Bilal Project on HERO MOTOCORPdhdrhhnfdj

7/28/2019 Bilal Project on HERO MOTOCORPdhdrhhnfdj

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PROJECT REPORT

ON

A STUDY OF IMPACT ON SALE AFTER SAPRATION OF HERO ANDHONDA

Under the Supervision of Submitted ByMr. ZEEBA KAMIL Mohd.BelalAsstt.prof MBA Group A

Academic Year 2011-2013

FACULTY OF MANAGEMENT and research

INTEGRAL UNIVERSITY


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ACKNOWLEDGEMENT

Every work constitutes great deal of assistance and guidance from the people

concerned and this particular project is of no exception.A project of the nature is surely a result of tremendous support, guidance,encouragement and help.Wish to place on record my sincere gratitude to Prof. (Dr.) Zeeshan Amir and theentire faculty of our department with special reference to my project guide, MrsZeeba Kamil I thank her for her constructive help and encouragement throughout the

project. Without their support and guidance taking this would not have been possible.Also, wish to acknowledge enthusiastic encouragement and support extended to me

by my family members. At last, I would like to thank all the faculty of businessmanagement to help me completing this project.I am also thankful to my friends who provided me their constant support andassistance.

Mohd.BelalMBA I st Year

Group -BMarketing

Roll no.:1100122065


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GUIDE CERTIFICATE

This is to certify that Mr. Mohd. Belal , student of M.B.A (Marketing) 1st Year

having Roll No. 1100122065 have completed his semester project on the topic ASTUDY OF IMPACT ON SALE OF HERO MOTOCORP AFTER THE JOINTVENTURE OF HERO AND under my supervision and guidance.

The behaviour of the student during the project period was found to be highlyappreciable and satisfactory.

I wish him all the best for his future endeavours.

Mrs. Zeeba KamilFACULTY GUIDEFACULTY OF MANAGEMENT & RESEARCH

.


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TITLE OF CONTENT

SerialNumber

Particulars PageNumber

1 Introduction 52 Objective 5

3 Research Method 6

4 Finding and Interpretation 7

5 Conclusion 9

6 Chapter 1: Introduction and Conceptual

background

16

7 Chapter 2:Industry Profile 40

8 Chapter 3:Research Methodology

9 Chapter 4:Finding and Control

10 Chapter 5:Conclusion and Suggestion

11 Bibliography

Annexure

Questionnaire


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EXECUTIVE SUMMARY

INTRODUCTION

Hero Motocorp Ltd. formerly Hero Honda is an Indian motorcycle and scooter

manufacturer based in New Delhi, India. Hero Honda started in 1984 as a jointventure between Hero Cycles of India and Honda of Japan. The company is thelargest two wheeler manufacturer in India. The 2006 Forbes 200 Most Respectedcompanies list has Hero Honda Motors ranked at 108.In 2010, When Honda decided to move out of the joint venture, Hero Group boughtthe shares held by Honda. Subsequently, in August 2011 the company was renamedHero MotoCorp with a new corporate identity.

OBJECTIVE

To study the factor responsible to increase the sales value of Hero product.To study the plan and strategy of Hero product.To ascertain the difference in technology and strategy of Hero and Honda.To predict the future of Hero Motocorp.

RESEARCH METHODOLOGY

Problem Definition

The project concerns studying regarding the A STUDY OF IMPACT ON SALE OFHERO MOTOCORP AFTER SEPARATION OF HERO AND HONDAApproach To The ProblemThe survey was conducted on a sample of 30 Peoples in Lucknow. The people

included both males and females in the age group ranging from 20-50 and above. The

target group included self employed peoples & businessman at different levels of

society in the city.

Type Of Research Design

In order to achieve the objective of the study the research design used was

Descriptive Research because the questionnaire designed describes the SAVING

AND INVESTMENT PATTERN OF RURAL PEOPLE.


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Source Of Data Collection

Data is collected through Primary and Secondary sources. Research was carried out

through Primary And Secondary Data.In Primary Data we use closed ended question which were being asked to thedifferent people of that village.In Secondary Data we use information from the previous reports, newspapers,

information from the net.

Sampling Technique

For the given research we used Simple Random sampling because from all thepeople available in the urban randomly only 30 people were selected to conduct theresearch due to shortage of time.


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CHAPTER ONE

INTRODUCTION AND CONCEPTUAL BACKGROUND

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INTRODUCTION

GENERAL INTRODUCTION TO THE STUDY

Two-Wheeler industry is one of the largest industries in the automobile sector ofglobal Market. Being the leader in product and process technologies in themanufacturing sector, it has been recognized as one of the drivers of economicgrowth. During the last decade, well-directed efforts have been made to provide a

new look to the automobile policy for realizing the sector's full potential for theeconomy. The liberalization policies have led to continuous increase in competitionwhich has ultimately resulted in modernization in line with the global standards aswell as in substantial cut in prices. Aggressive marketing by the auto financecompanies have also played a significant role in boosting automobile demand,especially from the population in the middle income group. Presently manyinternational brands like Honda, Suzuki, etc. are competing with Indian,


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Brands such as Hero Honda, Bajaj, and T V S, Kinetic etc. to capture Indian markets.These aggressive marketing strategies have resulted in making the consumer themajor key for success in the industry. Each product offering is now designed to meetand a exceed the expectations of the consumer. But understanding consumer behaviorand knowing consumers is never simple. And it is more difficult that to understand

what consumer perceives about the product. Customers may say one thing but doanother. They may not been touch with their deeper motivations. They may respondto influences that change their minds at the last moment. Small companies such as acorner grocery store and huge,Corporations stand to profit from understanding how and why their consumers

buyers.

THEORETICAL BACKGROUND OF STUDY

Market

The term marketmay be considered as a convenient meeting place where buyers andsellers gather together for the exchange of goods and services. Market means a groupof people having unmet wants, purchasing power to make their demand effective andthe will to spend their income to fulfill those wants. Today a market is equated withthe total demand.The American marketing association defines a market, as the aggregate demand ofPotential buyers for a product or service. Under keen competition, a marketer wants

to create or capture and retain the market i.e.Customer demand through an appropriate marketing mix offered to a target market.The market offering i.e. supply must meet customer demand, which are unmet needsand desires.

Marketing

Marketing is a comprehensive term and it includes all resources and set of activitiesnecessary to direct and facilitate the flow of goods and services form the producer tothe consumer through the process of distribution. Businessmen regards marketing as amanagement function to plan promote and deliver products to the clients orcustomers.Human efforts, finance and management constitute the primary resources inmarketing.We have twin activities, which are most significant in marketing:1. matching the product with demand i.e. customer needs and desires or the targetmarket.


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2. The transfer of ownership and possession at every stage in the flow of goods fromthe primary producer to the ultimate consumer.The American marketing association defines marketing as the process of planningand executing the conception, pricing, promotion and distribution of ideas, goods andservices to create exchanges that satisfy individual and organizational objectives.

Marketing Research

Marketing research is the systematic gathering, recording and analyzing of the dataabout problems connected to the marketing of goods and services i.e. problemsrelating to product, price, promotion and distribution of the 4ps of the marketingmix.Marketing research is concerned with all those factors, which have a direct impactupon the marketing of products and services. Marketing research has grown alongwith the expanded role of marketing as the focus for the business decision-making.

Need of marketing research

Marketing research is conducted for different purposes. They are:1. To estimate the potential market for a new product.2. To know the reactions of consumers to a product already existing in the market.3. To find out the general marketing condition and tendencies.4. To know the types of consumer buying and their buying motives.5. To know the reactions of failure of a product already in the market.

6. To assess the strength and weakness of competitors.

Customer perception

Perception is the sensing of stimuli external to the individual organism the act orprocess comprehending the world in which the individual exists.Perception has been defined by social psychologists as the Complex process bywhich People select organize and interpret sensory stimulation in to a meaningful andcoherent Picture of the work.


