Atlas Honda Limited

COMPANY INFORMATION

THE BOARD OF DIRECTORS

Mr. Yusuf H. Shirazi (Chairman)

Mr. Saqib Hussain Shirazi (CEO)

Mr. Aamir H. Shirazi (Director)

Mr. Motohide Sudo

Mr. Sanaullah Qureshi

Mr. Sherali Mundrawala

Mr. Takemi Ishikawa

Mr. Tariq Iqbal Ahmed

COMPANY SECRETARY

Mr. Sohail Ahmed

AUDITORS

Hameed Chaudhri & Company

Chartered Accountants

LEGAL ADVISORS

Mohsin Tayebaly & Co

BANKERS

Bank Al-Habib Limited

Credit Algricole Indosuez

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Atlas Honda Limited

Deutch Bank AG

Emirates Bank International P.J.S.C.

Habib Bank Limited

Muslim Commercial Bank Limited

National Bank Of Pakistan

The Bank Of Tokyo Mitsubishi Limited

United Bank Limited

REGISTERED OFFICE

1-McLeod Road, Lahore.

FACTORY

F-36, ESTATE AVENUE, S.I.T.E., KARACHI

26-27 KM, LAHORE-SHEIKHOPURA ROAD, SHEIKHOPURA

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Atlas Honda Limited

INTRODUCTION OF ATLAS HONDA LIMITED

Atlas Honda limited is a joint venture between the Atlas group and

Honda Motor Company, Japan. The company was created by the merger

of Punjdarya Limited Sheikhoopura successor to Atlas Epak Limited,

Dhaka. Since taken over by the government of Bangladesh and Atlas Autos

Limited in 1991.

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 shock absorbers under a technical assistance agreement

with Showa Of Japan, world leaders in shock absorber company Honda

motor cycles are by far the best selling motorcycle in the country with an

unmatched reputation for high quality, reliability and after sales services.

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 countries largest in house

manufacturing capacity in the industry at its Karachi and Sheikhupura

plants. To support the production facilities the company has established an

R&D (research and development) wing and tool making facilities, which are

growing rapidly in size and functions as the company expands.

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Atlas Honda Limited

Atlas has managed to execute nine joint ventures / technical assistance

agreements between local venders and foreign manufacturer for transfer of

technology.

Atlas management is striving to modernize company operations by adapting

applicable aspects of research and theory and more specially Honda’s unique

philosophy of hard / soft technologies to the realities of Pakistani conditions.

Company management structures, system, and processes are changed

frequently to meet demand of customer needs, growth and new technology

efforts are being made to develop participation of all levels of personal in

decision making and substantial and effective delegation has been

established at levels where applicable. Various participation programs such

as “AALA MAYAR” Quality circles movements, launched in 1985, are

strongly encouraged to allow constructive self expression and team work.

The company training and development program encourage each member to

develop himself and contribute to his full potential.

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 1500 motorcycles sales service and

spare parts dealers has been established. To backup the system, atlas has

setup technical training statement centers in Karachi Lahore and Faisalabad,

which provide several courses of varying duration, and complexity for

motorcycles 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.

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Atlas Honda Limited

VISION OF AHL

Atlas Honda limited, being Japanese, always believe in quality leadership

customer satisfaction and satisfaction of shareholders. The executives and

managers at AHL are keen about the staff cooperation and dedication. That’s

why promoting teamwork culture is the core activity of the company. The

vision of AHL as follows:

“To remain a market leader in the motorcycle industry and emerge as

a globally competitive center of production and exports.”.

The above statement clearly predicts the overall scenario of the management

at AHL.

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Atlas Honda Limited

MISSION STATEMENT

Mission Statement, the statement that further reveals the practicalities of any

organization, comparable to its vision statement. The Mission Statement at

AHL is highlighted below:

“To be a dynamic profitable growth oriented company through market

leadership excellence in quality and service optimizing value for the

shareholders and maximizing exports

To give attractive return to business associates and shareholders as per

their expectations.

Be a responsible employer and reward employees according to their

abilities and performance.

To be a good corporate citizen in order to fulfill its social responsibilities.

To create and foster a network of researchers, engineers, who will make

unique contribution to the development of motorcycle industry ensuring

satisfaction of our valuable customers and protection of the environment

by producing emission friendly green products. ”.

The Honda Company’s purpose is indispensable to all Honda associates,

when it comes to understanding the reason for the existence of the company.

Top management at AHL try to ensure that mission statement:

a) Is appropriate to the purpose of organization.

b) Includes commitment to comply with requirements and to continually

improve the effectiveness of quality management system.

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Atlas Honda Limited

c) Provides a framework for establishing and reviewing the specified

objectives.

d) Is communicated and understood within the organization.

e) Is reviewed for continual suitability.

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Atlas Honda Limited

COMPANY POLICY

CUSTOMER

Our customers are the reason and source of our business , it is our joint aim

with our dealers to ensure that the customer enjoy the highest level of

satisfaction from use of Honda motorcycle.

QUALITY

To ensure that our product and service meet the set standards of excellence.

LOCAL MANUFACTURING

To be the industry leader in indigenous of motorcycle parts.

TECHNOLOGY

To develop and maintain distinct business advantage through continuous

induction of improved hard and soft technology.

SHAREHOLDERS

To ensure health and viability of business and the safeguarding shareholder

by maximizing profit, payment of regular satisfactory dividend and adding

values of the shares.

