Marketing questionnaire for Hero Honda

Hero Honda

MARKETING AND ITS CONCEPTS Marketing is more than any other business function that deals with customers. Creating customer value and satisfaction are at the very heart of modern marketing thinking and practice.

The Marketing discipline is

undergoing fresh reappraisal in the light of the vast global, technological, economic, and social challenges facing today’s companies. Mass markets are fragmenting into micro markets, multi-distribution channels are replacing single channels;

customers

are

buying

directly

through

catalogues,

telemarketing, and home video shopping; price discounting and sales promotion are rampant and are eroding brand loyalty; conventional advertising media are delivering less and costing more.

The marketing discipline is

redeveloping its assumptions, concepts, skills, tools and systems for making sound business decisions. Marketing is the delivery of customer satisfaction of a profit. The goal of marketing is to attract new customers by promising superior value, and to keep current customers by delivering satisfaction. Today, marketing must be understood not in the old sense of making a sale “telling and selling” but in the new sense of satisfying customer needs. Peter drucker, a leading management thinker has put it in this way. The aim of marketing is to make selling super flows. The aim is to know and understand the customer so that the product or service fits and sells it. Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging product and value with others.

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Hero Honda CONSUMER BEHAVIOUR: The term consumer behavior refers to the behaviour that consumer display in searching for purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs. The study of consumer behaviour is the study of how individuals make decision to spend their available resource (time, money, effort) on consumption related items. It they buy it, where they buy it, how often they buy it, and how often they use it. Thus, a successful marketer must have a proper understanding of consumer behaviour in order to attract and retain the customers. It enables him to think logically and device strategy that would help him to close the gap between customers and company. One such imp. Aspect that influences a consumer’s purchase decision is the consumer’s decision-making process.

CUSTOMER DECISION MAKING PROCESS External Influences CHARACTERISTICS AFFECTING CONSUMER BEHAVIOUR Cultural Culture Sub culture Social class

Social Reference group

Personal Psychological Age & life cycle Motivation

Family Roles & status

stage Occupation Perception Learning Economic Situation Belief & attitudes life cycle

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Hero Honda CUSTOMER SATISFACTION Every company’s first task is “to create customers” towards this end it strives. But on the other hand, customers face a vast array of products and brand choices, prices and suppliers. It therefore becomes a major task for customers to opt for the right seller. It is believed that customers estimate which offer will deliver the most value. Customers are value maximizes, within bounds of search costs and limited knowledge, mobility & income. They form an expectation of value and act on it. Whichever or not the offer lives up to the value expectation affects both satisfaction & repurchase probability. Customer perceived value: Our premise is that customers will buy from the firm that they see as offering the highest perceived value (CPV) is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives. Total customer value is the perceived monetary value of the bundle of economic, functional, and psychological benefits customers expect from a given market offering. Total customer cost is the bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the given market offering. Delivering customer value and satisfaction: In a hyper competitive economy with increasingly rational buyers, a company can only win by creating and delivering superior value.

This

involves the following five capabilities: understanding customer value; delivering customer value; capturing customer value; and sustaining customer value. To succeed, a company needs to use the concepts of a value chain and a value – delivery network.

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Hero Honda Value Chain: Michael Porter of Harvard proposed the value chain as a tool for identifying ways to create more customer value. Every firm is a synthesis of activities that are performed to design, produce, and market, deliver and support its product.

The value chain identifies nine strategically relevant

activities that create value and cost in a specific business. These nine valuecreating activities consist of five primary activities and four support activities. The firm’s task is to examine its costs and performance in each valuecreating activity and to look for ways to improve it. The firm should estimate its competitor’s cost and performances as benchmarks against which to compare its own costs and performances. It should go further and study the “best of class” practices of the world’s best companies.

The firm’s success

depends not only on how well each department performs its work, but also on how well the various departmental activities are coordinated.

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Hero Honda

Customer Delivered value

Total customer Value

Total customer Cost

Product Value

Monetary Cost

Services Value

Time Cost

Personal Value

Energy Cost

Image Value

Psychic Cost

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Hero Honda Attracting and retaining customers: Today companies are intent on developing stronger bond with their customers called relationship management (CRM). This is the process of managing detailed information about individual customers and carefully managing all the customer “touch points” with the aim of maximizing customer loyalty. Attracting Customers Today’s customers are becoming harder to please. They are smarter, many more competitors with equal or better offers approach more price conscious, more demanding, less forgiving, and them.

The challenge,

according to Jeffrey Gitomer, is to induce and delight loyal customers. It is not enough to be skillful in attracting new customers; the company must keep them and increase their business. Too many companies suffer from high Customer churns namely, high customer defection. There are steps a company can take to reduce the defection rate. First, the company must define and measure its retention rate. For a magazine the renewal rate is a good measure of retention.

Second, the company must

distinguish the causes of customer’s attrition and identify those that can be managed better. Third, the company needs to estimate how much profit it loses when it loses customers. In the case of an individual customer, the lost profits is equal to the customer’s Lifetime value—that is, the present value of the profit stream that the company would have realized if the customer had not defected prematurely.

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Hero Honda Fourth, the company needs to figure out how much it would cost to reduce the defection rate. As long as the cost is less than the lost profit, the company should spend the money.

Customer retention: Most marketing theory and practice centers on the art of attracting new customers rather than on retaining and cultivating existing ones. The emphasis traditionally has been on making sales rather than building relationships; on preselling and selling rather than caring for the customer afterward.

A

company would be wise to measure customer satisfaction regularly, because the key to customer retention is customer satisfaction. A highly satisfied customer stays loyal longer, buys more as the company introduces new products and upgrades existing products, talks favorably about the company and its products, pays less attention to competing brands and is less sensitive to price, offers product or service ideas to the company, and cost less to serve than new customers because transactions are routine. Today, more companies are recognizing the importance of satisfying and retaining customers. Satisfied customers constitute the company’s relationship capital. If the company were to be sold, the acquiring company would have to pay not only for the plant and equipment and the brand name, but also for the delivered customer base, namely, the number and value of the customers who would do business with the new firm.

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Hero Honda

Total Customer Satisfaction: In general, satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectations. If the performance matches the expectations, the customer is satisfied.

If the performance exceeds

expectations, the customer is highly satisfied or delighted. At a very low level of customer satisfaction (level one), customers are likely to abandon the company.

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Hero Honda INTRODUCTION Planning for the future to achieve the long-term objective is integral to the survival and growth of every business. Strategic planning today has to take into cognizance the rapid changes in technology, increased competitiveness and the turbulent business environment, also with the world becoming one big global village. Strategy covers every aspect of business from business reengineering, new business development, product development and brand positioning to advertisements promotional campaigns, media and publicity. It is a game of innovation. In fact, marketing people are involved in marketing 10 types of entities; goods, services, experience, events, persons, places, properties, organizations, information and ideas. Marketing management is the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value. India is second largest manufacturer and producer of two-wheelers in the world. It stands next to Japan and China in terms of the number of two wheelers produced and domestic sales respectively. Indian two-wheelers industry made small beginning in early 50’s when Automobile products of India (API) started manufacturing scooter in India. Hero Honda was established on 13th of April 1984. The Indian two wheelers Industry

can

be

mopeds/scooterette.

broadly

classified

as

scooter,

motorcycles

and

In last six years domestic two-wheelers has seen

structural charges. This can be seen from the change in composition of two 9 P.A.S. College

Hero Honda wheeler sales, where the motorcycles have gained market share from the scooter and moped or scooterette segments. The Hero group of companies in India merged with the Honda Motor Company of Japan in creating a No.1 mantle in the making of the company Hero Honda. Hero Honda began operations with the establishment of the Dharuhera plant in 1985. This fully automated plant is equipped with state-ofthe-art machinery, in-house R&D set up, and today it produces a bike every 30 seconds. To meet the growing demand, Hero Honda opened another unit at Gurgaon, using FMS technology.

It is rated as one of the most modern

motorcycle manufacturing plants in the world. The plant produces 1,800 bikes everyday. The Indo-Japanese motorcycles segment dominated by Hero group, Bajaj and Escorts in collaboration with Japanese vehicle manufacturers Honda, Kawasaki and Yamaha respectively. The primary reason for growth of two-wheelers market is attributed to the fact that Indians, especially in the rural and semi urban areas retrying to change life style and people in metropolitan cities are completely disappointed with the public transportation. So, there is tremendous growth in the two-wheeler segment.

Two

wheeler segments of automobiles started with bicycles and diversified into scooters and as the man started looking for style, comfort, speed, power etc. Motor Cycles came into the picture. The motorcycle market in the present world like any other market place is a crowded one, with many sellers competing with each other to attract the same customer.

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Hero Honda Hero Honda, the world’s number .1 bikes have started in early 80’s. The brand image, quality maintenance, mileage and the style of the vehicle attracted a large number of customers and thus made it as the No.1 bike. The consumer is now faced with proliferation of brand models. Getting new customers as well as retaining them is an important task of manufacturers. So service after sales is very important. A satisfied customer brings in more name and goodwill to the company, which is why customer satisfaction is given more importance in today’s competitive world. A study on this aspect with Hero Honda two-wheelers at Hero Honda Motors Ltd was made.

NEED FOR THE STUDY Marketing starts with identifying the needs of customers and ends in satisfying those wants. The goal of marketing is to attract new customers by promising superior value and to keep current customers by delivering satisfaction based on their preferences retaining them. Without customer, no market exists. As the customers are regarded as the superiors in today’s market, the level of satisfaction and their preferences should be keenly studied. The two-wheeler industry has been expanding rapidly.

Gone are the

days when possessing a two-wheeler was seen as a luxury. Now days, it is viewed as a mere necessity. Prior, sale of two-wheelers was mainly confined to urban areas but lately in rural areas the bicycles are being replaced by power driven two-wheelers such as scooters, motorcycles.

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Hero Honda Not only this, this industry has also customers ranging from all demographic segments. It has been common sights that even school going children are driving two-wheelers. The women customers are also increasing due to increase in women literacy and employment. Getting a new customer is difficult, than retaining a current customer is a more difficult one and not only that it is estimated that the cost of attracting a new customer is five times the cost of retaining current customer. It requires a great deal of effort to induce satisfied customer to switch away from their current preference. Thus, customer satisfaction is been given top priority in today’s competitive world. Therefore, keeping the above stated objective in mind, this study was conducted to ascertain the customer’s satisfaction towards Hero Honda twowheelers in Hero Honda Motors Ltd. In view of this, a detailed study of customer preferences, levels of satisfaction and their complaints and suggestions was undertaken. OBJECTIVES This study was conducted keeping the following objectives in mind. 1. To study the factors which influence the purchase of Hero Honda twowheelers? 2. To know the customer level of awareness of Hero Honda two-wheelers. 3. To know the various factors, which influence customers in purchasing, they’re two - wheelers? 4. To find the after sales service offered by Hero Honda Motors Ltd. 5. To know the customer level of satisfaction of Hero Honda two-wheelers with respect to Hero Honda Motors Ltd. 6. To find the profile of Hero Honda two-wheeler customers.

