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Page 1: Hero Honda

Chapter : 1 EXECUTIVE SUMMARY

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1.EXECUTIVE SUMMARY

The main objective of the project is to get the full knowledge of the products of the HERO HONDA and how they are using the distribution network as a key differentiating factor from its competitors. This is also to find the preferences of customer and there market knowledge and product information, information about the presence of the rivals of HERO HONDA and all the other options they have in the market. HERO HONDA are also looking to tap the market in rural sector, so they also taking into consideration the needs and wants of the people there.

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Chapter : 2 INTRODUCTION TO HERO HONDA

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2. INTRODUCTION

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 more two 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 positive growth during the year in review. Without Hero

Honda, the domestic market would have actually shrunk.

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.

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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.''

2.1 HERO HONDA'S MISSION

 

Hero Honda’s 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

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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.

HERO HONDA'S VISION

Hero Honda now the leader in the two wheeler industry. Leaders are not born, they

evolve over time. It all started on the auspicious. “Baisakhi Day” the 13 th of April

1984, when the Hero Honda Motor Company joined hands. On its journey to take on

the No. 1 morale, Hero Honda created some prominent milestones…..

This leadership has been achieved only because of its philosophy to

excel in all areas. In fact, passion to excel is a credo of the entire Hero Honda family

and is a way of life in Hero Honda. The changing Scenario of increasing competition

and the entry of new brands has made the credo even more relevant. It serves as a

constant reminder to ensure excellence in providing service to the customer. They are

providing outstanding customer service.

It is in keeping with Hero Honda’s own passionate commitment to provide ultimate

customer satisfaction. Today, they consistently meet and exceed all requirement on

quality, cost and delivery.

2.2 PROFILE OF HERO HONDA

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.

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“Hero” is the brand name used by the Munjal brothers in the year 1956 with the flagship

company Hero Cycles. It is a joint venture between India's Hero Group and Honda Motor

Company; they are related to Jagdish Lal Munjal.

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. Now millions of

Hero Honda two wheelers tread Indian roads today. These are almost as many as the

number of people in Finland, Ireland and Sweden put together! Hero Honda has consistently

grown at double digits since inception; and today, every second motorcycle sold in the

country is a Hero Honda.

Hero Honda bikes currently roll out from two globally benchmarked manufacturing

facilities based at Dharuhera and Gurgaon in Haryana. These plants together are capable of

churning out 3.9 million bikes per year. A third state of the art manufacturing facility at

Hardwar in Uttranchal has been commissioned from April 2008 to cope with sustained

customer demand. Hero Honda's extensive sales and service network now spans over 3000

customer touch points.Hero Honda values its relationship with customers.

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.

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-

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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 more two 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 positive growth

during the year in review. Without Hero Honda, the domestic market would have

actually shrunk.

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

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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.''

.

New Models

The company has a large portfolio of brands, with the money-spinners being mainly

Splendor Plus (the world's largest selling bike) and Passion. However, the company

claims it was the launch of the 150cc CBZ and 225cc KARIZMA which established

Hero Honda as an inspirational brand. "The launch of CBZ and KARIZMA got us

into a different league altogether. Although the sales are just about 3,000 a month, it

made us an overall bike company”, Hero Honda would launch a new model of the

KARIZMA by the end of current year, the Managing Director, Mr. brijmohanlal

Munjal, said. Meanwhile, the company is yet to decide on the location of its proposed

Fourth manufacturing unit. “The feasibility study is on'', he said, adding that the new

plant was likely to come up in the next 18 months. New launches are likely to help

Hero Honda gain a market share in the coming quarters.

Hero Honda Motors Ltd, has launched a new 100-cc four-stroke bike, CD deluxe and

Dawn is likely to be phased out of the market once the new model sells ``10,000 plus''

units per month.

Sales Performance

Hero Honda went against the grain and created a growth trajectory all of its own.

Sales of the company grew by over 11 per cent in volume terms and in value terms;

they grew by over 19 per cent.

Effectively, this helped the company end the year with a market share of around 60

per cent. This robust performance helped the company increase earnings margin 120

basis points—a remarkable feat, considering that elsewhere in the world, the

automobile industry went through its worst year in recent history.

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Hero Honda’s performance in its silver jubilee year helped it retain its position as the

world’s largest two wheeler company for the eighth year in a row. It also helped the

company cross the 25 million unit mark—becoming the first company in India to

reach this milestone.

Last year, two new models were launched, namely CBZ XTREME and HUNK to

address super-style and economy segments. Passion pro has found its position firm

amongst Indian models, only next to Splendor, the largest selling bike in the world in

terms of sales performance. CBZ was re-launched as CBZ XTREME, in April 2007,

with changes and value additions to cater to specific needs of the customers.

Reportedly CBZ XTREME is doing well in its segments and has sold over 10,000

units in the initial months itself.

Hero Honda has targeted a sale of over 3 million bikes for the year 2009-10. This

effort is supplemented by a major launch this year, in October end; this bike will have

some exclusive features and will be in the 200cc plus range. There are some

ambitious programmes of launching a new range of bikes with technical support from

Honda in the coming years.

With a slew of such measures the capacity available at present locations can at best

support two-million production target at the existing plants. The company, therefore,

is looking at the possibility of setting up a third plant to meet the future demand and

for which techno-economic study is in progress.

New Initiatives

Customer and customer satisfaction is the purpose of our being an entity. To

increasingly understand him and make him part of our ongoing business. Customer

related initiative has been the increase of warranty period to three years since July

2008. This has attracted a great deal of customer attention.

During the year the company has added nearly a hundred dealerships and SSPs. In

terms of sheer numbers, the network has grown by 16% during the year 2008-09. We

would endeavor to increase our reach to every corner of this country.

Plans for the future

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In the previous year, the domestic two-wheeler industry entered a period of de-

growth. However, this was arrested in 2008-09, largely on the back of Hero Honda's

performance. After the blip of last year, the two-wheeler industry went back to a

growth phase, largely driven by Hero Honda and exports. The industry clocked total

volumes of 8.5 million during the year in review, a growth of 5 per cent compared to

a fall of 5 per cent in the previous year. The pace of growth was lower in the domestic

market, where the industry clocked sales of 7.43 million, a rise of only 2.60 per cent.

This, however, was a significant improvement over previous year when the industry

had shrunk by 8 per cent.

