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 To analyse the two wheeler industry in India

 .Comparative analysis : Hero Honda and TVS

 To suggest various factors to improve sales.

 To study the consumers’ opinion of their motor bikes .



Primary Data:

The primary data collected through questionnaires administered to a sample of 50 consumers

selectedfrom Raipur city the Questionnaire was pre-Designed and pre-tested before it was
For financial analysis money control .com has been considered
Annual report of Hero Honda TVS

Secondary Data :

Secondary data was collected through various publications of newspapers, magazines, books
and magazines websites of Hero Honda, and TVS bikes.websites

Sample Design :

A total of 50 consumers were selected from the Raipur city for this study to analyze the
consumers behaviour with reference to select motor bikes i.e., Yamaha, Hero Honda, Bajaj and
TVS bike.




India is emerging as one of the world’s fastest growing passenger car markets and second
largest two wheeler manufacturer. According to the International Yearbook of Industrial
Statistics 2008 released by United Nations Industrial Development Organisation (UNIDO),

India ranks 12th in the list of the world’stop 15 automakers. It is home to the largest two
wheeler manufacturer and fifth largest commercialvehicle manufacturer in the world. The
industry is producing about 19 lakh passenger vehicles, 4.5 lakh commercial vehicles, 90
lakh two wheelers and 5 lakh three wheelers per annum.

• In order to make India a power to reckon with in the automotive sector the
government launched theAutomotive Mission Plan (AMP) 2006-2016. As per the AMP,
it is estimated that the total turnover of theautomotive industry in India would be in
the order of USD 122 billion - USD 159 billion in 2016. It isexpected that in real terms,
India would continue to enjoy its eminent position of being the largest tractorand
three-wheeler manufacturers in the world and the world's second largest two-wheeler

• By 2016, India will emerge as the world's seventh largest car producer (as compared
to the eleventhlargest currently) and retain the fourth largest position in world truck
manufacturing sector.

• Further 2016, the automotive sector would double its contribution to the country's
GDP from current levels of five per cent to 10 per cent. The Indian automotive
industry consists of the following five segments


The total two-wheeler sales of the Indian industry accounts for around 77% of the total vehicles
sold inIndia. With 26,12,881 two wheelers already sold in India in the quarter from Jun-Sep
2009, the Indianwheeler industry is poised for high growth In the coming years. In terms of
volume, about 6% of the two wheelers manufactured are exported.



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The three main product segments in the two-wheeler category are scooters, motorcycles and
mopeds.However, in response to evolving demographics and various other factors, other
subsegments emerged,viz. scooterettes, gearless scooters, and 4-stroke scooters. While the
first two emerged as a response todemographic changes, the introduction of 4-stroke scooters
has followed the imposition of stringent pollution control norms in the early 2000. Besides,
these prominent sub-segments, product groups within these sub-segments have gained
importance in the recent years.The two wheeler industry has been growing at a CAGR of
9.45% from 2004 to 2009, with the productionbeing about 63 lakh vehicles in 2004 to an
estimated 100 lakhs in 2009. Motorcycles have always been the major contributor to the two
wheeler industry in India. From a share of about 77.39% in 2004, it hassteadily grown to about
80.38%. The share of scooters has gone down from 16.63% in 2004 to 13.88% in2009. The
following table gives the percentage share of motorcycles, scooters and mopeds in the two
wheeler industry in India

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The demand for two-wheelers has been influenced by a number of factors over the
past few years. The key demand drivers for the growth of the two-wheeler industry
are as follows:
• Inadequate public transportation system, especially in the semi-urban and rural
• Increased availability of cheap consumer financing in the past 3-4 years
• Increasing availability of fuel-efficient and low-maintenance models
• Increasing urbanisation, which creates a need for personal transportation
• Changes in the demographic profile
• Difference between two-wheeler and passenger car prices, which makes two
wheelers entrylevel vehicle
• Steady increase in per capita income over the past few years
• Increasing number of models with different features to satisfy diverse consumer needs.

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If we analyze the motorcycle sub-segments then it would be visible that Bajaj Auto has a
significantpresence in the premium segment with a market share of ~55% followed by Hero
Honda (~22%), TVS
Motors (~13%) and HMSI (10%).


