Hero Honda Project Report

TABLE OF CONTENTS
✔ OBJECTIVES OF THE PROJECT

✔ INTRODUCTION
✔ COMPANY PROFILE
✔ HERO HONDA'S MISSION
✔ OFFICERS & DIRECTORS
✔ KEY MILESTONES OF HERO HONDA
✔ PROMINENT AWARDS TO THE COMPANY
✔ CORPORATE SOCIAL RESPONSIBILITY
✔ TWO WHEELERS IN INDIA
✔ KEY FACTORS AFFECTING THE SALES OF MOTORCYCLES
✔ players in the Two-wheeler Industry
✔ HERO HONDA products
✔ SERVICES
✔ Market performance
✔ SWOT ANALYSIS
✔ RATIO ANALYSIS
✔ Balance sheet
✔ SUMMARY
✔ CONCLUSION
✔ LIMITATIONS
✔ RECOMMENDATIONS
✔ QUESTIONNAIRE
✔ BIBLIOGRAPHY
ARVIND ARORA (520813268) Page 1

OBJECTIVES OF THE PROJECT
1. To analyze the liquidity position of the firm.

2. To analyze the solvency position of the firm.
3. To study and analyze the overall profitability of the firm.
4. To study and analyze the changes in working capital and fund flow
position.
5. To relate the various items of profit and loss account with sales.
6. To compare the assets and liabilities of the current year and previous
year.
7. To study the and analyze the capital structure of the firm.
8. To determine the efficiency with which the current assets are managed.
9. To study the marketing mix of Hero Honda Company
10. To focus on comparative study of different products of

Hero Honda company
11. Different range of Products; their success and failure

INTRODUCTION
Company profile
Hero Honda Motors Limited was established in 1984, as a

joint venture between India's Hero Group (world's largest bicycle
manufacturers) and Japan's Honda Motor Company. In 1985
production began with the launch of its first motorcycle, the
CD100, which gave 80 km to the liter. In 1987 the engine plant
was started and in 1989 the Company produced its 3,00,000th
motorcycle. In 2001 Hero Honda manufactured its 50,00,000th
motorbike. Hero Honda has a reputation of being the most fuel-
efficient and the world's single largest two wheeler Company. Shri
Brijmohan Lall Munjal is the chairman and managing director of
this Company.
As early as in 1960’s very few Indian bicycle manufacturers

were interested in exports. However, the hero groups foray into
the overseas markets in 1963 pioneered Indian exports in the
bicycle segment. It was more prompted essentially by the need to
remain attuned to the global marketplace. While initial exports
were restricted to Africa and the middle east, today more than
50% of the exports from Hero Cycles Ltd. Meet the demands of
sophisticated markets in Europe and America. This is primarily
because of appropriate product development and excellent
quality that hero offers..
Hero Honda has grown like no other company in the auto

business. Several times in the path, savvy observers have insisted
that it has grown just too big and that no company its size can
continue to show growth rates. But Hero Honda has ignored that
opinion and continued growing at the place it has set many years
ago.
Hero Honda today faces more competitor than it has ever in

the history. Now that is the undisputed two wheeler Numero Uno
in the country. Every single two wheeler manufacturer in India if
looking market share away from it. More over for the first time
there are so many four- stroke challengers in the market. And
Hero Hondas best selling products are ageing.
Corporate Profile
The Hero Honda story began with a simple vision – the vision of a mobile and an
empowered India, powered by Hero Honda. This vision was driven by Hero
Honda's commitment to customer, quality and excellence, and while doing so,
maintain the highest standards of ethics and societal responsibilities. Twenty five
years and 25 million two wheelers later, Hero Honda is closer to fulfilling this
dream. This vision is the driving force behind everything that we do at Hero
Honda. We understood that the fastest way to turn that dream into a reality is by
remaining focused on that vision.
There were many unknowns but we kept faith, and today, Hero Honda has been the
largest two wheeler company in the world for eight consecutive years. Our growth

has kept compounding. The company crossed the ten million unit milestone over a
19-year span. In the new millennium, Hero Honda has scaled this to 15 million
units in just five years! In fact, during the year in review, Hero Honda sold
moretwo wheelers than the second, third and fourth placed two-wheeler company
put together. With Hero Honda, the domestic two wheeler market was able to show
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 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.'
CHAIRMAN OF HERO HONDA MOTERS
LEADING WITH A DREAM
We had a dream. The dream of making motorcycles that would touch and
transform the lives of our customers by giving them a mode of transport that was
fuel-efficient, comfortable and environment friendly. One that would enhance their
efficiency at work, enable them to share moments of joy with their families and
add up to a better quality of life.
In a scenario where the customer had a few choices, our vision was to offer the
highest quality at a reasonable price, to meet our customer’s expectations, and to
exceed them.
Behind the success of Hero Honda, is the saga of team-work. We would like to
acknowledge the role played by our JV partners, Honda Motor Company, Japan,
and all our business associates, shareholders and employees.
In the new millennium, we stand committed to innovation, to change, to achieving

breakthroughs… to moving forward in the new century, while retaining the values
that have been like a beacon in this journey thus far.
Brijmohan Lall
Chairman

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 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 MANDATE

Hero Honda is a world leader because of its excellent manpower, proven
management, extensive dealer network, efficient supply chain and world-class
products with cutting edge technology from Honda Motor Company, Japan. The
teamwork and commitment are manifested in the highest level of customer
satisfaction, and this goes a long way towards reinforcing its leadership status.
OFFICERS & DIRECTORS

005930.KS sum
Board of directors of Hero Honda Motorcycles Ltd.

“Mr. Brijmohan Lall Munjal”
(Chairman and Whole -Time Mr. Brijmohan Lall

Director) Munjal
Mr. Brijmohan Lall Munjal is the Chairman and
founder Director and Chairman Whole Time
of the Company and the $ 2.8 director
billion Hero Group. He is the Hero Honda Motors
Past President of Confederation Limited
of Indian Industry (CII), Society
of Indian Automobile
Manufacturers (SIAM) and was
a Member of the Board of the
Country's Central Bank
(Reserve Bank of India). In
recognition of his contribution
to industry, Mr Lall was
conferred the Padma Bhushan
Award by the Union
Government.
“MR. PAWAN MUNJAL”

(Managing Director)

Mr. Pawan
Munjal
Mr Pawan Munjal is the Chief Executive
of the Company. He is responsible for Managing
growth and strategic planning for the entire Director
Group. A graduate in mechanical Hero Honda Motors
engineering, Mr. Munjal has been Limited
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. TOSHIAKI NAKAGAWA”
(Jt. Managing Director)

MR. TOSHIAKI
NAKAGAWA
Mr. Toshiaki Nakagawa joined the
Company as Additional Director and Joint. Jt. Managing
Managing Director on February 1, 2006. He Director
joined Honda UK Ltd., as staff member & Hero Honda Motors
later on took various assignments at senior Limited
positions at various offices of Honda
situated in Hong Kong, Prague, Czech
Republic, France, and Beijing. Currently, he
also holds the position of Manager in the
Overseas Operations Office No. 1, Honda
Headquarters. His specializations include
startup of new overseas companies and
human resource management.

