CHAPTER I

OVERVIEW OF THE INDUSTRY

The two-wheeler industry in India has grown rapidly in the country since the

announcement of the process of liberalization in 1991 by the Finance Minister

Dr.Manmohan Singh, now Prime Minister of India.

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

world. Indian two-wheeler industry has got spectacular growth in the last few years.

Indian two-wheeler industry had a small beginning in the early 50's. The Automobile

Products of India (API) started manufacturing scooters in the country.

Bikes are a major segment of Indian two wheeler industry. Indian companies are

among the largest two-wheeler manufacturers in the world. Hero Honda and Bajaj Auto

are two of the Indian companies that top the list of world companies manufacturing two-

wheelers.

The two-wheeler market was opened to foreign companies in the mid 1980s. The

openness of Indian market to foreign companies lead to the arrival of new models of two-

wheelers into India. Easy availability of loans from the banks, relatively low rate of

interest and the discount of prices offered by the dealers and manufacturers lead to the

increasing demand for two-wheeler vehicles in India, this lead to the strong growth of

Indian automobile industry.

The two-wheeler segment has played an important role in giving a push to the

automobile industry in India.

An overview of the two wheeler industry makes clear that the two wheelers are

among the most sought after automobiles in India for some time and the trend is likely to

stay for a while. The economic growth, need for better conveyance and gradually.

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Improving road infrastructure coupled with better credit and financing options, has acted

as a major catalyst in encouraging the growth and development of the two-wheeler

segment in India.

Further, the new and improved features on the two wheelers, their stylish and trendy

looks and a rage with the country's youth who form a substantial influence in determining

the consumer behavior have ensured that the two wheelers remain on top of the

automobile industry's agenda in India.

Some of the features that deserve attention in respect of the Indian two wheeler

segment are as mentioned:

The total sale of two wheelers in India has touched a figure of 7.86 million units

by March 2009.

The production of two wheelers in India is expected to reach a staggering 17.85

million units by 2011-12, more than double of the current production level.

India is likely to export 1.39 million two-wheelers in 2011-12 compared with

590,000 in 2006-07.

Hero Honda, Bajaj Auto and TVS Motor remain the leading players in terms of

sales and popularity of their two wheelers.

SIGNIFICANCE TO THE ECONOMY

India represents one of the largest two-wheeler markets in the world, with an

estimated size of 5.4 million units a year.

India is the two-wheeler capital of Asia with an average of 27 two wheelers per

1000 peoples to compare to china 8 two-wheeler per 1000 people.

Driven by a slew of new launches and a galloping 8.1% Q1 GDP growth leading

to higher disposable incomes, Hero Honda Motors, Bajaj Auto and TVS Motor,

which together constitute over 86% of the domestic two-wheeler market, have

reported an average growth rate of 20%.

2

INTRODUCTION TO THE COMPANY

Hero Honda Motors Limited, based in Delhi, India, is the world's third largest

manufacturer of motorcycles after Honda and Yamaha. Hero Honda is a joint venture that

began in 1984 between the Hero Group of India and Honda of Japan. It has been the

world's biggest manufacturer of 2-wheeled motorized vehicles since 2001, when it

produced 1.3 million motorbikes in a single year. During the fiscal year 2008-09, the

company has sold 3.28 million bikes and the net profit of the company stood at Rs.1281.7

crore, up 32% from the previous fiscal year.

Hero Honda's Splendor is the world's largest selling motorcycle. “Hero” is the

brand name used by the Munjal brothers in the year 1956 with the flagship company

Hero Cycles.

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 Honda sold

millions of bikes purely on the commitment of increased mileage.

Hero Honda values its relationship with customers. Its unique CRM initiative -

Hero Honda Passport Program, one of the largest programs of this kind in the world, has

over 3 million members on its roster. The program has not only helped Hero Honda

understand its customers and deliver value at different price points, but has also created a

loyal community of brand ambassadors.

3

Type Public company BSE:HEROHONDA M

Founded January 19, 1984 in Gurgaon, Haryana, India

Headquarters New Delhi, India

Key people Brijmohan Lal Munjal (chair and founder)

Toshiaki Nakagawa (joint managing director)

Pawan Munjal (CEO)

Industry Automotive

Products Motorcycles, Scooters

Revenue U$ 2.8 billion

Website www.Herohonda.com

CORPORATE SOCIAL RESPONSIBILITY

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. Some of the other social responsibilities are

Raman Munjal Memorial Hospital

The Raman Munjal Sports Complex

Vocational Training Centre

Adult Literacy Mission

Marriage of Underprivileged Girls

Rural Health Care

4

PUBLIC RELATION PROGRAMMES

RIDE EDUCATION TIPS

Pre Ride Inspection

The customers should conduct pre-ride inspection before riding a two wheeler to

enhance safety and riding comfort.

Clean the two-wheeler body surface regularly to maintain the surface finish. Use

specifically designed cleaning products only.

