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: the gun for the year 2002-03. Says vice-president Ravi Sud, "We are confident of maintaining the 2001-02 operating margin levels in 2002-03."

Hero Honda has also been a cash-rich company and its free cash flows from operation have grown by 51.8 per cent (CAGR) over the past five years.

In spite of a doubling of equity over the last five years, the return on capital employed and earning per share has improved. Hero Honda’s earning per share has shot up from Rs 2.5 per share to Rs 12.40 (adjusted for 5:1 split in face value of Rs 10).

The fourth quarter profit after tax is expected to be around the third quarter figure of Rs 133 crore. That would mean a PAT of around Rs 440-450 crore for the full year ended March 2002, yielding an earnings per share of around Rs 22 per share.

The company has consistently met consumer expectations by introducing newer and efficient products. There has been a steady fall in the long-term debt to equity ratio for the company and over the past five years, the debt has dropped consistently and the ratio has dropped from 0.6:1 to almost 0:1.

As a result, profit before interest to interest ratio has improved from 9.5 times to over 156 times. It may not be possible to maintain the current growth rates with increased competition from existing players and expected entry of high technology companies (like its own joint venture partner Honda as an independent player).