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Hero Honda METHODOLOGY OF THE STUDY The information required for this study obtained was basically through two sources. Primary Data: Primary Data has been gathered by a survey through a structured questionnaire. The

Data

has

been

collected

from

100

customers,

through

questionnaires, by using simple random sampling. In addition interaction with the staff of Hero Honda Motors Ltd has also given some information. Secondary Data: Secondary Data comprises of information obtained from annual reports, brochures, manuals websites etc. LIMITATIONS I have observed the following limitations in the course of my study. 1. The areas which were selected were limited only to Hyderabad i.e., the

findings are regional and do not represent the state or country. 2. Time constraints hampered the study. 3. Since the study involved in gathering information was from upper to

higher-middle class people, interaction with them became difficult. 4. There may be respondent’s bias. 5. Even though utmost care has been taken in conducting the survey, the

findings may sometimes differ from the population.

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Hero Honda INDUSTRY PROFILE

The Indian two-wheeler contributes the largest volume 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 e.g. scooterettes and step-thru. The market primarily comprises five players in the two-wheelers segment with the most of the companies having foreign collaboration with well-known Japanese firms earlier. But most of the companies are now planning 100% subsidiaries in India. Two Wheeler & its role in Indian Context: As the cities grow & suburbs expand, transportation needs becoming more & more acute, with mounting pressure on its public transportation for which two wheelers are ideal. The two-wheeler Industry today has a significant role in the Indian economy, with an annual turnover of Rs. 9000 crores and compounded average growth of 10%. In recent years, it is of the few industrial sectors in the growth phase today considers personal transportation as one of the basic needs. The two-wheeler industry basically comprises mopeds, scooters, scooterettes and motorcycles. Mopeds are basic entry-level products aimed at lower/middle income groups, offering company. This category dominated by TVS SUZUKI, which has a market share of 50% today. The other major players in this segment include KINETIC ENGG., HERO MOTORS and BAJAJ AUTO. Scooters, which found largest segment in the industry (37 percent) is dominated by BAJAJ AUTO. It is however facing stiff competition from 14 P.A.S. College

Hero Honda LML, which offers better style and technology to the Indian customers. However, dominance of this category has been declining because of shift in the customer preferences. Major part of the growth in the two-wheeler industry has come from motorcycle especially, the Indo-Japanese 100cc motorcycles, which are considered fuel efficient, reliable and suited for rough roads. Scooterettes also growing at a fast phase and are being increasingly perceived as a better option providing convenience and motor style, by urban customers. In this category, TVS Scooty holds a dominant market share. With sales of over three million vehicles, India is the second largest twowheeler market in the world. Vehicle has become a necessity for day-to-day busy life, with the accelerated industrial and business activity in a liberalized environment. However, given the limited purchasing power and to high cost of cars, majority of the middle class vehicle users prefer two wheelers. With sales of over million vehicles, India is the second largest twowheelers market in the world. China is the market leader with around 51 percent of the Asia Market, India, Thailand; Indonesia & Taiwan are the other key markets for two-wheelers with market share of 19 percent, 10 percent, 9 percent and 5 percent respectively. In the last four to five years, the two-wheeler market has witnessed a market 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 58%, the share of scooters declined drastically from 33% to 25%, while that of mopeds declined by 2% from 19% to 17% during the year 2000-01. The Euro emission norms effective from April 2000 led to the existing players 15 P.A.S. College

Hero Honda 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. Fierce competition has also forced players to cut prices of certain models. Competition has intensified over the last couple of years altering the dynamics in the motorcycle segment with various companies planning to cash in on this spurt in demand by calling off their JVs like Suzuki Motors planning to break off with TVS. 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 and Escorts Yamaha. Low interest regime has helped in reducing cost of loans, which will help in boosting sales of 2wheelers, since 80% of the two-wheelers are credit –stimulated. The two-wheeler industry is passing through a critical but interesting phase. For many years, it was growing continuously but the turning point came in 1996=97 when it started slowing down. The impact was really (MI) felt in the next year when the overall growth was hardly two percent. This was also possible only because the motorcycle segment showed a healthy growth of 15 percent. The scooter segment went down by 3 percent and mopeds by 6 percent. Another highlights are that the motorcycle sales have surpassed the scooter sales for the first time in 1998-99. Until then, motorcycle sales were always trailing behind. The net result is that motorcycles now account for 41 percent of the twowheeler market, while scooters account for 36 percent. Mopeds have been able to hold their own at about 21 percent. 16 P.A.S. College

Hero Honda GROWTH MOTORCYCLES It is therefore not surprising that every major player is trying to get into the Motorcycle market to have a piece of the cake. Hero Honda is indisputable the leader with 38 percent share followed by Bajaj with 27 percent (includes M-80), TVS at 19 percent and Escorts at 13 percent. Now LML and Kinetic have announced their plans to manufacture motorcycles, which are likely to come in the market by next year. The battle is expected to be fierce but the consumer will be the greater beneficiary. The growth in motorcycles is slowly losing its hold. It is considered a family vehicle but perhaps there is competition from the second hand car markets where prices have fallen down rapidly. A1992 Maruti 800 is now available for just 70,000. The scooter manufactures have to watch this phenomenon and bring our many new product variants in the right price slots to sustain their shares in the market. The moped market has been steady with an average growth of 3 percent. It is dominated by TVS which holds 48 percent market share followed by Kinetic and Majestic Auto at 23 percent and 18 percent respectively. In each segment, there is a wide gap between the first two contenders, which makes their products positioning and marketing strategies most interesting. The two wheelers market seems to be maturing. There are the usual their conventional segment of scooters, mopeds and motorcycles. Two new segments are being created. NEW SEGMENTS A Step is through segment like Kinetic K4-100, Honda Street, Bajaj M80, which is quite close to the motorcycle segment. The other segment is scooterettes or mini scooters in which vehicles such as Kinetic SX/Style, TVS 17 P.A.S. College

Hero Honda Scooty, Hero Winner, Bajaaj Sunny/Sprite/Saffire and LML trendy can be considered. These are vehicles under 75 cc and largely targeted at the youth market such as college students, young boys and girls and new couples. They get the advantage of lower excise duty at 16 percent as compared to 24 percent applicable over 75 cc. The trend is towards push button start vehicles. Among the majors in the two-wheeler industry, first quarter figure for the current year of some players have been encouraging. The company sold 313,303 units last month as compared to 325,360 units in the same month last year. With this, BAL has recorded as 87 percent growth in the motorcycle segment in the first quarter with sales of 130,577 units (93,631 units in the corresponding period last year) BAL estimates market share of the first quarter-Geared scooters 75.9%, unguarded scooters- 16.5%, Step-thrus-72.3% and motorcycle-20.5%. In the scooterettes segment, sales of Bajaj Sunny and Bajaj Spirit increased by 170 percent to 7,876 units. First quarter sales registered an impressive 78 percent growth with sales of 19,562 (10,995 units). The overall sales grew by 9.3 percent in the quarter when the company sold 3.24 lakh vehicles. BAL however reported a decline in sales of scooters by 15.6 percent in the first quarter. The company hopes to increase the share of motorcycle in its product basket from 18 percent last year to 30 percent by 2003-04. Hero Honda (HHL) enjoys tremendous brand equity in the motorcycle segment. Kinetic Motors, another important player, managed to grow in 19992000, when the scooters segments a whole slipped by around 5 percent. TVS Suzuki, a motor two-wheeler market, has reported a growth of 13 percent in the first quarter period and sold 2.19 lakh units. Sales of motorcycles and scooters 18 P.A.S. College

Hero Honda were up by 18 percent and that of mopeds by 8 percent over the same period last year. The current year therefore promises to be a testing time for the twowheeler industry. Industry pundits feel that an overall growth rater of 5 percent should be possible as against 9 percent projected earlier. The sales volume therefore is expected to be around 3.8 million in 2000-2001. DRAMATIC CHANGES: The new products have contributed to 25 percent of the growth and helped the producers improve their bottom line. The year 1998-99 was a year of dramatic management changes. Singhanias have taken overall control of LML with the withedrawal of piaggio. Another corporate history was created with Kinetic tasking over the management control from its Japanese partnerHonda Motor company LTD in Kinetic Honda Motors. The coming years will see increasing competition due to the parity in products and price. The only differentiators will be technology, quality, product range and service. Imaginative marketing will emphasize relationship building, customer satisfaction and relationship. All is exploring new techniques such as direct marketing and institutional sales. Some of them are taking the vehicle actually to the customers doorstep. Now the customer is the king. HISTORICAL DEVELOPMENT OF TWO WHEELER INDUSTRY India is the second largest manufacturer and producer of two-wheelers in the world. It stands next to Japan and China in terms of the number of twowheelers produced and domestic sales respectively. This distinction was achieved due to variety of reasons as if respective policy followed by the 19 P.A.S. College

Hero Honda Government of India towards the passenger car industry, rising demand for personal transport, inefficiency in the public transportation system etc., In 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 1980, it setup a shop to manufacture them in technical collaboration with Piaggio of Italy. The agreement expired in 1971. In the initial stages, API it was later overtaken by Bajaj Auto dominating the scooter segment. Although various Government and Private enterprises entered the fray for scooters, the only new player that has lasted until 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 via 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. The two-wheeler market was opened to foreign competition in the mid 80’s. And then the market leaders-E5corts and Enfield- were caught unaware by the onslaught of the 100 cc bikes of the four IndoJapanese joint ventures. With the availability of fuel-efficiency low power bikes, demand swelled resulting in Hero Honda — the only producer of four-stroke bikes (100cc category), gaining a top slot.

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Hero Honda The first Japanese motorcycles were introduced in the early eighties. TYS Suzuki and Hero Honda brought in the first two-stroke and four-stroke engine motorcycles respectively. These two players initially started with assembly of CKD kits, and later on progressed to indigenous manufacturing. In the 90’s the major growth for motorcycle segment was brought in by Japanese motorcycles, which grew at a rate Of nearly 25% CAGR in the last five years. The industry had a smooth ride in the 50’s, 60’s and70’s when the government prohibited new entries and strictly controlled capacity expansion. The industry saw a sudden growth in the 80’s. The industry witnessed a steady growth of 14% leading to a peak volume of 1.9mm 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 line with this, the scooter segment has consistently lost its part of the market share in the two~whee1er market. In 1990, the entire automobile industry saw a drastic fall in demand. This resulted in a decline of 15% in 1991 and 8% in1992, resulting in the production loss of 0.4mn vehicles. Barring Hero Honda, all the major producers suffered from recession in FY93 and FY94. Hero Honda showed a marginal decline in 1992. The reasons for recession in the sector were the incessant rise in fuel price, high input costs and reduced purchasing power due to significant rise in general price level and credit crunch in consumer financing. Factors as if increased production in 1992, due to new entrants coupled with the recession in the industry resulted in either company reporting losses or fail in profits.

