INTRODUCTION OF HERO HONDA

Hero Honda Motors Ltd.

Type Public company BSE:HEROHONDA M January 19, 1984 in Gurgaon, Haryana, Founded India Headquarters New Delhi, India Brijmohan Lal Munjal, Founder Mr. Brijmohan Lal Munjal, Chairman Mr. Toshiaki Nakagawa, Joint Managing Key people Director Mr. Pawan Munjal, Managing Director, CEO Automotive Motorcycles, Scooters U$ 2.8 billion http://www.herohonda.com/

Industry Products Revenue Website

Hero Honda Motors Limited, based in Delhi, India, is the world's largest manufacturer of motorcycles1. Hero Honda is a joint venture that began in 1984 between the Hero Group of India and Honda of Japan. It has been the world's biggest manufacturer of 2-wheeled motorized vehicles since 2001, when it produced 1.3 million motorbikes in a single year. Hero Honda's pleasure is the world's largest selling scooty. Its 2 plants are in Dharuhera and Gurgaon, both in India. Third plant at Haridwar, Uttranchal has also started production by April, 2008. It will have production facilities such as Lean Manufacturing concept, more flexible lines & stream line material flow, within & proximity (planning to set

Hero Honda Pleasure (102 cc)

The Hero Honda Pleasure has made its name in the scooterette's market, being fitted with features meant specifically for the modern woman. New bikes in this series have a showroom price ranging from around Rs. 36,700 to around Rs. 41,700 inclusive of all charges like insurance, octroi, RTO, etc. Hero Honda CD-Deluxe prices vary with the two-wheeler dealer's location. Currently, Delhi has the lowest, and Mumbai the highest on-road prices for Hero Honda Pleasure. Hero Honda Pleasure scooter prices vary upon the two-wheeler dealer's location. Hero Honda two wheelers have been on Indian roads since 1984 when Hero Cycles Ltd. tied up with Honda Motor Company to start a joint venture. Today, Hero Honda is taken to be the world's largest two-wheeler manufacturer.lowest, and Mumbai the highest on-road prices for Hero Honda Pleasure. Hero Honda pleasure bike prices vary upon the twowheeler dealer's location.

Manufacturer of bikes
Bajaj Hero Hero Honda Honda Indus Kinetic Royal Enfield Suzuki TVS Yamaha Hero Honda motorcycles are reputed for low maintenance and high fuel efficiency. Hero Honda motorbikes ,including around 13 current varieties with names like Hero Honda Splendor, Hero Honda Glamour, and Hero Honda CBZ Xtreme, and one scooter, the Hero Honda Pleasure, are quite popular with the Indian two wheeler consumers. Hero Honda markets two wheelers for the middle-class ranging from Hero Honda two wheelers at around Rs. 37,000 to Rs. 83,000. Hero Honda two wheeler varieties include Bikes from Hero Honda

Bikes from Herohonda :

Hero Honda Pleasure Hero Honda CD-dawn Hero Honda CD-Deluxe Hero Honda Splendor Plus Hero Honda Splendor NXG Hero Honda Passion Plus Hero Honda Super Splendor Hero Honda Glamour Hero Honda Achiever Hero Honda CBZ Xtreme Hero Honda Hunk Hero Honda Karizma

HISTORY OF HERO HONDA

Hero Honda is worlds biggest two wheeler maker. India has the largest number of two wheelers in the world with 41.6 million vehicles. India has a mix of 30 percent automobiles and 70 percent two wheelers in the country. India was the second largest two wheeler manufacturer in the world starting in the 1950s with the birth of Automobile Products of India (API) that manufactured scooters. API manufactured the Lambrettas but, another company, Bajaj Auto Ltd. surpassed API and remained through the turn of the century from its association with Piaggio of Italy (manufacturer of Vespa scooters). The license raj that existed between the 1940s to 1980s in India did not allow foreign companies to enter the market and imports were tightly controlled. This regulatory maze, before the economic liberalization, made business easier for local players to have a sellers market. Customers in India were forced to wait 12 years to buy a scooter from Bajaj. The CEO of Bajaj commented that he did not need a marketing department, only a dispatch department. By the year 1990, Bajaj had a waiting list that was twenty-six times its annual output for scooters. The motorcycle segment had the same long wait times with three manufacturers: Royal Enfield, Ideal Jawa, and Escorts. Royal Enfield made a 350cc Bullet with the only four-stroke engine at that time and took the higher end of the market but there was little competition for their customers. Ideal Jawa and Escorts took the middle and lower end of the market respectively. In the mid-1980s, the Indian government regulations changed and permitted foreign companies to enter the Indian market through minority joint ventures. The two-wheeler market changed with four Indo-Japanese joint ventures: Hero Honda, TVS Suzuki, Bajaj Kawasaki and Kinetic Motor Company (Kinetic Honda). The entry of these foreign companies changed the Indian market dynamics from the supply side to the demand side. With a larger selection of two-wheelers on the Indian market, consumers started to gain influence over the products they bought and raised higher customer expectations. The industry produced more models, styling options, prices, and different fuel efficiencies. The foreign companies new technologies helped make the products more reliable and

with better quality. Indian companies had to change to keep up with their global counterparts.