Inspect customer motorcycle before start the engine. The items listed here will

only take few minutes, and in the long run they can save time, expense, and possibly the

customer’s life. Listed below are some of the few of the Tips to follow:

1. ENGINE OIL LEVEL

2. FUEL LEVEL

3. FRONT AND REAR BRAKES (DRUM TYPE)

4. TYRES

5. CLUTCH

6. DRIVE CHAIN

7. LIGHTS AND HORN: Check if the headlight, tail /stop light, turn signals,

indicators and horn function properly.

8. REAR VIEW MIRROR: Ensure that the rear view mirror gives a good rear

view when the customers are sitting on the motorcycle.

9. BATTERY

RIDE SAFE THE HERO HONDA WAY

The Company goal is not only to sell bike, but to also help the customer every

step of the way in making the right decisions. Assisting the customer in making the right

5

judgments on the road, and helping them to choose the right helmet and other riding

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

As bike handling requires know-how, skill and rigorous mental conditioning, they

have put together certain safety tips and suggestions that will enhance the customer riding

comfort. Always remember - a good rider is a safe rider.

BE A HERO HONDA GOOD RIDER

As a socially responsible company the company urges the customer to join us in

making this world a safer, healthier and more environment friendly place.

The company likes to promote the three E’s.

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

customer requirements, and road conditions.

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

Honda motorcycles continue to meet the most stringent pollution control norms at

every level – as they have since the very beginning.

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

wide dealer network and service centers; as well as in educating people on road

safety, in association with the traffic police and the transport department.

It is as part of the Hero Honda family that ‘We Care’ to drive home the message

of Road Safety and a Healthy Environment. Good riding practices will keep you healthy.

Taking good care of bike will always keep your bike healthy.

Here are simple steps to a healthy bike, healthy environment, and a healthy the entire

customer:

Health and Environment

Safety

Facts and Information

Social Responsibility

6

CHAPTER 2

PROFILE OF GEM MOTORS

Gem Motors is the 3rd Hero Hondo Outlet in Coimbatore in the year 2000.It

handles Hero Honda Motor Cycle Sales, Service and Safety. GEM Motors is functioning

form in its own building, suited in 1672, Trichi road Coimbatore. It was started in the

year of 2000. Total number of employees in the company is around 80.

The three partners are Mr.Ravichandran, Mr.Raviselvam, and Mr.Manoharan.

More than 8 years satisfaction of the customer the company proceeds with good sales and

services to our customer successfully.

COMPANY PROFILE

Company Name : GEM Motors

1672, Trichi Road,

Coimbatore- 641045.

Managing Director : Mr. Ravichandran

Managing Partner : Mr.Ravi Selvan,

Mr. Manoharan.

Bankers : Induslnd Bank,

Fulltron cr.ltd,

HDFC Finance.

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MISSION

GEM Motors 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. Mutually beneficial relationship with all its stake

holders.

VISION

GEM Motors vision is to build long lasting relationship with everyone

(Customers, Workers & Vendors).

GROWTH

Hero Honda experienced great growth throughout its early days. The Munjal

family started a modest business of bicycle components. By 2002 Hero Group had sold

86 million bicycles producing 16000 bicycles a day. Now Hero Honda has an assembly

line of nine different models of motorcycles available. It holds the record for most

popular bike in the world by sales is Splendor model.

Hero Honda Motors Limited was established in joint venture with Honda Motors

of Japan in 1984, to manufacture motorcycles. It is currently the largest producer of Two

Wheelers in the world. It sold 3 million bikes in the year 2005-2006. Recently it has also

entered in scooter manufacturing, with its model PLEASURE mainly aimed at girls.

HUNK is the latest offering from the HHML stable.

KEY POLICIES

Hero Honda goal is not only to sell bike to a customer, but also to help customer in

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.

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Hero Honda 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 the Worthy Chairman of Hero Honda Group Mr.Brijmohan Lall

Munjal.

ENVIRONMENT POLICY

Hero Honda committed to demonstrate excellence in our environmental

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

To achieve this the company commit to:

Integrate environmental attributes and cleaner production in all 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.

Institutionalize resource conservation, in particular, in the areas of oil, water,

electrical energy, paints and chemicals.

Enhance environmental awareness of their employees and dealers / vendors, while

promoting their involvement in ensuring sound environmental management.

9

QUALITY POLICY

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

They are committed at all levels to achieve high quality in whatever the company do,

particularly in their 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

SAFETY POLICY

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

who may be affected by its operations. The Company believes that the safe work

practices lead to better business performance, motivated workforce and higher

productivity.

