Hero

INDEX
S.No: CHAPTER PAGE NO.

1. CHAPTER-1
INTRODUCTION

 Scope of the Study

 Objectives of the Study
 Methodology of the Study
 Limitations of the Study
2. CHAPTER-1I
 INDUSTRY PROFILE &
 COMPANY PROFILE

3. CHAPTER-1II

 REVIEW OF LITERATURE
4. CHAPTER-1V
 DATA ANALYSIS AND
INTERPRETATION

5. CHAPTER-V
 FINDINGS
 SUGGESTIONS
 CONCLUSION
 BIBLIOGRAPHY

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CHAPTER-I
INTRODUCTION

Planning for the future to achieve the long-term objective is integral to

the survival and growth of every business. Strategic planning today has to take
into cognizance the rapid changes in technology, increased competitiveness
and the turbulent business environment, also with the world becoming one big
global village.

Strategy covers every aspect of business from business reengineering,

new business development, product development and brand positioning to
advertisements promotional campaigns, media and publicity. It is a game of
innovation.

In fact, marketing people are involved in marketing 10 types of entities;

goods, services, experience, events, persons, places, properties, organizations,
information and ideas.

Marketing management is the art and science of choosing target markets

and getting, keeping and growing customers through creating, delivering and
communicating superior customer value.

India is second largest manufacturer and producer of two-wheelers in the

world. It stands next to Japan and China in terms of the number of two
wheelers produced and domestic sales respectively.

Indian two-wheelers industry made small beginning in early 50’s when

Automobile products of India (API) started manufacturing scooter in India.
Hero was established on 13th of April 1984. The Indian two wheelers Industry
can be broadly classified as scooter, motorcycles and mopeds/scooterette. In
last six years domestic two-wheelers has seen structural charges. This can be

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seen from the change in composition of two wheeler sales, where the
motorcycles have gained market share from the scooter and moped or
scooterette segments.

The Hero group of companies in India merged with the Honda Motor
Company of Japan in creating a No.1 mantle in the making of the company
Hero. Hero began operations with the establishment of the Dharuhera plant in
1985. This fully automated plant is equipped with state-of-the-art machinery,
in-house R&D set up, and today it produces a bike every 30 seconds. To meet
the growing demand, Hero opened another unit at Gurgaon, using FMS
technology. It is rated as one of the most modern motorcycle manufacturing
plants in the world. The plant produces 1,800 bikes everyday.

The Indo-Japanese motorcycles segment dominated by Hero group,

Bajaj and Escorts in collaboration with Japanese vehicle manufacturers Honda,
Kawasaki and Yamaha respectively.

The primary reason for growth of two-wheelers market is attributed to

the fact that Indians, especially in the rural and semi urban areas retrying to
change life style and people in metropolitan cities are completely disappointed
with the public transportation.

So, there is tremendous growth in the two-wheeler segment. Two

wheeler segments of automobiles started with bicycles and diversified into
scooters and as the man started looking for style, comfort, speed, power etc.
Motor Cycles came into the picture. The motorcycle market in the present
world like any other market place is a crowded one, with many sellers
competing with each other to attract the same customer.

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Hero, the world’s number .1 bikes have started in early 80’s. The brand
image, quality maintenance, mileage and the style of the vehicle attracted a
large number of customers and thus made it as the No.1 bike.

The consumer is now faced with proliferation of brand models.

Getting new customers as well as retaining them is an important task of
manufacturers. So service after sales is very important. A satisfied customer
brings in more name and goodwill to the company, which is why Customer
Relationship Management is given more importance in today’s competitive
world. A study on this aspect with Hero two-wheelers at Hero Motocorp Ltd
was made.

NEED FOR THE STUDY

Marketing starts with identifying the needs of customers and ends in
satisfying those wants. The goal of marketing is to attract new customers by
promising superior value and to keep current customers by delivering
satisfaction based on their preferences retaining them.

Without customer, no market exists. As the customers are regarded as

the superiors in today’s market, the level of satisfaction and their preferences
should be keenly studied.

The two-wheeler industry has been expanding rapidly. Gone are the
days when possessing a two-wheeler was seen as a luxury. Now days, it is
viewed as a mere necessity.

Prior, sale of two-wheelers was mainly confined to urban areas but lately
in rural areas the bicycles are being replaced by power driven two-wheelers
such as scooters, motorcycles.

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Not only this, this industry has also customers ranging from all
demographic segments. It has been common sights that even school going
children are driving two-wheelers. The women customers are also increasing
due to increase in women literacy and employment.

Getting a new customer is difficult, than retaining a current customer is a

more difficult one and not only that it is estimated that the cost of attracting a
new customer is five times the cost of retaining current customer. It requires a
great deal of effort to induce satisfied customer to switch away from their
current preference. Thus, Customer Relationship Management is been given
top priority in today’s competitive world.

Therefore, keeping the above stated objective in mind, this study was
conducted to ascertain the customer’s satisfaction towards Hero two-wheelers
in Hero Motocorp Ltd. In view of this, a detailed study of customer
preferences, levels of satisfaction and their complaints and suggestions was
undertaken.

OBJECTIVES

This study was conducted keeping the following objectives in mind.

1. To study the factors which influence the purchase of Hero two-wheelers?
2. To know the customer level of awareness of Hero two-wheelers.
3. To know the various factors, which influence customers in purchasing,
they’re two - wheelers?
4. To find the after sales service offered by Hero Motocorp Ltd.
5. To know the customer level of satisfaction of Hero two-wheelers with
respect to Hero Motocorp Ltd.
6. To find the profile of Hero two-wheeler customers.

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METHODOLOGY OF THE STUDY

The information required for this study obtained was basically through
two sources.

Primary Data:

Primary Data has been gathered by a survey through a structured

questionnaire.

The Data has been collected from 100 customers, through

questionnaires, by using simple random sampling. In addition interaction with
the staff of Hero Motocorp Ltd has also given some information.

Secondary Data:

Secondary Data comprises of information obtained from annual reports,

brochures, manuals websites etc.

LIMITATIONS

I have observed the following limitations in the course of my study.

1. The areas which were selected were limited only to Hyderabad i.e., the

findings are regional and do not represent the state or country.

2. Time constraints hampered the study.

3. Since the study involved in gathering information was from upper to higher-

middle class people, interaction with them became difficult.

4. There may be respondent’s bias.

5. Even though utmost care has been taken in conducting the survey, the

findings may sometimes differ from the population.

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CHAPTER-II
INDUSTRY PROFILE

The Indian two-wheeler contributes the largest volume amongst all the
segments in automobile industry. Though the segment can be broadly
categorized into 3 sub-segments viz. scooters, motorcycles and mopeds; some
categories introduced in the market are a combination of two or more segments
e.g. scooterettes and step-thru. The market primarily comprises five players in
the two-wheelers segment with the most of the companies having foreign
collaboration with well-known Japanese firms earlier. But most of the
companies are now planning 100% subsidiaries in India.

Two Wheeler & its role in Indian Context:

As the cities grow & suburbs expand, transportation needs becoming

more & more acute, with mounting pressure on its public transportation for
which two wheelers are ideal.

The two-wheeler Industry today has a significant role in the Indian

economy, with an annual turnover of Rs. 9000 crores and compounded average
growth of 10%. In recent years, it is of the few industrial sectors in the growth
phase today considers personal transportation as one of the basic needs.

The two-wheeler industry basically comprises mopeds, scooters,

scooterettes and motorcycles. Mopeds are basic entry-level products aimed at
lower/middle income groups, offering company. This category dominated by
TVS SUZUKI, which has a market share of 50% today. The other major
players in this segment include KINETIC ENGG., HERO MOTOCORP and
BAJAJ AUTO.

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Scooters, which found largest segment in the industry (37 percent) is

dominated by BAJAJ AUTO. It is however facing stiff competition from
LML, which offers better style and technology to the Indian customers.
However, dominance of this category has been declining because of shift in the
customer preferences.

Major part of the growth in the two-wheeler industry has come from
motorcycle especially, the Indo-Japanese 100cc motorcycles, which are
considered, fuel efficient, reliable and suited for rough roads.

Scooterettes also growing at a fast phase and are being increasingly

perceived as a better option providing convenience and motor style, by urban
customers. In this category, TVS Scooty holds a dominant market share.

With sales of over three million vehicles, India is the second largest two-
wheeler market in the world. Vehicle has become a necessity for day-to-day
busy life, with the accelerated industrial and business activity in a liberalized
environment. However, given the limited purchasing power and to high cost of
cars, majority of the middle class vehicle users prefer two wheelers.

With sales of over million vehicles, India is the second largest two-
wheelers market in the world. China is the market leader with around 51
percent of the Asia Market, India, Thailand; Indonesia & Taiwan are the other
key markets for two-wheelers with market share of 19 percent, 10 percent, 9
percent and 5 percent respectively.

In the last four to five years, the two-wheeler market has witnessed a
market shift towards motorcycles at the expense of scooters. In the rural areas,
consumers have come to prefer sturdier bikes to withstand the bad road
conditions. In the process the share of motorcycle segment has grown from
48% to 58%, the share of scooters declined drastically from 33% to 25%, while

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that of mopeds declined by 2% from 19% to 17% during the year 2000-01.
The Euro emission norms effective from April 2000 led to the existing players
in the two-stroke segment to install catalytic converters. 4-stroke motorcycles
are now replacing all the new models. Excise duty on motorcycles has been
reduced from 32% to 24%, resulting in price reduction, which has aided in
propelling the demand for motorcycles. Fierce competition has also forced
players to cut prices of certain models.

Competition has intensified over the last couple of years altering the
dynamics in the motorcycle segment with various companies planning to cash
in on this spurt in demand by calling off their JVs like Suzuki Motors planning
to break off with TVS. Recently, Honda Corporation of Japan announced its
intentions to set up a 100% subsidiary to manufacture scooters and
motorcycles. Other players in the two-wheeler industry include Bajaj Auto
Ltd., Kinetic Motor Co.Ltd. LML and Escorts Yamaha. Low interest regime
has helped in reducing cost of loans, which will help in boosting sales of 2-
wheelers, since 80% of the two-wheelers are credit –stimulated.

The two-wheeler industry is passing through a critical but interesting

phase. For many years, it was growing continuously but the turning point came
in 1996=97 when it started slowing down. The impact was really (MI) felt in
the next year when the overall growth was hardly two percent. This was also
possible only because the motorcycle segment showed a healthy growth of 15
percent. The scooter segment went down by 3 percent and mopeds by 6
percent.

Another highlights are that the motorcycle sales have surpassed the
scooter sales for the first time in 1998-99. Until then, motorcycle sales were
always trailing behind.

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The net result is that motorcycles now account for 41 percent of the two-
wheeler market, while scooters account for 36 percent. Mopeds have been able
to hold their own at about 21 percent.

GROWTH MOTORCYCLES
It is therefore not surprising that every major player is trying to get into
the Motorcycle market to have a piece of the cake.

Hero is indisputable the leader with 38 percent share followed by Bajaj

with 27 percent (includes M-80), TVS at 19 percent and Escorts at 13 percent.
Now LML and Kinetic have announced their plans to manufacture
motorcycles, which are likely to come in the market by next year. The battle is
expected to be fierce but the consumer will be the greater beneficiary.

The growth in motorcycles is slowly losing its hold. It is considered a

family vehicle but perhaps there is competition from the second hand car
markets where prices have fallen down rapidly. A1992 Maruti 800 is now
available for just 70,000.

The scooter manufactures have to watch this phenomenon and bring our
many new product variants in the right price slots to sustain their shares in the
market. The moped market has been steady with an average growth of 3
percent. It is dominated by TVS which holds 48 percent market share followed
by Kinetic and Majestic Auto at 23 percent and 18 percent respectively.

In each segment, there is a wide gap between the first two contenders,
which makes their products positioning and marketing strategies most
interesting. The two wheelers market seems to be maturing. There are the usual
their conventional segment of scooters, mopeds and motorcycles. Two new
segments are being created.