Hero Honda Karizma Growth

Hero Honda experienced great growth throughout its early days. The Munjal family started a modest business of bicycle components. By 2002 Hero Group had sold 86 million bicycles producing 16000 bicycles a day. Today Hero Honda has an assembly line of nine different models of motorcycles available. It holds the record for most popular bike in the world by sales for Its Splendor model. Hero Honda Motors Limited was established in joint venture with Honda Motors of Japan in 1984, to manufacture motorcycles. It is currently the largest producer of Two Wheelers in the world. It sold 3 million bikes in the year 2005-2006. Recently it has also entered in scooter manufacturing, with its model PLEASURE mainly aimed at girls. HUNK is the latest offering from the HHML stable.

A Hero Honda "Splendor" bike Just-in-Time Manufacturing The Hero Group through the Hero Cycles Division was the first to introduce the concept of just-in-time manufacturing. The Group boasts of superb operational efficiencies. Every assembly line worker operates two machines simultaneously to save time and improve productivity. The fact that most of the machines are either developed or fabricated in-house, has resulted in low inventory levels. In Hero Cycles Limited, the just-in-time inventory principle has been working since the beginning of production in the unit. This is the Japanese
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style of production. In India, Hero is probably the only company to have mastered the art of the just-in-time inventory principle.

Ancillarisation
An integral part of the Group strategy of doing business differently was providing support to ancillary units. There are over 300 ancillary units today, whose production is dedicated to Hero's requirements and also a large number of other vendors, which include some of the better known companies in the automotive segment.

Labor relations
In Hero Group there is no organized labor union and family members of employees find ready employment within Hero. The philosophy with regard to labor management is "Hero is growing, grow with Hero." Hero workers receive a uniform allowance, as well as House Rent Allowance (HRA) and Leave Travel Allowance (LTA). Extra benefits include medical check-ups not just for workers, but also for the immediate family members. For the majority of the production workers, who are hired through contractors, these benefits are out of reach. This and other problems lead to a strike and factory occupation by 4,000 temp workers in the Gurgaon plant in spring 2006.

Diversification
Throughout the years of enormous growth , the Group Chairman, Mr. Lall has actively looked at diversification. A considerable level of vertical integration in its manufacturing activities has been ample in the Group's growth and led to the establishment of the Hero Cycles Cold Rolling Division, Munjal and Sunbeam Castings, Munjal Auto Components and Munjal Showa Limited amongst other component-manufacturing units.

Then there were the expansion into the automotive segment with the setting up of Majestic Auto Limited, where the first indigenously designed moped, Hero Majestic, went into commercial production in 1978. Then came Hero Motors which introduced Hero Puch, in collaboration with global technology leader Steyr Daimler Puch of Austria. Hero Honda Motors was established in 1984 to manufacture 100 cc motorcycles. The Hero Group also took a venture into other segments like exports, financial services, information technology, which includes customer response services and software development. Further expansion is expected in the areas of Insurance and Telecommunication.The Hero Group's phenomenal growth is the result of constant innovations, a close

watch on costs and the dynamic leadership of the Group Chairman, characterized by a culture of entrepreneurship, of right attitudes and building stronger relationships with investors, partners, vendors and dealers and customer.

Objectives
TO know the level of customer satisfaction regarding hero Honda motor.

To ascertain the customers views & motives about the hero Honda motor. To know about the customers preference in purchase decision. To conduct a customer behaviors survey as that a two way interaction between dealer & customer may be established for better production & selection. To know about effective advertising media to create customer awareness . To study the pricing & promotional strategies used by dealer. To ascertain about target market & customers. To explore the requirements of dealer &customers regarding the product. To ascertain with their any improvements & suggestions required in the quality & graphics of hero Honda two wheeler. To know the various competitors of this product that is available in the market.

RESEARCH METHODOLOGY
Meaning

Research methodology is a careful investigation or inquiry and especially for search for new fact in any branch of knowledge is called a research methodology. The research work is a combined word of two words first is re and second is Search means to search again and search means to search so the total meaning means search for the new factor to modify and facts in any branch of knowledge. The main function of research is to add new knowledge in simple words research can be defined as critical investigation search for truth fact or for certainty. The research based on primary data so that the data which is directly collected form the search also done in a few cases. Thus the research Methodology adopted was basically on the basis of two types of data.
1.Primary data 2. Secondary data

PRIMARY DATA
Primary data which is directly called from the source also done in few cases. We called primary data during the courses of doing experiment in on experimental research but in case we do research of the descriptive type and perform communication with respondents in one form of another on through personal interviews and though questionnaires.

SECONDARY DATA
Secondary data means data that are already available they refer to data which have already been collected and analyzed by someone else. When the researcher utilizes secondary data then he has to look in to various sources from where he can obtain them. Secondary data consists of data collected from secondary source such as: Newspaper , Magazines, Journals, Books, Various publications, Public records and statistics. And the sources of unpublished data are many they may be found in

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diaries letters scholars research must be very careful in using secondary data. .