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Cultural Factors

Cultural factors exert the broadest and deepest influence on consumer behavior. Theroles played by the buyers culture, subculture and social class are particularlyimportant. Culture refers to that complex whole which includes in it knowledge,

beliefs, art or anything man acquires as a member of society Subculture Eachculture consists of smaller subcultures that provide more specific identificationand socialization for their members. Sub cultures include nationalities, religions,racial groups and geographic regions.

Social Class

Virtually all-human societies exhibit social stratification. Stratification sometimestakes the form of a caste system where the members of different castes are reared forcertain roles and cannot change their caste membership more frequently; stratificationtakes the form of social class.

Reference Groups

A persons reference groups consists of all the groups that have a direct or indirectInfluence on the persons attitudes or behavior. of FamilyThe family is the most important consumer buying organization in the society and itconstitutes the most influential primary reference group. Roles and statusesA person participates in many groups, family, clubs, organizations etc.

Age and stage in the life cycle

People buy different goods and services over their lifetime. Taste in clothes, furnitureand recreation is all age related.Consumption is shaped by the family life cycle. Marketers often choose life-cycleGroups as their target market.

Occupation and economic circumstances

Occupation also influences a persons consumption pattern. Product choice is greatlyaffected by economic circumstances; spendable income, savings and assets, debts,

borrowing power and attitude toward spending versus saving.


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Lifestyle

People from the same subculture, social class, and occupation may lead quitedifferent lifestyles. A lifestyle is the persons pattern of living in the world expressedin activities, interests and opinions. Lifestyle portrays the world person interacting

with his or her environment.

Personality and self concept

Each person has a distinct personality that influences buying behavior. It is thatDistinguishing psychological characteristics that lead to relatively consistent andEnduring responses to environment. Related to personality is self-concept or selfimage. Marketers try to develop brand images that match target markets self image.

Motivations

A person has many needs at a given time. A need becomes a motive when it isaroused to a sufficient level of intensity. A motive is a need that is sufficiently

pressing to drive the person to act.

Objectives of the Study

1) To analyze consumer perception towards Hero Honda motor bikes2) To get feedback on what consumer expects from Hero Honda

3) To analyze consumer perception towards services offered by Hero Honda andPerformance of the motor cycle4) Develop skills in report writing through data collection, data analysis, and dataExtraction and presentation.

Scope of the study

The study helps in having an awareness of customer satisfaction towards HeroHonda. As the product had a good reputation in the market, this study will help toknow that how Hero Honda lost their grip in motor bike industry. It also helps us toincrease our practical knowledge towards marketing of a company. Marketing istaken as the functional area as the customer satisfaction is to be taken into account.


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Replacement demand to be a key contributor to 2W industry volumes

going forward

According to estimates, around 50% of the total domestic sales of 2W are now madeto first-time buyers, 30% to customers looking to upgrade from their existing vehicle,

and 20% to buyers seeking a second vehicle for the household. The break-up suggeststhat currently around 50% of the sales in the domestic 2W market are made toreplacement buyers. Industry estimates also suggest that the 2W ownership cycle hasnow shrunk to less than five years. Considering that the industry has sold around 79million 2W in the domestic market since the turn of the century, the total replacementdemand works out to a fairly large number. Add to this the healthy growth in sales tofirst-time buyers in recent years, driven in particular by sales to the rural market, thereplacement opportunity could only increase in the future.

Hero MotoCorp Limited (HMC) is the World's single largest two-wheeler motorcyclecompany. Honda Motor Company of Japan and the Hero Group entered a jointventure to setup Hero Honda Motors Limited in 1984. The joint venture not onlycreated the world's single largest two wheeler company but also one of the mostsuccessful joint ventures worldwide. The 26 year old Joint Venture finally ended inDecember, 2010 with the Munjal buying the 26% stake of Honda for an amount

believed to be in the region of USD 1.4 billion at a 30% discount. Following HMC'sexit, the Munjal Group now owns 52.2 per cent stake in Hero Honda Motors throughHero Investments Pvt. Ltd. (HIPL) (43.3 per cent) and Bahadur Chand Investments(8.7 per cent). Two private equity firms, namely Bain Capital and Lathe Investments

Pvt. Ltd., have funded Munjal Group's buyout of Honda Motor's 26 % stake and nowown 29 % of HIPL.

Split with Honda

Hero Honda Motors Ltd. and Honda Motors recently concluded the formalitiesassociated with Honda's exit through sale of the 26 per cent stake it held in HHML.The split with Honda does create some concerns in the form of absence of technologyto back future product launches as well as brand perception-related issues. The

current agreement is due to expire in 2014 until which time HHML may continue tosource technology from HONDA and its affiliates in return for royalty. HHML'smanagement has indicated that royalty payments for new models will remainrestricted to 3-5 per cent of sales despite the split. However, simultaneously; HHMLwill have to incur higher expenditure on setting up internal R&D capabilities. Thecompany could choose to develop internal capabilities or tie-up with domestic orinternational firms capable to provide the needed technical expertise for futurelaunches.


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Comparing the fundamentals of Hero MotoCorp with the other players in the two-wheeler segment, it can be observed that:

Based on the P/E ratio the stock seems to be overvalued if compared to its closestcompetitor Bajaj Auto Ltd. (BAL) as on 31st September.

Going further and factoring in the predicted growth rate (growth for BAL and

TVS calculated as a multiple of ROE and retention ratio of last five years) for thenext few years, BAL is still undervalued and as such looks like a more lucrativeoption to invest in as compared to HMC.

A similar story can be seen in the Price-to-Book Value ratio where BAL with a net worth close to INR 166 crores is trading at a multiple of 9 times while HMC istrading at 13 times its book value. In fact TVS which is trading way above the otherfirms when it comes to other multiples, is trading at 1/3rd of that of HMC.

with the industry driven by sales volumes, especially in the economy and

executive segments where the growth lays, the price-to-sales ratios gives a fairerindication as to the valuation of the stock in this industry. In this case both BAL andHMC are trading at an equal multiple.Key Risks that would affect the valuation

Inflation in input costs not being neutralised by price increases because ofcompetitive pressures.

High concentration on Executive segment.

Intensifying competition following the entry of global players and resurgence ofother Indian 2W companies.

Inability to develop in-house technical capability or form alternate technical tie-

ups with external institutions.


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Cash FlowStatementDESCRIPTION

Mar-07 Mar-08 Mar-09 Mar-10 Mar-11

Profit BeforeTax

1246.10 1410.28 1781.46 2831.73 2404.76

Adjustmentfor non cashexpenses

-18.50 -17.72 -19.30 -54.63 146.49

Changes InworkingCapital

-207.20 261.21 98.50 484.59 218.06

Tax Paid -395.35 -441.99 -501.63 -575.05 -481.20

Cash From

OperatingActivities

625.05 1211.78 1359.03 2686.64 2288.11

Cash FlowfromInvestingActivities

-273.13 -781.01 -861.19 -527.63 - 1322.31

Cash fromFinancingActivities

-493.46 -432.33 -499.93 - 2109.31 -989.18

Net CashInflow /Outflow

-141.54 -1.56 -2.09 49.70 -23.38

OpeningCash &CashEquivalents

158.72 16.66 15.19 13.45 62.61

Effect ofForeignExchange

Fluctuations

-0.52 0.09 0.35 -0.54 0.09

ClosingCash &CashEquivalent

16.66 15.19 13.45 62.61 39.32


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Capital expenditure

Hero Honda plans to expand its total installed capacity from 6.0 million units toaround 6.6 million units by the end of 2011 through expansion of its Hardwar

plant, (which is eligible for various excise duty and income tax exemptions). ThisBrownfield expansion would require an investment of Rs 1.0-1.2 billion. Thecompany is also looking for setting up its fourth plant, for which it has shortlisted

three states - Gujarat, Tamil Nadu and Karnataka. The new plant is likely to havean initial installed capacity of 0.5 to 0.8 million units.


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DRIVERS FOR ADOPTION OF THE HERO MOTOCORP

TECHNOLOGY Ltd.