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NEW SEGMENTS
A Step is through segment like Kinetic K4-100, Honda Street, Bajaj M-
80, which is quite close to the motorcycle segment. The other segment is
scooterettes or mini scooters in which vehicles such as Kinetic SX/Style, TVS
Scooty, Hero Winner, Bajaaj Sunny/Sprite/Saffire and LML trendy can be
considered. These are vehicles under 75 cc and largely targeted at the youth
market such as college students, young boys and girls and new couples. They
get the advantage of lower excise duty at 16 percent as compared to 24 percent
applicable over 75 cc. The trend is towards push button start vehicles.
Among the majors in the two-wheeler industry, first quarter figure for
the current year of some players have been encouraging. The company sold
313,303 units last month as compared to 325,360 units in the same month last
year. With this, BAL has recorded as 87 percent growth in the motorcycle
segment in the first quarter with sales of 130,577 units (93,631 units in the
corresponding period last year) BAL estimates market share of the first quarter-
Geared scooters 75.9%, unguarded scooters- 16.5%, Step-thrus-72.3% and
motorcycle-20.5%.

In the scooterettes segment, sales of Bajaj Sunny and Bajaj Spirit

increased by 170 percent to 7,876 units. First quarter sales registered an
impressive 78 percent growth with sales of 19,562 (10,995 units). The overall
sales grew by 9.3 percent in the quarter when the company sold 3.24 lakh
vehicles.

BAL however reported a decline in sales of scooters by 15.6 percent in

the first quarter. The company hopes to increase the share of motorcycle in its
product basket from 18 percent last year to 30 percent by 2003-04.

Hero (HHL) enjoys tremendous brand equity in the motorcycle segment.

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Kinetic Motors, another important player, managed to grow in 1999-

2000, when the scooters segments a whole slipped by around 5 percent. TVS
Suzuki, a motor two-wheeler market, has reported a growth of 13 percent in the
first quarter period and sold 2.19 lakh units. Sales of motorcycles and scooters
were up by 18 percent and that of mopeds by 8 percent over the same period
last year.

The current year therefore promises to be a testing time for the two-
wheeler industry. Industry pundits feel that an overall growth rater of 5 percent
should be possible as against 9 percent projected earlier. The sales volume
therefore is expected to be around 3.8 million in 2000-2001.

DRAMATIC CHANGES:

The new products have contributed to 25 percent of the growth and

helped the producers improve their bottom line. The year 1998-99 was a year
of dramatic management changes. Singhanias have taken overall control of
LML with the withedrawal of piaggio. Another corporate history was created
with Kinetic tasking over the management control from its Japanese partner-
Honda Motor company LTD in Kinetic Honda Motors.

The coming years will see increasing competition due to the parity in
products and price. The only differentiators will be technology, quality, product
range and service. Imaginative marketing will emphasize relationship building,
Customer Relationship Management and relationship. All is exploring new
techniques such as direct marketing and institutional sales. Some of them are
taking the vehicle actually to the customers doorstep. Now the customer is the
king.

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HISTORICAL DEVELOPMENT OF TWO WHEELER INDUSTRY

India is the second largest manufacturer and producer of two-wheelers

in the world. It stands next to Japan and China in terms of the number of two-
wheelers produced and domestic sales respectively. This distinction was
achieved due to variety of reasons as if respective policy followed by the
Government of India towards the passenger car industry, rising demand for
personal transport, inefficiency in the public transportation system etc.,

In Indian two-wheeler, industry made a small beginning in the early 50s

when Automobile Products of India (API) started manufacturing scooters in the
country. Until 1958, API and Enfield were the sole producers.

In 1948, Bajaj Auto began trading in imported Vespa scooters and three
wheelers. Finally, in 1980, it setup a shop to manufacture them in technical
collaboration with Piaggio of Italy. The agreement expired in 1971.

In the initial stages, API it was later overtaken by Bajaj Auto dominating
the scooter segment. Although various Government and Private enterprises
entered the fray for scooters, the only new player that has lasted until today is
LML.

Under the regulated regime, foreign companies were not allowed to

operate in India. It was a complete seller market with the waiting period for
getting a scooter from Bajaj Auto being as high as 12 years.

The motorcycles segment was no different, with only three

manufacturers via Enfield, Ideal Jawa and Escorts. While Enfield bullet was a
four-stroke bike, Jawa and the Rajdoot were two-stroke bikes. Enfield 350cc
bikes and Escorts 175cc bike initially dominated the motorcycle segment.

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The two-wheeler market was opened to foreign competition in the mid

80’s. And then the market leaders-E5corts and Enfield- were caught unaware
by the onslaught of the 100 cc bikes of the four IndoJapanese joint ventures.
With the availability of fuel-efficiency low power bikes, demand swelled
resulting in Hero — the only producer of four-stroke bikes (100cc category),
gaining a top slot.

The first Japanese motorcycles were introduced in the early eighties. TYS
Suzuki and Hero brought in the first two-stroke and four-stroke engine
motorcycles respectively. These two players initially started with assembly of
CKD kits, and later on progressed to indigenous manufacturing. In the 90’s the
major growth for motorcycle segment was brought in by Japanese motorcycles,
which grew at a rate Of nearly 25% CAGR in the last five years.

The industry had a smooth ride in the 50’s, 60’s and70’s when the
government prohibited new entries and strictly controlled capacity expansion.
The industry saw a sudden growth in the 80’s. The industry witnessed a steady
growth of 14% leading to a peak volume of 1.9mm vehicles in 1990.

The entry of Kinetic Honda in mid-eighties with a variometric scooter

helped in providing ease of use to the scooter owners. This helped in inducing
youngsters and working women towards buying scooters, who were earlier
inclined towards moped purchases. In line with this, the scooter segment has
consistently lost its part of the market share in the two~whee1er market.

In 1990, the entire automobile industry saw a drastic fall in demand.

This resulted in a decline of 15% in 1991 and 8% in1992, resulting in the
production loss of 0.4mn vehicles. Barring Hero, all the major producers
suffered from recession in FY93 and FY94. Hero showed a marginal decline in
1992.

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The reasons for recession in the sector were the incessant rise in fuel
price, high input costs and reduced purchasing power due to significant rise in
general price level and credit crunch in consumer financing. Factors as if
increased production in 1992, due to new entrants coupled with the recession in
the industry resulted in either company reporting losses or fail in profits.

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India is one of the very few countries manufacturing three wheelers in the
world. It is the world’s largest manufacturer and seller of three wheelers. Bajaj
Auto commands a monopoly in the domestic market with a market share of
above 80%; Bajaj Tempo, Greaves Ltd and Scooters in India share the rest.

The total number of registered two-wheelers and three-wheelers on road

in India, as on March 1998 was 27.9nm and 1 .7nin respectively. The two-
wheeler population has almost doubled in 1996 from a base of 12.6mn in 1990.

PENETRATION OF TWO-WHEELERS:

On a base of around 28mn vehicles on Indian roads and around 175mn

households, there were only 160 motorized two-wheelers per thousand
households in FY98. This compares poorly with countries like Thailand where
it is around 600 per thousand households. Also with a household size of 5.5
persons and more than one wage earner in about 60% of the households, the
potential for a second vehicle demand is also good.

The number of households in the low-income group has fallen since

FY86 and has been more pronounced in the post-reform period. On the other
hand, the number of households in the middle, upper middle and high-income
groups that form the consumer base for twowheelers, have increased. Their
share of the total number of households has increased from 10.6% in FY88 to
20.5% inFY96. This rising income profile however, has, been more
pronounced in the urban areas as average annual growth in industry surpassed
that of agriculture in the period FY93 to FY96.

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COMPANY PROFILE
FILL IT. SHUT IT. FORGET IT

When Hero Cycles and Honda Motor Company of Japan inked their
joint venture in India in April 1984, few could have imagined that the two
would go on to create history and become the subject of a case study at
business schools, internationally.

But that's the Hero saga for you. In a little over two decades, the world's
largest manufacturer of bicycles and the global leader in motorcycles have
created not only the world's single largest motorcycle company but also the
most endearing and successful joint venture for Honda Motor Company
worldwide. The company has sold over 15 million motorcycles and has
consistently grown at double digits since its inception and today, every second
motorcycle sold in the country is a Hero.

In two decades, Hero has built two world-class manufacturing facilities

at Dharuhera and Gurgaon in Haryana that now churn out over 3 million bikes
per year.

In this period, Hero has set up over 2400 customer touch points,
comprising a mix of dealers, service centres and stockists across rural and
urban India. Today, Hero is an amalgam of winning networks and relationships
with internal and external stakeholders, including Investors, Dealers, Vendors
and Employees. These relationships have helped the company hold on to the
mantle of World No.1 for years in succession.

What makes Hero well, Hero, is synergy. The two partners, leaders in
their respective domains, have been able to consistently draw on each other's
strengths. The Hero Group's deep domain knowledge of the Indian market and

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its supplier network has meshed with Honda's mastery over four-stroke engine
technology to create modern and fuel-efficient machines at affordable prices
for India 's 250-300 million strong middle class.

Progressively through the 1980s, the 1990s and now in the 2000s, Hero
has relied on 3 R's-- Reach, Research and Reliability as its basic building
blocks. Using feedback from the market, a fully-equipped R&D center has
consistently created best practices in designing, testing and harmonization,
besides placing strong emphasis on road safety and ride quality. This emphasis
has helped Hero build products that are ahead of their time.

In the 1980s, for example, Hero became the first company in India to
prove that it was possible to drive a vehicle without polluting the roads. The
company introduced new generation motorcycles that set industry benchmarks
for fuel thrift and low emission. A legendary 'Fill it - Shut it - Forget it'
campaign captured the imagination of commuters across India , and Hero sold
millions of bikes purely on the commitment of increased mileage.

Hero was also one of India 's first automotive companies to get close to
the customer. Over the years, feedback has flowed back and forth seamlessly
through a unique CRM program - the Hero Passport Program which now
has over 2.5 million members on its roster. The program has not only helped
Hero understand its customers and deliver value at different price points, but
has also created a loyal community of brand ambassadors.

The best is yet to come. Hero is powering its way through a market that
is still to unleash its true potential, as barely two per cent of the population has
been penetrated so far!

It isn't surprising that the company is in no mood to take its hand off the
throttle. As Brijmohan Lall Munjal, the Chairman, Hero Motocorp succinctly

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puts it, "We pioneered India's motorcycle industry, and it's our
responsibility now to take the industry to the next level. We'll do all it
takes to reach there.''

HERO'S MISSION

Hero’s mission is to strive for synergy between technology, systems and

human resources, to produce products and services that meet the quality,
performance and price aspirations of its customers. At the same time maintain
the highest standards of ethics and social responsibilities.

This mission is what drives Hero to new heights in excellence and helps
the organization forge a unique and mutually beneficial relationship with all its
stake holders.

HERO'S MANDATE

Hero is a world leader because of its excellent manpower, proven

management, extensive dealer network, efficient supply chain and world-class
products with cutting edge technology from Honda Motor Company, Japan.
The teamwork and commitment are manifested in the highest level of
Customer Relationship Management, and this goes a long way towards
reinforcing its leadership status.

FROM THE CHAIRMAN'S DESK

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LEADING WITH A DREAM

We had a dream. The dream of making motorcycles that would touch

and transform the lives of our customers by giving them a mode of transport
that was fuel-efficient, comfortable and environment friendly. One that would
enhance their efficiency at work, enable them to share moments of joy with
their families and add up to a better quality of life.

In a scenario where the customer had a few choices, our vision was to
offer the highest quality at a reasonable price, to meet our customer’s
expectations, and to exceed them.

Behind the success of Hero, is the saga of team-work. We would like to

acknowledge the role played by our JV partners, Honda Motor Company,
Japan, and all our business associates, shareholders and employees.