If your actions inspire others to dream more, learn more, do more and become more, you are a leader.
In some ways, Hero and Honda are like two volumes of a single book. What has made the book a bestseller is the fact that right from the outset, the co-authors knew the script they had to write in order to be successful in the Indian market. Over the course of two and a half decades, both partners have fine-tuned and perfected their roles. As the largest motorcycle producer in the world, Honda has been able to consistently provide technical know how, design specifications and R&D innovations to its most prolific affiliate in the world, Hero Honda. 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 developing the supply chain, ramping up production facilities, setting up distribution networks and creating customers. Since both partners are completely focused on their respective skills, they have been able not just to complement each other, but also draw from each others strengths. In the process, Hero Honda has gone on to create history, by becoming one of the most successful joint ventures in the world. Today, every second motorcycle sold in the country is a Hero Honda. There are more than 22
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CORPORATE PROFILE OF HERO HONDA

million Hero Hondas on Indian roads today. There are more Hero Honda bikes on this country's roads than the total population of some European countries put together! The company's growth in the two wheeler market in India is the result of an intrinsic ability to increase reach in new geographies and growth markets. Hero Honda's motorcycles and scooters are sold and serviced through a network of over 3500 customer touch points. These outlets comprise of a mix of dealers, service centres and stockists located across rural and urban India, and with every passing year, the network is augmented. Hero Honda has built two world-class manufacturing facilities at Dharuhera and Gurgaon in Haryana. These two units now churn out over 3 million bikes per year. The company's third, and its largest and most sophisticated plant at Haridwar has also gone onstream. All this has happened in the span of just two and a half decades! Leaders create pathways where none exist. In the 1980s much before green became a fashionable word,Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. 05 A legendary Fill it - Shut it - Forget it' campaign captured the imagination of commuters across India and Hero Honda sold millions of bikes purely on the commitment of increased mileage. Today, as Hero Honda enters its silver jubilee year, a riveting Dhak Dhak Go sets the tone for India's Gen Next, its emerging classes and its aspiring classes. The true test of champions comes when the going gets tough. Champions show the way by doing the basic things right. In a particularly difficult year, when the rest of the motorcycle industry shrunk by 14 per cent, Hero Honda has protected its turf and has actually grown its market share, by reestablishing a lead of more than one million bikes over its nearest rival. Not one to rest on its laurels, the company believes the best is yet to come. Today, Hero Honda is powering its way through a market that despite the short term hiccuphasn't still unleashed its true potential, since barely 2 per cent of the population has been penetrated so far. Not surprisingly, the company is in no mood to take its hand off the throttle. As Brijmohan Lall Munjal, the Chairman, Hero Honda Motors succinctly puts it, "We pioneered India's motorcycle industry, and it's our responsibility now to take the industry to the next level. We'll do all it takes to reach there.'

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INDUSTRY AND SEGMENT DYNAMICS

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19A leader leads by example, whether he intends to or not.

In the previous year, there were early signs that growth in the two wheeler industry was slowing. Within the space of a year, the pace of the fall has been quite dramatic, and perhaps for the first time since economic reforms started in 1991, India's domestic two wheeler market entered a period of de-growth. The industry clocked total volumes of 8.03 million during the year in review, a fall of nearly 5 per cent compared to the previous year. The picture was bleaker in the domestic market, where the industry clocked sales of 7.19 million, a decline of 8 per cent. While the motorcycle industry continues to dominate the structure of the two wheeler industry, this category's contribution to the domestic two wheeler industry actually declined during the year from 83 per cent to a little over 79 per centa clear symptom of the ongoing slowdown. In fact, this is the first time since the early nineties since motorcycles share of the two wheeler market has actually declined; reversing a consistently growing trend from the previous year. In contrast, there was another trend reversal during the year. After appearing to go into decline since the early 1990s, the scooter market clocked a revival of sorts during the year. After suffering at the hands of motorcycles for many years, scooter sales in the domestic market as a percentage of motorcycle sales actually increased from 12.4 percent to 14.8 per cent. As in previous years, the three price points in the motorcycle segment continued to grow at different paces. Dark clouds had started gathering in the entry segment during the previous year, with sales of entry level bikes growing at just 5 per cent. During the year in review, the entry segment in the domestic market shrunk visibly from over 36 percent of total motorcycle sales to around 30 per cent. In just two years, the entry segment's share in the total motorcycle mix has declined by 10 percent. This sharp decline shows the clear impact of interest rates on two wheeler buyers at the entry level. Interest rates started firming up in early 2007, and
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have shown no signs of letting up ever since; the slump in the entry segment indication that the entry segment is very interest elastic, and buyers in this segment (SEC B and C) react to higher interest rates perhaps by either post poning or canceling their purchase decisions. Rising interest rates impacted the deluxe segment of the motorcycle industry as well, albeit to a lesser extent. It was a matter of some irony that even where all the major players in the executive segment clocked an overall decline in numbers, the executive segment's share of the domestic motorcycle market actually increased by 4.4 per cent. The executive segment now makes up nearly 57 per cent of the motorcycle segment, compared to 52.5 per cent in the previous year. Quite obviously, the decline of the entry segment has been so sharp, that the absolute reduction in executive segment sales has translated into a relative increase in the executive segment's overall share in the motorcycle mix. The premium segment was the only category of motorcycles that managed to actually increase absolute sales in a sharply declining market. Sales in the domestic market for this segment actually increased by 2.2 percent while the premium segment's overall share of the motorcycle market increased from 11.1 per cent to 13 percent. This shows that of the three segments the interest effect has affected premium buyers the least. This isn't surprising, considering that buyers in the premium segment mostly fall in the SEC A category, who are the least likely to postpone purchase decisions on account of an increase in the EMI. At a broader level, there is no real cause for alarm in the executive segment or the premium segment, despite the current decline and slowdown. According to the National Council of Applied Economic Research (NCAER) in 2001-02, there were 61 million Indians belonging to families that earned more than Rs. 2 laces a year; by 2005-06, that number had crossed 100 million. In 2009-10, this number is projected to increase to 173 million. It is safe to assume that the bulk of the buyers from these segments will opt for either entry or deluxe segment motorcycle offerings. On the other hand, it has now been established beyond doubt that a large chunk of entry segment buyers will continue to react when there is a spike in interest rates. In other words, two wheeler makers have few options but to ride out the difficult times Performance Across Segments Hero Honda's sales in the entry segment declined by over 6 per cent; the same as the rest of the motorcycle industry. However, even in a declining market Hero Honda's share of entry segment went up from 28.7 per cent to 36.6 per
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centa clear indication that sales of manufacturers in the entry segment shrank substantially. In contrast, Hero Honda was able to limit the damage and in the process increased its market share. Hero Honda now finds itself in a situation to turn a position of relative weakness into a position of strength. Hero Honda's story in the executive segment was similar. Compared to the previous year, sales of executive segment bikes in the domestic market were down 1.18 per cent. However, the company still maintained its irongrip in thisthe largest segment of the two wheeler market -- by increasing its share from 68.9 per cent to 71.5 percent. Hero Honda turned in its best performance in the domestic market's premium segment, where its sales went up by a whopping 69 percent compared to the previous year. In 2006-07, Hero Honda had grown 25 per cent in this segment. In the course of a single year, the company increased its share of the overall premium motorcycle segment by more than 8 percent; the company's premium bikes now account for 23.5 per cent of the total premium pie. Given the pace of growth of this segment against the backdrop of a young and affluent middle class. There is no doubt that this segment will drive Hero Honda's growth in the future.