The Indian manufacturing Industry that has tremendous cost pressures is adopting

information technology in a big way to remain cost competitive and improveefficiencies. Today Hero MotoCorp Ltd., worlds largest two wheeler company,has some of the leading edge technologies that are supporting business achieve itsgoals.Apart from the business benefits of implementing any technology being the keydriver, the organizational culture of exploration and espousal of new technologyhas played an important role in driving technology adoption. The key role of theCIO and the other members of the senior management team is to nurture anenvironment where people are not averse to taking risk in early adoption oftechnologies. As long as it makes business sense and the initiatives are within

agreed parameters, management adequately supports these initiatives.Over the years, the need to push the deployment of technology in the organizationhas seen a phenomenal change with a major pull now coming from users to deployIT based solutions and automation so as to enable them to utilize their time betterin delivering business goals. While the users have realized the immense benefits oftechnology in an official set-up, another factor for rapidly growing adoption has

been the increasing penetration of IT in the daily life of people. With things likeinternet banking, on-line bookings or the advent of social networking, IT has

become an integral part of the life of users.

Yet another driver of adopting emerging technologies is the easy availability ofskill sets with the service providers and consultants. Now CIOs only have to focuson organizational needs while


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Hero MotoCorp maintains its leadership with a 44.7 % market share in the Indiantwo-wheeler industry, with presence across key segments, wide portfolio and awide-spread distribution network. Hero Honda continued its leadership in theexecutive segment with a market share of 63.8 % in 2010-11. The key brandsdriving volumes for the company included Super Splendor and Passion Plus in theexecutive segment. Over the past 5 years, HMC's overall market share in thedomestic market grew from 48 % in 2006-07 to over 60 % in 2008-09. Thecompany's market share currently stands at 55 % in 2010-11. While the company'soverall market share has improved, intense competition from the likes of.


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CHAPTER-TWOINDUSTRY PROFILE

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Company profile

Hero is the brand name used by the Munjal brothers for their flagship companyHero Cycles Ltd. A joint venture between the Hero Group and Honda Motor

Company was established in 1984 as the Hero Honda Motors Limited at DharuheraIndia. Munjal family and Honda group both own 26% stake in the Company. In2010, it was reported that Honda planned to sell its stake in the venture to theMunjal family.During the 1980s, the company introduced motorcycles that were popular in Indiafor their fuel economy and low cost. A popular advertising campaign based on theslogan 'Fill it - Shut it - Forget it' that emphasized the motorcycle's fuel efficiencyhelped the company grow at a double-digit pace since inception. The technology inthe bikes of Hero Honda for almost 26 years (19842010) has come from theJapanese counterpart Honda.

Hero MotoCorp has three manufacturing facilities based at Dharuhera, Gorgon inHaryana and at Hardwar in Uttarakhand. These plants together are capable ofchurning out 3 million bikes per year. Hero MotoCorp has a large sales and servicenetwork with over 3,000 dealerships and service points across India. Hero Hondahas a customer loyalty program since 2000, called the Hero Honda PassportProgram.The company has a stated aim of achieving revenues of $10 billion and volumes of10 million two-wheelers by 2016-17. This in conjunction with new countrieswhere they can now market their two-wheelers following the disengagement from

Honda, Hero MotoCorp hopes to achieve 10 per cent of their revenues frominternational markets, and they expected to launch sales in Nigeria by end-2011 orearly-2012. In addition, to cope with the new demand over the coming half decade.

History

Hero MotoCorp was started in 1984 as Hero Honda Motors Ltd.1956 -- Formation of Hero Cycles in Ludhiana (majestic auto limited)

1975 -- Hero Cycles becomes largest bicycle manufacturer in India.1983 -- Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signedShareholders Agreement signed1984 -- Hero Honda Motors Ltd. incorporated

1985 -- Hero Honda motorcycle CD 100 launched.1989 -- Hero Honda motorcycle Sleek launched.1991 -- Hero Honda motorcycle CD 100 SS launched.1994 -- Hero Honda motorcycle Splendor launched.


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1997 -- Hero Honda Motorcycle Street launched.1999 -- Hero Honda motorcycle CBZ launched.2001 -- Hero Honda motorcycle Passion and Hero Honda Joy launched.2002 -- Hero Honda motorcycle Dawn and Hero Honda motorcycle Ambition

launched.2003 -- Hero Honda motorcycle CD Dawn, Hero Honda motorcycle Splendor,

Hero Honda motorcycle Passion Plus and Hero Honda motorcycle Karizmalaunched.2004 -- Hero Honda motorcycle Ambition 135 and Hero Honda motorcycle CBZ

Launched.2005 -- Hero Honda motorcycle Super Splendor, Hero Honda motorcycle CD

Deluxe, Hero Honda motorcycle Glamour, Hero Honda motorcycle Achiever andHero Honda Scooter Pleasure.2007 -- New Models of Hero Honda motorcycle Splendor NXG, New Models of

Hero Honda motorcycle CD Deluxe, New Models of Hero Honda motorcyclePassion Plus and Hero Honda motorcycle Hunk launched.2008 -- New Models of Hero Honda motorcycles Pleasure, CBZ Extreme,

Glamour, Glamour Fi and Hero Honda motorcycle Passion pro launched.2009 -- New Models of Hero Honda motorcycle Karizma: Karizma - ZMR andlimited edition of Hero Honda motorcycle Hunk launched2010 -- New Models of Hero Honda motorcycle Splendor Pro andNew Hero

Honda motorcycle Hunk andNew Hero Honda Motorcycle Super Splendorlaunched.2011 -- New Models of Hero Honda motorcycles Glamour, Glamour FI, CBZExtreme, and Karizma launched. New licensing arrangement signed between Heroand Honda.August-- Hero and Honda part company, thus forming Hero MotoCorp and Hondamoving out of the Hero Honda joint venture. November-- Hero launched its firstever Off Road Bike Named Hero "Impulse".Termination of Honda joint ventureMain article: Hero Honda splitIn December 2010, the Board of Directors of the Hero Honda Group have decidedto terminate the joint venture between Hero Group of India and Honda of Japan in

a phased manner. The Hero Group would buy out the 26% stake of the Honda inJV Hero Honda. Under the joint venture Hero Group could not export tointernational markets (except Sri Lanka) and the termination would mean that HeroGroup can now export. Since the beginning, the Hero Group relied on theirJapanese partner Honda for the technology in their bikes. So there are concernsthat the Hero Group might not be able to sustain the performance of the JointVenture alone


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Hero MotoCorp

The new brand identity and logo, Hero MotoCorp, was developed by the Londonfirm Wolff Olins. The logo was revealed on 9 August 2011 in London, the day

before the third test match between England and India.Hero MotoCorp can now export to Latin America, Africa and West Asia. Hero isfree to use any vendors for its components instead of just Honda-approvedvendors.

Company performance

During the fiscal year 2008-09, the company sold 3.7 million bikes, a growth of12% over last year. In the same year, the company had a market share of 57% in

the Indian market. Hero Honda sells more two wheelers than the second, third andfourth placed two-wheeler companies put together. Hero Honda's bike Hero HondaSplendor sells more than one million units per year.RecognitionLogo of Hero Honda, as the company was known till Aug. 2011The Brand Trust Report published by Trust Research Advisory has ranked HeroHonda in the 13th position among the brands in India.Motorcycle modelsSee also: Category: Hero Honda motorcycles

SleekStreetAchieverAmbition 133, Ambition 135

CBZ, CBZ Star, CBZ ExtremeCD 100, CD 100 SS, Hero Honda Joy, CD Dawn, CD Deluxe, CD Deluxe (SelfStart)Glamour, Glamour FiHunk

Karizma, Karizma R, Karamu ZMR FI

Passion, Passion Plus, Passion ProPleasureSplendor, Splendor+, Splendor+ (Limited Edition), Super Splendor, Splendor

NXG, Splendor PRO.Suppliers


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It is reported Hero Honda has five joint ventures or associate companies, MunjalShowa, AG Industries, Sunbeam Auto, Rock man Industries and Satyam AutoComponents that supply a majority of its components.After premium bikes, Hero MotoCorp actively eyeing low-cost segment

NEW DELHI, MARCH 13,A year after dissolving its joint venture with Honda, Hero MotoCorp is activelylooking at the low-cost bike segment. This is expected to help the company furtherconsolidate its strong hold in the domestic mass biking segment.Low-cost bikes are typically targeted at buyers who would like to scale up frommopeds. So, the plan is to reduce prices to the Rs 20,000 30,000 range (now itstarts at Rs 34,500 for Hero's CD Dawn).We believe that there is a very large mass of customers in that segment at the

bottom of the pyramid. We're working on trying to come up with something, butit's not easy with the way costs are going up. But, we will have something, Mr.