In the new millennium, we stand committed to innovation, to change, to

achieving breakthroughs… to moving forward in the new century, while
retaining the values that have been like a beacon in this journey thus far.

Brijmohan Lall

Chairman

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ABOUT THE CHAIRMAN

Brijmohan Lall Munjal – Seeding a Dream

Don't dream if you can't fulfill your dreams,'' Brijmohan Lall Munjal is
often fond of saying. The founder and patriarch of the $ 2.8 billion Hero Group
is your classic first generation entrepreneur. He is a man who started small,
dreamt big and used a combination of grit and perseverance to create one of the
country's largest corporate groups and the World's No.1 Two Wheeler
Company.

Instinctive from a young age, Brijmohan Lall made a rather unusual start
in life. Around the time when the freedom movement in India was taking shape
in the late 1920s, he walked into a newly opened Gurukul (Indian heritage
school) near his home in Kamalia (now in Pakistan ). He was only six years old
then.

Thus began an extraordinary tale of courage and perseverance.

Brijmohan began his business story after partition in 1947, when he and his
brothers relocated to Ludhiana. The family set up a company that provided
poor people with basic transport (cycles). Three decades later, as India evolved,
he added a second crucial chapter - which visualized affordable and
technologically superior transport to millions of middle class Indians. The rest
is history.

Building Relationships

When Brijmohan and his brothers started out, there was no concept of
organized dealer networks. Companies just produced, and most dealers
functioned like traders. Brijmohan changed the rules of the business by trusting
his gut instincts; introducing business norms that were ahead of their time, and
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by investing in strategic relationships. Brijmohan built a series of bonds and

networks with hundreds of family members, vendors, dealers and employees.
Much like the Japanese keiretsu system, these networks are now the glue that
holds the Hero Group together.

"Thanks to the relationships that we have nurtured so passionately in the

Hero Family, the younger generations of some of our bicycle dealers have
become dealers of Hero. These relationships have survived through generations
- through bad times and good times,'' the patriarch now reminiscences.

Besides bonding with his vendors and dealers, Brijmohan has been
personally responsible for kindling a spirit of entrepreneurship amongst his
employees, and today, 40 of his former employees are successful
entrepreneurs.

Staying Ahead

Though not technically qualified in the conventional sense, few of his

contemporaries have understood the dynamics of technology better than
Brijmohan Lall has. He could always visualize the applicability of technology
before others could. For example, in the 1980s, when all two-wheeler
companies in India opted for two-stroke engine technology, Brijmohan
preferred a four-stoke engine - a technology that dramatically increased fuel
efficiency and reduced maintenance costs. This technology was one of the
biggest reasons for Hero's stupendous success.

Time and again, Brijmohan managed to steal a march over his industry
peers. For example, when Honda Motors of Japan was looking for a
collaborator in the 1980s, the Hero Group was not high up the pecking order
initially as there were other more eligible and established suitors.
Yet it didn't take long for the astute Japanese to realize that the Hero Group and
Honda had much more in common than earlier perceived; there a sharp focus

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on financial and raw material management, and employee turnover was low.
Honda officials were also amazed to find that the Munjals were already
practicing "Just-in-time-inventory" at the time (JIT). It turned out that
Brijmohan Lall's aspiration to provide cheap transportation to India 's poor by
default ensured lean and cost-effective operations. This in turn increased
vendor efficiency and led to near-zero inventories.

A Corporate Citizen

A frugal upbringing and a value system modeled on the famous Gurukul

system - which stresses the sanctity of the teacher-pupil relationship - imbibed
in Brijmohan a strong sense of social commitment and responsibility.

There is a special place in his heart for Ludhiana , the city where he took
roots. Today, Ludhiana is a modern, bustling city, but Brijmohan has played no
mean role in its evolution. Several schools and educational institutions in
Ludhiana owe their existence to the Munjal family.

The Ludhiana Stock Exchange owes its existence to Brijmohan's vision

as does the Ludhiana Flying Club. He's also set up the not-for-profit Dayanand
Medical College and Hospital-an institute now rated as one of the best medical
colleges in India , in terms of infrastructure, quality of staff and alumni profile.

In and around Dharuhera, near the first Hero plant, Brijmohan and his
family have left their stamp of philanthropy. The Raman Kant Munjal
Foundation - which Brijmohan set up in memory of his eldest son, today runs a
higher secondary school and a very modern and well-equipped 100-bed
hospital at Dharuhera. The group has also adopted numerous villages and
provides education, vocational training, drinking water, roads, streetlights and
sewerage.
PROMINENT AWARDS AND ACCOLADES
TO THE CHAIRMAN

23
 Hero

Year Awards and Accolades

2006 'Lifetime Achievement Award' for Translating Excellence in Corporate Governance
into Reality by The Institute of Company Secretaries of India
2005
Indian Automotive Hall of Pride by Overdrive
CNBC TV18 Commendation of Business Leadership displaying extraordinary
Corporate Leadership and Entrepreneurial Spirit
Padma Bhushan' by Government of India
Doctor of Letters (Honoris Causa) by Hemwati Nandan Bahuguna Garhwal
University , Srinagar Garhwal
Lifetime Achievement Award' by ET Awards for Corporate Excellence
2004 Life Time Achievement Award for Management by All India Management
Association
D. Litt. (Honoris Causa) by Banaras Hindu University
Lifetime Achievement Award by Amity Business School
Lifetime Achievement Award by HT Power Jobs
2002
Entrepreneur of the Year Award by Business Standard
Giants International Award to the Chairman in the field of Business & Industry
Business Leadership Award by Madras Management Association
2001 Entrepreneur of the Year Award by Ernst & Young
2000 Sir Jehangir Ghandy Medal for Industrial Peace - by XLRI, Jamshedpur
1998 Business Leader of the Year by Business Baron
1997 Distinguished Entrepreneurship Award by PHD Chambers of Commerce & Industry
1995 National Award for outstanding contribution to the Development of Indian Small
Scale Industry (NSIC Award - Presented by President of India)
1994 Businessman of the Year by Business India Group of Publications
1992 Honorary Membership - Indian Institution of Industrial Engineering Award

BOARD OF DIRECTORS

No. Name of the Directors Designation

1 Mr. Brijmohan Lall Munjal Chairman & Whole-time Director
2 Mr. Pawan Munjal Managing Director
3 Mr. Toshiaki Nakagawa Jt. Managing Director

24

4 Mr. Takao Eguchi
5 Mr. Satyanand Munjal
6 Mr. Om Prakash Munjal
7 Mr. Tatsuhiro Oyama
8 Mr. Masahiro Takedagawa
9 Mr. Narinder Nath Vohra
10 Mr. Pradeep Dinodia
11 Gen.(Retd.) Ved Prakash
Malik
12 Mr. Analjit Singh
13 Dr. Pritam Singh
14 Ms. Shobhana Bhartia
15 Dr. Vijay Laxman Kelkar
16 Mr. Sunil Bharti Mittal
CODE OF CONDUCT
FOR DIRECTORS AND SENIOR MANAGEMENT
1. INTRODUCTION
This Code of Conduct has been adopted by the Board of Directors of Hero
Motocorp Limited for its members and the Senior executives one level below,
the Directors, including all functional heads (hereinafter referred to as
"Specified employee").
Hero
Whole-time Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive & Independent
Director
Non-executive & Independent
Director
Non-executive & Independent
Director
Non-executive & Independent
Director
Non-executive & Independent
Director
Non-executive & Independent
Director
Non-executive & Independent
Director
Non-executive & Independent
Director
25
 Hero

There are certain clauses of the Code, which are meant for Directors only
such as attending meetings of the Board and Committee thereof. The Specified
employees need to ignore such clauses.

The principal duty of the Board of Directors, along with management, is to

ensure that the Company is well managed in the interests of its shareholders.
The Board of Directors plays the central role in the Company's governance. It
is the Company's decision-making authority on all matters except those
reserved to shareholders or delegated to the management. The Board of
Directors is not expected to assume an active role in the day-to-day
management of the Company.

I. GUIDELINES FOR CONDUCT

Each director and Specified Employees seek to use due care in the
performance of his/her duties, be loyal to the Company, act in good faith and
in a manner such Director and Specified employee reasonably believes to be
not opposed to the best interests of the Company. A Director and Specified
employee should seek to also:

 Make reasonable efforts to attend Board and committee meetings;

 Dedicate time and attention to the Company;
 Comply with all applicable laws, regulations, confidentiality obligations
and corporate policies of the Company; and be independent in judgement
and actions and to take all reasonable steps to be satisfied as to the
soundness of all decisions taken by the Board of Directors

II. CORPORATE BUSINESS OPPORTUNITIES

In carrying out their duties and responsibilities, Directors and Specified

employees should avoid:
26
 Hero

 Appropriating corporate business opportunities for themselves that are

discovered through the use of Company property or information or their
position as Directors and Specified employees;
 Using Company property or information, or their position as Director
and Specified employees, for personal gain; and competing with the
Company.

A corporate business opportunity is an opportunity:

1. Which is in the Company's line of business or proposed expansion or

diversification,
2. Which the Company is financially able to undertake and
3. Which may be of interest to the Company.

A Director and Specified employee, who learns of such a corporate

business opportunity and who wishes to avail of, it should disclose such
opportunity to the Company's Board of Directors. If the Board of Directors
determines that the Company does not have an actual or expected interest in
such opportunity, then, and only then, may the Director and Specified
employee avail of it, provided that the Director and Specified employee has not
wrongfully utilized the Company's resources in order to acquire such
opportunity

IV. CONFLICTS OF INTEREST

 Each Director and Specified employee should endeavor to avoid having

his or her private interests interfere with: i) the interests of the Company or
ii) his or her ability to perform his or her duties and responsibilities
objectively and effectively.
 They should avoid receiving, or permitting members of their immediate
family to receive, improper personal benefits from the Company, including

27
 Hero

loans from or guarantees of obligations by the Company, except as may be

provided in their employment contract.
 They should make a full disclosure to the entire Board of any transaction
or relationship that such a Director and Specified employee reasonably
expects could give rise to an actual conflict of interest with the Company
and seek the Board's authorization to pursue such transactions or
relationships.

III. COMPANY PROPERTY

In carrying out their duties and responsibilities, Directors and Specified

employees should endeavor to ensure that management is causing the
Company's assets, proprietary information and resources to be used by the
Company and its employees only for legitimate business purposes of the
Company.

28
 Hero

IV. CONFIDENTIAL INFORMATION

Director and Specified employees should maintain the confidentiality of

information entrusted to them in carrying out their duties and responsibilities,
except where disclosure is approved by the Company or legally mandated or if
such information is in the public domain.

The Company's confidential and proprietary information shall not be

inappropriately disclosed or used for the personal gain or advantage of any
Director and Specified employees or anyone other than the Company. These
obligations apply not only during a Director's and Specified employee's term,
but thereafter as well.

V. FAIR DEALING

In carrying out their duties and responsibilities, Director and Specified

employees should endeavor to deal fairly, and should promote fair dealing by
the Company, its employees and agents, with customers, suppliers and
employees.

Director and Specified employees should not seek to take unfair

advantage of the Company through manipulation, concealment, abuse of
privileged information, misrepresentation of material facts or any other unfair
dealing.

VI. COMPLIANCE WITH LAWS AND REGULATIONS

In carrying out their duties and responsibilities, Directors and Specified

employees should comply, and endeavor to ensure that the management is
causing the Company to comply, with applicable laws, rules and regulations.
In addition, if any Director and Specified employee becomes aware of any
information that he or she believes constitutes evidence of a material violation

29
 Hero

of any securities or other laws, rules or regulations applicable to the Company

or the operation of its business, by the Company, any employee or another
Director and Specified employee, then such Director and Specified employee
should bring such information to the attention of the Chairman of the Audit
Committee.

VII. INSIDER TRADING

Director and Specified employees should observe all applicable laws and
regulations including the Company policies and Codes as applicable to them
with respect to the purchase and sale of the Company's securities.