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CUSTOMER RELATIONSHIP MANAGEMENT OF HERO HONDA

A leader leads by example, whether he intends to or not.

Sales :

Despite a slow down in the two wheeler industry, the annual sales of the Company grew at 0.01 percent. Hero Honda clocked sales volume of 3,337,142 units in 2007-08 compared to 3,336,756 units in 2006-07. In value terms total sales (net of excise duty) increased by 4.4 per cent to Rs.10332 crores from 9900 crores in 2006-07.

Profitability :

The Company's earnings before interest depreciation and taxes (EBITDA) margins increased from 11.9 per cent in 2006-07 to 13.1 percent in 200708 and the Operating profit (PBT before other income) increased by 16.0 per cent from Rs.1056 crores in 2006-07 to Rs.1225 crores in 2007-08. The improvements on the margins was accomplished through better sales realisations and effective cost rationalisation measures which included better control over Material cost, Marketing cost, Overheads apart from sharp focus on operational efficiencies.

Other Income :

Other income marginally decline by 2.3 per cent from Rs. 190 crores in 2006-07 to Rs.185 crores in 2007-08.

Cash Flows :
Despite the nominal growth in sales turnover, better efficiencies in the working capital management have improved the cash flow from operations from Rs 625.05 crores to 1211.78 crores. Cash flows before working changes have also improved from Rs 1227.60 crores to Rs 1392.56 crores on account of better EBITDA margins. The Company spent a total of Rs.781 crores in investing activities, which included capacity expansion and investment in financial assests. There
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was also an outflow of Rs. 432 crores on account of liberal dividend outflows.

Capital Expenditure :

During the year the Company incurred a capital expenditure of Rs.375 crores. The funds were used towards setting up of new plant at Haridwar in Uttrakhand. The aggregate capital outlay for the new production facility is estimated at Rs.460 crores which has been funded over the last two financial years.

Raw Material Costs:

Due to softening metal prices particularly Aluminum & Nickel in second half of the year accompanied with better sales realisation in comparison to the previous year the share of material costs has reduced the overall cost structure. Raw material costs as a percentage of total sales declined from 72.5 per cent in 2006-07 to 71.6 per cent in 2007-08.

Current Asset Turnover:

This ratio, which shows sales as a proportion of average current assets, marginally decreased from 11.4 to 11.2, on account of higher average inventory & bank balance.

DEBT STRUCTURE
Hero Honda has been a debt free company for the last 7 years. The unsecured loan of Rs.132 crore from the state government of Haryana on account of sales tax deferment is interest free and has no holding costs. Net interest payment by the company has been negative during the last few years.
Net Cash Flow from Operations (Rs. in Crores)

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03-04

04-05

05-06

06-07

07-08

DIVIDEND POLICY
Over the years, the Company has consistently followed a policy of paying high dividends, keeping in mind the cash-generating capacities, the expected capital needs of the business and strategic considerations. For 200708, the board has recommended a dividend of 950 per cent which is higher than 850 per cent declared in the previous year. The payout ratio has for the year been pegged at 45.9 percent vis--vis 46.3 per cent in the previous year.

