A OVERALL STUDY ABOUT HERO MOTOCORP LTD,

TRICHY-620005

.

BY

S.JAYA PRAKASH

(Register No.814111631014)

A Project Report Submitted

to the

SHIVANI SCHOOL OF BUSINESS MANAGEMENT

in partial fulfillment of the requirements

for the award of the degree

Of

MASTER OF BUSINESS ADMINISTRATION

ANNA UNIVERSITY

CHENNAI-600025

OCTOBER 2012

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BONAFIDE CERTIFICATE

Certified that this project report titled A OVERALL STUDY ABOUT HERO MOTOCORP

LTD, TRICHY- 620005 is the bonafide work of S.JAYAPRASH (814111631014), who carried

out the project work under my supervision. Certified further, that to the best of my knowledge

the work reported herein does not form part of any other project report or dissertation on the

basis of which a degree or award was conferred on an earlier occasion on this or any other

candidate.

INTERNAL GUIDE Dr.M.Velavan

Dr. Suryamurthi Director

Asst. Professor Shivani School of Business Management

Shivani School of Business Management Tiruchirappalli

Tiruchirapalli

INTERNAL EXAMINER EXTERNAL EXAMINER

Date of Viva-Voce Examination:

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Pers/proj/

Director,

Shivani school of Business Management,

Navalur Kuttapattu, Trichy – 620009.

Dear sir,

Sub: Summer Project – permission for your student – reg

We are pleased to permit Mr S Jayaprakash, I MBA of your college to do summer project work in our organization.

The student may please be advised to contact the undersigned for further details.

Thanking you,

Yours faithfully,

R and D Tech, Srirangam, Tiruchirappalli, Tamil Nadu

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DECLARATION

I hereby declare that the project title A OVERALL STUDY ABOUT HERO MOTOCORP

LTD, TRICHY, 620005. Submitted for the award of Master of Business Administration in Anna

University, Chennai has carried out under the guidance of Assistant professor Dr.Suryamoorthi

MBA Assistant Professor Shivani School of Business Management, Tiruchirappalli and it is my

original work which does not form part of the award of any other degree.

Place: Signature of the candidate

Date:

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ACKNOWLEDGEMENT

It gives me immense pleasure to express sincere thanks to all who helped me in the

successful completion of this project work. First of all, I would like to thank the GOD

ALMIGHTY, who has been a constant support in every walk of my life and source of strength

in presenting this project.

I wish to convey my sincere thanks to Dr.P.Selvaraj, Chairman, Er.S.Vigneshwaran,

Secretary, Shivani School of Business Management, Trichy for their encouragement in doing this

project.

I express my special privilege and heartful thanks to Dr.M.Velavan, Director, Shivani

School of Business Management, Trichy for his guidance and encouragement.

I am greatly thankful to Dr.J.Sivasubramanian, Dean, Shivani School of Business

Management, Trichy for his guidance and encouragement.

I am greatly thankful to Dr.Suryamurthi, my internal guide for giving me this

opportunity and for extending constant support and valuable guidance throughout the project

work. I extend my sincere thanks to the Project Coordinator Mr.B.Narayanan, Assistant

Professor, Shivani School of Business Management, Trichy.

I would like to thank Mr. Manoj kumar, Personal Manager for providing me with an

opportunity to undertake this project in HERO MOTOCORP LTD, TRICHY.

My sincere thanks go to all faculty members of Shivani School of Business Management

for their help and assistance for the completion of the study.

Last but not least I wish to extend my sincere gratitude to my parents and friends, for the

support and co-operation they rendered to me to make this project perfect in its total. I convey

my thanks to all who helped me directly and indirectly to carry out this project successfully.

S.JAYAPRAKASH

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TABLE OF CONTENTS

S.No Title Page no.

1 INTRODUCTION 7

2 HISTORY 9

3 COMPANY PROFILE 11

4 CORPORATE PROFILE 12

5 KEY EXECUTIVES 14

6 TERMINATION OF HONDA JOINT VENTURE 16

7 COMPANY PERFORMANCE 17

8 RECOGNITION 17

9 MOTORCYCLE MODEL 18

10 SUPPLIERS 18

11 COMPETITORS 19

12 DEPARTMENTS 20

12.1 FINANCE 20

12.2 HUMAN RESOURCE FUNCTION 23

13 CONCLUSION 25

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INTRODUCTION

Hero MotoCorp Ltd., formerly Hero Honda, is an Indian motorcycle and scooter

manufacturer based in New Delhi, India. Hero Honda started in 1984 as a joint venture between

Hero Cycles of India and Honda of Japan. The company is the largest two wheeler manufacturer

in India. The 2006 Forbes 200 Most Respected companies list has Hero Honda Motors ranked at

#108.