It is the responsibility of each Director and Specified employee to

become familiar with and understand these laws, regulations, policies and
codes and should seek further explanations and advice concerning their
interpretation, if required.

Any waiver of or amendments to the Company's policies or Codes may

be made only by the Company's Board of Directors and will be disclosed
promptly as required by applicable laws and regulations including the rules of
any exchange on which the Company's securities are listed or traded.

Director and Specified employees should direct questions regarding the

application or interpretation of these guidelines to the Company
Secretary/Compliance Officer.

X. ENCOURAGING THE REPORTING OF ILLEGAL OR

UNETHICAL BEHAVIOUR

Director and Specified employees should endeavor to ensure that

management is causing the Company to promote ethical behavior and to

30
 Hero

encourage employees to report evidence of illegal or unethical behaviour to

appropriate Company personnel.

Director and Specified employees should endeavor to ensure that the

Company will not allow retaliation against any employee who makes a good
faith report about a possible violation of the Company's Code of Conduct.

XI. NON-COMPLIANCE

Suspected violations of this Code may be reported to the Chairman of

the Board or the Chairman of the Audit Committee. All reported violations
should be appropriately investigated.

A Director and Specified employees charged with a violation of this

Code should not participate in or vote on the matter in the meeting of a
Committee or the Board concerning his/her alleged violation, but may be
present at a meeting of the Board or of a Committee convened for that
purpose.

Any waiver of this Director and Specified employees' Code must be

approved by the Board of Directors and publicly disclosed if required by any
applicable law or regulation.

XII. EMPLOYEES

The Director and Specified employee should respect each and every
employee of the Company, treat each of them in a fair and equitable manner;
respect their privacy and not to share/disclose their personal information
without their prior consent; maintain non-discriminatory approach and refrain
from harassing employees, making sexual advancements, coercion, threat by
virtue of his/her position with the Company.

31
 Hero

XIII. CUSTOMERS

The Director and Specified employee should ensure to provide products

and services, which meet the desired quality and safety standards and redress
the Customer's grievance genuinely

XIV. SHAREHOLDERS

The Director and Specified employee should ensure to protect

shareholders complete records by avoiding false misleading or artificial entries
in the Books of accounts. should ensure to protect shareholders interest

32
 Hero

KEY MILESTONES OF HERO

PROMINENT AWARDS TO THE CHAIRMAN

Year Awards and Accolades

2006 'Lifetime Achievement Award' for Translating Excellence in Corporate
Governance into Reality by The Institute of Company Secretaries of
India
2005 Indian Automotive Hall of Pride by Overdrive

CNBC TV18 Commendation of Business Leadership displaying

extraordinary Corporate Leadership and Entrepreneurial Spirit

Padma Bhushan' by Government of India

Doctor of Letters (Honoris Causa) by Hemwati Nandan Bahuguna

Garhwal University, Srinagar Garhwal

Lifetime Achievement Award' by ET Awards for Corporate Excellence

2004 Life Time Achievement Award for Management by All India
Management Association

D. Litt. (Honoris Causa) by Banaras Hindu University

Lifetime Achievement Award by Amity Business School

Lifetime Achievement Award by HT Power Jobs

2002 Entrepreneur of the Year Award by Business Standard

Giants International Award to the Chairman in the field of Business &

Industry

Business Leadership Award by Madras Management Association

2001 Entrepreneur of the Year Award by Ernst & Young
2000 Sir Jehangir Ghandy Medal for Industrial Peace - by XLRI,
Jamshedpur
1998 Business Leader of the Year by Business Baron

33
 Hero

1997 Distinguished Entrepreneurship Award by PHD Chambers of

Commerce & Industry
1995 National Award for outstanding contribution to the Development of
Indian Small Scale Industry (NSIC Award - Presented by President of
India)
1994 Businessman of the Year by Business India Group of Publications
1992 Honorary Membership - Indian Institution of Industrial Engineering
Award

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Hero Motocorp takes considerable pride in its stakeholder relationships,

especially ones developed at the grassroots. The Company believes it has
managed to bring an economically and socially backward region in Dharuhera,
Haryana, into the national economic mainstream.

An Integrated Rural Development Centre has been set up on 40 acres of

land along the Delhi-Jaipur Highway. The Centre-complete with wide approach
roads, clean water, and education facilities for both adults and children-now
nurtures a vibrant, educated and healthy community.

The Foundation has adopted various villages located within vicinity of

the Hero factory at Dharuhera for integrated rural development. This includes:

 Installation of deep bore hand pumps to provide clean drinking water.

 Constructing metalled roads and connecting these villages to the
National Highway (NH -8).

34
 Hero

 Renovating primary school buildings and providing hygienic water and

toilet facilities.
 Ensuring a proper drainage system at each of these villages to prevent
water-logging.
 Promoting non-conventional sources of energy by providing a 50 per
cent subsidy on biogas plants.

Other key projects taken up by the Foundation include

Raman Munjal Vidya Mandir

The Raman Munjal Vidya Mandir began with three classes (up to
class II) and 55 students from nearby areas. It has now grown into a modern
Senior Secondary, CBSE affiliated co-educational school with over 1200
students and 61 teachers. The school has a spacious playground, an ultra-
modern laboratory, a well-equipped audio visual room, an activity room, a
well-stocked library and a computer centre.

Raman Munjal Memorial Hospital

Multi-specialty hospital equipped with the latest diagnostic and surgical

technology. The Raman Munjal Memorial Hospital provides healthcare to
the rural population in and around Dharuhera, and also caters to accident and
trauma victims driving along the Delhi-Jaipur highway.

Raman Munjal Sports Complex

The Raman Munjal Sports Complex has basketball courts, volleyball

courts, and hockey and football grounds are used by the local villagers. In the
35
 Hero

near future, sports academies are planned for volley ball and basket ball, in
collaboration with National Sports Authority of India

Vocational Training Centre

In order to help local rural people, especially women, Hero has set up a
Vocational Training Centre. So far 26 batches comprising of nearly 625 women
have been trained in tailoring, embroidery and knitting. The Company has
helped women trained at this center to set up a production unit to stitch
uniforms for Hero employees. Interestingly, most of the women are now self-
employed.

Adult Literacy Mission

This Scheme was launched on 21st September, 1999 , covering the

nearby villages of Malpura, Kapriwas and Sidhrawali. The project started with
a modest enrollment of 36 adults. Hero is now in the process of imparting
Adult Literacy Capsules to another 100 adults by getting village heads and
other prominent villagers to motivate illiterate adults.

Marriages of underprivileged girls

Marriages are organized from time to time, particularly for girls from
backward classes, by the Foundation by providing financial help and other
support to the families.

Rural Health Care

Besides setting up a modern hospital, the Foundation also regularly

provides doorstep health care services to the local community. Free health care

36
 Hero

and medical camps are now a regular feature in the Hero Group's community
outreach program.

KEY POLICIES

AN ENVIRONMENTALLY AND SOCIALLY, AWARE COMPANY

At Hero, our goal is not only to sell you a bike, but also to help you
every step of the way in making your world a better place to live in. Besides its
will to provide a high-quality service to all of its customers, Hero takes a stand
as a socially responsible enterprise respectful of its environment and respectful
of the important issues.

Hero has been strongly committed not only to environmental

conservation programmes but also expresses the increasingly inseparable
balance between the economic concerns and the environmental and social
issues faced by a business. A business must not grow at the expense of
mankind and man's future but rather must serve mankind.

"We must do something for the community from whose land we generate
our wealth."

A famous quote from our Worth Chairman Mr.Brijmohan Lall Munjal

Environment Policy

We at Hero are committed to demonstrate excellence in our environmental

performance on a continual basis, as an intrinsic element of our corporate
philosophy.

37
 Hero

To achieve this we commit ourselves to:

 Integrate environmental attributes and cleaner production in all our

business processes and practices with specific consideration to
substitution of hazardous chemicals, where viable and strengthen the
greening of supply chain.
 Continue product innovations to improve environmental compatibility.
 Comply with all applicable environmental legislation and also
controlling our environmental discharges through the principles of
"alara" (as low as reasonably achievable).
 Institutionalise resource conservation, in particular, in the areas of oil,
water, electrical energy, paints and chemicals.
 Enhance environmental awareness of our employees and dealers /
vendors, while promoting their involvement in ensuring sound
environmental management.

Quality Policy

Excellence in quality is the core value of Hero's philosophy.

We are committed at all levels to achieve high quality in whatever we do,

particularly in our products and services which will meet and exceed
customer's growing aspirations through:

 Innovation in products, processes and services.

 Continuous improvement in our total quality management systems.
 Teamwork and responsibility.

38
 Hero

Safety Policy

Hero is committed to safety and health of its employees and other

persons who may be affected by its operations. We believe that the safe work
practices lead to better business performance, motivated workforce and higher
productivity.

We shall create a safety culture in the organization by:

 Integrating safety and health matters in all our activities.

 Ensuring compliance with all applicable legislative requirements.
 Empowering employees to ensure safety in their respective work places.
 Promoting safety and health awareness amongst employees, suppliers
and contractors.

Continuous improvements in safety performance through precautions

besides participation and training of employees.

SALES PERFORMANCE

July'05 July'06 FY 05-06 FY 06-07

Total Sales 230053 235315 917617 1068006
Exports (incl in above) 6900 10575 36441 39970

39
 Hero

HERO REGISTERS 23% GROWTH IN JUNE '06

Hero Sells Over 2.50 Lakh Units In February 2006

Hero Begins 2006 On A High Note

Hero Motocorp Scales A New High In Cy ’05

Hero Continues On The Growth Path

Retail Sales Escalate To An Unprecedented 4 Lakh + Units In

Hero Registers 22.3 Per Cent Growth In September ’05

Hero's Sales Jump 28.5 Per Cent In August 2005

Hero Registers 12 Per Cent Growth In Sales In July 2005

Hero Registers 13% Growth In Sales In Q1 Of 2005-06

Hero Motorcycle Sales In May At 2,26,072

HERO REGISTERS 23% GROWTH IN JUNE '06

Records a growth of 21% Sales in Q1 Of 2006-07

New Delhi, Saturday, July 01, 2006: Hero, the 'World No.1' two-
wheeler company, continues to strengthen its leadership in the Indian two-
wheeler industry, registering impressive growth in sales in the first quarter of
the FY 2006 - 07.

40
 Hero

For the quarter ending June 2006, the company achieved cumulative
sales of 8,32,692 units, recording a growth of 21.29% compared to the same
period last year. During the corresponding period last Financial Year, the
company had recorded sales of 6,86,494 units in the first quarter ending June
2005.

In June 2006, the company sold 2,78,660 units registering an impressive

growth of 23.26% as against 2,26,073 units in June last year.

During the month, Hero launched Glamour FI - India's first Fuel

Injection motorcycle. The new technology eliminates the need for a carburetor,
offers the most comfortable drive and the lowest emissions, in addition to a
host of other features, which is now available for the first time to Indian two-
wheeler riders.

Hero Sells Over 2.50 Lakh Units In February 2006

CUMULATIVE SALES JUMP 14.16 %

New Delhi, Wednesday, March 01, 2006: Hero, the ‘World No. 1’ two-
wheeler company for the fifth year in a row, has continued to exhibit a leader’s
performance in the first couple of months in 2006.

During the month of February 2006, the company sold 2,50,695 units, as
compared to 2,23,546 motorcycles sold during February 2005. This translates
into a growth of 12.14 per cent in sales volume.

The cumulative sales of the company for the period April 2005 -
February 2006 also witnessed a notable jump of 3,38,632 units, from 23,89,807

41
 Hero

to 27,28,439 units during the corresponding period last year. This reflects a
growth of 14.16 percent.

In January 2006, Hero rolled out its first 100cc gearless scooter the
“Pleasure” across India. The company also launched 22 first ever women-
exclusive scooter showrooms “Just4her” across the country. “Just4her” is a
unique concept pioneered by Hero Motocorp targeting the women customers.

