two wheeler marketing in india

7/28/2019 Two Wheeler Marketing in India

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MARKET FOR TWO WHEELERS INDUSTRY IN INDIA SINCE 2010

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PROJECT REPORT ON

MARKET FOR TWO WHEELERS INDUSTRYIN INDIA SINCE 2010

COMPARATIVE CASE STUDY ON

HERO HONDA AND BAJAJ

SUBMITTED BY

RAHUL D. PATIL

TY BMS SEMESTERV

PROJECT GUIDE

PROF. ANJALI MISHRA

SUBMITTED TO

UNIVERSITY OF MUMBAI

THROUGHSMT. KAMALADEVI GAURIDUTT MITTAL

COLLEGE OF ARTS & COMMERCE

2012-2013


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SUBMITTED TO

UNIVERSITY OF MUMBAI

PROJECT REPORT ON

MARKET FOR TWO WHEELERS INDUSTRYIN INDIA SINCE 2010

COMPARATIVE CASE STUDY ON

HERO HONDA AND BAJAJ

SUBMITTED BY

RAHUL D. PATIL

THROUGH

SMT. KAMALADEVI GAURIDUTT MITTAL

COLLEGE OF ARTS & COMMERCE

ACADEMIC YEAR - 2012-2013


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DECLARATION

I, RAHUL D. PATIL OF SMT. K.G.MITTAL COLLEGE OF T.Y.B.M.S

(SEMESTER--V); HEREBY DECLARE THAT I HAVE COMPLETED THE

PROJECT ON MARKET FOR TWO WHEELERS INDUSTRY IN INDIA

SINCE 2010 IN THE ACADEMIC YEAR 2012-2013.

THE INFORMATION SUBMITTED IS TRUE AND ORIGINAL TO

THE BEST OF MY KNOWLEDGE...

Date: ___________________

(RAHUL D. PATIL)


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CERTIFICATE

This is to certify that, Mr. Rahul D.Patil the student of T.Y.B.M.S. has

successfully completed project on MARKET FOR TWO WHEELERS

INDUSTRY IN INDIA SINCE 2010.

In the academic year 2012-13 under the guidance of Prof. ANJALI MISHRA

___________________ ___________________

PROF. ANJALI MI SHRA PROF. LEENA GADAKARI

(PROJECT GUIDE) (BMS CO-ORDI NATOR)

____________________ ___________________DR. JOHN DMELLO EXTERNAL EXAMI NER(COLL EGE PRINCIPAL)


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PROJECT GUIDE CERTIFICATE

I, Prof. ANJALI MISHRAhereby certify that the project titled

MARKET FOR TWO WHEELERS INDUSTRY IN INDIA SINCE 2010is

carried out by Mr.Rahul D.Patil ofT.Y.B.M.S. (Semester-V), MARWARI

VIDYALAYA SANCHALIT SMT. K.G.MITTAL COLLEGE OF ARTS &

COMMERCE in the academic year 2012-2013.

The information submitted is true & original to the best of my

knowledge.

DATE:

___________________ ___________________ ___________________

PROF. NAMRATA ARORA PROF . LEENA GADAKARI DR. JOHN DMELLO

(PROJECT GUIDE) (BMS CO-ORDINATOR) (COLLEGE PRINCIPAL)


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ACKNOWLEDGEMENT

At the outset, I would first like to thank the University of Mumbai for giving

me an opportunity to do such an innovative project in the Fifth semester.

I would like to extend my sincere gratitude and appreciation to my projectguide Prof. ANJALI MISHRA who introduced me to the project MARKET

FOR TWO WHEELERS INDUSTRY IN INDIA SINCE 2010. It has indeed

been a great experience working under her during the course of project. I would

like to express my gratitude for her unconditional support, invaluable advice and

guidance provided throughout this project.

I am highly obliged to our college Principal Dr John DMello for giving

me an opportunity to conduct a detailed study and analysis of the topic relevant to

my project.

My thanks are also due to my parents & all other friends and well wishers

who have helped me at various levels. Last but not the least I would like to thank

all those who directly or indirectly helped me in giving the final touches to the

project. I once again thank all of them whole heartedly.

DATE: ----------------------------

RAHUL D. PATIL


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CONTENTS

SR NO TOPIC PAGE NO

EXECUTIVE SUMMERY 8

1. INTRODUCTION 9-10

2. HISTORICAL INDUSTRY DEVELOPMENT 11-13

3. TWO WHEELER INDUSTRY: THE CURRENTSCENARIO

14-15

4. INDUSTRY STRUCTURE AND GROWTH 16-21

5. DIFFERENT TYPES OF TWO WHEELER COMPANY

IN THE MARKET

22-30

6. COMPANYS SHARE IN MARKET 31-33

7. COMPARATIVE CASE STUDY ON BAJAJ GROUP

AND HERO HONDA GROUP

34-82

8. CONCLUSION 85-87

9. RECOMMENDATIONS 88-94

10. BIBLIOGRAPHY 95


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EXECUTIVE SUMMARY

I had undertaken a project titled MARKET FOR TWO WHEELERS INDUSTRY ININDIA SINCE 2010.

This project work consists of the different analytical study of two wheeler companies.

In my project, I have shown the comparative case study of hero Honda motors ltd, Bajaj ltd.This project highlights on the comparative case study, for which company is best for investment,which companys performance is good in a various business activity. In India, a two-wheeler isused as a personal/family vehicle or a good carrier, whereas it is Confined to sports/racing(heavy motorcycles) or short distance shopping (mopeds). So this Report records the findingsand analysis of a survey conducted in order to assess the marketing strategies of two wheeler

segment in automobile industry of Bajaj and Hero Honda. The survey has been conducted in asystematic manner right from investigating the objective and breaking it down to the variouscomponents of the research to arriving at final conclusion on possible parameters to study thecustomer satisfaction level towards dealer services. An attempt has been made to understand thesatisfaction level of the customer towards dealer services depending on the profile, i.e. Customerincome, demographic such as age, gender, occupation, etc.

The questionnaire was designed on the basis of an exploratory research. The actual datacollection was through personal survey of a convenient sample of units. In short term, marketshares of individual manufacturers are going to be sensitive to capacity, product acceptance,pricing and competitive pressures from other manufacturers.

Over this period, only the motorcycle segment is expected witness higher demand vis--vissupply, while the scooters and mopeds supply will outstrip demand. As income grow and peoplefeel the need to own a private means of transport, sale of two-wheelers will rise. Penetration isexpected to increase too approximately to more than 25% by 2009. While buying a motorcycleeconomy is the main consideration in form of maintenance cost, fuel efficiency. Hero Honda isconsidered to be most fuel-efficient bike on Indian Road.


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Chapter 1

INTRODUCTION

India is the third largest manufacturer of two-wheelers in the world, and the largest manufacturer

of three-wheelers. The major players in the Two Wheeler sector are Bajaj Auto, Hero Honda,

Kinetic, LML and TVS Motors. Among two-wheelers, motorcycles have led the upsurge (88%

growth) to result in a y-o-y growth of 42% for the sector. The Indian two-wheelers industry can

be broadly classified into three major segments -- scooters, motorcycles and mopeds.

With sales over 4.2 million, the industry is growing at the rate of nearly 16%. The motorcycle

segment is the fastest growing with its share in two wheeler sales increasing from 37.21% to

68.65% to nearly 70%.

In the last five to six 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. In the process the share of motorcycle segment has

grown from 48% to 70%, the share of scooters declined drastically from 33% to 22%, while that

of mopeds declined by 4% from 19% to 15%. Sale of scooters and mopeds segment decreased

51.20% and 47.93% respectively over the last five years.

