Any activity big or small is a result of collective effort of several individuals. From the very beginning of human civilization to this complex world, we are dependent on each other for accomplishment of our goals. The project report of such magnitude could not be accomplished without the assistance of several people who participated directly or indirectly. Exchange of ideas generates a new object to work in a better way. So whenever a person is helped and cooperated by others, his heart is bound to pay gratitude and obligation to them. Acknowledgement is not merely a formality but an expression of deep sense of gratitude and cumulative appreciation. I am thankful to the INDIRA SCHOOL OF BUSINESS STUDIES, PUNE authorities who have provided me the opportunity to seek higher education in the field of management studies. Words would be inadequate to thank my project supervisor and mentor PROF. ADITYA DESHPANDE whose cooperation, encouragement and continuous evaluation has made the project work possible. Last but not least I would like to thank my parents for their moral and financial support during my entire academic career without which I would not have been able to do anything. Prateek Agarkar Div D-32
The Indian Automobile Industry is manufacturing over 11 million vehicles and exporting about 1.5 million every year. The dominant products of the industry are two wheelers with a market share of over 75% and passenger cars with a market share of about 16%. Commercial vehicles and three wheelers share about 9% of the market between them. About 91% of the vehicles sold are used by households and only about 9% for commercial purposes. The industry has attained a turnover of more than USD 35 billion and provides direct and indirect employment to over 13 million people. The supply chain of this industry in India is very similar to the supply chain of the automotive industry in Europe and America. This may present its own set of opportunities and threats. The orders of the industry arise from the bottom of the supply chain i. e., from the consumers and goes through the automakers and climbs up until the third tier suppliers. However the products, as channelled in every traditional automotive industry, flow from the top of the supply chain to reach the consumers. Interestingly, the level of trade exports in this sector in India has been medium and imports have been low. However, this is rapidly changing and both exports and imports are increasing. The demand determinants of the industry are factors like affordability, product innovation, infrastructure and price of fuel. Also, the basis of competition is the sector is high and increasing and the life cycle stage is growth. With a rapidly growing middle class, all the advantages of this sector in India are yet to be leveraged. Note that, with a high cost of developing production facilities, limited accessibility to new technology and soaring competition, the barriers to enter the Indian Automotive sector are high and these barriers are study. On the other hand, India has a well-developed tax structure. The power to levy taxes and duties is distributed among the three tiers of Government. The cost structure of the industry is fairly traditional, but the profitability of motor vehicle manufacturers has been rising over the past five years. Major players, like Tata Motors and Maruti Suzuki have material cost of about 80% but are recording profits after tax of about 6% to 11%.
The level of technology change in the Motor vehicle Industry has been high but, the rate of change in technology has been medium. Investment in the technology by the producers has been high. System-suppliers of integrated components and sub-systems have become the order of the day. However, further investment in new technologies will help the industry be more competitive. Over the past few years, the industry has been volatile. Currently, India‘s increasing per capita disposable income which is expected to rise by 106% by 2015 and growth in exports is playing a major role in the rise and competitiveness of the industry. Tata Motors is leading the commercial vehicle segment with a market share of about 64%. Maruti Suzuki is leading the passenger vehicle segment with a market share of 46%. Hyundai Motor India and Mahindra and Mahindra are focusing expanding their footprint in the overseas market. Hero Honda Motors is occupying over 41% and sharing 26% of the two wheeler market in India with Bajaj Auto. Bajaj Auto in itself is occupying about 58% of the three wheeler market. Consumers are very important of the survival of the Motor Vehicle manufacturing industry. In 2008-09, customer sentiment dropped, which burned on the augmentation in demand of cars. Steel is the major input used by manufacturers and the rise in price of steel is putting a cost pressure on manufacturers and cost is getting transferred to the end consumer. The price of oil and petrol affect the driving habits of consumers and the type of car they buy. The key to success in the industry is to improve labour productivity, labour flexibility, and capital efficiency. Having quality manpower, infrastructure improvements, and raw material availability also play a major role. Access to latest and most efficient technology and techniques will bring competitive advantage to the major players. Utilising manufacturing plants to optimum level and understanding implications from the government policies are the essentials in the Automotive Industry of India. Both, Industry and Indian Government are obligated to intervene the Indian Automotive industry. The Indian government should facilitate infrastructure creation, create favourable and predictable business environment, attract investment and promote research and development. quality establishing cost With a combined effort, the Indian Automotive industry will emerge as the destination of choice in the world for design and manufacturing of automobiles. 6