Hero Honda dominates this segment with a market share of ~70% followed by Bajaj Auto (20%),
HMSI(~6%) and TVS Motors (1%). This segment retrieves higher revenues from the rural areas,
which are lessdependence on finance; therefore comparatively it is among the best performing


This segment is a strong foothold for Bajaj Auto which has a market share of ~45% followed by
Hero Honda (~34%) and TVS Motors (~24%). This is the most competitive segment as all the
3playersrelatively have a higher presence in the same. But this segment continues to be the
worst hit due to thecredit unavailability and global slowdown. The industry has shown a CAGR of
~15% from FY04-FY07on account of finance availability from PSU Banks and private banks like
ICICI Bank. But from FY08 –FY09 YTD the industry has shown shrinkage as most of the banks
reduced their exposure in the autofinance domain given the unfavorable macro economic

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SWOT Analysis

A scan of the internal and external environment is an important part of the strategic
planning process. Environmental factors internal to the firm usually can be classified as
strengths (S) or weaknesses (W), and those external to the firm can be classified as
opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a
SWOT analysis. SWOT analysis of the Indian automobile sector gives the following points:


• Large domestic market

• Sustainable labor cost advantage
• Competitive auto component vendor base
• Government incentives for manufacturing plants
• Strong engineering skills in design etc


• Low labor productivity

• High interest costs and high overheads make the production uncompetitive
• Various forms of taxes push up the cost of production
• Low investment in Research and Development
• Infrastructure bottleneck

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• Commercial vehicles: SC ban on overloading

• Heavy thrust on mining and construction activity
• Increase in the income level
• Cut in excise duties
• Rising rural demand


• Rising input costs

• Rising interest rates
• Cut throat competition

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Hero Honda :Largest two-wheeler manufacturer in the world

Hero Honda Largest two-wheeler manufacturer in the world

Bajaj Auto 2nd largest two-wheeler manufacturer in the world and the largest 3-
wheeler manufacturer

TVS Motors 3rd largest manufacturer with facilities in India & Indonesia

Honda Motors Recently entered the Indian market through its direct subsidiary (in
addition to its JV with Hero)

Suzuki Recently entered the Indian market through its direct subsidiary
(earlierJV with TVS was withdrawn)

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Industry present and future trends:-

Automobile is one of the largest industries in global market. Being the leader in
product and process technologies in the manufacturing sector, it has been recognised as one
of the drivers of economic growth. During the last decade, well¬-directed efforts have been
made to provide a new look to the automobile policy for realising the sector's full potential for
the economy. Steps like abolition of licensing, removal of quantitative restrictions and
initiatives to bring the policy framework in consonance with WTO requirements have set the
industry in a progressive track. Removal of the restrictive environment has helped
restructuring, and enabled industry to absorb new technologies, aligning itself with the global
development and also to realise its potential in the country. The liberalisation policies have
led to continuous increase in competition which has ultimately resulted in modernisation in
line with the global standards as well as in substantial cut in prices. Aggressive marketing by
the auto finance companies have also played a significant role in boosting automobile
demand, especially from the population in the middle income group.

Evolution of Two-wheeler Industry in India:-

Two-wheeler segment is one of the most important components of the automobile sector
that has undergone significant changes due to shift in policy environment. The two-wheeler
industry has been in existence in the country since 1955. It consists of three segments viz.
scooters, motorcycles and mopeds. According to the figures published by SIAM, the share of two-
wheelers in automobile sector in terms of units sold was about 80 per cent during 2003-¬04. This
high figure itself is suggestive of the importance of the sector. In the initial years, entry of firms,
capacity expansion, choice of products including capacity mix and technology, all critical areas of
functioning of an industry, were effectively controlled by the State machinery. The lapses in the
system had invited fresh policy options that came into being in late sixties. Amongst these
policies, Monopolies and Restrictive Trade Practices (MRTP) and Foreign Exchange Regulation
Act (FERA) were aimed at regulating monopoly and foreign investment respectively. This

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controlling mechanism over the industry resulted in: (a) several firms operating below minimum
scale of efficiency; (b) under-utilisation of capacity; and (c) usage of outdated technology.
Recognition of the damaging effects of licensing and fettering policies led to initiation of reforms,
which ultimately took a more prominent shape with the introduction of the New Economic Policy
(NEP) in 1985.

However, the major set of reforms was launched in the year 1991 in response to the major
macroeconomic crisis faced by the economy. The industrial policies shifted from a regime of
regulation and tight control to a more liberalised and competitive era. Two major results of policy
changes during these years in two-wheeler industry were that the, weaker players died out giving
way to the new entrants and superior products and a sizeable increase in number of brands
entered the market that compelled the firms to compete on the basis of product attributes. Finally,
the two-¬wheeler industry in the country has been able to witness a proliferation of brands with
introduction of new technology as well as increase in number of players. However, with various
policy measures undertaken in order to increase the competition, though the degree of
concentration has been lessened over time, deregulation of the industry has not really resulted in
higher level of competition.