Scooters and mopeds are rapidly losing their place in the market to the more fuel-efficient,

stylish and sturdy motorcycles. The Euro emission norms effective from April 2000 led to the

existing players in the two- stroke segment to install catalytic converters. 4-stroke motorcycles

are now replacing all the new models. Excise duty on motorcycles has been reduced from 32% to

24%, resulting in price reduction, which has aided in propelling the demand for motorcycles.

Competition has intensified over the last couple of years. Recently, Honda Corporation of Japan

announced its intentions to set up a 100% subsidiary to manufacture scooters and motorcycles.

Other players in the two-wheeler industry include Bajaj Auto Ltd, Kinetic Motor Co Ltd, LML,


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TVS Motors and Yamaha. Lowinterest regime has helped in reducing cost of loans, which will

help in boosting sales of 2-wheelers, since 80% of the two- wheelers are creditstimulated.

With more than 40 per cent of the motorcycle demand flowing from the rural sector, the success

or failure of monsoon has a major influence on the sales volume. After a robust growth in the

first quarter of the previous fiscal, motorcycle off take tapered during the second-half.


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Chapter 2

HISTORICAL TWO WHEELER INDUSTRY DEVELOPMENT

The invention of the first two-wheeler is a much-debated issue. "Who invented the first

motorcycle?"may seem like a simple question, but the answer is quite complicated.

Two-wheelers owe their descent to the "safety" bicycle, i.e., bicycles with front and rear wheels

of the same size, with a pedal crank mechanism to drive the rear wheel. Those bicycles, in turn

descended from high-wheel bicycles. The high-wheelers descended from an early type of

pushbike, without pedals, propelled by the rider's feet pushing against the ground. Theseappeared around 1800, used iron-banded wagon wheels, and were called "bone-crushers," both

for their jarring ride, and their tendency to toss their riders.

Gottlieb Daimler (who later teamed up with Karl Benz to form the Daimler-Benz Corporation) is

credited with building the first motorcycle in 1885. One wheel in the front and one at the back, it

had a smaller spring-loaded outrigger wheel on each side. It was constructed mostly of wood, the

wheels were of the iron-banded wooden-spoked wagon-type, and it definitely had a "bone-

crusher" chassis!

The Indian two-wheeler industry made a small beginning in the early 50s when Automobile

Products of India (API) started manufacturing scooters in the country. Until 1958, API and

Enfield were the sole producers.

In 1948, Bajaj Auto began trading in imported Vespa scooters and three-wheelers. Finally, in

1960, it set up a shop to manufacture them in technical collaboration with PiaggioofItaly. The

agreement expired in 1971. In the initial stages, Automobile Products of India dominated the


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scooter segment; Bajaj Auto later overtook it. Although various government and private

enterprises entered the fray for scooters, the only new player that has lasted till today is LML.

Under the regulated regime, foreign companies were not allowed to operate in India. It was a

complete seller market with the waiting period for getting a scooter from Bajaj Auto being as

high as 12 years.

The motorcycles segment was no different, with only three manufacturers viz., Enfield, Ideal

Jawa and Escorts. While Enfield bullet was a four-stroke bike, Jawa and the Rajdoot were two-

stroke bikes. Enfield 350cc bikes and Escorts 175cc bike initially dominated the motorcycle

segment.

Motorcycle, the name is evolved from motorized cycle. A motorcycle has an engine, wheels and

chain exposed. Moreover, it is chain driven. Two-stroke motorcycles are positioned as power

bikes by making use of their high power delivery to cater the young generation. Four-stroke

motorcycle is positioned as fuel-efficient and environment friendly vehicle.

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 complete knocked down 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 33% 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.


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The industry witnessed a steady growth of 14%leading to a peak volume of 1.9mn vehicles in

1990.

The entry of Kinetic Honda in mid-eighties with a variometric scooter helped in providing ease

of use to the scooter owners. This helped in inducing youngsters and working women, towards

buying scooters, who were earlier, inclined towards moped purchases. In the 90s, this trend was

reversed with the introduction of scooterettes. In line with this, the scooter segment has

consistently lost its part of the market share in the two-wheeler market.

In 1990, the entire automobile industry saw a drastic fall in demand. This resulted in a decline of

15% and 8% resulting in a production loss of 0.4mn vehicles. Barring Hero Honda, all the major

producers suffered from recession. Hero Honda showed a marginal decline in 1992.


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Chapter 3

TWO WHEELER INDUSTRIES: THE CURRENT SCENARIO

If Automobile companies have been showing poor growth rates, can the two-wheeler industry be

far behind? The two-wheeler segment of the industry had been bucking the normal trends

exhibited by the automobile industry for the past few years.

But it appears that the time has come for this segment to align itself with the overall industry

growth. The growth in two-wheeler sales has been quite steady over the past eight years and

right now, there is no reason to expect an upturn. The overall sales growth rates appear to have

been capped. There, in fact, could be a spiel for a fall in growth in penetration levels after a

decade of steady growth.

More specifically, one can argue that the higher base has been partly achieved through generous

financing packages and discount schemes. All major two-wheeler players- Bajaj Auto, TVS

Motors, LML, Kinetic Motors and Hero Honda Motors, are battling for the motorcycle segment.

This dramatic structural shift in the industry from scooters to motorcycles has been going on for

the last five years and is expected to have been completed.

The Indian consumer being sensitive to prices would certainly take the lead. Besides, the

industry size has become too big to sustain the growth rates. As a result, lower margins will

follow and supernormal returns would no more be possible.

Research outfit Morgan Stanley Dean Witter has estimated that profitability of players like Bajaj

Auto and TVS Motors will probably suffer as intense competition between the companies sets in.

Hero Honda will eventually have to compete on equal terms. As a result, MSDW has lowered its

rating on Hero Honda and TVS Motors to neutral, while Bajaj Auto was already neutral. The

overall Compounded Annual Growth Rate in two-wheeler sales was 8.3 per cent between 1997

and 2000. On a high base, an improvement may not be possible. Over the same period, the

CAGR for motorcycles was 22.5 per cent. This strong growth was fuelled by a shift away from

scooters.


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Now, given the share of 53.6 per cent in the total two-wheeler sales, motorcycles have less room

to grow at the expense of scooters. MSDW as a result, expects motorcycle growth rates to move

towards the overall industry growth rate in the next one to two years.

The recent acceleration in motorcycle sales has led to a serious rethinking in strategies in the

two-wheeler market. Bajaj Auto and TVS Motors are targeting volumes in the 4-stroke

motorcycle segment at the expense of margins. This is bound to lead to profitability pressures for

the two-wheeler industry as a whole, even subjecting Hero Honda to competitive pressures.

The two-wheeler industry is expected to undergo a period of transformation, which would

involve lower margins and profitability pressures. Both Bajaj Auto and TVS Motors have

already built in these pressures in their valuations while Hero Honda has not.

Growth expectations for Hero Honda, in MSDW's opinion are valid only for the next one-year,

after which it expects the company's growth to decelerate. Honda and Piaggio have announced

their plans to enter the Indian scooter market. Their scooter brands could cause a ripple in the

two-wheeler industry and slow the extent of migration to motorcycles from scooters.


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Chapter 4

INDUSTRY STRUCTURE AND GROWTH

The Indian two-wheelers Industry can be broadly classified into the following Segments: Scooters -Geared and Un-geared. Motorcycles.