WORKING CAPITAL MANAGEMENT

Hero Honda has always endeavored to efficiently use the various components of working capital cycle. Despite the adverse conditions in the two wheeler industry, the Company has been able to effectively control the receivable and inventories enabling it to continue to operate on negative working capital. As a part of its cost rationalization drive, the Company aggressively availed Cash discounts from vendors by making payments before due dates. This not only helped us improve operating profit margins but also allowed the Company to deploy the surplus funds in the core business.

NOTES ON WORKING CAPITAL :

The averages of inventory, receivables and payables have been taken for the calculations of inventory period, operating and cash cycle.
Inventory Period (Days) 10.5 10.4 11.9 Cash Cycle (Days) (23.9) (12.2) (10.6) Acid 0.45Table 1: WORKING

CAPITAL MANAGEMENT &

LIQUIDITY RATIOS

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2005-06 INVENTORY PERIOD (DAYS) Operating Cycle (Days) CASH CYCLE (Days) Current Ratio 10.5 14.9 23.9 0.74

2006-07 10.4 17.9 12.2 0.84

2007-08 11.9 21.2 10.6 0.68

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OPERATIONS, REASEARCH & SUPPLY CHAIN OF HERO HONDA

Price is what you pay. Value is what you get Manufacturing
Hero Honda commissioned its third, plant at Haridwar during the year, with an initial installed capacity of 500,000 units. With this new capacity expansion, HHML now has an overall annual capacity of 4.5 million two wheelers. With this, the Company has become a global-scale manufacturer. The Haridwar complex is the largest of the three Hero Honda plants, spanning about 275 acres. The plant has lean manufacturing and practices that ensure efficiency. It is connected with vendors through conveyors so that the material can avoid multiple handling and is delivered on time. The Haridwar plant is one of the greenest automobile plants in the country. Effluents are minimized, and there is zero discharge on liquid effluents. All waste is treated and consumed within the factory. The plant has 70 per cent of its area as green open spaces, and approximately 45,000 square metres of the plant roof area is being converted into a green roof.

Vendor Management

Vendor management is critical to Hero Honda, as nearly 73 per cent of the production is currently made up of material cost. During the year, the company managed an average cost reduction of Rs. 343 per vehicle despite volatility in metal prices. A national network of 256 vendors - including 36 ancillaries - forms the backbone of its plant operations. To improve plant efficiencies and inventory turns, Hero Honda has extended "Just in Time (JIT) beyond the shop floor. Vendors are also making critical investments in quality and capacity in collaboration with the Company. For example, the online vendor connectivity program has made rapid progress. Three years ago, the Company had only 46 vendors connected online to the company's

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factories. By the end of 2008-09, it is estimated that 72 per cent of the vendors and their supplies would be connected online. Around 100 ancillaries will be setting up their manufacturing base in Haridwar over the next two years to ensure a fully integrated supply chain. To begin with, 40 ancillaries will set up their facility in the Industrial Parks that are being specially developed for Hero Honda ancillaries. During 2008-09, Hero Honda plans to work with vendors to develop new vendor production facilities. 3PL service providers have also been identified for the Haridwar plant a first for any two-wheeler company in India. As part of an ongoing exercise aimed at quality control, members of senior management visited vendor premises for top quality audits. This has resulted in the reduction of rejection parts per million (PPM) by 20 per cent. During the year, the company launched a collaborative cost improvement program with vendors. In this programme the processes and methods are continuously toned so that the material cost can be managed better. Hero Honda is also evaluating horizontal deployment of third party logistic services providers (3PL) to manage costs along the supply chain better. In 2008-09, the Company plans to further study and tactfully optimise its supply chain. As part of this plan, raw materials will be optimised so that the best possible cost advantages accrue to the company.

Distribution Network
The company 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 representatives and 45 city work agents were added. All the four marketing zones of the Company showed a uniform increase in new customers points during the year in review.

Rural Network
During the year, Hero Honda's ambitious rural connect program HarGaon, Har Aangan also got underway. A total of 18,000 villages were covered out of the targeted 23360 villages with a population of 5,000

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people. In all, more than 100,000 opinion leaders in these villages were approached. The rural initiative was carried out by 500 specially trained rural sales executives at the dealership level.

