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A COMPARATIVE STUDY BETWEEN HERO MOTOCORP

AND BAJAJ AUTO.

DECLARATION

I Joydeep Nag , Registration Number: 020876, the student of Holy Cross College , Jubatara Lembucheera, Agartala Tripura- 799210 of 6th Semester BBA(Finance) Specialization from the Department of Business Administration do hereby declare that I have completed the project on “A comparative study between Hero and Bajaj” for the academic year 2017-18. The information submitted by me is true and original to the best of my knowledge.

I further declare that this project report is based on the information collected by me and has not been submitted to any other University or Academic body.

Date: Joydeep Nag

BBA 6th^ Semester

ACKNOWLEDGEMENT

The success and final outcome of this project required a lot of guidance and assistance from many people and I am extremely privileged to have got this all along the completion of my project. All that I have done is only due to such supervision and assistance and I would not forget to thank them.

I owe my deep gratitude to my project guide and Sir Sushobhan Sengupta, Head, Department of Business Administration, who took keen interest in my project work and guided me, till the completion of my project work by providing all the necessary information for developing a good system.

I would not forget to remember his encouragement and more over for his timely support and guidance till the completion of my project work.

I heartily thank the managers of Hero Moto Corp (khowai branch) and Bajaj Auto (khowai branch) for their help and support who trusted me and shared their valuable data with me.

I am thankful to and fortunate enough to get constant encouragement, support and guidance from all the Teachers of management department who helped me in successfully completing my project work. Also, I would like to extend my sincere esteems to my parents and friends who supported me during the entire course of the study.

DATE:

Joydeep Nag

BBA 6th^ Semester

Roll no: 1525010088

HOLY CROSS COLLEGE

Executive Summary

1. Title of the Project : A comparative study between Hero Moto Corp and Bajaj Auto.
2. Duration of the Project : 2 months.
3. Organisation : Hero Moto Corp and Bajaj Auto.
4. Project Guide : Mr Sushobhan Sengupta.
5. Objectives :
   1. To know the financial position (product-based assessment) of the companies
   2. To know the growth of the companies over the years in term of sales
   3. To identify the customer satisfaction of the two companies
6. Research Methodology : The study was based on the Primary data and some portion consist secondary data collected from different sources.
7. Data Analysis and Interpretation : Sales statements of both the companies are given along with illustrations and interpretations in 1st^ part, Analysis using Questionnaire are illustrated in 2nd^ part.
8. Findings and conclusion : Findings and conclusion are given so that the this paper can be easily studied.
9. Bibliography : Consists of all the references.

Introduction

Hero and Bajaj are known as the Giants of two wheeler automobile industry in India. They

have largest customer base in India in terms of sale. Customers like both the brands equally

as both of the company have their own way of doing the business in an economy. But as they

both belong to same industrial background that is automobile industry, it created a lot of

chaos regarding the issue that which company between them is leading in sales and in

financial sector, what are their sales position and their performance. So, to know the exact

percentage of their financial market activities I have chosen the stated topic “A comparative

study between Hero and Bajaj”, the main purpose of this study is to know the sales

position, financial growth and the market share of both the company for the years (2015-

2018). Sales Performance mean a general measure of a company‘s sales performance over a

given period of time, and it can be used to compare similar companies across the same

industry or to compare industries or sectors in aggregation present in the economy.

Who will go through this study will get some idea about both the company and how they are

performing in the competitive market condition where every decision is very sensitive and

decides the future of the company.

The study is done for the purpose of presenting a periodical report or analysing both the

company's sales statements to make better sales as well as financial decisions. Sales

statement analysis is a method or process involving specific techniques for evaluating risks,

performance and future prospects of an organization.

This study will also explain the list of tools which can be used to measure the brand value of

the companies and customer‘s satisfaction level which will ultimately help them to choose

the best out of these two. The purpose of measuring performance evaluation is not to know

the business is performing but to enable it to perform better.

Apart from sales and service performance of these two companies, this study will also discuss

the non-financial elements that are important for the customers to know before buying the

product from these two companies.