The motorcycles segment can be classified into three broad segments viz., the entry-level

segment, executive segment and the premium segment.

Till last year, the executive segment, the fastest growing segment among the two-wheelers, was

almost monopolized by Splendor, Indias highest selling bike. However, with a host of new

vehicles flooding the market, the market leader has started showing signs of flagging. Victor, the

flagship product of TVS, has done the trick, garnering a sequential growth throughout the last

four quarters.

The entry-level segment continues to witness competition on the price-front. Bajaj has a

stronghold of this segment with Boxer, as Hero Hondas Dawn, the renewed version of Joy, is a

distant second. It is this segment that is gradually eating away volumes from Scooters.


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These segments as shown below constitute the domestic two wheeler sales:


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PRELUDE TO INDIAN TWO-WHEELER SECTOR

Ever since 1987, it is only during FY03 that the drought has been severe enough to officially

declare it as drought year. The inflation is well under control at 3.40%, but concerns ofburgeoning fiscal deficit still remain at large.

While the 28% shortfall in precipitation would dampen agricultural output during the current

year, indicators on industrial output and infrastructure activities undoubtedly point towards an

economic recovery. The IIP {The Index of Industrial Production} witnessed a y-o-y increase of

6.1% with Automobiles clocking a 4.9% growth.

The two-wheeler sector witnessed a complete transformation in the level of competition and

growth rates as motorcycles lead the way in offering a wider choice at competitive prices. The

strong surge in motorcycles had led the entire two-wheeler sector in posting an incredible growth

of 41% in the first half of the last year.


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TWO-WHEELER INDUSTRY GROWTH IN THE LAST TWO

YEARS

The two-wheeler industry has seen a profound shift in the consumer preference towards

motorcycles from scooters. Until 1999, scooters held the upper hand in the contribution to

overall sales. The introduction of Hero Hondas blockbuster product Splendor was instrumental

in changing the scenario and the motorcycle growth continues to outsmart scooters till date.

STRICT ENFORCEMENT OF ENVIRONMENTAL

REGULATIONS

In the years to come, stringent regulations and environmental laws should increase replacement

demand for two-wheelers. The retention period of a two-wheeler in India is one of the highest in

the world. This should gradually decrease in the forthcoming years.

Among the two and three wheelers, both selected models of Hero Honda (Splendor and CD 100)

are the most eco friendly two wheelers. They have scored above average in vehicle and engine


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design and are one of the very few, four-stroke two wheeler fitted with any kind of pollution

control equipment.

Bajaj boxer, which ranks third, has scored well in vehicle and engine design but lacks in

emission control equipment and comparatively poorer emission.

The best performing two-stroke model ranks fourth amongst the two wheelers. The lowest score

has been obtained by Kinetic Safari moped, which obtained average scores in design and

emissions and very poor scores in pollution control equipment and emissions.


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Chapter 5

DIFFERENT TYPES OF TWO WHEELER COMPANY IN THE

MARKET

The Indian two-wheeler contributes the largest volumes amongst all the segments in automobile

industry. Though the segment can be broadly categorized into 3 sub-segments viz; scooters,

motorcycles and mopeds; some categories introduced in the market are a combination of two or

more segments. There are a lot of companies in this Industry. The major players are:

Hero Motors Ltd is one of the leading companies in the two-wheeler industry. At present, it is

the market leader in the motorcycle segment with around 50% of the market share. The companyhas emerged as one of the most successful players, much ahead of its competitors an account of

its superior and reliable product quality complemented with excellent marketing techniques. The

company has been consistently addressing the growing demand for motorcycles and has a

cumulative customer base of over 5 million customers, which is expected to reach 6mn mark

with the rural and semi-urban segment being the new class of consumers.

Hero continues to hold the coveted position of being the largest individual two wheelercompanies in the world as also being the No.1 two wheeler joint venture of Honda Motor

Co, Worldwide. The Hero Honda Splendor has maintained its leadership as the World

No.1 two wheeler brands.


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New model 'Dawn' recorded monthly sales of 10,000 units within three months of launch. The total sales turnover of the company was Rs.1, 745.21 crores from Rs.1, 359.82 crores

in the corresponding period last year.

Profit before tax was Rs.885 crores and Profit after tax was 581 crores. The company's sales volume during the first quarter of the year 2004 also recorded a

splendid increase, with sales of 6, 09,123 units of motorcycles as compared to 4, 58,779

motorcycles sold during the first quarter of the last FY.

The company offers the following products:

CD 100 CD 100 SS Splendor Passion CBZ CD Dawn Karizma Ambition Ambition 135 Splendor + Passion Plus CBZ Star

Address:

Registered & Corporate office:

H E R O M O T O R S L I M I T E D

34 Community Centre,

Basant Lok,

Vasant Vihar,


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New Delhi1100

Established in 1945, it was incorporated as a trading company. From 1948 till 1959, it imported

scooters and three wheelers from Italy and sold them in India. It then obtained a production

license in 1959 and struck a technical collaboration with Piaggio of Italy in 1960 and continued

with the same for the next two decades.

Scooter production commenced in 1961. Three wheeler productions followed in 1962. Its

collaboration with Piaggio expired in 1971 and since then the Company's scooters and three

wheelers are sold under the "Bajaj" brand name.

It is one of India's top ten companies in terms of market capitalization and among the top five in

terms of annual turnover.

Under the "Horizontal transfer of technology" policy, Maharashtra Scooters Ltd., a Company

with 24% equity participation by the Company and 27% participation from Maharashtra State

Government's Western Maharashtra Development Corp. was formed in 1975. Production

facilities are located at Satara, in Maharashtra State. This helped augment production capacities.


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These scooters are marketed through the Company's distribution network and under the

Company's brand name.

The Company's second plant was set up in 1984 at Aurangabad, in Maharashtra State. In this

plant, scooter production commenced in 1986, three wheeler production commenced in 1987 and

scooterettes and motorcycle facilities were commissioned in 1990 & 1991 respectively.

From 1961 when the annual production was about 4000 units, today the Company has become a

market leader with annual production in excess of 1.35 million units and with product offerings

in all segments (mopeds & scooterettes, scooters, motorcycles, three wheelers).

Its main models are:

Chetek Spirit CT 100 Caliber115 Wind125 Pulsar 150 KS Pulsar150 SS Pulsar 180 SS Eliminator

Address:

Mumbai - Pune Road,

Akurdi, Pune 411 035
http://auto.indiamart.com/motorcycles/kawasaki-bajaj125/index.htmlhttp://auto.indiamart.com/motorcycles/kawasaki-bajaj125/index.htmlhttp://auto.indiamart.com/scooters/bajaj-classic/index.htmlhttp://auto.indiamart.com/scooters/bajaj-classic/index.htmlhttp://auto.indiamart.com/scooters/bajaj-chetak/index.htmlhttp://auto.indiamart.com/scooters/bajaj-chetak/index.htmlhttp://auto.indiamart.com/scooters/bajaj-chetak/index.htmlhttp://auto.indiamart.com/scooters/bajaj-classic/index.htmlhttp://auto.indiamart.com/motorcycles/kawasaki-bajaj125/index.html


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LML is one of the leading scooter manufacturers in the country; with a 30% market share in

volume terms with its popular scooter brand "Supremo". Financially, LML's turnover has grown

from Rs.209.05 crores in 92-93 to Rs.832.71 crores in Sept '98. It plans to facilitate authorized

dealers with a WAN (wide area network) and sell spare parts through the Net.