Motorcycles continue to constitute the largest chunk of the two-wheeler industry, and

during the year in review, accounted for four fifth of sales. Interestingly, for the

second year in succession, scooters increased their share in the two-wheeler pie from

14 per cent to 16 per cent. This is clearly a trend reversal from the last 10 years, where

the share of scooters in the two-wheeler pie had been shrinking. Changing lifestyles

among women, and the introduction of feature-rich, high-quality scooters possibly has

much to do with the revival in demand

2.3 MILESTONES OF HERO HONDA

Year Event

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

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

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New motorcycle model - "Glamour" introduced

New motorcycle model - "Achiever" introduced

First Scooter model from Hero Honda - "Pleasure" introduced

2006 Hero Honda is the World No. 1 for the 5th year in a row

15 million production milestone achieved

2007 Hero Honda is the World No. 1 for the 6th year in a row

New 'Splendor NXG' launched

New 'CD Deluxe' launched

New 'Passion Plus' launched

New motorcycle model 'Hunk' launche

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' launcheh

CD Deluxe lauched with power start feature

New 'Glamour' launched

New 'Glamour Fi' launched

2009 Hunk' (Limited Edition) launched

Splendor completed 11 million production landmark

New motorcycle model 'Karizma - ZMR' launched

Silver jubilee celebrations

2.4 HISTORY

ABOUT THE CHAIRMAN

Brijmohan Lall Munjal – Seeding a Dream

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"Don't dream if you can't fulfill your dreams'' Brijmohan Lall Munjal is often fond of

saying. The founder and patriarch of the $ 2.8 billion Hero Group is your classic first

generation entrepreneur. He is a man who started small, dreamt big and used a

combination of grit and perseverance to create one of the country's largest corporate

groups and the World's No.1 Two Wheeler Company.

Instinctive from a young age, Brijmohan Lall made a rather unusual start in life.

Around the time when the freedom movement in India was taking shape in the late

1920s, he walked into a newly opened Gurukul (Indian heritage school) near his home

in Kamalia (now in Pakistan). He was only six years old then. 

Thus began an extraordinary tale of courage and perseverance. Brijmohan began his

business story after partition in 1947, when he and his brothers relocated to Ludhiana.

The family set up a company that provided poor people with basic transport (cycles).

Three decades later, as India evolved, he added a second crucial chapter - which

visualized affordable and technologically superior transport to millions of middle

class Indians. The rest is history. 

Building Relationships 

When Brijmohan and his brothers started out, there was no concept of organized

dealer networks. Companies just produced, and most dealers functioned like traders.

Brijmohan changed the rules of the business by trusting his gut instincts; introducing

business norms that were ahead of their time, and by investing in strategic

relationships.

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Brijmohan built a series of bonds and networks with hundreds of family members,

vendors, dealers and employees. Much like the Japanese keiretsu system, these

networks are now the glue that holds the Hero Group together.

"Thanks to the relationships that we have nurtured so passionately in the Hero Family,

the younger generations of some of our bicycle dealers have become dealers of Hero

Honda. These relationships have survived through generations - through bad times

and good times'' the patriarch now reminiscences.

Besides bonding with his vendors and dealers, Brijmohan has been personally

responsible for kindling a spirit of entrepreneurship amongst his employees, and

today, 40 of his former employees are successful entrepreneurs.

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Chapter : 3 PROFITS OF HERO HONDA

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3. PROFITS

HERO HONDA RETAINS WORLD NO.1 TWO-WHEELER

MANUFACTURER POSITION FOR THE 9TH CONSECUTIVE YEAR

REPORTS THIRD CONSECUTIVE QUARTER WITH  MORE THAN

A MILLION UNITS IN SALES

PAT GROWS BY 78.3% TO Rs. 535.77 CRORE

TURNOVER (NET SALES & OTHER OPERATING INCOME), AT RS.

3827 CRORE; GROWS BY 32.82%, EBIDTA AT 17.27%

OVER 59% SHARE IN DOMESTIC MOTORCYCLE INDUSTRY

Highlights of Q3, FY'09-10

Total turnover (Net sales & Other Operating income) 3827.03  crores, growth

of 32.82 per cent

Net profit after tax at Rs. 535.77 crores, growth of  78.34 per cent

EBIDTA margin for the quarter 17.27 per cent

Total sales for Q3 stands at 11,11,372 units, growth of 29.56 per cent

Third consecutive quarter with more than a million units in sales

New Delhi, January 25, 2010: Hero Honda Motors Ltd (HHML), the world's

largest two-wheeler manufacturer, today reported a profit after tax (PAT) of

Rs.535.77 for the third quarter (Oct – Dec’09) of Financial Year (FY) 2009-10 - a

growth of over 78.34% over the corresponding period in the last fiscal (Oct- Dec’08).

The company has recorded an EBIDTA margin of 17.27 per cent in the quarter. The

EBIDTA margin in the previous quarter (Oct - Dec'08) was 14.47 per cent.

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YTD FY ’10 has been a remarkable year for Hero Honda with the company posting

sales of over a million units and a PAT of over Rs. 500 crores in each of the

quarters. With the third quarter of fiscal 2009, Hero Honda concludes the calendar

year with record sales of over 4.4 million units, a growth of 22 per cent over the

calendar year 2008 when the company had sold 3.6 million units. With this, Hero

Honda has retained the coveted status of World No.1 two-wheeler manufacturer for

the 9th consecutive year.

Riding on a record sales of more than a million units (34, 13,594) of two-wheelers –

the third consecutive time that  the company crossed the magic million mark in a

quarter this year – Hero Honda’s total turnover (Net sales & Other Operating

income) grew to Rs 11708.91 crore, a growth of  31.05 per cent over Rs 8934.36 crore

recorded in the corresponding period last fiscal. The company has recorded an

EBIDTA margin of 17.55 per cent in the nine months ending December 09. The

EBIDTA margin in the corresponding previous period (April - Dec'08) was 13.44 per

cent.

The company continued with its commendable top line performance as sales volumes

were up 25.31% per cent during last nine months, while the industry grew by 20.05%

per cent during the same period.

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3.1 SLOGAN OF HERO HONDA

FILL IT. SHUT IT. FORGET IT

 

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.

Over 20 million Hero Honda two wheelers tread Indian roads today. These are almost

as many as the number of people in Finland, Ireland and Sweden put together!

Hero Honda has consistently grown at double digits since inception; and today, every

second motorcycle sold in the country is a Hero Honda. Every 30 seconds, someone

in India buys Hero Honda's top -selling motorcycle – Splendor. This festive season,

the company sold half a million two wheelers in a single month—a feat unparalleled

in global automotive history.

Hero Honda bikes currently roll out from its three globally benchmarked

manufacturing facilities. Two of these are based at Dharuhera and Gurgaon in

Haryana and the third state of the art manufacturing facility was inaugurated at

Haridwar, Uttrakhand in April this year. These plants together are capable of

producing out 4.4 million units per year.

Hero Honda's extensive sales and service network now spans over 3000 customer

touch points. These comprise a mix of dealerships, service and spare points, spare

parts stockiest and authorized representatives of dealers located across different

geographies.

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Hero Honda values its relationship with customers. Its unique CRM initiative - Hero

Honda Passport Program, one of the largest programs of this kind in the world, has

over 3 million members on its roster. The program has not only helped Hero Honda

understand its customers and deliver value at different price points, but has also

created a loyal community of brand ambassadors.

