Team Work

MR. UMAR SHAHID

063932-056

MR SHAKIR MUSTAFA

063932-061

MR. USAMA MEHMOOD

063932-026

MR. SOHAIL AHMED

063932-040

PREFACE

We want to know the economical transport wheeler for the

general public,so we choose the best company in field of

transport .we also want to know the share of the 2 wheeler

industry in the growth of economy. How it will knows the

need of the people and how it satisfy the customer demand

and how it is differ from others.

This project includes the complete detail and full knowledge

about the Pakistan largest transportation company Altas

Honda. It includes economic, marketing, management and

finance procedure prospective. It also include how we should

charge the prices of any good? Where we should place it?

And how to promote it?

In future it will prove very benefit for us. It will not only help

us but also helps others in making their projects.

TABLE OF CONTENTS

1 ..........................................................Automobile Industry

3. .....................................................Atlas Honda Motorbike

6. ..............................................................Company History

8 ......................................................................Management

10. .................................................................Swot Analysis

12. .....................................................................BCG Matrix

13. ..................................................Organization Hierarchy

18......................................................... Production Strength

21. ........................................................Demand And Supply

24. ...........................................................................Shifters

26. ............................Circular Flow Of Income And Product

27. ..........................Condition Of Honda In Product Market

30. .................................................................Factor Market

31..................................................................................Land

32.................................................................................Labor

33..............................................................................Capital

35....................................................................Entrepreneur

36........................................................................ Marketing

37..................................................................Marketing Mix

49. ...........................................................................Finance

52. ......................................................................Conclusion

ACKNOWLEDGMENTS

We would like to thank Ch. Muhammad Yousaf and Ch.

Muhammad Yaqoob, Owners Saleem Raza Goods

Transport Co. (official Atlas Honda’s Transportation) for

their continued support in completing the project and

cooperation in maintaining the high standard of excellence.

We would also like to give special thanks to Mr. Saadullah

Ejaz, Assistant Manager Admin & Industrial Relations

Atlas Honda Ltd. helped us in getting data and complete

information about company.

At the end we would also like to acknowledge Ms. Shehla

Shoaib, Resource Person, Who convinced our abilities,

enthusiasm and energy will secure a successful future. This

learning experience from this project will further help us in

throughout in educational career.

.

22

AUTOMOBILE INDUSTRY

The auto market is one of the largest segments in world

trade. The annual size of automotive export trade in the

world has grown to a massive level of over US$ 600 billion,

which accounts for about 10 per cent of the world export.

Changing models, improving fuel efficiency, cutting costs

and enhancing user comfort without compromising quality

are the most important challenges of the auto industry in a

fast globalizing world. Hence there is a need for exploring

the industrial complementarities in the region for better

quality, favourable costs, fuel efficiency and attractive

designs. Therefore, the requirement of information

exchange in the region is much more pronounced now than

ever before for keeping the auto industry afloat and

competitive.

Pakistan Overview

1

Since its independence in 1947, Pakistan has been able to

transform itself to a large extent, from a completely

agrarian economy to a fairly developed techno-industrial

base. Besides textiles, Pakistan’s exports are largely

manufactured items such as consumer durables and

engineering products. However, it is also a fact that

Pakistan has not been able to realize its potential due to

internal and external compulsions and thus it lags behind

many developing countries of the world. The following

economic indicators constitute the tell-tale of Pakistan’s

development performance:

Automobile Industry of Pakistan

22

The existing population of automotive vehicles in Pakistan is

3.9 million. The annual demand is estimated at 300,000, two

thirds of which is being met from local sources and imports

and the remaining one third is left unmet. The market value

of automotive vehicles in dollar terms is estimated at more

than 1 billion, out of which import constitutes around US$

200 million. The after market of auto parts is estimated at

US$ 500 million, imports and local production taken

together. Production figures of automobiles are given in the

following tables:

Pakistan’s strength of production elements lies in its vast

reservoir of land, labour and even capital. But technology and

purchasing power of the consumers are its major

weaknesses. Technology requirements are being met by joint

ventures and technology tie-ups with foreign players in

automotive sector. Japanese, Korean and European

entrepreneurs have invested almost US$ 1.5 billion in

33

Pakistan’s automotive sector. The local investment in the

automotive sector is approximately US$ 1 billion.

The GroupAtlas Honda Limited is a joint venture

between the Atlas Group and Honda Motor

Co., Japan. The foundation of the Atlas Group

was laid in 1962 with the establishment of

Shirazi Investments (Pvt) Limited with a capital of half a

million rupees and three men doing business in trading

shares and real estate. The growth of the Atlas Group is the

result of its focus on good corporate governance. Today Atlas

is a diversified group dealing in engineering, financial

services and trading. It consists of seven public limited

companies out of which six are quoted on the Stock

Exchanges in Pakistan, and five private limited companies.

