORP LTD (HMIL):

According to the nature expenditure cost are classified as under
Direct capital outlay on works
Technical consultancy
Incident expenditure during construction
Employee cost
Other establishment expenses:

Training and recruitment
Preliminary expenses
Misc. brought-out assets
Township cost
BRIEF
EXPLANATION
TO
THE
NATURE
OF
EXPENDITURE
INCLUDED IN EACH COST INDICATED BELOW:

These comprises of salaries, wages, allowance, contribution to PF and other funds and welfare
expenses such as LIC, Medical reimbursement, canteen subsidy etc., and provision for areas of
salary/D.A.
OFFICE AND OTHER EXPENSES:

Expenses incidental to construction and capital works not traceable directly to incidental
expenditure, during contribution equipments, vehicle running expense, office rent. Cost of
drawings, traveling expenses, printing & stationery, communication expenses, advertisement for
tenders etc., are major items in this category.
55
TRIANING
RECRUITMENT
&
OTHER
DEFFERED
REVENUE
EXPENDITURE:
The first part of the cost consist of expenses for training executives, and non-executive trainees,
rent for training halls and expenses for management development courses. The second part
consists of expenses for recruitment such as advertisement for recruitment, interview expenses
for to candidate etc., the third part combines preliminary expenses including share registration
lees and research and development expenses.
MISCELLANEOUS BOUGHT OUT PASSESS:

Vehicles, furniture and fixtures equipments, hospital and medical equipment, miscellaneous
assesses town ship figure in this cost.
REVIEW OF PROJECT COST:

MONTHLY REVIEW:
At monthly intervals, the costs should be reviewed by project review committee (PRC). Project
cost should report actual expenditure against cost heads. Works heads and corporate cost by the
7th of the month following the reporting month. The monthly review should be examined by
project review team (PRT), who should record reasons for any aviations and action proposed for
expending works in the minutes of the meetings reasons for any variations in the case of cost
heads exceeding 10% of the cost estimates revised estimates or whichever is lower Rs.5 lakhs
should be analyzed and reported upon.
QUATERLY REVIEW:
56
PRT should conduct a quarterly cost review with a view to projecting anticipated expenditure
during the year against approved cost estimates/ revised estimates. As time is essence of such
review, only a quick estimate of anticipated expenditure for individual cost heads involving
provisions exceeding for individual cost heads involving provisions exceeding Rs 50 lakhs in
each case should be made and reported upon in minutes of PRT. For this purpose, project cost
should furnish all the relevant data to general manager (project) and planning and systems by the
10th of the month following the quarter project cost committee should review the actual
expenditure and assess anticipated expenditure contract co ordination/engineers in charge the
assessments of anticipated expenditure should be furnished by the project cost committee to
general manager (project) by the 30th of the month following the quarter under review.
COST OF SERVICE DIVISION / CORPORATE COSTS:

A review of costs of service and corporate divisions should be conducted at quarterly intervals by
corporate cost committee (CSC). for this purpose, corporate accounts should report actual
expenditure up to the end of the quarter by the 10 th of the month following quarter to corporate
cost and cost co-ordination of the remaining period of the year should be sent to corporate cost
should be sent to corporate cost should put up a consolidated report division wise and project
wise to corporate cost committee (CBC) by the 15th of the may, August, November and February
every year.
OBJECTIVES OF THE CURRENT COST CONTROL SYSTEM IN

Hero MotoCorp Ltd.
In current to corporate cost control system operating phase has been compiled to achieve the
following objectives.
57
To control actual performance with reference to standards / norms adopted in the cost,
ascertain the deviations analyze and establish the reasons.
To identify constraints in generation and tamely action for estimation of constraints.
To monitor the generation of internal resources so as to ensure availability of adequate
funds.
To prepare revenue cost so as to forecasting the periodical profitability of the
organization.
To develop standards / norms of performance in the various areas of operation and
maintenance based on the experience.
To involve managers at various in the process of developing performance cost so as to
introduce the concept of responsibility accounting and participate management.
To ensure effective co-ordinate planning of all activities so the all the inputs and services
necessary for achieving the physical targets are available at appropriate time.
To create cost consciousness among the managers responsible for decision making.
To provide data regarding operational norms and costs for the purpose of formulating
tariff.
SCOPE OF THE PERFORMANCE COST:

The cost for operation and maintenance activities will be called performance cost operation.
This, in effect means that all financial targets in the cost will be based on performance targets in
physical terms.
The current cost control system operation phase envisages generation and transmission line
projects as independents investment centers. It becomes applicable to a project in the year in
which it plans to commercialize its first generation unit. However, the costing for expenses (net
of revenue) from the date of synchronization to the date of commercial generation (i.e. during
trail run) is to be taken case of in the capital cost of the respective project. Similarly, in the case
of transmission line project, the system becomes applicable from the year in the date commercial
58
generation of the first unit of generating project, with which this line is associated, whichever is
later. For subsequent lines, the O & M will be prepared from the energisation.
The sum totals of costs of the cost centers will be the cost for the investment center. However,
the cost for the profit center will be worked out by apportioning the revenue and cost of various
cost centers to individuals profits centers bases on specified norms.
The performance cost operation will consists of following costs along with the supporting
schedules
A. Cost balance sheet
B. Cost profit and loss account
C. Revenue cost
In addition, separate costs for revenue activities other than operation for research and
development consultancy contracts etc.
The expenses in respect of developmental expenditure for improvements, additions,
replaautomobile, renewals, balancing facilities etc., are of capital nature and will be costed for in
the construction cost of cost control system construction phase.
To facilitate management control the system also envisages, phasing of these costs into
monthly/quarterly targets. The actual performance then will be reasons for variations will be
analyzed and established for taking corrective remedial actions. The scope also includes
projections of internal resources for a period ranging from 5 to 15 years and updating of 5years
plan as well as perspective plan of the company.
STAGES IN THE FORMULATION OF PERFORMANCE COST:

The system provides for a two stages formulation for performance cost-operation the stages
are given below.
INITIAL PROPOSAL:
59
In the initial proposal, the project is required to indicate yearly targets. In he addition, to
furnishing basic information like synchronization and commercial generation dates
Constraints on coal operation at less than the designed specification, calorific value of raw
material and lime stone, material consumption in physical terms for items whose consumption
value in Rs.5 lakhs or more, planned shut down for a maintenance and overhauling and norm for
various operation parameters provided for design specification and in the tariff agreements to the
corporate cost committee.
In the initial proposals is planned to be submitted after considering these factors and keeping in
view the perspective plan of the organization, fixes as well as norms for various operating
parameters. These targets and norms are then communicated to all stations and transmissions line
offices in the last week of July to be used for formulating detailed cost in the firm of final
proposal.
FINAL PROPOSAL:
Costed balance sheet, costed profit & loss account and costs in the form of cash cost along with
the proposal will consist of detailed supporting schedules for each of the investment center / cost
center. This final proposal needs to be submitted to corporate center with in 3 weeks of receiving
approval for initial proposal.
The final proposal, after approval by board, will become the basis of monitoring performance for
cost centers and investment centers.
The frequency and extent review and monitoring will be done is under:
i.
The monitoring of actual performance against costed targets for investment center / profit
center on monthly basis and for cost centers on quarterly for remedial / corrective actions.
ii.
The review of performance cost on quarterly basis to assess the anticipated profitability.
The first step in the preparation of performance cost, O & M is formulation of maintenance and
overhauling schedules for Boiler and to which generation, then considering the grid demand, the
availability or inputs and factory problems.
NEXT GENERATION:
60
The sales value will be determined from quantum of net generation (i.e. gross generation aux.
Consumption)
AUXILIARY CONSUMPTION / CONSUMPTION BY UTILITES:

The automobile consumption by each of the cost centers for individuals unit auxiliaries, station
auxiliaries as well as transformer losses are to be estimated separately based on designed
specifications and added in order to workout total auxiliary consumption rather than fixing a
overall percentage. Similarly consumption by utilities will also need to be indicated by
concerned cost centers / departments like township and construction department. This will be
valued at cost net generation to arrive at the sales values for owns consumptions.
CHEMICAL CONSUMPTION:
The chemical are used by many cost centers for treatment of water. The consumption of
chemicals will be correlated with volume of water treated and certain norms will have to be
developed for different type of chemicals and different types of treatment.Based on these norms,
each of the cost centers will indicate consumption of chemical in quantitative as well as financial
terms. The cost center wise requirement will be consolidated to arrive at total chemicals
consumption to be charged to profit and loss account. The valuation of chemical will be done at
current prices only.
EMPLOYEE COST:
The basis employee cost will be approved manpower cost effective for respective years of cost
period. The estimation of employee cost is to be done for each grade considering mid-point of
the scale as basis pay and after adding various allowance like D.A., H.R.A., C.C.A project
allowance etc., as admissible in respective grades. This is to be worked 49 out or each of the cost
period based on existing strength (at the time of estimation) in each grade and additions during
each quarter (taking 70% satisfaction for additions).
The provisions for LTC, medical reimbursement, PF and other welfare expenses are to be made
based on trend of expenses in previous years and taking into account polices changes, if any. The
61
details of welfare expenses like liveries and uniforms, safety expenses, accident compensation,
games & sports, canteen subsidy etc., are to list out as per chart of account. The provisions for
incentive, bonus and payments of one time nature are to be shown separately based on total
employee cost for executives, supervisors and non-supervisors and total man power in these
categories, separate rates of cost per employee will be worked out for each of these categories as
under.
1. Salaries and allowance
2. Contribution to PF and other funds
3. Welfare expenses
The cost center of employee cost will be worked out based on these rates separately for
executives, supervisors and non-supervisors. This will again be consolidated separately for
operations. Maintenance and common service function. The employee cost of common function
will be appropriated between construction and O & M costs in the ratio of capital expenditure
and sales during the respective years.
REPAIRS & MAINTANANCE:

In line, with costing system following three activities can represent major classification of repairs
and maintenance.
1. Major overhaul
2. Preventive maintenance
3. Break down maintenance
Normally costing will be done for the former two: under each activity separate estimates will be
prepared for consumption of materials and maintenance jobs. This estimation will be done at
each of the sub cost center wise details are required to be mentioned.
The consumption material for repairs and maintenance will be classified into spares, lubricants,
loose tools and plants, consumables and others.
62
The cost center wise total separately for three activities will be added to arrive at summary of
material consumption and maintenance jobs, which will be reflected in the profit & loss account.
The material consumption especially of spares can be estimated based on the expected life of
various consumption / spears in the installed equipment the frequency of breakdowns in the past
and the requirement for prevented maintenance and major overhauls. The actual life of
components may be different from that indicated in the manufacturers specification. Therefore,
it is very difficult t estimate requirements of spares. But this new station it will be advisable to
collect such information from old stations that have gained experience in this field.
Normally maintenance of equipment through contractors should be avoided. But in certain areas,
if the expertise and in house capability or sufficient man power is not available, maintenance
jobs can be got done through contractors. Such contracts will need to be listed out separately. If
any owner supply items are covered in such contracts the cost of these items will be included in
the material cost.
FACTORY & GENERAL OVERHEADS:

All the items of expenditures under this head will be estimated based on past trend with due
adjustment for policy changes. The estimates will be given by cost center needs for items
identified with respective cost centers. The total administrative cost of service cost centers will
be allocated between construction and O & M in the ration of capital expenditure and sales
during the respective years.
DEPRECIATION:
This is to be charged as per ES act from the year following the year in which assets have been
capitalized. This will be done separately by each of the cost centers on the basis of capitalized
value and rates of depreciation furnished by site finance and account for different categories of
assets. Cost center-wise depreciation will be added at total depreciation for the investment center.
63
INTEREST ON FIXED CAPITAL:

As per existing accounting policy, the interest is to be charged to profit & loss account based on
the loan content in the capitalized assets restricted to total accrued interest on the actual loans.
For costing purposes, interest will be worked on equated loan content or equated loan which ever
is less.
EQUATED LOAN CONTENT:

Equated loan content is to taken as 50% if total capital cost and adjusted for number of operating
months in respective years. In case of both generating factory and transmission lines with
associated factory, the cost for each profit center will be taker as per actual or anticipated capital
cost.The equated loan content is to be individual units transmission lines separately for each of
the phases / stages. The total capital cost will be taken as proposed in the performance cost
construction.
CHAPTER-IV
64
DATA ANALYSIS AND INTERPRETATION
HERO MOTOCORP LTD

TABLE-I
SL.N
O
PARTICULAR
(Rs in corers)
Coasted estimated
for the 2014-15
Actual for the year

2014-15
Sales
Fixed cost recovery
724
65
72.4
618
61.8
Variable cost recovery
840
84.0
740
74.0
Fuel price adjustment recovery
820
82.0
863
86.3
Own consumption
132
13.2
148
14.8
Total of 1
2516
251.6
2369
236.9
Average intensives
102
10.2
98
9.8
Other income
56
5.6
49
4.9
2674
267.4
2516
251.6
GRAND TOTAL (1+2+3)
INTERPRETATION
The data pertaining to the generation and consumption havebeen obtained from the year 2014-15
and represented in table -1. The aspect included are total generation in (croresRs) and utilization
for auxiliary consumption respectively.
During the year 2014-15 the sales, fixed costs, variable cost , own Consumption was decreased.
When the estimated costed so sales consumption is 267% respectively.
During the year 2014-15 the average intensive are decreased 9.8% the other Income also
decreased 7% respectively.
66
Finally with regard to the result in revenue cost of HERO MOTOCORP LTD
totally decreased 251.6% in the year 2014-15 respectively.
HERO MOTOCORP LTD

TABLE-II
SL.N
O
PARTICULAR
(Rs in corers)
Costed estimated
for the 2013-14
Actual for the year

2013-14
Sales
Fixed cost recovery
702
70.2
598
59.8
802
80.2
680
68.0
67
adjustment recovery
790
79.0
852
85.2
Own consumption
121
12.1
122
12.2
Total of 1
2398
239.8
2168
216.8
Average intensives
96
9.6
84
8.4
Other income
51
5.1
40
4.0
2545
254.5
2292
229.2
GRAND TOTAL (1+2+3)
INTERPRETATION
The data pertaining to the generation and consumption have been obtained from the year 201314 and represented in table -2. The aspect included are total generation in (croresRs) and
utilization for auxiliary consumption respectively.
During the year 2013-14 the sales, fixed costs, variable cost,own Consumption was decreased.
When the estimated costed so sales consumption is 254.5% respectively.
During the year 2013-14 the average intensive are decreased 13% the other Income also
decreased11% respectively.
68
HERO MOTOCORP LTD

TABLE-III
SL.N
O
PARTICULAR
Costed estimated
for the 2012-13
Sales
Fixed cost recovery
(Rs in corers)
Actual for the year

2012-13
%
657
69
%
65.7
565
56.5
762
76.2
563
56.3
adjustment recovery
750
75.0
798
79.8
Own consumption
121
12.1
102
10.2
Total of 1
2290
229.0
2028
202.8
Average intensives
89
8.9
84
8.4
Other income
51
5.1
40
4.0
2430
243.0
2152
215.2
GRAND TOTAL (1+2+3)
INTERPRETATION
70
HERO MOTOCORP LTD

TABLE-IV
SL.N
O
PARTICULAR
Costed estimated
for the 2011-12
Sales
71
(Rs in corers)
Actual for the year

2011-12
Fixed cost recovery
680
68.0
569
56.9
789
78.9
623
62.3
adjustment recovery
695
69.5
812
81.2
Own consumption
121
12.1
122
12.2
Total of 1
2285
228.5
2126
212.6
Average intensives
96
9.6
84
8.4
Other income
51
5.1
40
4.0
2432
243.2
2250
225.0
GRAND TOTAL (1+2+3)
INTERPRETATION
72
HERO MOTOCORP LTD