In January 2006, Hero was also conferred the honor of the “Bike Maker
of the Year” by NDTV Profit-Bike and Car for the year 2005. Additionally its
150 cc offering Achiever received the coveted ‘Bike of the Year’ award.
Achiever and Glamour also received the best bike awards for their respective
categories. The most desirable amongst these awards, the ‘NDTV Viewers’
Choice’ award in the bike category was also awarded to Hero Glamour, truly
exemplifying the customers’ enduring trust and faith in the company.

Hero Begins 2006 On A High Note

CUMULATIVE SALES JUMP 14 %

New Delhi, Wednesday, February 01, 2006: Hero, the ‘World No 1’ two-
wheeler company for the fifth consecutive year, has continued to exhibit a
leader’s performance in the first month of the New Year.

During the month of January 2006, the company sold 2,49,450

motorcycles, as compared with 2,30,280 motorcycles sold during January
2005. This translates into an increase of 8.3 % in sales volume.

The cumulative sales of the company for the period April 2005 - January
2006 has also increased to 24,77,744 motorcycles, a notable jump from

42
 Hero

21,66,261 motorcycles during the corresponding period last year. This reflects
a growth of 14.3 %.

In the month of January, Hero rolled out its first scooter, the 100cc
“Pleasure” and launched 22 women-exclusive scooter showrooms “Just4her”
across the country. The cities where “Just4her” showrooms were launched
include Lucknow, Delhi, Ahmedabad, Pune (two showrooms), Bangalore,
Hyderabad, Baroda, Madgaon, Chennai (two showrooms), Chandigarh,
Ludhiana, Jaipur, Nagpur, Jamshedpur, Bhubaneswar, Guwahati, Coimbatore,
Cochin, Indore and Raipur.

The month of January also saw Hero being conferred the honour of the
“Bike Maker of the Year” by NDTV Profit-Bike and Car for the year 2005.
Additionally its 150 cc offering Achiever received the coveted ‘Bike of the
Year’ award. Achiever and Glamour also received the best bike awards for their
respective categories. The most desirable amongst these awards, the ‘NDTV
Viewers Choice’ award in the bike category was also awarded to Hero
Glamour, truly exemplifying the customers’ enduring trust and faith in the
company.

CLOSES THE YEAR WITH SALES OF OVER 29 LAC BIKES

New Delhi, Monday, January 02, 2006: Hero, the ‘World No. 1’ two-
wheeler company, set precedence in the industry by registering an unparalleled
growth throughout the calendar year (CY) 2005. In the year that logged an
impressive growth in the two-wheeler sector, Hero continued to exceed
expectations by selling a staggering 29,16,523 motorcycles during the calendar
year 2005. This converts to a growth of 15.3 per cent over CY ’04 where the
company sold 25,28,699 bikes.

43
 Hero

Mr. Pawan Munjal, Managing Director, Hero Motocorp Ltd., thanked

customers for the company’s continuous brilliant performance. He said “This
year has been exciting for us where we crossed significant milestones. We
fulfilled our commitment to the customers by providing the latest and global
standard products. We launched several new products this calendar year. It is to
the complete credit of our customers who have shown continued faith in us and
our products that we have achieved the World No. 1 two-wheeler company
year after year."

During CY ’05, the company continued its consistent growth in sales

performance. In December 2005, the company sold a total of 2,45,104
motorcycles as compared with 2,30,751 bikes during the same month last year
which means an increase of 6.2 per cent. With this, the cumulative tally for the
period April-December 2005 stands at 22,31,104 bikes, clocking a growth of
15.2 percent over the year 2004. The company sold 19,35,981 motorcycles
during the same period last year.

The calendar year 2005 also saw a slew of new launches in various
segments by the company. One of the biggest milestones was the launch of
‘Pleasure’- the first scooter by Hero. ‘Pleasure’ which is slated to hit the roads
in January is targeted primarily at women. Having established its leadership in
the industry, Hero further consolidated its position by launching three new
motorcycles - ‘Super Splendour’, ‘Glamour’ and ‘Achiever’.

The year also witnessed one of the highest civilian honours, the Padma
Bibhushan being awarded to Mr. Brijmohan Lall, Chairman, Hero Motors, for
his invaluable contribution to trade, industry and philanthropist activities. Mr.
Brijmohan Lall is a first generation entrepreneur who through sheer hard work
and perseverance has made his mark on the global business environment.
During the year Mr. Brijmohan Lall was also honoured with a Lifetime
Achievement Award by the Economic Times.

44
 Hero

Hero Continues On The Growth Path CUMULATIVE SALES FOR THE

PERIOD APR-NOV ’05 GROWS BY OVER 14 PER CENT

New Delhi, Thursday, December 01, 2005: Hero, the ‘World No. 1’
two-wheeler company, is continuing to ride high on its steady sales
performance month after month.

During November 2005, the company recorded a sales volume of

2,51,186 motorcycles as compared with 2,35,836 motorcycles sold during the
same month last year. This translates into an increase of 6.5 per cent.

The cumulative sales of the company for the period April-November

2005 has also jumped by 14.7 per cent, increasing from 17,05,230 motorcycles
sold during April– November 2004 to 19,56,416 motorcycles sold during the
same period in 2005.

The month of November also witnessed the 5th Hero Indian Television
Academy Awards, the first and only television awards in the country.

Retail Sales Escalate To An Unprecedented 4 Lakh + Units In

DESPATCH CROSSES THE 3-LAKH LANDMARK

New Delhi, Monday, October 31, 2005: Hero, the ‘World No.1’ two
wheeler manufacturer, has set yet another precedent for the Indian two-wheeler
industry by recording incredible sales in October 2005. The company’s retail
sales crossed the 4-lakh milestone, for the first time ever in the Indian two-
wheeler industry.

Additionally, dispatch during the month also reached an unprecedented

high of 3,02,000 units, marking a remarkable jump of 23.02% as compared

45
 Hero

with the corresponding month in 2004. The company had recorded dispatch of
2,45,475 units in October 2004.

Hero’s achievement of the landmark 4 lakh plus retail sales and 3 lakh
plus dispatch, within a single month, is an extraordinary feat considering the
growing competition in the two-wheeler market and is certain to redefine
industry standards.

The company’s sales performance during October 2005 is a testimony to

the success of its customer centric business philosophy. Month over month, the
company has been recording increasing sales, also signifying the success of its
new models launched in the current year.

The company’s sales (dispatch) during the month is up by 13.5%, as

compared with the previous month (September 2005), when the company had
recorded sales of 2,66,071 units.

With the first festive month ending, Hero’s cumulative sales (dispatch)
for the period April-October 2005 has also registered a significant growth of
17.87% over the corresponding period in the previous year. The company’s
cumulative sales tally has thereby increased to 17,31,992 units, a jump from
14,69,394 units in 2004.

With the recent launch of Achiever in end-October and the forthcoming

launch of Pleasure in mid-November, the company is confident of continuing
its upward movement on the sales chart.

The company’s festive promotion, which offers Rs.1001/- off on each of

its models, has also met with huge success, across the country.

Hero Registers 22.3 Per Cent Growth In September ’05

CLOSES HALF YEAR WITH IMPRESSIVE NUMBERS

46
 Hero

New Delhi, Saturday, October 01, 2005: Hero, the ‘World No.1’ two-
wheeler company, for the fourth consecutive year, continued its upswing
during the month of September 2005.

The September sales of Hero mark an impressive growth of 22.3 per

cent over last year. The company sold 2,66,071 bikes in September 2005 as
against 2,17,507 bikes in the corresponding month during the previous year.
Sales during the month have also jumped by 9.6 per cent over the previous
month (August 2005), when the company sold 2,46,304 motorcycles.

The cumulative sales of the company for the period April - September
2005 have also shown a growth of 16.84 per cent over the corresponding
period last year. The cumulative sales during the period have increased to
14,29,992 motorcycles from 12,23,919 motorcycles during April-September
2004.

Hero's Sales Jump 28.5 Per Cent In August 2005

PHASED LAUNCH OF 'GLAMOUR' COMPLETED; OVER 45,000
UNITS SOLD ALREADY New Delhi, Thursday, September 01, 2005: Hero
Motocorp Ltd., the ‘World No.1’ two-wheeler company for the fourth
consecutive year, is continuing with its robust performance month after month.
The company’s emphasis on proactive understanding and satisfaction of
customer needs and desires along with new product offerings has resulted in
the company consolidating its leadership in the industry.

The company sold a total of 2,46,304 motorcycles during August 2005,

thereby registering an impressive growth of 28.5 per cent in sales over the
corresponding month last year. The company had sold a total of 1,91,635
motorcycles in August 2004.

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 Hero

At the end of August 2005, the cumulative sales of the company for the
period April - August 2005 stood at 11,63,921 motorcycles, translating into a
growth of 15.6 per cent. The company had sold 10,06,412 motorcycles during
the corresponding period (April-August 2004) last year.

Also during the month, Hero completed the phased launch of ‘Glamour’-
its new offering in the 125 cc segment. The bike comes powered with the
futuristic and exemplary Quantum Core engine, which has been perfected after
a series of refinements and offers customers an unprecedented combination of
top-class fuel-efficiency and high power. The company has already sold over
45,000 units of Glamour since its first launch in South India towards the end of
June, demonstrating a tremendous response from customers.

Hero Registers 12 Per Cent Growth In Sales In July 2005

CUMULATIVE SALES CROSS NINE LAKH BIKES IN FOUR
MONTHS

New Delhi, Monday, August 01, 2005: Hero Motocorp Ltd., the ‘World
No.1’ two-wheeler company has come to epitomize consistent performance.
The company has, month on month, managed to stand up against all odds and
maintained its leadership in the increasingly competitive 2-wheeler segment.

During the month of July 2005, the company sold 2,30,050 bikes, as
against 2,05,654 bikes in the corresponding period last year, thus registering a
sales growth of 12 per cent.

For the period April - July 2005, the cumulative sale of the company
stood at 9,17,617 units, translating into a growth of 12.6% per cent. The
company had sold 8,14,777 units during the corresponding period last year.

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 Hero

The company was able to achieve this impressive growth in the face of
continuing supply constraints of components caused by the volatile labour
situation prevailing in parts of the state of Haryana, where both the
manufacturing plants of the company are located. The adverse situation
impacted other industries in the region as well. Thanks to the initiative taken
by the Haryana government, the situation has improved and production is
expected to be back on track.

Market demand for Hero products remains buoyant and the company
launched ‘Glamour’- a new entry by the company in the premium deluxe
segment, in Western India during this month. The bike was very successfully
launched in South India in the previous month and has been very well received
by the customers in that region. With this new product in its portfolio, the
company is now looking at consolidating its indisputable leadership in the
market.

Hero Registers 13% Growth In Sales In Q1 Of 2005-06

New Delhi, Friday, July 01, 2005: Hero, the ‘World No.1’ two-wheeler
company, continues to strengthen its leadership in the Indian two-wheeler
industry, registering impressive growth in sales in the first quarter of 2005 –
06.

For the quarter ending June 2005, the company achieved cumulative
sales of 6,86,494 units, recording a growth of 13 per cent. During the
corresponding period last Financial Year, the company had recorded sales of
6,09,123 units.

In June 2005, the company sold 2,26,073 bikes registering a growth of

12.5% as against 2,00,922 units in June last year.
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 Hero

This impressive growth was achieved in the face of continuing supply

constraints of components caused by the volatile situation prevailing in parts of
the state of Haryana, where both the manufacturing plants of the company are
located. The adverse situation has impacted other industries in the region as
well.

However, market demand for Hero products remains buoyant and

production is expected to be back on track to meet this demand. With the
steady progress of monsoon, the outcome also remains positive.

Hero Motorcycle Sales In May At 2,26,072

New Delhi, Wednesday, June 01, 2005: Hero, the ‘World No. 1’ two-wheeler
company, sold 2,26,072 units in May 2005.