Pawan Munjal, Managing Director and CEO of Hero MotoCorp.We'll be looking at prices which are much lower than where we currently are,otherwise it makes no sense. The market is for people who don't have any(personal) transport at all.


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PRODUCT STRATEGY

In its recently set up R&D facility and along with new technical partners theUS-based EBR, and a rumored tie-up with Austrian power train expert AVL thecompany is working on several new product strategies. Apart from larger enginesfor high-end models, downsizing engines below its current starting point of 100cc

is also being looked at.Hero's increased interest in the mass segment is underlined by the fact that 88 percent of its 4.53 million two wheeler sales (April-December 2011) came from theup to 125cc segment.As this segment represents 70 per cent of total domestic bike sales, Herocommands a 45 per cent market share overall.


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It's easy to make something like a moped, but does that serve your purpose. Amoped is not as successful in this country since it is not rugged and sturdy as perthe usage our consumers the kind of loading patterns and driving habits. Wehave to have a real motorcycle, Mr. Munjal said.Industry sources said Hero had been eyeing this segment for the past few years buthad been constrained from developing new technologies under the terms of its 27-year-old joint venture agreement with Honda.That partnership formally ended in March last year, paving the way for Hero to setup its own research and development facility and seek fresh alliances.Hero MotoCorp, AVL pair up for engine developmentIndias largest two-wheeler maker by volumes, Hero MotoCorp will now workwith worlds largest privately owned engine developer, AVL Engineering, to shareits technology for manufacturing Hero vehicles engines that would be developedin-house. We have tied up with AVL to develop our in-house capabilities in

technologies. A team from our R&D division is already in Austria working in closecoordination with AVL ITC (Indian Technical Centre) based in Gudgeons, saidPawn Munjal, MD & CEO, Hero MotoCorp.The tie-up with AVL (Install fur) is completely separate from its recent strategicalliance with Erik Buell Racing. Hero would also improve its existing models by

putting in their learnings with the two tie-ups. AVL has earlier developed frugalworkhorses for Royal Enfield and Mahindra & Mahindra. We would bedeveloping engines of all sizes to make new products and also refurbish theexisting product line, added Munjal. This will surely ramp up visibility among the11 million strong two-wheeler consumer bases in the country.Hero also plans on working on its concept hybrid scooter showcased at the 2012Delhi Auto Expo with the R&D imparted from the two companies. Currently, Herohas 16 two-wheelers in the country CD Dawn, CD Deluxe, Pleasure, Splendor +,Splendor NXG, Passion Pro, Super Splendor, Glamour, Splendor Pro, GlamourPGM Fi, Achiever,CBZ Extreme, Hunk, Karizma, Karizma ZMR and its latestentry, the Impulse. The two-wheeler came out as Indias first trans-roader and wonaccolades like the 2011 Bike of the Year award in the ET-ZigWheels Car &Bike of the Year awards.

High-end bikes from Hero MotoCorp

Hero MotoCorp Ltd (HMCL) on Wednesday said it has entered into a strategic tie-up with the U.S.-based Erik Buell racing that would help the company introducehigh-end bikes in India and overseas markets.We are entering into a strategic partnership with Erik Buell Racing (EBR), whichcurrently is more into high-end and high-performance racing bikes as we are


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completely missing in this category of motorcycles, Hero MotoCorp ManagingDirector and Chief Executive Officer Pawn Munjal told journalists here. HMCLwill receive support in terms of cutting-edge technology and design to developfuture models from EBR, the East Troy, Wisconsin-based firm.

Is Hero MotoCorp Eyeing Ducati? UpdatedJust a couple of weeks ago, word got out that Ducati is looking for a buyer,

possibly considering Volkswagen and BMW as potential suitors. Then a week ago,up pops Hero MotoCorp in a relationship with Erik Buell racing, showing theyhave intentions beyond the small displacement motorcycles they're currentlyknown for. Now, in what has to be one of the more surprising developments in allof this, word is out that Hero MotoCorp is talking to bankers about a possibleacquisition of Ducati. Wow! I guess they really are trying to expand into anothermarket.

"Weve been seen as a utility-bike maker, fuel-efficient bikes, and somebodywhos at the lower level of the market, whos more small-town and rural-marketfocused," said Munjal. "So our ambition is to become one of the biggest globaltwo- wheeler players and to do that, you cannot only be in one small segment"This may be very preliminary and no one is going to be talking about it outside the

boardrooms where the discussions are taking place, but what is becoming clear ismany more buyers may be getting into this game than everyone initially thought.Let's see, a company manufacturing motorcycles in Italy, with its largest market inthe USA and owned by a company in India. Would it be any different if they wereowned by a company in Germany? Does any of this even matter anymore? HeroMotoCorp certainly wouldn't be the first name to pop up when you think of aDucati sale, but it does make you wonder who else may be interested in the Italianmanufacturer.UPDATE: In an update to their previous article, Bloomberg reports Hero has cashreserves of about $1 billion, quite an accomplishment, considering their currentrange of motorcycles start at $763.Investors are scared about Heros plan of buying Ducati, said Umesh Karen, ananalyst with Brice Securities Ltd. in Mumbai. Hero will have to take on the

burden in terms of Ducatis debt so initially there may be some pain.

This is going to be an interesting process to follow as the big money starts to circleDucati. Ducati enthusiasts probably need not worry about the company continuingwith its product line, at least for the near term, since that is the value, along withthe underlying technology, that's being purchased. However, if a company likeHero is trying to branch out and establish itself as a player in a much larger marketand they are successful in their acquisition, sooner or later, motorcycles withDucati's technology may begin to appear with the Hero nameplate. Hero in Moto


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Like I said, this could get very interesting, especially as the other potential buyersbegin to see new and unexpected suitors moving in.Hero MotoCorp unveils its new global corporate identityThe largest two wheeler producer in the country, Hero MotoCorp (formerly knownas Hero Honda) has unveiled its new global corporate identity. The new avatar ofthe company, not only marks the end of 26 year old pact of Munjal family andJapans Honda Motor but also establishes, Hero group as the biggest sole entity inits space.The mandate for re-designing the brand identity including the brand architecture,name, logo and positioning has been accomplished by Wolff Online, a global

brand & innovation specialist and a part of the Omnicom group.The new logo of the two-wheeler major shows the letter H in capital with a neatwhite background along with Hero written beneath in Red. The black color inthe logo stands for solidity and premiumness while the Red gives a feeling of

energy, passion, and confidence.To represent, Hero in 3D, the logo even has a triangle, trapezoid and a

parallelogram in the first letter of its name. The sharp edge of the logo depicts thestyle, engineering, innovation and connection with the new brand.Regarding the companys new branding, Pawan Munjal, MD & CEO, HeroMotoCorp said, Through this we shall establish a new paradigm.The companys old logo was Red in color, with an amalgamation of Hero andHonda in it.The company has recently bought Law & Kenneth as its creative agency on board.With this new identity, the company aims to surpass the 10m units annual sales,with a $10b turnover in five years.Hero MotoCorp to invest INR 1200cr in Gujarat plant