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.''

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3.2 HERO HONDA OVERVIEW AS A WHOLE

Date of Establishment 1984Revenue 2674.39 ( USD in Millions )Market Cap 335425.078125 ( Rs. in Millions )Corporate Address 34 Community Centre,Basant Lok Vasant Vihar,

New Delhi-110057, Delhiwww.herohonda.com

Management Details Chairperson - Brijmohan Lall Munjal MD - Pawan MunjalDirectors - Analjit Singh, Anand C Burman, Arun Nath Maira, Brijmohan Lall Munjal, Ilam C Kamboj, Masahiro Takedagawa, Meleveetil Damodaran, Om Prakash Munjal, Pawan Munjal, Pradeep Dinodia, Pritam Singh, Ravi Nath, Satoshi Matsuzawa, Shobhana Bhartia, Sumihisa Fukuda, Sunil Kant Munjal, Takashi Nagai, Toshiaki Nakagawa, V P Malik, Ved Prakash Malik

Business Operation Automobile Two & Three WheelersBackground Hero Honda Motors Limited is the World's single

largest two-wheeler motorcycle company. Honda Motor Company of Japan and the Hero Group entered a joint venture to setup Hero Honda Motors Limited in 1984.

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 worldwid

Financials Total Income - Rs. 126303 Million ( year ending Mar 2009) Net Profit - Rs. 12817.6 Million ( year ending Mar 2009)

Company Secretary Ilam C KambojBankers ABN Amro Bank, Bank of America, Bank of

Tokyo Mitsubishi , Canara Bank , Citi Bank, HDFC Bank, HSBC Bank, ICICI Bank, Punjab National Bank, Standard Chartered Bank

Auditors AF Ferguson & Co

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3.3 COMPETITORS OF HERO HONDA :-

1. BAJAJ AUTO

2. TVS MOTORS

3. MAH SCOOTERS

4. SCOOTERS INDIA

5. LML

6. KINETIC ENGG.

7. MAJESTIC AUTO

8. KINETIC MOTORS

9. ATUL AUTO

10. VCCL

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3.4 Board of Directors

No. Name of the Directors Designation 1 Mr. Brijmohan Lall Munjal Chairman & Whole-time Director

2 Mr. Pawan Munjal Managing Director & CEO

3 Mr. Toshiaki Nakagawa Joint Managing Director

4 Mr. Sumihisa Fukuda Technical Director

5 Mr. Om Prakash Munjal Non-executive Director

6 Mr. Sunil Kant Munjal Non-executive Director

7 Mr. Masahiro Takedagawa Non-executive Director

8 Mr. Satoshi Matsuzawa Non-executive Director

9 Mr. Pradeep Dinodia Non-executive & Independent Director

10 Gen.(Retd.) V. P. Malik Non-executive & Independent Director

11 Mr. Analjit Singh Non-executive & Independent Director

12 Dr. Pritam Singh Non-executive & Independent Director

13 Ms. Shobhana Bhartia Non-executive & Independent Director

14. Mr. Meleveetil Damodaran Non-executive & Independent Director

15. Mr. Ravi Nath Non-executive & Independent Director

16. Dr. Anand C. Burman Non-executive & Independent Director

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MR. PAWAN MUNJAL

Mr. Pawan Munjal is the Managing Director and CEO of the Company. He is

responsible for growth and strategic planning for the entire Group. A graduate in

mechanical engineering, Mr. Munjal has been instrumental in bringing about

technological and managerial excellence in the Company's operations. He has been

the Chairman of several Committees of CII.

He is also on the board of Indian Institute of Management, Lucknow . An avid golfer,

Mr. Munjal is Past Chairman of the Asian PGA Tour Board of Directors and the Past

President of Professional Golfers Association of India (PGAI). Under his guidance,

Hero Honda launched the Hero Indian Sports Academy (HISA) in collaboration with

Laureus Foundation to provide equal opportunities in sports to various communities

and to reward talent in the country.

Mr. Pawan Munjal is currently on the Board of the following companies:

 No. Name of Company Nature of Office

1 Hero Honda Motors Limited Managing Director

2 Hero Honda Finlease Limited Director

 MR. TOSHIAKI NAKAGAWA

 Mr. Toshiaki Nakagawa joined the Company as Joint Managing Director on February

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1, 2006.

He joined Honda Motor Co., Ltd, Japan in April 1973 and later on took various

assignments at Senior Positions in world wide Honda net work, such as staff member

of UK, Hongkong and President of Honda Czech Republic, Honda France and

General Manager of Honda Beijing Office.

Before joining the Company, he held the position as General Manager of Operating

Office of China, ASEAN succeeding by Operating Office No.1 (North America,

South America and Europe) at Honda Head Office, Japan.

His specialization is “Overseas Sales of Automobiles and Motorcycles.”

Mr. Nakagawa is currently on the Board of the following companies:

 No. Name of Company Nature of Office

1 Hero Honda Motors Limited Joint Managing Director

2 Hero Honda Finlease Limited Director

 

 MR. SUMIHISA FUKUDA

 Mr. Sumihisa Fukuda was appointed as an Additional and Technical Director in the

Whole-time employment of the Company by way of passing a resolution by

Circulation on May 13, 2008 . Mr. Fukuda was born on December 12, 1955 at

Nagasaki , Japan and after completing a course in Mechanical Engineering, he joined

Honda Motor Co., Ltd., Japan as an Engineer & has completed various assignments in

Honda. In recent past, he was working as Manager – Asian Autoparts Co. Ltd.,

Thailand . He brings with him rich experience of more than 30 years.

Mr. Fukuda is currently on the Board of the following companies:

 No. Name of Company Nature of Office

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1 Hero Honda Motors Limited Whole-time Director

2 Hero Honda Finlease Limited Director

CHAPTER : 4

Products of Hero Honda

1. Hero Honda CD- dawn (97.20 cc) : - Hero Honda CD Dawn is a beginner's bike well tested on Indian roads and proven in city conditions. Hero Honda CD Dawn is a no-nonsense bike that's all about price and utility. New bikes have showroom prices of around Rs. 32,000 and on-road prices of around Rs. 37,000 at Ahmedabad. Currently, Delhi has the lowest, and Chennai the highest on-road prices for Hero Honda CD-dawn. Hero Honda CD-dawn bike prices vary upon the two-wheeler dealer's location.

2. Hero Honda CD-Deluxe (97.20 cc) : - Hero Honda CD Deluxe is a good beginner's bike and convenient for city conditions. Hero Honda CD Deluxe sales have grown by 23 per cent between January-September 2007, within which time the industry actually declined by 14 per cent in the entry segment. New bikes in this series have a showroom price ranging from around Rs. 36,000 to around Rs. 41,000 inclusive of all charges like insurance, octroi, RTO, etc. Hero Honda CD-Deluxe prices vary with the two-wheeler dealer's location. Currently, Delhi has the lowest, and Bangalore the highest on-road prices for Hero Honda CD-Deluxe. Hero Honda CD-Deluxe bike prices vary upon the two-wheeler dealer's location.