In 2010, when Honda decided to move out of the joint venture, Hero Group bought the

shares held by Honda. Subsequently, in August 2011 the company was renamed Hero MotoCorp

with a new corporate identity On June 4, 2012,Hero MotoCorp approved a proposal to merge

the investment arm of its parent Hero Investment Pvt. Ltd. into the automaker. The decision

comes after 18 months of its split from Honda Motors.

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Type Public company

Traded as BSE: 500182

NSE: HEROMOTOCO

BSE SENSEX Constituent

Industry Automotive

Founded January 19, 1984

Founder(s) Brijmohan Lall Munjal

Headquarters New Delhi, India

Area served India, Sri Lanka

Key people Deya Varadh Sens (Chairman)

Pawan Munjal (MD & CEO)

Products Motorcycles, Scooters, Three-Wheeler vehicles

Revenue  239.43 billion (US$4.36 billion) (2012)

Net income 23.78 billion (US$432.8 million) (2012)

Total assets  60.58 billion (US$1.1 billion) (2012)

Parent Hero Group

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Website www.heromotocorp.com

History

Hero MotoCorp was started in 1984 as Hero Honda Motors Ltd.

1956—Formation of Hero Cycles in Ludhiana(majestic auto limited)

1975—Hero Cycles becomes largest bicycle manufacturer in India.

1983—Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed

Shareholders Agreement signed

1984—Hero Honda Motors Ltd. incorporated

1985—Hero Honda motorcycle CD 100 launched.

1989—Hero Honda motorcycle Sleek launched.

1991—Hero Honda motorcycle CD 100 SS launched.

1994 - Hero Honda motorcycle Splendor launched.

1997—Hero Honda motorcycle Street launched.

1999 - Hero Honda motorcycle CBZ launched.

2001 - Hero Honda motorcycle Passion and Hero Honda Joy launched.

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2002—Hero Honda motorcycle Dawn and Hero Honda motorcycle Ambition launched.

2003—Hero Honda motorcycle CD Dawn, Hero Honda motorcycle Splendor plus, Hero

Honda motorcycle Passion Plus and Hero Honda motorcycle Karizma launched.

2004—Hero Honda motorcycle Ambition 135 and Hero Honda motorcycle CBZ*

launched.

2005—Hero Honda motorcycle Super Splendor, Hero Honda motorcycle CD Deluxe,

Hero Honda motorcycle Glamour, Hero Honda motorcycle Achiever and Hero Honda

Scooter Pleasure.

2007—New Models of Hero Honda motorcycle Splendor NXG, New Models of Hero

Honda motorcycle CD Deluxe, New Models of Hero Honda motorcycle Passion Plus and

Hero Honda motorcycle Hunk launched.

2008—New Models of Hero Honda motorcycles Pleasure, CBZ Xtreme, Glamour,

Glamour Fi and Hero Honda motorcycle Passion Pro launched.

2009—New Models of Hero Honda motorcycle Karizma:Karizma - ZMR and limited

edition of Hero Honda motorcycle Hunk launched

2010—New Models of Hero Honda motorcycle Splendor Pro and New Hero Honda

motorcycle Hunk and New Hero Honda Motorcycle Super Splendor launched.

2011—New Models of Hero Honda motorcycles Glamour, Glamour FI, CBZ Xtreme,

Karizma launched. New licensing arrangement signed between Hero and Honda. In

August Hero and Honda parted company, thus forming Hero MotoCorp and Honda

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moving out of the Hero Honda joint venture. In November, Hero launched its first ever

Off Road Bike Named Hero "Impulse".

2012-New Models of Hero MotoCorp Maestro the Masculine scooter and Ignitor the young

generation bike are launched

Company profile

“Hero” is the brand name used by the Munjal brothers for their flagship company, Hero Cycles

Ltd. A joint venture between the Hero Group and Honda Motor Company was established in

1984 as the Hero Honda Motors Limited at Dharuhera, India. Munjal family and Honda group

both owned 26% stake in the Company. In 2010, it was reported that Honda planned to sell its

stake in the venture to the Munjal family.