Industry overview and analysis (PEST and Porter’s Five force)
The automotive industry in India is one of the larger markets in the world and had previously been one of the fastest growing globally, but is now seeing flat or negative growth rates.India's passenger car and commercial vehicle manufacturing industry is the sixth largest in the world, with an annual production of more than 3.9 million units in 2011. According to recent reports, India overtook Brazil and became the sixth largest passenger vehicle producer in the world (beating such old and new auto makers as Belgium, United Kingdom, Italy, Canada, Mexico, Russia, Spain, France, Brazil), grew 16 to 18 per cent to sell around three million units in the course of 2011-12. In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand. In 2010, India beat Thailand to become Asia's third largest exporter of passenger cars.As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second (after China) fastest growing automobile market in the world in that year. According to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 4 million by 2015, no longer 5 million as previously projected. The majority of India's car manufacturing industry is based around three clusters in the south, west and north. The southern cluster consisting of Chennai is the biggest with 35% of the revenue share. The western hub near Mumbai and Pune contributes to 33% of the market and the northern cluster around the National Capital Regioncontributes 32%. Chennai, with the India operations of Ford, Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan Motors, Daimler, Caparo, and PSA Peugeot Citroënis about to begin their operations by 2014. Chennai accounts for 60% of the country's automotive exports. Gurgaon and Manesar in Haryana form the northern cluster where the country's largest car manufacturer, Maruti Suzuki, is based. The Chakan corridor near Pune, Maharashtra is the western cluster with companies like General Motors, Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land Rover, Jaguar Cars, Fiat and Force Motors having assembly plants in the area. Nashik has a major base of Mahindra & Mahindra with a UV assembly unit and an Engine assembly unit. Aurangabad with Audi, Skoda and Volkswagen also forms part of the western cluster. Another emerging cluster is in the state of Gujarat with manufacturing facility of General Motors in Halol and further planned for Tata Nano attheir plant in Sanand. Ford, 7
Maruti Suzuki and Peugeot-Citroen plants are also set to come up in Gujarat. Kolkata with Hindustan Motors, Noida with Honda andBangalore with Toyota are some of the other automotive manufacturing regions around the country. INDUSTRY OVERVIEW 2012 Largest three wheeler market in the world
2nd largest two wheeler market in the world 7th largest passenger car market in Asia & 10th Largest in the world 4th largest tractor market in the world 5th largest commercial vehicle market in the world 5th largest bus & truck market in the world
The Indian Automobile Industry embarked on a new journey since 1991 with delicensing of the sector and subsequent opening up for 100 per cent FDI through automatic route. Almost all the global majors have set up their facilities in India taking the next level of production of vehicles from 2 million in 1991 to 110+ million in 2011.
The Automotive Aftermarket Business in India
The Indian automotive aftermarket is currently estimated at Rs 33,000 Crores, where the global market is at Rs 2,70,000 Crores. India has been one of the few markets globally to buck the recessionary trend and recorded a strong 25.6% volume growth in FY 2010. The growth momentum continues to be non track with first 11 months of FY 2011, registering a growth of 29.8% over the corresponding period in the previous year.
The automotive aftermarket for parts in India is a large and growing market that spans manufacturers, distributors, retailers, service providers and garages. Currently worth INR 19,000 crore to INK 24,000 crore, the market has been growing at 11 per cent, and is estimated to reach INR 39,000 crore to INR 44,000 crore by 2015. This growth will primarily be fuelled by the increasing number of vehicles on the road, as well as the aggressive expansion of independent and foreign players. While current margins for the industry remain attractive, players across the value chain may see margins reducing to the 8
lower levels observed in developed economies. Therefore, to sustain profitability, it is imperative that players evaluate additional ways of capturing value, including expanding service networks, developing branded generic parts, forward integrating and building scale. Looking ahead, revenue pools remain large across the value chain; hence, if players are able to pursue appropriate strategies, significant profits can be made in this sector.
