A Study on Hero Motocorp Ltd: Splender

Submitted BY:

Indian Two Wheeler Industry 3 KEY PLAYERS IN THE TWO-WHEELER INDUSTRY ------------------------------------- 4 COMPANY PROFILE --------------------------------------------------------------------------------- 5 MISSION -------------------------------------------------------------------------------------------------- 6 VISION ---------------------------------------------------------------------------------------------------- 6 BRIEF PROFILE OF HEROHONDA --------------------------------------------------------------- 6

Indian Two Wheeler Industry

India is the second largest producer and manufacturer of two-wheelers in the world. Indian two-wheeler industry has got spectacular growth in the last few years. Indian two-wheeler industry had a small beginning in the early 50's. The Automobile Products of India (API) started manufacturing scooters in the country. Bikes are a major segment of Indian two wheeler industry, the other two being scooters and mopeds. Indian companies are among the largest two-wheeler manufacturers in the world. Hero Honda and Bajaj Auto are two of the Indian companies that top the list of world companies manufacturing two-wheelers. The two-wheeler market was opened to foreign companies in the mid 1980s. The openness of Indian market to foreign companies leads to the arrival of new models of two-wheelers into India. Easy availability of loans from the banks, relatively low rate of interest and the discount of prices offered by the dealers and manufacturers lead to the increasing demand for two-wheeler vehicles in India. This lead to the strong growth of Indian automobile industry. Excise duty on motorcycles has been reduced resulting in price reduction, which has aided in propelling the demand for motorcycles. Fierce competition has also forced players to cut prices in certain models. Kinetic Honda was introduced in the Indian market during the mid 80s. The main feature of Kinetic Honda is its ease of use. This helped the youngsters and the women to buy scooters. The license raj that existed between the 1940s to 1980s in India did not allow foreign companies to enter the market and imports were tightly controlled. This regulatory maze, before the economic liberalization, made business easier for local players to have a sellers market. Customers in India were forced to wait 12 years to buy a scooter from Bajaj. The CEO of Bajaj commented that he did not need a marketing department, only a dispatch department. By the year 1990, Bajaj had a waiting list that was twenty-six times its annual output for scooters. The motorcycle segment had the same long wait times with three manufacturers: Royal Enfield, Ideal Jawa, and Escorts. Royal Enfield made a 350cc Bullet with the only four-stroke engine at that time and took the higher end of the market but there was little competition for their customers. Ideal Jawa and Escorts took the middle and lower end of the market respectively.

In the mid-1980s, the Indian government regulations changed and permitted foreign companies to enter the Indian market through minority joint ventures. The two-wheeler market changed with four Indo-Japanese joint ventures: Hero Honda, TVS Suzuki, Bajaj Kawasaki and Kinetic Motor Company (Kinetic Honda). The entry of these foreign companies changed the Indian market dynamics from the supply side to the demand side. With a larger selection of two-wheelers on the Indian market, consumers started to gain influence over the products they bought and raised higher customer expectations. The industry produced more models, styling options, prices, and different fuel efficiencies. The foreign companies new technologies helped make the products more reliable and with better quality. Indian companies had to change to keep up with their global counterparts. The 2006 Forbes 200 Most Respected companies list has Hero Honda Motors ranked at 108.