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Atlas Honda Limited

EMPLOYEE

To enhance and continuously update each member’s capabilities and

education and to provide an environment to encourage practical expressions

of individual potential in goal directed team efforts and compensate them

attractively, according to their abilities and performance.

CORPORATE CITIZEN

To comply with all government laws and regulations and to maintain high

standards of ethics in all operations, and act as a responsible member of

community.

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Atlas Honda Limited

QUALITY POLICY

Commitment to provide the high quality motorcycles & parts

Right work in first attempt and on time

Maintain and continuously improve quality

Training of manpower and acquisition of latest technology

Safe, clean and healthy environment

Market leadership and prosperity for all.

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Atlas Honda Limited

PHILOSOPHY AT AHL

The center of AHL’S philosophy is based on the company’s principle.

Underlying the company’s principle are two fundamental beliefs:

1. Respect for individuals and

2. Three Joys.

1. RESPECT FOR INDIVIDUALS

At AHL individuals are counted as a member of team that is working for the

achievement of specific targets. So here every individual from the top

management to the employees is categorized as an important part of the

company. Also every associate is honored for his or her efforts and

contribution.

Associates at Honda are motivated to think creatively and act on their

judgment and initiative.

All members at AHL are equally recognized, no discrimination is made on

the basis of race, age, sex, religion, national origin, educational background

and social and economic status.

2. THREE JOYS

AHL believe that each person working, or coming in touch with our

company directly or through our products, should share a sense of joy

through the experience. This feeling is expressed as “ Three Joys”.

AHL’S goal is to provide joys to those who:

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Atlas Honda Limited

Produce their Products.

Sell their Products.

Buy their Products.

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Atlas Honda Limited

CULTURE OF ATLAS HONDACULTURE OF ATLAS HONDA

During my stay at atlas HondaDuring my stay at atlas Honda Limited Karachi I have found a unique blendLimited Karachi I have found a unique blend

of differentof different valuable cultural variables that includes valuable cultural variables that includes

There is egalitarian system in the whole organization i.e. there areThere is egalitarian system in the whole organization i.e. there are

equal opportunities and chances of progress for all employees.equal opportunities and chances of progress for all employees.

There is power delegation at every level.There is power delegation at every level.

There is lesser power distance between top-level management andThere is lesser power distance between top-level management and

lower level management for example each and every employee canlower level management for example each and every employee can

have an easy access to even the CEO of organization. have an easy access to even the CEO of organization.

There is room for innovation. Each employee is encouraged to pave aThere is room for innovation. Each employee is encouraged to pave a

better way for innovation.better way for innovation.

There is practical implementation of There is practical implementation of TQMTQM (total quality (total quality

management) and continuous improvement which is inherited inmanagement) and continuous improvement which is inherited in

Japanese culture , in the form of Japanese culture , in the form of KAIZEN KAIZEN ( a slight change towards( a slight change towards

improvement ) and improvement ) and AALA MAYAR.AALA MAYAR.

There exists equality in overall organization, which is well There exists equality in overall organization, which is well

represented by the thing that the lower level workers and top levelrepresented by the thing that the lower level workers and top level

management even the CEO of the organization wear the samemanagement even the CEO of the organization wear the same

uniform. uniform.

Employees are very much cooperative with each other.Employees are very much cooperative with each other.

Management and employees are open to market challenges.Management and employees are open to market challenges.

There are no unnecessary bindings of excessive rules and regulations.There are no unnecessary bindings of excessive rules and regulations.

There is effective interdepartmental communication between all theThere is effective interdepartmental communication between all the

departments.departments.

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Atlas Honda Limited

There are no communication gaps between top-level management andThere are no communication gaps between top-level management and

lower lever workers.lower lever workers.

There is almost 100% job security for employees, so employees areThere is almost 100% job security for employees, so employees are

devoted towards their jobs and are well satisfied with their jobs. Theredevoted towards their jobs and are well satisfied with their jobs. There

is almost zero percent job turn over.is almost zero percent job turn over.

Customers’ satisfaction is the major focus of the organization.Customers’ satisfaction is the major focus of the organization.

Customer is king for the organization.Customer is king for the organization.

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Atlas Honda Limited

DEPARTMENTS

I have visited following departments of ATLAS HONDA LTD, Karachi.

Human resource

Finance

Maintenance

Vender procurement

Production

Information technology

Marketing

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Atlas Honda Limited

HUMAN RESOURCE DEPARTMENT

This department has three sections

1. Human resource

2. Administration

3. Industrial relations

HUMAN RESOURCES

This section performs following functions

Recruitment & selection of employees

Training & development of employees

Succession planning of employees

ADMINISTRATION

This section performs following functions

Facilitation of company guests and executives

Employees’ Mess management

Utilities administration

Miscellaneous administrative activities

INDUSTRIAL RELATIONS

This section performs following functions

To build a healthy cooperation between management and workers.

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Atlas Honda Limited

FINANCE

Atlas Honda has a well established finance department. It is totally

computerized .it has its own system which is prepared by IT department.

Finance department has further following sections.

Finance

General ledger

Costing

Taxation

Sales

Payables

Payroll

FINANCE

This section deals with the

Banking matters

Fund management

Import accounting.

COSTING

It is an important section of finance department, which deals with all costing

matters including all material, labor, and overhead costs.