N Name of the Directors Designation
o.
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

(Alternate Director to Mr.
Takashi Nagai)
9 Mr. Pradeep Dinodia Non-executive &

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

11 Mr. Analjit Singh Non-executive &

12 Dr. Pritam Singh Non-executive &

13 Ms. Shobhana Bhartia Non-executive &

14 Mr. Meleveetil Damodaran Non-executive &

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

16 Dr. Anand C. Burman Non-executive &


KEY MILESTONES OF HERO HONDA
Year Event
1983 Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed
Shareholders Agreement signed

1984 Hero Honda Motors Ltd. incorporated
1985 First motorcycle "CD 100" rolled out

1987 100,000th motorcycle produced
1989 New motorcycle model - "Sleek" introduced
1991 New motorcycle model - "CD 100 SS" introduced
500,000th motorcycle produced

1992 Raman Munjal Vidya Mandir inaugurated - A School in the memory of
founder Managing Director, Mr. Raman Kant Munjal
1994 New motorcycle model - "Splendor" introduced
1,000,000th motorcycle produced

1997 New motorcycle model - "Street" introduced
Hero Honda's 2nd manufacturing plant at Gurgaon inaugurated

1998 2,000,000th motorcycle produced
1999 New motorcycle model - "CBZ" introduced
Environment Management System of Dharuhera Plant certified with ISO-

14001 by DNV Holland
Raman Munjal Memorial Hospital inaugurated - A Hospital in the memory

of founder Managing Director, Mr. Raman Kant Munjal
2000 4,000,000th motorcycle produced
Environment Management System of Gurgaon Plant certified ISO-14001 by

DNV Holland

Splendor declared 'World No. 1' - largest selling single two-wheeler model
"Hero Honda Passport Programme" - CRM Programme launched

2001 New motorcycle model - "Passion" introduced
One million production in one single year
New motorcycle model - "Joy" introduced
5,000,000th motorcycle produced

2002 New motorcycle model - "Dawn" introduced
New motorcycle model - "Ambition" introduced
Appointed Virender Sehwag, Mohammad Kaif, Yuvraj Singh, Harbhajan

Singh and Zaheer Khan as Brand Ambassadors
2003 Becomes the first Indian Company to cross the cumulative 7 million sales
mark
Splendor has emerged as the World's largest selling model for the third
calendar year in a row (2000, 2001, 2002)
New motorcycle model - "CD Dawn" introduced
New motorcycle model - "Splendor +" introduced
New motorcycle model - "Passion Plus" introduced
New motorcycle model - "Karizma" introduced

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
Joint Technical Agreement renewed
Total sales crossed a record of 10 million motorcycles

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
New motorcycle model - "Glamour" introduced
New motorcycle model - "Achiever" introduced
First Scooter model from Hero Honda - "Pleasure" introduced

15 million production milestone achieved

New 'Splendor NXG' launched
New 'CD Deluxe' launched
New 'Passion Plus' launched
New motorcycle model 'Hunk' launched
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' launched
CD Deluxe lauched with power start feature
New 'Glamour' launched
New 'Glamour Fi' launched

2009 Hero Honda GoodLife Program launched
Hunk' (Limited Edition) launched
Splendor completed 11 million production landmark
New motorcycle model 'Karizma - ZMR' launched
Silver jubilee celebrations

PROMINENT AWARDS TO THE COMPANY
Year Awards & Recognitions

2010 Company of the Year awarded by Economic Times Awards for Corporate
Excellence 2008-09.
CNBC TV18 Overdrive Awards 2010 'Hall of Fame' to Splendor
NDTV Profit Car & Bike Awards 2010 –
• Two-wheeler Manufacturer of the Year
• CnB Viewers' Choice Two-wheeler of the Year (Karizma ZMR)
Bike Maker of the Year by ET-ZigWheels Car & Bike of the Year Awards
2009
2009 'Two-wheeler Manufacturer of the Year' by NDTV Profit Car & Bike
Awards 2009 and Passion Pro adjudged as CNB Viewers' Choice two-
wheeler
Top Indian Company under the 'Automobile - Two-wheelers' sector by the
Dun & Bradstreet-Rolta Corporate Awards
Won Gold in the Reader's Digest Trusted Brand 2009 in the 'Motorcycles'
category
NDTV Profit Business Leadership Awards 2009 - two-wheeler category

2008 NDTV Profit Business Leadership Award 2008 - Hero Honda Wins the
Coveted "NDTV Profit Business Leadership Award 2008"
TopGear Design Awards 2008 - Hunk Bike of the Year Award
NDTV Profit Car India & Bike India Awards - NDTV “Viewers’ Choice
Award” to Hunk in Bike category
IndiaTimes Mindscape and Savile Row ( A Forbes Group Venture )
Loyalty Awards - “Customer and Brand Loyalty Award” in Automobile
(two-wheeler) sector
Asian Retail Congress Award for Retail Excellence (Strategies and
Solutions of business innovation and transformation) - Best Customer
Loyalty Program in Automobile category
NDTV Profit Car India & Bike India Awards - Bike Manufacturer of the
year
Overdrive Magazine - Bike Manufacturer of the year
TNS Voice of the Customer Awards:
• No.1 executive motorcycle Splendor NXG
• No.1 standard motorcycle CD Deluxe
• No. premium motorcycle CBZ Xtreme
2007 The NDTV Profit Car India & Bike India Awards 2007 in the following
category:
• Overall "Bike of the Year" - CBZ X-treme
• "Bike of the Year" - CBZ X-treme (up to 150 cc category)
• "Bike Technology of the Year" - Glamout PGM FI
"Auto Tech of the Year" - Glamout PGM FI by Overdrive Magazine.
"Bike of the Year" - CBZ X-treme by Overdrive Magazine.
Ranked CBZ X-treme "Bike of the Year" - by B S Motoring Magazine
“Most Trusted Company” , by TNS Voice of the Customer Awards 2006.
CD Deluxe rated as "No 1 standard motorcycle" by TNS Voice of the

Customer Awards 2006.
2006 Adjudged 7th Top Indian Company by Wallstreet Journal Asia (Top Indian
Two Wheeler Company).

One of the 8 Indian companies to enter the Forbes top 200 list of world’s
most reputed companies.
No. 1 in automobile industry by TNS Corporate Social Responsibility

Award.
Best in its class awards for each category by TNS Total Customer
Satisfaction Awards 2006:
• Splendor Plus (Executive)
• CD Deluxe (Entry)
• Pleasure (Gearless Scooters)
Splendor & Passion - Top two models in two wheeler category by ET Brand
Equity Survey 2006.
Adjudged 7th Top Indian Company by Wallstreet Journal Asia (Top Indian
Two Wheeler Company).
Top Indian company in the Automobile - Two Wheeler sector by Dun &
Bradstreet - American Express Corporate Awards 2006.
Hero Honda Splendor rated as India's most preferred two-wheeler brand at

the Awaaz Consumer Awards 2006.
Certificate of Export Excellence for outstanding export performance during

2003-04 for two-wheeler & three- wheelers - Complete (Non SSI) by
Engineering Export Promotion Council.
The NDTV Profit Car India & Bike India Awards 2006 in the following
category:
• Bike Maker of the Year
• Bike of the Year - Achiever
• Bike of the Year - Achiever (up to 150 cc category)
• Bike of the Year - Glamour (up to 125 cc category)
• NDTV Viewers' Choice Award to Glamour in the bike category