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Hero Honda India is one of the very few countries manufacturing three wheelers in the world. It is the world’s largest manufacturer and seller of three wheelers. Bajaj Auto commands a monopoly in the domestic market with a market share of above 80%; Bajaj Tempo, Greaves Ltd and Scooters in India share the rest. The total number of registered two-wheelers and three-wheelers on road in India, as on March 1998 was 27.9nm and 1 .7nin respectively. The twowheeler population has almost doubled in 1996 from a base of 12.6mn in 1990. PENETRATION OF TWO-WHEELERS: On a base of around 28mn vehicles on Indian roads and around 175mn households, there were only 160 motorized two-wheelers per thousand households in FY98. This compares poorly with countries like Thailand where it is around 600 per thousand households. Also with a household size of 5.5 persons and more than one wage earner in about 60% of the households, the potential for a second vehicle demand is also good. The number of households in the low-income group has fallen since FY86 and has been more pronounced in the post-reform period. On the other hand, the number of households in the middle, upper middle and high-income groups that form the consumer base for twowheelers, have increased. Their share of the total number of households has increased from 10.6% in FY88 to 20.5% inFY96. This rising income profile however, has, been more pronounced in the urban areas as average annual growth in industry surpassed that of agriculture in the period FY93 to FY96.

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Hero Honda

COMPANY PROFILE FILL IT. SHUT IT. FORGET IT When Hero Cycles and Honda Motor Company of Japan inked their joint venture in India in April 1984, few could have imagined that the two would go on to create history and become the subject of a case study at business schools, internationally. But that's the Hero Honda saga for you. In a little over two decades, the world's largest manufacturer of bicycles and the global leader in motorcycles have created not only the world's single largest motorcycle company but also the most endearing and successful joint venture for Honda Motor Company worldwide. The company has sold over 15 million motorcycles and has consistently grown at double digits since its inception and today, every second motorcycle sold in the country is a Hero Honda. In two decades, Hero Honda has built two world-class manufacturing facilities at Dharuhera and Gurgaon in Haryana that now churn out over 3 million bikes per year. In this period, Hero Honda has set up over 2400 customer touch points, comprising a mix of dealers, service centres and stockists across rural and urban India. Today, Hero Honda is an amalgam of winning networks and relationships with internal and external stakeholders, including Investors, Dealers, Vendors and Employees. These relationships have helped the company hold on to the mantle of World No.1 for years in succession. What makes Hero Honda well, Hero Honda, is synergy. The two partners, leaders in their respective domains, have been able to consistently draw on each other's strengths. The Hero Group's deep domain knowledge of 23 P.A.S. College

Hero Honda the Indian market and its supplier network has meshed with Honda's mastery over four-stroke engine technology to create modern and fuel-efficient machines at affordable prices for India 's 250-300 million strong middle class. Progressively through the 1980s, the 1990s and now in the 2000s, Hero Honda has relied on 3 R's-- Reach, Research and Reliability as its basic building blocks. Using feedback from the market, a fully-equipped R&D center has consistently created best practices in designing, testing and harmonization, besides placing strong emphasis on road safety and ride quality. This emphasis has helped Hero Honda build products that are ahead of their time. In the 1980s, for example, 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 Honda sold millions of bikes purely on the commitment of increased mileage. Hero Honda was also one of India 's first automotive companies to get close to the customer. Over the years, feedback has flowed back and forth seamlessly through a unique CRM program - the Hero Honda Passport Program which now has over 2.5 million members on its roster. The program has not only helped Hero Honda understand its customers and deliver value at different price points, but has also created a loyal community of brand ambassadors. The best is yet to come. Hero Honda is powering its way through a market that is still to unleash its true potential, as barely two per cent of the population has been penetrated so far! 24 P.A.S. College

Hero Honda It isn't surprising that the company is in no mood to take its hand off the throttle. As Brijmohan Lall Munjal, the Chairman, Hero Honda Motors succinctly puts it, "We pioneered India's motorcycle industry, and it's our responsibility now to take the industry to the next level. We'll do all it takes to reach there.''

HERO HONDA'S MISSION

Hero Honda’s mission is to strive for synergy between technology, systems and human resources, to produce products and services that meet the quality, performance and price aspirations of its customers. At the same time maintain the highest standards of ethics and social responsibilities. This mission is what drives Hero Honda to new heights in excellence and helps the organization forge a unique and mutually beneficial relationship with all its stake holders. HERO HONDA'S MANDATE Hero Honda is a world leader because of its excellent manpower, proven management, extensive dealer network, efficient supply chain and world-class products with cutting edge technology from Honda Motor Company, Japan. The teamwork and commitment are manifested in the highest level of customer satisfaction, and this goes a long way towards reinforcing its leadership status.

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Hero Honda FROM THE CHAIRMAN'S DESK LEADING WITH A DREAM We had a dream. The dream of making motorcycles that would touch and transform the lives of our customers by giving them a mode of transport that was fuel-efficient, comfortable and environment friendly. One that would enhance their efficiency at work, enable them to share moments of joy with their families and add up to a better quality of life. In a scenario where the customer had a few choices, our vision was to offer the highest quality at a reasonable price, to meet our customer’s expectations, and to exceed them. Behind the success of Hero Honda, is the saga of team-work. We would like to acknowledge the role played by our JV partners, Honda Motor Company, Japan, and all our business associates, shareholders and employees. In the new millennium, we stand committed to innovation, to change, to achieving breakthroughs… to moving forward in the new century, while retaining the values that have been like a beacon in this journey thus far. Brijmohan Lall

Chairman

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Hero Honda ABOUT 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 27 P.A.S. College

Hero Honda 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 Honda. These relationships have survived through generations - through bad times and good times,'' the patriarch now reminiscences. Besides bonding with his vendors 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 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. 28 P.A.S. College

Hero Honda 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 cost-effective 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-for-profit 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 Honda plant, Brijmohan and his 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. 29 P.A.S. College

Hero Honda PROMINENT AWARDS AND ACCOLADES TO THE CHAIRMAN Year Awards and Accolades 2006 'Lifetime Achievement Award' for Translating Excellence in Corporate Governance into Reality by The Institute of Company Secretaries of India 2005 Indian Automotive Hall of Pride by Overdrive CNBC TV18 Commendation of Business Leadership displaying extraordinary Corporate Leadership and Entrepreneurial Spirit Padma Bhushan' by Government of India Doctor of Letters (Honoris Causa) by Hemwati Nandan Bahuguna Garhwal University , Srinagar Garhwal Lifetime Achievement Award' by ET Awards for Corporate Excellence 2004 Life Time Achievement Award for Management by All India Management Association D. Litt. (Honoris Causa) by Banaras Hindu University Lifetime Achievement Award by Amity Business School Lifetime Achievement Award by HT Power Jobs 2002 Entrepreneur of the Year Award by Business Standard Giants International Award to the Chairman in the field of Business & Industry Business Leadership Award by Madras Management Association 2001 Entrepreneur of the Year Award by Ernst & Young 2000 Sir Jehangir Ghandy Medal for Industrial Peace - by XLRI, Jamshedpur 1998 Business Leader of the Year by Business Baron 1997 Distinguished Entrepreneurship Award by PHD Chambers of Commerce & Industry 1995 National Award for outstanding contribution to the Development of Indian Small Scale Industry (NSIC Award - Presented by President of India) 1994 Businessman of the Year by Business India Group of Publications 1992 Honorary Membership - Indian Institution of Industrial Engineering Award BOARD OF DIRECTORS

30 P.A.S. College

Hero Honda No.

Name of the Directors

Designation

1

Mr. Brijmohan Lall Munjal

Chairman & Whole-time Director

2

Mr. Pawan Munjal

Managing Director

3

Mr. Toshiaki Nakagawa

Jt. Managing Director

4

Mr. Takao Eguchi

Whole-time Director

5

Mr. Satyanand Munjal

Non-executive Director

6

Mr. Om Prakash Munjal

Non-executive Director

7

Mr. Tatsuhiro Oyama

Non-executive Director

8

Mr. Masahiro Takedagawa

Non-executive Director

9

Mr. Narinder Nath Vohra

Non-executive & Independent Director

10

Mr. Pradeep Dinodia

Non-executive & Independent Director

11 12

Gen.(Retd.) Ved Prakash

Non-executive & Independent

Malik

Director

Mr. Analjit Singh

Non-executive & Independent Director

13

Dr. Pritam Singh

Non-executive & Independent Director

14

Ms. Shobhana Bhartia

Non-executive & Independent Director

15

Dr. Vijay Laxman Kelkar

Non-executive & Independent Director

16

Mr. Sunil Bharti Mittal

Non-executive & Independent Director

CODE OF CONDUCT

FOR DIRECTORS AND SENIOR MANAGEMENT 1. INTRODUCTION

This Code of Conduct has been adopted by the Board of Directors of Hero Honda Motors Limited for its members and the Senior executives one level below, the Directors, including all functional heads (hereinafter referred to as "Specified employee"). 31 P.A.S. College

Hero Honda There are certain clauses of the Code, which are meant for Directors only such as attending meetings of the Board and Committee thereof. The Specified employees need to ignore such clauses. The principal duty of the Board of Directors, along with management, is to ensure that the Company is well managed in the interests of its shareholders. The Board of Directors plays the central role in the Company's governance. It is the Company's decision-making authority on all matters except those reserved to shareholders or delegated to the management. The Board of Directors is not expected to assume an active role in the day-to-day management of the Company.

I.

GUIDELINES FOR CONDUCT Each director and Specified Employees seek to use due care in the

performance of his/her duties, be loyal to the Company, act in good faith and in a manner such Director and Specified employee reasonably believes to be not opposed to the best interests of the Company. A Director and Specified employee should seek to also:

•

Make reasonable efforts to attend Board and committee meetings;

•

Dedicate time and attention to the Company;

•

Comply with all applicable laws, regulations, confidentiality obligations

and corporate policies of the Company; and be independent in judgement and actions and to take all reasonable steps to be satisfied as to the soundness of all decisions taken by the Board of Directors II.

CORPORATE BUSINESS OPPORTUNITIES

32 P.A.S. College

Hero Honda In carrying out their duties and responsibilities, Directors and Specified employees should avoid: •

Appropriating corporate business opportunities for themselves that are discovered through the use of Company property or information or their position as Directors and Specified employees;

•

Using Company property or information, or their position as Director and Specified employees, for personal gain; and competing with the Company.

