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Arvind Arora (520813268)
Arvind Arora (520813268)
Company profile
Hero Honda has grown like no other company in the auto business. Several
times in the path, savvy observers have insisted that it has grown just too big and
that no company its size can continue to show growth rates. But Hero Honda has
ignored that opinion and continued growing at the place it has set many years
ago.
Hero Honda today faces more competitor than it has ever in the history.
Now that is the undisputed two wheeler Numero Uno in the country. Every single
two wheeler manufacturer in India if looking market share away from it. More
over for the first time there are so many four- stroke challengers in the market.
And Hero Hondas best selling products are ageing.
Corporate Profile
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
Honda's commitment to customer, quality and excellence, and while doing so,
maintain the highest standards of ethics and societal responsibilities. Twenty five
years and 25 million two wheelers later, Hero Honda is closer to fulfilling this
dream. This vision is the driving force behind everything that we do at Hero
Honda. We understood that the fastest way to turn that dream into a reality is by
remaining focused on that vision.
There were many unknowns but we kept faith, and today, Hero Honda has been the
largest two wheeler company in the world for eight consecutive years. Our growth
has kept compounding. The company crossed the ten million unit milestone over a
19-year span. In the new millennium, Hero Honda has scaled this to 15 million
units in just five years! In fact, during the year in review, Hero Honda sold
moretwo wheelers than the second, third and fourth placed two-wheeler company
put together. With Hero Honda, the domestic two wheeler market was able to show
Over the course of two and a half decades, and three successive joint venture
agreements later, both partners have fine-tuned and perfected their roles as joint
venture partners. What the two partners did was something quite basic. They
simply stuck to their respective strengths. As one of the world's technology leaders
in the automotive sector, Honda has been able to consistently provide technical
know-how, design specifications and R&D innovations. This has led to the
development of world class, value - for- money motorcycles and scooters for the
Indian market. On its part, the Hero Group has taken on the singular and onerous
responsibility of creating world-class manufacturing facilities with robust
processes, building the supply chain, setting up an extensive distribution networks
and providing insights into the mind of the Indian customer. Since both partners
continue to focus on their respective strengths, they have been able to complement
each other. In the process, Hero Honda is recognized today as one of the most
successful joint ventures in the world. It is therefore no surprise that there are more
Hero Honda bikes on this country's roads than the total population of some
European countries
put together!
The company's meteoric growth in the two-wheeler market in India stems from an
intrinsic ability to reach out and come closer to its customers, with every passing
year. Hero Honda's bikes are sold and serviced through a network of over 3500
customer touch points, comprising a mix of dealers, service centres and stockists
located across rural and urban India. Hero Honda has built two world-class
manufacturing facilities at Dharuhera and Gurgaon in Haryana, and its third and
most sophisticated plant at Haridwar has just completed a full year of operations. It
is difficult to imagine that all this has happened in the span of just two and a half
decades!
The best is yet to come. During the year in review, Hero Honda powered its way in
a market that, for all practical purposes, was feeling the full effects of the
economic slowdown in India. With an economic recovery now clearly on the
cards, Hero Honda is all set to ride into another summit. As Brijmohan Lall
Munjal, the Chairman, Hero Honda Motors succinctly puts it, "We pioneered
India's two wheeler industry, we've steered it through difficult times; now it is our
responsibility to set the pace again.'
We had a dream. The dream of making motorcycles that would touch and
transform the lives of our customers by giving them a mode of transport that was
fuel-efficient, comfortable and environment friendly. One that would enhance their
efficiency at work, enable them to share moments of joy with their families and
add up to a better quality of life.
In a scenario where the customer had a few choices, our vision was to offer the
highest quality at a reasonable price, to meet our customer’s expectations, and to
exceed them.
Behind the success of Hero Honda, is the saga of team-work. We would like to
acknowledge the role played by our JV partners, Honda Motor Company, Japan,
and all our business associates, shareholders and employees.
Brijmohan Lall
Chairman
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.
MR. TOSHIAKI
Mr. Toshiaki Nakagawa joined the Company as NAKAGAWA
Additional Director and Joint. Managing Director on Jt. Managing
February 1, 2006. He joined Honda UK Ltd., as staff Director
member & later on took various assignments at senior
Hero Honda Motors
positions at various offices of Honda situated in Hong
Limited
Kong, Prague, Czech Republic, France, and Beijing.
Currently, he also holds the position of Manager in the
Overseas Operations Office No. 1, Honda Headquarters.
His specializations include startup of new overseas
companies and human resource management.
Year Event
1983 Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed
Splendor has emerged as the World's largest selling model for the third
calendar year in a row (2000, 2001, 2002)
Hero Honda became the World No. 1 Company for the third consecutive
year.