A Growth Perspective:-

The composition of the two-wheeler industry has witnessed sea changes in the post-reform
period. In 1991, the share of scooters was about 50 per cent of the total 2-wheeler demand in the
Indian market. Motorcycle and moped had been experiencing almost equal level of shares in the
total number of two-wheelers. In 2003-04, the share of motorcycles increased to 78 per cent of the
total two-wheelers while the shares of scooters and mopeds declined to the level of 16 and 6 per
cent respectively. A clear picture of the motorcycle segment's gaining importance during this period
is exhibited by the Figures 1, 2 and 3 depicting total sales, share and annual growth during the
period 1993-94 through 2003-04.

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National Council of Applied Economic Research (NCAER) had forecast two-wheeler demand
during the period 2002¬-03 through 2011-12. The forecasts had been made using econometric
technique along with inputs obtained from a primary survey conducted at 14 prime cities in the
country. Estimations were based on Panel Regression, which takes into account both time series
and cross section variation in data. A panel data of 16 major states over a period of 5 years ending
1999 was used for the estimation of parameters. The models considered a large number of macro-
economic, demographic and socio-economic variables to arrive at the best estimations for different
two-wheeler segments. The projections have been made at all India and regional levels. Different
scenarios have been presented based on different assumptions regarding the demand drivers of the
two-wheeler industry. The most likely scenario assumed annual growth rate of Gross Domestic
Product (GDP) to be 5.5 per cent during 2002¬-03 and was anticipated to increase gradually to 6.5
per cent during 2011¬-12. The all-India and region-wise projected growth trends for the motorcycles
and scooters are presented in Table 1. The demand for mopeds is not presented in this analysis
due to its already shrinking status compared to' motorcycles and scooters.

It is important to remember that the above-mentioned forecast presents a long-term growth for
a period of 10 years. The high growth rate in motorcycle segment at present will stabilise after a
certain point beyond which a condition of equilibrium will set the growth path. Another important thing
to keep in mind while interpreting these growth rates is that the forecast could consider the trend till
1999 and the model could not capture the recent developments that have taken place in last few
years. However, this will not alter the regional distribution to a significant extent.

Table 1 suggests two important dimensions for the two-¬wheeler industry. The region-wise
numbers of motorcycle and scooter suggest the future market for these segments. At the all India
level, the demand for motorcycles will be almost 10 times of that of the scooters. The same in the
western region will be almost 20 times. It is also evident from the table that motorcycle will find its
major market in the western region of the country, which will account for more than 40 per cent of its
total demand. The south and the north-central region will follow this. The demand for scooters will be
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the maximum in the northern region, which will account for more than 50 per cent of the demand for
scooters in 2011-12.


Source: Indian Automobile Industry: Optimism in the Air, Industry Insight, NCAER

The present economic situation of the country makes the scenario brighter for short-term
demand. Real GDP growth was at a high level of 7.4 per cent during the first quarter of 2004.
Both industry and the service sectors have shown high growth during this period at the rates of
8.0 and 9.5 per cent respectively. However, poor rainfall last year will pull down the GDP
growth to some extent. Taking into account all these factors along with other leading indicators
including government spending, foreign investment, inflation and export growth, NCAER has
projected an average growth of GDP at 6.7 per cent during the tenth five-year plan. Its mid-
term forecast suggests an expected growth of 7.4 per cent in GDP during 2004-05 to 2008-09.
Very recently, IMF has portrayed a sustained global recovery in World Economic Outlook. A
significant shift has also been observed in Indian households from the lower income group to
the middle income group in recent years. The finance companies are also more aggressive in
their marketing compared to previous years. Combining all these factors, one may visualise a
higher growth rate in two-wheeler demand than presented in Table 1, particularly for the
motorcycle segment.There is a large untapped market in semi-urban and rural areas of the
country. Any strategic planning for the two¬-wheeler industry needs to identify these markets
with the help of available statistical techniques. Potential markets can be identified as well as
prioritised using these techniques with the help of secondary data on socio-economic
parameters. For the two-wheeler industry, it is also important to identify the target groups for
various categories of motorcycles and scooters. With the formal introduction of secondhand car
market by the reputed car manufacturers and easy loan availability for new as well as used
cars, the two-wheeler industry needs to upgrade its market information system to capture the
new market and to maintain its already existing markets. Availability of easy credit for two-
wheelers in rural and smaller urban areas also requires more focussed attention. It is also
imperative to initiate measures to make the presence of Indian two-wheeler industry felt in the
global market. Adequate incentives for promoting exports and setting up of institutional
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mechanism such as Automobile Export Promotion Council would be of great help for further
surge in demand for the Indian two-wheeler industry.