A corporate business opportunity is an opportunity: 1. Which is in the Company's line of business or proposed expansion or diversification, 2. Which the Company is financially able to undertake and 3. Which may be of interest to the Company. A Director and Specified employee, who learns of such a corporate business opportunity and who wishes to avail of, it should disclose such opportunity to the Company's Board of Directors. If the Board of Directors determines that the Company does not have an actual or expected interest in such opportunity, then, and only then, may the Director and Specified employee avail of it, provided that the Director and Specified employee has not wrongfully utilized the Company's resources in order to acquire such opportunity IV. CONFLICTS OF INTEREST •

Each Director and Specified employee should endeavor to avoid having

his or her private interests interfere with: i) the interests of the Company or

33 P.A.S. College

Hero Honda ii) his or her ability to perform his or her duties and responsibilities objectively and effectively. •

They should avoid receiving, or permitting members of their immediate

family to receive, improper personal benefits from the Company, including loans from or guarantees of obligations by the Company, except as may be provided in their employment contract. •

They should make a full disclosure to the entire Board of any transaction

or relationship that such a Director and Specified employee reasonably expects could give rise to an actual conflict of interest with the Company and seek the Board's authorization to pursue such transactions or relationships. III.

COMPANY PROPERTY In carrying out their duties and responsibilities, Directors and Specified

employees should endeavor to ensure that management is causing the Company's assets, proprietary information and resources to be used by the Company and its employees only for legitimate business purposes of the Company.

34 P.A.S. College

Hero Honda IV.

CONFIDENTIAL INFORMATION Director and Specified employees should maintain the confidentiality of

information entrusted to them in carrying out their duties and responsibilities, except where disclosure is approved by the Company or legally mandated or if such information is in the public domain. The Company's confidential and proprietary information shall not be inappropriately disclosed or used for the personal gain or advantage of any Director and Specified employees or anyone other than the Company. These obligations apply not only during a Director's and Specified employee's term, but thereafter as well. V.

FAIR DEALING In carrying out their duties and responsibilities, Director and Specified

employees should endeavor to deal fairly, and should promote fair dealing by the Company, its employees and agents, with customers, suppliers and employees. Director and Specified employees should not seek to take unfair advantage of the Company through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing. VI.

COMPLIANCE WITH LAWS AND REGULATIONS In carrying out their duties and responsibilities, Directors and Specified

employees should comply, and endeavor to ensure that the management is causing the Company to comply, with applicable laws, rules and regulations. In addition, if any Director and Specified employee becomes aware of any 35 P.A.S. College

Hero Honda information that he or she believes constitutes evidence of a material violation of any securities or other laws, rules or regulations applicable to the Company or the operation of its business, by the Company, any employee or another Director and Specified employee, then such Director and Specified employee should bring such information to the attention of the Chairman of the Audit Committee. VII.

INSIDER TRADING Director and Specified employees should observe all applicable laws and

regulations including the Company policies and Codes as applicable to them with respect to the purchase and sale of the Company's securities. It is the responsibility of each Director and Specified employee to become familiar with and understand these laws, regulations, policies and codes and should seek further explanations and advice concerning their interpretation, if required. Any waiver of or amendments to the Company's policies or Codes may be made only by the Company's Board of Directors and will be disclosed promptly as required by applicable laws and regulations including the rules of any exchange on which the Company's securities are listed or traded. Director and Specified employees should direct questions regarding the application

or

interpretation

of

these

guidelines

to

the

Company

Secretary/Compliance Officer. X.

ENCOURAGING

THE

REPORTING

OF

ILLEGAL

OR

UNETHICAL BEHAVIOUR Director and Specified employees should endeavor to ensure that management is causing the Company to promote ethical behavior and to 36 P.A.S. College

Hero Honda encourage employees to report evidence of illegal or unethical behaviour to appropriate Company personnel. Director and Specified employees should endeavor to ensure that the Company will not allow retaliation against any employee who makes a good faith report about a possible violation of the Company's Code of Conduct. XI. NON-COMPLIANCE Suspected violations of this Code may be reported to the Chairman of the Board or the Chairman of the Audit Committee. All reported violations should be appropriately investigated. A Director and Specified employees charged with a violation of this Code should not participate in or vote on the matter in the meeting of a Committee or the Board concerning his/her alleged violation, but may be present at a meeting of the Board or of a Committee convened for that purpose. Any waiver of this Director and Specified employees' Code must be approved by the Board of Directors and publicly disclosed if required by any applicable law or regulation. XII. EMPLOYEES The Director and Specified employee should respect each and every employee of the Company, treat each of them in a fair and equitable manner; respect their privacy and not to share/disclose their personal information without their prior consent; maintain non-discriminatory approach and refrain from harassing employees, making sexual advancements, coercion, threat by virtue of his/her position with the Company.

37 P.A.S. College

Hero Honda XIII. CUSTOMERS The Director and Specified employee should ensure to provide products and services, which meet the desired quality and safety standards and redress the Customer's grievance genuinely XIV. SHAREHOLDERS The Director and Specified employee should ensure to protect shareholders complete records by avoiding false misleading or artificial entries in the Books of accounts. should ensure to protect shareholders interest

38 P.A.S. College

Hero Honda KEY MILESTONES OF HERO HONDA PROMINENT AWARDS TO THE CHAIRMAN Year

Awards and Accolades

2006

'Lifetime Achievement Award' for Translating Excellence in Corporate Governance into Reality by The Institute of Company Secretaries of India

2005

Indian Automotive Hall of Pride by Overdrive CNBC TV18 Commendation of Business Leadership displaying extraordinary Corporate Leadership and Entrepreneurial Spirit Padma Bhushan' by Government of India Doctor of Letters (Honoris Causa) by Hemwati Nandan Bahuguna Garhwal University, Srinagar Garhwal Lifetime Achievement Award' by ET Awards for Corporate Excellence

2004

Life Time Achievement Award for Management by All India Management Association D. Litt. (Honoris Causa) by Banaras Hindu University Lifetime Achievement Award by Amity Business School Lifetime Achievement Award by HT Power Jobs

2002

Entrepreneur of the Year Award by Business Standard Giants International Award to the Chairman in the field of Business & Industry Business Leadership Award by Madras Management Association

2001

Entrepreneur of the Year Award by Ernst & Young

2000

Sir Jehangir Ghandy Medal for Industrial Peace - by XLRI, Jamshedpur 39

P.A.S. College

Hero Honda 1998

Business Leader of the Year by Business Baron

1997

Distinguished Entrepreneurship Award by PHD Chambers of Commerce & Industry

1995

National Award for outstanding contribution to the Development of Indian Small Scale Industry (NSIC Award - Presented by President of India)

1994

Businessman of the Year by Business India Group of Publications

1992

Honorary Membership - Indian Institution of Industrial Engineering Award

CORPORATE SOCIAL RESPONSIBILITY (CSR) Hero Honda Motors takes considerable pride in its stakeholder relationships, especially ones developed at the grassroots. The Company believes it has managed to bring an economically and socially backward region in Dharuhera, Haryana, into the national economic mainstream. An Integrated Rural Development Centre has been set up on 40 acres of land along the Delhi-Jaipur Highway. The Centre-complete with wide approach roads, clean water, and education facilities for both adults and children-now nurtures a vibrant, educated and healthy community. The Foundation has adopted various villages located within vicinity of the Hero Honda factory at Dharuhera for integrated rural development. This includes:

•

Installation of deep bore hand pumps to provide clean drinking water.

40 P.A.S. College

Hero Honda •

Constructing metalled roads and connecting these villages to the National Highway (NH -8).

•

Renovating primary school buildings and providing hygienic water and toilet facilities.

•

Ensuring a proper drainage system at each of these villages to prevent water-logging.

•

Promoting non-conventional sources of energy by providing a 50 per cent subsidy on biogas plants.

Other key projects taken up by the Foundation include Raman Munjal Vidya Mandir The Raman Munjal Vidya Mandir began with three classes (up to class II) and 55 students from nearby areas. It has now grown into a modern Senior Secondary, CBSE affiliated co-educational school with over 1200 students and 61 teachers. The school has a spacious playground, an ultramodern laboratory, a well-equipped audio visual room, an activity room, a well-stocked library and a computer centre. Raman Munjal Memorial Hospital Multi-specialty hospital equipped with the latest diagnostic and surgical technology. The Raman Munjal Memorial Hospital provides healthcare to the rural population in and around Dharuhera, and also caters to accident and trauma victims driving along the Delhi-Jaipur highway.

Raman Munjal Sports Complex 41 P.A.S. College

Hero Honda The Raman Munjal Sports Complex has basketball courts, volleyball courts, and hockey and football grounds are used by the local villagers. In the near future, sports academies are planned for volley ball and basket ball, in collaboration with National Sports Authority of India Vocational Training Centre In order to help local rural people, especially women, Hero Honda has set up a Vocational Training Centre. So far 26 batches comprising of nearly 625 women have been trained in tailoring, embroidery and knitting. The Company has helped women trained at this center to set up a production unit to stitch uniforms for Hero Honda employees. Interestingly, most of the women are now self-employed. Adult Literacy Mission This Scheme was launched on 21st September, 1999 , covering the nearby villages of Malpura, Kapriwas and Sidhrawali. The project started with a modest enrollment of 36 adults. Hero Honda is now in the process of imparting Adult Literacy Capsules to another 100 adults by getting village heads and other prominent villagers to motivate illiterate adults. Marriages of underprivileged girls Marriages are organized from time to time, particularly for girls from backward classes, by the Foundation by providing financial help and other support to the families.

Rural Health Care

42 P.A.S. College

Hero Honda Besides setting up a modern hospital, the Foundation also regularly provides doorstep health care services to the local community. Free health care and medical camps are now a regular feature in the Hero Group's community outreach program.

KEY POLICIES AN ENVIRONMENTALLY AND SOCIALLY, AWARE COMPANY At Hero Honda, our goal is not only to sell you a bike, but also to help you every step of the way in making your world a better place to live in. Besides its will to provide a high-quality service to all of its customers, Hero Honda takes a stand as a socially responsible enterprise respectful of its environment and respectful of the important issues. Hero Honda has been strongly committed not only to environmental conservation programmes but also expresses the increasingly inseparable balance between the economic concerns and the environmental and social issues faced by a business. A business must not grow at the expense of mankind and man's future but rather must serve mankind.

"We must do something for the community from whose land we generate our wealth." A famous quote from our Worth Chairman Mr.Brijmohan Lall Munjal

Environment Policy

43 P.A.S. College

Hero Honda We at Hero Honda are committed to demonstrate excellence in our environmental performance on a continual basis, as an intrinsic element of our corporate philosophy.