The Indian market is valued at INR 19,000 crore to INR 24,000 crore, of which roughly 30 per cent comprises spurious parts. CV, which include multi-axle vehicles, LCVs, buses and trailers account for roughly 22 per cent of this market (INR 4,500-5,500 crore), with Maharashtra, Tamil Nadu, Gujarat and Kerala accounting for over 40 per cent. The car market is estimated at INR 6,000-7,000 crore (34 per cent of the market) with Maharashtra, Andhra Pradesh, Delhi and Tamil Nadu cumulatively accounting for about 40 per cent of the share (Exhibit 1).
The two - wheeler market is the largest at INR 10,000 crore to INR 11,000 crore, or 44 percent of the market, and Tamil Nadu, Maharashtra, Gujarat and Uttar Pradesh constitute close to 45 per cent of the market. This market is also expected to grow the fastest, given the strong growth in new sales (more than 15 per cent per year) and the large volume of two-wheelers entering the vintage for aftermarket parts (2 to 12 years).
With the population of automobiles in India exceeding 110 million and growing at the rate of 12% p.a. the automotive aftermarket business in India is poised for an immense growth. There are tremendous opportunities in Automotive Services, Maintenance and Aftermarket Products. Some of the specific trends in the aftermarket business in India include:
Growth in Vehicle Sales, Vehicle Population, Replacement Parts and Aftermarket Products Huge Demand for Vehicle Servicing, Repairs and Maintenance Non Vehicle Manufacturers are getting into Automotive Service Business Branded service networks being set up both by vehicle manufacturers and other players Fuel Stations adding to the Servicing & Aftermarket Network 9
Expansion of Service Networks by Vehicle Manufacturer Increased Customer Awareness on Vehicle Maintenance. Emergence of One-stop-shop for vehicle owners to meet their needs like servicing, spares, accessories, insurance, warranty, etc, under one roof
PEST ANALYSIS PEST analysis is concerned with the environmental influences on a business. The acronym stands for the Political, Economic, Social and Technological issues that could affect the strategic development of a business Identifying PEST influences is a useful way of summarizing the external environment in which a business operates. However, it must be followed up by consideration of how a business should respond to these influences. 1. Political Environment:
Indian Government has changed its role from controller to facilitator with prime focus on providing better infrastructure, growth oriented economic policies and right 10
environment to attract investments.This has made giant auto manufacturers enter into India and affect the competitive environment.
The liberalization steps, such as, relaxation of the foreign exchange and equity regulations, reduction of tariffs on imports, and refining the banking policies, have played an equally important role in bringing the Indian Automotive industry to great heights.
Institutionalization of automobile finance has further paved the way to sustain a longterm high growth for the industry.
2. Economic environment:
Rising GDP consecutively for the last 5 years has led to increased purchasing power and hence the automobiles.
Per capita Income is rising , which is affecting the segments of automobiles being ventured into.
There is cut Throat competition among many players in market. Increasing urbanization of rural India also has given rise to increase in sales. The concept of service in auto industry has changed into customer care now , thus encompassing the greater value into it.
3. Social Environment: The demand of cars has been fueled by following factors :
Indian families are becoming increasingly nuclear Increasing Propensity to spend
Increasing distances between work-place and residence. 4. Technology: • Alternate Fuel: increasing use Use of CNG and LPG instead of conventional fuel has made the entry of new kinds of vehicled in the market. • Advent of Internet: The customer can now use the Internet to place the order and expect the manufacturer to fulfill his customized de-mand in the minimum time. 11
• Electric Car: With technological advance- ments electrical car may emerge as a preferred option . Conclusions • Institutionalization of automobile finance has be-come important factor for sustainable
growth. • Car industry is gaining exports orientation due to foreign investment and delicensing. • Increase in money supply would ensure a reason-able demand for cars. • Car industry is a growth industry which is sustainable. • The changing lifestyles indicate an increase in demand for cars in the all the segments and especially mid price segment • The changing buying behavior shows preference for styling, comfort, fuel efficiency conformance to environmental standards • Technologically the industry is experiencing major changes like alternative fuels , and
customization etc. • Intense competition is indicated in the coming years due to increase in market players. • The concept of value has been widened up to in-clude customer care. • Increase in percentage of working women has increased number of earning members in a family. Porter's Five Forces Analysis - Indian Automobile Industry A Porter's Five Forces Analysis explores five principal industry factors to determine the attractive of a given industry in a given market. In this P5F exercise, we look at the automobile industry in India. This is independent of any manufacturer. As such, it applies to every Indian car manufacturer.