Key players in the Two-wheeler Industry After facing its worst recession during the early 1990s, the two-wheeler industry bounced back with a 25% increase in volume sales in February 1995. The scooters are considered as family vehicles. There are many two-wheeler manufacturers in India. Major players in the 2wheeler industry are Hero Honda Motors Ltd (HHML), Bajaj Auto Ltd (Bajaj Auto) and TVS Motor Company Ltd (TVS). The other key players in the two-wheeler industry are Kinetic Motor Company Ltd (KMCL), Kinetic Engineering Ltd (KEL), LML Ltd (LML), Yamaha Motors India Ltd (Yamaha), Majestic Auto Ltd (Majestic Auto), Royal Enfield Ltd (REL) and Honda Motorcycle & Scooter India (P) . Hero Honda Motors has been at the top of the unit sales of the last month. The company sold 4, 91,306 units for July 2011. In July last year, Hero Honda had sales of 4, 27,686 units. This is an increase of 63,620 units or 15 per cent for this years month of July. Bajaj Auto was also on the list of the companies that registered an increase in their sales. Bajaj had 14 per cent of increase in their sales for the month of July 2011 as compared to the sales of July 2010. Last July Bajaj sold 3, 18,415 units. The sales for this years July was recorded at 3, 63,712 units. That is an increase of 45,297 units. TVS Motors comes third with the same percentage of sales figures as that made by Bajaj Auto. TVS registered sales of 1, 89,962 units. Mahindra Two Wheelers Ltd. (MTWL), the

latest prominent name in the two-wheeler Indian market, had a growth of 15 per cent since the last year. Percentage wise, Suzuki had the most successful year. Last year, there sales stood at 18,533 units. This July it increased to 27,088 units showing an increase of 8555 units. This increase equals to around 46 per cent of growth. Yamaha and Honda Motorcycle and Scooter India are also making their presence felt in the two-wheeler Indian market. Honda Motorcycle and Scooter India, is especially making good strides and can potentially kick off TVS from the third spot. Though they have recorded growth of only 10 per cent, the promise they are showing is far too great than that of the figures.

Company Profile Hero is the brand name used by the Munjal brothers in the year 1956 with the flagship company Hero Cycles. The joint venture between India's Hero Group and Honda Motor Company, Japan has not only created the world's single largest two wheeler company but also one of the most successful joint ventures worldwide. During the 80s, Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. A legendary 'Fill it - Shut it - Forget it' campaign captured the imagination of commuters across India, and Hero Honda sold millions of bikes purely on the commitment of increased mileage Having reached an unassailable pole position in the Indian two wheeler market, Hero Honda is constantly working towards consolidating its position in the market place. The company believes that changing demographic profile of India, increasing urbanization and the empowerment of rural India will add millions of new families to the economic mainstream. This would provide the growth ballast that would sustain Hero Honda in the years to come. As Brijmohan Lall Munjal, the Chairman, Hero Honda Motors succinctly points out, "We pioneered India's motorcycle industry, and it's our responsibility now to take the industry to the next level. We'll do all it takes to reach there. Hero Honda has a large sales and service network with over 3,000 dealerships and service points across India. Hero Honda has a customer loyalty program since 2000, called the Hero Honda Passport Program.

Mission
Hero MotoCorp's mission is to become a global enterprise fulfilling its customers' needs and aspirations for mobility, setting benchmarks in technology, styling and quality so that it converts its customers into its brand advocates. The company will provide an engaging environment for its people to perform to their true potential. It will continue its focus on value creation and enduring relationships with its partners.

Vision
The story of Hero Honda began with a simple vision - the vision of a mobile and an empowered India, powered by its bikes. Hero MotoCorp Ltd., company's new identity, reflects its commitment towards providing world class mobility solutions with renewed focus on expanding company's footprint in the global arena.

BRIEF PROFILE OF HEROHONDA

Company name Type Founded Headquarters Key people

: Hero MotoCorp Ltd (Hero Honda Motors Ltd) : Public company BSE:HEROHONDA M : January 19, 1984 in Gurgaon, Haryana, India : New Delhi, India : Brijmohan Lal Munjal, Founder : Mr. Brijmohan Lal Munjal, Chairman : Mr. Toshiaki Nakagawa, Joint Managing Director : Mr. Pawan Munjal, Managing Director, CEO

Industry Products Revenue

Sales Volume

: Automotive : Motorcycles, Scooters : Rs 5,683.33 crore

: over five lakh two-wheelers in each month(First quarter FY11)

Website

: www.heromotocorp.com (www.Herohonda.com)