The impressive figure was achieved despite some supply constraints.

With the huge demand for Hero bikes in the market and supplies now back to
normal, sales are set to get a boost in June.

During the month of May, Hero also announced auditions for Hero MTV
Roadies- 3, a reality show that the company has been associated with for the
last two years. This year the Hero MTV Roadies journey will begin on June
12th from Jaisalmer to Leh with 13 bikers on Hero Karizma, the only premium
sports bike in India. The show aims at testing the participants’ endurance and
bringing out the real riders in them.

RIDE SAFE THE HERO WAY

At Hero, our goal is not only to sell you a bike, but to also help you
every step of the way in making the right decisions. Assisting you in making
the right judgments on the road, and helping you choose the right helmet and

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 Hero

other riding equipment that can not only help save your skin but possibly your
life!

And as bike handling requires know-how, skill and rigorous mental conditioning, we
have put together certain safety tips and suggestions that will enhance your riding comfort.
Click to view the videos.

Pre - Ride Checks Riding Gear

Riding Posture Riding On the Road

Braking Balancing

Cornering

PRE RIDE INSPECTION

You should conduct pre - ride inspection before riding a two wheeler to
enhance safety and riding comfort.

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Clean the two-wheeler body surface regularly to maintain the surface

finish. Use specifically designed cleaning products only.

Inspect your motorcycle before you start the engine. The items listed
here will only take few minutes, and in the long run they can save time,
expense, and possibly your life. Click to follow the tips as given below:

1. ENGINE OIL LEVEL

2. FUEL LEVEL

3. FRONT AND REAR BRAKES (DRUM TYPE)

4. TYRES

5. CLUTCH

6. DRIVE CHAIN

7. THROTTLE

8. LIGHTS AND HORN: Check if the headlight, tail /stop light, turn
signals, indicators and horn function properly.

9. REAR VIEW MIRROR: Ensure that the rear view mirror gives a good
rear view when you are sitting on the motorcycle.

10.AIR SUCTION VALVE: Make sure all tube connections are secured
properly.

To meet emission standards, certain models of two wheelers are

provided with the air suction valve. Air suction valve supplies fresh air from
air filter to the exhaust manifold to convert carbon monoxide to carbon
dioxide. This reduces the CO% in the vehicle exhaust.

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 Hero

11.FITTING & FASTENERS: Check & tighten if necessary.

12.BATTERY

13.STEERING: Check for smooth action and maneuverability.

PUC CERTIFICATION

You should get your motorcycle inspected and certified from an

authorised PUC centre to ensure that the emission performance of the
vehicle in within the desired limits.

For petrol engine two - wheelers the c urrent regulation requirement is as

follows.

Idle CO (Carbon Monoxide) % = 3.50 % (max)

HC (Hydrocarbon) = 4500 ppm (max)

Vehicles which do not undergo a periodic maintenance are liable to emit

exhaust gases more than the permissible limit. Few important tips to
maintain low emission levels –

 Clean spark plug and maintain specified gap between electrodes.

 Keep the air filter clean.
 Get the carburetor tuned at authorized Hero workshop.
 Do not overfill the engine oil and follow the replacement schedule.
 Avoid use of adulterated fuel.

You should get the emission level certified once in every 3 months at
any of the authorised emission checking Centres.

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IMPORTANT MAINTENANCE TIPS

HERO GENUINE ENGINE OIL - 4 T PLUS

Engine oil is a key determinant for efficient motorcycle performance and

increased engine life. Hero 4-T Plus Genuine Engine Oil is a premium
quality engine oil, e ngineered to meet the lubrication requirements of Hero
Engines. Hero 4-T Plus conforms to International specifications of API SJ
SAE 20 W 40 / 10 W 30 and meets the JASO specifications. We strongly
recommend that you use Hero 4-T plus to maintain optimum engine
performance during extreme driving conditions.

Hero 4-T plus Genuine Engine Oil provides the following benefits
compared to API SF grade oil:

 Enhanced engine oil life.

 Excellent anti-wear properties to increase your motorcycle’s engine life.
 Minimizes the blow by gases by sealing the clearances within engine
and improves the engine’s power.
 Provides excellent protection against corrosion.
 Has very high stability against oxidation & temperatures.
 Facilitates easy cold starting.
 Special additives in the engine oil provide better engine cleaning

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 Hero

Hero 4T Plus (20 W 40) Hero 4T Plus (10 W 30)

Recommendation

For best results from your Hero two-wheeler we recommend use of

Hero 4T Plus Genuine Engine Oil as per the following schedule

How to check the engine oil level?

In order to check the level of the engine oil, the vehicle should be on
main stand. Check the engine oil level using the dipstick. The engine oil level
should be maintained between the upper and the lower level marks of the
dipstick. In case it is needed, top up the engine oil up to the upper level on the
dipstick.

Replace the engine oil if it is due for replacement

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BATTERY MAINTENANCE

Your motorcycle battery needs periodical maintenance to ensure a long

and trouble free life. Do the following checks at regular intervals for a reliable
battery performance.

Check the electrolyte level against the top and bottom markings on the
battery shell. Always top up with distilled water whenever required.

Check for any leakage from battery. It should be clean and free from any
leakages. In case of non use of motorcycle, battery should be kept fully
charged and electrolyte level should be at Top mark.

TYRE PRESSURE

Proper tyre pressure provides maximum riding comfort and tyre life.

Check the tyre pressure of both the front and rear wheels. Ensure
recommended air pressures once a week. Also check for any cuts, embedded
nails or any other sharp objects in the tyre.

BE A HERO GOOD RIDER

As a socially responsible company we urge you to join us in making this world

a safer, healthier and more environment friendly place.

At Hero we like to promote the three E’s.

Engineering – which is the right technology, specifically designed for Indian

customer requirements, and road conditions. It is exemplified in the 4-stroke
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 Hero

Hero engines that give you amazing reliability and fuel-efficiency, year after
year. We have always manufactures 4-stroke engines, ever since inception in
1985.

Environment – which is about ensuring that the high technology 4-stroke

Hero motorcycles continue to meet the most stringent pollution control norms
at every level – as they have since the very beginning.

Education – which is about promoting comfortable and safe driving, through a

wide dealer network and service centres; as well as in educating people on road
safety, in association with the traffic police and the transport department. Do
remember that you and your family are not only riders, but pedestrian as well.

It is as part of the Hero family that ‘We Care’ to drive home the message of
Road Safety and a Healthy Environment.

Your Hero, the environment and you. It is a three-way relationship that you
should nurture, to reap the benefits for years to come. A well tuned bike keeps
the environment healthy. Good riding practices will keep you healthy. Taking
good care of your bike will always keep your bike healthy.

Here are simple steps to a healthy bike, healthy environment, and a healthy
you.

 Health and Environment

 Safety

 Facts and Information

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 Hero

Social Responsibility

Achiever New Sign of Desire Deluxe Life

Next Generation Pleasure

of Motorcycling

Campaigns:

We got a Good thing Going!

A Lot less Stops One Litre Road It's the Honda

Stretch That Litre. Save Petrol

Chartered Accountant Over-Time Best Seller

Economical Honours

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 Hero

Others:

Friends For Life Nawab of Najafgarh Designed to Excel

Awaaz Consumer Awards '06

REGISTERED & CORPORATE OFFICE

HERO MOTOCORP LIMITED

34, Community Centre, Basant Lok, Vasant Vihar,

New Delhi - 110057

Tel: 26142451, 26144121 Fax: 26143321, 26143198

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CHAPTER-III
THEORITICAL STUDY
MARKETING AND ITS CONCEPTS

Marketing is more than any other business function that deals with
customers. Creating customer value and satisfaction are at the very heart of
modern marketing thinking and practice. The Marketing discipline is
undergoing fresh reappraisal in the light of the vast global, technological,
economic, and social challenges facing today’s companies. Mass markets are
fragmenting into micro markets, multi-distribution channels are replacing
single channels; customers are buying directly through catalogues,
telemarketing, and home video shopping; price discounting and sales
promotion are rampant and are eroding brand loyalty; conventional advertising
media are delivering less and costing more. The marketing discipline is
redeveloping its assumptions, concepts, skills, tools and systems for making
sound business decisions. Marketing is the delivery of Customer Relationship
Management of a profit. The goal of marketing is to attract new customers by
promising superior value, and to keep current customers by delivering
satisfaction. Today, marketing must be understood not in the old sense of
making a sale “telling and selling” but in the new sense of satisfying customer
needs.

Peter drucker, a leading management thinker has put it in this way. The
aim of marketing is to make selling super flows. The aim is to know and
understand the customer so that the product or service fits and sells it.

Marketing is a social and managerial process by which individuals and

groups obtain what they need and want through creating, offering and
exchanging product and value with others.

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CONSUMER BEHAVIOUR:

The term consumer behavior refers to the behaviour that consumer

display in searching for purchasing, using, evaluating, and disposing of
products and services that they expect will satisfy their needs. The study of
consumer behaviour is the study of how individuals make decision to spend
their available resource (time, money, effort) on consumption related items. It
they buy it, where they buy it, how often they buy it, and how often they use it.

Thus, a successful marketer must have a proper understanding of

consumer behaviour in order to attract and retain the customers. It enables him
to think logically and device strategy that would help him to close the gap
between customers and company. One such imp. Aspect that influences a
consumer’s purchase decision is the consumer’s decision-making process.

CUSTOMER DECISION MAKING PROCESS

External Influences

CHARACTERISTICS AFFECTING CONSUMER BEHAVIOUR

Cultural Social Personal Psychological

Culture Reference group Age & life cycle Motivation
stage
Sub culture Family Occupation Perception Learning
Social class Roles & status Economic Situation Belief & attitudes
life cycle

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CUSTOMER RELATIONSHIP MANAGEMENT

Every company’s first task is “to create customers” towards this end it
strives. But on the other hand, customers face a vast array of products and
brand choices, prices and suppliers. It therefore becomes a major task for
customers to opt for the right seller.

It is believed that customers estimate which offer will deliver the most
value. Customers are value maximizes, within bounds of search costs and
limited knowledge, mobility & income. They form an expectation of value and
act on it. Whichever or not the offer lives up to the value expectation affects
both satisfaction & repurchase probability.

Customer perceived value:

Our premise is that customers will buy from the firm that they see as
offering the highest perceived value (CPV) is the difference between the
prospective customer’s evaluation of all the benefits and all the costs of an
offering and the perceived alternatives. Total customer value is the perceived
monetary value of the bundle of economic, functional, and psychological
benefits customers expect from a given market offering. Total customer cost is
the bundle of costs customers expect to incur in evaluating, obtaining, using,
and disposing of the given market offering.

Delivering customer value and satisfaction:

In a hyper competitive economy with increasingly rational buyers, a

company can only win by creating and delivering superior value. This
involves the following five capabilities: understanding customer value;
delivering customer value; capturing customer value; and sustaining customer
value. To succeed, a company needs to use the concepts of a value chain and a
value – delivery network.

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Value Chain:

Michael Porter of Harvard proposed the value chain as a tool for

identifying ways to create more customer value. Every firm is a synthesis of
activities that are performed to design, produce, and market, deliver and
support its product. The value chain identifies nine strategically relevant
activities that create value and cost in a specific business. These nine value-
creating activities consist of five primary activities and four support activities.

The firm’s task is to examine its costs and performance in each value-
creating activity and to look for ways to improve it. The firm should estimate
its competitor’s cost and performances as benchmarks against which to
compare its own costs and performances. It should go further and study the
“best of class” practices of the world’s best companies. The firm’s success
depends not only on how well each department performs its work, but also on
how well the various departmental activities are coordinated.