During the 1980s, the company introduced motorcycles that were popular in India for their fuel

economy and low cost. A popular advertising campaign based on the slogan 'Fill it - Shut it -

Forget it' that emphasized the motorcycle's fuel efficiency helped the company grow at a double-

digit pace since inception. The technology in the bikes of Hero Honda for almost 26 years

(1984–2010) has come from the Japanese counterpart Honda.

Hero MotoCorp has three manufacturing facilities based at Dharuhera, Gurgaon in Haryana and

at Haridwar in Uttarakhand. These plants together are capable of churning out 3 million bikes per

year. Hero MotoCorp has a large sales and service network with over 3,000 dealerships and

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service points across India. Hero Honda has a customer loyalty program since 2000, called the

Hero Honda Passport Program.

The company has a stated aim of achieving revenues of $10 billion and volumes of 10 million

two-wheelers by 2016–17. This in conjunction with new countries where they can now market

their two-wheelers following the disengagement from Honda. Hero MotoCorp hopes to achieve

10 per cent of their revenues from international markets, and they expected to launch sales in

Nigeria by end-2011 or early-2012.

CORPORATE PROFILE

Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) is the world's largest manufacturer of two –

wheelers, based in India. In 2001, the Company achieved the coveted position of being the largest two-wheeler

manufacturing Company in India and also, the ‘World No.1’ two-wheeler Company in terms of unit volume sales in

a calendar year. Hero MotoCorp Ltd. continues to maintain this position till date.

Vision

The story began with a simple vision – the vision of a mobile and an empowered India, powered by its

bikes. Hero MotoCorp Ltd., company’s new identity, reflects its commitment towards providing world class

mobility solutions with renewed focus on expanding company’s footprint in the global arena.

Mission

Hero MotoCorp mission is to become a global enterprise fulfilling its customers’ needs and aspirations for

mobility, setting benchmarks in technology, styling and quality so that it converts its customers into its brand

advocates. The Company will provide an engaging environment for its people to perform to their true potential. It

will continue its focus on value creation and enduring relationships with its partners.

Strategy

Hero MotoCorp key strategies are to build a robust product portfolio across categories, explore growth

Opportunities globally, continuously improve its operational efficiency; aggressively expand its reach to customers,

Continue to invest in brand building activities and ensure customer and shareholder delight.

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Manufacturing

Hero Honda bikes are manufactured across three globally benchmarked manufacturing facilities. Two of

these are based at Gurgaon and Dharuhera which are located in the state of Haryana in northern India. The third and

the latest Manufacturing plant is based at Haridwar, in the hill state of Uttarakhand.

Technology

In the 1980’s the Company pioneered the introduction of fuel-efficient, environment friendly four-stroke

motorcycles in the country. It became the first Company to launch the Fuel Injection (FI) technology in Indian

motorcycles, with the launch of the Glamour FI in June 2006.

Its plants use world class equipment and processes and have become a benchmark in leanness and

productivity.

Hero MotoCorp, in its endeavor to remain technology pioneer, will continue to innovate and develop

cutting edge products and processes.

Products

Hero Honda's product range includes variety of motorcycles that have set the industry standards across all

the market segments. The Company also started manufacturing scooter in 2005. Hero Honda offers large no. of

products and caters to wide variety of requirements across all the segments.

Distribution

The Company’s growth in the two wheeler market in India is the result of an intrinsic ability to increase

reach in new geographies and growth markets. Hero MotoCorp extensive sales and service network now spans over

to 5000 customer touch points. These comprise a mix of authorized dealerships, Service & Spare Parts outlets, and

dealer-appointed outlets across the country.

Brand

The new Hero is rising and is poised to shine on the global arena. Company’s new identity “Hero

MotoCorp Ltd.” Is truly reflective of its vision to strengthen focus on mobility and technology and creating global

footprint. Building and promoting new brand identity will be central to all its initiatives, utilizing every opportunity

and leveraging its strong presence across sports, entertainment and ground- level activation.