TAXATION

It deals with all tax and custom duty related affairs.

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Atlas Honda Limited

PAYABLES

This section deals with the following activities.

Vender payables

Utility payables

Insurance payables

Tax payables

Club payments

Other payable

PAYROLLS

This section controls the salary system of the organization. All the system is

computerized. First of all the attendance of all employees is recorded and at

the end of the month salary of all employees are paid after all deductions*

* Tax deductions, absenteeism deductions and all other deductions

GENERAL LEDGER

Finally all the transactions are recorded in general ledgers. General ledger

for each account is maintained separately. There is a computerized system,

which then produce different statements.

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Atlas Honda Limited

VENDOR PROCUREMENT DEPARTMENT

At present, 82 vendors are working with the company.

This department performs following functions

This department is responsible for all the relations and dealing with

different vendors.

This department motivates vendors to produce excellent quality and

train them to achieve the highest level of quality.

This department also deals with the CKD (complete knock down).

This department performs VIP (vendor improvement programe).

Under this programe, the department representatives go to the vendors and

train them for new methods to produce better quality at reasonable price.

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Atlas Honda Limited

PRODUCTION DEPARTMENT

It is very important department as it produces the main product of the

company, which will eventually generate revenue. The production

department has twelve different shops. Each shop is responsible for different

production functions. These shops include

Raw material shop

Cutting shop

Press shop

Dying shop

Welding shop

CKD shop

Switch assembly shop

Tire shop

Engine shop

Washing shop

Final assembling shop

Inventory shop

The productions department is very efficient. The average per

motorcycle assembling time is four minutes. The production department

of Karachi plant can produce 250 motorcycles per day.

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Atlas Honda Limited

INFORMATION TECHNOLOGY DEPARTMENT

Atlas Honda has a sophisticated IT system. All the departments are

linked through network. Each and every department is computerized. This

computerization has reduced the burdens on employees. Particularly the

employees of finance department have different soft wares to support their

work. All these soft wares have been developed by company’s own IT

department. Mostly soft wares are developed in-house and in some special

cases outsourcing is also being used.

VISION STATEMENT OF IT DEPARTMENT

I.T Department is dedicated to provide reliable information base using most

modern technology to potential users at all levels. Our professionals individually

and collectively, will constantly improve their competitive skills and excel in

providing quality service covering all the aspects of the technology.

By embarking into the digital age we will accelerate the positive effects and

mitigate the challenges as knowledge grows when shared.

We will innovate in a research-oriented manner with technologies to create our

own future and value added activities for profitable relationships with our

stakeholders, thus encouraging intellectual curiosity for our products, service

and insight that will help people around the world, shape the ways business and

education will be done in future. Our professionals and their competitive skills

will be the hallmark, that combined with technology innovation, expert skills

and teamwork, will keep us leaders in "CHANGE" to open new doors.

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Atlas Honda Limited

MAINTENANCE

This department is responsible for all the maintenance of the whole factory,

offices and even the houses of top management. In order to provide

effective, efficient and timely maintenance this department has two type of

information.

It has Machine wise spare parts report

Machine and equipment list

Seventeen employees are there in this department. Three are engineers and

others are workers.

It provides two types of maintenance.

Corrective/ Breakdown maintenance

Preventive maintenance

CORRECTIVE/BREAKDOWN MAINTENANCE

The same department also carries out Emergency/breakdowns of

machines & equipments and plant maintenance work. If any of the above

problems occur then the concerned department sends a Work Request to this

department, then this department resolves the problems according to the

Work Request.

PREVENTIVE MAINTENANCE

In this maintenance system department tends to provide and follows a In this maintenance system department tends to provide and follows a

comprehensive preventive maintenance program. According to this programcomprehensive preventive maintenance program. According to this program

the department set a sequence of maintenance activities for all the machinesthe department set a sequence of maintenance activities for all the machines

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Atlas Honda Limited

of different production shops on continuous basis. Some machines areof different production shops on continuous basis. Some machines are

checked on monthly basis and others are maintained on some other fixchecked on monthly basis and others are maintained on some other fix

intervals in order to prevent any breakdown and to streamline the productionintervals in order to prevent any breakdown and to streamline the production

process.process.

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Atlas Honda Limited

MARKETING DEPARTMENT

Marketing department is divided into three parts on behalf of its functions.

Sale

Service

Spare parts

SALE

It is an important division of marketing department. It is the profit centre of

the company. It deals with three types of sales.

1. INSTITUTIONAL SALE

The company provides the direct sale to the institutions. Company provides

the motorcycle to following institutions.

Police departments

CSD (canteen store department)

TCS (technology communication supplies)

Pesticide companies

Many others

2. INDIVIDUAL SALE

This is the usual sale to the individuals. This usually follows the following

path.

Company Dealer Customer

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3. EXPORTS

Company also exports CG 125 to Sri Lanka, Nepal and Bangladesh.

FUNCTIONS PERFORMED BY SALE SECTION

The sale section of the marketing department performs the following

functions

Forecasting of sale

Booking of motorcycles through dealers

Managing the payment

Manage the dealership network

The company follows the policy of advance booking which means company

first receive the payment and then produce the product according to demand

and this is the reason that the company has a very low amount of receivables

and most of the receivables are based on the sale made to institutions.