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3. Hero Honda Splendor Plus (97.20 cc) : - Hero Honda Splendor Plus is one of the largest selling bikes in India. It sports several improvements over the old splendor. At the showroom, this bike costs around Rs. 40,000 with an on-road price of around Rs. 45,000. Currently, Delhi has the lowest, and Mumbai the highest on-road prices for Hero Honda Splendor Plus. For Hero Honda Splendor Plus bike prices vary upon the two-wheeler dealer's location.

4. Hero Honda Splendor NXG (97.20 cc) : - The Hero Honda Splendor NXG is a new age bike in Hero Honda's 100 cc stable. Stunning looks, economic performance, and a multitude of features backed by Hero Honda's reliable support network, makes this a good choice for the city commuter. The Hero Honda Splendor NXG is now available at a showroom price of around Rs. 42,000 with an on road price of around Rs. 48,000 including supplementary charges. Currently, Delhi has the lowest, and Bangalore the highest on-road price for Hero Honda Splendor NXG. Currently, Delhi has the lowest, and Chennai the highest on-road prices for Hero Honda Splendor NXG. Hero Honda Splendor NXG bike prices vary upon the two-wheeler dealer's location.

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5. Hero Honda Passion Plus (97.20 cc) : - The Hero Honda Passion Plus is a bike meant for the executive city commuter. This improved version of the Hero Honda Passion comes with several improvements over its earlier versions and gives an easy ride and easy handling. New bikes have showroom prices of around Rs. 42,700 and on road prices of around Rs. 48,200 at Ahmedabad. Currently, Delhi has the lowest, and Mumbai the highest on-road prices for Hero Honda Passion Plus. Hero Honda Passion Plus bike prices vary upon the two-wheeler dealer's location.

6. Hero Honda Super Splendor (124.70 cc) : - Hero Honda Super Splendor is not a bike to race with, but one you can depend on to get you to your destination and back in the city safely and economically. New bikes in this series have a showroom price ranging from around Rs. 45,000 to around Rs. 51,000 inclusive of all charges like insurance, octroi, RTO, etc. Hero Honda CD-Deluxe prices vary with the two-wheeler dealer's location. Currently, Delhi has the lowest, and Mumbai the highest on-road prices for Hero Honda Super Splendor. Hero Honda Super Splendor bike prices vary upon the two-wheeler dealer's location.

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7. Hero Honda Glamour (125 cc) : - The new Hero Honda Glamour looks all the better with enhanced graphics and other details and continues to sell to the discerning. At the showroom, this bike costs around Rs. 48,000 with an on-road price of around Rs. 55,000. Currently, Delhi has the lowest, and Mumbai the highest on-road prices for Hero Honda Glamour. Hero Honda Glamour bike prices vary upon the two-wheeler dealer's location.

Hero Honda Glamour FI (125 cc.) : - The Hero Honda Glamour FI 125 cc, built after the existing Glamour 125 cc, is a technological trendsetter in two wheelers. The Hero Honda Glamour FI 125 cc is now available at a showroom price of around Rs. 52,000 with an on road price of around Rs. 58,500 including supplementary charges. Currently, Delhi has the lowest, and Bangalore the highest

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on-road prices for Hero Honda Glamour FI. Hero Honda Glamour FI bike prices vary upon the two-wheeler dealer's location.

8. Hero Honda Achiever : - The Hero Honda Achiever has made a comeback in a new 2007 avatar with definite improvements over its 2006 model. New bikes have showroom prices of around Rs. 55,000 and on road prices of around Rs. 61,500 at Ahmedabad. Currently, Delhi has the lowest, and Mumbai the highest on-road prices for Hero Honda Achiever. Hero Honda Achiever bike prices vary upon the two-wheeler dealer's location.

9. Hero Honda CBZ Xtreme (Kick Start) : - The Hero Honda CBZ Xtreme has little in common with its earlier version the Hero Honda CBZ except a similar headlamp. New bikes in this series have a showroom price ranging from around Rs. 55,500 to around Rs. 62,000 inclusive of all charges like insurance, octroi, RTO, etc. Hero Honda CD-Deluxe prices vary with the two-wheeler dealer's location. Currently, Delhi has the lowest, and Mumbai the highest on-road prices for Honda CBZ Xtreme (Kick Start). Honda CBZ Xtreme (Kick Start) bike prices

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vary upon the two-wheeler dealer's location.

Hero Honda CBZ Xtreme (Self Start) : - The Hero Honda CBZ Xtreme has little in common with its earlier version the Hero Honda CBZ except a similar headlamp. At the showroom, this bike costs around Rs. 57,500 with an on-road price of around Rs. 64,300. Currently, Delhi has the lowest, and Mumbai the highest on-road prices for Hero Honda CBZ Xtreme (Self Start). Hero Honda CBZ Xtreme (Self Start) bike prices vary upon the two-wheeler dealer's location.

10. Hero Honda Hunk (Kick Start) : - New bikes have showroom prices of around Rs.55,000 and on road prices of around Rs.60,000 at Ahmedabad. Hero Honda Hunk (Kick Start) bike prices vary upon the two-wheeler dealer's location.

Hero Honda Hunk (Self Start) : - New bikes have showroom prices of around Rs. 57,000 and on road prices of around Rs. 60,000 at Delhi. Hero Honda Hunk(Self Start) bike prices vary upon the two-wheeler dealer's location.

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11. Hero Honda Karizma : - The Hero Honda Karizma may be the most modern bikes presently on Indian roads today. New bikes have showroom prices of around Rs. 74,000 and on road prices of around Rs. 82,000 at Ahmedabad. Currently, Delhi has the lowest, and Mumbai the highest on-road prices for Hero Honda Karizma. Hero Honda Karizma bike prices vary upon the two-wheeler dealer's location.

12. Hero Honda Pleasure (102 cc) : - The Hero Honda Pleasure has made its name in the scooterette's market, being fitted with features meant specifically for the modern woman. New bikes in this series have a showroom price ranging from around Rs. 36,700 to around Rs. 41,700 inclusive of all charges like insurance, octroi, RTO, etc. Hero Honda CD-Deluxe prices vary with the two-wheeler dealer's location. Currently, Delhi has the lowest, and Mumbai the highest on-road prices for Hero Honda Pleasure. Hero Honda Pleasure scooter prices vary upon the two-wheeler dealer's location.