In any P5F analysis, one must examine the following: 1. The threat of new entrants 2. The bargaining power of buyers/customers 3. The threat of substitute products 4. The amount of bargaining power suppliers have 5. The amount of rivalry among competitors 1. The threat of new entrants In most markets, the capital and expertise needed to setup an auto or parts manufacturing facility, would be a great enough barrier to entry to prevent many new entrants from setting up. However, given India's incredible growth forecasts, infrastructure progress (especially new and better roads), and ever-expanding financing options to rural residents, the market is attractive. As such, we expect the threat of new entrants to be high. Result: Unfavorable 2. The bargaining power of buyers/customers Buyers in India have a wide variety of choice. There are more than 20 foreign manufacturers selling in India (including ultra high-end such as Rolls-Royce and Lamborghini). Of course there are also a plethora of incredibly cheap choices, like the famous Tata Nano. Result: Unfavorable 3. The threat of substitute products India is famous for its two-wheelers (bikes and mopeds) and three-wheelers. These are very real and obvious threats to auto manufacturers. Result: Unfavorable 4. The amount of bargaining power suppliers have It is likely that the suppliers to the manufacturers have considerable bargaining power. They are not held ransom by one single manufacturer as they can market their products to any of the others in India.
Company Profile (Two Wheeler-Hero Moto Corp)
Vision The story of Hero Honda began with a simple vision - the vision of a mobile and an empowered India, powered by its bikes. Hero MotoCorp Ltd., company's new identity, reflects its commitment towards providing world class mobility solutions with renewed focus on expanding company's footprint in the global arena. Mission Hero MotoCorp's mission is to become a global enterprise fulfilling its customers' needs and aspirations for mobility, setting benchmarks in technology, styling and quality so that it converts its customers into its brand advocates. The company will provide an engaging environment for its people to perform to their true potential. It will continue its focus on value creation and enduring relationships with its partners.
MR.SUNIL KANT MUNJAL (BOARD OF DIRECTORS,NON EXECUTIVE DIRECTOR)
MR.SUMANT KANT MUNJAL (ADDITIONAL DIRECTOR)
MR.RAVI SUD (VICE PRESIDENT,CHIEF FINANCIAL OFFICER)
Employee Strength he 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. Based on recorded statements Hero MotoCorp Limited is currently employing 6.11 K people. This is 63.34% lower than that of Consumer Goods sector, and 94.7% lower than that of Auto Manufacturers - Major industry, The Number of Employees for all stocks is 46.49% higher than the company.
Turnover /Revenue HERO MOTOCORP RIDES ON HIGHEST-EVER QUARTERLY SALES TO REPORT ITS BEST-EVER TURNOVER OF RS. 6031 CRORE IN Q3‘, FY‘12
PBT STANDS AT RS 724 CRORE & PAT STANDS AT RS. 613 CRORE EBIDTA MARGIN FOR THE QUARTER AT 15.6 PER CENT VOLUME SALES DURING THE QUARTER AT 15,89,286 UNITS, GROWTH OF 11.3% New Delhi, January 19, 2012: Riding on its highest-ever quarterly volume sales of 15,89,286 units, Hero MotoCorp Ltd (HMCL), the world‘s largest two-wheeler manufacturer, today reported its best-ever turnover (Net Sales & Other Operating income) of Rs. 6031.45 crores for the third quarter (October-December 2011) of FY‘12. This is a growth of 16.85 per cent over the corresponding period in the last fiscal (OctoberDecember 2010) of FY‘ 11. The company‘s profit before tax for the period stood at Rs 723.79 crore, while profit after tax (PAT) for the period stood at Rs 613.03 crores. The company has recorded an EBIDTA margin of 15.63 per cent. Hero MotoCorp registered its highest ever quarterly sales of 15,89,286 two-wheelers in the third quarter this fiscal, fuelled by consistent half million-plus unit sales in all the three months of the quarter - 512,238 units in October, 536,772 units in November and 540,276 units in December. 2013: Two-wheeler manufacturer Hero MotoCorp on Sunday said it has recorded highest monthly sales of 5,57,797 units in January 2013. This is a growth of 7.21 per cent from 5,20,272 units sold in same month of 2012, Hero MotoCorp said in a statement.