Company’s Profile

Hero Motocorp Ltd ., formerly Hero Honda, is an Indian motorcycle and scooter manufacturer based in New Delhi, India. The company is the largest two-wheeler manufacturer in the world and also in India, where it has a market share of about 46% in the two-wheeler category. The 2006 Forbes list of the 200 World's Most Respected Companies has Hero Honda Motors ranked at 108. On 31 March 2013, the market capitalisation of the company was ₹30,800 crore (US$4.7 billion).

Hero Honda started its operations in 1984 as a joint venture between Hero Cycles (sometimes called Hero Group, not to be confused with the Hero Group food company of Switzerland) of India and Honda of Japan. In 2010, when Honda decided to move out of the joint venture, Hero Group bought the shares held by Honda. Subsequently, in August 2011.

In June 2012, Hero MotoCorp approved a proposal to merge the investment arm of its parent Hero Investment Pvt. Ltd. with the automaker. This decision came 18 months after its split from Hero Honda.

"Hero" is the brand name used by the Munjal brothers for their flagship company, Hero Cycles Ltd. A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda Motors Limited at Dharuhera, India. Munjal family and Honda group both owned 26% stake in the Company. During the 1980s, the company introduced motorcycles that were popular in India for their fuel economy and low cost. A popular advertising campaign based on the slogan 'Fill it – Shut it – Forget it' that emphasised the motorcycle's fuel efficiency helped the company grow at a double-digit pace since inception. In 2001, the company became the largest two-wheeler manufacturing company in India and globally. It maintains global industry leadership to date. The technology in the bikes of Hero Motocorp (earlier Hero Honda) for almost 26 years (1984–

2010. has come from the Japanese counterpart Honda.

The name of the company was changed from Hero Honda Motors Limited to Hero MotoCorp Limited on 29 July 2011. The new brand identity and logo of Hero MotoCorp were developed by the British firm Wolff Olins. The logo was revealed on 9 August 2011 in London, to coincide with the third test match between England and India. Hero MotoCorp can now export to Latin America, Africa and West Asia.

Hero is free to use any vendor for its components instead of just Honda-approved vendors. On 21 April 2014, Hero MotoCorp announced their plan on a ₹254 crore (US$39 million) joint venture with Bangladesh's Nitol Niloy Group in the next five years also hero updated its 100cc engine range in 2014 for 100cc bikes except hero dawn.

Bajaj Auto Limited is a global two-wheeler and three-wheeler manufacturing company. Bajaj Auto manufactures and sells motorcycles, scooters and auto rickshaws. Bajaj Auto is a part of the Bajaj Group. It was founded by Jamnalal Bajaj in Rajasthan in the 1940s. It is based in Pune, Mumbai, with plants in Chakan (Pune), Waluj (near Aurangabad) and Pantnagar in Uttarakhand. The oldest plant at Akurdi (Pune) now houses the R&D centre 'Ahead'.

Bajaj Auto is the world's sixth-largest manufacturer of motorcycles and the second-largest in India. It is the world's largest three-wheeler manufacturer.

On May 2015, its market capitalisation was ₹640 billion (US$9.8 billion), making it India's 23rd largest publicly traded company by market value. The Forbes Global 2000 list for the year 2012 ranked Bajaj Auto at 1,416.

Bajaj Auto came into existence on 29 November 1944 as M/s Bachraj Trading Corporation Private Limited. It started off by selling imported two- and three-wheelers in India. In 1959, it obtained a licence from the Government of India to manufacture two-wheelers and three- wheelers and obtained Licence from Piaggio to manufacture Vespa Brand Scooters in India and started making Vespa 150 scooters, it became a public limited company in 1960.

In 1970, it rolled out its 100,000th vehicle. In 1977, it sold 100, vehicles in a financial year. In 1985, it started producing at Waluj near Aurangabad. In 1986, it sold 500,000 vehicles in a financial year. In 1995, it rolled out its ten millionth vehicles and produced and sold one million vehicles in a year.

With the launch of motorcycles in 1986, the company has changed its image from a scooter manufacturer to a two-wheeler manufacturer.

In 2017 it was announced that Bajaj Auto and Triumph Motorcycles Ltd would form an alliance to build mid-capacity motorcycles.