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TV Sundaram Iyengar and Sons Limited (TVSs) is the holding company for the TVS Group of
companies engaged in the manufacturing of almost all kinds of automotive components, best
two wheelers and a few other industrial products. They are also into the financial services sector.
The turnover of the entire group was close to $2 billion in 2003. The TVS group of companies is
mainly situated in Padi, Tamil Nadu, in the outskirts of Chennai (formerly Madras).

The company has many first to its credit like the introduction of the first indigenous moped and a
100 cc motorcycle in collaboration with Japanese auto giant Suzuki. When the collaboration
ended in 2003, many thought that the company would die a natural death due to the exit of the
foreign collaborator. However the company proved its detractors wrong by introducing the TVS
Victor and rest as they say is history. The company roped in master blaster Sachin Tendulkar for
the promotions and the sales went northwards after that. TVS company is aiming to capture a
quarter of the total two wheeler market in the country.

TVS group was a pioneer in mopeds but slowly they have shifted focus to the motorcycle
segment since the entire market seems to be moving in that direction as consumer preferences
and choices have changed with the changing times.The company has been able to outdo it self
and spring a surprise, as many analysts felt that the company would be pushed to the periphery
of the two wheeler market. With the exit of Suzuki, many felt TVS would have to limit itself to the

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moped market in the country.
The company did not have a good track record of in-house product development as most of its'
earlier ventures like the Shaolin, Shogun and the Supras failed to take off.

This further heightens the importance of the success of the TVS Victor, the company aims to
become the number 2 two wheeler manufacturers in India and also want to crack the top five in
Asia. The company has products across all categories from premium motorcycles to entry level
mopeds and has recently launched Apache in the premium segment.

The major products

• TVS Fiero
• TVS Samurai
• TVS Shaolin
• TVS Shogun
• TVS Apache (150 cc,13.7 Ps @8500rpm)
• TVS Apache RTR 160 EFI (Electronic Fuel Injection)
• TVS Apache RTR 180 (17.3ps)
• TVS Centra
• TVS Flame
• TVS Flame (125 cc,ccvti technology)
• TVS MAX 100
• TVS Star
• TVS Star City
• TVS Star Sport
• TVS Supra
• TVS Victor (110 cc)
• TVS Victor GLX (125 cc)

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The third largest two-wheeler company is the flagship company of the TVS Group (4billion USD)
withan annual turnover of over a billion. It was the fiirst two-wheeler manufacturer in the world to
behonored with the Japanese Quality award – The Deming Prize for Total Quality Management.
Set up in the 1980s with its origin in Sundaram Clayton Ltd., launched an easy-to-use 50cc
mopedfollowed by the launch of 7 new bikes on a single day. After the takeover by Suzuki
Motorcycles in 1987its name changed to TVS Suzuki Ltd. This ended in 2001 when TVS Motor
Company came to existence.


For the fiscal year ended 31 March 2009, TVS Motor Company Limited's revenues increased
13% to RS38.11B. Net loss totaled RS632M, up from RS282.5M. Revenues reflect an increase
in income fromoperations. Higher loss reflects an increase in labour charges, increased
depreciation charges, an increasein interest & finance charges, higher repair & maintenance
expenses, increased audit fees, higher power& fuel expenses and increased other expenses.
EBITDA Margins

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Source: Annual Report

The increased growth in Ungeared Scooters is due to its independence from influence of
availability of retail finances. Although sales grew in two wheeler segment at 5% growth its
incomparable to that of Hero Honda at 30%.
Three wheeler, TVS King was introduced in six states and has achieved a 5% MS.

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Hero Honda's company profileThe joint venture between India's Hero Group and Honda Motor
Company, Japan has not only created the world's single largest two wheeler company but also
one of the mostsuccessful joint ventures worldwide.During the 80s, Hero Honda became the first
company in India to prove that it was possible to drive a vehicle without polluting the roads. The
company introduced new generationmotorcycles that set industry benchmarks for fuel thrift and
low emission. A legendary 'Fill it - Shut it - Forget it' campaign captured the imagination of
commuters acrossIndia, and Hero Honda sold millions of bikes purely on thecommitment of
increased mileage.Over 20 million Hero Honda two wheelers tread Indian roadstoday. These are
almost as many as the number of people inFinland, Ireland and Sweden put together!Hero
Honda has consistently grown at double digits since inception; and today, every second
motorcycle sold in thecountry is a Hero Honda. Every 30 seconds, someone in India buys Hero
Honda's top -selling motorcycle – Splendor. Thisfestive season, the company sold half a million
two wheelers i n a single month—a feat unparalleled in global automotive