2005 Awaaz Consumer Awards 2005 - India's most preferred two-wheeler brand
by CNBC in the 'Automobiles' category.
Bike Maker of the Year Award by Overdrive Magazine.
ICWAI National Award for Excellence (Second) in Cost Management 2004
in the private sector category by ICWAI.
10th Motilal Oswal Wealth Creator Award for as the most consistent wealth
creator for the period 1991-2005.
2004 Winner of the Review 200 - Asia's Leading Companies Award (3rd Rank
amongst the top 10 Indian companies).
GVC Level 1 (Highest Rating) by CRISIL for corporate Governance.
Adjudged as the Best Value Creator - Large Size Companies 2003-04 by
The Outlook Money.
Corporate Excellence Award 2004 by Indian Institute of Materials
Management.
Adjudged as the Organization with Innovative HR Practices by HT Power
Jobs for HR Excellence.
ICSI National Award for Excellence in Corporate Governance 2004 by The
Institute of Company Secretaries of India.
2003 Winner of the Review 200 - Asia 's Leading Companies Award (3rd Rank
Most Respected Company in Automobile Sector by Business World.
Bike Maker of the Year by Overdrive Magazine.
2002 Bike Maker of the Year by Overdrive Magazine.
Winner of the Review 200 - Asia 's Leading Companies Award (4th Rank
Company of the Year of ET Awards for Corporate Excellence.
Ranked 4th in 'Overall Best Managed Company' category, ranked 3rd in
'Best Financial Management' and 'Best Operational Efficiency' category,
ranked 6th in 'Overall Best Investor Relations' category, by Asiamoney.
Highest Wealth Creating Company of the Year Award by the Money.
GVC Level 1 (Highest Rating) by CRISIL for Corporate Governance.

2001 Bike Maker of the Year by Overdrive Magazine.
Winner of the Review 200 - Asia 's Leading Companies Award (9th Rank
amongst the top 10 Indian Companies).
Winner of Three Leaves Award for showing Corporate Environment
Responsibility in the Automobile Sector by Centre for Science &
Environment.
1999 National Productivity Award for the Best Productivity Award in the
category of Automobile & Tractor presented by Vice President of India.
1995 The Analyst Award 1995 presented to Hero Honda Motors Ltd. on being
ranked 9th amongst the most investor rewarding companies in India.
1995 National Award for outstanding contribution to the Development of Indian
Small Scale Industry (NSIC Award - Presented by President of India).
1991 Economic Times-Harvard Business School Award for Corporate
Performance to Hero Honda Motors Ltd.
CORPORATE SOCIAL RESPONSIBILITY (CSR)

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.
• KEY POLICIES AN ENVIRONMENTALLY AND SOCIALLY,
AWARE COMPANY
• At Hero Honda, our goal is not only to sell you a bike, but also to help you
every step of the way in making your world a better place to live in. Besides
its will to provide a high-quality service to all of its customers, Hero Honda
takes a stand as a socially responsible enterprise respectful of its
environment and respectful of the important issues.
Hero Honda has been strongly committed not only to environmental

conservation programmes but also expresses the increasingly inseparable
balance between the economic concerns and the environmental and social
issues faced by a business. A business must not grow at the expense of
mankind and man's future but rather must serve mankind.
"We must do something for the community from whose land we

generate our wealth."
A famous quote from our Worthy Chairman Mr.Brijmohan Lall Munjal.
Environment Policy
We at Hero Honda are committed to demonstrate excellence in our

environmental performance on a continual basis, as an intrinsic element of our
corporate philosophy.
To achieve this we commit ourselves to:

• Integrate environmental attributes and cleaner production in all our business
processes and practices with specific consideration to substitution of
hazardous chemicals, where viable and strengthen the greening of supply
chain.
• Continue product innovations to improve environmental compatibility.
• Comply with all applicable environmental legislation and also controlling
our environmental discharges through the principles of "alara" (as low as
reasonably achievable).
• Institutionalise resource conservation, in particular, in the areas of oil, water,
electrical energy, paints and chemicals.

• Enhance environmental awareness of our employees and dealers / vendors,
while promoting their involvement in ensuring sound environmental
management.
Quality Policy
Excellence in quality is the core value of Hero Honda's philosophy.

We are committed at all levels to achieve high quality in whatever we do,
particularly in our products and services which will meet and exceed customer's
growing aspirations through:
• Innovation in products, processes and services.
• Continuous improvement in our total quality management systems.
• Teamwork and responsibility.
Safety Policy
Hero Honda is committed to safety and health of its employees and other
persons who may be affected by its operations. We believe that the safe work
practices lead to better business performance, motivated workforce and higher
productivity.
We shall create a safety culture in the organization by:

• Integrating safety and health matters in all our activities.
• Ensuring compliance with all applicable legislative requirements.
• Empowering employees to ensure safety in their respective work places.
• Promoting safety and health awareness amongst employees, suppliers and
contractors.
• Continuous improvements in safety performance through precautions
besides participation and training of employees.
TWO WHEELERS IN INDIA

The feeling of freedom and being one with the Nature comes
only from riding a two wheeler. Indians prefer the two wheelers
because of their small manageable size, low maintenance, pricing
and easy loan repayments. Indian streets are full of people of all
age groups riding a two wheeler. Motorized two wheelers are seen
as a symbol of status by the populace. Thus, in India, we would
see swanky four wheels jostling with our ever reliable and sturdy
steed the two wheeler.
India is the second largest producer and manufacturer of

two-wheelers in the world. It stands next only to Japan and China
in terms of the number of two-wheelers produced and domestic
sales respectively. Indian two-wheeler industry has got
spectacular growth in the last few years. Indian two-wheeler
industry had a small beginning in the early 50's. The Automobile
Products of India (API) started manufacturing scooters in the
country.
Bikes are a major segment of Indian two wheeler industry,

the other two being scooters and mopeds. Indian companies are
among the largest two-wheeler manufacturers in the world.
In the initial stages, the scooter segment was dominated by API; it

was later overtaken by Bajaj Auto. Although various government

and private enterprises entered the fray for scooters, the only
new player that has lasted till today is LML.
The motorcycle segment was initially dominated by Enfield

350cc bikes and Escorts 175cc bike. The two-wheeler market was
opened to foreign competition in the mid-80s. And the then
market leaders - Escorts and Enfield - were caught unaware by
the onslaught of the 100cc bikes of the four Indo-Japanese joint
ventures. With the availability of fuel efficient low power bikes,
demand swelled, resulting in Hero Honda - then the only producer
of four stroke bikes (100cc category), gaining a top slot.
The first Japanese motorcycles were introduced in the early

eighties. TVS Suzuki and Hero Honda brought in the first two-
stroke and four-stroke engine motorcycles respectively. These
two players initially started with assembly of CKD kits, and later
on progressed to indigenous manufacturing. In the 90s the major
growth for motorcycle segment was brought in by Japanese
motorcycles, which grew at a rate of nearly 25% CAGR in the last
five years.
The industry had a smooth ride in the 50s, 60s and 70s when the
Government prohibited new entries and strictly controlled
capacity expansion. The industry saw a sudden growth in the 80s.

The industry witnessed a steady growth of 14% leading to a peak
volume of 1.9mn vehicles in 1990.
In 1990, the entire automobile industry saw a drastic fall in

demand. This resulted in a decline of 15% in 1991 and 8% in
1992, resulting in a production loss of 0.4mn vehicles. Barring
Hero Honda, all the major producers suffered from recession in
FY93 and FY94. Hero Honda showed a marginal decline in 1992.
The reasons for recession in the sector were the incessant

rise in fuel prices, high input costs and reduced purchasing power
due to significant rise in general price level and credit crunch in
consumer financing. Factors like increased production in 1992,
due to new entrants coupled with the recession in the industry
resulted in company either reporting losses or a fall in profits.
Later with development of economic situation, sales of two
wheeler rapidly increased.
The trend of owning two-wheelers is due to a variety of facts

peculiar
to India. One of the chief factors is poor public transport in many
parts of India. Additionally, two-wheelers offer a great deal of
convenience and mobility for the Indian family. In the last eight to
ten years, the two-wheeler market has witnessed a marked shift
towards motorcycles at the expense of scooters. In the rural

areas, consumers have come to prefer sturdier bikes to withstand
the bad road conditions. All the new models are now being
replaced by 4-stroke motorcycles. Excise duty on motorcycles has
been reduced resulting in price reduction, which has aided in
propelling the demand for motorcycles. Fierce competition has
also forced players to cut prices in certain models. During the
year 2006-07, 78.57 lakhs Two-wheelers were sold in India.