SHOW ROOM

Sale section also deals with the showroom. There is only one company

owned showroom in Karachi and this showroom is meant only for the

display of motorcycles. In the past the company used to sell the motorcycles

from the showroom but now a days company doesn’t sell the motorcycles

through its showroom. But in some special cases the company sells the

motorcycles from showroom to the persons that have relationship to the

company employees.

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Atlas Honda Limited

SPARE PARTS

This is another important division of the marketing department.

Basically company doesn’t consider it as profit center rather a supportive

section to produce better customer service. It has separate distribution

system and different parts dealers in different regions.

SERVICE

The second major section of the marketing department is service section.

The service section deals with

Antenna or service dealers

Warranty and training centre

ANTENNA OR SERVICE DEALERS

These are the authorized dealers of the company. The company provides

them autonomy while dealing with the claims and these dealers have the

autonomy to replace the defected part without consultation with the

company. Company provides two free tunings after the sale of motorcycle.

Basic reason for the establishment of these dealers is to satisfy their

customer and increase the customer loyalty.

WARRENTY CENTRE

In Karachi the company has a well-established warranty and training centre.

this centre handles the service section. Warranty and training section

performs the following functions

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Atlas Honda Limited

Deals with the claims

Training to different service dealers

CLAIMS

The company has a policy that customers’ claims will be settled if these are

made within the six months or 1000 km coverage (whatever occurs first)

warranty conditions.

TRAINING

Warranty center not only provides training to their antenna and service

dealers but also the mechanics of ordinary workshop in order to develop the

skilled four stroke mechanics. Company organizes the workshops on regular

basis and invites antenna and service dealers from all over the Pakistan to

participate in these workshops and training program.

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Atlas Honda Limited

MARKETING MIX

There are four elements of marketing

Product

Price

Place

Promotion

PRODUCT

Atlas Honda has two basic products

Honda CD 70

Honda CG 125

Both of them are the four stroke motorcycles. Both the products have a good

repute in the market and that is the reason that Honda has approximately

63% market share now a days.

The basic reason of the success is the quality maintained by the company

throughout its career.

These two models of HONDA are being manufactured in Sheikhupura and

Karachi. Each plant has a capacity to produce 250 motorcycles per day, but

still the market demand is not being fulfilled.

In order to increase market share marketing department perform following

activities

New model

Changes in design

In-house production

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Atlas Honda Limited

NEW MODEL

In order to get more market share atlas Honda has been introducing new

models over the time. The latest model was launched by company in 1992-

93. Previously there was a small fuel tank but in the new model company

introduced a large fuel tank as compared to the previous one. But the

company always maintained the quality of its motorcycle.

CHANGES IN DESIGN

There was a great demand from the customers to launch a new model but it

is a difficult job to launch a new model so in order to fulfill the customer

wants the company has a policy to change the stickers of fuel tank and side

covers and some other nominal changes in indicators headlights etc. time by

time, in order to satisfy customers needs. But the engine and other main

accessories are the same.

INHOUSE PRODUCTION

At the outset of company 90-95% parts were imported from Japan and were

assembled in Pakistan. With the passage of time company introduced the

concept of localization. Company encouraged the local vendors and

suppliers to produce the parts of motorcycle according to the level of Honda

international. So in order to maintain the quality, the parts made by local

vendors were approved by the Honda international and then they were used

in local production. So now Atlas Honda has managed to localize almost

89% of the parts. Still 11% parts are being imported from Japan. Atlas

Honda also provides assistance to their vendors to maintain high quality.

They send their engineers to check the quality and to train the vendors in

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order to produce the required qualitative product. This all is done under the

head of marketing department.

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COMPETITORS BRANDS & MODELSCOMPETITORS BRANDS & MODELS

YamahaYb-100ExcellenceYama-4

SuzukiSD-110SD-Flash

SohrabJS-70JC-125 (china)

Pak hero PH-70

Hero RF-70RF-125

Star DS-70C-70 (CBU)

Lifan LF-70LF-150

Jailing JH-70 (Remot-Self)JH-70 (Without)

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PRICE

Atlas Honda has two products and their prices are as under

Honda CD70 Rs. 58500

Honda CG 125 Rs. 73000

The company uses the single price strategy. It means the product has the

same price all over the Pakistan.

Initially Atlas Honda was the only producer of qualitative four-stroke

motorcycle in Pakistan. So they were taking the advantage of this

monopolistic situation and using the price skimming strategy and were

charging higher prices.

Till 17th may 2003 company had the high prices for its motorcycles.

Due to these high prices the competitors found a gap and entered into the

market with low prices and start capturing market share. After the intense

research work Atlas Honda was in a position to reduce prices. The major

objective to reduce the prices was to increase the market share and to utilize

full production capacity. So company has reduced Rs. 10,000 in HONDA

CD70 and almost Rs. 5000 in CG 125.

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COMPETITORS’ BRAND PRICES

Yamaha Rupees

Yb-100 61800Excellence 62500Yama-4 63300

SuzukiSD-110 64000SD-Flash 76500

SohrabJS-70 43500JC-125 (china) 62000

Pak heroPH-70 42500

HeroRF-70 46000RF-125 70000

StarDS-70 40400C-70 (CBU) 52000

LifanLF-70 40000LF-150 85000

JailingJH-70 (Remot-Self) 46000JH-70 (Without) 42000

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PROMOTION

Promotion mix is

Advertisement

Sales promotion

Personal selling

Publicity

ADVERTISEMENT

Atlas Honda uses the print media as well as electronic media for

advertisement. In print media the company gives advertisements in

newspapers and it also uses billboards on the road side for the promotion of

the product.