Atlas shareholders equity now stands over 25 billion rupees;

assets have increased to over 60 billion rupees; personnel

strength is over 7000 and annual sales have crossed 60

billion rupees. The Group paid taxes of Rs. 15 billion over 2%

of the total government revenues.

All this progress is due to the Group's reliance on the

intellectual capital, dedicated efforts and team spirit of all

44

the stakeholders. Every member is striving for excellence and

taking pride in the Group's motto:

Organization Development

Through Self Development

The Company

The company was created by the merge of Panjdarya Limited

and Atlas Autos Ltd. in 1988. Both these motorcycle

manufacturing concerns were established by the Atlas Group.

Atlas Honda Limited

manufactures and markets

Honda motorcycles in

collaboration with Honda Motor

Company. The Company also

manufactures various hi-tech

components in-house in

collaboration with leading parts

manufacturers like Showa,

Atsumitech, Nippon Denso and

Toyo Denso. Honda motorcycles

5

SHIEKHUPORA

5

are by far the largest selling motorcycles in the country with

an unmatched reputation for high quality, reliability and

after-sales-service.

Atlas has undertaken to develop local manufacturing

capabilities to the highest, economically feasible level. While

a major role in localization has been assigned to vendor

industries, Atlas has the country’s largest in-house

manufacturing capability at its Karachi and Sheikhupura

plants. To support the production

facilities, the company has

established an R&D wing and tool making facilities through

CDA & CAM, which are growing rapidly in size and function

as the company expands. Atlas has managed to execute 14

Joint Venture/Technical Assistance Agreements between local

vendors and foreign manufacturers for transfer of

technology.

Atlas Honda is playing a pioneering role in creating

conditions for easy and confident use of motorcycles all over

the country. A vast and growing network of over 1600

motorcycles sales service and spare parts dealers has been

established. In order to back up this system, Atlas has set up

Technical Training Centers in Karachi and Lahore, which

provide several courses of varying duration and complexity

for motorcycle mechanics and users each year. Mobile

training facilities take the latest know-how, technology and

maintenance of motorcycles to major rural and urban centers

around the country.

6

KARACHI PLANT

6

VisionMarket leader in the motorcycle industry, emerging as a

globally competitive centre of production and exports.

MissionA dynamic, profitable and growth oriented company through

market leadership, maximizing export and excellence in

quality and service; to ensure attractive returns to equity

holders; reward employees according to their ability and

performance; to foster a network of researchers and

engineers ensuing unique contributions to the development

of the industry; customer satisfaction and protection of the

environment by producing emission friendly green products

and to remain a good corporate citizen fulfilling its social

responsibilities in all respects.

Our slogan

For Honda to remain Honda, and for everyone to realize their

aspirations, we must believe in "The Power of

Dreams"

Company History

Since its inception the company has

experienced an unprecedented

77

growth in its operations from a small manufacturing company

to the leading motorbike manufacturer of Pakistan. Following

is the chronological order of the major events in the

company's history.

2004 Contribution to national exchequer reached Rs.

3.18 billion - 72% of wealth generated, out of

Group 7.56 billion (1.48% of the Government

total revenues). LPDC project completed (New

Generation Of Technology). Stared

implementation of GDC & Case Damper

Production Projects through Showa Corporation,

Japan. Launch 500 K Capacity Expansion

Project.

2003 Major re-adjustment of prices to pass on the

benefits to customers. Best Corporate Report

award by joint committee of ICAP & ICMAP.

Achievement of landmark sales of 100,000

motorcycles. Technical agreement with Keihin

(Japan) for Mgf. Of Fuel Cock Assembly. Switch

Assembly Light & Winker + Ignition Coil.

2002 Deletion level reached to 87% and 80% for CD70

& CG125 respectively. Introduction of Gratuity

Scheme for staff. Best Corporate Report award

by joint committee of ICAP & ICMAP.

2001 Concept of 5S dealership - Sales, Service, Spare

Parts, Second hand exchange and Special

(Credit) sales launched. New Block for hi-tech

88

engine plant.

2000 Investment in Crankshaft Project. TC Agreement

with Toyo Denso.

1999 ISO 9002 certification for both factories.

1998 New models (MMC) of CD70 & CG125 launched.

1997 Investment in Gear Project.

1995 Exports to Bangladesh. Export Agreement

signed with Honda Motor Company Limited.

1994 Mr. Kawamoto President, Honda Motor

Company Limited, visited AHL.

1992 Change of name to Atlas Honda Limited (AHL).

1991 Inauguration of CG125 Engine Project at

Sheikhupura Factory.

1990 Merger of Panjdarya Limited into Atlas Autos

Limited.

1989 Export of built up motorcycles to Nepal.

1988 Production capacity expansion III. Joint Venture

agreement signed with Honda Motor Company

Limited.

1987 Inauguration of CD70 Engine Project at Karachi

Factory.

1986 Technical Assistance Agreement with Showa

Corporation.