KEY FACTORS AFFECTING THE SALES OF
MOTORCYCLES
Government policy impact on petrol prices: Petrol prices

determine the running cost of two wheelers expressed in rupees
per kilometre. Petrol prices are the highest in India as GOI
subsidizes kerosene and diesel. But with the change in the GOI
policy to reduce the subsidy, the prices of petrol will remain
constant at the current prices. This will have a positive effect on

two wheelers market. This trend would actually affect positively
the whole automotive industry.
Improvement in disposable income: With the increase in

salary levels due to entry of multinationals following liberalization
process the disposable income has improved exponentially over
the years. This will have a multiplier effect on demand for
consumer durables including two wheelers. This is already
witnessed in improved demand two wheelers.
Availability of credit for vehicle purchase: The availability

and cost of finance affects the demand for two wheelers as the
trend for increased credit purchases for consumer durables have
increased over the past few years.
Key players in the Two-wheeler Industry:
There are many two-wheeler manufacturers in India. Major

players in the 2-wheeler industry are Hero Honda Motors Ltd
(HHML), Bajaj Auto Ltd (Bajaj Auto) and TVS Motor Company Ltd
(TVS).

The other key players in the two-wheeler industry are Kinetic
Motor Company Ltd (KMCL), Kinetic Engineering Ltd (KEL), LML
Ltd (LML), Yamaha Motors India Ltd (Yamaha), Majestic Auto Ltd
(Majestic Auto), Royal Enfield Ltd (REL) and Honda Motorcycle &
Scooter India (P) Ltd (HMSI).
Types of Two-wheelers in India:
There are mainly three types of two-wheelers available in

India. They are Motorcycles, Scooters and Scooterettes/Mopeds.
Motorcycles in India:
Bikes comprise a major segment of Indian two wheeler industry.

Company : Bajaj Auto Ltd.
* Bajaj Avenger
* Bajaj CT 100
* Bajaj Platina
* Bajaj Discover DTSi
* Bajaj Pulsar DTSi
* Bajaj Wave
* Bajaj Wind 125
Company : HERO HONDA
* Sonic DTSi
* Hero Honda Achiever
* Hero Honda CD Dawn
* Hero Honda CD Deluxe
* Hero Honda Glamour
* Hero Honda Glamour-Fi
* Hero Honda Karizma
* Hero Honda Passion Plus
* Hero Honda Pleasure
* Hero Honda Super Splendor
* Hero Honda Splendor NXG

* Hero Honda CBZ X-Treme
* Hero Honda Hunk
Company: Kinetic Motor
* Kinetic Aquila
* Kinetic Boss
* Kinetic Challenger
* Kinetic Comet
* Kinetic GF
Company: TVS Motor
• TVS Ind Suzuki AX 100

• TVS MAX 100
• TVS MAX R 100
• TVS Supra
• TVS Suzuki Samurai
• TVS Suzuki Shogun
• TVS Suzuki Shalion
• TVS Suzuki Fiero
• TVS Fiero
• TVS Star
• TVS Star City
• TVS Star city deluxe
• TVS Star Sport
• TVS Fiero F2
• TVS Fiero FX
• TVS Centra

• TVS Victor (110 cc)
• TVS Victor GLX (125 cc)
• TVS Victor EDGE (125 cc)
• TVS Flame (125 cc,ccvti technology)
• TVS Apache (150 cc,13.7 Ps @8500rpm)
• TVS Apache RTR 160
• TVS Apache RTR 160 EFI (Electronic Fuel Injection)
Company: Yamaha Motor India
* TVS Victor
* Yamaha Crux
* Yamaha G5
* Yamaha Gladiator

. Products of Hero Honda Motors
Scooters
○ Hero Honda Pleasure: Hero Honda Pleasure
Manufact Hero Honda

urer motorcycle Ltd.
Producti
on
Price Rs. 37990
Engine 102 cc, 7bhp@
7000 rpm,
torque,0.78 kgm
@5000 rpm

Motorcycles Hero Honda CD 100 Deluxe
○ Hero Honda CD
100 Deluxe:
Manufac Hero Honda

turer motorcycle Ltd
Producti 2001-present
on
Price Rs. 35642
Engine 97.cc,7.5bhp@8000rp
m,4stroke engine,
singal cylinder

Hero Honda Ambition 135cc
○ Hero Honda
Ambition 135cc:
Manufact Hero Honda

urer motorcycle Ltd
Productio 2004-present
n
Price Rs, 49000
Engine 135 cc , four-stroke
engin, single piston,
kick start
11 bhp

○ Hero Honda CBZ Hero Honda CBZ Extreme
Extreme:
Manufact Hero Honda

urer motorcycle Ltd
n
Price Rs. 59213
Engine 149.2 cc , four-stroke
cycle, single piston,
kick start
Power: 14.2 bhp hp @
8500 rpm
Torque: 1.26 kgm @
6500rpm

Hero Honda Passion Plus
○ Hero Honda
Passion Plus:
Manufact Hero Honda

urer motorcycle Ltd
n
Price Rs. 44265
Engine 97 CC, 4-stroke
engine, singale
cylinder. 7.4 bhp
@8000 rpm

○ Hero Honda CD Hero Honda CD Dawn
Dawn:
Manufact Hero Honda motorcycle

urer Ltd
n
Price Rs. 33542
Engine 97 CC,7.5 bhp @8500
rpm, 4 stroke engine,
torque of 8.05 Nm at
5,500 rpm

Hero Honda Karizma 225
○ Hero Honda
Karizma 225:
Manufact Hero Honda motorcycle

urer Ltd.
n
If you look at the 223c mill of the Price Rs. 76393

Karizma, you can make out the familiar Engine 4 – Stroke,12.68 KW
streak that runs through the engines on (17 PS) @ 7000
the CBZ and the Ambition. No prizes rpm,223 cc
on this count as to the reason but the
223cc Karizma engine represents - for the moment - the maximum capacity this modular
design theme can be taken to. The crankcase is of virtually the same size though the covers do
have some detail differences and the engine mounts are the same as in the other two bikes and
completing the picture are the scaled-up barrel (with an additional fin) and head.