On electronic media, company gives their advertisement on GEO channel

during hourly news. Company has a contract with AdCom (advertising

agency) for all of its advertising activities.

SALES PROMOTION

Atlas Honda also promotes its product through different sales promotional

activities.

Company sponsors different functions and activities in main cities.

Company provides rewards and incentives to their dealers on

achieving targets. Company send their successful dealers to different trips all

over the world.

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Atlas Honda Limited

PERSONAL SELLING

The company does personal selling as well, not to individuals but to

institutional customers.

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DISTRIBUTION

Atlas Honda gained good market share due to its strong distribution

network. For distribution atlas Honda has divided the whole country into

two regions.

1. South region

2. North region

SOUTH REGION

It includes following territories

Karachi

(Karachi region covers whole Sindh province)

Quetta

(This covers whole Baluchistan province)

NORTH REGION

It includes following three territories

Multan

(Its includes all lower Punjab cities)

Lahore

(It covers cities from upper Punjab)

Rawalpindi

(It covers Islamabad and NWFP.)

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“5S” DEALERS

This is a new emerging trend set by atlas Honda. Now days the company is

emphasizing on “5S” facilities to their customers through “5S dealers”.

5s stands for the following five facilities

1. Sale

2. Service

3. Spare parts

4. Special sale

5. Second hand sales

SALE

It includes only the sale of new motorcycles.

SERVICE

It includes after sale service to the customers like Warranty claims, Tuning

of motorcycles, Repair of motorcycles etc.

SPAREPARTS

Company provides spare parts facility to their customer

.

SPECIAL SALE

It deals with the credit facility. In special sale, the dealer provides the

customer with credit facility at his own behalf. Atlas Honda does not provide

any support for credit sale.

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Atlas Honda Limited

SECOND HAND SALE

Dealer also deals in second hand Honda motorcycles. The company wantsDealer also deals in second hand Honda motorcycles. The company wants

that the customer might not switch to other brand even in second handthat the customer might not switch to other brand even in second hand

motorcycles.motorcycles.

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SALES PROFILES

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SALES TRENDSSALES TRENDS

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SALES GRAPH

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MARKET SHARESMARKET SHARES

2 WHEELER MARKET SIZE IN PAKISTAN2002-2003

HONDAHONDA 117000117000 60%60%

YAMAHAYAMAHA 2800028000 14%14%

SUZUKISUZUKI 1400014000 07%07%

CHINESECHINESE 3600036000 18%18%

TOTALTOTAL 195000195000 100%100%

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BRANDBRAND JULY~JUNE 2002-03JULY~JUNE 2002-03

Atlas Honda Limited

FINANCIAL ANALYSIS

In order to know whether a firm is using its resources efficiently or not,

financial analysis is necessary. The information derived from these types of

analysis is used to determine the overall financial position of the company. I

have calculated certain ratios which will be helpful to determine the existing

financial position of AHL.

TYPES OF FINANCIAL RATIOS

Different ratios can be calculated from financial statements. Major

categories are as follows.

A. Liquidity ratios

B. Leverage ratios

C. Activity ratios

D. Profitability ratios

LIQUIDITY RATIOS

It measures the firm’s ability to meet its short-term obligations as they come

due. If a firm is unable to pay its current liabilities through its current assets

it can become insolvent in future. This ratio includes:

1) Working Capital = Current Assets-Current Liabilities

2002 2001

Rs. 347,904,000 Rs. 327,842,000

Working capital of AHL has increased in 2002 as compare to 2001, which is

a good sign for the company. It means firm has enough cash to meet its

short-term obligations.

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2) Current Ratio = Current Assets / Current Liabilities

2001 2002

1.48 1.38

A little bit decrease has occurred in year 2002 but still it is not good as it is

above 1.s

3) Quick (Acid-Test) Ratio = Current Assets – Inventory /

Current liabilities

2001 2002

64.8 % 83.5 %

It also shows an increase as compare to previous year, so AHL has enough

cash available to pay all its current assets.

Cash Ratio = Cash Equivalents + Marketable Securities / total assets

2001 2002

15.7 % 32 %

cash ratio has gone up in 2002. it’s a good indicator but company can earn

more by investing it in some other activities.

LEVERAGE RATIO

It measures a firm’s long-term solvency problems whether a firm is able to

pay its long-term debts or not.

This includes following Ratios:

4) Debt – Equity Ratio = Current Liabilities + Long Term

Liabilities / Stock Holder’s Equity

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Atlas Honda Limited

2001 2002

0.57 0.616

This ratio has gone up from previous year. It is a good indicator as this ratio

is going up. It means company is making progress.

5) Debt Ratio = Total Liabilities / Total Assets

2001 2002

55% 56%

This ratio is almost same in both years. it means there is stability . this is a

good indicator.

ACTIVITY RATIO

It indicates how efficiently management utilizes its assets in generating

revenues. It can be measured by:

6) Total Asset turnover = Sales / Total Assets

2001 2002

3.16 3.015

Ratio has decreased from previous year.

Fixed Asset turn over = Sales / Fixed Assets

2001 2002

10.46 10.31

It has approximately the same as in 2001. AHL is more efficiently utilizing

its fixed assets, as fixed assets are more productive. So it is a good sign.