To achieve this we commit ourselves to: •

Integrate environmental attributes and cleaner production in all our business processes and practices with specific consideration to substitution of hazardous chemicals, where viable and strengthen the greening of supply chain.

•

Continue product innovations to improve environmental compatibility.

•

Comply with all applicable environmental legislation and also controlling our environmental discharges through the principles of "alara" (as low as reasonably achievable).

•

Institutionalise resource conservation, in particular, in the areas of oil, water, electrical energy, paints and chemicals.

•

Enhance environmental awareness of our employees and dealers / vendors, while promoting their involvement in ensuring sound environmental management.

Quality Policy Excellence in quality is the core value of Hero Honda's philosophy. We are committed at all levels to achieve high quality in whatever we do, particularly in our products and services which will meet and exceed customer's growing aspirations through: •

Innovation in products, processes and services.

•

Continuous improvement in our total quality management systems.

•

Teamwork and responsibility.

44 P.A.S. College

Hero Honda

Safety Policy Hero Honda is committed to safety and health of its employees and other persons who may be affected by its operations. We believe that the safe work practices lead to better business performance, motivated workforce and higher productivity. We shall create a safety culture in the organization by: •

Integrating safety and health matters in all our activities.

•

Ensuring compliance with all applicable legislative requirements.

•

Empowering employees to ensure safety in their respective work places.

•

Promoting safety and health awareness amongst employees, suppliers and contractors.

Continuous improvements in safety performance through precautions besides participation and training of employees. SALES PERFORMANCE July'05

July'06

FY 05-06

FY 06-07

Total Sales

230053

235315

917617

1068006

Exports (incl in above)

6900

10575

36441

39970

45 P.A.S. College

Hero Honda

HERO HONDA REGISTERS 23% GROWTH IN JUNE '06 Hero Honda Sells Over 2.50 Lakh Units In February 2006 Hero Honda Begins 2006 On A High Note Hero Honda Motors Scales A New High In Cy ’05 Hero Honda Continues On The Growth Path Retail Sales Escalate To An Unprecedented 4 Lakh + Units In Hero Honda Registers 22.3 Per Cent Growth In September ’05 Hero Honda's Sales Jump 28.5 Per Cent In August 2005 Hero Honda Registers 12 Per Cent Growth In Sales In July 2005 Hero Honda Registers 13% Growth In Sales In Q1 Of 2005-06 Hero Honda Motorcycle Sales In May At 2,26,072

HERO

HONDA

REGISTERS

23%

GROWTH

IN

JUNE

'06

Records a growth of 21% Sales in Q1 Of 2006-07 New Delhi, Saturday, July 01, 2006: Hero Honda, the 'World No.1' two-wheeler company, continues to strengthen its leadership in the Indian twowheeler industry, registering impressive growth in sales in the first quarter of the FY 2006 - 07.

For the quarter ending June 2006, the company achieved cumulative sales of 8,32,692 units, recording a growth of 21.29% compared to the same period last year. During the corresponding period last Financial Year, the 46 P.A.S. College

Hero Honda company had recorded sales of 6,86,494 units in the first quarter ending June 2005. In June 2006, the company sold 2,78,660 units registering an impressive growth of 23.26% as against 2,26,073 units in June last year. During the month, Hero Honda launched Glamour FI - India's first Fuel Injection motorcycle. The new technology eliminates the need for a carburetor, offers the most comfortable drive and the lowest emissions, in addition to a host of other features, which is now available for the first time to Indian twowheeler riders. Hero

Honda

Sells

Over

2.50

Lakh

Units

In

February

2006

CUMULATIVE SALES JUMP 14.16 % New Delhi, Wednesday, March 01, 2006: Hero Honda, the ‘World No. 1’ two-wheeler company for the fifth year in a row, has continued to exhibit a leader’s performance in the first couple of months in 2006. During the month of February 2006, the company sold 2,50,695 units, as compared to 2,23,546 motorcycles sold during February 2005. This translates into a growth of 12.14 per cent in sales volume. The cumulative sales of the company for the period April 2005 February 2006 also witnessed a notable jump of 3,38,632 units, from 23,89,807 to 27,28,439 units during the corresponding period last year. This reflects a growth of 14.16 percent. In January 2006, Hero Honda rolled out its first 100cc gearless scooter the “Pleasure” across India. The company also launched 22 first ever womenexclusive scooter showrooms “Just4her” across the country. “Just4her” is a

47 P.A.S. College

Hero Honda unique concept pioneered by Hero Honda Motors targeting the women customers. In January 2006, Hero Honda was also conferred the honor of the “Bike Maker of the Year” by NDTV Profit-Bike and Car for the year 2005. Additionally its 150 cc offering Achiever received the coveted ‘Bike of the Year’ award. Achiever and Glamour also received the best bike awards for their respective categories. The most desirable amongst these awards, the ‘NDTV Viewers’ Choice’ award in the bike category was also awarded to Hero Honda Glamour, truly exemplifying the customers’ enduring trust and faith in the company. Hero Honda Begins 2006 On A High Note CUMULATIVE SALES JUMP 14 %

New Delhi, Wednesday, February 01, 2006: Hero Honda, the ‘World No 1’ two-wheeler company for the fifth consecutive year, has continued to exhibit a leader’s performance in the first month of the New Year. During the month of January 2006, the company sold 2,49,450 motorcycles, as compared with 2,30,280 motorcycles sold during January 2005. This translates into an increase of 8.3 % in sales volume. The cumulative sales of the company for the period April 2005 - January 2006 has also increased to 24,77,744 motorcycles, a notable jump from 21,66,261 motorcycles during the corresponding period last year. This reflects a growth of 14.3 %. In the month of January, Hero Honda rolled out its first scooter, the 100cc “Pleasure” and launched 22 women-exclusive scooter showrooms 48 P.A.S. College

Hero Honda “Just4her” across the country. The cities where “Just4her” showrooms were launched include Lucknow, Delhi, Ahmedabad, Pune (two showrooms), Bangalore, Hyderabad, Baroda, Madgaon, Chennai (two showrooms), Chandigarh, Ludhiana, Jaipur, Nagpur, Jamshedpur, Bhubaneswar, Guwahati, Coimbatore, Cochin, Indore and Raipur. The month of January also saw Hero Honda being conferred the honour of the “Bike Maker of the Year” by NDTV Profit-Bike and Car for the year 2005. Additionally its 150 cc offering Achiever received the coveted ‘Bike of the Year’ award. Achiever and Glamour also received the best bike awards for their respective categories. The most desirable amongst these awards, the ‘NDTV Viewers Choice’ award in the bike category was also awarded to Hero Honda Glamour, truly exemplifying the customers’ enduring trust and faith in the company. CLOSES THE YEAR WITH SALES OF OVER 29 LAC BIKES New Delhi, Monday, January 02, 2006: Hero Honda, the ‘World No. 1’ two-wheeler company, set precedence in the industry by registering an unparalleled growth throughout the calendar year (CY) 2005. In the year that logged an impressive growth in the two-wheeler sector, Hero Honda continued to exceed expectations by selling a staggering 29,16,523 motorcycles during the calendar year 2005. This converts to a growth of 15.3 per cent over CY ’04 where the company sold 25,28,699 bikes. Mr. Pawan Munjal, Managing Director, Hero Honda Motors Ltd., thanked customers for the company’s continuous brilliant performance. He said “This year has been exciting for us where we crossed significant milestones. We fulfilled our commitment to the customers by providing the latest and global standard products. We launched several new products this calendar year. It is to the complete credit of our customers who have shown 49 P.A.S. College

Hero Honda continued faith in us and our products that we have achieved the World No. 1 two-wheeler company year after year." During CY ’05, the company continued its consistent growth in sales performance. In December 2005, the company sold a total of 2,45,104 motorcycles as compared with 2,30,751 bikes during the same month last year which means an increase of 6.2 per cent. With this, the cumulative tally for the period April-December 2005 stands at 22,31,104 bikes, clocking a growth of 15.2 percent over the year 2004. The company sold 19,35,981 motorcycles during the same period last year. The calendar year 2005 also saw a slew of new launches in various segments by the company. One of the biggest milestones was the launch of ‘Pleasure’- the first scooter by Hero Honda. ‘Pleasure’ which is slated to hit the roads in January is targeted primarily at women. Having established its leadership in the industry, Hero Honda further consolidated its position by launching three new motorcycles - ‘Super Splendour’, ‘Glamour’ and ‘Achiever’. The year also witnessed one of the highest civilian honours, the Padma Bibhushan being awarded to Mr. Brijmohan Lall, Chairman, Hero Honda Motors, for his invaluable contribution to trade, industry and philanthropist activities. Mr. Brijmohan Lall is a first generation entrepreneur who through sheer hard work and perseverance has made his mark on the global business environment. During the year Mr. Brijmohan Lall was also honoured with a Lifetime Achievement Award by the Economic Times. Hero Honda Continues On The Growth Path CUMULATIVE SALES FOR THE PERIOD APR-NOV ’05 GROWS BY OVER 14 PER CENT New Delhi, Thursday, December 01, 2005: Hero Honda, the ‘World No. 1’ two-wheeler company, is continuing to ride high on its steady sales performance month after month. 50 P.A.S. College

Hero Honda During November 2005, the company recorded a sales volume of 2,51,186 motorcycles as compared with 2,35,836 motorcycles sold during the same month last year. This translates into an increase of 6.5 per cent. The cumulative sales of the company for the period April-November 2005 has also jumped by 14.7 per cent, increasing from 17,05,230 motorcycles sold during April– November 2004 to 19,56,416 motorcycles sold during the same period in 2005. The month of November also witnessed the 5th Hero Honda Indian Television Academy Awards, the first and only television awards in the country. Retail Sales Escalate To An Unprecedented 4 Lakh + Units In DESPATCH CROSSES THE 3-LAKH LANDMARK New Delhi, Monday, October 31, 2005: Hero Honda, the ‘World No.1’ two wheeler manufacturer, has set yet another precedent for the Indian twowheeler industry by recording incredible sales in October 2005. The company’s retail sales crossed the 4-lakh milestone, for the first time ever in the Indian two-wheeler industry.