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Chapter : 5 4 P’s OF HERO HONDA

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5. 4P s of Marketing

PRODUCTS

Hero Honda, which has a technology tie-up with Japan's Honda Motors, was currently

discussing the feasibility of manufacturing scooters for the Indian market, Mr. Munjal

said. However, the company has a binding clause with Honda's scooter manufacturing

The TCS study examines customer evaluations at three distinct ownership periods: 1

to 6 months, 7 to 18 months, and 25 to 36 months. This helps in understanding the

differences in satisfaction during initial ownership, in-warranty and post-warranty

ownership periods. Satisfaction ratings decline as the length of vehicle ownership

increases. However, Hero Honda Splendor is among the few models to maintain

consistency across the three ownership periods.

Product Range and New Models:

The Company's product range includes "Splendor+" which is the largest selling

motorcycle brand in the world with over 10 lacs vehicles sold in 2008-09. A

cumulative over 40 million customers are the real foundation of the company's

strength. The total shall soon cross the 7 million mark. Its volumes have been

growing at a strong pace of 40% p.a. over the last five years.

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The Company launched a new 100 cc model "Passion pro" in June 2008. The

motorcycle is focused on style and contemporary design, compared to the

Company's earlier motorcycles that were focused on utility and/or style. "Passion

pro" has received an excellent response from the market and has established itself

well, with sales reaching a level of 29000 units in august 2008, within just three

months of its launch.

PRICING

Pricing is a important component of marketing mix of the firm. Determining the

prices of different products of a firm is very difficult task of the marketing manager.

Price denotes money value of a product. If represent the amount of money for which a

product can be exchange. In other words, prices represents the money which the buyer

pays to the seller for a product price represent the exchange value of goods and

services in terms of money. Price is all around.

Price factor has very well been touched by the manufacturers. The pricing strategy of

the company is very set. they price their product according to the cost of production

and also by keeping an eye on the price of the competitors of that segment and

demand of the product in the market.

A pricing strategy that ensured an average manufacturer margin that game dealer an

adequate return and created a reputation with consumers like “a company selling a

good quality product at a reasonable price. Industry focus them selves the low cost

producer with good quality and aimed to maintain the price advantage in every market

of two wheelers.

Hero Honda group ensures an easily affordable pricing through excellent

transportation to common man. I fixes customer centric pricing that provide customer

total satisfaction.

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Hero Honda’s pricing objectives are: List price, Discount , Financing schemes, Credit

terms , Maximize profits

Hero Honda group ensures an easily affordable pricing through excellent

transportation to common man. It fixes customer centric pricing that provides the

customer with total satisfaction.

ADVERTISEMENT

Advertisement, local events sponsorship and promotions and inviting a prominent

personality for the inaugural or first like delivery function would contribute

effectively in generating a wider local interest and attention.

Hero Honda’s latest DKD commercial its two brand starring its Ambassador and

India’s heart throbs, Hritik Roshan and priyanka chopra, truly reflects the multi fact

roles that today’s new generation plays. The commercial reflecting the charisma and

vibrancy of these two stars, takes Desh Ki Dhadkan to dazzling new heights. It is

young, colorful and vibrant and represent the icons of contemporary times. And it will

go a long way in strengthening the leadership status of the product by the mile.

The new commercial is powerful film repeat with an impressive storyline. The effort

to pack the story, drama and impact in just 60 seconds was phenomenal challenge

itself. The idea was born itself. The idea was born out of the very essence of “Hero

and Stars”. Keeping in mind would cause on the drama and impact it would cause on

the audience. It is a commercial packed with action where today’s heart throbs, Hritik

roshan and Priyanka Chopra, are seen tackling new roles. The story being in a field

adjoining a hill with Hritik and priyanka on Hero Honda bikes and Pleasure

respectively.

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Both Sameer and Aditya win lifetime opportunity act with Hritik and Priyanka, the

two star heartthrobs of millions in India and all four will be seen in action in the new

commercial DKD.

Celebrity Endorsement: Hero Honda has roped in film actor Hrithik Roshan, Priyanka

chopra, Mohammed Kaif, Harbhajan Singh, Zaheer Khan, Yuvraj Singh and Virender

Sehwag as its brand ambassadors. Announcing the formation of the Hero Honda

`Team Ambition', Mr. Pawan Munjal, said, "Indian Cricket and Hero Honda have

both made the nation proud and helped the world recognize India's potential. The

`Team Ambition' has many similarities in personality with Hero Honda, such as

`splendor of performance', `passion to excel' and `ambition to win".

In their role as brand ambassadors, the `Team Ambition' would soon star in Hero

Honda's new commercials. As part of the association, Hero Honda will also find

prominence on the bats to be used by Yuvraj Singh and Zaheer Khan in the

forthcoming cricket events.

Sourav Ganguly, who has been associated with Hero Honda since 2000, said,

"Through Team Ambition, we are looking forward to communicate more directly

with over 6 million Hero Honda customers in India and the millions more added every

year."

Says Mr. Anil Dua, Senior Vice-President, Marketing and Sales, Hero Honda, "Hero

Honda has been promoting cricket for over a decade now. Starting with the

memorable Hero Cup in 1993, we have adequately benefited through the promotion

of this national fervor.

Cricket is one sport which binds our entire nation and is, perhaps, the largest platform

in the world, enabling companies to communicate with millions of consumers in the

shortest possible time."

The `Team Ambition' would also provide coaching and guidance to the budding talent

in the country and support cricket projects undertaken by Hero Honda in India and

abroad, a company release said.

Hero Honda will keep up its promotional activities with emphasis on cricket and

entertainment. The company claims that its Desh Ki Dhadkan campaign featuring

brand ambassadors priyanka chopra and Hrithik Roshan has received a very good

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response and helped build the company's image. Last year, the company spent around

Rs 90 crore on advertising and marketing.

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SALES PROMOTION

A fundamental concern of any customer during the purchase Of a double product is

the quality and provision of efficient service. After all queries on product quality,

performance, features and benefits have been satisfied, the customer invariably

focuses on the service factor for the product as the end objectives is to ensure trouble

free operation. In this respect servicing acquires paramount importance and Hero

Honda’s focus and emphasis on these key result area have been instrumental in

establishing its superiority and technological edge in the market. The host of training

programmes and relationship enchantment activity additionally backs the spates of

servicing camp, organized throughout the country. The active support of servicing and

co-operation rendered by the dealer in the form of logistics and infrastructure further

aid in making such programmes highly meaningful and valuable. They are doing free

check up camps reinforce customer trust. Service advisor’s collecting information

from a customer about his satisfaction level after the servicing of their bike. For the

promotion of products the Hero Honda dealer rally. Hero Honda is organizing so

many events in sports, cultural programmes, film -festivals etc for the promotion of

the product eg. Hero Honda NKP salue Challenger Cricket Cup brings new talent to

the force, MALTA Junior Tennis Tournament, Hero Honda social’s Commitment

rehabilitating children affected by violence, operational,

Relief, donation for drought relief, Rota Trade Mela 2007, Road Show, Training

programmers to enhance quality of service, free back up camps reinforce customer’s

trust, ride safe programmes held for Delhi Traffic Police, Mobile Revolution in

servicing etc.