7) Inventory Turn over Ratio = Cost of Goods Sold /

Inventory

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Atlas Honda Limited

2001 2002

7.92 times 10.36 times

There is increase in this ratio, which shows good performance. It shows that

company has increased its sales in this year to a great extent.

8) Average age of Inventory = 365 / Inventory Turn Over

2001 2002

45 days 35days

It shows that after how many days inventory is being sold out. It has also

reduced to 35 days in 2002, which shows that AHL is making progress. This

is because the sales have gone up in year 2002.

PROFITABILITY RATIOS

It measures the overall record of management in generating profit. If a firm

does not earn adequate profit, its long run survival will be threatened.

9) Gross Profit Margin = Gross Profit / Net Sales

2001 2002

9.7 % 13.31

This ratio has increased in 2002. It means that management is efficiently

controlling its variable cost, and the efficiency of the firm is increasing as

the gross profit margin is increasing.

10) Operating Profit Margin = EBIT / Net Sales

2001 2002

4.69 % 7.48%

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Atlas Honda Limited

It has increased in year 2002 it shows, AHL has a good control over its

expenditures.

11) Net Profit Margin = Net profit after Taxes / Net Sales

2001 2002

2.5% 4.9 %

Net Profit Margin has also increased. Profit margin is almost double in 2002

than in 2001. it shows that company is on its way to progress. If a company

is not able to earn profit, it will be no longer in the industry. It shows the

strength of the company.

12) Return on total assets = Net Profit / Total Assets

2001 2002

7.91% 14.76 %

It measures the firm’s ability to utilize its assets to generate profit. It has

been increased in year 2002; it means that the productivity of assets to

generate profit has been increased. Same assets are now generating more

profit.

13) Dividend payout Ratio = Dividends / Net Profit after Taxes

2001 2002

44 % 40.9 %

Dividend pay out ratio has been reduced but it cannot be a bad indicator

always. Profit may be reinvested which is a good approach by management

to be successful in long run.

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Atlas Honda Limited

SWOT ANALYSISSWOT ANALYSIS

STRENGTHS

Atlas Honda Ltd. has following strengths.

QUALITY PRODUCTQUALITY PRODUCT

Atlas Honda Ltd. has quality products, which is one of its major

strengths.

GOOD IMAGEGOOD IMAGE

Company has a good and favorable image in the market and in the

mind of customers.

EXCELLENT SERVICESEXCELLENT SERVICES

Company provides excellent services (after sales services) to its

customers.

FINANCIAL STRENGTHFINANCIAL STRENGTH

Atlas Honda ltd. is financially strong company which is its anotherAtlas Honda ltd. is financially strong company which is its another

strength.strength.

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Atlas Honda Limited

INTENSIVE DISTRIBUTION NETWORKINTENSIVE DISTRIBUTION NETWORK

Company has intensive distribution network (dealers) through out the

country which is it strength.

COMMITTED EMPLOYEESCOMMITTED EMPLOYEES

Company has committed and devoted employees that are loyal to the

company, which is another strength of the company.

FOUR STROKE TECHNOLOGYFOUR STROKE TECHNOLOGY

Four-stroke technology is being used in Honda motorcycles that is

again another strength of the company. This is the latest technology being

used in this industry.

AVAILABILITY OF PARTSAVAILABILITY OF PARTS

The Spare Parts OF the motorcycles are easily available all over the

country which is another strength of the company.

LARGEST SERVICE NETWORKLARGEST SERVICE NETWORK

The company has the largest service network through out the country.

RESEARCH AND DEVELOPEMENTRESEARCH AND DEVELOPEMENT

The company has an R&D department which suggests the production

department to use latest technologies.

MARKET RESEARCH

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Atlas Honda Limited

Company has a sophisticated market research system. With the help of thisCompany has a sophisticated market research system. With the help of this

system company is able to get knowledge about competitors activities and marketsystem company is able to get knowledge about competitors activities and market

trends. trends.

LATEST PRODUCTION FACILITIESLATEST PRODUCTION FACILITIES

The company has latest production facilities which increases the

production level and quality.

INNOVATIVE CULTUREINNOVATIVE CULTURE

The culture of the company is very rich which is supportive for

employees to innovate new ways to improve the things.

VENDOR IMPROVEMENT PROGRAMVENDOR IMPROVEMENT PROGRAM

Company has a vendor improvement program. With the help of this

program company is able to convince vendors to produce better quality

for the company productions.

LOCALIZATION

Till now company is in a position to localize its productions up to

89%. Almost 89% of parts to be used in production are in house.

LESS EMPLOYEE TURN OVERLESS EMPLOYEE TURN OVER

Employee turn over is very less at Atlas Honda ltd. this shows that the

employees are well satisfied with their jobs.

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Atlas Honda Limited

WEAKNESSES

HIGH PRICEHIGH PRICE

The price of Honda motorcycle is relatively higher than others.

LACK OF NEW MODELLACK OF NEW MODEL

Company has not introduces any new model with major changes fromCompany has not introduces any new model with major changes from

a long time.a long time.

LESSER PROMOTIONAL ACTIVITIESLESSER PROMOTIONAL ACTIVITIES

Company has lesser promotional activities. Usually it do not useCompany has lesser promotional activities. Usually it do not use

electronic media to promote the motorcycle but now company is adoptingelectronic media to promote the motorcycle but now company is adopting

the strategy to use the electronic media as well for promotion.the strategy to use the electronic media as well for promotion.