1982 Deletion Project financed by PICIC.

1981 Commercial Production started at Panjdarya

Limited. Production capacity expansion II.

1979 Incorporation of Panjdarya Limited as Joint

Venture with Honda Motor Company limited.

99

1976 Production capacity expansion I.

1965 Public offering of Shares.

1964 Commercial Production started.

1962 Technical Assistance Agreement signed with

Honda Motor Company Limited. Incorporation of

Atlas Autos Limited.

MANAGEMENT

Maintaining a global viewpoint we are dedicate to supplying product of the `highest quality yet a reasonable point for worldwide customer satisfaction. Honda remains its rich culture of customer satisfaction, it being serving nation. For management we have following our management strategy.

Proceed always with ambition and youthfulness. Respect sound theory, develop fresh ideas, and

make the most effective use of time. Enjoy your work and encourage open

communications. Strive constantly for a harmonious flow of work. Be ever mindful of the value of research and

endeavor. Respect for all – man has priority over others.

MANGEMENT LIFE CYCLE

PLANNING

1010

CONTROLLING

ORGANIZING

LEADING

PLANNING

Transportations Purpose

Two Wheeler Road

Transportation Strategy

Better quality at

economical rates Objective

Produce different

models for different

customers

Programs

1111

CD 70,CD 100, CG

125

CD 100 Economical

with speed specially

for middle-aged, CG

125 Speed specially

for Youngsters, CD

70 economical

specially for oldies

Policies

Always on time

delivery and return

of defected products

entertained

RULES

SWOT

STRENGHTS WEAKNESSES

OPPORTUNITIES THREAD

1212

Strengths: Qualified and well trained staff

Biggest sale network

Best production plant in the world

Financial Strong

Biggest market share

People Trusted Products

High Quality Products

ISO Certified

Resale value

Customer Care

Customized products

Brand Image

Availability of Spare parts

Best delivery system (Transportations)

Weaknesses

High Price of Products

Political instability

Low per capita income of public

Less overhead rates of competitors

Increasing Prices of Oil

1313

Rising inflation

Opportunities

Industry expansion

Technology upgrading

Strong Position

Market Integration opening up

Opportunity growing in other countries

Newly developed Areas/Markets (e.g. Gawader)

Favorable govt. policies

Big Market

Economy is expanding

Threats

Chinese cheaper products challenges

Free Trade & WTO

Strong competition from competitors in near

future

Instability of Government

High rate of Taxation

Bad infrastructure

BCG MATRIX

1414

ORGANIZATION HIERARCHEY

15

CHINESE BIKES

HIGH

LOW

HIGH

LOW

15

The above chart shows the centralization in the industry. The

main decision comes from the Chairman of the company

while Board of Directors approves his decisions and this

implement in organization by respective committees. The

Board of directors is committed to good corporate

governance. The company is managed and supervised

responsibly and proper internal controls and risk

management policy. Its procedures are in place for efficient

and effective operations of the company, safeguarding of

assets of the company. This is compliance with laws and

regulations and proper financial reporting in accordance with

International Financial Reporting standards.

As a part of group corporate strategy it has five committees

at group level to guide the management in various key areas

of the company’s operations ranging from Human Resource,

Information Technology, Audit , Environment Safety and

health.

16

Chairman

Group Executive Committee

Group Human Resource Committee

Group System & Technology Committee

Audit Committee

Management Committee

Board of Directors

16

Following is summary of role and responsibilities of each

committee;

MANAGEMENT PROFILE

BOARD OF DIRECTORSChairman Yusuf H. Shirazi

Chief Executive Officer Saquib H. Shirazi

Directors Koji Nakazono

Nurul Hoda

Sanaullah Qureshi

Sherali Mundrawala

Toshitsugu Kaneko

Yoshitaka Kitamura

Company Secretary Zaryab Tarique

________________________________________

GROUP EXECUTIVE COMMITTEE

This is responsible for setting overall corporate objectives

and strategies, identifying opportunities, monitoring group

business strategies & plans and developing its group

members as leaders of their respective fields.

GROUP EXECUTIVE COMMITTEE

Chairman Aamir H. Shirazi

Members Frahim Ali Khan

Iftikhar H. Shirazi

Jawaid Iqbal Ahmed

Saquib H. Shirazi

1717

Secretary Theresa Dias

__________________________________________

GROUP HUMAN RESOURCE COMMITTEE

It determines the compensation package for the management

staff. The committee has also responsibility to create and

maintain conducive work environment that instills trust and

ensures respect fair treatment, development opportunities &

grooming and make succession plan for all employees.

GROUP HUMAN RESOURCE COMMITTEE

Chairman Yusuf H. Shirazi

Members Aamir H. Shirazi

Bashir Makki

__________________________________________

GROUP SYSTEMS AND TECHNOLOGY COMMITTEE

The Group system and Technology committee is responsible

to provide an insight towards the various technological

aspects of information systems. The objective of the

committee is to introduce leading edge technology and IT

initiative to automate information delivery and accessibility

of data for enhancement of time and cost efficiency.

