1 | P a g e MINOR PROJECT REPORT ON HERO MOTO CORPSubmitted in Partial Fulfillment of the Requirements of Bachelor of Business Administration Of Guru Gobind Singh Indraprastha University Submitted by Submitted to: MAHENDER SINGH MEENA MRS. ANU BHARDWAJ BBA 3 RD SEM ASSISTANT PROFESSOR 09714201713Jagannath International Management School Vasant Kunj, New Delhi –70
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During the 80s, Hero Moto Corp (previously Hero Honda) became the first company in India to
prove that it was possible to drive a vehicle without polluting the roads. The company introduced
new generation motorcycles that set industry benchmarks for fuel thrift and low emission. A
legendary 'Fill it - Shut it - Forget it' campaign captured the imagination of commuters across
India, and Hero Moto Corp (previously Hero Honda) sold millions of bikes purely on the
commitment of increased mileage. In today world customer is the king irrespective of whatever
the business may be ,wherever the operations may be .A good business organization is known
by its strong customer loyalty, which turns to become a unified family.
The project assigned to me by the company was a market study on 100cc bikes among the
dealers and customers with special reference to Hero Moto Corp (previously Hero Honda) dealer
and loyalty of customers towards the bike. The objective of the study was to find out the dealers
and customers opinion about the 100cc bikes with special reference to Hero Moto Corp
(previously Hero Honda) dealer to understand how market fluctuations affect their strategicdecision. The research methodology was descriptive in nature encompassing a sample of
200customers for in-depth analysis It was observed that 80%of the respondents are interested to
purchase Hero Moto Corp (previously Hero Honda) motor vehicle .are in the age group of 18-35.
A large part of respondents with majority of 60% are satisfied with the availability of spare part
and remaining 40% says no. It was observed that the 92% resplendence are either highly satisfied
are just satisfied and remaining 8% are dissatisfied. Different models Hero Moto Corp
(previously Hero Honda) vehicles can be introduced for ladies, with better comfort, speed and
power, so that it can cater to the changing tastes of women.
More service station should be established in every part of the city, so those customers have an
easy accessibility. With a strong sales and service network of 650 Authorized dealership, 1500
authorized service centers and over 1000 certified service points, Hero Moto Corp (previously
Hero Honda) is growing from strength to strength. Hero Moto Corp (previously Hero Honda)
motor should also start producing other models and should add a different style and variety to
their product line. This will surely attract more customers. This will help to increase the existing
goodwill and position in the market. The experience gained during the analysis and drawinginferences was an exiting and informative exercise under the guidance of unit head.
HISTORYABOUT THE CHAIRMAN
Brijmohan Lall Munjal – Seeding a Dream
"Don't dream if you can't fulfill your dreams'' Brijmohan Lall Munjal is often fond of saying. The
founder and patriarch of the $ 2.8 billion Hero Group is your classic first generation
entrepreneur. He is a man who started small, dreamt big and used a combination of grit and
perseverance to create one of the country's largest corporate groups and the World's No.1 Two
Wheeler Company. Instinctive from a young age, Brijmohan Lall made a rather unusual start in
life. Around the time when the freedom movement in India was taking shape in the late 1920s,
he walked into a newly opened Gurukul (Indian heritage school) near his home in Kamalia (now
in Pakistan). He was only six years old then. Thus began an extraordinary tale of courage and
perseverance. Brijmohan began his business story after partition in 1947, when he and his
brothers relocated to Ludhiana. The family set up a company that provided poor people with
basic transport (cycles). Three decades later, as India evolved, he added a second crucial chapter
which visualized affordable and technologically superior transport to millions of middle class
Indians. The rest is history.
Building Relationships When Brijmohan and his brothers started out, there was no concept of
organized dealer networks. Companies just produced, and most dealers functioned like traders.
Brijmohan changed the rules of the business by trusting his gut instincts; introducing business
norms that were ahead of their time, and by investing in strategic relationships. Brijmohan built a
series of bonds and networks with hundreds of family members, vendors, dealers and employees.
Much like the Japanese keiretsu system, these networks are now the glue that holds the Hero
Group together. "Thanks to the relationships that we have nurtured so passionately in the Hero
Family, the younger generations of some of our bicycle dealers have become dealers of Hero
Moto Corp (previously Hero Honda). These relationships have survived through generations -
through bad times and good times'' the patriarch now reminiscences. Besides bonding with hisvendors and dealers, Brijmohan has been personally responsible for kindling a spirit of
entrepreneurship amongst his employees, and today, 40 of his former employees are successful
entrepreneurs.