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ORGANISATION CHART

11

MANAGING DIRECTOR

GENERAL MANAGER

Purchase Department

Sales Department

Service Department

Passport Department

Accounts Department

Marketing Department

Finance Department

Stock Department

Network Manager

Branch Manager

Assistant Sales

Manager

Assistant Sales

Manager

TeamLeader

Team Leader

Assistant Manager

Floor Supervisor

Insurance Claim Supervisor

Mechanic

Sales Executive

Sales Executive

Sales Executive

Sales Executive

Mechanic

Finance Manager

Stock Manager

PRODUCT PROFILE

BIKES:

Hero Honda CD Dawn

Hero Honda CD Delux

Hero Honda CD Delux (self)

Hero Honda Splender NXG

Hero Honda Splender NXG(self)

Hero Honda Splender plus

Hero Honda Passion plus

Hero Honda Passion PRO(self)

Hero Honda Glamour (self)

Hero Honda Glamour-FI

Hero Honda CBZ Extreme

Hero Honda Hunk

Hero Honda Karizma

Hero Honda Pleasure Scooter

Hero Honda Passion Plus

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Engine 4-stroke, Single Cylinder, Air - Cooled OHC

Displacement 97.2 cc

Max. Power 7.5 Ps at 8000 rpm

Gear Box 4 Speed Constant Mesh

Clutch Multi-Plate Wet Type

Max. Speed 85 Kmph.

Frame Tubular Double Cradle

Suspension (Front) Telescopic Hydraulic Fork

Suspension (Rear ) Swing Arm with 5 step adjustable hydraulic damper.

Tyre Size (Front) 2.75 * 18- 4 PR /42 P

Tyre Size (Rear ) 3.00*18-4/6 PR

Brakes (Front) (130mm)/ Hydraulic Disc Type (Optional)

Brakes (Rear) Internal Expanding Shoes Type (130 mm)

Final Drive Roller Chain

Battery 12 V-2.5 Ah

Ignition Electronic CDI

Starting Kick Starter

Wheelbase 1235 mm

Hero Honda Achiever

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Engine / Transmission

Engine 4 Stroke, Single Cylinder, Air Cooled,

Displacement 149.1cc

Max. Power 10 KW (13.4 Bhp)

Top Speed 101 kmph

Acceleration 0-60 in (5 seconds)

Gears 5 Gears

Tyre

Tyre Size (Front) 2.75 * 18- 42 P /4 PR

Tyre Size (Rear) 3.00*18-52 P/6 PR

Electricals

Head light Halogen Bulb 35 W / 35 W (Multi Reflector)

Brakes

Brakes (Front) Drum / Disc

Brakes (Rear) Drum

Features

Kerb Weight 134 Kgs

Colours AvailableRed, Maroon, Yellow, Blue, Tahitian Blue, Black with

Golden strip, Black with Grey strip, Silver, Violet

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Hero Honda Super Splendor

Specifications

Engine / Transmission

Engine 4-Stroke OHC, Single Cylinder, Air Cooled

Bore x Stroke 52.4 x 57.8 mm

Displacement 124.7 cc

Compression Ratio 9.1: 1

Max Power 6.72 Kw (9 BHP) @ 7000 rpm

Torque 10.35 Nm @ 4000 rpm

Max Speed 90 Kmph

Clutch 4 - Speed Constant Mesh

Final Drive Roller Chain

Electricals

Ignition Digital - CDI Ignition (AMI)

Advanced Micro Processor Ignition

system

Head Light 12V – 35W Multi Reflector Halogen Bulb - AC Type

Starting Kick StartSelf Start (Optional)

Tyres

Front 2.75 X 18 - 4 PR / 42P

Rear 2.75 X 18 - 6 PR / 48P

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Brakes

Front Drum Type Internal Expanding Type - 130 mm Dia

Front Disc Type Hydraulic Disc Type - 215 mm Dia (Optional

Rear Internal Expanding Type - 130 mm Dia

Suspension

Front Telescopic Hydraulic Fork

Rear Swing Arm with Hydraulic Shock Absorbers

Dimensions

Dimensions (LXWXH) 1995 X 735 X 1095 mm

Wheel Base 1265 mm

Ground Clearance 150 mm

Kerb Weight117 Kg (Kick Version)

121 Kg (Self Version)

Frame Tubular Double Cradle

Fuel Tank Capacity 12 Ltrs. (Min)

Colours Available Black, Silver, Red, Blue, Maroon

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Hero Honda Dawn

Engine 4 Stroke, Single Cylinder, Air Cooled

Cubic Capacity 97.2cc

Max. Power 7.4 BHP @ 8000rpm

Gear Box 4 Speed

Ignition CDI

Front Brakes 130mm Drum

Rear Brakes 110mm Drum

Front Tyre 2.75 X 18

Rear Tyre 3.00 X 18

Wheelbase 1230mm

Ground Clearance 160mm

Dry Weight 114 Kg

Tank Capacity 10.5 Litres

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HERO HONDA SUPER SPLENDOR

Specifications

Engine / Transmission

Engine 4-Stroke OHC, Single Cylinder, Air Cooled

Bore x Stroke 52.4 x 57.8 mm

Displacement 124.7 cc

Compression Ratio 9.1: 1

Max Power 6.72 Kw (9 BHP) @ 7000 rpm

Torque 10.35 Nm @ 4000 rpm

Max Speed 90 Kmph

Clutch 4 - Speed Constant Mesh

Final Drive Roller Chain

Electricals

Ignition Digital - CDI Ignition (AMI)