It is also working towards setting up five training schools (one each in Mumbai, Kanpur,

Bangalore, Calcutta and Noida), to train mechanics and service personnel. Beginning with 120

people in the first quarter of 1999, it hopes to build up a base of 20,000 trained mechanics over

time. Besides, its 300-dealer strength is to be over 500 soon.

Models Provided: Freedom DX Freedom Prima 110 Freedom Prima 125 Freedom Prima 125 DB Freedom Topper Graptor Address:

Registered Office:

C 3 Panki Industrial Estates,

Kanpur - 208 022


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Kinetic Engineering Ltd., founded in the year 1970, is the leading manufacturer and exporter of

2-wheelers.Born of the vision of the late Shri.H. K. Firodia, it has produced useful, heart -

winning products for over two decades.

KEL manufactures a wide range of Mopeds, Scooters and Motorcycles that are very popular in

the country and are well recognized for their fuel economy, quality and reliability.

KEL has 3 manufacturing plants, with the capacity to manufacture 4 lakh vehicles per year.

Their well endowed technologically advanced manufacturing set up has enabled them to reach

high quality standards.

The company also exports these vehicles to countries like USA, Canada, Sweden, Latin

America, Denmark and the Middle East.

The company has always been conscious of quality and customer oriented production.

A strong service network set up across India backs Kinetic Engineering Ltd. Kinetic Engineering

are also the promoters of Kinetic Honda Motor Ltd., a joint venture with the internationally

known Honda Motor Company of Japan.

The Models provided are:

Nova EX / DLX / 135


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ZX Zoom Zing STD Zing Rockin 80 Rock in Zing Boss Boss SP Boss 115 Boss EX GF170 Laser Velocity King DLX Aquilla

Address:

D-1 Block, Plot No. 18/2,

MIDC Chinchwad,

Pune- 411 019


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TVS MOTOR COMPANY

TVS Motor Company Limited, part of the TVS Group, is one of India's leading two-wheelermanufacturers. With a turnover of over Rs.2800 crores, the Company manufactures a wide range

of motorcycles, scooters, mopeds and scooterettes. Little wonder, it boasts of more than 9.5

million happy customers.

The year was 1980, was a year to remember for the Indian two-wheeler industry. For it was this

year that saw India's first two-seater moped, TVS 50, rolling out on the Indian roads. For some it

was freedom to move.

With the joint venture with Suzuki Motor Corporation in 1983, TVS-Suzuki became the first

Indian company to introduce 100 cc Indo-Japanese motorcycles in September 1984. Through an

amicable agreement the two companies parted ways in September 2001.

With a strong sales and service network of 500 Authorized Dealerships, 1018 Authorized Service

Centers and over 864 Certified Service Points, TVS is growing from strength to strength.


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Products offered by the Company:

Max 100

Max R Centra Victor GL Victor GLX Fiero F2/FX Scooty PEP DLX Scotty KS Scotty ES

Address:

Jayalakshmi Estates

V Floor

8, Haddows Road

Chennai - 600006


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Chapter 6

COMPANYS SHARE IN MARKET


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SECTOR OUTLOOK

The motorcycles segment is bubbling with a spate of models launched in the last four quarters.

With more players joining the fray in the motorcycle segment, the competition should ultimatelygive each player its share.

Among the two-wheeler majors, TVS Motor Ltd is taking its chances with the massive R&D and

capacity expansion plans. On similar lines, LML is banking on its new products for growth and

is coming out with a flurry of new models in the executive segment of the motorcycles, where

the growth is highest.

The current fiscal should bring in considerable bottom-line growth to all the two-wheeler players

due to positive demand outlook for the sector. But the major concern for all the players is the

acute pressure on pricing that may impact the margins for all of them.


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CHAPTER 7

COMPARATIVE CASE STUDY ON BAJAJ GROUP HERO

HONDA

BAJAJ GROUP

Profile of the company

The Bajaj Group came into existence during the turmoil and the heady euphoria of India's

freedom struggle. Jamnalal Bajaj, founder of the Bajaj Group, was a confidante and disciple ofMahatma Gandhi, and was deeply involved in the effort for freedom. The integrity, dedication,

resourcefulness and determination to succeed which are characteristic of the Company today, are

often traced back to its birth during those long days of relentless devotion to a common cause.

Today, Rahul Bajaj is the Head of the Group. He has been the Chief Executive Officer of Bajaj

since 1968 and is recognized as one of the most outstanding business leaders in India. As

dynamic and ambitious as his illustrious predecessors, he has been recognized for his

achievements at various national and international forums. Bajaj Auto is the flagship of the Bajaj

Group of Companies.

Bajaj is currently India's largest three-wheeler manufacturer and one of the biggest in the world.

We have long left behind our annual turnover of Rs.72 million (1968), to last years, impressive

figure of Rs.39 billion (US$ 920 million).


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Management

A team of seasoned professionals ably manages Bajaj Auto Ltd.

Board of Directors

Rahul Bajaj Chairman & Managing Director

Madhur Bajaj Vice Chairman & Whole-Time Director

Kantikumar R. Podar Director

Shekhar Bajaj Director

D.J. Balaji Rao Director

D.S. Mehta Whole-Time Director

J.N. Godrej Director

S.H. Khan Director

Rajiv Bajaj Joint Managing Director

Mrs. Suman Kirloskar Director

Naresh Chandra Director

Nanoo Pamnani Director

Committees of the Board

Audit Committee

S.H. Khan Chairman

J.N. Godrej

Nanoo Pamnani

D.J. Balaji Rao
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Naresh Chandra

Shareholders & Investors Grievance committee

D.J. Balaji Rao Chairman

J.N. Godrej

Naresh Chandra

Remuneration committee

D.J. Balaji Rao Chairman

S.H. Khan

Naresh Chandra

Objectives and Goals

The main objective of Bajaj Auto is not only on sharp increase in output but also on:

Transparency: A commitment that the business is managed along transparent lines. Fairness: To all stakeholders in the Company, but especially to minority shareholders. Disclosure: Of all relevant financial and non-financial information in an easily

understood manner.

Supervision: Of the Company's activities by a professionally competent and independentboard of directors.

Policies

They approach their responsibilities with ambition and resourcefulness. They organize themselves for a transparent and harmonious flow of work. They respect sound theory and encourage creative experimentation.

And they make their workplace a source of pride.
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Bajaj Performance

The market for the so-called 'mature' segment, which according to Mr. Rajiv Bajaj (jointmanaging director) included, geared scooters, mopeds, step-thru and three-wheelers.

The geared scooter market in which Bajaj is clearly the market leader with its Chetak andSuper's till ruling strong. The company has a stranglehold in the southern and western

regions of the country with a market share ranging between 80% to 90%.

Next, comes the largest market of the north (55% of total scooter market). Here too Bajajis relatively well placed with only LML to worry about. But the good part of the story

ends right here. As this market is a mature one, growth opportunities are limited and

Bajaj has come around to accept that only too well.

Sale of Company's new products introduced during 1998 - 1999 viz., Spirit, Bravo,Legend and Caliber was 30% of the total number of two wheelers sold during the period.

Going forward, its strategy would be to position itself in the fuel-economy segment at acompetitive price point. Secondly, Bajaj will try to capture market share by introducing

top-of-the-line scooters, which match its competitors in terms of style and technology.