Business Line reported that Hero MotoCorp is expected to announce plans to setup its fourth plant in Gujarat in March itself, even as talks speed up for a fifthfacility likely at Karnataka. Apart from feeding growing local demand, additionalcapacity would help the two wheeler market leader to meet its USD 1 billionexport target by 2020. Sources close to the development said that in a deal that hasalready been finalized with the Gujarat Government, the company is likely toinvest about INR 1,200cr for a two million unit capacity plant set up over two

phases. Chosen because of the proximity to ports, the location is a 300-acre plotclose to General Motors' car plant in Halol, Central Gujarat. Mr. Pawn Munjal MD& CEO of Hero MotoCorp told Business Line that Within this month, I should bemaking the announcement for the new plant. It will get to those levels (as Hardwar

plant's 2.5 million unit annual capacity), but will have modular capacities. Stateofficials said that for the fifth plant expected to focus on the south Indian market, a500 acre plot near TATA Motors' plant at Dharwad, Karnataka, has been offered


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by the Karnataka Government. This comes after months of discussions thatcompany officials reportedly held with many States such as Tamil Nadu, Rajasthanand Himachal Pradesh

Hero MotoCorp in Talks with Many Bankers on Possible Ducati Acquisition

Hero MotoCorp Ltd. (HMCL), Indias biggest motorcycle maker, is in talks withbankers about buying Ducati Motor Holding Spa as it seeks technology to enhanceits bikes and expand its business globally.Lots of people have been coming to us with Ducati: Not one banker but many

bankers, Pawn Kant Munjal, the managing director of Hero MotoCorp, saidyesterday in an interview in New Delhi. Were talking to a lot of people. Not justDucati, whoever comes to us, we talk to them.Hero, which in December 2010 decided to exit a 26-year partnership with HondaMotor Co. (7267), is looking to gain technology through partnerships and

acquisitions after that licensing relationship ends in 2014. The company has cashreserves of about $1 billion, Munjal said.Invest industrial Spa, the Milan-based private-equity firm that owns Ducati, mayhold an initial public offering of the luxury-motorcycle maker in Hong Kong thisyear or sell it to a rival, two people familiar with the plans said last month,declining to be identified because the plans are private. A spokesman for Investindustrial wasnt immediately available to comment late yesterday.Motorcycle makers Hero and Bajaj Auto Ltd. (BJAUT) are looking to expand theirmarkets amid increased competition in the worlds second-biggest motorcyclemarket as the Indian units of Honda, Yamaha Motor Co. and Suzuki Motor Co.expand capacity in the country. Only China buys more motorcycles.Looking Overseas

Motorcycle sales in India grew 15 percent in 2011 to 9.95 million units,

according to data from the Society of Indian Automobile Manufacturers. The

industry body expects deliveries of two-wheelers, including motorcycles andscooters, in the year beginning April 1 will increase 11 percent to 14 percent.Hero is looking to begin sales in Africa and Latin America this year as it tries tomimic the strategy of its nearest domestic rival, Bajaj Auto. Bajaj sells more than

35 percent of its products overseas and expects to exceed its export target of 1.5million units in the year ending March 31.Hero aims to export 1 million units annually in five or six years, Munjal said.Weve been seen as a utility-bike maker, fuel-efficient bikes, and somebodywhos at the lower level of the market, whos more small-town and rural-marketfocused, said Munjal. So our ambition is to become one of the biggest globaltwo- wheeler players and to do that, you cannot only be in one small segment.


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Ducati, whose bikes are owned by actors such as Brad Pitt and Tom Cruise, wasdelisted in 2008 from the Milan stock exchange.Honda is expanding its operations in India after separating from Hero, and willspend as much as 10 billion rupees ($202 million) on its third factory nearBangalore in southern India that will be ready in 2013, the company said inAugust. When complete, Honda will have a capacity to build 4 million two-wheelers in India annually.

Hero may export bikes

Expects to sell 1 million 2-wheelers abroad by 2016-17 and generate 10% of itstotal revenue from exports by 2020Hero MotoCorp Ltd will start exporting scooters and motorcycles sometime in theApril-June quarter this year, a year after it broke up with Japans Honda Motor Co.

Ltd after a 27-year-long partnership that effectively prevented it from tappingoverseas markets for its products.


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We will start exporting very soon, maybe in the first quarter of the next financialyear, Heros chief executive and managing director Pawn Munjal said in aninterview last week. We have identified some distributors in FACTORSINFLUENCING OUTSOURCING OF TECHNOLOGY IN MANUFACTURINGLatin America and Africa.

Currently, Hero exports to Sri Lanka, Bangladesh, Nepal and some Latin Americancountries, but these accounts for a very small portion of the 6.5 million vehicles itsells every year.In 2010-11, for instance, it exported 114,581 scooters and motorcycles, accordingto data from the Society of Indian Automobile Manufacturers. According to thecompany, it expects to sell one million scooters and motorcycles in overseasmarkets by 2016-17, and generate $1 billion or Rs. 5,060cr today, (10%) of its totalrevenue from exports by 2020.

A senior Hero executive, on condition of anonymity, said the firm is alsoidentifying overseas locations for assembly plants (factories that assemble vehiclesfrom parts). Were open to set up an assembly plant if (the) volumes justify it.There are (also) some countries where import duties are on a higher side...that mayrequire us to assemble locally, he said. Typically, import duty on a completescooter or bike is higher than that on parts.As part of the joint venture pact between the Hero Group and Honda in 1984, Herowas not allowed to export motorcycles to most large markets where Honda had itsown assembly units. After breaking up with Honda, Hero created a separate armfocused on export markets, Hero International Business.The African market for two-wheelers is estimated to be one million units per year,according to Sagan Pala ne, senior regional leader and auto expert (South Africa)at conic can enter them due to dual-fuel usage, Jinesh Gandhi and Manish Verma,sector analysts at Motilal Oswal Securities Ltd, a Mumbai-based brokerage firm,wrote in a report.Gandhi explained that the current range of Heros engines may not perform well incountries such as Brazil, Argentina, Mexico and Chile that use ethanol-blendedfuel.Brazil is Latin Americas largest two-wheeler market and saw sales of at least one

million scooters and motorcycles in 2011, Gandhi said. It is also the worldslargest. Producer of sugar cane. Ethanol is produced in significant quantity by theBrazilian sugar cane industry, and it is blended with petrol or diesel.Hero wont immediately make money from exports, the Motilal Oswal analystssaid in their report. Going by the experience of Bajaj Auto, exports in the initialramp-up phase could be loss-making, they wrote.


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In order to build its brand overseas, the firm also plans to be present at prominentmotor shows, Munjal said. Last year, we were present at Milan Motor Show andthis year well be going to Brazil, which is also famous for motorcycles, he said.A year ago in March, Hero Group bought Hondas 26% stake in Hero Honda, nowHero MotoCorp, at half the market value. Hero Investments Pvt. Ltd, theinvestment arm of Hero Group, paid Rs. 3,842cr to buy Hondas stake in HeroHonda. Tags - Find More Articles On: Hero MotoCorp Exports Bikes MotorCyclesAuto.