Advanced Micro Processor Ignition

system

Head Light 12V – 35W Multi Reflector Halogen Bulb - AC Type

Starting Kick StartSelf Start (Optional)

Tyres

Front 2.75 X 18 - 4 PR / 42P

Rear 2.75 X 18 - 6 PR / 48P

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Brakes

Front Drum Type Internal Expanding Type - 130 mm Dia

Front Disc Type Hydraulic Disc Type - 215 mm Dia (Optional

Rear Internal Expanding Type - 130 mm Dia

Suspension

Front Telescopic Hydraulic Fork

Rear Swing Arm with Hydraulic Shock Absorbers

Dimensions

Dimensions (LXWXH) 1995 X 735 X 1095 mm

Wheel Base 1265 mm

Ground Clearance 150 mm

Kerb Weight117 Kg (Kick Version)

121 Kg (Self Version)

Frame Tubular Double Cradle

Fuel Tank Capacity 12 Ltrs. (Min)

Colours Available Black, Silver, Red, Blue, Maroon

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CHAPTER 3

FUNCTIONAL DEPARTMENTS

PURCHASE DEPARTMENT

The Purchase Department is engaged in the activity of making the order for stocks

when the stock level reaches its minimum level. The stocks will be dispatched from the

Hero Honda Head office either through truck or train. When the stock is sent through

truck then it takes a maximum of 9 days to reach Gem Motors and when it is sent through

train it takes a maximum of 20 days.

In the process of executing the purchase order, a Purchase Invoice will be

executed in which the engine number and the chase number will be checked upon. Once

the stock is dispatched from the Head Office, GEM Motors can get the updates relating to

quantity of stock dispatched, the time, the mode, the vehicle details and all other details

from the company website using the net.

Functions

Buy a Bikes, Spares and Genuine parts from the Head Office

Receive Invoice form and payments made to the Head Office

Payment is done through HDFC & ICICI Bank

Negotiate the delivery dates and other terms and conditions

Send the copy of purchase order to the respective departmental heads and service

managers.

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SALES DEPARTMENT

The sales department is the most important department since it is the department

which forms a link between the company and the customer. The business activity starts

with this department by the sale of automobile and the relationship with the customer

goes on forever by means of after sales service.

The sales figure for the last year(2008 - 09) was 5424 bikes and the sales has seen

a decline since the sales for the previous year(2007 - 08) was 6535 bikes. The average

sales of bikes till the month of May is around 400 – 500 bikes. The reason for this

slowdown in sales has been due to the recession and the global meltdown.

PROCESS OF SALE:

Reception Enquiry

Interaction with the Sales Executives

Demo - Vehicle Specification

Price Details

Test Ride

Mode of Payment - Cash/Finance Arrangement

Filling of Enquiry Form

Filling of Booking form

Selection of Model

Registration

Delivery

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RECEPTION ENQUIRY:

The first step in the process of sale of an automobile begins at the reception desk.

Here the receptionist gets to know the basic details from the customers and directs them

to the concerned sales executives for the further dealings.

INTERACTION WITH THE SALES EXECUTIVES:

The Sales Executive interacts with the customers and tries to understand the needs

and the requirements of the customers and then he provides them details accordingly. It is

this interaction that the sales executives use as a first step in the process of creating a

strong desire in the minds of the customers to buy.

DEMO – VEHICLE SPECIFICATION:

To further create a strong impression and to smooth the progress of the buying

decision of the customer, the sales executives give a clear demo of the product detailing

all the technical aspects and other specifications of the product, which in turn gives a

clear idea about the different bike specifications

PRICE DETAILS:

The final aspect that determines the buying decision of the customer is the price

of the automobiles. The sales executives has to first know the price range acceptable to

the customers and show those bikes that exclusively fit the price range of the customers.

The price of the bikes ranges from (lowest price) to (highest price).

TEST RIDE:

This is merely an outcome of how effective the sales executive had been in the

process of creating the desire. If the customers are very much convinced then the go

ahead with the next step of going for a test ride of the automobile as the case may be and

experience the pleasure of driving the vehicle.

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MODE OF PAYMENT – CASH/FINANCE ARRANGEMENT:

Once the customers decide upon the vehicle to be purchased then the next aspect

that is to be considered is the mode of payment, whether cash payment or loan option.

Based on the mode chosen by the customers, the sales executives have to make the

necessary arrangements. The executives should detail about the loan arrangements

undertaken by them, the financial institutions with which they have tie up, the formalities

and procedures to be complied with and the documents to be submitted by the customers

FILLING OF ENQUIRY FORM:

The customer is then given an enquiry form and asked to fill in the required

details.

FILLING OF BOOKING FORM:

After the enquiry form, the customer is to fill the booking form, which is yet

another confirmation of the purchase that is to be made by the customers. In this booking

form the customer has to provide information about the model to be purchased, the

colour, and all other information related to the automobile.

SELECTION OF MODEL:

Of the various models available the customer has to decide and then select the

model which suits his specification.