Towards this, Bajaj Introduced the four-stroke 'Chetak' in November 2000 giving 65

kms/liter fuel economy and the 'Fusion' and 'BravoHP' in October 2000 to give LML

something to think about. In Step-thrus, the upgraded M-80 Major was introduced in August 1999. It incorporates a

new engine that delivers higher power, better fuel economy and significantly lowers

emissions. This vehicle is well received by customers. M-80 four strokes will be

introduced in the current quarter. With this introduction Company's step-through market

share should exceed 60%.


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Sale of Spirit scooterettes has crossed 6,000 units per month. This was followed by a newscooterettes in the next quarter. With this, the Company expects to become India's largest

scooterettes manufacturer.

The success of Pulsar has helped the company to stay clear of adopting an aggressiveprice reduction strategy. Caliber 115 has also enjoyed a fair degree of success. As a

result, aided by its cash-rich status, the company has been able to hold its ground in the

times of recession.

Commercial production of Saffire, four-stroke automatic scooter commenced at BajajAuto's new plant at Chakan

(Pune) on October 20, 1999.

Bajaj has consistently rolled out successful models for example one of the feathers in itscrown is the Bajaj Pulsar..a premium bike segment motorcycle which has been a very

successful model. Bajaj Kawasaki is one other bike which created quite a stir in the

industry.

With the Indian two-wheeler industry focused on the motorcycle segment, Bajaj Autonow becomes the only Indian company with offerings in each user segment. Starting with

the entry level Boxer series, the companys range includes Caliber, Caliber Croma and

Aspire in the executive bike segment, Pulsar in the premium bike segment, and the only

cruiser bike of India the Eliminator. An estimated Rs.100crores has been invested in developing Pulsar and the project took

36 months from conceptualization to commercial production of the vehicle. Pulsar is

being manufactured at Bajaj Autos state-of-the-art facilities at Chakan near Pune where

all the stylish un-geared scooters such as Bajaj Spirit and Bajaj Saffire are manufactured.

In motorcycle segment, introduction of new Boxer AT, CT and Caliber has been veryencouraging.


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Sales in number for and upto the Month of August 2004

Products For

August

2004

Up to

August

2004

For

August

2003

Up to August

2003

Motorcycles 106,745 485,791 76,487 394,983

Scooters Geared 8,898 48,071 12,570 68,314

Scooters Un-

geared3,205 15,900 5,427 23,457

Step thrus 1,299 8,639 3,024 14,256

Total Two

wheelers120,147 558,401 97,508 501,010

Strategies used in the Past

Bajaj strategic plan was to establish in three main areas viz establish volume leadership, establish

cost leadership and reduce the respond time and bring in.

Volume Leadership:

Retain the high reliability and work on easing out immediate availability. Vast expansion supported by Quality circles, kanban, just-in-time and high automation. Expanded the dealer network to reach town, cities and even villages. Improve the genuine spares availability. Reduce the prices drastically to match local specious parts.


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Cashed on branding, image to penetrate into rural areas than competitors. Came up with easy financing scheme and several occasional discounts to establish

volume leadership.

Cost Leadership:

Macro value addition chain was exploited throughout the companies operation but alsospread within micro value addition chain i.e. dealers and distributors, through free test

rides, registration and insurance schemes.

Macro value addition suppliers offering them hi-tech automation, by keeping andimproving the productivity.

After exploiting value addition micro and macro chain further establishing the costleadership, cost cutting exercises, was adopted to ultimately reduce the cost of 58% to a

target of 55%.

Response Time:

Total transparency within the dealer, distribution and works through online. Delivery within 24 hours of any variant within the circle. Improves ecstatic and added variants to support the wide range. Make available any variant, any range or access to definite information directly. Improve

to customers perception and loyalty to product with widening the base and strengthening

the brand loyalty.

Example: Bajaj scooter customers change over to Bajaj motorbikes.


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Economics

1. Demand Forecasting:

Forecasting means to know the trend or behaviors after a period of time. The aim of

economic forecasting is to reduce the risk or uncertainties that the firm faces in its short-term

operational decision-making and in planning for its long-term growth. A firm must decide

how much of each product to produce, what price to charge, and how much to spend on

advertising, and it must also plan for future growth of the firm.

One of the techniques of forecasting is:

Moving Averages

The simplest smoothing technique is the moving average technique. Here the forecasted

value of a time series in a given period (Month, quarter, year, etc) is equal to the average

value of a time series in a number of previous periods e.g. with a three period moving

average, the forecasted value of a time series for the next period is given by the average value

of the time series in the previous three method

2. Cost cutting:A) At Akurdi Plant:

Replacement of 40/60 W incandescent bulbs by 7 W PL lamps in office building. Installation of automatic temperature controllers in standard room and water chilling

plant at general canteen and use of solar energy systems for canteens and paint shop.

Use of thermo sol fuel activities for LDO for better combustion efficiency.


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Installation of auto control panels for minimum use of garden lights, fountain and roadlights.

B) At Waluj Plant:

Reduction of avoidable losses (replacement of capacitors, switch-off of lights, fans,pumps, cooling water pumps etc. at identified locations during identified hours).

Fine turning of equipment (thereopac, changed temperature setting of air conditioningsystem etc.)

Plant voltage optimization.


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Marketing

Four Ps of Marketing Mix

1. Product

The term "product" is anything that can be offered to a market to satisfy a want or need.

Products that can be marketed include Physical goods, services, experiences, events, persons,

places, properties, organizations, information, and ideas.

Components of a market offering:

Value based prices

Attractiveness Market offering Services mix and Quality

Product Levels

In planning its market offering, the company needs to think thru five levels of the product. Each

level adds more costumer value, and the five constitute a customer value hierarchy.

First level is the core benefit. The fundamental service or benefit that the customer is really

buys. Here in Bajaj the core product is the vehicle. (Means for transportation)


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Second level, the company has to turn the core benefit into a basic product. The basic product

would include the gears, the leather seat, the rear view mirrors, the trunk and the petrol tank.The

essential accessories that would make the product useful.

Third level, the company prepares an expected product, a set of attributes and conditions buyers

normally expect when they buy the product. Here in case of two wheelers it is the warranty, the

after sales service that the customers expect. At Bajaj they have special customer care service

tips which are accessible even on its website. They have a 24-hour service whereby the

customers can post their queries to the company and they try to answer the queries within a span

of 7 days. They have personalized service charts, which are exclusive to each model. This

enables the customer to get the right way of taking care of his vehicle.

Fourth level, the marketer prepares an augmented product that exceeds customer expectations.

Auto finance is one such feature which is an unexpected service though these days its no more a

pleasant surprise almost all leading companies offer finance which works as an incentive for the

buyers. Augmented product adds cost and soon becomes expected product. Bajaj Auto Finance

Ltd (BAFL), a group company of Bajaj Auto Ltd is one of the biggest retail financing companies

in the country today.

2. PricePricing is an important part of the marketing strategy. The consumers demand quality

products at low prices which is as good as a tightrope walk for manufacturer as he needs to

control the cost in order to reduce price but at the same time also maintain good quality.

The basic price-deciding factor in any product is the cost. At Bajaj also the cost factor is

taken into consideration while deciding the prices for the products. So now we have more

and more products trying to find space in the market, which makes them, take every possible

step to eat into each others share. For products like Two-wheeler the positioning of the

product as well the price of the product is quite important.


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Motorcycles

Chetak4 Stroke 39,485 Spirit 29,301 CT 100 40,083 Caliber115 46,062 Wind125 51,042 Pulsar 150 KS 57,386 Pulsar150 SS 61,312 Pulsar 180 SS 65,840 Eliminator 95,602

3. PlaceBajaj has a very wide spread dealer network of 219 dealers across the country and abroad

which provide excellent customer service. The company has been operating in the two-

wheeler industry since decades and enjoys a favorable logistics position. Considering that the

industry demands a good availability of service stations Bajaj definitely has a distinct edge

over its competitors due to the presence of a widespread dealer and service station network in

the remotest region of India.