Operational Expenditure Cost for the Year 2014-15
TABLE I
Rs in corers
73
SL.
NO
1
2
3
PARTICULAR
VARIABLE COST
OPERATIVE
COSTED ESTIMATED
FOR THE 2014-15
ACTUAL FOR THE

YEAR
AMOUNT
RS/MT
AMOUNT
897
89.7
856
2014-15
S/MT
85.6
254
25.4
215
21.5
Deprecation
42
4.2
15
1.5
Interest on fixed capital
18
1.8
20
2.0
Total of 3
60
6.0
35
3.5
1211
121.1
1106
110.6
MAINTENANCE COST
FINANCE CHARGES
GRAND TOTAL (1+2+3)
INTERPRETATION
Observed from the above table that the operational expenditure cost of Hero MotoCorp Ltd in
the year 2014-15.Maintenance, employee cost, stationary & general expenses, rebate and share
of other expenses is all are fluctuating with the expenses of the year 2014-15. However the total
operating maintenance costs are 25.4% decreasing respectively.
In finance charges depreciation and interest on fixed capital, has been included
The total finance charges recording decreasing of 9.5% in the year 2014-15 respectively.
The overall costs results of Hero MotoCorp Ltdare earning more profits.
HERO MOTOCORP LTD

TABLE II
Rs in corers
74
SL.
NO
1
2
3
PARTICULAR
VARIABLE COST
OPERATIVE
COSTED ESTIMATED
FOR THE 2014-15
ACTUAL FOR THE

YEAR
AMOUNT
RS/MT
AMOUNT
841
84.1
822
2014-15
S/MT
82.2
247
24.7
201
20.1
Deprecation
39
3.9
12
1.2
15
1.5
18
1.8
Total of 3
54
5.4
30
3.0
1142
114.2
1053
105.3
MAINTENANCE COST
FINANCE CHARGES
GRAND TOTAL (1+2+3)
INTERPRETATION
The total finance charges recording decreasing of 2.4% in the year 2013-14respectively.
HERO MOTOCORP LTD

TABLE III
Rs in corers
75
SL.
NO
1
2
3
PARTICULAR
VARIABLE COST
OPERATIVE
COSTED ESTIMATED
FOR THE 2013-14
ACTUAL FOR THE

YEAR
AMOUNT
RS/MT
AMOUNT
811
81.1
798
2013-14
S/MT
79.8
214
21.4
157
15.7
Deprecation
36
3.6
11
1.1
15
1.5
18
1.8
Total of 3
51
5.1
29
2.9
1076
107.6
984
98.4
MAINTENANCE COST
FINANCE CHARGES
GRAND TOTAL (1+2+3)
INTERPRETATION
HERO MOTOCORP LTD

TABLE IV
Rs in corers
76
SL.
NO
1
2
3
PARTICULAR
VARIABLE COST
OPERATIVE
COSTED ESTIMATED
FOR THE 2014-15
ACTUAL FOR THE

YEAR
AMOUNT
RS/MT
AMOUNT
754
75.4
658
2014-15
S/MT
65.8
198
19.8
135
13.5
Deprecation
29
2.9
0.9
15
1.5
18
1.8
Total of 3
44
4.4
27
2.7
GRAND TOTAL (1+2+3)
996
99.6
820
82.0
MAINTENANCE COST
FINANCE CHARGES
INTERPRETATION
Observed from the above table that the operational expenditure cost ofHero MotoCorp Ltd in
77
CHAPTER-V
FINDINGS & CONCLUSIONS