2-Wheeler

Auto Expo 2012: Hero MotoCorp unveils indigenously developed Hybrid ScooterAfter launching two motorcycles and a scooter for men a couple of days ago, HeroMotoCorp on Friday unveiled India's first concept hybrid scooter at the 11th Auto

Expo. The scooter is being developed in association with a foreign consultant andis first ever series hybrid scooter from India. We are showing the rest of the worldthat we have arrived," Hero MotoCorp Managing Director and Chief ExecutiveOfficer Pawn Munjal said. The concept hybrid scooter-LEAP-indigenouslydeveloped with the help of an international consultant, he added. Talking about thelaunch of the scooter, Munjal said, "we will definitely product ionize it in future.We have to work a lot for launching it commercially. So it will take some time."Elaborating on the technology he said, "the hybrid scooter will have an engine thatgets started on the battery power comes down." When asked about sales, Munjalsaid, "2012 may not be as good as 2011 but we will still see a double digit growth."In August last year, India's largest two-wheeler maker Hero MotoCorp (formerlyHero Honda) had ended its 27 years long relationship with Honda.Hero MotoCorp partners with US-based Erik Buell Racing Hero MotoCorp formedthe partnership to bring next-generation high-end bikes to India. It will furtheraugment R&D capabilities through multiple alliances.Hero MotoCorp Ltd (HMCL), said it partnered with US-based Erik Buell Racing(EBR) for sharing technology. As part of the partnership, HMCL will receivesupport in terms of cutting-edge technology and design to develop future modelsfrom EBR - the East Troy, Wisconsin-based firm, which specializes in designing

and manufacturing powerful and high-speed motorcycles. Announcing this, PawnMunjal, managing director and chief executive officer, Hero MotoCorp, said Itgives me immense pleasure to welcome Erik Buell to the exciting world of HeroMotoCorp. This is in keeping with my objective of quickly scaling up our own in-house R&D capabilities to a global two-wheeler technology power-house byleveraging a network of strategic international alliances. Erik and his team have


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been working closely with our engineers and designers to develop our next-generation range of products.

With cutting-edge technology and first-of-its-kind features.

Erik F Buell, chairman and CTO of EBR, said EBR is delighted to partner witha company as iconic as Hero MotoCorp. Both HMCL and EBR share the commoncommitment to manufacturing world-class two-wheelers with technology of thefuture. I have personally been deeply impressed with and inspired by Pawnsvision. He has given us a challenging brief, and our highly-motivated team isworking towards giving shape to that dream. We look forward to designingtechnology solutions which are in line with contemporary global standards and alsofuturistic in their appeal and utility. Through this alliance, Hero MotoCorp willalso, for the first time, enter the exciting world of international motorcycle racing.

The company will mark its foray into the racing arena by sponsoring two teams:Team Hero and AMSOIL Hero - a first by any Indian two-wheeler company at theAMA Pro Racing National Guard Superbikes Championship. Popular young racerDanny Slick will represent Team Hero while another well-known racer GeoffMay will represent team AMSOIL Hero both riding on EBR 1190RS bikes. HeroMotoCorp also showcased the EBR 1190RS bike at the press conference. The firstrace is scheduled at the Daytona Speedway, at Daytona beach, Florida, USA

between 15 March 2012 and 17 March 2012. Hero MotoCorp is also developingthe concept hybrid scooter called Leap , showcased at the recently-concluded

Auto Expo, in collaboration with EBR. EBR 1190RS is the flagship bike fromEBR, and an exclusive engineering marvel, as the company is producing only 100inaugural units of these, including a handful of the carbon edition package. TheEBR 1190RS is taking the American motorcycle racing world by storm with its

performance, styling and handling

Insider Story: How Hero Honda became Hero MotoCorp

On November 1, Hero MotoCorp, the new avatar of Hero Honda, announced thatits dealers sold a record 650,000 motorcycles and scooters in October.Farmers had harvested their crops, and salaried people had got Diwali bonuses; thecompany had no reason to complain.Some days before that, it had declared its financial results for the quarter endedSeptember 2011, the first full quarter without Honda as a shareholder, whichshowed that sale as well as profit had hit at an all-time high.


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For several years, the Manuals, the promoters of the company, have been known assharp businessmen but their success was always credited to technology andinnovation from Honda. The ride without Honda was the real test of their skills.The Munjals and Honda had formed Hero Honda, a 26-26 joint venture, in the late-1980s. The first sign of discord became visible over ten years ago when Honda setup a 100 per cent arm, Honda Motorcycles and Scooters India.Finally, on December 16 last year, Hero Honda informed the stock markets that the

partnership was over and Honda would soon exit the company.In the days that preceded the announcement, the Munjals had formed a core teamof three people to assess if life was possible without Honda.The team, which was kept under wraps from the rest of the world, could not go outfor consumer research because that would have let the secret out.It had to rely on gut feel. What may have played on this team's mind was HondaMotorcycles and Scooters India's performance in the motorcycle market and Hero

Honda's performance in the scooter market.Both had entered these markets in 2006; while Honda had got 7 per cent of themotorcycle market, Hero Honda had grabbed over 17 per cent of the scootermarket which was dominated by the Honda Active. Technology, the teamconcluded, was equal for all, and what really mattered to Indians was the total costof ownership - low price tags, high fuel economy, inexpensive spares and highresale value.On December 16, immediately after it had informed the stock markets that Hondawill exit the company and before answering calls from anxious analysts andinquisitive journalists, Hero Honda Managing Director & CEO Pawn Munjal did alive webcast to all employees, vendors and dealers. The dealers were the realstrength of the Munjals..

Economic ScenariosThe year 2010-11 turned out to be a year of moderation, with growing trepidationacross the domains of economics, environment and geopolitics.If recovery was the underlying theme for the previous year, 2010-11 s summativetheme was surely uncertainty, with the massive earthquake in Japan and turmoil in

the Middle East and North Africa (MENA) creating insecurity, along withvolatility in crude and commodity prices.In the US, a slew of factors double-dipping home prices; a slow recoveryinlabour markets and weak wage growth; the fiscal contraction of state and localgovernments; and underlying weakness in final demand suggested that thesubpar, anemic recovery for the U.S. economy might endure for a while.


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Barring Germany, European recovery has almost ground to a halt. The reasons arenot hard to seek: fiscal tightening in UK (a leading economy), political uncertaintyin Italy, recession in some Scandinavian countries and solvency problems in

peripheral EU nations (Greece and Turkey) contributed to the mess. Japan, whichhad just begun to limp back on apathy of recovery, plunged back into deflation asthe impact of its natural disaster fully sank in.To make matters worse, the growth potential in emerging markets like China,Brazil and India, which had demonstrated so much promise in recent years,showed signs of getting impacted by monetary tightening and high interest rates.In 2010-11, India followed a deviant growth trajectory as opposed to last year: thefastest growth was notched in the first quarter, and the slowest was reserved for thelast. In the previous year, India began growing at a comparatively slow pace, butended with a strong kick. This sparked off hope that the economy would enter thenine percent growth orbit. In fact, economic performance was strong throughout

the first half of the fiscal, with the manufacturing sector growing in double digits,and the service sector growing almost as fast. Yet towards the completion of theyear, the growth rate dwindled to 7.8%; in the last quarter of 2010-11 it was theslowest in six quarters.Even though the manufacturing sector notched a double-digit growth during thefirst two quarters of the year, monetary tightening eventually took its toll in theremaining quarters: it slowed down the pace of capital formation and kept growthin the index of industrial production in single digits.

Nevertheless, India eventually ended the year with 8.5% growth; this was largelyon the back of a strong export demand, a resurgent agriculture sector and sustainedgrowth in industries like hotels, real estate, retail and banking as well as coreindustries, such as cement and steel.Of course, the performance of the service and agriculture sector was important fordifferent reasons: the former now makes up more than 57% of national output,while 2/3 of India depends on the farm sector for its livelihood.Services and agriculture growth in turn, ensured strong demand for both consumerdurables and automobiles. However, there is little doubt that if high interest rates

persist, they will start eating into demand and private consumption expenditure inthe coming fiscal. In fact, as the year progressed, there was some early evidence of

this in March 2011, with consumer durable growth shrinking to 12% from 23% inthe previous month.In the previous annual report, fears were expressed that inflation could stifle someof Indias growth impetus in 2010-11. That is exactly what happened during theyear in review. 2010-11 began with double digit food inflation. By the time itended, manufacturing inflation became the source of concern: it accounted for 30%