2010-11 Performance

Total unit sales of 54, 02,444 two-wheelers, growth of 17.44 per cent

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Total net operating income of Rs. 19,401.15 Crores, growth of 22.32 per cent

Net profit after tax at Rs. 1,927.90 Crores

Total dividend of 5250% or Rs. 105 per share including Interim Dividend of Rs. 70 per share on face value

of each Share of Rs. 2 each

EBIDTA margin for the year 13.49 per cent

EPS of Rs. 96.54

KEY EXECUTIVES:

S.No Name Designation

1 Brijmohan Lall Munjal Chairman

3 Pawan Munjal Managing Director

2 Ilam C Kamboj Company Secretary

4 Suman Kant Munjal Non-Executive Director

5 Paul Edgerley Non-Executive Director

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6 Sunil Kant Munjal Joint Managing Director

10V P Malik

Non-Executive & Independent

Director

11M Damodaran

Non-Executive & Independent

Director

12Ravi Nath

Non-Executive & Independent

Director

7Pradeep Dinodia

Non-Executive & Independent

Director

8Pritam Singh

Non-Executive & Independent

Director

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Senior Management.MR. RAVI SUD

Sr. Vice President and Chief Financial Officer.

MR. ANIL DUA

Sr. Vice President - Marketing and Sales

MR. VIKRAM KASBEKAR

Sr. Vice President and Head of Operations & Supply Chain

DR. ANADI S. PANDE

Vice President (HRM, Corporate Planning & Strategy)

MR. VIJAY SETHI

Vice President and Chief Information Officer, Hero MotoCorp Ltd.

MR. NEERAJ MATHUR

Vice President- Strategic Sourcing & Supply Chain Management

HARJEET SINGH

Vice President and Head R&D

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Termination of Honda joint venture

In December 2010, the Board of Directors of the Hero Honda Group has decided to

terminate the joint venture between Hero Group of India and Honda of Japan in a phased

manner. The Hero Group would buy out the 26% stake of the Honda in JV Hero Honda. Under

the joint venture Hero Group could not export to international markets (except Sri Lanka) and

the termination would mean that Hero Group can now export. Since the beginning, the Hero

Group relied on their Japanese partner Honda for the technology in their bikes. So there are

concerns that the Hero Group might not be able to sustain the performance of the Joint Venture

alone.

The Japanese auto major will exit the joint venture through a series of off market

transactions by giving the Munjal family—that held a 26% stake in the company—an additional

26%. Honda, which also has an independent fully owned two wheeler subsidiary—Honda

Motorcycle and Scooter India (HMSI)—will exit Hero Honda at a discount and get over $1

billion for its stake. The discount will be between 30% and 50% to the current value of Honda's

stake as per the price of the stock after the market closed on Wednesday.

The rising differences between the two partners gradually emerged as an irritant.

Differences had been brewing for a few years before the split over a variety of issues, ranging

from Honda's reluctance to fully and freely share technology with Hero (despite a 10-year

technology tie-up that expires in 2014) as well as Indian partner's uneasiness over high royalty

payouts to the Japanese company. Another major irritant for Honda was the refusal of Hero

Honda (mainly managed by the Munjal family) to merge the company's spare parts business with

Honda's new fully owned subsidiary Honda Motorcycle and Scooter India (HMSI).

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As per the arrangement, it will be a two-leg deal. In the first part, the Munjal family, led

by Brijmohan Lal Munjal group, will form an overseas-incorporated special purpose vehicle

(SPV) to buy out Honda's entire stake, which will be backed by bridge loans. This SPV would

eventually be thrown open for private equity participation and those in the fray include Warburg

Pincus, Kohlberg Kravis Roberts (KKR), TPG, Bain Capital, and Carlyle Group.

Honda will continue to provide technology to Hero Honda motorbikes until 2014 for

existing as well as future models.[20]

Company performance

During the fiscal year 2008-09, the company sold 3.7 million bikes, a growth of 12%

over last year. In the same year, the company had a market share of 57% in the Indian market.

Hero Honda sells more two wheelers than the second, third and fourth placed two-wheeler

companies put together. Hero Honda's bike Hero Honda Splendor sells more than one million

units per year. On 1 June 2012, Hero MotoCorp reported its highest ever monthly sales at 5,

56,644 units in May, registering a growth of 11.28%.

Recognition

The Brand Trust Report published by Trust Research Advisory has ranked Hero in the

13th position among the brands in India.

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Motorcycle models

Streak

Achiever

Ambition 133, Ambition 135

CBZ , CBZ Star, CBZ Extreme

CD 100, CD 100 SS, CD Dawn, CD Deluxe, CD Deluxe (Self Start)

Glamour, Glamour F.I

Hunk

Karizma , Karizma R, Karizma ZMR FI

Passion , Passion Plus, Passion Pro

Pleasure

Splendor , Splendor+, Splendor+ (Limited Edition), Super Splendor, Splendor

NXG,Splendor PRO

Hero Impulse launched in 2011 after the separation of hero and Honda. Its India's first

off-road and on road Bike.