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Customer
Delivered
value

Total customer Total customer

Value Cost

Product Monetary
Value Cost

Services Time
Value Cost

Personal Energy
Value Cost

Image Psychic
Value Cost

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Attracting and retaining customers:

Today companies are intent on developing stronger bond with their

customers called relationship management (CRM). This is the process of
managing detailed information about individual customers and carefully
managing all the customer “touch points” with the aim of maximizing
customer loyalty.

Attracting Customers

Today’s customers are becoming harder to please. They are smarter,

many more competitors with equal or better offers approach more price
conscious, more demanding, less forgiving, and them. The challenge,
according to Jeffrey Gitomer, is to induce and delight loyal customers.

It is not enough to be skillful in attracting new customers; the company

must keep them and increase their business. Too many companies suffer from
high Customer churns namely, high customer defection.

There are steps a company can take to reduce the defection rate. First,
the company must define and measure its retention rate. For a magazine the
renewal rate is a good measure of retention. Second, the company must
distinguish the causes of customer’s attrition and identify those that can be
managed better.

Third, the company needs to estimate how much profit it loses when it
loses customers. In the case of an individual customer, the lost profits is equal
to the customer’s Lifetime value—that is, the present value of the profit stream
that the company would have realized if the customer had not defected
prematurely.

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Fourth, the company needs to figure out how much it would cost to
reduce the defection rate. As long as the cost is less than the lost profit, the
company should spend the money.

Customer retention:

Most marketing theory and practice centers on the art of attracting new
customers rather than on retaining and cultivating existing ones. The emphasis
traditionally has been on making sales rather than building relationships; on
preselling and selling rather than caring for the customer afterward. A
company would be wise to measure Customer Relationship Management
regularly, because the key to customer retention is Customer Relationship
Management.

A highly satisfied customer stays loyal longer, buys more as the

company introduces new products and upgrades existing products, talks
favorably about the company and its products, pays less attention to competing
brands and is less sensitive to price, offers product or service ideas to the
company, and cost less to serve than new customers because transactions are
routine.

Today, more companies are recognizing the importance of satisfying and

retaining customers. Satisfied customers constitute the company’s relationship
capital. If the company were to be sold, the acquiring company would have to
pay not only for the plant and equipment and the brand name, but also for the
delivered customer base, namely, the number and value of the customers who
would do business with the new firm.

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Total Customer Relationship Management:

In general, satisfaction is a person’s feelings of pleasure or

disappointment resulting from comparing a product’s perceived performance
(or outcome) in relation to his or her expectations. If the performance matches
the expectations, the customer is satisfied. If the performance exceeds
expectations, the customer is highly satisfied or delighted. At a very low level
of Customer Relationship Management (level one), customers are likely to
abandon the company.

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CHAPTER-IV
DATA ANALYSIS AND INTERPRETATION

1. Name and Gender:

Exhibit 5.1 Respondents Gender

Gender No. Of Respondents Percentage

Male 92 92%
Female 8 8%
Total 100 100%

INTERPRETATION:

From the above table, we can infer that 92% of the respondents were
males and only 8% of respondents were females. From the above findings, we
can analyze that majority of the respondents were males. The reason, for
majority of respondents being males is that most of the Hero vehicles are
suitable only for men.

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92%

100%

90%

80%

70%

60%

50%

40%

30% 8%
20%

10%

0%
Male Female

Graph – 1

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2. Age:

RESPONDENTS AGE

AGE GROUP NO. OF PERCENTAGE

RESPONDENTS
18-29 42 42%
30-49 33 33%
50-59 18 18%
Above 60 7 7%
TOTAL 100 100%

INTERPRETATION:

From the above table, we can infer that 42% of the respondents belong
to age group of 18-29, 33% of the respondents belongs to age group of 30-49,
18% of the respondents belong to age group of 50-59 and 7% of the
respondents belong to age group of above 60 years.
The reason for the majority of respondents belonging to the age group of
18-29 is; the age group 18-29 is an appropriate age, where people have been
using for their enjoyment and easy mobilization.
The reason why only 7% of the respondents belonging to the age group
above 60 have purchased it is, because it is difficult to drive a two-wheeler at
that age, which is impossible at that age.

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RESPONDENTS AGE

42%
45%

40% 33%

35%

30%

25% 18%

20%

15%
7%
10%

5%

0%
18-29 30-49 50-59 Above 60

Graph No: 2

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3. Education

RESPONDENTS EDUCATION

QUALIFICATION NO. OF PERCENTAGE

RESPONDENTS
Graduation 48 48%
Post graduation 31 31%
Under graduation 16 16%
Others 5 5%
TOTAL 100 100%

INTERPRETATION:

From the above table, we can infer that 48% of respondents were
graduates, 31% of respondents were postgraduates, 16% of respondents were
under graduates and others count up to 5%.
From the above table, we can analyses that majority of the respondents
were post graduates (31%) and only 16% of the respondents were under
graduates.
The reason for majority of the respondents being graduates may be
firstly, minimum educational qualifications in India being graduation, many
respondents were graduates.
Secondly, most of the respondents were employees.

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QUALIFICATION

48%
50%
45%
40%
31%
35%
30%
25%
16%
20%
15%
10% 5%

5%
0%
Graduation Post graduation Under Others
graduation

Graph No: 3

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4. Occupation:

RESPONDENTS OCCUPATIONS

OCCUPATION NO. OF PERCENTAGE

RESPONDENTS
Student 31 31%
Employed 49 49%
Business 13 13%
Others 7 7%
TOTAL 100 100%

INTERPRETATION:

From the above table, we can infer that 31% of respondents were
students, 49% of the respondents were employed, 13% of the respondents were
business people and 7% of the respondents include others.
From the above table, we can analyze that, majority of the respondents
were employees, and only 13% of the respondents were business people.
The reason for the majority of the respondents being employees is that it
is easy to transport. The remaining categories such as business people, others
occupy least share in purchasing the two-wheelers.

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RESPONDENTS OCCUPATION

49%
50%
45%
40%
31%
35%
30%
25%
20% 13%

15% 7%
10%
5%
0%
Student Employed Business Others

Graph No: 4

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5. Annual Income (in Rs.)

Exhibit No 5.5 RESPONDENTS ANNUAL INCOME

INCOME NO. OF PERCENTAGE

RESPONDENTS
Below 50,000 14 14%
50,000 - 1,00,000 47 47%
1,00,000 - 1,500,000 26 26%
Above 1,50,000 13 13%
TOTAL 100 100%

INTERPRETATION:

From the above table we can infer that 14% of the respondents income
was below 50,000 (per annum), 47% of respondents income was between
30,000- 1,00,000 (per annum), 26% of respondents income was between
1,00,000 – 1,50,000 and above occupy a large share in purchase of two-
wheelers and only 13% of respondents income was below 50,000.
The reason for the majority of the respondents earning above
1,00,000 purchase more two-wheelers due to their high disposable income.

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ANNUAL INCOME

47%
50%
45%
40%
35%
26%
30%
25%
20% 14%
13%
15%

10%
5%
0%
Below 50,000 50,000 - 1,00,000 1,00,000 - 1,500,000 Above 1,50,000

Graph No: 5

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6. Please specify the model of your Hero Two-Wheelers?

RESPONDENTS MODEL

BRAND NAME NO. OF RESPONDENTS PERCENTAGE

Splendor 28 28%
Passion 12 12%
CD 100 13 13%
CD 100ss 11 11%
Ambition 8 8%
CD – Dawn 12 12%
CBZ 12 12%
Street 4 4%
TOTAL 100 100%

INTERPRETATION:

When an enquiry was made as to which brand of two-wheeler was

owned by the respondent, it was revealed that maximum of 28% has Hero
Splendor, 13% have CD 100, and 12% of Passion, CD-Dawn and CBZ, 11% of
respondents were using the CD 100ss. And 8% of respondents were using
Ambition and only 4% of respondents were using Street. In this maximum
Splendor users were employees and students.

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MODELS

30% 28%

25%

20%

15% 12% 13%

12% 12%
11%

10% 8%

4%
5%

0%
Splender Passion CD 100 CD 100ss Ambition CD – Dawn CBZ Street

Graph No: 6

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 Hero

7. Since how long are you using these particular two-wheelers?

Exhibit No. 5.7 RESPONDENTS DURATION HAVE USING TWO-

WHEELERS

NO. OF YEARS NO. OF PERCENTAGE

RESPONDENTS
< 1 Year 32 32%
1 –2 Years 36 36%
2– 5Years 19 19%
And Above 13 13%
TOTAL 100 100%

INTERPRETATION:

The response of the question “since how long they were using the
particular two-wheelers” shows that 36% of respondents were using since two
years 32% of respondents were using since one year, 19% of the customers
were using since five years and the remaining respondents (13%) were using
them from five years.

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DURATION OF USING

40% 36%
32%
35%

30%

25% 19%
20%
13%
15%

10%

5%

0%
< 1 Year 1 –2 Years 2– 5Years And Above

Graph No: 7

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 Hero

8. How did you gain awareness about this bike?

Exhibit No. 5.8 RESPONDENTS AWARENESS ABOUT THIS BIKE

PREFERENCE NO. OF PERCENTAGE

RESPONDENTS
Paper Advertisement 5 5%
TV Advertisement 25 25%
Bill board and display 5 5%
Friends and relatives 65 65%
TOTAL 100 100%

INTERPRETATION:
The above table shows that 5% of the customers have gained awareness about
their bike through paper advertisement, 25% through T.V advertisement,
5% through Billboards displays and 65% of them gained awareness
through friends and relatives.

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65%
70%

60%

50%

40%

25%
30%

20%

5% 5%
10%

0%
Paper TV Advertisement Bill board and Friends and
Advertisement display relatives

Graph -8

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9. Why did you prefer the particular Brand?

Exhibit No. 5.9 REASON FOR PREFERENCE

PREFERENCE NO. OF RESPONDENTS PERCENTAGE

Quality 24 24%
Price 10 10%
Brand Image 22 22%
Fuel efficiency 28 28%
Resale value 16 16%
TOTAL 100 100%

INTERPRETATION:

From the above table we can infer that 24% of the respondents gave
preference to quality, 20% of respondents gave preference to brand image and
20% of the respondents gave preference to the service networks, 10%, of the
respondents gave to fuel efficiency.
From the above findings, we can analyze that 40% of respondents
were more quality conscious and only 10% respondents gave preference to
price and fuel efficiency.
The reasons are even though people are price conscious to some
extent; the consumers are more quality conscious than price conscious because
they have enough income to buy two-wheeler.
They are ready to spend a little more to get good quality product and
also they felt that goods they purchase should reflect their personal image.

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PREFERENCE

28%
30%
24%
25% 22%

20% 16%

15%
10%

10%

5%

0%
Quality Price Brand Image Fuel efficiency Resale value

Graph No: 9

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10. What factors influenced you to purchase your Two-Wheeler?

Exhibit No.5.10. FACTORS INFLUENCING PURCHASE

FACTORS NO. OF PERCENTAGE

RESPONDENTS
Sales Executives 50 50%
Family Members 20 20%
Friends 20 20%
Relatives 10 10%
TOTAL 100 100%

INTERPRETATION:

From the above table we can infer that 50% of the Respondents were
influenced by sales executives, 20% of the respondents were influenced by
their family members, 20% of the respondents were influenced by their friends
and only 10% of the respondents were influenced by their relatives, while
purchasing two wheelers.
From the above findings we can analyze that sales executives influenced
50% of respondents, and relatives influenced only 10% of respondents.
The reason for majority of the respondents being, mostly influenced by
sales executives while purchasing was firstly, sales executives give more
technical description about the product and attract customers to purchase two
wheelers by using their effective communication skills.
The reason why only 10% of respondents were influenced by relatives
is that they may not possess more knowledge about the products like two
wheelers.

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FACTORS

50%

50%
45%
40%
35%
30%
20% 20%
25%
20%
10%
15%
10%
5%
0%
Sales Executives Family Members Friends Relatives

Graph No: 10

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11. Are you satisfied with your vehicle?