According to the authors of Globality: Competing with Everyone from Everywhere for Everything, Bajaj has operations in 50 countries creating a line of bikes targeted to the preferences of entry-level buyers

Bajaj Auto had a total of 8,036 employees as of 31 March 2013 of which 51 were women (0.63%) and 25 were differently-abled (0.31%). It spent ₹6.5 billion (US$100 million) on employee benefit expenses during the FY 2012–13. The company is headed by Rahul Bajaj, whose net worth was around US$2 billion in March 2013.

Bajaj Auto bought a controlling stake in the Tempo Firodia Company, renaming it "Bajaj Tempo". Germany's Daimler-Benz, a long-time collaborator with Firodia because of their ownership of the original Tempo works in Germany, owned 16% of Bajaj Tempo. Daimler sold their stake back to the Firodia group in 2001, meaning that they once again held a controlling interest, with BAL retaining 24% of the shares. It was agreed that Bajaj Tempo would gradually phase out the use of the "Tempo" brand name, as it still belonged to Mercedes-Benz. The name of the company was changed to Force Motors in May 2005, dropping "Bajaj" as well as "Tempo", over the objections of Bajaj Auto with whom the company shares a long history as well as a compound wall.^2

Name of Models available in the state:

 Bajaj Avenger Cruiser 220

 Bajaj Avenger Street 220

 Bajaj Avenger Street 150

 Bajaj Platina 100

 Bajaj Pulsar NS

 Bajaj Pulsar NS

 Bajaj Pulsar RS

 Bajaj Discover 125

 Bajaj Pulsar 150

 Bajaj Pulsar 180

 Bajaj Pulsar 220F

 Bajaj Dominar 400

 Bajaj CT 100

 Bajaj V

(^2) Auto, B. (2018, March 26). bajajauto. Retrieved March 26, 2018, from www.bajajauto.com: hhtp://www.bajajauto.com/

Senthilkumar, V. (2012): In the study entitled ―A Comparative Study of Maruti and Tata‖, conducted a research on the effects of customer service and product quality on customer satisfaction to clarify the relationship among four aspects of customer service quality, product quality, customer satisfaction and customer loyalty. A well-designed questionnaire was made using five point scale.52 customers were surveyed using this questionnaire.

The data analysis revealed that customer service and product quality has been influential on customer satisfaction. The analysis showed that there was statistically significant correlation between satisfaction and repurchase. The researcher also commented that there is a positive and meaningful relationship between customer satisfaction and customer loyalty.

The objectives of the study were:

(i) To understand and categorize the factors influencing service quality (ii) To find out the variables which can be defined under each factor (iii) To compare Maruti and Hyundai showrooms in terms of quality

From the analysis it was found that there is a significant difference between the service provided by Maruti and Tata. The researchers concluded that loyalty is a powerful marketing tool and customer satisfaction plays a key role in choosing a particular brand.

Shambhu, (2012): ―Comparative study of Hero Honda motors with Bajaj automobiles‖, the

researcher had conducted a survey on productivity, challenges and output of the companies.

The study was based on the data provided by Hero and Bajaj auto. The researcher studied

about the different strategies that the companies were using to promote, produce and maintain

quality of their products. As it was felt that his strategies would help to maintain a standard of

project giving a theoretical aspect of the financial position of the companies.

The researcher further discussed about the challenges that the companies faced during the

financial activities over the past years and how they overcome from those situations. Some of

the challenges are also discussed in this project paper.

Some of the tools that the researcher used:

1. Profitability ratio
2. Debt equity ratio
3. Current ratio
4. Gross profit ratio

Tariq Zafar, S.M. Khalid, S.M. (2012): In the study entitled ―A Comparative Evaluation Of Financial Performance And Market Value Of Maruti And Tata Company‖, the author stated that in modern time of globalization investment sectors, risk and return change at rapid pace. The accounting and financial ratios are important indicators‘ of the company‘s health and indicate a quantitative relationship. The key factor behind this much rise and growth of auto industry is liberalization of government norms, supportive policy measures for foreign investment.