REGISTRATION:

Once the model is selected the customer has to comply with the legal procedure of

registering the vehicle and generally this facility is also facilitated by the Automobile

dealers.

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DELIVERY:

The registered vehicle is then handed over to the customers with all the

procedures being completed. The mode and the time of delivery will all be carried out as

stated by the customers.

SALES PERFORMANCE

HERO HONDA REPORTS LEADERSHIP PERFORMANCE WITH 50 % NET

PROFIT IN Q2, '08-09

DEFIES INDUSTRY TREND WITH TURNOVER (NET SALES & OTHER OPERATING

INCOME), AT RS. 3202 CRORE; EBIDTA AT 13.58 PER CENT

  Aug'06 Aug'07 FY 06-07 FY 07-08

Total Sales 2,15,076 2,40,875 12,82,860 12,63,254

Total turnover(Net sales & Other Operating income)Rs 3202 crores, growth of

35.6 per cent

Net profit after tax at Rs 306.30 crores, growth of 50 per cent

EBIDTA margin for the quarter 13.58 per cent

Total sales for Q2 stands at 9,72,095 units, growth of 28.5 per cent

Total sales for H1 stands at 18,66,349, growth of 19.7 per cent

Over 55 per cent share in domestic motorcycle market

Launches first-of-its kind music video to celebrate 25 years of Hero Honda

24

PASSPORT DEPARTMENT

Hero Honda values its relationship with customers. Its unique CRM initiative -

Hero Honda Passport Program, one of the largest programs of this kind in the world, has

over 3 million members on its roster. The program has not only helped Hero Honda

understand its customers and deliver value at different price points, but has also created a

loyal community of brand ambassadors.

This is one of unique facility provided by Hero Honda to provide additional

facilities and to honor the long standing customers of the company. This is a

distinguishing feature of Hero Honda as it is provided by no other automobile company.

GEM Motors has a customer membership of 20,000 people in its passport department.

HERO HONDA PASSPORT PROGRAMME

The Hero Honda Passport Programme is a ‘Customer Relationship Programme’

instituted specially for the customers. It gives a chance to understand and serve customers

better. Upon enrolling for the programme, customer obtain a Hero Honda Passport, which

entitles customer to a host of benefits, privileges and exclusive rewards. Customer also

become eligible for the Hero Honda ‘Winners of the Month’, which could win customer a

Hero Honda Splendor+, or a cash prize of Rs.40000!

HERO HONDA PASSPORT

The Hero Honda Passport is a personal identification document that would carry

details such as customer photograph, name, address and signature.

This document certifies customer membership to the Hero Honda Passport

Programme.

The Hero Honda Passport opens the door to a host of special offers that Hero

Honda Motors Limited has in store for customer including attractive gifts, special

invitations and discounts.

The Hero Honda Passport is valid for a period for 3 years.

25

ELIGIBLE FOR THE HERO HONDA PASSWORD

Any Hero Honda motorcycle owner or user is eligible for the Hero Honda

Passport. However, it is the actual user of the motorcycle, who derives maximum benefits

from it.

HOW TO APPLY FOR THE HERO HONDA PASSPORT

Fill-in the Hero Honda Passport Application Form available at all Hero Honda

authorized dealerships/workshops.

Pay requisite enrolment fee, and attach two passport-sized photographs with the

application form.

Customers personalized Hero Honda Passport will be processed and delivered to

customer by their dealer, within 4 weeks of applying.

BENEFITS OF OWNING A HERO HONDA PASSPORT

Some of the Benefits are

Instant Benefits

A one-year or three-year Free Accident Insurance cover worth Rs.1 lakh.

Opportunity to participate in a national draw and win Rs.40000 in cash or

Splendor+.

Bike Related Benefits

Attractive gifts on reaching specific milestones.

A Special gift on customer first transaction with Hero Honda dealership or an

authorized service centre.

26

Opportunity to get a Bike service Certificate that may increase the resale value of

their bike.

A special 5% discount on the purchase of spares.

Lifestyle Related Benefits

Chance to be invited to events such as movie shows, musical nights and carnivals.

Exclusive discount offers from other brands of customer interest.

Regular information through the Suhana Safar newsletter.

PROCEDURE TO USE THE HERO HONDA PASSPORT

Customer need to carry their Hero Honda Passport with them whenever they visit

a Hero Honda authorized dealership/workshop.

Every time customer do a transaction at a Hero Honda showroom/workshop, the

dealer would reward points in to their Passport. Customers are eligible to

accumulate points, against purchase of spares, accessories, service and by

referring friends to purchase a Hero Honda motorcycle.

Customer can win several gifts as their accumulate points swiftly.

Also, customer points do not become zero after a gift collection and can keep

collecting gifts as they reach a particular milestone.

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INSURANCE DEPARTMENT

GEM Motors operates a separate Insurance department to assist the customers

with all the Insurance formalities related to the bike. The Insurance Premium is to be paid

every year and hence has to renewed every year by paying the required premium

amount.The insurance activities of GEM Motors is entrusted to the ‘National Insurance’.