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of the inflation pie in the March-July period, but in the November-Marchperiod,manufacturing s share of the inflation pie was up more than 55%.This forced RBI to tighten monetary policy aggressively throughout 2010-11. The

process continues, even at the time of writing as headline inflation remains wayabove the apexbank s comfort level.While the near-term outlook for the Indian economy looks uncertain, India long-term growth prospects are stable, given the favorable demographics and increasingconnectivity between India and Bharat. At one level, there is visible evidence ofsustainable demand emanating from traditional rural areas. At the other, growth

poles opportunities are sprouting in newly urbanized centers across the country.Even in the short term, there is a growing perception that India may soon be on topfits rate hike and inflation curves; in other words, as food inflation moderates onthe back of another good monsoon and as crude prices stabilize, the RBI mayloosen its tightening policy towards the end of 2011. This would have a stabilizing

influence on growth towards the end of 2011-12.Industry and Segment Insight

A growing number of jobs in the service sector, favorable demographics,increasingurbanisation across towns and bountiful rains ensured strong demand fortwo wheelers in India during the year in review. In combination, these factorsoffset continuously rising consumer finance rates.The domestic two-wheeler market grew a rollicking 26%, with sales of 11.8million units, compared to 9.4 million in the previous year.Two wheeler exports grew 35%, and crossed the 1.5 million mark for the first time.Overall, two wheelers sales grew at 27% in 2010-11, with 13.4 million units ofsales as compared to 10.5 million units of sales in the previous year.Each of the three two wheeler segments clocked strong growth. Motorcycle salesexpanded by 24% from 8.4 million units to 10.5 million units. Domestic salesmade up the bulk of motorcycle sales. The domestic motorcycle market witnesseda growth of 23% in 2010-11, sales of 90, 18,945 units as compared to sales of 73,and 41,090 units in 2009-10.Continuing with a recent trend, scooter sales grew the fastest (42%) from 1.5 to2.2million units. In the domestic market, scooters now make up close to 18.5% of

the two-wheeler market. The revival in the mopeds segment continued as well;sales were up 23%from 5.7 lakh to over 7lakh units.Indias motorcycle market comprises three categories: entry, executive and

premium. During the year, the entry segment grew at close to 14%. Nevertheless,the entrysegment s overall share in the two wheeler pie declined from 18.7% to17.3%. The deluxe segment sustained its steady performance, notching volumes of


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4.8 million units, and a growth in excess of 15%. This segment accounted for over62% of overall motorcycle sales.The show-stealer in the motorcycle category was the premium segment. More than1.85million units were sold during the year, a growth of 66%. The strong showingensured that the premium share in the overall motorcycle pie went up from 15.3%to 20.6%.In fact in the domestic industry the premium segment outsold the entry segment forthe first time ever.

New Product LaunchesThe Company has consistently relied on innovation, technology and design tosustain excitement amongst customers.This year saw the introduction of several new product launches and refreshes. Thenew products launches and refreshes were supported throughout the year byimpactful, clutter-breaking and engaging communication. The products which

were launched are Glamour, Glamour FI, New Hunk, Super Splendor, SplendorPro, and New Karizma.Accelerated PerformanceDespite its significantly higher base vise-a-vise competitors, Companys two-wheeler sales improved by 17%; from 4.6 to 5.4 million units during the year togarner over 40%two wheeler market shares. In the domestic two wheeler market, ithad a share of 44.5%, with sales of 5.2 million.In the motorcycle segment, the Company sold over five million units. In thedomestic market, the Company sold over 4.9 million motorcycles at a growth of15%, thereby capturing 54.6% domestic motorcycle market share.In the scooter segment Pleasure, grew a whopping 65% during the year, with salesof3.42 lakh units. This single scooter brand now accounts for over 16% marketshare.Across various motorcycle segments, the Company bested industry growth in theentry segment by growing in excess of 17%, and selling more than 1.5 millionunits.In the deluxe segment, the Company captured 68.9% share. With sales of 3.8million units, the Company registered growth in excess of 12%.Financial Scorecard

SalesThe Companys sales grew by 17.44%. It ended the year with a domestic marketshare of around 45%. The Company clocked a sales volume of 5,402,444 units in2010-11, compared to 4,600,130 units in 2009-10. In value terms total sales (net ofexcise duty) increased by 22.1% to Rs. 19,245 crores from Rs. 15,758 crores in2009-10.Profitability


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The Companys earnings before interest depreciation and taxes (EBITDA) marginsdecreased from 17.45% in 2009-10 to 13.49% in 2010-11 and the Operating Profit(PBT before other income) decreased from Rs. 2,575.48 crores in 2009-10 to Rs.2,214.61 crores in2010-11. The margin fell despite healthy growth in the salesvolume on account of higher prices of raw materials and components andadditional cost of meeting emission normsOther Income, including non-operating incomeOther income increased by 24.7% from Rs. 341 crores in 2009-10 to Rs. 425 croresin2010-11.Cash flowsThe free cash flow from operations during the year stood at Rs. 2,288.11 crores(previous year 2,686.64 crores). The same have been deployed in capital assets,investments and paid out as dividends during the year.Capital expenditure

During the year, the Company incurred a capital expenditure of Rs. 364.12 crores.The funds went into capacity expansion and replacements.Raw material costsHardening of metal prices particularly steel, copper, aluminums and nickel duringthe year results in escalation in material costs. Raw material costs as a proportionof total cost increased 68.1% to 73.3% and adversely impacted EBITDA margins.Current asset turnoverThis ratio, which shows sales as a proportion of average current assets, decreasedfrom17.2 to 15.5 times, on account of higher average inventory and loans andadvances.Debt structureHero Honda has been a debt free company for the last 10 years. The unsecuredloan of Rs. 32.71 crores from the state government of Haryana on account of salestax deferment is interest free and has no holding costs. Net interest payment by theCompany has been negative during the last few years.Dividend policyOver the years, the Company has consistently followed a policy of paying highdividends, keeping in mind the cash-generating capacities; the expected capitalneeds other business and strategic considerations. For 2010-11, the Board has

recommended a dividend of 1750% higher than 1500% declared in previous year,and has maintained a payout ratio of 42.1% vise-a-vise 31.3% in the previous year.Further, it has also declared 3500%interim dividend (previous year 4000%).

Working capital management


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The Company has always sought to efficiently use the various components ofworking capital cycle. It has been able to effectively control the receivable andinventories, enabling it to continue to operation negative working capital.


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CHAPETR-THREE

RESEARCH METHODOLOGY

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RESEARCH DESIGN

Introduction

The two wheeler industry in India collectively produces 20 Lakh vehicles a year.Some players have managed to cut through consumer resistance with innovation,

pricing and aggressive marketing. The competition level in the two wheelerindustry is very high now. Many brands are fighting in the market for maximumshare. They have to bring out a lot of differentiation among them. The major dutyof the marketer is to know the reasons for preferring particular motor bike by theconsumers.

?????????????????Review of Literature

The Customer Perception Report includes questions in four key areas,Expectations, Purchase Decisions, Customer Service, and Future Purchases. So thecustomer should be invited to participate in the survey. Setting realisticexpectations during the sales process is a vital component of making happycustomers. How a company sets and meets product and service expectations playsa pivotal role in fashioning customer opinions. How a company meets or exceedsexpectations is measured in three important areas: product/service, support, and

price. These three areas will be used to factor a score for the Expectations

category. The results of the three questions will be used to factor an overallexpectations perception score.The Purchase Decision category gives us a better understanding of how thecustomerPerceives the purchase process. Two key areas for questions include an open endedquestion on why they purchased and a ratings question on their experience. TheratingQuestion data will be used for the analysis of Purchase Decision category. Theopen ended responses from the Why questions will be used for product strengthsanalysis. The results of the purchase experience question will be used for theoverall Purchase perception analysis. Customer service is one of the mostimportant differentiations a company can have. For this report, customers will ratea company in three key areas: customer service, timeliness for problem resolution,and expertise. These three areas will be used to factor a score for the CustomerService category.


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???????????????????Purpose of Literature Review

Literature review is one of the prime parts of every project. The very basic purposeof the literature review is to gain insight on the theoretical background of theresearch problem. It helps the researcher to gain strong theoretical basis of the

problem under study and also help to explore whether any one has done researchon the related issue.Thats why literature review helps one to find out the path of problem solving. Inthis regards the very basic purpose of the literature review in this dissertation issame as mentioned.