Hero Honda Motors Ltd. started out in 1984 as a joint venture between the Hero Group of India
and the Honda Motor Company of Japan, to manufacture 1000 cc motorcycles. The company
enjoys a market share of 48 per cent and has catered to five million customers so far. Hero
Honda sold 12,63,254 vehicles and recorded net profit of Rs 275 crore and turnover of Rs. 2795
crore in Q3 FY 07-08.

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Corporate Profile

The Hero Honda story began with a simple vision – the vision of a mobile and an empowered
India, powered by Hero Honda. This vision was driven by Hero Honda's commitment to
customer, quality and excellence, and while doing so, maintain the highest standards of ethics
and societal responsibilities. Twenty five years and 25 million two wheelers later, Hero Honda is
closer to fulfilling this dream. This vision is the driving force behind everything that company do
at Hero Honda. Company understood that the fastest way to turn that dream into a reality is by
remaining focused on that vision.

There were many unknowns but Hero Honda kept faith, and today, Hero Honda has been the
largest two wheeler company in the world for eight consecutive years. Our growth has kept
compounding. The company crossed the ten million unit milestone over a 19-year span. In the
new millennium, Hero Honda has scaled this to 15 million units in just five years! In fact, during
the year in review, Hero Honda sold more two wheelers than the second, third and fourth placed
two-wheeler company put together. With Hero Honda, the domestic two wheeler market was
able to show positive growth during the year in review. Without Hero Honda, the domestic
market would have actually shrunk.

Over the course of two and a half decades, and three successive joint venture agreements later,
both partners have fine-tuned and perfected their roles as joint venture partners. What the two
partners did was something quite basic. They simply stuck to their respective strengths. As one
of the world's technology leaders in the automotive sector, Honda has been able to consistently
provide technical know-how, design specifications and R&D innovations. This has led to the
development of world class, value - for- money motorcycles and scooters for the Indian market.
On its part, the Hero Group has taken on the singular and onerous responsibility of creating
world-class manufacturing facilities with robust processes, building the supply chain, setting up
an extensive distribution networks and providing insights into the mind of the Indian customer.
Since both partners continue to focus on their respective strengths, they have been able to
complement each other. In the process, Hero Honda is recognized today as one of the most
successful joint ventures in the world. It is therefore no surprise that there are more Hero Honda
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bikes on this country's roads than the total population of some European countries put
together! .The company's meteoric growth in the two-wheeler market in India stems from an
intrinsic ability to reach out and come closer to its customers, with every passing year. Hero
Honda's bikes are sold and serviced through a network of over 3500 customer touch points,
comprising a mix of dealers, service centres and stockists located across rural and urban India.
Hero Honda has built two world-class manufacturing facilities at Dharuhera and Gurgaon in
Haryana, and its third and most sophisticated plant at Haridwar has just completed a full year of
operations. It is difficult to imagine that all this has happened in the span of just two and a half

The best is yet to come. During the year in review, Hero Honda powered its way in a market that,
for all practical purposes, was feeling the full effects of the economic slowdown in India. With an
economic recovery now clearly on the cards, Hero Honda is all set to ride into another summit.

Type Public company


Founded January 19, 1984 in Gurgaon, Haryana,

India Headquarters New Delhi,

India Key people Brijmohan Lal Munjal (chair and founder)

Toshiaki Nakagawa (joint managing director)
Pawan Munjal (Managing Director & CEO)

Industry Automotive

Products Motorcycles, Scooters

Revenue U$ 2.8 billion

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Hero Honda Bikes

• Achiever
• Ambition 133, Ambition 135
• CBZ, CBZ Star, CBZ Xtreme
• CD 100, CD 100 SS, CD Dawn, CD Deluxe, CD Deluxe (Self Start)
• Glamour, Glamour F.I
• Hunk
• Joy
• Karizma, Karizma R, Karizma ZMR FI
• Passion, Passion+, Passion Pro
• Pleasure
• Street
• Splendor, Splendor+, Splendor+ (Limited Edition), Super Splendor, Splendor NXG

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2004 2005 2006 2007 2008 2009

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TVS 1 2875.91 3234.9 3854.9 3219.5 3670.9

