ATLAS CYCLE INDUSTRIES
INTRODUCTION:
Atlas Cycles (Haryana) Ltd. previously known as Atlas Cycle Industries (ACIL) started with
the manufacture of bicycle saddles in 1951 and produced its first bicycle in 1952. From a
modest beginning of 120 cycles per day the company has come a long way to become India's
second-largest cycle manufacturer.
HISTORY:
It has units at Sonepat Sahibabad Rasoi and Gurgaon all in Haryana. Its combined
manufacturing capacity stands at a hefty 3.1 million cycles per annum. It emerged as the largest
exporter of bicycles from India. New export markets like Myanmar and South Africa were
explored in 1994-95. It has been exporting components bicycles and mopeds besides tapping
the fitness equipment market overseas. Its ISO-9002 certification is expected to boost exports.
The steel tube manufacturing facility at Gurgaon was expanded from 25000 tpa to 50000 tpa.
The expansion was funded by a rights issue of NCDs in Nov.'94. This backward integration
helped Atlas stem the profit erosion due to rising costs.It continued its backward integration by
setting up a 10000 tpa cold-rolled (CR) steel project (cost : Rs 14 cr) at Sonepat housed at the
site used previously by its moped unit. The company has developed and implemented a
sophisticated frame alignment checking and correcting fixture by employing hydraulic
clamping electronic sensing and display capable of reading errors upto 0.1 mm. A new design
for a rowing machine and a bicycle with front telescopic suspension have been developed.
Their prototypes are being tested. The company has awarded its shareholders six bonus issues
between 1966 and 1994. During 1995-96 new TANGO range of fancy bikes covering SLR's
CTB's ATB's & MTB's has been developed. Company has newly introduced `Laser' series of
bicycles. The paint application plant has been commissioned.
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BALANCE SHEET:
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PROFIT AND LOSS:
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CAPITAL STRUCTURE OF INFOSYS:
CAPITAL STRUCTURE: (DEBT & EQUITY)
Source of fund 2017-2018 2018-2019 2019-2020
Amt % Amt % Amt %
Dept 50.81 83.9 60.11 86.10 9.00 47.84
Equity 9.7 16.1 9.7 13.89 9.7 51.56
Total 60.51 100% 69.81 100% 18.81 100%
INTERPRETATION:
1. In year 2020 debt 48% and equity 52% but in 2019 debt 86% and equity 14% it shows
the company entered into the cheapest source of finance.
2. Because debt is the cheapest source of finance when compared to equity.
3. In year 2020 debt is less than equity so it was conservative. In year 2021 debt is higher
than the equity so it was conservative. In year 2020 debt is higher than the equity so
it was conservative.
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EBIT AND EPS ANALYSIS:
2017-2018 2018-2019 2019-2020
Total Income 652.21 530.84 197.24
Retained Earnings 90.42 44.60 51.62
EBIT 2.31 -52.2 -2.48
EPS -2.47 -70.44 4.80
INTERPRETATION:
Total income:
1. Total income of Atlas Cycles in year 2018-652.21, in year 2019-530.84, and in year
2020-197.24(in cr)
2. Here total income was increased on year2018 and the decreased in yr2020.
3. By seeing of total income it’s not good company.
Retained earnings:
1. Retained earnings of Atlas Cycles in the year 2018 – 90.42, in yr 2019 – 44.60 and in
year 2020 – 51.62 (in cr).
2. Here the retained earning was decreased year by year it is not a good one from the
firm
EPS:
1. EPS was increased year by year because retained earning decreased it is not good for
an organization.
2. This company have both debt and equity therefore it have leverage like financial,
operating and combined leverage.
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FORMULAE FOR LEVERAGE:
Financial Leverage = EBIT/EBT
Operating Leverage = Contribution/EBIT
Here, Contribution = Sales – Variable Cost
Combined Leverage = Financial Leverage × Operating Leverage
Note : Here all numbers are in cr.(without leverages)
FOR YEAR 2020:
EBIT = -2.48
Interest = 9.42
EBT = -11.9
Tax = -9.99
EAT =-1.91
EPS =4.80
Sales =155.90 VC =126.09+2.28+34.79=163.16
Financial leverage= -2.48 / -11.9 =0.20
Contribution = 155.90 – 163.16 = -7.26
Operating leverage = -7.26 / -2.48 =2.92
Combined leverage = 0.20 * 2.92 = 0.584
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FOR YEAR 2019:
EBIT =-52.2
Interest =7.03
EBT = -59.23
Tax = -10.60
EAT = -69.83
EPS =-70.44
Sales =538.36 VC =462.62+5.72+36.45= 504.79
Financial leverage = -52.2 / -59.23 = 0.881
Contribution = 538.36-504.79 =33.6
Operating leverage = 33.6/-52.2 =-0.643
Combined leverage = 0.881*0.643 =0.566
FOR YEAR 2018:
EBIT =2.31
Interest =9.83
EBT = -7.52
Tax =-0.36
EAT = -7.16
EPS = -2.47
Sales = 649.87 VC =512.29+5.59+38.98 = 556.86
Financial leverage = 2.31 / -7.52 =-0.307
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Contribution = 649.87 – 556.86 =93.01
Operating leverage = 93.01 /2.31 =40.26
Combined leverage = -0.307 * 40.26 =-12.359
2018 2019 2020
Financial leverage -0.307 0.881 0.20
Contribution 93.01 33.6 -7.26
Operating leverage 40.26 0.643 2.92
Combined leverage -12.359 0.566 0.584
Interpretation:
Financial leverage, Operating leverage and Combined leverage of atlas cycle increases
year on year from 2020 to 2022.
CONCLUTION:
From the capital structure analysis we conclude that debt increases and equity decreases year
on year it shows the company entered into the cheapest source of finance. And also EPS
decreases and retained earnings increases year on year it leads to develop the company and also
company value and it’s share value increases. It is good company for investing.