1818

GROUP SYSTEMS & TECHNOLOGY COMMITTEE

Chairman Iftikhar H. Shirazi

Members Mushtaq Alam

Zia Ullah Begg

Secretary Sarfraz Hassan

________________________________________________

AUDIT COMMITTEE

This is most prime committee of board, which reviews

financial, and internal reporting process, the system of

internal controls, management of risk and the internal and

external audit processes. It also proposes the appointment of

external auditors to the shareholders and is directly

responsible for their approval and oversights of their work.

An independent Internal Audit function reports to the

committee regarding risks and internal controls across

organization. The audit committee reviews reports from

external auditors on any accounting matters than might be

regarded as critical. The committee consists of three

members including chairman of committee are non-executive

directors. The audit committee meets three times a year and

review quarterly, half year and annual financial statements

besides internal audit plan, material audit findings and

recommendations of internal auditor.

AUDIT COMMITTEE

1919

Chairman Sanaullah Qureshi

Members Sherali Mundrawala

Nurul Hoda

Head of Internal Audit Aamir Shakoor Khan

Secretary Ashfaq Ahmad

MANAGEMENT COMMITTEE

It acts at the operating level in an advisory capacity to CEO.

It provides recommendations relating to the business and

other corporate affairs. The committee has responsibility for

reviewing and forwarding long-terms plans, capital and

expense budget development and stewardship of business

plans. It is also responsible for maintaining healthy

environment within and outside the company through its

environment friendly products.

MANAGEMENT COMMITTEE

Chief Executive Officer Saquib H. Shirazi

Vice President Marketing Nurul Hoda

Vice President Technical Toshitsugu Kaneko

Chief Financial Officer Suhail Ahmed

General Manager Plants Amir Awan

General Manager CAMA Maqsood A. Basraa

General Manager Development Yoshitaka Kitamura

General Manager Quality Assurance Lt. Col. (R) Sultan

Ahmed

General Manager Human Resource Raffat Iqbal

2020

General Manager IT Mushtaq Alam

General Manager Logistic Talha Saad

________________________________________

PRODUCTION STRENGTH

Atlas has undertaken to

develop local manufacturing

capabilities to the highest,

economically feasible level.

While a major role in

localization has been

assigned to vendor

industries, Atlas has the country’s largest in-house

2121

manufacturing capability at its Karachi and Sheikhupura

plants. To support the production facilities, the company has

established an R&D wing and tool making facilities through

CDA & CAM, which are growing rapidly in size and function

as the company expands. Atlas has managed to execute 14

Joint Venture/Technical Assistance Agreements between local

vendors and foreign manufacturers for transfer of

technology. Besides, Atlas has directly executed 5 Joint

Venture/Technical Assistance Agreements other than Honda.

In 1994, the plant was constructed with installed capacity of

5,000 units on single shift basis. This moderate capacity

continued to cater to the business requirements for some

years. For the last couple of years, due to rising demand, the

immediate expansion was inevitable. Thus the paint shop,

being bottleneck of the process, was expanded with

installation of another paint booth at a capital cost of Rs

185.0 million in order to enhance the production capacity.

Due to this expansion, coupled with the double shift

operation and extended process efficiency, now the plant has

annual capacity of 30,000 units on double shift basis against

12,000 units last year.

The expansion of the capacity was inaugurated on December

20, 2004. After running on trial basis for a couple of weeks,

the plant started operation on double shift basis from

September 2004 and gradually monthly production was

2222

increased to 2,403 units in December 2004. Now onward, on

an average, the company plans to produce 2,500 units

monthly. The paint shop expansion yielded dividend, as the

quarterly production showed 33.8% and 23.0% increase in

the third and fourth quarters respectively.

Production Capacity in Pakistan

The Atlas Honda has largest production capacity in Pakistan

about 400,000 annually. Following is Honda’s production

with ratio to other manufacturers in Pakistan.

Company Production Capacity

Atlas Honda Ltd. 400,000Dawood Yamaha

Ltd.200,000

Suzuki Motorcycles Pakistan Ltd.

65,000

Saigols Qingqi Motors Ltd.

100,000

Sohrab 42,000 Source: Pakistan Automotive Manufacturers Association

This is graphical representation of Production capacity of

Honda with respect to other manufacturers.

2323

Production Strength of Honda

Following is table showing its ten years production and sale.