RATE 1.98% 12.48% 19.47 16.48 14.02

HERO 5832.4 8713.9

HONDA 2 7421.65 8 9899.96 10331.8 12319.1

RATE 2.7 25 17.41 13.61 4.36 19.23

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TVS Motors showed a healthy growth in sales from FY 2004 to
FY 2007 due to a booming automobile industry and rising demand,
with sales rising from Rs. 2820 Cr in FY 2004 to Rs 3219.5Cr in FY
2007. Due to the global recession, and the high interest costs and
interest rates, the automobile industry was severely impacted in FY
2008, resulting in a sharp drop in TVS’s sales of16.5%. 2 Wheeler
sales jumped back again in FY 2009, with a rise in sales of 14.02% for
TVS. ThusTVS has had a healthy increase in turnover from FY 2004 to
FY 2009, except for FY 2008, when itwas impacted due to the global
recession and slackening demand. Corresponding 2-wheeler sales
figures from The Society of Indian Automobile
Manufacturers(SIAM) indicate that that the 2 wheeler sales in the
industry fell from 7,872,334 units in FY 2007 to7,249,278 units in
FY 2008 thus indicating the slackening demand due to
adverse financialconditions in FY 2008

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For TVS, the current ratio is constantly increasing, which is a good

indicator that management’s efforts are increasing the ratio. Even
during the recession time of FY2008, the ratio increased as aresult of
better management of liabilities. For Hero Honda, the values are
always less than 1 andmuch less than TVS’ current ratios. None the
less, both firms show values that are less than the rule-of-thumb
indicator. “Total outstanding dues of creditors other than
small scale industrial undertakings” increased in 08, bringing down
the current ratio value for Hero Honda. The drop in thecurrent ratio of
Hero Honda, from FY 2008 to FY 2009 is due to a steep increase in
the currentliabilities and this increase can be attributed to an entry in
the balance sheet called ‘Other Liabilities’

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By rule of thumb, the quick ratio should ideally be 1:1. This condition is
not met by Hero Honda. As expected, because of the downturn, the
quick ratio of Hero Honda has decreased in FY 2007.

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3.Inventory turn over ratio

The inventory management of TVS does not appear to be good.

Instead of an increase in the values, we see a decrease from FY 05-
08. In FY 09, there is a slight improvement. But, there is still room for
improvement. There is a 19.1% dip in the ratio for FY08 as
compared to FY 07 which may be attributed to a drop in COGS
(~14%). Hero Honda has a good i COGS. But, there has been a dip in
the ratio showing that inventory management is not good nventory
turnover ratio. In the FY 08, there is a positive change of 3% in In
comparison to TVS, Hero Honda has a much better inventory
management strategy value during FY08 due to the dip in sales
owing to the recession. But, in FY2009, probably due to

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Generally, a debtor ratio indicated a better debt

collection strategy of the company. But, in the current case, it
may indicate that the companies became more willing to sell on
credit than they were before. This is substantiated by the fact that
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the increase in the accounts receivables is mainly due to increase in
unsecured short term debtors which may indicate credit line to
customers. The debtor turnover ratio for TVS has been decreasing
since FY 06. The increase as compared to FY05 is due to the higher
sales growth without corresponding increase in debtors. The debtor
turnover ratio for Hero Honda was at a very good value in FY 05,
but there has been a considerable decrease ever since.
Comparatively, Hero Honda has a much better debt turnover ratio
indicating that their strategy of debt collection is much more
effective than TVSs

5. Average Inventory Holding


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The average inventory holding period for TVS has been on the rise
since FY2005. Particularly in FY08, there has been a greater
inventory holding period which could be attributed to the decrease
in sales during recession leading to more inventories for more time
For Hero Honda, the period had been decreasing from FY05 till
FY07. There was an increase in the value during FY08 due to the dip
in sales owing to the recession. But, in FY2009, probably due to
better inventory management, the value of the inventory holding
period has come down In comparison to TVS, hero Honda has a
much better inventory management strategy.


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The operating cycle for both the companies has increased in

FY08 due to an increase in both inventory holding period and
debt collection period owing to the recession. That the inventory
management of Hero Honda is much better than that of TVS can be
clearly seen from the values in the table.


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Hero Honda is operating at higher P/E Ratio relatively to TVS motor.