SUGGESTIONS
BIBLIOGRAPHY
FINDINGS & CONCLUSIONS

Every organization has pre-determined set of objectives and goals, but reaching those objectives
and goals only by proper planning and executing of the plans economically.
78
The Hero MotoCorp Ltdis objectives of planning promoting and organizing an integrated
development of cement Company.
The corporation mission of Hero MotoCorp Ltdis to make available and quality service in
increasingly large quantities, the company will spear head the process of accelerated
development of banking sector by expeditiously.
The organization needs the capable personalities as management to lead the organization
successfully, the management makes the plans and implement of these plans are expressed in
terms of cost and cost control.
The Hero MotoCorp Ltdhas cost process in two stages. One is the capital expenditure cost and
another is operating maintenance cost, the capital expenditure cost shows the list of capital
projects selected for investment along with their estimated cost, operating & maintenance cost
refers to the repairs & maintenance costs, the special costs are rarely used in the organization like
long-term costs, research & development cost and cost for consultancy.
It Is to make available and quality work efficient resources and implementation of sophisticated
technology and cement generation and also creating ambience of collective working of its
employees.
SUGGESTIONS
Planning has become the primary function of management most of the planning relates to
individual and individual proposals. Costs are nothing but his expressions, largely in financial
79
terms, cost control has, therefore become and essential tool of management for controlling and
maximizing profits.
The company objectives of the organization and how they can be achieved through cost
control
Time tables for all stages of costing follow
Reports, statements, forms and other record to be maintained
Continuous comparison of actual performance with coasted performance.
BIBLIOGRAPHY
FINANCIAL ACCOUNTING
RP TRIVEDI
80
FINANCIAL MANAGEMENT
I.M. PANDEY
ANNUAL REPORT OF HERO MOTOCORP LTD

FUNDAMENTAL OF FINANCIAL MANAGEMENT
PRASANNA CHANDRA
DETAILED PROJECT REPORT OF Hero MotoCorp Ltd
www.google.com
www.hero.com
www.costcontrolinindia.com
www.yahoofinance.com
81

Cost Analysis Hero

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Cost Analysis Hero

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CHAPTER-I

Definition of 'Cost-Benefit Analysis'

NEED OF THE STUDY:

SCOPE OF THE STUDY:

Form the concerned officers of the Hero MotoCorp Ltd

Hero MotoCorp Ltd journals.

Accounting books, records.

Key books of concerned title.

Hero MotoCorp Ltd library.

Tool which increase effectiveness of managerial control.

Automobile industry in India

HISTORY OF THE TWO WHEELERS:

INVENTION OF TWO WHEELERS:

HISTORICAL INDUSTRY DEVELOPMENTS:

HERO HONDA'S MISSION

HERO HONDA'S MANDATE

Name of the Directors

Chairman & Whole-time Director

Managing Director & C.E.O.

Mr. Toshiaki Nakagawa

Joint Managing Director

Mr. Sumihisa Fukuda

Mr. Sunil Kant Munjal

Mr. Suman Kant Munjal

Mr. Takashi Nagai

Mr. Yuji Shiga

Non-executive & Independent Director

Gen. (Retd.) V. P. Malik

Non-executive & Independent Director

Mr. Analjit Singh

Non-executive & Independent Director

Dr. Pritam Singh

Non-executive & Independent Director

Non-executive & Independent Director

Non-executive & Independent Director

Mr. Ravi Nath

Non-executive & Independent Director

Dr. Anand C. Burman

Non-executive & Independent Director

BRIEF PROFILE OF DIRECTORS

MR. BRIJMOHAN LALL MUNJAL

Hero Honda Motors Limited

Chairman and Whole-time Director

Hero Honda Finlease Limited

Chairman and Director

Munjal Showa Limited

Chairman and Director

Easy Bill Limited

Rockman Industries Limited

KEY MILESTONES OF HERO HONDA

1998 2,000,000th motorcycle produced

Total sales crossed a record of 10 million motorcycles

New motorcycle model 'Karizma - ZMR' launched

New model Splendor Pro launched

New licensing arrangement signed between Hero and Honda

Two-wheeler Manufacturer of the Year

CnB Viewers' Choice Two-wheeler of the Year (Karizma ZMR)

Bradstreet-Rolta Corporate Awards

No.1 executive motorcycle Splendor NXG

No.1 standard motorcycle CD Deluxe

No. premium motorcycle CBZ Xtreme

Overall "Bike of the Year" - CBZ X-treme