The powerful benefits of test rides, special promotions and communication drives to

draw in the initial customers, preparation of accurate customer information forms to

create a customers database, offer of finance facility and active steps to impart

specific transiting at the dealer’s sales and services levels would be essential steps to

achieving the brand and the company objectives. Mr. Uppal also touched upon the

servicing policy for passion and cautioned the invitees to remain alert for substitution

in Hero Honda brands among its customers.

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PUBLICITY

For the purpose of publicity Hero Honda is always organizing different events, etc.

and they are always inviting celebrities from film, sports, media, politics, etc. There

are some of event and parties are as follows:-

The Hero Honda stardust millennium Honours and BFJA awards for Bengali films.

In a gesture that honors and salutes some of the finest talent in south Indian Cinema.

Hero Honda also security sponsored the 20th Cinema Express Awards.

The sponsorship of the women’s World Cup in 1997 came next, then the ICC Cricket

World Cup 2004.

Hero Honda, the largest two wheeler leader in Indian sponsored the 21st Cinema

express Awards. Marketing Convention 2006. They are priyanka Chopra, Miss

World, Lara Dutta Miss Universe, Diya Mirza Miss Asia Pacific, Sourav Ganguly

Indian Cricket Captain, Daler Mehndi, Mr. Harsha Bhogle the famous cricket

commentator etc.

Dandiya programme at Kota and Banswara. In this Ms Sunita Rao, the popular singer

entertains at the festivals at the Dandiya Programme.

Thrill and the excitement at the Hero Honda Master Golf tournament. In this

tournament Kapil Dev, virendra sehwag, Pronoy Roy, Milkha Singh and so many

celebrities were present.

Galaxy of stars add to the glitter Surat rang 2008. Pinaz Masani, the famous gazhal

singer, Kavita Krishnamurthy the famous play back Singer, Shibani Kashyap the pop

singer are the main highlight of this programme.

Hero Honda sponsor’s 26th Cinema Express Awards and the main celebrities of this

programme are evergreen Hero Devanand, Film Makers Hero Honda sponsor Army

ordnance Corp Motor Cycle Expedition.

Joy of buying

At Hero Honda, we believe in providing the best of service, as reflected in our

corporate ‘We Care’ philosophy.

An extension of this is the passport programme, popularly known as ‘suhana safar’.

This unique programme aims to build long-term relationship with customers.

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5.1 CORPORATE SOCIAL RESPONSIBILITY:

 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 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:

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. Promoting non-conventional sources of energy by providing a 50 per cent

subsidy on biogas plants.

RAMAN MUNJAL VIDYA MANDIR

The Raman Munjal Vidya Mandir began 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 ultra-modern laboratory, a well-equipped audio visual room, an activity room, a well-stocked library and a computer centre.

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5.2 DISTRIBUTION CHANNEL OF HERO HONDA

HERO HONDA HAS direct contact with the dealers. There are no middlemen

involved. The dealers directly sell to the customers. The channel is of 1st level which

has only the dealers as the link between the customers and the company.

Distribution Channel

Manufacturer Dealer Customer

Sub-dealer

How Promptly The Work Done?

The dealers keep in contact with the manufacturer or the head office or the regional

office. As the order fax reach the manufacturer, as in Delhi it takes only one-nights

time of transit from the manufacturer to the dealer. The dealers in far off places like in

Assam, South India and others, it takes a maximum of 7 days to reach the placed

order due to the transit.

Basically, the delay of delivery of the order is basically due to the transit time. The

transit time in near places is not more than one night.

How The Transit Done?

The manufacturer's have their own transportation facilities. The manufacturers have

trucks which can load 18-25 units of bikes at a time, individually. When the units are

dispatched from the factory, or manufacturing it, it is in its standard form and

accessories like seat cover, handle cover, back-looking glass and others are not part of

the standard unit of the two wheeler of Hero Honda.

The transportation trucks straightway reach the warehouses of the dealers. In case the

warehouse of the dealer is not there then the trucks straight away come to the dealers

showroom where they usually have some place for storing the stock as in the case of

Daryaganj dealer. The Daryaganj dealer’s stock is stored in the place just behind the

showroom. For this particular dealer the transportation cost to bring the units from the

warehouse to the showroom is saved and thus the distribution cost is saved. But there

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are dealers like in Green Park, this dealer does not have their ware house nearby to the

showroom which means that this dealer has to keep their own transportation system to

bring the units from the warehouse to the showroom which is not cost effective.

The sub-dealers usually hire the trucks to get the units delivered to their outlets.

Sometimes the dealer’s truck is used by the sub-dealers to carry the units to their

outlets on goof faith. If the sub-dealer is the part of the same dealer then the

transportation charge are less and if they hire it then the cost is high for the sub-

dealers.

What Does Customer Want?

The customers of Hero Honda, according to the Asst. Manager (Sales) are very

particular about the colors that Hero Honda offers in its wide variety of scooters. He

said that the customers are very much aware of their purchase. Gone are the days

when the sales people could influence the buyer to buy a particular product. Almost

90-93% of the customer, whoever comes to the showroom. Usually comes after

he/she had made a decision. So, the work of the sales person is less. The rest 7-10%

have some doubts with regard to the purchase of Hero Honda. It is here, where the

sales persons have to do some work in convincing the customers about the scooter.

The sales person in this regard convey the customers about the mileage, strokes and

also the parameters that the customers enquire.

When Do They Sell More?

Hero Honda scooters peak season selling state from the month of April, just after the

budget and after the month of November the sells become slack. This is mainly due to

the people think that the budget can reduce the prices and moreover the budget

usually brings in a difference at Rs. 1000 - 1500. This is an important factor for

increasing in sells. Usually in the month of November the manufacturer comes with

re-modeling and also new launches. People wait till the month of April to see

whether the prices are slashed or not.

How Is The Price Determined According To The Change?

Manufacturer, on the basis of the cost of production determines the price and the

factors like tax and others. Usually the sales tax on the two wheelers is 8% but in

Hero Honda it 4%. This is because Delhi Government has found out that the pollution

from Hero Honda is very less due to the catalytic converter which every model of

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Hero Honda have. The government has identified that by using the catalytic converter

Hero Honda is helping the environment which is a social cause. Hero Honda Bikes

not only have market in India, but also in abroad. To maintain the differences in

market of the different companies it takes the help of the local manufacturers or the

dealers outside for the distribution of their scooters smoothly.

How's The Relationship Between The Manufacturer And Dealers?