Two-wheeler insurance policy is governed by the Indian Motor Tariff.

Personal accident cover

The motor insurance provides compulsory personal accident cover of Rs. 1 lakh

for individual owner driver of the vehicle insured while traveling on, mounting or

dismounting from the vehicle.

Loss or damage to the vehicle

The policy covers also against any loss or damage caused to the vehicle due to

the following natural and man-made calamities.

Natural Calamities - Fire, explosion, self-ignition or lightning,

earthquake, flood, typhoon, hurricane, storm, tempest, inundation,

cyclone, hailstorm, frost, landslide, rockslide.

Man-made Calamities - Burglary, theft, riot, strike, malicious act,

accident by external means, terrorist activity, any damage in transit by

road, rail, inland waterway, lift, elevator or air.

Third party legal liability

This protects against legal liability arising due to accidental damages for

Any permanent injury/ death of a person. & Any damage caused to the property.

28

Sum insured

The vehicles are insured at a fixed value called the Insured’s Declared Value

(IDV). IDV is calculated on the basis of the manufacturer’s listed selling price of the

vehicle (plus the listed price of any accessories) after deducting the depreciation for every

year as per the schedule provided by the Indian Motor Tariff.

If the price of any electrical and / or electronic item installed in the vehicle is not

included in the manufacturer’s listed selling price, then the actual value (after

depreciation) of this item can be added to the sum insured over and above the IDV.

Under this policy, you are not covered against:

Normal wear, tear and general aging of the vehicle

Depreciation or any consequential loss

Mechanical/ electrical breakdown

Wear and tear of consumables like tyres and tubes

Vehicle being used otherwise than in accordance with limitations as to use

Damage to/ by a person driving the vehicle without a valid license

Damage to/ by a person driving the vehicle under the influence of drugs or liquor

Loss/ damage due to war, mutiny or nuclear risk

29

ACCOUNTS DEPARTMENT

The accounts Department is headed by the Cashier and in entrusted with all the

accounting activities of the business. The books of accounts are maintained. The accounts

department is computerized and they use software packages to carry out the accounting

work.

One of the accounting packages used is Tally 7.2 and hence the accounting

statements are maintained with high accuracy. To ensure correctness and fairness of the

accounting details, the concerned internal auditors are auditing the books of accounts

every 2 months.

30

STOCK DEPARTMENT

The stock department is concerned with maintaining the required amount of

stocks to ensure uninterrupted flow of sales. The stock department has a minimum and a

maximum stock level, which ensures that there in no under stocking or over stocking.

The minimum stock level maintained by Gem Motors is 250. Every month the stock is

replenished by making a purchase to the extent of 650. The monthly target for sales set

by Gem Motors ranges between a minimum of 550 and a maximum of 700.

The purchase activity has been at a slightly slower pace in the month of may for

Gem Motors. It had made a purchase of only 350 stocks as against a usual 650 as the

sales has been quite slow due to recession. When the stocks that are being sent from the

Head Office is damaged, then the person concerned with stock keeping takes a picture of

the damaged part and sends it to the Head Office. Then the Head Office will send their

representative to do a survey of the vehicle and when approved by this person, the

damage part will be sent back to the Head Office for replacement.

COMPETITORS:

The major competitor of Gem Motors is

Suguna North &

Suguna South.

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SUB DEALERS:

The Gem Motors is extending its sales activity through its Sub dealers who are

referred to as the Authorized Representative Dealers (ARD).

Its Authorized Representative Dealers are

Millennium Motors,

Surya Auto Service and

Annai Auto Service and are given a target of 50 each.

The Gem Motors has a separate service point which carries out all the servicing

activities and this activity is entrusted to KVS Auto Agency. The spare parts will all be

acquired from the Hero Honda Head office.

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MARKETING DEPARTMENT

The GEM Motors has well-developed marketing department and the main activity

undertaken is Advertising. It uses various forms of advertising like boards, banners,

leaflets and it also adopts the float mechanism, in which the vehicle is taken for a round

in the van around the city to create awareness and to enable people to have a look at the

vehicle. It also uses TV in which the ads are displayed as scrolls in the lower part of the

screen.

They in which they follow also undertake tele Marketing up is 4 times. The

advertisement expenses come to around 50,000. The company has a tie up with the Deer

Printing and AD Vision companies for all the printing activities relating to banners,

boards and leaflets.

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HUMAN RESOURSE DEPARTMENT

The people are selected through the normal recruiting process and every member

selected is given training for 1 month along with a stipend of Rs.3500. Every sales person

has given a target of 100 vehicles and if the person is able to sell above the prescribed

target of 100 then he gets Rs.50 as incentive for every extra vehicle sold. And when the

sales person sells any of the premium segment vehicles having 150cc like Hunk or

Karizma, then he Rs.250 as incentive for each vehicle sold. The incentives act as

motivational factors for the employees to perform better.