○ Hero Honda Hero Honda Glamour
Glamour:
Manufact Hero Honda

urer motorcycle Ltd
Producti 2005-present
on
Price Rs 49777-56529
Engine 124.7 cc , four-stroke
cycle, single piston,
kick start, 9 bhp
@7000 rpm

Hero Honda Achiever
○ Hero Honda
Achiever:
Manufact Hero Honda

urer motorcycle Ltd
n
Price Rs. 51298-56022
Engine 149.1 CC, 4-stroke
engine, single
cylinder.13.4 bhp @
8000 rpm

○ Hero Honda Splendor Hero Honda Splendor NXG
NXG:
Manufact Hero Honda

urer motorcycle Ltd
n
Price Rs. 46500
Engine 124.7 CC,9 bhp @
7000 rpm, 4 stroke
engine,, torque of
8.05 Nm at 5,500 rpm

SERVICES
HHML has constituted one the best after-sales service network in the industry.
Apart from improving the quality of service and easy availability of spare parts,
HHML has also focused on cleanliness and other aesthetics of the service stations
and added amenities such as air-conditioned waiting area, internet browsing and
coffee shops etc. to enhance the in-house experience of the consumers at those
“customer touch-points”.
To ensure that millions of customers in the rural areas are not left waiting for
adequate service as it is impossible for HHML to introduce service stations at
every nook & corner of the country, mobile service stations are regularly arranged
with prior intimation to public about the route that the mobile workshop would
take when passing through that region, so that consumers can come and get their
two-wheelers serviced. All these activities are aimed to increase the customer
loyalty and thus retaining customers.
The value activities done by HHML in its value chain (both primary
& support activities) are given in Fig. IA1. The unique value
activities of HHML that is at the heart of its competitive
advantages

Company Share Information:
Share Holding Pattern Holder's Name No of Shares

% Share Holding
Promoters 57833555
28.96%
Other Companies 1500702

0.75%
Foreign NRI 180204

0.09%
Foreign Institutions 48428475

24.25%
Foreign Industries 1250

0.00%
Others 1311172
0.66%
Banks Mutual Funds 7549210

3.78%
General Public 14662220

7.34%

Financial Institutions 16301962
8.16%
Foreign Promoter 51918750

26.00%

List of Exchanges:
• Bangalore Stock Exchange Ltd.

• Calcutta Stock Exchange Association Ltd.
• Cochin Stock Exchange Ltd.
• Delhi Stock Exchange Assoc. Ltd.
• Hyderabad Stock Exchange Ltd
• Inter-connected Stock Exchange of India
• Ludhiana Stock Exchange Assoc. Ltd.
• Madras Stock Exchange Ltd.,
• National Stock Exchange of India Ltd.
• Over The Counter Exchange Of India Ltd.
• The Stock Exchange, Mumbai
• Uttar Pradesh Exchange Assoc Ltd.

Market performance
Marketing arm of HHML started the hugely successful “Fill it, Shut it, Forget it”
campaign years ago to pitch for its better fuel efficiency and thus lower owning
cost. It has been a constant strive for HHML’s marketing efforts (in
advertisements, in promos) to focus the value for money and reliability of its
products and thus attracting new customers and retaining customers as well. To
ensure customer loyalty, HHML has come up with Hero Honda Passport Program
which gives special privileges to its customers. HHML does not indulge in price
wars in an effort to maintain the perception of enduring quality among present &
potential customers. Of late, there were complaints from customers that HHML is
not dynamic enough to present newer, flashier & more powerful bike models in the
premium segment that competitors like recharged Bajaj is offering. Another
complaint was that many of the variants offered by HHML have little or
insignificant product differentiation which can justify the price difference. HHML
has paid heed to these stated & unstated needs of its customers and improved the
4P’s (Product, Price, Place & Promotion). Its offerings now are well accepted in
the market.
HHML has roped in popular heartthrob Hrithik Roshan as its brand ambassador to
give impetus to its marketing efforts. It has been a constant endeavor of HHML to
cater to both urban and rural markets with similar zest, with advertising campaigns
and promotional events clearly focusing on the two markets – “Har Gaon, Har

Angaan” is the recent rural connect initiative to cover ~ 23,360 villages with a
population of 5000 or more by 500 specially trained rural sales executives.
HHML has a conscious strategy of penetrating new markets and unrepresented

territories through its distribution network which is made up of dealers, authorized
representatives, stockists and SSPs. In March 2001, the company had 826 such
customers points in India. By March 2008, this number went up to over 3500. On
an all India basis, 50 dealers, 150 SSPs, 267 dealers and 45 city work agents were
added within this period. The distribution network of HHML is both wide & deep
rooted; it is based on both mutual trust & relationship between HHML & its
distributors and HHML’s philosophy of ensuring its partners to grow with its own
growth. Trust & loyalty of distribution network is very important in maintaining
the leadership position in this highly competitive industry. In fact, HHML’s
strength in Supply Chain & distribution network is one of the unique intangible
resources that it has; superior brand image & reliability perception of its brand is
the outcome of these intangible & tangible key assets.

FACTS & FIGURES
Sale of Hero Honda in Rural area and Urban area

In the survey of rural as well as urban area it is found that in rural area the sale of
Hero Honda is less but in urban area it gives very exiting result. This may be
because of the conditions of roads there.
Area % of Respondents
Urban Area 72
Rural Area 28
FAMILY INCOME OF RESPONDENTS

The income distribution of the families of respondents shows that the bike, which
was considered earlier to be out of range for middle class families is now
becoming very fast an article for them.
Family income (Rs.) % of Responses

5000-10000 10
10000-15000 46
15000-20000 36
Above 20000 08
PERSONS WHO KNOW TODRIVE BIKE
Almost every person know how to drive a Bike (In my Survey)
Response % Of respondents
Driving known 96
Driving not know 04

FACTOR PROMPT TO BUY HERO HONDA
It should be stated that the performance is the most important factor followed by
look. The possible combination and corresponding number of respondents are
shown in the table below.
Features % of respondents
Performance 18
Look 11
Availability 5
Price 1
Maintenance 4
Brand image 5
After sale service 6
HOW DID THE RESPONDENT CAME TO KNOW ABOUT THE BIKE?

The best media of advertisement (according to which the respondents came to
know about the bike) is the ads on television. Friends & magazine are the other
sources. Only 2 % of them came to know through hoardings.

Medium of Advertisement % of Respondents
Television 46
Magazine 36
Friends 14
Hoardings 02
Others 02
PURCHASE OF BIKE
Almost 94 % of the respondents say that they have purchased the bike by cash.
Only 6% of the respondents say that they have purchased their bike through bank
loans.
Purchase Type % of Respondents
Cash Purchase 94
Hire Purchase 06

DECISION INFLUENCED BY
Maximum no. of the Respondents have taken decision to buy the bike on their own. After
that their friends and parents influenced them.
Influencer % of Respondents
Parents 16
Self 54
Friends 18
Relatives 08
Others 04
BIKES PREVIOUSLY USED
More than 60% were using Hero Honda CD100 bikes. They were followed by
Yamaha RX100 & very little have chosen other bikes.

Previously Used % of Respondents
CD100 62
Yamaha RX100 32
Others 06
RATING OF BIKES
42% of the respondents have rated as the best bike they have used, but it is facing a
stiff competition from Pulsar & Fierro.
Bikes % rating by Respondents

Spleandor 38
Passion 08
Ambition 06
Pulsar 28
Fierro 14
Others 06
4.2 SURVEY REPORT

The Initial Quality Study of Two Wheelers in India
Something to Ponder over.
Which model of Motor Cycle would you recommend to your dear friend?
Does the basic reliability of two-wheelers measure up to the promises made by the
manufacturer…?
Where exactly is the quality lacking…?
Are buyers happy with the quality they get…?
What is the trend over the years…?
Would they buy the same model again or more importantly from the
manufacturer’s point of view… would they advise their friends to buy it…?
So let the people know just how the two-wheelers fared on the road…

SWOT ANALYSIS
STRENGTHS:
➢ Hero Honda introduced First stroke bike in the Indian
market.
➢ Hero Honda gives 80 Km/Liter Avg.
➢ Huge sale network (3500 Dealers).
➢ Better sale service.
➢ It has the highest share in automobile sector.
➢ It has a good brand image.
➢ It gives better service for customers.
➢ Best customer preference.
➢ Debt equity ratio is only 0.1.
➢ The company has clarified about its intention of
setting a third plant in addition to its existing two plants. The
company has embarked upon a green field expansion plan
and has earmarked Rs 2 bn for the same. It should be noted
that the company has a strong cash flow position; it
generated Rs 9 bn from operation in FY04 and is virtually a
debt free company.