Improvement of sells is the first and foremost concern of the trading people. He said

that they are given the dealership to sell the products of Hero Honda and the

relationship is better when the sells are more. On an average, sells around 5 to 6

scooters per day. The company representatives keeps in contact with the dealers over

telephone and keeps an pressuring the sales managers of the dealers to improve the

sells. The Dealer have 2 sales staff in the showroom and 7 more sales staff who

moves around their sells territory on the call of the customers. The representatives of

the company visit the dealers weekly or fortnightly. As per Mr. Ayub, the

representatives of the company keeps on pressuring the dealers to increase the sales as

in the case of the aforesaid dealer. Earlier they use to sell around 5-6 scooters a day

and now they are asked to sell around 8-10 scooters on an average per day. The

company keeps a very good relationship with the dealers. As the launch of the new

models the company calls on all the dealers for meeting. In these meetings the

company executives discusses the strategies that the company will follow during the

forthcoming months. The company accordingly asks the dealers to change their

strategies. Things like the target of sales sells for the forthcoming year, what should

be the attitude towards the market, the company's forecast and many such issues are

discussed in these meetings. The company also meets with the dealers during the time

of new launch. Here the company invites the dealers and also the sub dealers to train

them about the new product that is going to be launched. The company gives the

dealers and sub-dealers mechanics a training of around 15 to 20days.

The most important fact about the dealers of Hero Honda is that they organize training

programmes for the local mechanics who doesn't have any affiliation from any brand

two-wheelers. These mechanics who are running their business in very small scale are

invited to the training camps of the dealers at the launch of new models. The dealers

improve the relationship at personal level with these local garage by giving them gifts.

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5.3 4 A’s OF HERO HONDA

1. Availability a) Hero Honda's 2 plants are in Dharuhera and Gurgaon, both in India. Third

plant at Haridwar, Uttaranchal has also started production by April, 2008.b) Hero Honda's extensive sales and service network have spans over 3,000

customers touch points.c) The number of touch points (dealerships plus sales and service outlets) is

already 3,500 from 2002 and another 500 would be added every year.

2. Affordability a) Hero Honda offer cheapest motorcycles in India cost between Rs 30,000 and

Rs 35,000. b) Hero Honda with the help of ICICI Bank provides loan to the customers &

also provide easy monthly installment scheme to customers.

3. Awareness a) Hero Honda Motors Ltd was the top advertiser then, accounting for a little

over 25% (one fourth) of the share.b) Five hundred sales representatives were taken on board for the mission

Har Gaon, Har Aangan (every village, every courtyard.)c) Company gives advertisement in different media vehicles time to time. Like

in TV. Magazines, newspaper, etc.d) Hero Honda also organizes free service camps every year.e) Hero Honda also takes art in trade fair.

4. Acceptability a) Hero Honda has accepted by people because its strong brand image and

product quality.b) Hero Honda is considered to be most fuel-efficient bike on Indian roads.c) Hero Honda bikes are purchased more by daily users who needs more

average of bikes as well as look.d) People prefer Hero Honda because of its product varieties & stylish design

etc.

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Chapter : 6 COMPARISON OF HERO HONDA PRODUCTS

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6. COMPARISON OF HERO HONDA’S THREE PRODUCTS

CBZ-X-TREME

While CBZ was introduced the market for 150c segment war not quite well

developed. It was a niche market with a number of

unsatisfied and unrecognized customer who aspired for more power, life style

and speed. So it can be concluded that the product the strategy was

diversification. The customers were to be taught about their unrealized needs.

For that the company had to use informative as well as aspirational advertisement

To make the customers understand that the bike was for the upper class market, it

was priced a premium also.

KARIZMA

In the case of karizma, the market for 200+ segment was

Non existing. The company introduced the bike as a new product. For the

company it was the first bike in the highly demanded 200+cc segment. Here the

company has adopted the product development strategy.

The company has priced this product with respect to future competetion.

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SPLENDOR+

Splendor+ came to the scenario as a more

efficient bike catering to the needs of the 100cc segment, which at that time was

served by many others.

The analysis reveals that the company has adopted Market penetration as its

strategy. For that, advertising mainly focusing on its superior quality, were then

released. Fuel efficiency coupled with zero maintenance was projected as a key

differentiator.

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6.1 MARKET SHARE

Hero Honda Motors Ltd on 14- July- 2009 reported a forecast-beating 7.1 per cent rise in net profit. Helped by falling commodity prices, a cut in excise duties and sales in rural areas.

Hero Honda's closest rival, Bajaj Auto Ltd, second week of July, 2009 reported a 23 per cent drop in net profit for its fiscal third quarter as a lack of financing and high interest rates crimped demand.

Hero Honda was not as affected, as 60 per cent of its revenues come from rural markets, where purchase are less reliant on loan financing than in urban areas and where its 100 cc bikes are popular, Munjal said.

Company Apr-Jun2008-09

Apr-Jun2009-10

Growth%)

MarketShare (%)

Rural Market share

Urban Market share

Hero Honda

877,089 1,094,996 24.84 51.26 10% 25%

Bajaj Auto

391,100 331,731 -15.18 15.53

TVS Motors

292,530 315,785 7.94 14.78

Honda 226,068 284,890 26.01 13.33Total Market

1,865,767 2,135,869 14.48 -

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6.2 WHY HERO HONDA IS SUCCESSFUL BRAND

Hero Honda has managed to put in spectacular performance going from strength despite increase in competition; the company's sales have witnessed an uptrend, registering an average growth of 42% in the three years under review.

Hero Honda has managed to achieve this because its strong brand image and proven product quality underpinned the performance growth in recent years. Apart from the strong brand "splendor" the company's performance across the spectrum of the motorcycle market helped it exploit the growing demand for 4-stroke motorcycle.

At the lower end the company has CD 100 SS at middle level splendor, passion and Dawn the CBZ Extreme/ Karizma range is targeted at premium segment.

Some years back Hero Honda are getting stiff competition because of Bajaj, TVS and Yamaha have a presence in 125cc bikes segments where Hero Honda has not any presence in this segment. Now this gap is filling up by Hero Honda's new Splendor NXG, Glamour. But still there is a gap between 150cc to 225cc segment which is most preferable segment by youth today.

With newer and better models are coming up customer has better and bigger choices to choose from.

It is the competition on various aspects such as price, design technology, after sales services and even purchases offers, which provides to both buyer and seller.

Even many dealers are in view that today Hero Honda and Bajaj, thrives on competition.

Right now it seems that the real war is between Hero Honda and Bajaj auto. But one cannot discount the fact that there are other players, who are gaining strength day by day.

There was a time when Bajaj ruled the Indian Two Wheeler Industry with their scooters in the form of Chetak and the likes. They had a minor presence in the motorcycle market with some models from the Kawasaki range. Hero Honda was a minor player in that market with their 4-stroke bikes, which were totally dominated by Yamaha with their RX-100.

Situation changed dramatically when the pollution norms meant, two wheelers had to go 4-stroke and petrol started to get expensive. Hero Honda started emerging as the dominating force with their extremely efficient engines. People started looking towards motorcycles instead of scooters and the day arrived when Hero Honda became the largest two-wheeler manufacturer in the world with Splendor breaking all records.