Dealer Preparedness

The company must ensure that the dealers are well aware of the product when it is launched and

the dealers are equipped to provide the after sales services as well. There is a general complain

from the dealers that by the time they come to know of a product in totality, the company

launches a new product. So to ensure that no such complaints arise the dealers must be asked to
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do a prior homework. With the launch of products with new technologies, proper training must

also be imparted to the employees at the dealerships.

4. PromotionBajaj Auto is an aggressive advertiser. The advertising Budget of Bajaj Auto is more than

Rs.100 Crores. Bajaj has a distinct style of promoting its products, for every product

launched theres a new and fresh advertising strategy, developing the firm-positioning

platform.

One of the successful campaigns from the Bajaj has been the commercial for the launch of

Bajaj pulsar.

Bajaj Pulsar

Chatting merrily, three girls

Walk by a line of motorbikes.

One's dupatta skims over the

bikes and then gets stuck...


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...making her turn in

Consternation. She pulls it away

Slowly to reveal...

... The logo, "Pulsar". MVO: Bajaj

Pulsar, definitely male

Market Segmentation rather than Product Differentiation

Over the past two years, the 100cc economy segment has taken off, as Bajaj introduced low

priced motorcycles. The economy segments share of the total motorcycle market has ballooned

to 31% from about 20% three years ago. The 100cc executive segment continues to dominate the

motorcycle market-it forms about 56% of the total motorcycle sales. The premium segment

125cc+ is small at 13% of the total market. However, this premium segment is expected to be the

future growth driver.

It can be clearly seen that an attempt has been made by all the motorcycle producing companies

to lure the customers to buy their bikes in the entry level segment with one of the long term

objectives to gain their loyalty towards the company so as when these customers tend to shift

towards higher segments they prefer their brands again.


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Management Information System

Bajaj - The IT Effect

In the dynamic environment within which all organization has to function IT certainly has started

playing a vital role. Indian organizations are no exception to this. IT planning and

implementation in such a changing environment has become a challenging task. However, right

from the beginning the IT strategy has been to focus on the current business needs and to use the

available technology to help in achieving the business objectives at that time.

This resulted in a 4-phase implementation:

Phase I - started with use of computers in accounting.

Phase II - the focus changed to manufacturing. Online computers were used during this phased

to help in achieving production targets, improving men and machine productivity, improving

quality and reducing costs which were the major issues at a time when the company was in the

sellers market.

Phase III - in this phase Bajaj auto used the exploding technology in the areas of CAD/CAM,

Networking and Communications and Office automation in the strategic areas of marketing and

engineering. Marketing and dealership computerization was brought into effect.

Phase IV- in this phase Bajaj auto used SAP. The my SAP Enterprise Portal will cover 100

sales field employees, 350 dealers in the first phase and the remaining will be covered in second

phase. The dealer portal, in addition to operating information, provides access to unstructured

information like news items, new product releases, new product introduction, dealer discussion

groups, internal market-place, etc.


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SWOT Analysis

Strength:

Technical expertise, in collaboration with Kawasaki Heavy Industries, Japan. Worlds lowest cost manufactures in the market. Extensive service and dealer networks. Higher labor productivity and greater automation. Global-scale production. Lined up a range of 17 two wheelers covering the entire spectrum from motorcycles to

scooters.

Weaknesses:

In the late seventies there was skid in production due to intermittent labor problems. Underutilization of capacity. Not considered living with times.

Opportunities:

Launching of new products and variants of existing models backed up by appropriatemarketing efforts.

Fuel efficiency which is much higher than competitors. Virtual zero maintenance among the products. Bajaj plans to offer CNG models with euro-II compliant. Focusing more on motorcycles to capture the urban market.


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Threats:

Hero Honda's switch start automatic transmission 100cc scooter. Competition from MNC's. Government regulations. Dealers not adjusted with changing realities. Change in tastes of consumers. Increase of secondary or resale market for two-wheelers.

International Marketing

Based on our own brand of globalization, we have built our distribution network over 60

countries worldwide and multiplied our exports from 1% of total turnover in Fiscal 1989-90 to

over 5% in Fiscal 1996-97.

The countries where our products have a large market are USA, Argentina, Colombia, Peru,

Bangladesh, Sri Lanka, Italy, Sweden, Germany, Iran and Egypt. Bajaj leads Colombia with 65%

of the scooter market, in Uruguay with 30% of the motorcycle market and in Bangladesh with

95% of the three-wheeler market.


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Several new models are being developed specifically for global markets and with these we will

progressively endeavor to establish our presence in Europe too.

In countries where we perceive a good market potential, we seek a tie up with one of the major

industrial establishments, which would be in a position to invest in the project and which would

also entail manufacturing activities apart from marketing, distribution and after sales services

through a well-established nation-wide network.

We offer a full range of services to such business partners:

Training in sales, service and spare parts management based on the Bajaj distributionsystem.

Active supports for setting up manufacturing facilities overseas including transfer oftechnical knowhow.

Assistance in setting up an assembly plant for assembly of vehicles from completeknocked down (CKD) kits.

Select machinery and equipment, training of technical personnel, all in a phased manneras required by the regulations in the recipient country.

Production and Operation Research

R&D Objectives and Set-up


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The objective of Bajaj Auto's R&D is to contribute towards making life a better experience for

society as a whole. At Bajaj Auto, we intend to achieve this objective by giving priority to

environmental concerns, which include minimizing toxic emissions and optimizing the use of

natural resources while also keeping in mind the exact requirements of the customers in a fast

changing world racing towards modernization.

We intend to use R&D not only to develop products better and

faster, but to also evolve technologies that are eco-friendly, more

fuel-efficient and cost effective.

Our strength in R&D comprises 500 dedicated professionals who work as team members on a

platform concept. These platforms comprise of engineers skilled in product engineering,

manufacturing engineering, component development, project management and quality assurance.

The primary objective of these platforms is to develop newer, better, more efficient and lesspolluting vehicles for both the Indian and International market.

Our foreign technology partners, like Kawasaki, Kubota and Tokyo R&D, collaborate closely

with the platform teams, with transfer of the latest technology and R&D assistance. Our designs

are also subjected to an exacting and critical assessment from our technology partners.

Total Quality Management

The core competency of Bajaj Auto lies in the quality provided to the customers.


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At Bajaj, they are committed to high quality standards with a motive for productivity behind it.

They believe that poor quality is the greatest productivity deterrent of all.

The constant drive for perfection and the single-minded pursuit of excellence of the employees

makes Bajaj one of the largest manufacturers of two and three-wheelers and gives it the

resilience to take on competition from the world's biggest players. This commitment starts with

the top management and extends to every worker on the shop floor.

The phenomenal growth in volumes, profitability and market share, year after year, has been

possible only because every aspect of the operations is managed to perfection through effective

management systems, HRD initiatives and quality assurance and control.

At Bajaj, products are more than just a process output. They are an expression of creative and

innovative energies, in which technology plays a passionate role. And in the midst of all this,

Bajaj has never lost sight of the human factor. Acutely tuned to lifestyles and social conditions,

Bajaj engineers are trained to develop products that precisely match consumer needs.

The Process:

The process of achieving such high levels of quality begins at the product development stage

itself and continues right up to the time the vehicle stands gleaming in a dealer showroom.