WEEKNESS:
➢ Suppose to be very sophisticated.
➢ Not fit for ruler India.
➢ They have big gap between cubic capacities of its
products.
➢ Its market share is reducing from last few years.
➢ Spare parts are too costly.
OPPOURTUNITIES:
➢ Hero Hondas the first manufacture to launch eco

friendly bikes with 4-stroke engines. They have attained a
stronger good will and popularity in the industry and the
consumers.
➢ They should go in new segments of bikes.
➢ There is large no. of young consumers in the
market. Company has to focus on them.
➢ They have big opportunities in heavy bike
segments.
➢ As government polices are amended against
pollution in metro cities, Hero Honda being 4 stroke bike

manufacture have great opportunities to explore its new
innovations and technologies.
THREATS:
➢ Main threats to Hero Honda are their competitors

like:-
○ Bajaj Auto Ltd.
○ TVS motors Ltd.
○ Yamaha Motors India.
○ Honda motorcycle and scooter India.
➢ The cost of the product is very high in comparison
to other companies.
➢ Decreasing market share.

FINDINGS
It is clear from the report that the Hero Honda Motors is facing
cutthroat competition; hence the company’s manager has to be
fast and smart so as to understand the customers needs. They
have to come up with various new techniques or schemes to be
able to cater to different categories of people.
Customers are becoming more wise day by day and they are now
willing to know all the in and out of the things happening around
them. This has led to increased customer awareness.
We can analyze that if the brand is reputed that doesn’t win the
customers delight unless it’s provided same value-added features
or else we can say competitive advantage.
• For gaining a competitive advantage it has to continuously

compare the product and services with the competitors and
find the weak area of the rivals for gaining competitive
advantage.
• Surveys revealed that awareness of Hero Honda Motors is
low among its target segment for creativity awareness. The

company has to take some keen step for promotional
activity.
• The company should regularly send the sales person who
have good communication skill to the customers so that they
should be aware about the product and services in market
and know the quality of the services offered by the
company.
RATIO ANALYSIS
Meaning and definition of ratio analysis:
Ratio analysis is a widely used tool of financial analysis. It is

defined as the systematic use of ratio to interpret the financial
statements so that the strength and weaknesses of a firm as well
as its historical performance and current financial condition can
be determined. The term ratio refers to the numerical or
quantitative relationship between two variables.
Significance or Importance of ratio analysis:
• It helps in evaluating the firms performance:
With the help of ratio analysis conclusion can be

drawn regarding several aspects such as financial health,
profitability and operational efficiency of the undertaking.
Ratio points out the operating efficiency of the firm i.e.

whether the management has utilized the firm’s assets
correctly, to increase the investor’s wealth. It ensures a fair
return to its owners and secures optimum utilization of firms
assets
• It helps in inter-firm comparison:
Ratio analysis helps in inter-firm comparison by

providing necessary data. An interfirm comparison indicates
relative position.It provides the relevant data for the
comparison of the performance of different departments. If
comparison shows a variance, the possible reasons of
variations may be identified and if results are negative, the
action may be initiated immediately to bring them in line.
It simplifies financial statement:
The information given in the basic financial statements serves no

useful Purpose unless it s interrupted and analyzed in some
comparable terms. The ratio analysis is one of the tools in the
hands of those who want to know something more from the
financial statements in the simplified manner.
• It helps in determining the financial position of the

concern:
Ratio analysis facilitates the management to know

whether the firms financial position is improving or

deteriorating or is constant over the years by setting a trend
with the help of ratios The analysis with the help of ratio
analysis can know the direction of the trend of strategic ratio
may help the management in the task of planning,
forecasting and controlling.
• It is helpful in budgeting and forecasting:
Accounting ratios provide a reliable data, which can be

compared, studied and analyzed. These ratios provide sound
footing for future prospectus. The ratios can also serve as a
basis for preparing budgeting future line of action.
• Liquidity position:
With help of ratio analysis conclusions can be drawn

regarding the Liquidity position of a firm. The liquidity
positon of a firm would be satisfactory if it is able to meet its
current obligation when they become due. The ability to met
short term liabilities is reflected in the liquidity ratio of a
firm.
Long term solvency:
Ratio analysis is equally for assessing the long term

financial ability of the Firm. The long term solvency s
measured by the leverage or capital structure and

profitability ratio which shows the earning power and
operating efficiency, Solvency ratio shows relationship
between total liability and total assets.
• Operating efficieny:
Yet another dimension of usefulness or ratio analysis,

relevant from the View point of management is that it throws
light on the degree efficiency in the various activity ratios
measures this kind of operational efficiency.
Classification of ratios
Different ratios are used for different purpose these ratios

can be grouped into various classes according to the financial
activity. Ratios are classified into four broad categories.
1. Liquidity Ratio
2. Leverage Ratio
3. Profitability Ratio

4. Activity Ratio
1. Liquidity Ratio:
Liquidity ratio measures the firms ability to meet

its currentobligations i.e. ability to pay its obligations and
when they become due. Commonly used ratios are:
• Current ratio:
Current ratio is the ratio, which express relationship
between current asset and current liabilities. Current asset are
those which can be converted into cash within a short period of
time, normally not exceeding one year. The current liabilities
which are short- term maturing to be met.
Current ratio =
Current Asset
Current liabilities
Acid test ratio:
The acid test ratio is a measure of liquidity esigned to

overcome the

Defect of current ratio. It is often referred to as quick ratio
because it is a measurement of firms ability to convert its
current assets quickly into cash in order to meet its current
liabilities.
Current asset -Inventories
Acid test ratio =
Current
liabilities
1. Leverage or capital structure ratio:
Leverage or capital structure ratios are the ratios, which

indicate the relative interest of the owners and the creditors in
an enterprise. These ratios indicate the funds provided by the
long-term creditors and owners.
To judge the long term financial position of the firm

following ratios are applied.
1. Debt –equity ratio:

Debt-equity ratio which expresses the relatonship between
debt and
equityThis ratio explains how far owned funds are sufficient
to pay
outside liabilities. It is calculated by following formula
Long term +short term debts +current

liabilities
Debt equity ratio =
Net worth
.
2. Total Debt ratio:
This ratio explains how far owned and borrowed funds are
sufficient
to pay debt of the firm
Long term+short term borrowing+current liabilities

Capital employed
3. Profitability ratio:
Profitability ratio are the best indicators of overall

efficiency of the business concern, because they compare
return of value over and above the value put into business with
sales or service carried on by the firm with the help of assets
employed. Profitablity ratio can be determined on the basis of:
• Sales
• Investment
• Profitability ratios related to sale:
1. Gross profit to sales ratio.

2. Net profit to sales ratio or net profit of margin.
1. Gross profit to sales ratio:
The gross profit to sales ratio establishes relationship

between

gross profit And sales to measure the relative operating
efficency of
the firm to reflect pricing policy
Sales-cost of goods sold

Gross profit to sales ratio = *
100
Sale
1. Net profit margin:
The net margin indicates the managements ability to

earn sufficient profit on sales to earn sufficient profit on
sales not only to cover all revenue operating expenses of the
business, the cost of borrowed funds and the cost of goods
or servicing, but also to have sufficient margin to pay
reasonable comparison to shareholders on their
contributions to the firm.
Net profit after tax and interest
Net profit margin = *100

Sales
2. Profitability ratios related to investments:
a. Return on assets
b. Return on capital employed
a. Return on assets:
The profitability ratio here measures the relationship

between net
profit and assets.
Net profit after tax
Return on assets =
Fixed assets

b. Return on capital employed:
Net profit after taxes
Return on capital employed =
Total capital
employed
1. Activity ratio:
Activity ratio are sometimes are called efficiency ratios.