As export increased the domestic automobile industry is riding high on success, despite the presence of foreign brands, the domestic companies are dominating the markets. The core objective of the study in changing business environment is to understand and analyse qualitative and quantitative performance of Maruti & Tata and to investigate their risk and returns factors.

For interpreting the results modern financial analysis have been carried out which evaluates and examine components for companies smooth functioning like Liquidity Analysis in which Current Ratio, Liquidity Ratio are tested, in Profitability Analysis in Relation to Sales G. P Ratio, N. P Ratio, O. P Ratio are tested.

In the shadow of above revelation and fact the study conclude that Maruti have better strategic position in comparison to its competitor in all the respective ratios. By analysing the current trend of Indian economy and automobile industry it is clear that future of automobile industries is bright and still has to cross many levels.

Jaggi, V (2011) : In the project entitled ―Comparative study between Bajaj and Hero Honda‖, the author stated that over the last decade these two companies changed its image from a scoter and cycle manufacturing company to a two wheeler (bike) manufacturing company. India has the largest number of two wheelers running on road in the world. In this paper the author gave more emphasis on theoretical aspects of the management, objectives were selected after a brain storming session and questionnaires were made which are related to the objective. This research paper includes both Primary and Secondary data. Research approach was survey method; the research was carried out in Chandigarh. Some of the objectives of the paper are:

1. To know the market share of Bajaj and Hero Honda.

2. To know the perception of customers regarding bikes.

3. To determine customer satisfaction regarding bikes.

4. To determine the factors influencing the choice of customer regarding bikes.

The author also discussed about the problems he faced during the time of research and highlighted that limited time and some biased reviews made the research incomprehensive.

Sherasiya, M. Sherasiya, N. Sherasiya, R. Katiria, N. (2009): In the paper entitled ―Comparative Study of Bajaj and Hero Honda‖, the researchers have conducted a survey on the brand image, customer base and the products (two wheelers) of the two companies and stated that the last decade was the period when two companies changed its image from a scoter and cycle manufacturing company to a two wheeler (bike) manufacturing company. The researchers studied about the different strategies that the companies were using to promote, produce and maintain the image of their products, objectives were selected and questionnaires were made. Researchers further discussed about the challenges that the companies faced during the financial activities over the past years and how they overcome from those situations The research paper includes both Primary and Secondary data. The research was carried out in New Delhi.

The researchers collected data and shown their findings using different diagrams such as pie chart, which was used for company‗s market share. Tools that used:

1. Histogram 2) Bar diagram

2. Line chart 4) Pie char

Ashima, (2009): In the study entitled ―A Comparative and Analytical Study of the Financial Performance Evaluation of Automobile Industry in India (with special reference to Maruti Udyog Ltd. & Hyundai Motors India Ltd.)‖. The development of Industries depends on several factors such as Human, Technology, Quality, Marketing and Financial. The success or failure of any organization depends on the efficiency with which it works and achieves its objectives. Evaluating Performance is necessary to understand its strengths and weaknesses to know the risks and rewards. This Study aims at focusing on the following:-

1. To get familiar with the profile of sample units under study.
2. To assess the Performance Evaluation of Sample Companies in terms of different financial parameters.
3. To analyse the liquidity and profitability of sample units under study using Ratio Analysis.
4. To study the efficiency and leverage (long term solvency position) of sample units with the help of ratios.
5. To compare the financial performance of sample units on the basis of Ratio Analysis.

The study dealt with performance evaluation of sample units in terms of functional and financial areas. Only secondary data (quantitative financial data) will be used for the performance evaluation of sample units. Only ten years period will be taken with limited no. of financial indicators.

In view of the above, it is worth mentioning here that, in the research of Kumar, V. (2014) and Shambhu, (2012) the author discussed about the challenges faced by the companies in the economy. Whereas the research paper of Ashima, (2009), Aloysius, R. (2010) and Jaggi,V (2011) aimed at evaluating the sales performance and financial performance of the companies. They also aimed at evaluating the customer satisfaction level during the sales and after sales services provided by the companies.