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During the elaborate development procedure, prototypes over three different stages are subjected

to a battery of laboratory and field tests. Besides supervising the pre-production process, Quality

Assurance lays down norms for their vendor force.

The close interaction ensures that agreed quality levels are unfailingly maintained on the shop

floor, mistakes are not rectified- they are prevented. Cell members conduct a scrupulous self-

inspection of components while Quality Control experts measure and improve manufacturing

processes, through the application of statistical tools.

Every engine and transmission assembly, and finally every vehicle goes through a series of static

and dynamic product verification checks by 'Quality Control' before clearance for dispatch to the

dealers.

The process of quality control is extended to its dealerships and sales and service outlets, where

every dealer conducts an extensive pre-delivery inspection before a vehicle is delivered to a

customer. Workshops are manned by skilled company-trained mechanics and equipped with

appropriate tools, testing facilities and adequate stocks of spare parts.

The determined effort to optimize employee output has led to the adoption of the unique V1-V10

system of cellular manufacture. This model calls for a continuous minimization of all inputs -

space, men, material, and equipment - to achieve the same level of output.

Results:

Results have been creditable. Manpower productivity measured in terms of number of vehicle

per man-year has grown by 88% in this decade alone. More significantly, the increase in capacity

at Bajaj in recent years has been largely due to a surge in productivity rather than a rise in

investment.


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Quality Management:

ISO 9002 Certificate awarded by the Bureau Veritas Quality International (BVQI), to the Moped

and Motorcycle Division of the Company at Waluj, Aurangabad, in December 1994.

ISO 14001 Certificate awarded by the Bureau Veritas Quality International (BVQI) to the

Company's Plant at Waluj, Aurangabad, in August 1997.

Current Strategies Suggested

Bajaj auto must come out with new models in 2 and 3-wheeler segment to sustain itsmarket share in the comparative domestic market.

Bajaj auto should tighten up the supply chain mechanism and gearing up of thedistribution system. It is advised also Bajaj auto to take steps for cutting costs, especially

overheads including salaries.

It should increase focus on its 5 different products- scooters, motorcycles, step- thruscooters, scooterettes & 3 wheelers-from productions to dealers front.

Bajaj should strengthen its marketing and sales department by creating a separate teamfor different products in the coming months.

Stung by the declining scooter sales, Bajaj auto should undertake a portfolio re-shufflesexercise by which the motorcycles division will be main growth vehicle of the company.

It should gear up towards improving its productivity levels and they should be able todouble the output with the current workforce.

There is a need for greater decentralization at the plant level to ensure that each workeradds value.

In a bid to cut costs, the company should work towards in pushing up indigenization forits 2-wheeler models and reduce waste at the factory level. It should also work in tandem

with vendors to identify for bringing down the cost at the latter's end.


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Bajaj auto has started a component procurement and product development restructuringexercise called 'Scorpio'. This will reduce the company's inventory levels and cut the

vendor base by half.

Cost/Price Monitoring

Bajaj should concentrate more at reducing the costs and thereby translate this in the price of the

vehicle. The cost if controlled shall help it in competing against competitions. Bajaj is about to

launch its chopper style Eliminator motorcycle. It has been successful to a certain extent in

reducing the costs at its Akurdi plant, and this needs to be done for the Waluj plant as well.

Technological Up-Gradation

Bajaj should plan to upgrade its technical performance with a manufacturer who has the desired

expertise and the technology for making the power bikes. New players like Kinetic Engineering

and Kanpur based LML are coming into the picture and the competition is bound to increase. Insuch a scenario the company should be proactive rather than being reactive.


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HERO GROUP

Profile of the Company

"Hero", the brand name symbolizing the steely ambition of the Munjal brothers, came into being

in the year 1956. From a modest manufacturer of bicycle components in the early 1940's to the

world's largest bicycle manufacturer today, the odyssey was fueled by one vision - to build long-


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lasting relationships with everyone, including workers, dealers and vendors. This philosophy has

paid rich dividends through the years.

Management

Chairman Mr. Brijmohan Lall Munjal

Managing Director Mr. Pawan Munjal

Joint Managing Director Mr. Akio Kazausa

Director Mr. Shinichi Nakayama

Director Mr. Satyanand Munjal

Director Mr. Om Prakash Munjal

Director Mr. M P Wadhawan

Director Mr. S P Virmani

Director Mr. O P Gupta

Director Mr. M. Sudo

Director Mr. S Toshida

Director Mr. N. N.Vohara

Director Mr. Pradeep Dinodia

Director Gen. (Retd.) V P Malik


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Consolidated Family Business

The Hero Group is a strong family business - there is no other Group that has so successfully

managed to stay together for over 40 years. The system is to bring in any new family member,

coming of age, within the fold of the existing business or set him up in a new business. The third

generation is already actively involved in existing as well as the new initiatives within the Group.

The second and the third generations of the family, aided by workers who typify the hardy spirit

of the Punjab, are consolidating the Groups future with the same zeal.

Hero, a name synonymous with two wheelers in India is today a multi-unit, multi-product,

geographically diversified Group of companies. Through fully integrated operations, the Munjals

roll their own steel, make critical components such as free wheels for their bicycles, and have the

foresight to simultaneously diversify into myriad ventures, like product designing, IT enabled

services, finance and insurance, just to name a few.

Like every success story, Hero's saga contains an element of spirit and enterprise; ofachievement through grit and determination, coupled with vision and meticulous planning.

Throughout its success trail, the Hero Group and its members have displayed unwavering

passion of setting higher standards for themselves and delivering simply the best to their

customers.

The Hero Group philosophy is: "To provide excellent transportation to the common man at

easily affordable prices and to provide total satisfaction in all its spheres of activity." Thus apart

from being customer-centric, the Hero Group also provides its employees with a fine quality of

life and its business associates with a total sense of belonging.


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"Engineering Satisfaction" is the prime motive of the Hero Group and it has become a way of life

and a part of the work culture of the Group. This is what drives the Group to seek newer vistas,

adopt faster technology and create quality driven products to the utmost satisfaction of

customers, partners, dealers and vendors.

Today the Hero Group has a number of accolades and achievements to its credit, yet consumer

requirements and newer technologies provide fresh challenges every day and at Hero the wheels

of progress continue to turn.

Glorious History

The Legend of Hero

What started out as a Joint Venture between Hero Group, the world's largest bicycle

manufacturers and the Hero Motor Company of Japan, has today become the World's single

largest two wheeler Company. Started with the initial investment of Rs.55 crores, it came into

existence on January 19, 1984. Hero 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


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the trust of over 5 million customers, the Hero Honda product range today commands a market

share of 50% making it a veritable giant in the industry. Add to that technological excellence, an

expansive dealer network, and reliable after sales service and you have one of the most

customer- friendly companies.

T h i s i s p r o v e d b y t h e

c o m p a n y ' s s a l e s o v e r t h e

y e a r s

1985-86 43,000 units

1989-90 96,200 units

1998-99 5, 30,600 units

1999-00 7, 61,210 units

2000-01 10, 29,555 units

2001-02 14, 25,195 units

2002-03 16, 77,537 units

2003-04 20, 70,147 units

Mission Statement

We at Hero Honda are continuously striving for synergy between technology, systems, and

human resources to provide products and services that meet the quality, performance and price

aspirations of the customers. While doing so we maintain the highest standards of ethics and

societal responsibilities. Constantly innovate products and processes, and develop teams that

keep the momentum going to take the company to excellence in the new millennium.