On other basis, the employees are given various benefits. One such benefit is,

when the employee meets with a accident in the course of his employment, then the

employee will be provided salary for the period he is been hospitalized and his medical

expenses will be taken care by providing advance to the extent of Rs.10,000. This

advance will be deducted from his salary in equal monthly installments of Rs.500 or

Rs.1000 as the case may be.

The personnel department is entrusted with the task of managing the Human

Resource of the company. All the decision relating to the employees, recruitment,

training, holidays, the duties and the responsibilities of the employees, the benefits to be

provided them are all decided by the Personnel Department.

The different Category of employees in the personnel Department are assigned

various jobs according to their designation and thus the duties and responsibilities all

differ accordingly. The staffs are entitled only to government holidays, whereas the

employees under the service category are entitled to only half-day leave every week.

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RESPONSIBILITIES:

To achieve Customer Satisfaction.

To develop long-standing relationship with the customers.

To address the problems of customers immediately and to provide them with

proper solutions.

DISADVANTAGES OF EMPLOYEE WORKINGS:

Fixed working timings

Get a break only for one day in a month.

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SERVICE & MAINTAINANCE DEPARTMENT

The service is one of the main departments as it is concerned with providing

better and additional service to the customers. This department is aimed at providing

exclusive service, which ensures satisfaction of the customers and ultimately results in

achieving customer loyalty. The service is provided by two means – free service and paid

service.

WARRANTY POLICY

Scope of Warranty

Hero Honda Motors Limited warrants all its two–wheelers manufactured

/assembled in Dharuhera, Gurgaon and Haridwar Plants, distributed in India and sold

through its Authorised dealers to be free, under normal use and condition, from any

defect both in material and workmanship, subject to the following terms and conditions.

Terms and Conditions

1. All Hero Honda two-wheelers are warranted for a certain period specified in

terms of time and kms from the date of purchase, whichever term gets satisfied

earlier.

2. It is mandatory for the customer to avail all free and paid services as per the

recommended schedule to be eligible for the warranty benefits.

3. If a defect is observed in any Hero Honda two-wheeler, Hero Honda's only

obligation/liability is to repair or replace those parts which is/are considered to be

the cause of malfunction free of charge of both labour and material, when Hero

Honda acknowledges that such malfunction has not come out of misuse or

improper handling etc. such defective two-wheeler should be brought to the

nearest Hero Honda dealer/authorised service centre by the owner for necessary

inspection and subsequent repairs.

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Limitations of Warranty

The warranty shall not apply:

If any of the free services or subsequent paid service is not availed as per the

recommended service schedule given in the owner's manual.

To normal wear and tear components like bulbs, electrical wiring, filters, spark

plugs, clutch plates, brake shoes, fasteners, shims, washers, oil seals, gaskets,

rubber parts, plastic components, chain and sprockets and in case of wheel rim

misalignment or bend.

If there is any damage due to modification or fitting of accessories other than the

ones recommended by Hero Honda.

If the two-wheeler has been used in any competitive events like track races.

If there is any damage to the painted surface due to industrial pollution or other

extraneous factors.

If there is any damaged caused due to usage of improper oil/grease, non genuine

parts.

For maintenance repairs required due to misuse while driving or due to

adulteration of oil, petrol or due to bad road conditions.

For consumables like oil, grease etc. used during free services or used during

warranty repairs.

If any part of the vehicle is repaired by unauthorized persons/workshops etc.

Warranty on Proprietary Items

Warranty on proprietary items like tyres, tubes & battery etc. will be directly

handled by the respective Original Equipment Manufacturers (OEM’s).

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SERVICE & MAINTENANCE SCHEDULE  

The company constant Endeavour is to support the company's mandate of

providing highest level of customer satisfaction by taking good care of their two-wheeler

service and maintenance through the company vast network of more than 2100

committed Dealers and Service outlets spread across the country.

Having two-wheeler serviced at an authorised workshop ensures highest standards

of service quality and reliability.

FREE SERVICE

The free service can be availed for 6 times but all this 6 services have to availed

within at time span of 1 year, after the period for free service is over. The period at which

the vehicle is to serviced is determined on the basis of the kilometers the vehicle is run.

The various service points on the basis of the kilometers run is as follows:

First Service 500 to 700 Oil service will also be rendered

Second Service 2500 to 2700 No oil service

Third Service 5000 to 5500 Oil service

Fourth Service 7000 to 7500 No oil service

Fifth Service 9000 to 9500 Oil service

Sixth Service 11000 to11500 No oil service

The free service can be availed 2 months once if the required kilometers are run.

PAID SERVICE

After the period of free service is over, then any service that is been availed will

be paid service only. The company follows Tele Marketing in which the customers will

be called 2 months once and will be given a Service Reminder. After the service is been

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rendered, the feedback of the customers as to the service rendered will be got through

telephones.

If in case of accidents, the customers can get insurance facility for which the

damage has to be determined. In the process of determining the value of damage, 80%

will be considered as depreciation for the metal parts and 50% depreciation for the plastic

items and thus the value will be arrived after adjusting for depreciation. The Engines has

a warranty for a period of 2 years.