Source: Pakistan Automotive Manufacturers Association

Here is chart of its past years performance of sales & production;

Demand and Supply Strategy

24

Year Production

Sale

1996-97

68,637 ~

1997-98

63,463 ~

1998-99

59,639 61,536

1999-00

59,357 58,579

2000-01

78,397 78,062

2001-02

90,111 90,027

2002-03

115,924 117,201

2003-04

190,679 190,424

2004-05

287,271 287,172

2005-06

360,561 360,110

2006-07

136,050 135,505

24

The two wheeler industry has continues to enjoy a period of

growth since 2000-01. The strength of the demand can be

judged from the fact that growth of 25 % on year to year

basis was recorded despite the poor agriculture cop. On an

annual basis, Industry sales now have crossed 650,000

marks.

ANNUALY SUPPLY CHART

Traditionally, the motorcycle sale has been directly linked

to the performance of the agriculture sector.

However, during the past few years the product has

established itself as a necessity for a large segment of the

urban population too. It is now well recognized its sale as

an indicator of the economy’s performance. The growth in

sales has attracted all sorts of entrepreneurs to the arena.

In addition to the manufacturers with long standing, and

who are members of PAMA, new entrance from

2525

backgrounds and business interests have started

importing and assembling motorcycles. The difference in

business practices has also effected the environment of

“doing business”. Those who go strictly by the law are at

distinct advantages as the slack and selective applications

laws leave them competing with virtually an unorganized

that avoid duties and taxes with impunity. The difference

in cost structures that ensue leaves and uneven playing

field for the organized sector.

ANNUALY DEMAND CHART

The company accepts the realities of a growing market

and expects no more then a level playing field. One is glad

to see that the government is finally pursuing this

normally with vigour. A recent raid of ten units in the

unorganized sector, so far, has inearthed a huge tax

evasion scam over 1 Billion penalties have been assessed.

Your company continues insistence of tax evasion as the

main cause of price differences has been proved accurate.

One hopes that will not only to recover from the existing

2626

ones the past evasion but also from the close down

fraudulent assemblers. Atlas Honda has invested and is

continuation to invest heavily in localization. It has the

strongest vendor base as well as the state of the art in

house manufacturing capabilities. This is a result of

decades of strong commitment to the localization cause,

Motorcycle industry has now reached a point where it has

achieved production surpluses. Your company has already

established export markets but had production constraints

that kept is from serving these markets to their

satisfaction. The company has now received global export

rights for Honda CD 100. This is recognition of over 40

years of consistent performance. It is indeed a huge leap

forward for atlas Honda and is a larger commendation for

the potential of Pakistan’s auto industry .in next three

years. Atlas Honda is targeting at least10% of its sales to

come from exports. For this an enabling export policy is

being pursued at the highest levels of the government.

FACTORS EFFECTING DEMAND & SUPPLY

Demand Factors:

Population

As the population of the country is increasing the

demand of the bikes are also increasing.

Income

As income increasing, his purchase power will also

increase. It will effect demand to increase. The

2727

purchase of the newly launched CG 125 model is

decreased due to less per capita income.

Fashion

Honda motorbikes are in fashion of Pakistan society.

They are symboling of pride and good willing so its

demand increasing day by day.

Govt Policies

Since motorbike industry is emerging industry and 2.2

% of total economy depends upon Honda Industry. So

Govt always makes favorable policies for the company.

So its demand is upwards.

In short:

All factors of demand are favorable for

company

Supply Factors:

Cost of Production

The company has best plant of the world; it enables it

to produce more products which cover the people

needs by adopting concept of “Cost Effectiveness”.

Technology

As technology upgrade the quality of goods increases.

That’s innovate products which creates more demands

thus resulting more supply.

2828

External Environment Factors

Natural hazards and disasters badly damage product

delivery and production process which results in less

supply. We have seen recently the earth quack which

damaged the market.

Govt Policies

Govt policies are always favorable for the Market

leader in Pakistan. Which take its supply to peak.

Future expectations

Company is excepting strong competition with its

competitors especially cheap bikes of china. In future

they want to overcome the market so they will increase

their supply.

Taxation

Govt has imposed huge tax on Atlas Honda Company. It

is estimated that company pays 35 % annual as Tax to

government. This huge tax increases the production

cost which reduces its Supply.

2929

Source: Honda Annual Report 2006

CIRCULAR FLOW OF INCOM AND

PRODUCT

3030

Condition of Honda in Product Market

31

Production

Sector(Engine

& Chasis)

Customer

Sector(Provide Motorbi

kes)

Final services

Productive services

Intermediate services

Supply of Finished services

Factor Market (L,l,K,E

)MoneyMone

y

Product MarketAtlas

Honda

31

Atlas Honda is the leader in motorcycle industry. It is selling

three products named as CD 70, CG 125 and CD100

respectively. CD 70 and CG 125 are old brands while CD100

was launched on 11 October 2004 in Lahore on 13 October

2004 in Karachi.

MOTORCYCLE MARKET V/S HONDA MARKET SHARE

It has market share of 56 % currently. It is the biggest

manufacturer of motorcycles in the country. Last year it

produced 1,90,395 bikes. It means company achieved 62 %

growth in production. Now according to the increasing

demand and market it has doubled its production capacity.