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Its Vision

Its our mission to strive for synergy between technology, systems and human resources, to

produce products and services."

Brijmohan Lall Munjal - Chairman Hero Group.

Achievements and Awards

1990:

Pegasus Award from Readers Digest for campaigning 'One Liter Road'.

1991:

Economic Times-Harvard Business School Award for Excellent Governance to HeroHonda Motors Ltd.

Hero Honda moved into India's Top 100 Companies - Ranked 87.

1992

Honorary Membership - Indian Institution of Industrial Engineering.


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1994:

The Businessman of the Year award is conferred upon the Chairman, Mr. BrijmohanLall Munjal - by Business India Group of Publications.

1995:

National Award for Outstanding contribution to the Development of Indian Small ScaleIndustry (NSIC Award - Presented by President of India).

The Analyst Award 1995 presented to Hero Honda Motors Limited on being ranked 9thamongst the most investor rewarding Companies in India.

1996:

Hero Honda becomes first company to server Army, Navy & Air Force with its 100ccmotorcycles.

1997:

Distinguished Entrepreneurship Award conferred upon the Chairman Mr. Brijmohan LallMunjal by, PHD Chamber of Commerce & industry.

1998:

Business Leader of the Year conferred upon the Chairman, Mr. Brijmohan Lall Munjal,by Business Baron.

1999:

Best Productivity Award for the best performance in Automobile & Tractor Sector byNational Productivity Council presented by Vice President of India.

2000:

Splendor declared World No. 1 - largest selling single two-wheeler model.


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Sir Jahangir Ghandi Medal for Industrial Peace conferred upon the Chairman, Mr.Brijmohan Lall Munjal, by XLRI, Jamshedpur.

2001:

Bike Maker of the Year, by Overdrive Magazine. Winner of the Review 200 - Asia's Leading Companies Award (9th Rank amongst top 10

Indian Companies).

Entrepreneur of the Year Award conferred upon the Chairman, Mr. Brijmohan LallMunjal, by Ernst & Young.

Three Leaves Award for Environment to Hero Honda by Centre for Social &Environment Green Rating Project.

2002:

Bike Maker of the Year, by Overdrive Magazine. Winner of the Review 200 - Asias Leading Companies Award (4th Rank amongst top 10

Indian Companies)

Entrepreneur of the Year Award conferred upon on the Chairman, Mr. Brijmohan LallMunjal, by Business Standard.

Company of the Year for Corporate Excellence, by the Economic Times.

Giants International Award to the Chairman, Mr. Brijmohan Lall Munjal, in the field ofBusiness & Industry.

Business Leadership Award conferred upon on the Chairman, Mr. Brijmohan LallMunjal, by Madras Management Association.

2003:

Winner of the Review 200 - Asia's Leading Companies Award (3rd Rank amongst thetop 10 Indian Companies).

Most Respected Company in Automobile Sector, by Business World. Bike Maker of the Year by Overdrive Magazine.


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Areas of Management

Hero Group > Growth Models

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:

Inventory Control


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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.

Purchase Policy

80% of the components in the manufacturing of a bike today are outsourced to the vendors.

Those vendors are located in the vicinity of the plants and company is moving towards full

employment of Just In Time policy wherein the components arrive, just before they are

required to be installed on the bikes, resulting in substantial savings in terms of inventory costs.

Most vendors supply the components & HHML shares a very nice relationship with the vendors.

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. The raw material vendors

bring in the goods get paid instantly and by the end of the day the finished product is rolled outof the factory. 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.


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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'srequirements and also a large number of other vendors, which include some of the better-known

companies in the automotive segment.

The Munjal have gone much beyond the conventional definition of ancillarisation, making it a

point to extend technical and managerial support to these ancillaries. These ancillary units are

manned by friends, relatives, ex-employees or close associates of the Munjal family since the

Group patriarch, Mr. Brijmohan Lall, " never wanted to march alone."

Employee Policy

Another Striking feature within the Hero Group is the commitment and dedication of its workers.

At Hero Cycles Limited, the flagship unit of the Group it is claimed that except for a few days

during Operation Bluestar, the plant has never had any stoppage of work. 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 employeesa 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.

Financial Planning


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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 Honda Motors Limited, the focus is on

financial and raw material management and a low employee turnover.

Diversification

Throughout the years of mammoth growth, the Group Chairman, Mr. Lall has actively looked at

diversification. A significant level of backward integration in its manufacturing activities has

been substantial 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 that introduced Hero Puch, in collaboration withglobal technology leader Steyr Daimler Puch of Austria. Hero Honda Motors was established in

1984 to manufacture 100 cc motorcycles.

The Munjal also took a foray 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.

In Conclusion

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 an ethos of


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entrepreneurship, of right attitudes and building stronger relationships with investors, partners,

vendors and dealers and customers.

Marketing Ps

A) Product & Price:

Hero Honda

CD 100 42,616 CD 100 SS 43,218 Splendor 45,778 Splendor (Disc) 48,741 CBZ (Disc) 59,225 CBZ (Self) 65,193 CD Dawn 35,217 Karizma 76,219 Ambition (Disc) 56,793 Ambition (Drum) 53,580 Ambition 135 (Drum) 50,170 Ambition 135 (DrumSelf) 53,580 Splendor + (Disc) 49,034 Splendor + (Drum) 46,352 Passion + (Disc) 50,883


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Passion + (Drum) 47,931 CBZ Star 59,196

Hero Motors

Smart 23,256 Sting 26,615 E Zee SX 27,407

Product Range and New Models

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

in the world with over 6.9 lakhs vehicles sold in 2000-01. A cumulative over 5 million customers

are the real foundation of the company's strength.

The identity of Hero Motors in the market has been established through two of its leading

international products - Hero Puch and Hero Winner. When Hero Motors entered into a technical

collaboration with Steyr Daimler Puch of Austria, Hero Puch was born which marked a new

chapter in the two-wheeler scenario of the country. Hero Puch, the mini-motorcycle designed by

Ferdinand Porsche combined the power (4.15 bhp) and ease of a motorcycle and at 91 km/hr, the

economy of a moped.


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A.PlaceDealer Network

At Hero essentially they have a completely customer-driven approach. A nation-wide dealer

network comprising of over 3,500 bicycle dealers, 350 dealers for mopeds and 225 franchise

holders for motorcycles, ensures convenient access to the Group's products across the

country.

Strong dealer company relationship with a deep sense of belonging to the Hero fraternity, the

Group's dealer network has catalyzed growth and acted as a strong bridge between the

customers and the Group.

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.

There are more than 1000 committed dealers & service outlets spread across the country. The

authorized workshop have well laid out standards for motorcycle servicing supported by fully

equipped infrastructure in terms of quality precision instruments, pneumatic tools & a team

of highly trained service technicians. Having your motorcycle serviced at an authorized

workshop ensures highest standards of service quality and reliability.


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B.Promotion

HHML is an organization, which is known for its innovative & Aggressive Marketing.

Rs.120 crores was the Annual budget for market for the financial year 2002-2003. All the

mediums are used extensively, be it print or mass media like T.V & hoardings.

HHML also promotes sports in the country. It is also the sponsor of the ICC world Cup 2003

and half of the Indian team represents Hero Honda. Those players are Virender Sehwag,

Mohammad Kaif, Yuvraj Singh, Harbhajan Singh, Zaheer Khan and Sourav Ganguly as

Brand Ambassadors. Superstar Hrithik Roshan is also a Brand Ambassador for Hero Honda

Company. They will endorse

two wheeler marketing in india

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