Service Schedule

Hero Honda offers free services on all its two-wheelers. The customer should

avail these services within the stipulated conditions of time period or km range,

whichever condition gets satisfied earlier from the date of purchase. After the completion

of free services or its validity period must continue availing paid services as per the

recommended service schedule.

Maintenance Schedule

Proper care and maintenance are paramount for trouble free operation and

optimum performance of their two-wheeler.

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FINANCE DEPARTMENT

The fund transfer facility is carried out through the two major banks – HDFC &

ICICI. As far the payment is concerned, the dealers have to make the payment within 15

days from the date on which the vehicles are being dispatched from the Head Office. If a

delay is made in payment, then the dealers will be charged interest at a rate of 2 to 3% as

the case may be.

The truck can carry up to a maximum of 55 vehicles or up to a value of

Rs.18,00,000 whichever is higher. A constant check will be made over the payment

matters and if there is any delay then the necessary corrective measures will be taken.

LOAN FACILITY

When the customers cannot make cash payment, then they will be provided with

Loan facility and the payment will be made in Installments, which is referred to as Equal

Monthly Installments (EMI). When the payment is made through cheque, then it will be

processed through the Electronic Clearing Service. To avail the Loan facility the

following documents are required:

Address Proof

Identity Proof

Photos

Cheque Leaf

EB Bill – if own house

Gas bill- if rented house

Past 3 months Bank statement

Generally 70% of the total vehicle amount can be availed as loan. But in certain cases

when the person is of high credit worthiness then the loan can be availed to the extent

of 85% of the amount.

CASH PURCHASE

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If the vehicle is purchased on a cash basis, then not much formality are involved. The

customers will have to make the payment along with the following documents:

Address Proof

4 Photos

Customer Signature

PAST 5 YEAR PERFORMANCE

As can be seen from the table below, the company the sales as well as the profits have

increased enormously. The company net sale has shown a CAGR of 27% and net profits

have shown a CAGR of 39% led by its motorcycle led dominance. The operating margin

of the company has improved by 290 basis point to 16.8%.

(Rs m) FY00 FY01 FY02 FY03 FY04

Motor Cycles sold (m) 0.76 1.03 1.43 1.68 2.07

Net sales 22,464 31,687 44,654 51,017 58,324

Other income 204 221 767 956 1,681

Total revenues 22,668 31,907 45,422 51,973 60,005

Operating profit 3,070 4,285 6,807 8,636 9,801

Depreciation 347 443 510 580 733

PBIT 2,724 3,843 6,297 8,056 9,068

Interest 47 25 15 17 17

PBT 2,880 4,038 7,049 8,995 10,732

Extraordinary Items -34 -268 -105 (149) (7)

Tax 925 1,301 2,315 3,038 3,441

Net Profit 1,921 2,469 4,629 5,808 7,283

Operating profit margin 13.7% 13.5% 15.2% 16.9% 16.8%

Net profit margin 8.6% 7.8% 10.4% 11.4% 12.5%

Number of shares (m) 39.9 199.7 199.7 199.7 199.7

Face Value (Rs) 10.0 2.0 2.0 2.0 2.0

DPS (Rs) 10.0 3.0 17.0 18.0 20.0

EPS (Rs) 48.1 12.4 23.2 29.1 36.5

Fully Diluted EPS (Rs) 9.6 12.4 23.2 29.1 36.5

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CHAPTER 4

SWOT ANALYSIS OF GEM MOTORS

Strengths

Ability to understand customer’s needs and wants

Recognized and established brand name

Effective advertising capability

Weaknesses

Shift in consumer preference.

R&D is not close to the Hero manufacturing plant

Hero is weak in the joint venture because Honda Motor Company has so

much power

Opportunities

Expansion of target market (include women)

To become India’s leader in the scooter market

Threats

Unavailability of spare parts & after sales service.

Honda Motorcycles and Scooters India can take away market share and

cause joint venture to go sour.

Bajaj Motors is a strong competitor.

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CHAPTER 5

OBSERVATIONS & CONCLUSION

The company has established good Brand name and occupies dominant position

in the market. It has a Strong Marketing Department. It has a Broad Local Knowledge,

which helps to understand he needs of the customer. The Company frequently upgrades

to latest Technology.

IMPLEMENTING CHANGES

Management introduced new ideas coupled with improved terms of agreement for

their joint venture

Two primary goals in mind of the company are Continuing their success &

Maintaining their existing market.

NEW TACTICS

Establishing a more proactive marketing department

Expanding the distribution network

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CONCLUSION

This summer internship training in GEM Motors was highly fruitful and all days

of the training were very much interesting and I gained lot of practical focus. I have been

engaged in many interesting works in various departments in the company. My

experience there was very useful.

They have lot of Department Functions in the company like Organization

Structure, Administration activities, day-to-day activities, Sales Process, Accounting,

Stock Details, Marketing etc.

Finally I conclude that the period of study of the summer internship training

taught me a lot.

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