Staying Ahead Though not technically qualified in the conventional sense, few of his
contemporaries have understood the dynamics of technology better than Brijmohan Lall has. He
could always visualize the applicability of technology before others could. For example, in the
1980s, when all two-wheeler companies in India opted for two-stroke engine technology,Brijmohan preferred a four-stoke engine - a technology that dramatically increased fuel
efficiency and reduced maintenance costs. This technology was one of the biggest reasons for
Hero Moto Corp (previously Hero Honda)'s stupendous success. Time and again, Brijmohan
managed to steal a march over his industry peers. For example, when Honda Motors of Japan
was looking for a collaborator in the 1980s, the Hero Group was not high up the pecking order
initially as there were other more eligible and established suitors. Yet it didn't take long for the
astute Japanese to realize that the Hero Group and Honda had much more in common than earlier
perceived; there a sharp focus on financial and raw material management, and employee turnover
was low. Honda officials were also amazed to find that the Munjals were already practicing
"Just-in-time-inventory" at the time (JIT). It turned out that Brijmohan Lall's aspiration to
provide cheap transportation to India's poor by default ensured lean and costeffective operations.
This in turn increased vendor efficiency and led to near-zero inventories.
A Corporate Citizen A frugal upbringing and a value system modeled on the famous Gurukul
system - which stresses the sanctity of the teacher-pupil relationship - imbibed in Brijmohan a
strong sense of social commitment and responsibility. There is a special place in his heart for
Ludhiana, the city where he took roots. Today, Ludhiana is a modern, bustling city, but
Brijmohan has played no mean role in its evolution. Several schools and educational institutions
in Ludhiana owe their existence to the Munjal family. The Ludhiana Stock Exchange owes its
existence to Brijmohan's vision as does the Ludhiana Flying Club. He's also set up the not-
forprofit Dayanand Medical College and Hospital-an institute now rated as one of the best
medical colleges in India, in terms of infrastructure, quality of staff and alumni profile. In and
around Dharuhera, near the first Hero Moto Corp (previously Hero Honda) plant, Brijmohan andhis family have left their stamp of philanthropy. The Raman Kant Munjal Foundation - which
Brijmohan set up in memory of his eldest son, today runs a higher secondary school and a very
modern and well-equipped 100-bed hospital at Dharuhera. The group has also adopted numerous
villages and provides education, vocational training, drinking water, roads, streetlights and
sewerage.
The Board of Directors of The Hero Moto Corp (previously Hero Honda) Group
Hero Moto Corp (previously 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 Moto Corp
(previously Hero Honda) to new heights in excellence and helps the organization forge a unique
and mutually beneficial relationship with all its stake holders.
ACHIEVEMENTS AWARDS AND ACCOLADES
Year Awards & Recognitions 2009
ET Awards for Corporate Excellence - Hero Moto Corp (previously Hero Honda) is the winner
of the ―Company of the Year" award for 2008 - 09. NDTV Profit Business Leadership Award
2008 - Hero Moto Corp (previously Hero Honda) Wins the Coveted "NDTV Profit Business
Leadership Award 2008" Top Gear 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 India Times Mindscape and Savile Row ( A Forbes Group Venture ) Loyalty Awards -
―Customer and Brand Loyalty Award‖ in Automobile (two-wheeler) sector Asian RetailCongress 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:
2008
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:
hundred dealerships and SSPs. In terms of sheer numbers, the network has grown by 16% during
the year 2008-09. We would endeavor to increase our reach to every corner of this country. Plans
for the future In the previous year, the domestic two-wheeler industry entered a period of de-growth. However, this was arrested in 2008-09, largely on the back of Hero Moto Corp
(previously Hero Honda)'s performance. After the blip of last year, the two-wheeler industry
went back to a growth phase, largely driven by Hero Moto Corp (previously Hero Honda) and
exports. The industry clocked total volumes of 8.5 million during the year in review, a growth of
5 per cent compared to a fall of 5 per cent in the previous year. The pace of growth was lower in
the domestic market, where the industry clocked sales of 7.43 million, a rise of only 2.60 per
cent. This, however, was a significant improvement over previous year when the industry had
shrunk by 8 per cent. Motorcycles continue to constitute the largest chunk of the two wheeler
industry, and during the year in review, accounted for four fifth of sales. Interestingly, for the
second year in succession, scooters increased their share in the two-wheeler pie from 14 per cent
to 16 per cent. This is clearly a trend reversal from the last 10 years, where the share of scooters
in the two-wheeler pie had been shrinking. Changing lifestyles among women, and the
introduction of feature-rich, high-quality scooters possibly has much to do with the revival in
demand
The entry segment – made up of basic 100 cc bikes -Had started slowing two years ago, and
during the year in review, sales in this segment were down by more than 15 per cent. This could
be attributed to the fact that deluxe segment bikes have become affordable on account of a 4 per
cent excise cut, 1 per cent reduction in CST and the special package of reduction in excise duty
in December, which most manufacturers passed on to the consumers. The deluxe segment-made
up of value for money and feature-rich bikes in the 100-125 cc category-grew by 15.2 per cent.