Additionally, dispatch during the month also reached an unprecedented high of 3,02,000 units, marking a remarkable jump of 23.02% as compared with the corresponding month in 2004. The company had recorded dispatch of 2,45,475 units in October 2004. Hero Honda’s achievement of the landmark 4 lakh plus retail sales and 3 lakh plus dispatch, within a single month, is an extraordinary feat considering

51 P.A.S. College

Hero Honda the growing competition in the two-wheeler market and is certain to redefine industry standards. The company’s sales performance during October 2005 is a testimony to the success of its customer centric business philosophy. Month over month, the company has been recording increasing sales, also signifying the success of its new models launched in the current year. The company’s sales (dispatch) during the month is up by 13.5%, as compared with the previous month (September 2005), when the company had recorded sales of 2,66,071 units. With the first festive month ending, Hero Honda’s cumulative sales (dispatch) for the period April-October 2005 has also registered a significant growth of 17.87% over the corresponding period in the previous year. The company’s cumulative sales tally has thereby increased to 17,31,992 units, a jump from 14,69,394 units in 2004. With the recent launch of Achiever in end-October and the forthcoming launch of Pleasure in mid-November, the company is confident of continuing its upward movement on the sales chart. The company’s festive promotion, which offers Rs.1001/- off on each of its models, has also met with huge success, across the country. Hero Honda Registers 22.3 Per Cent Growth In September ’05 CLOSES HALF YEAR WITH IMPRESSIVE NUMBERS New Delhi, Saturday, October 01, 2005: Hero Honda, the ‘World No.1’ two-wheeler company, for the fourth consecutive year, continued its upswing during the month of September 2005.

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Hero Honda The September sales of Hero Honda mark an impressive growth of 22.3 per cent over last year. The company sold 2,66,071 bikes in September 2005 as against 2,17,507 bikes in the corresponding month during the previous year. Sales during the month have also jumped by 9.6 per cent over the previous month (August 2005), when the company sold 2,46,304 motorcycles. The cumulative sales of the company for the period April - September 2005 have also shown a growth of 16.84 per cent over the corresponding period last year. The cumulative sales during the period have increased to 14,29,992 motorcycles from 12,23,919 motorcycles during April-September 2004. Hero

Honda's

Sales

Jump

28.5

Per

Cent

In

August

2005

PHASED LAUNCH OF 'GLAMOUR' COMPLETED; OVER 45,000 UNITS SOLD ALREADY New Delhi, Thursday, September 01, 2005: Hero Honda Motors Ltd., the ‘World No.1’ two-wheeler company for the fourth consecutive year, is continuing with its robust performance month after month. The company’s emphasis on proactive understanding and satisfaction of customer needs and desires along with new product offerings has resulted in the company consolidating its leadership in the industry. The company sold a total of 2,46,304 motorcycles during August 2005, thereby registering an impressive growth of 28.5 per cent in sales over the corresponding month last year. The company had sold a total of 1,91,635 motorcycles in August 2004. At the end of August 2005, the cumulative sales of the company for the period April - August 2005 stood at 11,63,921 motorcycles, translating into a growth of 15.6 per cent. The company had sold 10,06,412 motorcycles during the corresponding period (April-August 2004) last year. 53 P.A.S. College

Hero Honda Also during the month, Hero Honda completed the phased launch of ‘Glamour’- its new offering in the 125 cc segment. The bike comes powered with the futuristic and exemplary Quantum Core engine, which has been perfected after a series of refinements and offers customers an unprecedented combination of top-class fuel-efficiency and high power. The company has already sold over 45,000 units of Glamour since its first launch in South India towards the end of June, demonstrating a tremendous response from customers. Hero Honda Registers 12 Per Cent Growth In Sales In July 2005 CUMULATIVE SALES CROSS NINE LAKH BIKES IN FOUR MONTHS New Delhi, Monday, August 01, 2005: Hero Honda Motors Ltd., the ‘World No.1’ two-wheeler company has come to epitomize consistent performance. The company has, month on month, managed to stand up against all odds and maintained its leadership in the increasingly competitive 2wheeler segment. During the month of July 2005, the company sold 2,30,050 bikes, as against 2,05,654 bikes in the corresponding period last year, thus registering a sales growth of 12 per cent. For the period April - July 2005, the cumulative sale of the company stood at 9,17,617 units, translating into a growth of 12.6% per cent. The company had sold 8,14,777 units during the corresponding period last year. The company was able to achieve this impressive growth in the face of continuing supply constraints of components caused by the volatile labour situation prevailing in parts of the state of Haryana, where both the manufacturing plants of the company are located. The adverse situation impacted other industries in the region as well. Thanks to the initiative taken 54 P.A.S. College

Hero Honda by the Haryana government, the situation has improved and production is expected to be back on track. Market demand for Hero Honda products remains buoyant and the company launched ‘Glamour’- a new entry by the company in the premium deluxe segment, in Western India during this month. The bike was very successfully launched in South India in the previous month and has been very well received by the customers in that region. With this new product in its portfolio, the company is now looking at consolidating its indisputable leadership in the market. Hero Honda Registers 13% Growth In Sales In Q1 Of 2005-06 New Delhi, Friday, July 01, 2005: Hero Honda, the ‘World No.1’ twowheeler company, continues to strengthen its leadership in the Indian twowheeler industry, registering impressive growth in sales in the first quarter of 2005 – 06. For the quarter ending June 2005, the company achieved cumulative sales of 6,86,494 units, recording a growth of 13 per cent. During the corresponding period last Financial Year, the company had recorded sales of 6,09,123 units.

In June 2005, the company sold 2,26,073 bikes registering a growth of 12.5% as against 2,00,922 units in June last year. This impressive growth was achieved in the face of continuing supply constraints of components caused by the volatile situation prevailing in parts of the state of Haryana, where both the manufacturing plants of the company are

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Hero Honda located. The adverse situation has impacted other industries in the region as well. However, market demand for Hero Honda products remains buoyant and production is expected to be back on track to meet this demand. With the steady progress of monsoon, the outcome also remains positive.

Hero Honda Motorcycle Sales In May At 2,26,072 New Delhi, Wednesday, June 01, 2005: Hero Honda, the ‘World No. 1’ twowheeler company, sold 2,26,072 units in May 2005. The impressive figure was achieved despite some supply constraints. With the huge demand for Hero Honda bikes in the market and supplies now back to normal, sales are set to get a boost in June. During the month of May, Hero Honda also announced auditions for Hero Honda MTV Roadies- 3, a reality show that the company has been associated with for the last two years. This year the Hero Honda MTV Roadies journey will begin on June 12th from Jaisalmer to Leh with 13 bikers on Hero Honda Karizma, the only premium sports bike in India. The show aims at testing the participants’ endurance and bringing out the real riders in them. RIDE SAFE THE HERO HONDA WAY At hero Honda, our goal is not only to sell you a bike, but to also help you every step of the way in making the right decisions. Assisting you in making the right judgments on the road, and helping you choose the right helmet and other riding equipment that can not only help save your skin but possibly your life!

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Hero Honda And as bike handling requires know-how, skill and rigorous mental conditioning, we have put together certain safety tips and suggestions that will enhance your riding comfort. Click to view the videos. Pre - Ride Checks

Riding Gear

Riding Posture

Riding On the Road

Braking

Balancing

Cornering

PRE RIDE INSPECTION

You should conduct pre - ride inspection before riding a two wheeler to enhance safety and riding comfort. Clean the two-wheeler body surface regularly to maintain the surface finish. Use specifically designed cleaning products only.

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Hero Honda Inspect your motorcycle before you start the engine. The items listed here will only take few minutes, and in the long run they can save time, expense, and possibly your life. Click to follow the tips as given below: 1. ENGINE OIL LEVEL 2. FUEL LEVEL 3. FRONT AND REAR BRAKES (DRUM TYPE) 4. TYRES 5. CLUTCH 6. DRIVE CHAIN 7. THROTTLE 8. LIGHTS AND HORN: Check if the headlight, tail /stop light, turn

signals, indicators and horn function properly. 9. REAR VIEW MIRROR: Ensure that the rear view mirror gives a good

rear view when you are sitting on the motorcycle. 10. AIR SUCTION VALVE: Make sure all tube connections are secured

properly. To meet emission standards, certain models of two wheelers are provided with the air suction valve. Air suction valve supplies fresh air from air filter to the exhaust manifold to convert carbon monoxide to carbon dioxide. This reduces the CO% in the vehicle exhaust.

11. FITTING & FASTENERS: Check & tighten if necessary. 12. BATTERY 13. STEERING: Check for smooth action and maneuverability.

PUC CERTIFICATION

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Hero Honda You should get your motorcycle inspected and certified from an authorised PUC centre to ensure that the emission performance of the vehicle in within the desired limits. For petrol engine two - wheelers the c urrent regulation requirement is as follows. Idle CO (Carbon Monoxide) % = 3.50 % (max) HC (Hydrocarbon) = 4500 ppm (max) Vehicles which do not undergo a periodic maintenance are liable to emit exhaust gases more than the permissible limit. Few important tips to maintain low emission levels – •

Clean spark plug and maintain specified gap between electrodes.

•

Keep the air filter clean.

•

Get the carburetor tuned at authorized Hero Honda workshop.

•

Do not overfill the engine oil and follow the replacement schedule.

•

Avoid use of adulterated fuel. You should get the emission level certified once in every 3 months at

any of the authorised emission checking Centres.

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Hero Honda

IMPORTANT MAINTENANCE TIPS HERO HONDA GENUINE ENGINE OIL - 4 T PLUS Engine oil is a key determinant for efficient motorcycle performance and increased engine life. Hero Honda 4-T Plus Genuine Engine Oil is a premium quality engine oil, e ngineered to meet the lubrication requirements of Hero Honda Engines. Hero Honda 4-T Plus conforms to International specifications of API SJ SAE 20 W 40 / 10 W 30 and meets the JASO specifications. We strongly recommend that you use Hero Honda 4-T plus to maintain optimum engine performance during extreme driving conditions. Hero Honda 4-T plus Genuine Engine Oil provides the following benefits compared to API SF grade oil: •

Enhanced engine oil life.

•

Excellent anti-wear properties to increase your motorcycle’s engine life.

•

Minimizes the blow by gases by sealing the clearances within engine

and improves the engine’s power. •

Provides excellent protection against corrosion.

•

Has very high stability against oxidation & temperatures.

•

Facilitates easy cold starting.

•

Special additives in the engine oil provide better engine cleaning

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Hero Honda

Hero Honda 4T Plus (20 W 40)

Hero Honda 4T Plus (10 W 30)

Recommendation For best results from your Hero Honda two-wheeler we recommend use of Hero Honda 4T Plus Genuine Engine Oil as per the following schedule

How to check the engine oil level? In order to check the level of the engine oil, the vehicle should be on main stand. Check the engine oil level using the dipstick. The engine oil level should be maintained between the upper and the lower level marks of the dipstick. In case it is needed, top up the engine oil up to the upper level on the dipstick. Replace the engine oil if it is due for replacement

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Hero Honda

BATTERY MAINTENANCE Your motorcycle battery needs periodical maintenance to ensure a long and trouble free life. Do the following checks at regular intervals for a reliable battery performance. Check the electrolyte level against the top and bottom markings on the battery shell. Always top up with distilled water whenever required. Check for any leakage from battery. It should be clean and free from any leakages. In case of non use of motorcycle, battery should be kept fully charged and electrolyte level should be at Top mark.