The market size for two wheeler segment was around

340,000, while demand for Atlas Honda touched 230,000.

Parts of bikes are being manufactured 85 % locally.

Last year an investment of 4 billion has come in the

motorcycle industry, form that Atlas Honda invested 2.5

billion alone. Honda is a popular brand in the market and

3232

people want to buy it because of its quality, durability, after

sale services and good resale value. In the motorcycle

industry Honda has become an aspiration group for those

who have some other brand.

Competitor Brands

In Pakistani motorcycle industry Honda is a leader. Although

there are 50 brands of bike are available yet many of them

have not got recognition among the people.

All these exist in different segments of markets.

Yamaha

It is a basically two stroke 100 CC

motorcycle. It is very popular in

villages because people consider it more durable and a

smooth driving bike on rough roads. It is second second

largest selling brand of Pakistan.

3333

Sohrab

It is first Pakistani brand that was introduced. First time it

introduced heavy bike look in a four stroke and 70 CC

motorcycle. Its price is low as compare to Honda but. It is not

direct threat for Honda. But to some extent people like it

because it is rapidly increasing its quality, after sales

services and resale value. It is getting popularity in villages.

SuzukiIt is third selling brand in

Pakistan and it also targets the

villagers. Its image is also approximately same as Yamaha in

the mind of people and it also targets the village areas

3434

FACTOR MARKET

3535

Land:

36

CAPITAL (K)

ENTERPENEUR

LABOUR(L)

LAND(l)

FACTOR MARKET

36

Atlas Honda has two plants in Pakistan at Shiekhupora and

Karachi. The area of Shiekhupora Plant is 27 Acres and the

area of Karachi plant is 5 acres. Sheikupura plant is newly

constructed.

Labour:

The company created a good

environment, new trees, green

belts and grassy lawn have

been planted and developed

which have been appreciated

by those who have attended

the factory

Honda Company believes that when the organization grows,

the employ should also grow. During the year 2006 the

company put up a new factory and as a result 131

management associates were recruited. To train them the

company arranged extensive in-house and external trainings.

Atlas Fundamental Course (AFC-1) and junior management

course for non-management and middle management

associates respectively. Such activities enable the new

associates to mash into Atlas culture as well as learn sharp

floor management skills. In all 436 employees AFC-1 & J

course during year 2006. During the same year 12 employees

were also sent abroad for training. The Traditional Family

Day functions are being held at both plants which are well

3737

attended by families of associates. Company also give good

performance awards to well performed employees.

The labour of company are fully trained and 93.4 % are

literate. Following is the table showing data about education

profile of company labour.

EDUCATION PROFILES

Sr.

Qualification Mgmt Non-Mgmt

Total

1 CA/FCMA/ACMA 26 - 262 Masters 143 - 143

3 Bachelors 283 4 287

4 Intermediate 85 5 90

5 Certificates Holder(T.T.C)

81 -- 81

6 Matric 67 219 286

7 Middle -- 88 88

8 Illiterate - 65 65

Total 685 381 1,066Literacy Percentage 93.91 %

Illiteracy Percentage 6.09 %

Presentation in Chart

3838

CAPITAL

Money:

The Atlas Honda company is part of

Atlas Group which is financially

strong group is Pakistan. The

company was established with a

small amount of money.

From first day to now Honda strive hard time. In the begging

company was established with a loan of 560,000 and only

three men working. Now Honda’s annual share is Rupee 60

Billion. Honda is sharing 2.2% of Pakistan’s GDP. This

indicates it has enough capabilities to face challenges and

39

TECHNOLOGY MONEY

39

hardships of Pakistan Market. Honda power lies truly in his

financial power and mass production which are from his

group.

Technology:

Atlas has the country’s largest in-house manufacturing

capability at its Karachi and Sheikhupura plants.

To support the production facilities, the company has

established an R&D wing and tool making facilities through

CDA & CAM, which are growing rapidly in size and function

as the company expands. Atlas has managed to execute 14

Assistance Agreements between local vendors and foreign

manufacturers for transfer of technology.

Honda has world’s upgraded Japanese technology production

plant. This enables them to enhance their production. By

adopting technology Honda is producing their best quality

products. Which helping them to increase their production

and this makes them Pakistan’s Market Leader.

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ENTERPENUER

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MARKETING

MARKETING STRAGETY

The marketing team rightly takes

pride in achieving an all time high

sales. The real achievement of the

company has been in shouldering

its responsibility as the market

leader in the growth of the total

motorcycle industry. Atlas Honda

has taken some tough decisions in

enhancing the total customer base

as well as dealing with the menace of the unorganized

sector. On the achievement of the landmark, Atlas Honda

with the support of its large supplier network readjusted its

prices to pass on the benefit to its customers. Other players

followed suit and the unprecedented adjustment of prices

changed the two wheeler market in the country in a way

that has never been seen before.