8. Cash flow statement analysis

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For TVS Motors, analysing the cash flow statement of the firm from

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FY 2005 to FY 2009, we see that TVS generates a large amount of
cash from operating activities, signifying a higher earnings quality.
It has had a sig signifying that the company is investing heavily in
its plant, machinery and capacity expansion. Also signifying that the
company is investing heavily in its plant, machinery and capacity
expansion. the company has a smaller proportion of positive cash
flows from financing activities (except for FY and FY 2007 when
financing cash flow contributed a large proportion) indicating that
the company is able to generate cash from loans availed after
disbursing interest and dividend payments But the net increase in
cash and cash equivalents is still negative and contributing towards
a negative cash balance, indicating a cash crunch for the company.
From FY 2005 to FY 2009 (except for FY 2008 and FY 2006), cash
flow from operating activities is significantly greater than net profit
of the firm, indicating a higher earnings quality and indicating
that the firm has been growing with increasing cash from
operating activities. As “cash is king” increasing cash from
operating activities signify that the firm has been growing. In FY
2008, operating cash flow was significantly smaller than Net Profit,
indicating a lower earnings quality for FY 2008 Dividend payments
for TVS have followed no specific trend and dividend payments
have been in manageable proportions with respect to cash flow
from operations. Only in FY 2008, when operating cash flow was
strained, the company chose to pay out dividend close to 66% of
their operating cash flow, indicating excessive dividend payment to
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keep shareholders happy


The cash flow statements of Hero Honda show an overall increase

in the net profit over the six financial years considered except for
a dip in the profits in FY 2007 owing to recession. From FY 2004 to
FY2009, the cash flow from operating activities has remained at a
value greater than the net profit excepting for FY 2005 and FY
2007. This proves the fact that Hero Honda’s quality of
earnings is significantly high. From FY 2004 to FY 2009 Hero
Honda has consistently shown a negative value for cash flow from
financing activities which is constituted by tax, dividends and
interest payments and repayments for long term borrowings. So,
we can infer that financing for investment activities is mainly
derived from the cash from the operating activities. The net
increase in cash and cash equivalents for all the six years is positive
contributing towards the positive cash balance. Hence, the
company is free from cash crunch. The trend of increase in the cash
flow from operating activities leads to the inference that the firm
has seen a healthy growth for the past six years (except for FY
2005 and FY 2007 when the quality of earnings are low due to the
cash flow from operating expenses being lower than the net profit).
Hero Honda has no particular pattern for dividend payments. The
percentage of dividend payment was relatively high wi company
witnessed a comparatively lower cash flow from operating
activities, yet, the amount paid the 56.59% in FY 2004 and
63.37% in FY 2007. In the latter period, the as dividend was high
Comparing the two companies, it can be seen that Hero Honda has
a much better performance than TVS. Also, for Hero Honthere has
always been a net increase in the cash and cash equivalents

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 Sample size is taken to be 50

 It is assumed that Hero Honda is the market leader among all other bikes.

 It is assumed that the chosen sample is the representation of whole


 It is assumed that information provided by the samples is accurate and

Best of knowledge

 Comaparative study of Hero Honda & Tvs

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1Existing customer

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2. Chart showing the customer satisfaction regarding their

Total number of customer satisfied = 50

Total number of customer not satisfied = 0

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3 Satisfaction level on basis of after sales service.

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Satisfied = 39
Unsatisfied= 11

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5. Bikes spare part is easily available i

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6. Resale value of bike

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7 Bike preferable for female

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Although I have given my 100 percent for doing this project. But still were certain limitations
while doing the research work. Some of the limitations were
as follows.
1. One of the biggest limitations with this project work is the time factor. Since we had got
only 60 days for doing this project, therefore we think it was less time for doing this project work.
Time was very much limited and as a result we were restricted with the time boundation.

2. Another limitation was with the language. While doing the researchwork, I faced a lot of
problem regarding the language. Since every person didn’t understand English, therefore we
had to make them understand in different languages like Hindi

3. Also due to the limited time period, we couldn’t able to cover more area.That’s why we were
also restricted with the area also.

4. The research work is influenced by the exaggeration of some of therespondents.

5. In some cases, the respondents were not giving us the proper reply.He/she might think that
this was only westage of time or this might create some problem etc. And as a result he/she
had given some fake answers and filled the questionnaire very casually.

6. It was very difficult to take name, address and phone number of therespondents. Some of the
respondents after filling the questionnaire didn’t want to give their name, address and phone

7.The sample size for this research report is 50 only which may not dispute the actual picture of
this study.

 The mood of the respondents while felling up of the questionnaire, can also have adverse
impact on true finding of study.

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 This research report is subject to Raipur city only. So the conclusion drawn cannot be
applicable to whole of India or national level.

 There may be sampling error.

 The economic constraints of the researcher can also have impact on the result of the

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• The most likely scenario assumed annual growth rate of Gross Domestic Product (GDP)
to be 5.5 per cent during 2002-03 and was anticipated to increase gradually to 6.5 per
cent during 2011-12.