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 & Bradstreet-Rolta Corporate Awards
Won Gold in the Reader's Digest Trusted Brand 2009 in the 'Motorcycles'
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
One of the 8 Indian companies to enter the Forbes top 200 list of world’s
most reputed companies.
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.
The NDTV Profit Car India & Bike India Awards 2006 in the following
category:
Bike Maker of the Year
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
2005 Awaaz Consumer Awards 2005 - India's most preferred two-wheeler brand
10th Motilal Oswal Wealth Creator Award for as the most consistent wealth
creator for the period 1991-2005.
2004 Winner of the Review 200 - Asia's Leading Companies Award (3rd Rank
amongst the top 10 Indian companies).
Adjudged as the Best Value Creator - Large Size Companies 2003-04 by The
Outlook Money.
Winner of the Review 200 - Asia 's Leading Companies Award (4th Rank
amongst the top 10 Indian companies).
Winner of the Review 200 - Asia 's Leading Companies Award (9th Rank
amongst the top 10 Indian Companies).
An Integrated Rural Development Centre has been set up on 40 acres of land along
the Delhi-Jaipur 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:
Environment Policy
Quality 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.
The feeling of freedom and being one with the Nature comes only from
riding a two wheeler. Indians prefer the two wheelers because of their small
manageable size, low maintenance, pricing and easy loan repayments. Indian
streets are full of people of all age groups riding a two wheeler. Motorized two
wheelers are seen as a symbol of status by the populace. Thus, in India, we would
see swanky four wheels jostling with our ever reliable and sturdy steed the two
wheeler.
In the initial stages, the scooter segment was dominated by API; it was later
overtaken by Bajaj Auto. Although various government and private enterprises
entered the fray for scooters, the only new player that has lasted till today is LML.
The motorcycle segment was initially dominated by Enfield 350cc bikes and
Escorts 175cc bike. The two-wheeler market was 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 efficient 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. In the 90s the major
growth for motorcycle segment was brought in by Japanese motorcycles, which
grew at a rate of nearly 25% CAGR in the last five years.
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 reasons for recession in the sector were the incessant rise in fuel
prices, high input costs and reduced purchasing power due to significant rise in
general price level and credit crunch in consumer financing. Factors like increased
production in 1992, due to new entrants coupled with the recession in the
industry resulted in company either reporting losses or a fall in profits. Later with
development of economic situation, sales of two wheeler rapidly increased.
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) Ltd (HMSI).
Motorcycles in India:
* Bajaj Avenger
* Bajaj CT 100
* Bajaj Platina
* Bajaj Wave
* Sonic DTSi
* Kinetic Aquila
* Kinetic Boss
* Kinetic Challenger
* Kinetic Comet
* Kinetic GF
* TVS Victor
* Yamaha Crux
* Yamaha G5
* Yamaha Gladiator
Scooters
Production
o Hero Honda CD
100 Deluxe:
Production 2001-present
Engine 97.cc,7.5bhp@8000rpm,4stroke
engine, singal cylinder
Production 2004-present
Production 2005-present
Production 2006-present
Production 2004-present
Production 2005-present
Engine 4 – Stroke,12.68 KW
(17 PS) @ 7000
rpm,223 cc
If you look at the 223c mill of the Karizma, you can make out the familiar streak that runs
through the engines on the CBZ and the Ambition. No prizes on this count as to the reason but
the 223cc Karizma engine represents - for the moment - the maximum capacity this modular
design theme can be taken to. The crankcase is of virtually the same size though the covers do
have some detail differences and the engine mounts are the same as in the other two bikes and
completing the picture are the scaled-up barrel (with an additional fin) and head.
Production 2005-present
Price Rs 49777-56529
Production 2006-present
Production 2004-present
HHML has constituted one the best after-sales service network in the industry.
Apart from improving the quality of service and easy availability of spare parts,
HHML has also focused on cleanliness and other aesthetics of the service stations
and added amenities such as air-conditioned waiting area, internet browsing and
coffee shops etc. to enhance the in-house experience of the consumers at those
“customer touch-points”.
To ensure that millions of customers in the rural areas are not left waiting for
adequate service as it is impossible for HHML to introduce service stations at
every nook & corner of the country, mobile service stations are regularly arranged
with prior intimation to public about the route that the mobile workshop would
take when passing through that region, so that consumers can come and get their
two-wheelers serviced. All these activities are aimed to increase the customer
loyalty and thus retaining customers.