The 125-250 cc category-grew at 8.8 per cent. The pace of growth has fallen from last year's
levels. There is no doubt that the higher interest rates have brought down growth. Nevertheless,
this segment was still able to clock a growth rate in high single digits mainly because of the
excitement caused by a slew of new models that came into this segment during the year. The
bigger story, of course, is that buyers in small-town India and rural India, as well as employees
of the state and Central government, were relatively less affected by the slowdown, and this
benefitted the two wheeler industry.
The legend of Hero Moto Corp (previously Hero Honda)
What started out as a Joint Venture between Hero Group, the world's largest bicycle
manufacturers and the Honda Motor Company of Japan, has today become the World's single
largest two wheeler Company. Coming into existence on January 19, 1984, Hero Moto Corp
(previously Hero Honda) Motors Limited gave India nothing less than a revolution on two-
wheels, made even more famous by the 'Fill it - Shut it - Forget it ' campaign. Driven by the trust
of over 5 million customers, the Hero Moto Corp (previously Hero Honda) product range today
commands a market share of 48% making it a veritable giant in the industry. Add to thattechnological excellence, an expansive dealer network, and reliable after sales service, and you
have one of the most customer- friendly companies.
Customer satisfaction, a high quality product, the strength of Honda technology and the Hero
group's dynamism have helped HHML scale new frontiers and exceed limits. In the words of
Mr. Brijmohan Lall Munjal, the Chairman and Managing Director, "We will continue to make
every effort required for the development of the motorcycle industry, through new product
development, technological innovation, and investment in equipment and facilities and through
and through efficient management."
History Of Company
1984
The Company was Incorporated on 19th January, at New Delhi. The Company Manufacture
motor cycles up to 100 cc capacity. The Company was promoted by Hero Cycles (P) Ltd.
(HCPL).
The Company entered into a technical-cum-financial collaboration agreement with Honda Motor
Co. Ltd., Japan (HML). As per this collaboration agreement, HML was to furnish complete
technical information and know-how and trade secrets and other relevant data.
Hero Moto Corp (previously Hero Honda) CD-100 is the first four stroke motorcycle to be
introduced in India in 100cc range. Its most attractive features are fuel efficiency and its lightweight. CD-100 will be equipped with electronic ignition system, illuminated speedometer, 4
speed gear box, neutral and flasher indicators, etc. 15 No. of equity shares subscribed for by the
promoters, etc. In November, 119,99,985 No. of equity shares issued at par of which 71,99,985
shares reserved for allotment as under:
(i) 31,19,998 shares to Hero Cycles (P) Ltd., Hero Investments (P) Ltd., and Bahadur
Chand Investments (P) Ltd.
(ii) 31,20,000 shares to Honda Motor Co. Ltd., Japan and
(iii)
9,59,987 shares to friends and association of promoters. Out of the balance 48,00,000
shares, 2,40,000 shares were reserved for subscription by the employees of the
Company and 96,000 shares by business associates. The remaining 44,64,000 shares
were offered at par for public subscription during November.
1985
The Company embarked on its 2nd phase of expansion of increasing its installed capacity from
1,20,000 to 1,50,000 vehicles per annum by the addition of several critical aliminium and steel
components.
1986
36,00,000 rights equity shares issued at par in prop. 3:10.
1987
The Company offered 6,00,000 - 15% secured redeemable non-convertible debentures of Rs 100
each for cash at par on rights basis in the proportion 1 debenture: 18 equity shares. Another
3,00,000 - 15% debentures were allotted to retain oversubscription. Thedebentures were to be
redeemed at a premium of Rs 5 per debenture on the expiry of the 7th year from the date of
allotment of the debentures
3,75,000 rights equity shares issued at par in prop.3:10
1989.
The Company introduced a new model "Sleek" during July.850 No. of equity shares forfeited.
It wasn’t an easy year for the two wheeler industry. Rising interest rates and the economic
slowdown resulted in delayed consumer decision making and a rise in loan defaults. Over the
course of the year, banks withdrew financing facilities from satellite towns. The share of
financing, which had increased rapidly to 50-60 per cent of the total retail sales by early 2007,
has now come down to below 30 per This came as a major setback for the two-wheeler industry.