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• Before getting into country law enforcement official insparsey populated two wheeler
• Two-wheeler segment is one of the most important components of the automobile
sectorthat has undergone significant changes due to shift in policy environment.
• The two wheeler industry current assets are decreased comparing between 2008-
• The two wheeler industry fixed assets are decreased comparing between 2008-
• The two wheeler industry current liabilities are also decreased because the two wheeler
industry short term debt and other current liabilities are also decreased comparing
between 2008-2009years.
• The two wheeler industry current liabilities are also decreased because the two wheeler
industry account payable and other liabilities are also decreased comparing between
• The two wheeler industry long term liabilities are also decreased.
• The two wheeler industry long term liabilities are increased comparing between 2008-
• The two wheeler industry share holders equity is also decreased.
o The two wheeler industry has been on a strong growth trajectory in the past years.
• After a decline of 4.5% during 2007-08, the two wheeler industry grew by a modest 5%
during 2008-2009
• . Domestic motorcycle sales marginally grew by 1% while exports recorded a growth of
• TVS has had a healthy increase in turnover from FY 2004 to FY 2009, except for FY 2008
• On the basis of that research we find that in case of bike, Hero Honda isthe market leader

• It is found that Mileage is the main factor which influences to a consumer in his buying
decision, and after the Mileage next preference goes to Price, people gives same
weightage to Power and style and after that they are being influenced by Advertisements
and Service respectively.

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• It is also found that consumer’s decision is influenced more bymileage.
• By this research we come to know that almost 95% people are satisfied with their bikes
performance and it’s after sales services.
• TVS Motors showed a healthy growth in sales from FY 2004 to FY 2007 due to
a booming automobile industry and rising demand
• TVS, the current ratio is constantly increasing, which is a good indicator
• Hero Honda is operating at higher P/E Ratio relatively to TVS motor.

• The operating cycle for both the companies has increased in FY08 due to an
increase in both inventory holding period and debt collection

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Hero Honda should think about fuel efficiency in case of upper segment bikes.
• TVS should target rural area as Hero Honda did
• Maintenance cost and the availability of the spare parts should also begiven
due importance.
• TVS should try to introduce some good finance/discount schemes for

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• TVS should focus on its advertisement and mileage to increaseits market
Company should also focus on its after sales service as well as the
performance of the bikes.
• Hero-Honda should also give some offers with their different models.This
will help in increasing the market share of the Hero-Honda company.
• The TVS should also launch some cheaper models so that the students can
buy more. This will be beneficial for both i.e. the company and the
• Since in the female bike category, TVS is the market leader with a total
market share of 43%. Hero-Honda has a total market share of 35%.

• Hero-Honda is maintaining a good customer loyalty. Therefore company

should also focus on innovations and newer technologies. This will help
• the company to capture more and more market and earn more and more
• TVS should focus on inventory management in order to reduce cost of




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Name :- ________________________________


Respected Sir/Madam,
My name is MANVENDRA KUMAR the students of DSM RAIPUR. As per our course

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I am doing the market research on “Consumer perception
about Hero Honda / other bikes”. So I need your valuable
view for the questions given below. We will be grateful to you.

Q1 :- Which bike do you have?

a. Hero-Honda b. Bajaj
c. TVS d. Yamaha

Q2 :- Please prioritize the options that affects your purchasing

decision of bikes.[1 being the most important and 6 being
the less important].
a. Advertisement [ ] b. Price [ ]
c. Mileage [ ] d. Service [ ]
e. Style [ ] f. Power [ ]

Q3 :- Are you satisfied with your bikes performance?

a. Yes b. No

Q4 :- Are you satisfied with your bikes after sales service?

a. Yes b. No

Q5 :- Rate your bike on the basis of safety and comfort level.

[1 being the highly safe and comfortable and 5 being the least
safe and comfortable. 12345
Q6 :- To what extent do you think that your bike is durable?
a. Very strong b. Strong
c. Medium d. Weak
e. Very weak

Q7 :- According to your perception which bike’s spare parts are

easily available in the market?
a. Hero-Honda b. Bajaj c. TVS d. Yamaha

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e. Any other (please specify) __________________

Q8 :- Regarding resale value, what is your consideration?

a. Hero-Honda b. Bajaj c. TVS d. Yamaha
e. Any other (please specify) __________________

Q9:- According to you, which bike is most preferable for

a. Hero-Honda b. Bajaj c. TVS d. YAMAHA

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