Methodology

The research will be done through survey method. The collection of data will bedone through questionnaire, interview and related websites .The sample size takenfor this research is 100 ??????????????????????/customers those who having HeroHonda motor bikes. The area of this survey consists of Bangalore city. Thecollection of data will be done with the help of a structured questionnaire. Thedesigning of questionnaire needs precision and classification of the subject, so thatthe respondents can easily understand the question and can answer it sincerely andcorrectly.

Sources of Data

Primary data:-Primary data consists of original information for the specific purpose at hand. It isfirst hand information for the direct users of respondents. The tools used to collectthe data may vary and can be collected through various methods like questionnaire,

Secondary data:-Secondary data is the data which is already been collected and assembled. This

data is available with the companies or firms and it can be collected fromnewspapers, periodicals, magazines, websites etc.


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Sample Design

Sample:-

The sample size taken for this research is 30 customers having Hero Hondamotorbikes.Sampling TechniqueConvenient Sampling technique is used for this project.Data Collection ToolQuestionnaires as the primary form of collecting data.

Statistical techniques2. Pie-Chart1. Bar Diagrams

Statistical tools1. Statistical software like Microsoft ExcelLimitations of the study:-

a) In this study it is not possible to collect the opinion of all the customers owing topersonal constraints. So the assumptions are drawn on the basis of the informationgiven by the respondents.

b) The study needs to be completed within a specified time of one month and incertain restricted areas. So the findings cannot be generalized for the company as awhole.c) This study covers only a limited Hero Honda sector. So this study will not beapplicable for those areas.


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CHAPTER-FOUR

FINDING AND CONCLUSION

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Q1. What is the impact of end of joint venture of HERO HONDA and HONDA onsale of its vehicle?

A:- Increase

B:- Decrease

C:- No Impact

INTERPRETATION


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From the above analysis I came to know that out of 30 people, 20 agreed that salewill increase, 9 said that sale will decrease and1 people said that it will have noimpact,Q2.What is customer preference after the breakup of joint ventureA:-They will still stick to hero MotocorpB:-They will switch to other vehicle manufacturer

INTERPRETATION

From the above analysis I came to know that 12 people out of 30 will still continueand prefer Hero Motocorp, on the other hand 18 will switch to other vehicle.


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Q3. Will Hero Motocorp adopt new strategy for its forthcoming product?A:-YesB:-NOC:-It will remain same

INTERPRETATION

From the above analysis it is clear that 16 people believe that Hero Motocorp willchange its strategy.11 people believe that they will continue with the same strategyand only 3 accepted that they will continue with the same.


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Q4. What will be the new innovation undertaken by Hero Motocorpafter the expiryof Joint Venture, will it still manufacture product focusing on middle incomegroup?A:-YesB:-NOC: - Will continue the previous method

INTERPRETATION

Above analysis proves that 20 people have opinion that Hero Motocorp willmanufacture product focusing on middle income class. 8 believe that it will not


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focus on middle income group people and 2 believed that it will continue to use thesame method.

Q5. What is the problem faced by Hero Motocorp after the end of Joint Venturewith Honda?A:-Lack of technologyB:- Poor marketing research.C:-Failure of effective strategy.D: -Other factor

INTERPRETATION


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From the above , it is clear that 17 people have that Hero Motocorp will facetechnology problem.8 believe that it is facing marketing problem,3 have opinionthat failure in strategy will be there.2 people didnt agree with given option.

Q6.What is the reason behind the unsucess of Hero Motocorp after expiry of JointVenture?A:-Unawareness among peopleB:-Lack of technologyC:-Lack of Publicity

INTERPRETATION

From the analysis, it is clear that out of 30 sample people 9 believe that HeroMotocorp failed because of unawareness among people.18 believed the reason islack of technology and rest 3 believed it was lack of publicity behind the failure.


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Q7. What will be the impact of expiry of joint venture on the resale value of itsvehicles?A: - Resale value will remain same

B: - Resale value will fallC: - Resale value will rise

INTERPRETATION

From the above analysis , it is clear that 9 people believed that resale value willremain same after the joint venture.15 have opinion that resale value will fall and 6

believed that after the expiry of the joint venture resale value will rise.


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Q8. Will Hero Motocorp product gain the customer's confidence as he was able todo at the time of existence of Hero Honda (during Joint venture with Honda)?A: - YesB: - No

INTERPRETATION

Above analysis shows that 18 people have view that Hero Motocorp will gain thecustomers confidence whereasrest 12 believed that it will fail to gain the sameconfidence level.


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Q9. What will the future for Hero Motocorp?A: - It will surviveB: - It will declineC: - Cant be predicted

INTERPRETATION

From the above analysis, it is clear that 18 people Have opinion that HeroMotocorp will survive, 9 believed that it will decline and the rest 3 were not sureabout the future.


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Q10. Will Hero Motocorp be able to launch a product which proves to be assuccessful as Hero Honda Splendor?A: -YesB: - No

INTERPRETATION

From the above analysis, people who were asked about the future product successof Hero motocorp, 18 said it will be able to launch further successful product infuture and the rest said it will failed to manufacture product like Hero HondaSplendor.


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CHAPTER FIVE

CONCLUSION AND SUGGESTION

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CONCLUSION

Since the name Hero Honda can be used up to 2015, I am sure it gives a greatchance for both the Hero Group as well as Honda India to develop their

respective strategies. With the infrastructure already there and continuous researchand development, both these organizations would be really successful in the longrun.

It all depends on how fast they are able to leverage their individual identities andmove out of theDesh Ki Dhadkan bit!

Well, hope both the companies give us the same good products in the years tocome


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SUGGESTION

Besides of new innovation and changes in strategy and plan, Hero Motocorp stillneeds to work out on its marketing techniques. This should be done in order to

make sure what the different user groups of the Hero product want, so that they canbe provided with the same.Because if they are provided with what they want they will get satisfied, theirsatisfaction will increase the brand image and all these factors will prove to be a

boon for Hero Motocorp.


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BIBLIOGRAPHY

1 :-Survey from the local residents.2 :-Hero motocorp attendants.

3 :-Hero motocorp websites.4 :-Internet.


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ANNEXURE

Questionnaire

NAME:-.........................................................AGE:-.............................................................GENDER:-.......................................................INCOME:-......................................................OCCUPATION:-...............................................

1. What is the impact of end of joint venture of Hero Honda and Honda on sale ofits vehicles?A: - Increase

B: - DecreaseC: - No Impact

2. What is customer preference after the breakup of joint venture?A:-They will still stick to hero motocorpB:-They will switch to other vehicle manufacturer

3. Will Hero Motocorp adopt new strategy for its forthcomg product?A:- Yes

B: - NoC:- It will remain same

4. What will be the new innovation undertaken by Hero Motocorp after expiry ofJoint venture, will it still manufacture product focusing on middle income group?A:-YesB:-NoC:- will continue the previous method (more of economy and less sporty bikes)

5. What is the problem faced by Hero Motocorp ltd after the end of joint venture

with Honda?A:- lack of technologyB:- poor marketing researchC:- failure of effective strategyD:- other factors


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6. What are the reasons behind the unsuccessful of Hero Motocorp after expiry ofjoint venture?A:- unawareness among peopleB:- lack of technologyC:- lack of publicity

7. What will be the impact of expiry of joint venture on the resale value of itsvehicles?A:-Resale value will remain sameB:- Resale value will fallC:- Resale value will rise

8. Will Hero Motocorp product gain the customer's confidence as he was able to doat the time of existence of Hero Honda (during Joint venture with Honda)?

A:-YesB:- No

9. What will the future for Hero Motocorp?A:- It will surviveB:-It will declineC:- Cant be predicted

10 Will Hero Motocorp be able to launch a product which proves to be assuccessful as Hero Honda Splendor?A:- YesB:- No

Bilal Project on HERO MOTOCORPdhdrhhnfdj

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