TYRE PRESSURE Proper tyre pressure provides maximum riding comfort and tyre life. Check the tyre pressure of both the front and rear wheels. Ensure recommended air pressures once a week. Also check for any cuts, embedded nails or any other sharp objects in the tyre. BE A HERO HONDA GOOD RIDER

As a socially responsible company we urge you to join us in making this world a safer, healthier and more environment friendly place. At Hero Honda we like to promote the three E’s. Engineering – which is the right technology, specifically designed for Indian customer requirements, and road conditions. It is exemplified in the 4-stroke 62 P.A.S. College

Hero Honda Hero Honda engines that give you amazing reliability and fuel-efficiency, year after year. We have always manufactures 4-stroke engines, ever since inception in 1985. Environment – which is about ensuring that the high technology 4-stroke Hero Honda motorcycles continue to meet the most stringent pollution control norms at every level – as they have since the very beginning. Education – which is about promoting comfortable and safe driving, through a wide dealer network and service centres; as well as in educating people on road safety, in association with the traffic police and the transport department. Do remember that you and your family are not only riders, but pedestrian as well. It is as part of the Hero Honda family that ‘We Care’ to drive home the message of Road Safety and a Healthy Environment. Your Hero Honda, the environment and you. It is a three-way relationship that you should nurture, to reap the benefits for years to come. A well tuned bike keeps the environment healthy. Good riding practices will keep you healthy. Taking good care of your bike will always keep your bike healthy. Here are simple steps to a healthy bike, healthy environment, and a healthy you. •

Health and Environment

•

Safety

•

Facts and Information

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Hero Honda Social Responsibility

Achiever

New Sign of Desire

Next Generation

Pleasure

Deluxe Life

of Motorcycling Campaigns: We got a Good thing Going!

A Lot less Stops

One Litre Road

It's the Honda

Stretch That Litre. Save Petrol

Chartered Accountant

Over-Time

Best Seller

Economical Honours Others: 64 P.A.S. College

Hero Honda

Friends For Life

Nawab of Najafgarh Designed to Excel

Awaaz Consumer Awards '06

REGISTERED & CORPORATE OFFICE HERO HONDA MOTORS LIMITED 34, Community Centre, Basant Lok, Vasant Vihar, New Delhi - 110057 Tel: 26142451, 26144121

Fax: 26143321, 26143198

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Hero Honda

DATA ANALYSIS AND INTERPRETATION

1. Name and Gender: Exhibit 5.1 Respondents Gender Gender Male Female Total

No. Of Respondents 92 8 100

Percentage 92% 8% 100%

INTERPRETATION: From the above table, we can infer that 92% of the respondents were males and only 8% of respondents were females. From the above findings, we can analyze that majority of the respondents were males. The reason, for majority of respondents being males is that most of the Hero Honda vehicles are suitable only for men.

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Hero Honda

92% 100% 90% 80% 70% 60% 50% 40% 30%

8%

20% 10% 0% Male

Female

Graph – 1

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Hero Honda 2. Age:

RESPONDENTS AGE AGE GROUP

NO. OF

PERCENTAGE

18-29 30-49 50-59 Above 60 TOTAL

RESPONDENTS 42 33 18 7 100

42% 33% 18% 7% 100%

INTERPRETATION: From the above table, we can infer that 42% of the respondents belong to age group of 18-29, 33% of the respondents belongs to age group of 30-49, 18% of the respondents belong to age group of 50-59 and 7% of the respondents belong to age group of above 60 years. The reason for the majority of respondents belonging to the age group of 18-29 is; the age group 18-29 is an appropriate age, where people have been using for their enjoyment and easy mobilization. The reason why only 7% of the respondents belonging to the age group above 60 have purchased it is, because it is difficult to drive a two-wheeler at that age, which is impossible at that age.

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Hero Honda

RESPONDENTS AGE 42% 45% 33%

40% 35% 30%

18%

25% 20% 15%

7%

10% 5% 0%

18-29

30-49

50-59

Above 60

Graph No: 2

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Hero Honda 3. Education RESPONDENTS EDUCATION QUALIFICATION Graduation Post graduation Under graduation Others TOTAL

NO. OF

PERCENTAGE

RESPONDENTS 48 31 16 5 100

48% 31% 16% 5% 100%

INTERPRETATION: From the above table, we can infer that 48% of respondents were graduates, 31% of respondents were postgraduates, 16% of respondents were under graduates and others count up to 5%. From the above table, we can analyses that majority of the respondents were post graduates (31%) and only 16% of the respondents were under graduates. The reason for majority of the respondents being graduates may be firstly, minimum educational qualifications in India being graduation, many respondents were graduates. Secondly, most of the respondents were employees.

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Hero Honda

QUALIFICATION 48% 50% 45% 40%

31%

35% 30% 25%

16%

20% 15%

5%

10% 5% 0% Graduation

Post graduation

Under graduation

Others

Graph No: 3

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Hero Honda 4. Occupation: RESPONDENTS OCCUPATIONS OCCUPATION Student Employed Business Others TOTAL

NO. OF

PERCENTAGE

RESPONDENTS 31 49 13 7 100

31% 49% 13% 7% 100%

INTERPRETATION: From the above table, we can infer that 31% of respondents were students, 49% of the respondents were employed, 13% of the respondents were business people and 7% of the respondents include others. From the above table, we can analyze that, majority of the respondents were employees, and only 13% of the respondents were business people. The reason for the majority of the respondents being employees is that it is easy to transport. The remaining categories such as business people, others occupy least share in purchasing the two-wheelers.

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Hero Honda

RESPONDENTS OCCUPATION 49% 50% 45% 40% 35%

31%

30% 25% 13%

20%

7%

15% 10% 5% 0% Student

Employed

Business

Others

Graph No: 4

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Hero Honda 5. Annual Income (in Rs.) Exhibit No 5.5 RESPONDENTS ANNUAL INCOME INCOME Below 50,000 50,000 - 1,00,000 1,00,000 - 1,500,000 Above 1,50,000 TOTAL

NO. OF

PERCENTAGE

RESPONDENTS 14 47 26 13 100

14% 47% 26% 13% 100%

INTERPRETATION: From the above table we can infer that 14% of the respondents income was below 50,000 (per annum), 47% of respondents income was between 30,000- 1,00,000 (per annum), 26% of respondents income was between 1,00,000 – 1,50,000 and above occupy a large share in purchase of twowheelers and only 13% of respondents income was below 50,000. The reason for the majority of the respondents earning above 1,00,000 purchase more two-wheelers due to their high disposable income.

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Hero Honda

ANNUAL INCOME

47% 50% 45% 40% 35%

26%

30% 25% 14%

20%

13%

15% 10% 5% 0% Below 50,000

50,000 - 1,00,000

1,00,000 - 1,500,000

Above 1,50,000

Graph No: 5

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Hero Honda

6. Please specify the model of your Hero Honda Two-Wheelers? RESPONDENTS MODEL BRAND NAME Splendor Passion CD 100 CD 100ss Ambition CD – Dawn CBZ Street TOTAL

NO. OF RESPONDENTS 28 12 13 11 8 12 12 4 100

PERCENTAGE 28% 12% 13% 11% 8% 12% 12% 4% 100%

INTERPRETATION: When an enquiry was made as to which brand of two-wheeler was owned by the respondent, it was revealed that maximum of 28% has Hero Honda Splendor, 13% have CD 100, and 12% of Passion, CD-Dawn and CBZ, 11% of respondents were using the CD 100ss. And 8% of respondents were using Ambition and only 4% of respondents were using Street.

In this

maximum Splendor users were employees and students.

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Hero Honda

MODELS

30%

28%

25% 20% 15%

12%

13%

12%

11%

12%

8%

10%

4% 5% 0%

Splender

Passion

CD 100

CD 100ss

Ambition

CD – Dawn

CBZ

Street

Graph No: 6

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Hero Honda 7. Since how long are you using these particular two-wheelers? Exhibit No. 5.7 RESPONDENTS DURATION HAVE USING TWOWHEELERS NO. OF YEARS < 1 Year 1 –2 Years 2– 5Years And Above TOTAL

NO. OF

PERCENTAGE

RESPONDENTS 32 36 19 13 100

32% 36% 19% 13% 100%

INTERPRETATION: The response of the question “since how long they were using the particular two-wheelers” shows that 36% of respondents were using since two years 32% of respondents were using since one year, 19% of the customers were using since five years and the remaining respondents (13%) were using them from five years.

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Hero Honda

DURATION OF USING

36%

40% 35%

32%

30% 25%

19%

20%

13%

15% 10% 5% 0% < 1 Year

1 –2 Years

2– 5Years

A nd A bove

Graph No: 7

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Hero Honda 8. How did you gain awareness about this bike? Exhibit No. 5.8 RESPONDENTS AWARENESS ABOUT THIS BIKE PREFERENCE Paper Advertisement TV Advertisement Bill board and display Friends and relatives TOTAL

NO. OF

PERCENTAGE

RESPONDENTS 5 25 5 65 100

5% 25% 5% 65% 100%

INTERPRETATION: The above table shows that 5% of the customers have gained awareness about their bike through paper advertisement, 25% through T.V advertisement, 5% through Billboards displays and 65% of them gained awareness through friends and relatives.

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Hero Honda

65%

70% 60% 50% 40% 25%

30% 20%

5%

5%

10% 0%

Paper Advertisement

TV Advertisement

Bill board and display

Friends and relatives

Graph -8

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Hero Honda 9. Why did you prefer the particular Brand? Exhibit No. 5.9 REASON FOR PREFERENCE PREFERENCE NO. OF RESPONDENTS Quality 24 Price 10 Brand Image 22 Fuel efficiency 28 Resale value 16 TOTAL 100

PERCENTAGE 24% 10% 22% 28% 16% 100%

INTERPRETATION: From the above table we can infer that 24% of the respondents gave preference to quality, 20% of respondents gave preference to brand image and 20% of the respondents gave preference to the service networks, 10%, of the respondents gave to fuel efficiency. From the above findings, we can analyze that 40% of respondents were more quality conscious and only 10% respondents gave preference to price and fuel efficiency. The reasons are even though people are price conscious to some extent; the consumers are more quality conscious than price conscious because they have enough income to buy two-wheeler. They are ready to spend a little more to get good quality product and also they felt that goods they purchase should reflect their personal image.

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Hero Honda

PREFERENCE

28%

30% 24% 25%

22%

20%

16%

15%

10%

10% 5% 0% Quality

Price

Brand Image Fuel efficiency Resale value

Graph No: 9

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Hero Honda 10. What factors influenced you to purchase your Two-Wheeler? Exhibit No.5.10. FACTORS INFLUENCING PURCHASE FACTORS

NO.