Hero Honda kept playing their cards with modest decorative upgrades to their range of bikes though competition forced them to launch newer models in the form of

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Ambition, CBZ, and Karisma. However, the entry-level bikes in the form of Hero Honda Splendor and Hero Honda Passion were not upgraded to face the competition from Bajaj or TVS. The bike still retains extremely high confidence level from the users and sells like hot cakes.

Entry of Hero’s partner in the Hero Honda in form of Honda changed all that. They announced their entry with an extremely successful bike Unicorn which after months of its launch still has waiting periods of many weeks. More interesting models are come in the market regularly. They also are competing with Bajaj heads on with their extremely popular models in the scooters market (Activa and Dio).

This has forced Hero Honda to think again… Honda can emerge as a dominating force in the market with its extremely high quality standards and technical expertise. And the results are coming in front of us. They have announced their arrival in the scooters market for the first time with a model planned for launch. Moreover, they have released a much-needed upgrade model of their best selling Splendor.

Super Splendor is a 125cc bike, which is being manufactured at the company state-of-the-art plant in Gurgaon, Haryana. They have priced this model at a modest Rs 42,500. This should help Hero Honda retain their market share in the executive segment considering the brand value of Splendor.

They are also considering setting up a third plant to increase their production capacity, which already stands at an impressive figure of 2.4 lakh units.

WHY HERO HONDA IS A WINNER

Building a wide product range across segments Differentiated brand building campaigns Focus on driving sales in rural India Launching new models

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CHAPTER : 7

SWOT ANALYSIS OF

HERO HONDA COMPANY

A) STRENGTH:-

a) Achievement: Retained the coveted position of World No 1 two-wheeler company for the seventh consecutive year.

b) High Sales Growth: Hero Honda experienced great growth throughout its early days. The Munjal family started a modest business of bicycle components. By 2002 Hero Group had sold 86 million bicycles producing 16000 bicycles a day. Today Hero Honda has an assembly line of nine different models of motorcycles available.

c) Fuel economy: Over all fuel consumption by its products is less in compare to other brand’s product. They have so far been able to give better mileage output. Because of this Hero Honda splendor has magical sales record.

d) Quality policy: Total quality management is the chore philosophy of the company and it is thus always focussed on product innovation and performance.

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B) Weakness:

a) Less promotion: The promotions and ads of Hero Honda are very less as

compared to its competitors.

b) High maintenance: Some of the products of hero Honda like Karizma require

high maintenance.

c) Lack of recycling scrap: It expected that by 2020 scrap generated by end of life

vehicles in India would be about 2.5 million tonnes and 40% of it will come from two

wheeler.But hero honda is not capable enough to recycle the scrap generated and may

impose environmental threat.

d) Labor relations: In Hero Group there is no organized labor union and family

members of employees find ready employment within Hero. The philosophy with

regard to labor management is "Hero is growing, grow with Hero."

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C) Opportunities:

a) High GDP & increasing income level of consumer: Supported by strong demand

impulses, especially in the manufacturing and service sector, India’s gross domestic

product grew at 8.9 per cent. This is the fourth successive year in which the country’s

growth has exceeded 8 per cent growth, and India is now in a select club of 12

countries with a trillion dollar plus economy.

b) Good will of the company: If the company utilizes the good will they have gained

so far from their customers, they can increase the sales performance by economizing

the cost and few technical renovation of the product. With new launch they can be

benefited at present market scenario like Karizma, Hunk has huge attraction towards

the younger generation because of its style, sporty look, and high accelerating power

and is stable at its feet even at high speeds.

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D) Threats:

a) Finance assistance: Easy availability of finance is the main cause of sales growth

and any restriction will hamper its growth prospects.

b) Inflation: If inflation increases cost of raw material used in production will go

high and selling price may go high that may decrease demand of the two wheeler.

c) Technical renovation aspect: Competitor bike like pulsar and apache are threat to

Hero Honda product like Karizma and Hunk in respect to fuel economy. So if they

don’t short out in the new launches and give something extra in its engineering

performance it may affect in demand of this company product.

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CHAPTER : 8

RECOMMENDATIONS

After the complete analysis of entire assignment we put forward a set of

recommendations which are a follows:

Since the client has targeted the right segments, but the reason for the low sales of

Hero Honda

Cbz is high price. Moreover the client has positioned the bike as “city ride made

easy” fuel –efficient bike as a result of which if comes in direct competition with.

TVS Victor and Bajaj Boxber. But HHML is overlooking one feature in bike.

Which is its low maintenance, and reliability (i.e. less chances of breakdown)

which are absent in its competitors. Therefore in order to meet the sales target,

two options are available with the client, one is to redesign the bike and second is

to reposition the bike as “bike with one time investment” since redesigning of bike

may involve a big task and huge investment therefore we recommended

repositioning the bike.

In order to increase the market share, customers promotional activities should be

encouraged through advertisements to attract the male & female segment.

Hero Honda, if it starts functioning independently, has to innovate and develop

their own technology to support their growth aspirations.

The dissatisfied customers should be dealt with appropriately should be satisfied

so that they do not break the relationship with company.

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CHAPTER : 9 CONCLUSION

"We are confident that we will continue getting technology from Honda."

Honda, for its part, has also made similar statements. However, industry

analysts do have doubts. Says an industry analyst, "Honda's track record in

India does lead to some apprehensions.

An analysis of Honda's past tie-ups in India would prove so. For instance,

Honda exited the joint venture with Kinetic by selling its stake to the

promoters and launched a replica of Kinetic Honda's ungeared scooter; its

60:40 ventures with SIEL for cars progressively became a 99:1 partnership

and its venture with the Shriram group for gensets ended when it bought out

Shriram's stake. This does throw up some questions with regards to the path

ahead for Hero Honda." These examples prove that Honda has always wanted

to have its own entity, says another analyst.

Most of the customers of Hero Honda belong to congested areas. They mostly

belong to middle class and are mostly officials/ executives. Thus, we conclude

client has targeted the right segment.

From the findings we conclude that a customers while purchasing a bike,

customers takes into consideration mainly fuel efficiency, good looks, low

maintenance cost and reliability.

The main competitors of Hero Honda are Bajaj Auto, Yamaha and TVS.

The consumer preference basically depends upon wider network and better

services.

Customers are influenced more to buy a product by advertisements rather than

dealer friend’s or family recommendations.

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CHAPTER : 10

BIBLOGRAPHY

1. WWW.HEROHONDA .COM

2. WWW.GOOGLE.CO.IN

3. WWW.NESTIE.COM

4. ANNUAL REPORT 2008-09

5. BUSINESS INDIA

6. FINANCIAL EXPRESS

7. BUSINESS LINE

8. OVER DRIVE MAGAZINE

9. WWW.INDIAINFOLINE.COM

10. WWW.ECONOMICTIMES.COM

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