Ongoing government investments very clearly emphasis inclusive growth through improved
connectivity, job-creation and improving quality of life. The rural road outlay has been upped by
close to 60 per cent, the budget for the Urban Renewal Mission has been hiked by 87 per cent,
and fund allocation to the ongoing National Highways program has been upped by 23 per cent.Importantly, India has added fresh impetus to its flagship job creation program for rural India:
the National Rural Employment Guarantee Scheme. During 2008-09, this scheme, which
provides 100 guaranteed days of work a day for the country’s rural poor, provided employment
opportunities to more than 44 million households last year; a year ago, 33 million households
were covered. During the year, there have been important developments in two wheeler industry.
The competition has strengthened though there are hardly any new entrants into the industry.
There is an increasing emphasis on price and this has led to cost cutting efforts all across cent.
the industry, thereby, making the customer an ultimate beneficiary. The trend also saw
introduction of new motorcycles with capacity ranging from 100 to 250cc bikes. We anticipate
that many more new models will be launched during the year and provide customers plenty of
choice at competitive prices. Businesses cannot consistently grow at 25-30 per cent. Each
business has a tendency to taper and plateau after attaining a particular size. An annual growth
rate of 10-12 per cent over a period of time is extremely healthy. The TCS study rankings are
conducted at the motorcycle segment level to provide comparisons among similar groups of
motorcycles. Motorcycles ranking highest in their respective segments for TCS are: Hero Moto
Corp (previously Hero Honda) splendor plus (best standard motorcycle segment); Bajaj pulser
segment). "The relatively low score for the executive segment indicates that most manufacturers
have fallen short of meeting the high expectations of these buyers,".
Production, sales growth of the industry
The two-wheeler companies have been operating at high capacities due to high growth rates
between 2009 and 2008. The growth is expected to lead to increase in the capacities from present
52 lakh units to 65 lakhs per annum in the year 2009-10, whereas the actual production estimates
by that period at an estimated growth rate of 18% is only 60 lakhs. Charts showing two-wheeler
industry growth rates Demand
In India the two-wheeler provide an easy and popular mode of personal transport for the middleclasses. With public transportation system being inadequate and ineffective the demand for the
two wheeler is likely to rise. The two-wheeler sales are expected to touch the 5 million mark by
the end of the decade as against the annual sales of 35,49,271 in 2008-09. Technology With
liberalization and the increasing competition. The two- wheeler industry has witnessed
technological changes. The four- stroke engine is being introduced in place of the traditional
populations and fuel inefficient two stroke engine. The smaller capacity engine with the
electronic fuel injection is also being used. Bajaj auto is now feeling the need to increase its
technological competence. Wit the competition cashing in on the technological competence for
their collaborators. Emphasizes being laid on lighter and fuel- efficient vehicles. A class of
vehicle having fuel efficiency of a moped and sleekness and style of the motorcycles called
scooter is growing. The vehicles offer a fuel efficiency of 60-65 km p/h. They enter into new
segment, Bajaj Auto has come out with TVS with Scooty pep and Hero Moto Corp (previously
Hero Honda) has come out with a Pleasure and upgraded version of sleek. Government policy
The excise duty on two-wheeler , which has previous 10 percent to 30 percent according to the
engine capacity, was rationalized is only two categories size. 15 percent for 75 cc engine
capacity and 25 percent for above 75 cc engine capacity the excise duty structure has been left
untouched since the 1993-94 budget.
The Indian two-wheeler industry is experiencing a major shift in its shape and structure. The
established players in the industry are taking a hard look at their portfolio of products and are in
2008, the growth momentum of the first six months was lost. Planned investment projects were
shelved; live projects faced a shortage of funds as credit flows dried up. As money became
dearer, pay packets became slimmer and risk aversion grew both from the demand and supplyside. Compulsions of coalition politics at the Centre and the impending Lok Sabha elections
didn't help either, and slowed down reforms and implementation of projects, particularly in
critical sectors like roads, ports and power. The worst hit was the manufacturing sector. From the
second half of the financial year, the index of industrial production contracted on three
occasions, remained close to zero on two occasions, and was mildly positive only once. Two –
Wheeler Financing Though two-wheeler are the most preferred from of transport in India, the
fact remains that it is a lower end market product. Most two-wheeler manufacturer like Bajaj
Auto and kinetic engineering have set up their own finance company since organized financiers
do not think the returns are particularly attractive. The argument given by some financiers is that
the price of a Yamaha or Hero Moto Corp (previously Hero Honda) is so high that people prefer
to buy a second hand car instead. This is particularly true of small town where people desire to
own a car and they have the means the two wheeler is then only a second vehicle for the family.