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DATA ANALYSIS OF HERO HONDA

Life laughs at you when you are sad; smiles at you when you are happy. But life salutes you when you make others happy.
Hero Honda Motors takes considerable pride in its community relationships, especially ones at the grassroots that have evolved over time. The Company has played a pivotal role in bringing an economically and socially backward Region in Dharuhera, Haryana, into the national economic mainstream through direct interventions in education, health care, vocational training, creation of social and physical infrastructure, and environment management. Most of the group's social enterprises including the Rural Development Centre-- are planned and executed by the Raman Kant Munjal Foundation. To help local people, especially women, Hero Honda has set up a vocational training centre which runs a 6 months Diploma Course for Tailoring, Embroidery and carpet weaving, etc. During the year in review, the Centre was upgraded. It now trains 50 girls per batch up from 25 & the duration of the course was increased from six months to 9 months. The Centre has also been Equipped with modern machines to prepare the girls for the Garment Export Industry, where placement is 100%. Also during the year, women from four villages near the factory at Dharuhera benefited from food-processing courses conducted at the Centre. In February 2007, the Foundation had set up a computer training & learning centre in partnership with Microsoft. A total of 8 to 10 batches (boys and girls) are run simultaneously consisting of 18-20 students per batch. Till date, close to 400 students have been trained at the centre. To enhance the value of rural youth in the job market, a spoken English course was started during the year. Currently the course is being run in three Batches during the day. It is proposed to train approx 120 students per year. The Foundation will make an effort to place them with BPO/Call Centres, provided the students also have the requisite computer training. A
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vocational centre for boys is expected to start during 2008-09 and will run on the lines of an ITI. The centre will provide training in Fitter, Welding, Carpentry and Plumbing & Electrician Trades. It is planned to train approx. 50 students every year, and efforts will be made to accommodate them in group companies. The Foundation also runs an Adult Literacy Program, a marriage facilitation service for underprivileged girls, besides doorstep healthcare programs and medical camps for the local population. A graduate teacher from the targeted village is appointed to teach the elders. Approx 650 people have benefited from this scheme spread over 20 villages. In every CSR Project undertaken, the Foundation always involves either a local NGO preferably the village itself or panchayat members not only during execution but also for subsequent sustainability/maintenance of project. In certain areas such as computer learning by rural youth Udyan Care, a reputed NGO has been made a partner in association with Microsoft. In Projects like Hygiene, Sanitation & Safe Drinking Water, Local Government Representatives such as Block Development Officers are also Involved.

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CORPORATE INFORMATION OF HERO HONDA IN INDIA

Statutory Auditors A.F. Ferguson & Co. Chartered Accountants, 9, Scindia House,Kasturba Gandhi Marg, New Delhi 110 001, India Tel: 011-2331 5884 Principal Bankers ABN Amro Bank N.V.Bank of America NT & SA Canara Bank Citibank N.A. HDFC Bank Limited HSBC Limited ICICI Bank Limited Punjab National Bank Standard Chartered Bank the Bank of Tokyo-Mitsubishi UFJ Limited Cost Auditors Ramanath Iyer & Co. BL-4 (Paschmi), Shalimar Bagh Delhi 110 088 Tel. : 011-27481904 Technical & Financial Collaborators Honda Motor Co., Ltd., 1-1, 2 - chome, Minato - ku, Tokyo 107-8556, Japan www.world.honda.com Registered & Corporate Office 34, Community Centre, Basant Lok, Vasant Vihar, New Delhi 110 057, India Tel.: 011-2614 2451, 2614 4121 Fax: 011-2615 3913 www.herohonda.com Registrar & Transfer Agents
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Karvy Computer share Pvt. Ltd. Plot No. 17-24, Vithlrao Nagar, Madha Pur, Hyderabad 500 081 Tel.: 040-23420815-820 Fax: 040-23420814 Minami - Aoyama, Dharuhera Plant 69 KM Stone, Delhi-Jaipur Highway, Dharuhera, Distt. Rewari, Haryana 122 100, India Tel.: 01274-264 012-15 Fax: 01274-267 024 Gurgaon Plant 37 KM Stone, Delhi-Jaipur Highway, Sector 33, Gurgaon, Haryana 122 001, India Tel.: 0124-2372 123-134 Fax: 0124-2373 141-142 Haridwar Plant Plot No. 3 Sector-10, 11E, SIDCUL, Roshanabad, Haridwar 248 001 Uttrakhand Tel.: 01334 - 239513 Fax: 01334 - 239512

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BUSINESS PERFORMANCE OF HERO HONDA LTD.

Hero Honda Company defied a process of de-growth in the industry and achieved cumulative sales of 33,37,142 units of two-wheelers. In the process, Hero Honda consolidated its leadership position in domestic twowheeler market with more than 52 per cent market share. The Company successfully launched seven new models including variants during the year under review. On the financial front, total income (net of excise duty) of the Company grew by 4.2 per cent from Rs. 10, 090 crores in previous year to Rs. 10,517 crores during 2007-08. The Company posted a net profit (PAT) of Rs. 968 crores, compared to Rs. 858 crores in the previous fiscal, a growth of 13 per cent. Despite the increasing pressure on inputs, your Company was able to maintain EBIDTA margins at 13.1 per cent, compared to 11.9 per cent in the previous year. During the year, Hero Honda also retained, for the seventh year in a row, its position as the World's Number One Two Wheeler Company. During 2007-08, your Company achieved another landmark of reaching cumulative sales of 20 million bikes. In the course of the year, your Company launched new models (including variants) including Splendor NXG, Hunk, New Super Splendor, New Passion Plus, Commemorative Splendor+ and a refreshed version of Pleasure. A detailed discussion on the business performance and future outlook has been given in the chapter on Management Discussion & Analysis Report.

DIVIDEND
Few manufacturing companies in the Indian corporate sector have a better dividend pay out record than Hero Honda. We have recommended a Dividend of 950 per cent i.e. Rs.19 per equity share of Rs. 2 aggregating to Rs. 379.41 crores (exclusive of corporate dividend tax) for your approval for the financial year ended March 31, 2008. The dividend, if approved, will be paid to the eligible members well within the stipulated period. Our dividend policy is in line with our strong and consistent belief that if funds are not re-invested for capital investments, they should be optimally distributed to shareholders.