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Atlas Honda Limited

OPPORTUNITIESOPPORTUNITIES

“5S” CONCEPT“5S” CONCEPT

New concept of “5S” is an opportunity for company to develop. WithNew concept of “5S” is an opportunity for company to develop. With

this new concept company has introduced two new “S” other than sales,this new concept company has introduced two new “S” other than sales,

spare parts and service. These are special sales and second hand sale.spare parts and service. These are special sales and second hand sale.

According to this new idea dealers will help the customers to replace theirAccording to this new idea dealers will help the customers to replace their

second hand motorcycle with new one and customers can get motorcycle onsecond hand motorcycle with new one and customers can get motorcycle on

credit as well. credit as well.

POOR QUALITY OF CHINESE BRANDSPOOR QUALITY OF CHINESE BRANDS

Chinese brands that are available in the market are not comparableChinese brands that are available in the market are not comparable

with HONDA motorcycle in quality terms. So the poor quality of Chinesewith HONDA motorcycle in quality terms. So the poor quality of Chinese

brands is an opportunity for the company as the company believes thatbrands is an opportunity for the company as the company believes that

people using Chinese brand will eventually switch back towards HONDApeople using Chinese brand will eventually switch back towards HONDA

because of relatively poor quality of Chinese brands.because of relatively poor quality of Chinese brands.

GOVERNMENT RULE OF LOCALIZATIONGOVERNMENT RULE OF LOCALIZATION

Recently government of Pakistan has passed a rule for the motorcycle

industry in Pakistan. According to this rule, within few years only that

motorcycle company will be able to sell their brands which will localize its

production at a rate of 5% to 10 % each year. HONDA has localized its

production up to 89% till now. So the company is leading the industry in this

regard. This is an opportunity for company as it has more government

support because of this reason (localization).

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Atlas Honda Limited

THREATS

MARKET CONDITIONS OF KARACHI

Karachi is most populated city of Pakistan. So it is a huge market for

the company. But now a days snatching of new HONDA motorcycle is very

common in Karachi. Because of this reason people are reluctant to buy new

motorcycle. So it is a great threat for the company.

NEW CHINESE BRANDS

There are more than 15 Chinese brands of motorcycle available in the

market. These are competing HONDA in price terms very badly. So it is a

threat for the company.

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Atlas Honda Limited

SURVEYSURVEY

((DDURINGURING MYMY STAYSTAY ATAT A ATLASTLAS H HONDAONDA LTDLTD. I . I HAVEHAVE CONDUCTEDCONDUCTED AA SURVEYSURVEY

((RESEARCHRESEARCH) ) UNDERUNDER THETHE SUPERVISIONSUPERVISION OFOF NATIONALNATIONAL MANAGERMANAGER SALESSALES ANDAND

MARKETINGMARKETING MANAGERMANAGER.).)

MARKETING RESEARCH PLANMARKETING RESEARCH PLAN

Objective:Objective:

What is the impact on sales of different brands of Motorcycles after price

reduction?

Topics:

Dealer Related:

How much price has been reduced?

Why prices have been reduced?

Impact of price reduction on sales?

Is there any chance for further price reduction?

Public Related:

Why do people prefer to buy specific brand of motorcycle?

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Atlas Honda Limited

METHODOLOGY

I have conducted interviews of dealers and customers based one the

questionnaires given here. I have gone to dealers’ outlets in order to get

forms filled by the dealers and went to different markets in order to approach

customers.

TARGETED LOCATIONS

My main target market for dealers was “Akbar Road” and for

customers’ identification, we have chosen Zainab market, Tariq Road,

Akbar market and Karachi University.

TIME FRAME

I have spent three weeks for this research project.

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Atlas Honda Limited

QUESTIONNAIRES

QUESTIONNAIRE (FOR DEALERS)

1. Name of Dealer__________________________________________________

2. Name of dealership/outlet__________________________________________

3. Since how long are you in this industry_______________________________

4. Had you been dealing in other brands_________________________________

Yes

No

5. If yes, what are those brands________________________________________

6. Why have you chosen this specific brand to deal in______________________

7.7. What strategy have you used to cope with the decreased prices of theWhat strategy have you used to cope with the decreased prices of the

motorcycle industry?motorcycle industry?

______________________________________________________________________________________________________________________________

8.8. What was your old price and what is your new price?____________________What was your old price and what is your new price?____________________

9.9. To what extent would you like to further reduce your prices? ______________To what extent would you like to further reduce your prices? ______________

10.10. How much your sales have been changed? How much your sales have been changed?

Previous average sales_______________________________________Previous average sales_______________________________________

New average sales__________________________________________New average sales__________________________________________

11.11. What impact does it has on the prices on second hand motorcycles?What impact does it has on the prices on second hand motorcycles?