RESPONDENTS OPINION ON SATISFACTION
OPINION NO. OF PERCENTAGE
RESPONDENTS
Yes 95 95%
No 5 5%
TOTAL 100 100%

INTERPRETATION:

The response to the question “Are you satisfied with the vehicle” reveals
that as high as 95% of them were satisfied and 22% of them dissatisfied.
The people were asked as to why they were dissatisfied with their Hero
two-wheeler. They responded that in splendor there is a problem with weak
battery, and cbz’s look is very good but the mileage is very low, each and every
model is having some problem and some servicing centers also disappointed
them. But 95% of the respondents are very much satisfied with their two-
wheeler.

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95%

100%
90%
80%
70%
60%
50%
40%
30%
5%
20%
10%

0%
Yes No

Graph No: 11

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12. What is your opinion on the “Service provided by the Dealers”?

RESPONDENTS OPINION ON SERVICE

RATING NO. OF PERCENTAGE

RESPONDENTS
Excellent 40 40%
Good 46 46%
Average 12 12%
Poor 2 2%
TOTAL 100 100%

INTERPRETATION:

The respondents replied about the service offered by Hero Motocorp

Ltd. The maximum number of customers of Hero Motocorp Ltd was very
much satisfied. 40% of respondents are rated as excellent, 46% of respondents
rated as good, 12% of respondents rated as average and only 2% of
respondents rated as poor.
This shows that Hero Motocorp Ltd Ltd takes more care about the
customers during their servicing time.

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OPINION ON SERVICE

46%
50%
40%
45%
40%
35%

30%
25%
20%
12%
15%
10%
2%
5%
0%
Excellent Good Average Poor

Graph No: 12

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13. How would you rate the cleanliness and appearance of the workshop?

CLEANLINESS AND APPEARANCE HAVE THE WORKSHOP

RATING NO. OF PERCENTAGE

RESPONDENTS
Excellent 2 2%
Good 87 87%
Fair 8 8%
Poor 3 3%
TOTAL 100 100%

INTERPRETATION

From the above table we can infer that 2% of the respondents rate the
cleanliness and appearance of the workshop as Excellent, 87% of the
respondents rate it as Good, 8% of them rate it as fair and the remaining 3%
rate it as poor.
This shows that a majority of the customers were happy with the
cleanliness and appearance of the workshop

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87%
90%

80%

70%

60%

50%

40%

30%

20% 8%
3%
2%
10%

0%
Excellent Good Fair Poor

Graph No: 13

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14. What is your opinion on the after sales service and replacement of
spare parts offered by Hero Motocorp Ltd?

Exhibit No. 5.14 REPLACEMENT OF SPARE PARTS

RATING NO. OF PERCENTAGE

RESPONDENTS
With intimation 87 87%
Without intimation 13 13%
Total 100 100%

INTERPRETATION

The table reveals that 87% of the customers were satisfied with the after
sales service and replacement of spare parts offered by Hero Motocorp Ltd the
remaining were dissatisfied.
From this we can infer that most of the customers were satisfied with the
services offered by the dealers.

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87%

90%

80%

70%

60%

50%

40%

30% 13%

20%

10%

0%
With intimation Without intimation

Graph – 15

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 Hero

15. How do you rate the attitude of the frontline staff?

ATTITUDE HAVE THE FRONT LINE STAFF

RATING NO. OF PERCENTAGE

RESPONDENTS
Formal 29 29%
Friendly 70 70%
Informal 1 1%
Total 100 100%

INTERPRETATION:
When questioned about the attitude of the frontline staff, 29% of
the respondents rated it as formal, 70% of the respondents rated it as friendly,
and the remaining 1% rated it as informal.

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Customer Relationship Management

70%

70%

60%

50%

40%
29%

30%

20%

1%
10%

0%
Formal Friendly Informal

Graph No: 15

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CHAPTER-V
CONCLUSION

A study of Customer Relationship Management at Hero Motocorp Ltd

was done with the sample size of 100 respondents. The data is mainly divided
into two types i.e. primary data & secondary data. Primary data was collected
through Questionnaire & Personal interview; secondary data was collected
from Journals, magazines, dailies, websites & industrial survey.
To ascertain the customer preference towards Hero two-wheelers in Hero
Motocorp Ltd, a detailed study of Customer Relationship Management,
attitudes and level of satisfaction and their complaints & suggestions, was
under taken the study also includes assessing the future prospects of two-
wheeler industry.
India is the second largest manufacturer & producer of two-wheelers in
the world. The two-wheeler industry made a small beginning in the early 50’s
when Automobile products of India (API) started manufacturing scooters in the
country.
The industry has a smooth ride in 50’s, 60’s, 70’s when government
prohibited new entries and strictly controlled capacity expansion. The industry
saw a sudden growth in the 80’s. The industry witnessed a steady growth of
14% leading to a peak volume of 1.9mm vehicles in 1990. In the 90’s the trend
was reversed. There is a decline of 15% in 1991 and 8% in 1992, resulting in a
production loss of 0.4mm vehicles. Barring Hero, all showed major
producers suffered from recession in FY93 and FY 94 Hero showed a marginal
decline in 1992.
The reasons for recession in the sector were the incessant rise in fuel
prices, high input costs and reduced purchasing power due to significant rise in
general price level and credit crunch in consumer financing. Factors like
increased production in 1992, due to new entrants coupled with the recession in

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the industry resulted in company either reporting losses or a fall in profits. The
two-wheeler population has almost doubled in 1996 from a base of 12.6mm in
1990.
The Indian two-wheeler industry can be broadly classified as scooters,
motorcycles and mopeds. The Indian motorcycle industry can be broadly
categorized in to Indian motorcycles and Indo-Japanese motorcycles. Hero
group, Bajaj and Escorts dominate the indo-Japanese motorcycle segment in
collaboration with Japanese vehicle manufacturers Honda, Kawasaki and
Yamaha respectively. The Indian motorcycles segment is dominated by Hero
two-wheelers.
The Hero was established on the 13 th of April 1984. The Hero group of
companies in India merged with the Honda Motors Company of Japan in
creating a no. 1 mantle in the making of the company Hero.

Hero begins operations with the establishment of the dharuhera plant in

1985. This is fully automated plant is equipped with state-of-the-art
machinery, an in-house R & D set up, and today it produces a bike every 30
seconds. To meet the growing demand, Hero opened another unit at gurgaon,
using FMS technology. It is rated as one of the most modern motorcycle
manufacturing plants in the world. The plant produces 1,800 bikes every day.

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The essence of the marketing concept is that organizations must adopt

customer-oriented features and focuses their attention on building programs,
offerings and strategies that satisfy customer needs and wants. Many
organizations maintain their focus on operations or product or sales efforts and
there by get dislocated by mistaking the means for the end.
Customer Relationship Management plays an important role in
marketing. It depends upon t he products performance relative to a buyers
expectation customer might experience various degree of satisfaction. If the
products performance falls short of expectations the customer is dissatisfied
and if matches the customer is satisfied. Customer value and satisfaction are
important ingredients in the marketer’s formula for success.

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FINDINGS OF THE STUDY

 The study reveals that majority of the customers age was between 18 years
to 29 years.
 The target customers were mainly in middle class as well as upper middle
class income group.
 Most of the customers of Hero Two-Wheelers were students and employees.
 Most of the customers were employees followed by students.
 Out of total customers 40% of the customers were graduates and only few
customers were under graduates.
 Splendor, Passion, CD Dawn, CD 100, CD 100ss, CBZ, Street and Karizma
are the brands mostly preferred by Hero Motocorp Ltd.
 The Hero Two-Wheelers are mainly preferred because of the look & style
fuel efficiency and brand image.
 Majority of the customers were self-influenced to purchase Hero Two-
Wheelers.
 The main reason to choose Hero Motocorp Ltd to buy their two-wheeler was
due to their excellence service.
 Most of the customers of Hero Motocorp Ltd were satisfied with their two-
wheeler.
 Some people were not satisfied because spare parts costs are very high and
price of vehicle is also very high.
 Majority of customers rated good for service offered by the Hero Motocorp
Ltd.
 Majority of the customers of Hero Motocorp Ltd stated that the future of the
two-wheeler industry would be good.

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SUGGESTIONS
It is very hard to hold the pulse of a customer in the market. Customer’s
satisfaction is different for different people at different situations; the following
were some of the suggestions given to the Hero Motocorp Ltd to improve the
sales of Hero Two –Wheelers.

 The cost of accessories & spare parts of Hero Two-wheelers should be

reduced.
 As a promotional measure, Hero Motocorp Ltd may go for free service
camps. This will increase the customer’s loyalty.
 Cost of the Two-Wheelers is little bit high as compared to others.
 The sales have to be motivated by providing better incentives.
 Direct contact with potential customer and explaining the strengths and
advantages by using their products will help in increasing the sales of the
company.
 As the location of the show room is ideally located with middle class
population, Hero Motors Ltd should try to give more advertisements in news
paper, bill boards in that area to enable easy recall of the people for Hero
Motocorp Ltd.
 It should conduct road shows in colleges.
 Hero Motocorp Ltd. should constantly keep in touch with its customers and
inform them about the latest models/ finance schemes.
 It should employ Marketing Executives to go and tap the Industrial belt
employees rather than wait for customers to come to Hero; Hero should go to
prospective customers with the help of integrated market efforts.
 Hero Motocorp Ltd. should track the movement of spare-parts and stock
spare parts in advance otherwise the fake parts would become popular.
 Hero Motocorp Ltd. should setup sub dealers in remote localities in the area.
Hero should conduct road shows in nearby districts.

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BIBILIOGRAPHY

 FINANCIAL MANAGEMENT - PRASANNA CHANDRA

 COST ACCOUNTING - S. N. MAHESHWARI

 COST ACCOUNTING - VARSHINI & SAXENA

 INVENTORY MANAGEMENT - Bhagirath Singh.

Websites:

 www.heromotocorp.com

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Balance Sheet of Hero Motocorp ------------------- in Rs. Cr. -------------------

Mar '15 Mar '14 Mar '13 Mar '12

12 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 39.94 39.94 39.94 39.94
Equity Share Capital 39.94 39.94 39.94 39.94
Reserves 6,501.39 5,559.93 4,966.30 4,249.89
Networth 6,541.33 5,599.87 5,006.24 4,289.83
Secured Loans 0.00 0.00 302.16 1,011.39
Total Debt 0.00 0.00 302.16 1,011.39
Total Liabilities 6,541.33 5,599.87 5,308.40 5,301.22
Mar '15 Mar '14 Mar '13 Mar '12

12 mths 12 mths 12 mths 12 mths

Application Of Funds
Gross Block 4,697.98 3,761.52 4,427.29 4,980.69
Less: Accum. Depreciation 1,785.29 1,518.27 1,356.31 1,195.18
Net Block 2,912.69 2,243.25 3,070.98 3,785.51
Capital Work in Progress 712.55 854.11 62.09 38.84
Investments 3,154.11 4,088.77 3,623.83 3,964.26
Inventories 815.49 669.55 636.76 675.57
Sundry Debtors 1,389.59 920.58 665.00 272.31
Cash and Bank Balance 159.25 117.50 181.04 76.82
Total Current Assets 2,364.33 1,707.63 1,482.80 1,024.70
Loans and Advances 1,378.02 1,203.54 1,401.95 1,075.61
Total CA, Loans & Advances 3,742.35 2,911.17 2,884.75 2,100.31
Current Liabilities 3,180.69 2,903.12 2,893.39 3,497.63
Provisions 799.68 1,594.31 1,439.86 1,090.07
Total CL & Provisions 3,980.37 4,497.43 4,333.25 4,587.70
Net Current Assets -238.02 -1,586.26 -1,448.50 -2,487.39 -
Total Assets 6,541.33 5,599.87 5,308.40 5,301.22

Contingent Liabilities 816.42 487.63 502.00 252.62

Book Value (Rs) 327.58 280.43 250.70 214.83

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