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TRANSFER TO GENERAL RESERVE A sum of Rs. 97 crores have been transferred to the General Reserve of the Company. This reaffirms the inherent financial strength of the Company.

MATERIAL CHANGES AND COMMITMENTS

No material changes and commitments affecting the financial position of the Company have occurred between April 1, 2008 and the date on which this Report has been signed.

BOARD OF DIRECTORS
During the period under review, Mr. Tatsuhiro Oyama resigned from directorship on May 11, 2007 and Mr. Takashi Nagai was appointed as an Additional Director in Non-Executive Category on May 11, 2007. Further, Dr. Vijay Laxman Kelkar has resigned from directorship on December 31, 2007. Mr. Satoshi Matsuzawa was appointed as an Alternate Director to Mr. Takashi Nagai w.e.f. April 24, 2008. Mr. Yutaka Kudo, Whole-time Director of the Company resigned from both the offices i.e. Director & Whole-time Director W.e.f. May 31, 2008. Mr. Sumihisa Fukuda was appointed as an Additional and Technical Director in the whole-time employment of the Company in his stead on June 1, 2008. Mr. M. Damodaran was appointed as an Additional Director in the Non-Executive and Independent Category w.e.f. June 16, 2008. Mr. Narinder Nath Vohra has resigned from Directorship w.e.f. June 24, 2008. The Board place on record their sincere appreciation and gratitude for the work put in by the out going members, and wishes them a rewarding and satisfying career ahead. The Directors also welcome the new members on the Board and wish them a successful and fruitful tenure with the Company. At the ensuing Annual General Meeting, Ms. Shobhana Bhartia, Mr. Sunil Bharti Mittal, Mr. Masahiro Takedagawa and Mr. Pradeep Dinodia will retire by rotation and being eligible, offer themselves for reappointment in terms of provisions of Articles of Association of the Company. The brief resume/details relating to Directors, who are to be appointed and re-appointed has been furnished after the Explanatory Statement to the Notice of the ensuing Annual General Meeting. Your Directors recommend their re-appointment at the ensuing Annual General Meeting.

DIRECTORS' RESPONSIBILITY STATEMENT

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To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956: 1. That in the preparation of the annual accounts for the year ended March 31, 2008, the applicable accounting standards have been followed; 2. that appropriate accounting policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs as at March 31, 2008 and of the profit of the Company for the financial year ended March 31, 2008; 3. That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions Of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; 4. That the annual accounts for the year ended March 31, 2008 have been prepared on a going concern basis.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

A detailed chapter on, 'Management Discussion and Analysis'(MDA), pursuant to Clause 49 of the Listing Agreement forms part of this Report.

CORPORATE GOVERNANCE
At Hero Honda, it is our firm belief that the essence of Corporate Governance lies in the phrase 'Your Company'. It is 'Your' Company because it belongs to you - the shareholders. The Chairman and Directors are 'Your' fiduciaries and trustees. Their objective is to take the business forward in such a way that it maximises 'Your' long-term value. Your Company is committed to benchmark itself with global standards for providing good Corporate Governance and has put in place an Effective Corporate Governance System which ensures that the provisions of Clause 49 of the Listing Agreement are duly complied with. The Board has also evolved and adopted a Code of Conduct based on the principles of Good Corporate Governance and best Management practices being followed globally. The Code is available on the website of the Company www.herohonda.com. A report on Corporate Governance along with the Auditors' Certificate on its compliance is annexed hereto as Annexure - I.

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Hero Honda Motors Ltd. vs...

Action
Compare Compare Compare Compare Compare Compare Compare Compare Compare Compare

Company
+ Mahi. & Mahi (Sensex) + Maruti Suzuki India (Sensex) + Tata Motors Ltd. (Sensex) + Ashok Leyland (A) + Bajaj Auto Ltd. (A) + Bajaj Holdings & Inv (A) + Eicher Motors (B) + Escorts Ltd. (B) + Hind. Motor (B) + LML Ltd. (B)

Close (Rs)
550.55 718.45 414.80 29.20 617.90 450.20 262.65 66.90 20.65 9.64

Hero Honda Pleasure

ENGINE
Engine Displacement Bore and Stroke Compression Ratio Max. Power 4 Stroke, Single Cylinder, Air Cooled 102 cc 50 X 52 9:1 7.1 PS (5.22 KW) @ 7000rpm

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Max. Torque Transmission Clutch Ignition Fuel Supply

7.85 Nm @ 5500rpm Variomatic Dry Automatic Centrifugal CDI Carburettor High rididity Underbone Type Bottom link with spring loaded hydraulic damper Swing arm with spring loaded hydraulic damper Front - 130mm Drum / Rear - 130mm Drum Front - 3.50 X 10 / Rear - 3.50 X 10 12V 5Ah 35W/35W Halogen MFR 5/21W 750mm 1240mm 125mm 104 Kg 5 Litres