The value activities done by HHML in its value chain (both primary & support
activities) are given in Fig. IA1. The unique value activities of HHML that is at the
heart of its competitive advantages
Marketing arm of HHML started the hugely successful “Fill it, Shut it, Forget it”
campaign years ago to pitch for its better fuel efficiency and thus lower owning
cost. It has been a constant strive for HHML’s marketing efforts (in
advertisements, in promos) to focus the value for money and reliability of its
products and thus attracting new customers and retaining customers as well. To
ensure customer loyalty, HHML has come up with Hero Honda Passport Program
which gives special privileges to its customers. HHML does not indulge in price
wars in an effort to maintain the perception of enduring quality among present &
potential customers. Of late, there were complaints from customers that HHML is
not dynamic enough to present newer, flashier & more powerful bike models in the
premium segment that competitors like recharged Bajaj is offering. Another
complaint was that many of the variants offered by HHML have little or
insignificant product differentiation which can justify the price difference. HHML
has paid heed to these stated & unstated needs of its customers and improved the
4P’s (Product, Price, Place & Promotion). Its offerings now are well accepted in
the market.
HHML has roped in popular heartthrob Hrithik Roshan as its brand ambassador to
give impetus to its marketing efforts. It has been a constant endeavor of HHML to
cater to both urban and rural markets with similar zest, with advertising campaigns
and promotional events clearly focusing on the two markets – “Har Gaon, Har
Angaan” is the recent rural connect initiative to cover ~ 23,360 villages with a
population of 5000 or more by 500 specially trained rural sales executives.
Area % of Respondents
Urban Area 72
Rural Area 28
28%
72%
The income distribution of the families of respondents shows that the bike, which
was considered earlier to be out of range for middle class families is now
becoming very fast an article for them.
8%
10%
36%
46%
Response % Of respondents
Driving known 96
Driving not know 04
4%
96%
It should be stated that the performance is the most important factor followed by
look. The possible combination and corresponding number of respondents are
shown in the table below.
Features % of respondents
Performance 18
Look 11
Availability 5
Price 1
Maintenance 4
Brand image 5
After sale service 6
8%
2%
10% 22%
Magazine 36
Friends 14
Hoardings 02
Others 02
2%
14%
46%
2%
36%
Television
Magazine
Friends
Hordings
Others
Almost 94 % of the respondents say that they have purchased the bike by cash.
Only 6% of the respondents say that they have purchased their bike through bank
loans.
Cash Purchase 94
Hire Purchase 06
6%
94%
Maximum no. of the Respondents have taken decision to buy the bike on their own. After
that their friends and parents influenced them.
Influencer % of Respondents
Parents 16
Self 54
Friends 18
Relatives 08
Others 04
4%
8%
16%
18%
54%
More than 60% were using Hero Honda CD100 bikes. They were followed by
Yamaha RX100 & very little have chosen other bikes.
CD100 62
Yamaha RX100 32
Others 06
6%
32%
62%
42% of the respondents have rated as the best bike they have used, but it is facing a
stiff competition from Pulsar & Fierro.
6%
14%
38%
28%
8%
6%
Which model of Motor Cycle would you recommend to your dear friend?
Does the basic reliability of two-wheelers measure up to the promises made by the
manufacturer…?
Would they buy the same model again or more importantly from the
manufacturer’s point of view… would they advise their friends to buy it…?
So let the people know just how the two-wheelers fared on the road…
STRENGTHS:
Hero Honda introduced First stroke bike in the Indian market.
Hero Honda gives 80 Km/Liter Avg.
Huge sale network (3500 Dealers).
Better sale service.
It has the highest share in automobile sector.
It has a good brand image.
It gives better service for customers.
Best customer preference.
Debt equity ratio is only 0.1.
The company has clarified about its intention of setting a third
plant in addition to its existing two plants. The company has embarked
upon a green field expansion plan and has earmarked Rs 2 bn for the same.
It should be noted that the company has a strong cash flow position; it
generated Rs 9 bn from operation in FY04 and is virtually a debt free
company.
OPPOURTUNITIES:
It is clear from the report that the Hero Honda Motors is facing cutthroat
competition; hence the company’s manager has to be fast and smart so as to
understand the customers needs. They have to come up with various new
techniques or schemes to be able to cater to different categories of people.
Customers are becoming more wise day by day and they are now willing to know
all the in and out of the things happening around them. This has led to increased
customer awareness.
We can analyze that if the brand is reputed that doesn’t win the customers
delight unless it’s provided same value-added features or else we can say
competitive advantage.
The information given in the basic financial statements serves no useful Purpose
unless it s interrupted and analyzed in some comparable terms. The ratio analysis
is one of the tools in the hands of those who want to know something more from
the financial statements in the simplified manner.
Ratio analysis is equally for assessing the long term financial ability of
the Firm. The long term solvency s measured by the leverage or capital
structure and profitability ratio which shows the earning power and
operating efficiency, Solvency ratio shows relationship between total
liability and total assets.