Sales Executives Family Members Friends Relatives TOTAL

RESPONDENTS 50 20 20 10 100

OF PERCENTAGE 50% 20% 20% 10% 100%

INTERPRETATION: From the above table we can infer that 50% of the Respondents were influenced by sales executives, 20% of the respondents were influenced by their family members, 20% of the respondents were influenced by their friends and only 10% of the respondents were influenced by their relatives, while purchasing two wheelers. From the above findings we can analyze that sales executives influenced 50% of respondents, and relatives influenced only 10% of respondents. The reason for majority of the respondents being, mostly influenced by sales executives while purchasing was firstly, sales executives give more technical description about the product and attract customers to purchase two wheelers by using their effective communication skills. The reason why only 10% of respondents were influenced by relatives is that they may not possess more knowledge about the products like two wheelers.

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FACTORS 50% 50% 45% 40% 35% 30% 20%

25%

20%

20% 10%

15% 10% 5% 0% Sales Executives Family Members

Friends

Relatives

Graph No: 10

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11. Are you satisfied with your vehicle? RESPONDENTS OPINION ON SATISFACTION OPINION

NO. OF

PERCENTAGE

Yes No TOTAL

RESPONDENTS 95 5 100

95% 5% 100%

INTERPRETATION: The response to the question “Are you satisfied with the vehicle” reveals that as high as 95% of them were satisfied and 22% of them dissatisfied. The people were asked as to why they were dissatisfied with their Hero Honda two-wheeler. They responded that in splendor there is a problem with weak battery, and cbz’s look is very good but the mileage is very low, each and every model is having some problem and some servicing centers also disappointed them. But 95% of the respondents are very much satisfied with their two-wheeler.

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95% 100% 90% 80% 70% 60% 50% 40% 30%

5%

20% 10% 0% Yes

No

Graph No: 11

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Hero Honda 12. What is your opinion on the “Service provided by the Dealers”? RESPONDENTS OPINION ON SERVICE RATING Excellent Good Average Poor TOTAL

NO. OF

PERCENTAGE

RESPONDENTS 40 46 12 2 100

40% 46% 12% 2% 100%

INTERPRETATION: The respondents replied about the service offered by Hero Honda Motors Ltd. The maximum number of customers of Hero Honda Motors Ltd was very much satisfied. 40% of respondents are rated as excellent, 46% of respondents rated as good, 12% of respondents rated as average and only 2% of respondents rated as poor. This shows that Hero Honda Motors Ltd Ltd takes more care about the customers during their servicing time.

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OPINION ON SERVICE

46%

50% 40%

45% 40% 35% 30% 25% 20%

12%

15% 10%

2%

5% 0% Excellent

Good

Average

Poor

Graph No: 12

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Hero Honda 13. How would you rate the cleanliness and appearance of the workshop? CLEANLINESS AND APPEARANCE HAVE THE WORKSHOP RATING Excellent Good Fair Poor TOTAL

NO. OF

PERCENTAGE

RESPONDENTS 2 87 8 3 100

2% 87% 8% 3% 100%

INTERPRETATION From the above table we can infer that 2% of the respondents rate the cleanliness and appearance of the workshop as Excellent, 87% of the respondents rate it as Good, 8% of them rate it as fair and the remaining 3% rate it as poor. This shows that a majority of the customers were happy with the cleanliness and appearance of the workshop

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87% 90% 80% 70% 60% 50% 40% 30% 20%

8%

3%

2%

10% 0%

Excellent

Good

Fair

Poor

Graph No: 13

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Hero Honda 14. What is your opinion on the after sales service and replacement of spare parts offered by Hero Honda Motors Ltd? Exhibit No. 5.14 REPLACEMENT OF SPARE PARTS

RATING With intimation Without intimation Total

NO. OF

PERCENTAGE

RESPONDENTS 87 13 100

87% 13% 100%

INTERPRETATION The table reveals that 87% of the customers were satisfied with the after sales service and replacement of spare parts offered by Hero Honda Motors Ltd the remaining were dissatisfied. From this we can infer that most of the customers were satisfied with the services offered by the dealers.

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87% 90% 80% 70% 60% 50% 40% 13%

30% 20% 10% 0% With intimation

Without intimation

Graph – 15

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Hero Honda 15. How do you rate the attitude of the frontline staff? ATTITUDE HAVE THE FRONT LINE STAFF

RATING Formal Friendly Informal Total

NO. OF

PERCENTAGE

RESPONDENTS 29 70 1 100

29% 70% 1% 100%

INTERPRETATION: When questioned about the attitude of the frontline staff, 29% of the respondents rated it as formal, 70% of the respondents rated it as friendly, and the remaining 1% rated it as informal.

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70% 70% 60% 50% 40%

29%

30% 20% 1%

10% 0% Formal

Friendly

Informal

Graph No: 15

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Hero Honda SUMMARY A study of customer satisfaction at Hero Honda Motors Ltd was done with the sample size of 100 respondents. The data is mainly divided into two types i.e. primary data & secondary data. Primary data was collected through Questionnaire & Personal interview; secondary data was collected from Journals, magazines, dailies, websites & industrial survey. To ascertain the customer preference towards Hero Honda two-wheelers in Hero Honda Motors Ltd, a detailed study of customer satisfaction, attitudes and level of satisfaction and their complaints & suggestions, was under taken the study also includes assessing the future prospects of two-wheeler industry. India is the second largest manufacturer & producer of two-wheelers in the world. The two-wheeler industry made a small beginning in the early 50’s when Automobile products of India (API) started manufacturing scooters in the country. The industry has a smooth ride in 50’s, 60’s, 70’s when government prohibited new entries and strictly controlled capacity expansion. The industry saw a sudden growth in the 80’s. The industry witnessed a steady growth of 14% leading to a peak volume of 1.9mm vehicles in 1990. In the 90’s the trend was reversed. There is a decline of 15% in 1991 and 8% in 1992, resulting in a production loss of 0.4mm vehicles. Barring Hero Honda, all showed

major producers suffered from recession in FY93 and FY 94 Hero

Honda showed a marginal decline in 1992. The reasons for recession in the sector were the incessant rise in fuel prices, high input costs and reduced purchasing power due to significant rise in general price level and credit crunch in consumer financing. Factors like increased production in 1992, due to new entrants coupled with the recession in the industry resulted in company either reporting losses or a fall in profits.

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Hero Honda The two-wheeler population has almost doubled in 1996 from a base of 12.6mm in 1990. The Indian two-wheeler industry can be broadly classified as scooters, motorcycles and mopeds. The Indian motorcycle industry can be broadly categorized in to Indian motorcycles and Indo-Japanese motorcycles. Hero group, Bajaj and Escorts dominate the indo-Japanese motorcycle segment in collaboration with Japanese vehicle manufacturers Honda, Kawasaki and Yamaha respectively. The Indian motorcycles segment is dominated by Hero Honda two-wheelers. The Hero Honda was established on the 13th of April 1984. The Hero group of companies in India merged with the Honda Motors Company of Japan in creating a no. 1 mantle in the making of the company Hero Honda. Hero Honda begins operations with the establishment of the dharuhera plant in 1985. This is fully automated plant is equipped with state-of-the-art machinery, an in-house R & D set up, and today it produces a bike every 30 seconds. To meet the growing demand, Hero Honda opened another unit at gurgaon, using FMS technology.

It is rated as one of the most modern

motorcycle manufacturing plants in the world. The plant produces 1,800 bikes every day.

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Hero Honda The essence of the marketing concept is that organizations must adopt customer-oriented features and focuses their attention on building programs, offerings and strategies that satisfy customer needs and wants.

Many

organizations maintain their focus on operations or product or sales efforts and there by get dislocated by mistaking the means for the end. Customer satisfaction plays an important role in marketing. It depends upon t he products performance relative to a buyers expectation customer might experience various degree of satisfaction. If the products performance falls short of expectations the customer is dissatisfied and if matches the customer is satisfied.

Customer value and satisfaction are important

ingredients in the marketer’s formula for success.

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Hero Honda FINDINGS OF THE STUDY  The study reveals that majority of the customers age was between 18 years to 29 years.  The target customers were mainly in middle class as well as upper middle class income group.  Most of the customers of Hero Honda Two-Wheelers were students and employees.  Most of the customers were employees followed by students.  Out of total customers 40% of the customers were graduates and only few customers were under graduates.  Splendor, Passion, CD Dawn, CD 100, CD 100ss, CBZ, Street and

Karizma are the brands mostly preferred by Hero Honda Motors Ltd.  The Hero Honda Two-Wheelers are mainly preferred because of the look & style fuel efficiency and brand image.  Majority of the customers were self-influenced to purchase Hero Honda Two-Wheelers.  The main reason to choose Hero Honda Motors Ltd to buy their two-

wheeler was due to their excellence service.  Most of the customers of Hero Honda Motors Ltd were satisfied with

their two-wheeler.  Some people were not satisfied because spare parts costs are very high and price of vehicle is also very high. 

Majority of customers rated good for service offered by the Hero Honda Motors Ltd.



Majority of the customers of Hero Honda Motors Ltd stated that the future of the two-wheeler industry would be good.

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Hero Honda

SUGGESTIONS It is very hard to hold the pulse of a customer in the market. Customer’s satisfaction is different for different people at different situations; the following were some of the suggestions given to the Hero Honda Motors Ltd to improve the sales of Hero Honda Two –Wheelers.  The cost of accessories & spare parts of Hero Honda Two-wheelers should be reduced. 

As a promotional measure, Hero Honda Motors Ltd may go for free service camps. This will increase the customer’s loyalty.

 Cost of the Two-Wheelers is little bit high as compared to others.  The sales have to be motivated by providing better incentives.  Direct contact with potential customer and explaining the strengths and advantages by using their products will help in increasing the sales of the company. 

As the location of the show room is ideally located with middle class population, Hero Honda Motors Ltd should try to give more advertisements in news paper, bill boards in that area to enable easy recall of the people for Hero Honda Motors Ltd.

 It should conduct road shows in colleges. 

Hero Honda Motors Ltd. should constantly keep in touch with its customers and inform them about the latest models/ finance schemes.

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It should employ Marketing Executives to go and tap the Industrial belt employees rather than wait for customers to come to Hero Honda; Hero Honda should go to prospective customers with the help of integrated market efforts.

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Hero Honda Motors Ltd. should track the movement of spare-parts and stock spare parts in advance otherwise the fake parts would become popular.

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Hero Honda Motors Ltd. should setup sub dealers in remote localities in the area. Hero Honda should conduct road shows in nearby districts. 100 P.A.S. College