CHASSIS
Chassis Type Suspension (Front) Suspension (Rear) Brakes Tyres

ELECTRICALS
Battery Head Lamp Tail / Stop Lamp

DIMENSIONS
Seat Height Wheelbase Ground Clearance Weight Fuel Tank Capacity

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Price on Road Individual : Rs. 44,150 Company : Rs. 49,400 Fuel Efficiency (Kmpl) City : +/- 10% Normal : +/- 10%

MARKET SHARE OF HERO HONDA

50 40 30 20 10 0
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HERO HONDA BAJAJ YAMAHA OTHER

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INFLUENCING MEDIA

OTHER

5 15 20 60 0 10 20 30 40 Series1 50 60 70

NEWSPAPER

MAGAZINES

TV

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FACTOR THAT AFFECTING PURCHASING DECISION

40 35 15 5 QUALITY BRAND NAME PRICING Series1 OTHER

40 35 30 25 20 15 10 5 0

35

LEVEL OF CUSTOMER SATISFACTION

YES NO

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CHART SHOWING SATISFACTION OF CUSTOMER RGGARDING MILEAGE

AVERAGE

GOOD VERY GOOD EXCELLENT 0 10 20 30 40

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LIMITATIONS
1. As the medium of questionnaire was in English the respondents had a difficulty in understanding it. This took lot of time to make them understand the questionnaire in Hindi. 2. There was possibility of no reply with many respondents, as they have no interest in this concern. 3. There aroused a lot of problems in collecting the theory matter, as the dealer was unable to provide full information regarding brand of detergent. 4. People do not take much interest in filling up the questionnaire. 5. There is a lack of understanding between respondents and investigators because of educational and different cultural background. 6. Various respondents neglected for answering the questions. 7. Consumers and distributors quite busy in their own work and dont have enough time to spare to the investigators to answer and satisfy them. 8. There is also a lot of wastage of time and money while traveling from one sample unit to another.

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Suggestion
Company every time effort is to maximize the sales through various activities. Therefore company should consider all the Ps i.e. product, price, place, promotion. All these features should be mainly focused & steps should be taken to improve them. Hero Honda should make their better & different services from others. More effective policy to attract the customer to promote the sales of Hero Honda. Advertising should be more & more features should be added. Company should be more flexible regarding their marketing policy. Distribution network should be developed & strength evened. More then one authorized dealer should be made by company to ensure proper distribution & availability. Effort should be made to make more popular among general people through effective advertising; especially television advertising.

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 Company should go for regular product modification & innovations to ensure better customer satisfaction. More incentives in the form of free gifts, commission, & discount should be provided to dealer as well as customer. The frequency of advertisement should be increased to have greater impact on customers. Effort should be made to ensure customer satisfaction.

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Conclusion
The survey of customer satisfaction of Hero Honda is based on opinion of customers as well as dealer of Hero Honda turn out some significant conclusion. o The data also revealed that media also play a very important role to influence the customer. o The data showed that the customers buying decision is affected by quality, pricing, brand name, and advertising. o After filling the questionnaires it is found suggest focusing on the particular features of the product i.e. quality, innovativeness, price, etc. o Hero Honda is leader according to dealer due to the reasonable price & long lasting durability & mileage. o As comparison to other Hero Honda yield on more profit. o Most of the customers looked satisfied with after sales services offered by company. o Splendor is most preferred bike due to mileage & other features.

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o Hunk & Karizma is also able to attract the customer it has a unique look. o Hero Honda motor launches bikes for all ages groups & income groups. o Bajaj is close competitor of Hero Honda.

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Bibliography
Method of primary data collection page No. 90
Marketing Research Principle Application & Cases Sharma Dr. D.D. Edition, Published by sultan chand & sons.

Websites:
Www. askme.com www.hero honda.com www.wikipedia .com

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APPENDIX
AN ENVIRONMENTALLY AND SOCIALLY, AWARE COMPANY 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.
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Continuous improvement in our total quality management system. 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.

KEY MILESTONES OF HERO HONDA

Year 1994 1997 1998 1999 Event New motorcycle model - "Splendor" introduced 1,000,000th motorcycle produced New motorcycle model - "Street" introduced Hero Honda's 2nd manufacturing plant at Gurgaon inaugurated 2,000,000th motorcycle produced New motorcycle model - "CBZ" introduced Environment Management System of Dharuhera Plant certified with ISO-14001

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by DNV Holland Raman Munjal Memorial Hospital inaugurated - A Hospital in the memory of 2000 founder Managing Director, Mr. Raman Kant Munjal 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 2001 "Hero Honda Passport Programme" - CRM Programme launched New motorcycle model - "Passion" introduced One million production in one single year New motorcycle model - "Joy" introduced 2002 5,000,000th motorcycle produced New motorcycle model - "Dawn" introduced New motorcycle model - "Ambition" introduced Appointed Virender Sehwag, Mohammad Kaif, Yuvraj Singh, Harbhajan Singh 2003 and Zaheer Khan as Brand Ambassadors 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 2004 New motorcycle model - "Karizma" introduced 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

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New motorcycle model - "CBZ*" introduced Joint Technical Agreement renewed 2005 Total sales crossed a record of 10 million motorcycles 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 2006 First Scooter model from Hero Honda - "Pleasure" introduced Hero Honda is the World No. 1 for the 5th year in a row

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