Activity ratios are concerned with how efficiency the assets of
the firm are managed.
These ratio express relatonship between level of sales and

the investment in various assets inventores, receivables, fixed
assets etc.

The important activity ratios are as follows:
1. Inventory turnover ratio:
Raw materials
consumed
Inventory turnover ratio =
Average stock of raw

materials
2. Debt turnover ratio:
This ratio shows quickly debtors are converted into

cash
= Total sales
Debtors
3. Average collection period ratio:

This ratio indicates how quickly the inventory is converted
into cash.
Days in a year
Debtors turnover
4. Working capital turnover ratio:
This ratio shows the number of times the working

capital turns in trading transaction. If it has an increasing trend
over the previous year it shows that the working capital is
being used efficiently.
LIQUIDITY RATIOS
Meaning of liquidity:
The term liquidity refers to ability to pay its

obligations when they become due. Liquidity ratios measure
the ability of a firm to meet its short-term obligations and
reflect the short-term financial strength or solvency of a firm.

Liquidity ratios are classified into two types:
1. Short term liquidity and

2. Long term liquidity
1. short term liquidity:
Short term liquidity refers to finance required by a

firm for a period of one year or less. Short –term finance is also
called working capital finance as it is required for investment in
working capital or current assets like cash and bank balances,
inventories, accounts receivables and marketable securities.
Further short term liquidity ratios are categories into

three types they are as follows:

Hero Honda Motors Ltd. -
Profit loss account
Mar ' Mar ' Mar '

09 08 07
Income
12,325. 10,345. 9,905.
Operating income
38 01 95
Expenses
8,820.0 7,479.5 7,252.
Material consumed
5 0 46
Manufacturing expenses 427.78 360.66 332.62
Personnel expenses 448.65 383.45 353.81
Selling expenses 582.16 503.62 507.10
Adminstrative expenses 293.72 250.01 258.00
Expenses capitalised - - -
10,572. 8,977.2 8,703.
Cost of sales
36 4 99
1,753.0 1,367.7 1,201.
Operating profit
2 7 96
Other recurring income 108.56 88.85 83.73
1,861.5 1,456.6 1,285.
Adjusted PBDIT
8 2 69
Financial expenses 13.04 13.47 13.76

Depreciation 180.66 160.32 139.78
Other write offs - - -
1,667.8 1,282.8 1,132.
Adjusted PBT
8 3 15
Tax charges 499.70 442.40 388.21
1,168.1
Adjusted PAT 840.43 743.94
8
Non recurring items 113.58 127.45 113.95
Other non cash
- - -
adjustments
1,281.7
Reported net profit 967.88 857.89
6
Earnigs before 3,303.5 2,562.6 2,081.
appropriation 3 6 94
Equity dividend 399.38 379.41 339.47
Preference dividend - - -
Dividend tax 67.87 64.48 57.69
2,836.2 2,118.7 1,684.
Retained earnings
8 7 78
Hero Honda Motors Ltd. -
(Rs crore)

Balance sheet
Mar ' Mar ' Mar '

09 08 07
Sources of funds
Owner's fund
Equity share capital 39.94 39.94 39.94
Share application money - - -
Preference share capital - - -
3,760.8 2,946.3 2,430.
Reserves & surplus
1 0 12
Loan funds
Secured loans - - - --
Unsecured loans 78.49 132.00 165.17
3,879.2 3,118.2 2,635.
Total
4 4 23
Uses of funds
Fixed assets
2,516.2 1,938.7 1,800.
Gross block
7 8 63
Less : revaluation reserve - - -
Less : accumulated
942.56 782.52 635.10
depreciation

Mar ' Mar ' Mar '
09 08 07
1,573.7 1,156.2 1,165.
Net block
1 6 53
Capital work-in-progress 120.54 408.49 189.92
3,368.7 2,566.8 1,973.
Investments
5 2 87
Net current assets

Current assets, loans & 1,022.1
942.00 914.65
advances 4
Less : current liabilities & 2,205.9 1,955.3 1,608.
provisions 0 3 74
- -
-
Total net current assets 1,183.7 1,013.3
694.09
6 3
Miscellaneous expenses not
- - -
written
3,879.2 3,118.2 2,635.
Total
4 4 23

RATIO OF HERO HONDA LTD.
Profitability ratios 2009 2008 2007
Operating margin (%) 14.22 13.22 12.13
Gross profit margin (%) 12.75 11.67 10.72
Net profit margin (%) 10.30 9.27 8.58
Adjusted cash margin (%) 10.84 9.59 8.84
Adjusted return on net worth
30.73 28.14 30.11
(%)
Reported return on net worth
33.72 32.41 34.73
(%)
Return on long term funds (%) 43.33 41.57 43.48
Leverage ratios
Long term debt / Equity 0.02 0.04 0.06
Total debt/equity 0.02 0.04 0.06
Owners fund as % of total
97.97 95.76 93.73
source
Fixed assets turnover ratio 5.34 5.89 6.01
Liquidity ratios
Current ratio 0.46 0.48 0.56
Current ratio (inc. st loans) 0.46 0.48 0.56
Quick ratio 0.31 0.31 0.39

Inventory turnover ratio 47.53 42.82 47.48
Payout ratios
Dividend payout ratio (net
36.45 45.86 46.29
profit)
Dividend payout ratio (cash
31.95 39.34 39.80
profit)
Earning retention ratio 60.01 47.19 46.62
Cash earnings retention ratio 65.36 55.65 55.06
Coverage ratios
Adjusted cash flow time total
0.05 0.13 0.18
debt
142.7 108.1
Financial charges coverage ratio 93.44
6 4

RATIO ANALYSES
Liquidity Ratio’s.
1)CURRENT RATIO:
CURRENT ASSETS
CURRENT LIABILITIES
2007
2008 2009
0.51
0.62 0.57

Interpretation:
The ideal ratio 2:1 . The liquidity position of the company is not
satisfactory because it is not reached the ideal ratio 2:1 . The
company should increase the current assets and decrease the
current liabilities.
Quick Ratio:
Current assets –inventories.
Current liabilities
2007 2008
2009
0.31 0.36
0.33

Interpretation:
the liquidity position of the company is not satisfactory because

the ratio is decrease and not reached the ideal ratio 1:1 the
company should increase quick assets such as cash and bank
balance and decrease the current liabilities.
LEVERAGE RATIO’
1)Proprietary Ratio
2)Fixed Asset Ratio
3)Interest Coverage RatiO
Proprietary Ratio:
Net Worth /Total Assets
2007 2008 2009
0.09 0.07 0.04

Interpretation:
These ratio is the indicative of strong financial position

of business . The higher the ratio , the better it is. but the
company
Should increase the shareholders funds.
Fixed Assets Ratio:
Fixed Assets
Net worth =
2007 2008 2009
0.45 0.51
0.50
Interpretation:
This ratio is satisfactory and the ideal ratio is 0.67 and it

will never be more than 1 , the long term funds are used
to buy or acquire the fixed assets.

Turn Over Ratios
1)working capital turnover
2)inventory turnover ratio
3)fixed assets turnover ratio
Working Capital TurnOver Ratio
Net Sales/Working Capital
2007 2008
2009
-11.75 -17.49
-11.64
Interpretation:
The Company should increase the sales and also increase the
working capital i.e., increase the current assets and decrease
current liabilities .