MARKET MECHANICS: Since 1985, when the first Hero Moto Corp (previously Hero Honda)
it has been and instant hit. A mileage miser with just about adequate performance further backed
by image of Honda and Hero Cycles brand of aggressive marketing, it climbed up the sales chart
outselling every other motorcycle by ten of thousands every year. Over the years, company has
received its share of accolades, including the National Association of India Award against 200
contenders.
SEGMENTATION, TARGETING & POSITIONING
From the current segmentation, targeting & positioning and consumer surveys we found that our
client has targeted the following segments
♦ Congested areas of urban cities.
♦ Males/Females between the age group of 18-36
♦ Middle class people , mostly officials & executives The client analysis from our questionnaire
it was found that our client has targeted the right segment HHML is overlooking one feature in
bike which is its low maintenance cost and reliability (i.e. less chances of breakdown) which is
absent in its competitors. Therefore, in order to meet the sales target, two option are available
with the client, one is to redesign the bike and second is to reposition the bike as ―Bike with onetime investment‖. Since redesigning of bike may involve a big task and huge investment
therefore we recommended repositioning the bike.
Growth
The business growth of Hero Moto Corp (previously Hero Honda) has been phenomenal
throughout its early days. The Munjal family started a modest business of bicycle components.
Hero Group expanded so big that by 2002 they had sold 86 million bicycles producing 16000
bicycles a day. Today Hero Honda has an assembly line of 9 different models
of motorcycles available. It holds the record for most popular bike in the world by sales for Its
Splendor model. Hero Moto Corp (previously 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. The Hero Group has done business differently right from the start and that is what has
helped them to achieve break-through in the competitive two-wheeler market. The Group's low
key, but focused, style of management has earned the company plaudits amidst investors,
employees, vendors and dealers, as also worldwide recognition.
The growth of the Group through the years has been influenced by a number of factors:
Just-in-Time
The Hero Group through the Hero Cycles Division was the first to introduce the concept of just-
in-time inventory. 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 and is functional even
till date.. This is the Japanese style of production and in India; Hero is probably the only
company to have mastered the art of the just-in-time inventory principle.
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'srequirements and also a large number of other vendors, which include some of the better known
companies in the automotive segment. Employee Policy: Another Striking feature within the
Hero Group is the commitment and dedication of its workers. 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." When it comes to workers'
benefits, the Hero Group is known for providing facilities, further ahead of the industry norms.
Long before other companies did so, Hero was giving its employees a uniform
allowance, as well as House Rent
Allowance (HRA) and Leave Travel Allowance (LTA). Extra benefits took the form of medical
check-ups, not just for workers, but also for the immediate family members.
Dealer Network
The relationship of Hero Group with their dealers is unique in its closeness. The dealers are
considered a part of the Hero family. A nation-wide dealer network comprising of over 5,000
outlets, and have a formidable distribution system in place. Sales agents from Hero travels to all
the corners of the country, visiting dealers and send back daily postcards with information on the
stock position that day, turnover, fresh purchases, anticipated demand and also competitor
action in the region. The manufacturing units have a separate department to handle
dealer complaints and problems and the first response is always given in 24 hours.
Financial Planning
The Hero Group benefits from the Group Chairman's financial acumen and his grasp on
technology, manufacturing and marketing. Group Company, Hero Cycles Limited has one of the
highest labor productivity rates in the world. In Hero Moto Corp (previously Hero Honda)
Motors Limited, the focus is on financial and raw material management and a low employee
During this research project I came in to contact with many customers who are having bikes. It
has been found that in Hero Moto Corp (previously Hero Honda) mostly the customers are
having splendor while the ratio of the customers using Passion, Karizma and other bikes are
comparatively low. In Bajaj the customers are giving more preference to Discover and Pulsar
models and in case of TVS Bikes the customers are givig more preference to the other models
rather than Flame,Starcityand Apache. The maximum numbers of customers that are using these
bikes fall in the income group of 200000-300000.
It has been observed that the customers are using their bikes mostly for official and personal
purpose. It is observed that the awareness of Hero Moto Corp (previously Hero Honda) bikesmostly comes from friends while of Bajaj and TVS the awareness comes from newspapers and
televisions. Out of the sample size of 100 customers, 65 customers agree with the fact that
advertisements play a very significant role in influencing their behavior to choose the bike. On
the other hand 15 customers do not agree to this fact. While remaining 17 customers are not sure