Suppliers

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It is reported Hero Honda has five joint ventures or associate companies, Munjal Showa,

AG Industries, Sunbeam Auto, Rockman Industries and Satyam Auto Components, that supply a

majority of its components.

Competitors:

Bajaj Auto

TVS Motor

Maharashtra Scooters

Atul Auto

Scooters India

Kinetic Engg

LML

Kinetic Motors

VCCL

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DEPARTMENTS.

FINANCE:

Revenues rise 2.5% yoy on back of a 3.6% yoy increase in realizations. The improvement

was sharp sequentially wherein net sales were better by 19.3% qoq post a weak Q2 FY12 

Margins at 12.6% were down 304bps yoy and 128bps qoq on back of increased ad spends

and higher material costs (unfavorable product mix)

Depreciation which includes royalty payments to Honda was noted lower by 2.2% qoq on

back of weakening of yen against Rupee

On back of slightly better volumes in H2 FY12, we build in flat volumes for the year and

assume moderate growth in FY13 

Maintain Market Performer with a revised 9-month price target of Rs1, 945. 

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Result table

(Rs m) Q3 FY12 Q3 FY11 %

yoy

Q2 FY12 % qoq

Volume 1,573,135 1,589,286 (1.0) 1,332,805 18.0

Realisation 39,333 37,979 3.6 38,921 1.1

Net sales 61,876 60,360 2.5 51,875 19.3

Material costs (45,854) (43,948) 4.3 (37,702) 21.6

Personnel costs (1,982) (1,993) (0.5) (1,922) 3.2

Other overheads (6,253) (4,987) 25.4 (5,059) 23.6

Operating profit 7,786 9,432 (17.4) 7,192 8.3

OPM (%) 12.6 15.6 (304)

bps

13.9 (128) bps

Depreciation (2,832) (2,987) (5.2) (2,895) (2.2)

Interest (30) (35) (15.7) (30) 0.3

Other income 901 828 8.8 993 (9.3)

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PBT 5,826 7,238 (19.5) 5,261 10.7

Tax (947) (1,108) (14.5) (855) 10.7

Effective tax rate

(%)

16.3 15.3 95

bps

16.3 0 bps

PAT 4,879 6,130 (20.4) 4,406 10.7

PAT margin (%) 7.9 10.2 (227)

bps

8.5 (61) bps

Ann. EPS (Rs) 97.7 122.8 (20.4) 88.2 10.7

Volumes rebound on festive chee. Gains back some market share

Hero Motocorp Ltd (HMCL) reported 19.3% qoq increase in revenues to Rs61.9bn on

back of strong festive sales booked in the quarter. Total volumes sold during the quarter were at

1,573,135 units which were 1% down yoy but up by a healthy 18% on qoq basis. The

realizations were higher sequentially by 1.1% on back of a slightly better product mix in

motorcycles wherein the dispatches of 125cc-150cc category increased during the quarter.

The quarter sales enabled HMCL to regain market share by 190bps in domestic

motorcycle segment on a sequential basis. In the scooters segment also HMCL made smart

market share gains of 3.9% at the expense of market leader HMSI. The share of scooters in total

domestic volumes continued to increase to 10.2% (vis-à-vis 9.9% in Q2 FY12) on back of the

success of the Pleasure and Maestro. Management indicated of increasing the capacity in

scooters and slew of product launches in this segment going ahead to further reap this market.

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HR FUNCTIONS:

The following are main function of Human Resource department and manager.

They are as follows:

Recruitment

Training

Disciplinary action

Preparing an organization chart

Maintain and updating employee’s personnel data

Long term settlement co-ordination

Shift & attendance record

Employee grievances

Safety

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Security

Employee social arrangement

Leave records maintenances

Leave records maintenances

Advise to wages calculation

Retirement

Award distribution

Annual day celebration

Communication, union, employee ship council meeting

conducting safety programs

Providing uniforms.

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CONCLUSION:

It is one of the great choices to do practical analysis in industry through this

field work. I got some exposure, knowledge from the resources. And I know about

the peaceful setup how helps the management and worker to succeed in their life.

And I thank who all helped me to finish this project report.

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