Inventory TurnOver Ratio:
CGS/Avg. Inventory
2007 2008 2009
34.02 34.56 30.17
Interpretation:
The ideal ratio is 8. the company should control the cost of

goods sold expenses and increase the sales in order to
increase the ratio.
Fixed Assets Turn Over Ratio:
TurnOver/ Fixed Assets

2007 2008 2009
8.77 7.30 6.67
Interpretation:
The ideal ratio is 5. the ratio is decreasing from year to year

and we should increase the sales up to the maximum level and
we should use the fixed assets up to full 100% capacity.
Profitability Ratio’s:
1)Gross Profit Ratio
2)Operating Ratio
Gross profit ratio:
gross profit X 100

Sales
2007 2008 2009
15.91 12.34 13.46
Interpretation:
The profitability position of the company is satisfactory

because of the Gross profit ratio is increasing from year to year
but it is not enough the company should control the cost of
goods sold expenses and increase the sales.
Operating Ratio:
CGS + Operating Exp X 100
Net Sales
2007 2008 2009
85.40 89.07 88.09
Interpretation:
The company had controlled the operating expenses that’s

why the ratio is decreased ,the lower the ratio the better it is,
the company should continue this performance in the future
also. It is satisfactory

SUMMARY
1) After the analysis of Financial Statements, the company

status is better, because the Net working capital of the
company is doubled from the last year’s position.
2) The company profits are huge in the current year; it is better

to declare the dividend to shareholders.
3) The company is utilising the fixed assets, which majorly help

to the growth of the organisation. The company should
maintain that perfectly.
4) The company fixed deposits are raised from the inception, it

gives the other income i.e., Interest on fixed deposits.

CONCLUSION
The company’s overall position is at a good position. Particularly the

current year’s position is well due to raise in the profit level from the last year
position. It is better for the organization to diversify the funds to different sectors
in the present market scenario.

LIMITATION
Financial analysis is a powerful mechanism of determining

financial strength and weakness of a firm. But the analysis is
based on the information available in the financial statements.
Thus the financial analysis suffers from some serious inherent
limitation of financial statements, which are as follows :-
1. It is only a study of interim reports.

2. Financial analysis is based only upon monetary
information & non- monetary factors are ignored.
3. It does not consider changes in price level.
4. As financial statement are prepared on the basis of a

going concern; it does not give exact position.
5. Analysis is only a mean not an end in itself. The analyst

has to make interpretation and draw his own conclusion.
RECOMMENDATION
While Hero Honda has strong foothold in the industry, the

company should look into the areas of weakness.
In this connection, It is suggested that the company can look into

the following areas:

• In order to expand its business it should introduce innovative
schemes for young generations, better financial schemes,
etc.
• The company should expand its service centers.
• The must move towards the rural areas to expand its sale.
Questionnaire for the survey of Motorbikes.
1. Name __________________________________________________
2. Address _____________________________________________
_____________________________________________
3. Phone No. ___________________
Mobile No. ___________________

4. Age 18 – 22 years [ ] 23 – 27 years [ ]
28 – 32 years [ ] above 32 years

[ ]
5. Do you have any bike in your house?
Yes [ ] No [ ]
6. If yes, Name and Company of the bike.

________________________________________________________.
7. If No, Do you have any plan to buy it in next 6

months?
Yes [ ] No [ ]
8. If Yes, Name and Company of the Bike.

________________________________________________________.
9. Which Bike does you like most?

________________________________________________________.

10.Rank the Motorbike manufacturing company.
1. Hero Honda [ ]
2. Yamaha [ ]
3. Bajaj [ ]
4. L.M.L. [ ]
11.Do you remember any advertisement of Hero Honda?

________________________________________________________.
12.What should the price range in your opinion?
Splendor + ___________________ Sufficient [ ]

CD dawn ___________________ Sufficient [ ]
Passion + ___________________ Sufficient [ ]

CBZ ___________________ Sufficient [ ]
Karizma ___________________ Sufficient [ ]
13.Any new facilities or any improvement that you want.

________________________________________________________
_____________________________________________________________
___________________________________________________.
14.Give remark to your old Bike Company.
Good [ ] Very Good [ ]
Excellent [ ] Out standing [ ]
Don’t have a Bike [ ]
15Give remark to Hero Honda.

Good [ ] Very Good [ ]
Excellent [ ] Out standing [ ]
Don’t have a Bike [ ]
Thanks
Surveyed by: ………………………
Checked by: ………………………

BIBLIOGRAPHY
BOOKS:
 Name of the book:- Marketing research

Author :- Dr. C.B.Mamoria
 Name of the book:- Marketing research

Author :- Mr. Kothari.
MAGAZINES, JOURNALS AND NEWSPAPERS:
 Journals published by Hero Honda, Annual Report

 Auto India
 Business World
INTERNET:
 www.herohonda.com
 www.google.com


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TABLE OF CONTENTS

✔ OBJECTIVES OF THE PROJECT

ARVIND ARORA (520813268) Page 1

1. To analyze the liquidity position of the firm.

9. To study the marketing mix of Hero Honda Company

10. To focus on comparative study of different products of

11. Different range of Products; their success and failure

ARVIND ARORA (520813268) Page 2

Hero Honda Motors Limited was established in 1984, as a

As early as in 1960’s very few Indian bicycle manufacturers

Hero Honda has grown like no other company in the auto

Hero Honda today faces more competitor than it has ever in

ARVIND ARORA (520813268) Page 4

ARVIND ARORA (520813268) Page 5

In the new millennium, we stand committed to innovation, to change, to achieving

ARVIND ARORA (520813268) Page 6

HERO HONDA'S MANDATE

OFFICERS & DIRECTORS

Board of directors of Hero Honda Motorcycles Ltd.

ARVIND ARORA (520813268) Page 7

(Chairman and Whole -Time Mr. Brijmohan Lall

“MR. PAWAN MUNJAL”

ARVIND ARORA (520813268) Page 8

He is also on the board of Indian

“MR. TOSHIAKI NAKAGAWA”

(Jt. Managing Director)

ARVIND ARORA (520813268) Page 9

ARVIND ARORA (520813268) Page 10

1 Mr. Brijmohan Lall Munjal Chairman & Whole-time

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 &

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

11 Mr. Analjit Singh Non-executive &

12 Dr. Pritam Singh Non-executive &

13 Ms. Shobhana Bhartia Non-executive &

ARVIND ARORA (520813268) Page 11

14 Mr. Meleveetil Damodaran Non-executive &

15 Mr. Ravi Nath Non-executive &

16 Dr. Anand C. Burman Non-executive &

ARVIND ARORA (520813268) Page 12

Shareholders Agreement signed

1985 First motorcycle "CD 100" rolled out

500,000th motorcycle produced

1,000,000th motorcycle produced

Hero Honda's 2nd manufacturing plant at Gurgaon inaugurated

Environment Management System of Dharuhera Plant certified with ISO-

Raman Munjal Memorial Hospital inaugurated - A Hospital in the memory

Environment Management System of Gurgaon Plant certified ISO-14001 by

ARVIND ARORA (520813268) Page 13

"Hero Honda Passport Programme" - CRM Programme launched

One million production in one single year

New motorcycle model - "Joy" introduced

5,000,000th motorcycle produced

New motorcycle model - "Ambition" introduced

Appointed Virender Sehwag, Mohammad Kaif, Yuvraj Singh, Harbhajan

New motorcycle model - "CD Dawn" introduced

New motorcycle model - "Splendor +" introduced