The volumes that have now become possible will provide the

all-important base for more investment and even better

quality. In the process, Atlas Honda is now leading the two

wheeler industry towards a path that will enable it to

become globally Competitive. The Company will adopt the

middle way of push and pull strategy because due to

increasing demand pull strategy is not suitable. Similarly

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push strategy does not give a good impression to the

customer.

MAKETING MIX

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PRODUCTS

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PRODUCT

PROMOTION

PLACE

PRICE

MARKETPOSITIONIN

G

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Maintaining a global viewpoint, we are dedicated to

supplying products of the highest quality yet at a

reasonable price for worldwide customer satisfaction.

During the year 2006, the company launched new models. In

the 125cc segment Honda CG-125 Deluxe was launched.

Modern styling, added power and a disk brake function has

made it the choice purchase for a selected segment that was

looking for added value in the existing popular CG-125. In

addition to this, the regular CG 125 also underwent a Minor

Model Change (MMC) which proved to be huge success. A 53

growth in sales on year to year basis in the 125 cc category is

a testament to the success of the new model and the CG-125

MMC. The MMC has been a major success and Honda CD-70

is the best selling motorcycle in the market qwith sales of

over 300,00 annually. A 25 % increase to last year is a

measure of popularity of this model.

Currently we have following products to fulfill the needs of

market.

Honda CD 70

Honda CD 100

Honda CG 125

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HONDA CD 70

Honda CD 70 is the No. 1 choice in motorcycles. In addition

to its established superiority in terms of great speed and fuel

economy, the Honda CD 70 is presented with special

features;

The new attractively designed CD 70

Aerodynamic shape

Super econo-power

Smoke-free 4-Stroke engine

Special Honda 12-volt CDI

technology.

New eye-catching graphics,

Front and rear mud-flaps

Comfortable seat and the new

utility box

High resale value

Excellent petrol average makes

Easily available spare parts

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Honda CG 125

Honda CG 125 is the ideal combination of elegance and

power. Its speed and performance symbolizes the true

essence of modern life. It has following features;

125 cc 4-stroke engine

11-Horse Power

Low fuel consumption.

CDI Ignition System

12-volt battery (instead of

6-volt).

Brighter Headlight and

indicators

Easy starting-up of the

engine.

Ideal for

o High speed

o Long runs

o Rough pathways.

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HONDA CD 100

Honda Motorcycles are defined by Quality, Performance,

Speed, Economy Petrol and Re-sale Value. All these have

managed to successfully bag your trust on the New Honda

CD100.

It is a stunning result of

advanced Japanese

technology and right up

there as an outstanding

performer representing all

the qualities that make

Honda motorcycles so

special.

Bigger Headlight

Catching stylish look

Low oil consumption

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Easy go

PRICE

Atlas Honda products are well known due to its

quality and reliability. Company commitment is

not to just sale products for profits but quality

which enables us to win the confidents of people

and customer satisfaction.

Following are our prices of our products.

MODEL PRICE

Honda CD 70 Rs. 54000

Honda CD 100 Rs. 64000

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Honda CG 125 Rs. 71000

PLACE

Atlas Honda has developed Pakistan’s largest after sale

services network. The company has made its 1 to 5 S

dealers through out the country.

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These 5S stands for

Sales

Services

Spare Parts

Second Hand Exchange

Special Sales (credit)

According to the company these are not the simple selling

points but these are the complete HONDA Company. The

company has made Dealer Development Department, which

is responsible for the co-ordination with dealers and training

of mechanics.

The year 2006 saw improvement in almost all the major

marketing areas. The 5‘S’ dealer network was further

expanded dealers have upgraded their dealerships to a

modern, global standard. The resultant image enhancement

in the eyes of the public has generated more customers for

the company. The effective media promotion has made your

company and its products household names. The recall value

of the promotion has been rated as one of the highest ever.

This policy has further cemented the value of the product

and a greater number of first time users are now Atlas

Honda customers.

COVERS ALL PAKISTAN

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Atlas Honda has Pakistan’s

biggest sales network. The

company focused all over the

Pakistan, they sale their

products by their authorized

dealers.

Delivery System

Since Honda Company established, company has given the

contract to Saleem Raza Goods Transports Co. for delivering

their products to their sales points. They have very good

relation with the company and they are contributing their

best in growth of company.

PROMOTION

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The company focuses on its promotion campaign very

seriously. There are several internal and external programs

to increase its sale.

INTERNAL PROGRAMS

Service Development Department

The company has made Service Development Department,

which is responsible for the co-ordination with dealers and

training of mechanics. Department conducts massive

campaigns to familiarize and train the service and sales

dealers about the technical features of new models. In 2006,

there were different training programs. These attended by

931 Service dealers, 80 Antenna dealers and 3650 Honda 4

stroke mechanics. Moreover, 296 sales dealer’s staff and 85

Marketing staff of AHI were familiarized with the features of

new models.