Objective of the study

1. To know the financial activities (product-based assessment): One of the most important objective or purpose of my study is to check the financial activities or what was the product wise financial activities of both the companies in the Financial Year 2015-2016, 2016-2017 and 2017-2018. How much the dealers gets as commission after selling of every single unit, their expanses etc.

2. To know the growth of the companies over the years in term of sales: Second objective of the study is to find the yearly growth of both the companies (from 2015 to 2018). This will help to find whether the companies made any progress during those years or not.

3. To know the financial strategies of the company(s): This study will further help to know the financial strategies of the company during those years. Financial strategies of a company define how a company works to meet customer demand.

4. To identify the customer satisfaction of the two companies: This study will also help to know the customer satisfaction of the two companies. Customer satisfaction is a measure which depends upon the service provided by the company during sales or other activities related with customers. Customer satisfaction helps company to gain more goodwill which ultimately helps the company to sell more, to earn more revenue and to increase more customer base.

Scope of the study

As In the present market scenario the competition between the automobile industries increased. The companies are struggling a lot to keep their market share up in the industry and to improve the sales of their products. So, the company needs to know their position in the market and the opinion of the customers and the distributors, dealers when compared to their competitor. Because of this reason the comparative analysis is very important and useful through the comparative analysis we can understand strategies the competitors are using for the increase their sales volume.

The study mainly attempts to analyse the sales position and performance as well as the after sales service of the companies which were taken for the present study. Customers, Investors as well as financial authorities of the automobile industries may use this report for evaluating their performance in future, which will help them to analyse financial statements and help to apply the resources properly for the development of the company and its employees to bring overall growth. The present study attempts to find various aspects such as the trend of the business, sales position, satisfaction of the customers etc.

Period of study:

To study the performance of a company reasonably a longer period is required which will

enable to find out the consistency and stability over a period of time. But there is no denying

the fact that it is a very challenging task to take a period more than three to five year as

because of time constrains. Therefore, the period of study is taken for 3 years i.e. financial

year 2015-2016 to 2017-2018.

Data analysis:

Based on the data collected from available source the sales position of the companies as

well as the performance of the companies is evaluated, for further analysis the results from

different analysis are discussed or interpreted in brief which will ultimately help to

understand the sales and after sales service of the company(s).

Limitations

Every researcher tries their best to fulfil the objectives of study but still there are some

limitations which slower the report making process, such limitations are as follows:

1. Data received from the organizational authorities cannot be tested as organization doesn‘t disclose all their records on interest.
2. Organization may give false data to the researcher, and if data is not correct, then the interpretation will not be correct resulting to wrong report making.
3. The level of changes in the price of the product, cost of production and other determinants over a period of time makes the comparison difficult for the research.
4. Only 3 years period is taken.
5. Shortage of Time is also a reason for in-comprehensiveness.

Data Analysis and Interpretation (Part 1)

Sales Statement Analysis of Hero Moto Corp (Khowai, Branch) for the year 2015-2016 :

Interpretation:

 In the 1st^ quarter of 2015-2016 (April - June) Hero Moto (khowai Branch) sold 159 units of two-wheelers which includes 121units of bikes and 38 units of scooty/scoters and earned a total profit of Rs 104,  In 2nd^ quarter the profit increased by a margin of Rs 7,025 and the total amount was Rs 111,775, they sold 169 units of two-wheeler out of which 35 were scooty/scooter and rest were bikes.  In 3rd^ quarter the sales were 172 units where 29 were scooty/scooter and rest were bikes. Profit from sales was Rs 115,530 which was more than the profit of 2nd^ quarter of 2015. During this period the Company launched 2 new bikes (modified versions) and targeted the customers of young age as both the models were under sporty class and for the people of love speed, both variants were powered by 223cc engines.  In the last quarter of the financial year 2015-2016 sales were almost same like the previous quarter, in this quarter they sold 174 units of two-wheelers in total which gave a profit of Rs 118,166 higher than all other quarters.  At the end of the financial year 2015-2016 they sold 674 units of two-wheelers out of which Super splendor was the most sold two-wheeler due to its low maintenance cost, low pricing, good mileage, they earned a total of Rs 450,221 profit.