Models Models 19991999 20002000 20012001 20022002

Before reductionBefore reduction ________ ________ ________ ________

After reductionAfter reduction ________ ________ ________ ________

DifferenceDifference ________ ________ ________ ________

12. How do you see the future of your brand and other brands_______________12. How do you see the future of your brand and other brands_______________

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Atlas Honda Limited

QUESTIONNAIRE (FOR CUSTOMERS)QUESTIONNAIRE (FOR CUSTOMERS)

1.1. Name of respondent____________________________________________Name of respondent____________________________________________

2.2. Which Motorcycle do you have___________________________________Which Motorcycle do you have___________________________________

3.3. Which Motorcycle did you had before this one_______________________Which Motorcycle did you had before this one_______________________

4.4. Why have you kept/replaced the previous one _______________________Why have you kept/replaced the previous one _______________________

5.5. Why have you decided to buy this brand? __________________________Why have you decided to buy this brand? __________________________

Friends/Relatives suggestionFriends/Relatives suggestion

Your own decisionYour own decision

6.6. If it was your own decision, why have you decided this brand If it was your own decision, why have you decided this brand

Brand loyaltyBrand loyalty

Better qualityBetter quality

Lesser priceLesser price

DesignDesign

EconomyEconomy

OthersOthers

7.7. Are you satisfied with this brand?Are you satisfied with this brand?

YesYes

NoNo

8.8. If no, why____________________________________________________If no, why____________________________________________________

9.9. If you have to buy another motorcycle, will you choose the same brandIf you have to buy another motorcycle, will you choose the same brand

again?again?

YesYes

NoNo

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Atlas Honda Limited

10.10. If no, why____________________________________________________If no, why____________________________________________________

11.11. Please rank these brands in preference order (most preferred at # 1 and leastPlease rank these brands in preference order (most preferred at # 1 and least

preferred at last)preferred at last)

Yamaha ______ Yamaha ______ Suzuki ______ Pak Hero ______Suzuki ______ Pak Hero ______ Hero ______Hero ______

Sohrab ______Sohrab ______ Honda ______ Super star ______Honda ______ Super star ______ Jinan ______Jinan ______

Star ______Star ______ LifanLifan ______ Jialing ______ ______ Jialing ______

12. Suggestions for improvement, if any ______________________________ 12. Suggestions for improvement, if any ______________________________

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Atlas Honda Limited

RESULTS

SAMPLE SIZE

(I have chosen sample on the basis of random method)

Dealers = 13

Customers = 30

DEALERS

Among these 13 dealers, I have chosen four HONDA dealers and nine dealers of

other brands including Chinese.

Dealers who have ever dealt in some other brands = 07 (54%)

Dealers who have never dealt in some other brands = 06 (66%)

Dealers who have been switched from HONDA to some other brands = 01

REASONS:

There was no sale of HONDA in Karachi market before price reduction, so

he has decided to deal in some other brand.

Dealers who have switched from some other brand to HONDA. = 01

REASONS:

He has felt that in near future HONDA will capture the motorcycle market,

so he has left the dealership of VESPA and started dealing in HONDA.

Impact of price reduction on sales of new Motorcycle:

HONDA = Sales have increased by 3 to 4 times after the price reduction.

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Atlas Honda Limited

OTHER BRANDS = Sales have decreased by one half.

Impact of price reduction on the prices of second hand Motorcycle:

Prices of all models of HONDA (from 1999 to 2002 model) have gone down

by Rs.7,000 to Rs.10,000.

There is no specific market price for second hand motorcycles of Chinese

brands.

Future of different brands:

According to different dealers point of views, the HONDA may remain market

leader but the market will be in the hands of the brand, which will be able to

provide better quality at reasonable prices and will be able to provide services

as well.

Almost more than 80% of Chinese brands will be out of the market in near

future just because of poor after sale service.

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Atlas Honda Limited

CUSTOMERS

Customers using HONDA = 22 (73.33%)

Customers using YAMAHA = 03 (10.00%)

Customers using SUZUKI = 01 (03.33%)

Customers using other brands* = 04 (13.34%)

Total number of customers = 30 (100%)

*All Chinese, Vespa and Kawasaki.

Customers who are satisfied with HONDA = 22(100%)

Customers who are not satisfied with HONDA = 00(0%)

Users of HONDA who want to repeat the same brand = 21(95.45%)

Users of HONDA who don’t want to repeat the same brand

= 01(05.55%)

Reasons

The person has told that he will not repeat Honda because he want to have

some new motorcycle at lower price, so he will like to have some Chinese

motorcycle because of its low price.

Ranking of different Brands by Customers

Position Brand

Number one = HONDA

Number two = YAMAHA

Number three = SUZUKI

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Atlas Honda Limited

SUGGESTIONS BY CUSTOMERS:

During this research project we have found some major

demands from customers. Few of them are as follows.

Customers are very happy because of the price reduction by HONDA.

But customers still want further price reduction by the company.

It is a major demand from the customers that now company should

introduce some major change in model.

Customers want the company to introduce some new models in

addition with CD 70 and CG 125.

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Atlas Honda Limited

FINDING AND SUGGESTIONS

I have found the following things important during this project

The company should try to improve the relations with dealers, as some

dealers are not satisfied and happy with some of the company’s policies.

It is a better time to introduce some new model. There is an intense

competition in the market so major change in model will pave a better way

for the company not only to maintain the existing shares but also to increase

the number of market share.

Company should increase its capacity in long run and in short run company

should start night shifts to fulfill the increasing market demands of their

products.

Company should develop proper measures to eliminates the rumors from

the market regarding the company and its dealers

Company should control the prices of the motorcycle in the markets. We

have observed some dealers at our own, selling the motorcycles to the

customers above the market price. Although the company has already a

system to control the price but it is not sufficient.

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