The company is mostly using push strategy to promote its

motorcycles.

As CD-100 is their new product to promote it they force

the dealers to keep a CD-100 bike with them so that

when customers come they offer him to try the new

bike.

The company is offering package to dealers that for

every ’x’ bikes of CD 70 or CG 125 you have to take “y”

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bikes of CD 100. This also forces the dealers to try to

sell this new product.

Dealer Promotion

For the promotion of its dealers the company arranges

meetings and buffet dinners. One promotion activity was held

on 27th of April 2006 in Mughal-e-Azam near university

campus.

Technicians Training

For the promotion of its products the company has

trained 7000 mechanics. These mechanics are not only

providing repairing services to the people but also publicize

the products of company by word of mouth.

EXTERNAL PROGRAMS

Honda Company organizes different types of promotion

activities, some of them are following;

For the promotion of its products the company arranges rallies.

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Print media

The company is giving different types of commercials on different print periodicals.

Some are following;

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FINANCE

The Company has strong financial position. The year 2005-

06 was a good year; The Company undertook several major

projects which were executed in a timely and cost efficient

manner. The sales revenue grew to Rs. 17.42 billion. This

represents an increase of 23.37 % as against the previous

year’s Rs. 14.12 billion. In the financial year 2005-06, your

company continued to build on the successes of the previous

year by selling 360,108 units as compared to 287,184 units in

the corresponding period of 2005 which shows 25 % growth.

The gross profit margin for the period slightly decreases to

9.35 % from 9.52 % of the corresponding period. This was

largely due to unprecedented rise in raw material prices and

utility costs. However, the net impact has been more or less

offset by an increase in sales, volume, benefits of localization

and efficient fund management.

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Operating Expenses

The operating expenses increased to Rs. 528.32 million as

against Rs. 445.27 million for the same period last year. This

escalation was in line with the increase in sales and the

launching of new CG-125 deluxe, a premium model. The

increase in interest rates and additional borrowing for

capacity expansion and new projects led to an increase in

financial expenses to Rs. 151.61 million. The company had

budgeted this rise feels comfortable with the current capital

structure ot finance its growth. The company earned ever

highest profit before tax of Rs. 1,047.06 million as against Rs.

905.63 million for previous year a bottom line growth of 15

%.

Govt. Expenditures

The company paid taxes to national exchequer amounting to

Rs. 5.034 billion which are higher ever. On account of sales

tax, income tax and custom duties as against Rs. 4.5 billion

contributed last year. Payment of these taxes was more than

7.5 times the net after tax earning. The company’s

contribution to the national economy by way of value

addition this year amounts to 7.04 billion 71.46 % of net

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receipts from operations 13.6 % higher as compared to last

year.

Cash Flow:

The cash flow generated through the operating activities

was Rs. 543.86 million in 2006 as compared with Rs.

1489.11 million during 2005. Net income after tax increased

to Rs. 676.83 million in 2006 from Rs. 597.12 million in

2005, reflecting higher volume and growth on impact of

Localization.

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The positive cash flow during the year was mainly deployed

for capital expenditure (Rs. 2,125.86), debt repayment (Rs.

231.98 million).

Conclusion:

The reduction in tariff rates liberalization and global image of

Pakistan has resulted in substantial growth in foreign

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investment and exports. At the same time, there are

significant challenges that can be a threat if not addressed

timely. The company is faced with a great cost increase

problem due to the continuous rise in input raw material

especially steel prices, rubber and petroleum products.

The year 2005-06 turned out much as planned, although the

task was made harder by the burden of global raw material

price hike. Next year will be a difficult year for the country

economy. The business environment and the economy are

becoming more open and the business environment more

difficult. The automobile industry policy of deletion and

“forced” localization have been abandoned by the

government. The implications are severe i.e. “survival of

fitness”. In this environment, competitiveness is the key

success factor. However, your company is well positioned in

terms of capacity & efficiency. Barring any unforeseen

economics adjustment, Atlas Honda should maintain its

growth momentum. There is excepted strong competition

from Chinese and its Japanese competitors. So Honda should

recover from its internal and external expenditures hence it

would reduce cost of production. Customers will buy more

Atlas Honda in case if price still low.

It is strongly believed that under WTO agreements the

developing countries economies will be seriously affected.

The auto industry, and especially the motorcycle industry, is

poised for growth. The results speak for themselves. This is

the time to further nurture the industry otherwise a great

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opportunity to diversify the industry will be lost to the

country.

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BIBLIOGRAPHY

Pakistan Automotive Manufacturer Association

Atlas Honda Annual Reports (2002 to 2006)

Ministry of Industry and Trade, Govt. of Pakistan

Honda Web Site www.atlashonda.com.pk

Administration & Industrial Relations Department Atlas

Honda Limited

Karachi Stock Exchange

Trade Development Authority

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