Operating efficieny:
Different ratios are used for different purpose these ratios can be grouped
into various classes according to the financial activity. Ratios are classified into
four broad categories.
1. Liquidity Ratio
2. Leverage Ratio
3. Profitability Ratio
4. Activity Ratio
1. Liquidity Ratio:
Current ratio:
Current ratio is the ratio, which express relationship between current asset
and current liabilities. Current asset are those which can be converted into cash
within a short period of time, normally not exceeding one year. The current
liabilities which are short- term maturing to be met.
Current liabilities
Current liabilities
Leverage or capital structure ratios are the ratios, which indicate the
relative interest of the owners and the creditors in an enterprise. These ratios
indicate the funds provided by the long-term creditors and owners.
.
2. Total Debt ratio:
This ratio explains how far owned and borrowed funds are sufficient
to pay debt of the firm
Capital employed
3. Profitability ratio:
Profitability ratio are the best indicators of overall efficiency of the business
concern, because they compare return of value over and above the value put
into business with sales or service carried on by the firm with the help of
assets employed. Profitablity ratio can be determined on the basis of:
Sales
Investment
Sales
a. Return on assets
b. Return on capital employed
a. Return on assets:
Return on assets =
Fixed assets
3. Activity ratio:
Activity ratio are sometimes are called efficiency ratios. Activity ratios
are concerned with how efficiency the assets of the firm are managed.
= Total sales
Debtors
This ratio indicates how quickly the inventory is converted into cash.
Days in a year
Debtors turnover
This ratio shows the number of times the working capital turns in
trading transaction. If it has an increasing trend over the previous year it
shows that the working capital is being used efficiently.
LIQUIDITY RATIOS
Meaning of liquidity:
The term liquidity refers to ability to pay its obligations when they
become due. Liquidity ratios measure the ability of a firm to meet its short-
term obligations and reflect the short-term financial strength or solvency of a
firm.
Further short term liquidity ratios are categories into three types
they are as follows:
Income
Expenses
Expenses capitalised - - -
Preference dividend - - -
(Rs crore)
Balance sheet
Sources of funds
Owner's fund
Loan funds
Secured loans - - - --
Uses of funds
Fixed assets
Leverage ratios
Liquidity ratios
Coverage ratios
Liquidity Ratio’s.
1)CURRENT RATIO:
CURRENT ASSETS
CURRENT LIABILITIES
2007 2008
2009
0.51 0.62
0.57
The ideal ratio 2:1 . The liquidity position of the company is not satisfactory
because it is not reached the ideal ratio 2:1 . The company should increase the
current assets and decrease the current liabilities.
Quick Ratio:
Current liabilities
Interpretation:
the liquidity position of the company is not satisfactory because the ratio is
decrease and not reached the ideal ratio 1:1 the company should increase quick
assets such as cash and bank balance and decrease the current liabilities.
1)Proprietary Ratio
Proprietary Ratio:
Interpretation:
Fixed Assets
Net worth =
Interpretation:
This ratio is satisfactory and the ideal ratio is 0.67 and it will never be more
than 1 , the long term funds are used to buy or acquire the fixed assets.
Interpretation:
The Company should increase the sales and also increase the working capital
i.e., increase the current assets and decrease current liabilities .
CGS/Avg. Inventory
The ideal ratio is 8. the company should control the cost of goods sold
expenses and increase the sales in order to increase the ratio.
Interpretation:
Profitability Ratio’s:
2)Operating Ratio
Sales
Interpretation:
Net Sales
Interpretation:
The company had controlled the operating expenses that’s why the ratio is
decreased ,the lower the ratio the better it is, the company should continue
this performance in the future also. It is satisfactory
2) The company profits are huge in the current year; it is better to declare the
dividend to shareholders.
3) The company is utilising the fixed assets, which majorly help to the growth
of the organisation. The company should maintain that perfectly.
4) The company fixed deposits are raised from the inception, it gives the other
income i.e., Interest on fixed deposits.
5. Analysis is only a mean not an end in itself. The analyst has to make
interpretation and draw his own conclusion.
While Hero Honda has strong foothold in the industry, the company should look
into the areas of weakness.
In this connection, It is suggested that the company can look into the following
areas:
The must move towards the rural areas to expand its sale.
1. Name __________________________________________________
2. Address _____________________________________________
_____________________________________________
Yes [ ] No [ ]
1. Hero Honda [ ]
2. Yamaha [ ]
3. Bajaj [ ]
4. L.M.L. [ ]
_____________________________________________________________
___________________________________________________.
Thanks
BOOKS:
INTERNET:
www.herohonda.com
www.google.com