TABLE OF CONTENT

Serial no . Chapter Page No

1. OBJECTIVE OF PROJECT 3

2. RESEARCH METHODOLOGY 5

3. INTRODUCTION

INDIAN AUTO INDUSTRY 6

TWO WHEELER INDUSTRY 10

4. COMPANY PROFILE

TVS MOTORS 25

HERO HONDA 30

5. COMPARATIVE ANALYSIS 34

6. HYPOTHESIS 47

7. DATA ANALYSIS 49

8. LIMITATION 56

9. FINDINGS 59

10. SUGESTION & RECOMMENDATIONS 62

11. BIBLOGRAPHY 64

12. QUESTIONNAIRE FORMAT 65

1 | P a g e

OBJECTIVES OF THE project

2 | P a g e

OBJECTIVE

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 .

3 | P a g e

RESEARCH METHODOLOGY

4 | P a g e

RESEARCH METHODOLOGY

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

administered.n

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.

5 | P a g e

INTRODUCTION

INDIAN AUTOMOBILE INDUSTRIE

INDIAN AUTO INDUSTRY

6 | P a g e

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

manufacturer.

7 | P a g e

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

FIGURE 1: INDIAN AUTOMOBILE INDUSTRY

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.

8 | P a g e

FIGURE 2: DOMESTIC MARKET SHARE FOR 2008-09

9 | P a g e

TWO WHEELER INDUSTRY

10 | P a g e

TWO WHEELER SEGMENTAL CLASSIFICATION AND ITS GROWTH

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

11 | P a g e

DEMAND DRIVERS

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

areas

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.

12 | P a g e

INDIAN TWO WHEELER INDUSTRY SEGMENTS

13 | P a g e

14 | P a g e

PREMIUM SEGMENT

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%).

EXECUTIVE SEGMENT

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

segments

ECONOMY SEGMENT

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

situation.

15 | P a g e

16 | P a g e

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:

Strengths:-

Large domestic market

Sustainable labor cost advantage

Competitive auto component vendor base

Government incentives for manufacturing plants

Strong engineering skills in design etc

Weaknesses:-

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

17 | P a g e

Infrastructure bottleneck

Opportunities:-

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

Threats:-

Rising input costs

Rising interest rates

Cut throat competition

18 | P a g e

PLAYER ANALYSIS

Hero Honda :Largest two-wheeler manufacturer in the world

Hero Honda Largest two-wheeler manufacturer in the worldBajaj 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)

19 | P a g e

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

20 | P a g e

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

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

21 | P a g e

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.

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.

22 | P a g e

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

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

23 | P a g e

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

mechanism such as Automobile Export Promotion Council would be of great help for further surge in demand for the

Indian two-wheeler industry.

COMPANY PROFILE

24 | P a g e

TVS MOTOR COMPANY

TVS

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.

25 | P a g e

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

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

26 | P a g e

TVS Star

TVS Star City

TVS Star Sport

TVS Supra

TVS Victor (110 cc)

TVS Victor GLX (125 cc)

SHARE HOLDING PATTERN

27 | P a g e

HISTORY

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.

FINANCIAL SYNOPSIS

28 | P a g e

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.

Revenues

EBITDA Margins

PAT

SEGMENTAL PERFORMANCE

29 | P a g e

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.

HERO HONDA

30 | P a g e

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

Introduction

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.

Corporate Profile  

31 | P a g e

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

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

32 | P a g e

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

decades!

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

BSE: HEROHONDA M

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

33 | P a g e

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

34 | P a g e

COMPARATIVE FINANCIAL ANALYSIS OF

HERO HONDA AND TVS

35 | P a g e

SALES GROWTH ANALYSIS

2004 2005 2006 2007 2008 2009 TVS 2826.21 2875.91 3234.9 3854.9 3219.5 3670.9 GROWRH RATE 1.98% 12.48% 19.47 16.48 14.02 HERO HONDA 5832.42 7421.65 8713.98 9899.96 10331.8 12319.1

36 | P a g e

37 | P a g e

GROWTH RATE 2.7 25 17.41 13.61 4.36 19.23

38 | P a g e

39 | P a g e

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

LIQUIDITY RATIO

40 | P a g e

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’

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.

3.Inventory turn over ratio

41 | P a g e

4 DEBTOR TURNOVER RATIO

42 | P a g e

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

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 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 Period

43 | P a g e

INTERPRETATION

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.

6.OPERATING CYCLE

44 | P a g e

INTERPRETATION:

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.

7.CAPITAL MARKET ANALYSIS P-E RATIO45 | P a g e

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

8. Cash flow statement analysis

46 | P a g e

INTERPRETATION:

For TVS Motors, analysing the cash flow statement of the firm from FY 2005 to FY

47 | P a g e

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 keep

shareholders happy

HERO HONDA

48 | P a g e

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

49 | P a g e

HYPOTHESIS

Sample size is taken to be 50

50 | P a g e

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

population.

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

Best of knowledge

Comaparative study of Hero Honda & Tvs

DATA ANALYSIS

51 | P a g e

1Existing customer

52 | P a g e

2. Chart showing the customer satisfaction regarding their bikesperformance.

Total number of customer satisfied = 50 Total number of customer not satisfied = 0

53 | P a g e

3 Satisfaction level on basis of after sales service.

Satisfied = 39

Unsatisfied= 11

54 | P a g e

5. Bikes spare part is easily available i

55 | P a g e

6. Resale value of bike

56 | P a g e

7 Bike preferable for female

57 | P a g e

58 | P a g e

LIMITATIONS

59 | P a g e

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

number.

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.

60 | P a g e

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

study

61 | P a g e

FINDINGS

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.

62 | P a g e

Before getting into country law enforcement official insparsey populated two wheeler

country

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-

2009years.

The two wheeler industry fixed assets are decreased comparing between 2008-

2009years.

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

2008-2009years.

The two wheeler industry long term liabilities are also decreased.

The two wheeler industry long term liabilities are increased comparing between 2008-

2009years.

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

24%.

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.

63 | P a g e

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

64 | P a g e

Suggestions/recommendations

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

students.

65 | P a g e

TVS should focus on its advertisement and mileage to increaseits market

share.

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

consumers.

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

profits.

TVS should focus on inventory management in order to reduce cost of

production.

BIBLOGRAPHY

1. SIAM

2. WWW.HEROHONDA.COM

66 | P a g e

3. WWW.TVSMOTORS.COM

4. 4P MAGAZINE

5. WWW.TWOWHEELERS .COM

6. ANNUAL REPORT - HERO HONDA & TVS

7. INDIAN AUTOMOBILE INDUSTRY: OPTIMISM IN THE AIR, INDUSTRY INSIGHT,

NCAER

Questionnaire

Name :- ________________________________

Sex a) MALE B) FEMALE

Respected Sir/Madam,

My name is MANVENDRA KUMAR the students of DSM RAIPUR. As per our course

curriculum,

67 | P a g e

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. 1 2 3 4 5

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

e. Any other (please specify) __________________

68 | P a g e

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

female?

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

69 | P a g e

THANK YOU

70 | P a g e