Business opertations and Plant Locations Hero MotoCorp has three manufacturing facilities based at Dharuhera, Gurgaon in Haryana and at Haridwar in Uttarakhand. These plants together are capable of churning out 3 million bikes per year.] Hero MotoCorp has a large sales and service network with over 3,000 dealerships and service points across India. the company was going to build their fourth factory in South India and their fifth factory in Western India. There is no confirmation where the factories would be built. The company is looking at setting up assembly bases in Kenya, Nigeria, Columbia and Brazil over time to meet demand in Africa and Latin America," Munjal had said.
Joint Ventures 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
Hero MotoCorp joins hands with Erik Buell Racing (EBR) of USA for a strategic alliance to augment its R&D capabilities and add high-end performance motorcycles to its illustrious model range. Swot Analysis: SWOT Analysis
1. Huge brand equity and one of the biggest players in the two wheelers Indian market 2. Excellent R&D, and wide variety of products in every segment. 3. Excellent distribution, over 3000 dealerships and service centers 4. Good advertising and excellent rebranding from Hero Honda to Strength Hero Moto Corp
1. Absence in the premium bike segment 2.High imports for its spare parts i.e. over 30% imports 3. Most of the products have similar features and low on design Weakness and innovation
1.Two-wheeler segment is one of the most growing industries Opportunity 2.Export of bikes is limited i.e. untapped international markets
1. Strong competition from Indian as well as international brands 2. Dependence on government policies and rising fuel prices Threats 3. Better public transport will affect two-wheeler sales
CSR STAKEHOLDER TIES AT THE GRASSROOTS 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 DelhiJaipur 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 MotoCorp 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). 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.
Built for a sustainable future. At Hero MotoCorp, environmental protection and preservation is one o the core business values. Our manufacturing facilities have adopted the best environmental practices and are ISO 14001 (Environmental Management Systems) certified. As a responsible corporate citizen, we believe that we can improve environment management not only in our premises, but also by partnering with our vendors and dealers to ensure that sustainable development and environmental strategies are adopted by all. The Green Supply Chain Management is an initiative in that direction. It targets 2 important ends of the supply chain:
Competative Analysis Top 3 competitors of Hero Moto Corp India is 1. Bajaj 2. TVS 3. Honda
1.Bajaj Vission and Mission: Bajaj doesn't have a straight vision or mission statement. They define it in terms of brand identity, brand essence (derived from mission) and brand values.
Our Brand Identity Our Brand is the visual expression of our thoughts and actions. It conveys to everyone our intention to constantly inspire confidence. Our customers are the primary audience for our brand. Indeed, our Brand Identity is shaped as much by their belief in Bajaj as it is by our own vision. Everything we do must always reinforce the distinctiveness and the power of our brand. We can do this by living our brand essence and by continuously seeking to enhance our customers‘ experience.
In doing so, we ensure a special place for ourselves in the hearts and the minds of our customers.
Our Brand Essence Our Brand Essence is the soul of our brand. Our brand essence encapsulates our mission at Bajaj. It is the singular representation of our terms of endearment with our customers. It provides the basis on which we grow profitably in the market. Our Brand Essence is Excitement. Bajaj strives to inspire confidence through excitement engineering. Blending together youthful creativity and competitive technology to exceed the spoken and the implicit expectations of our customers. By challenging the given. By exploring the unknown and thereby stretching ourselves towards tomorrow, today.
Our Brand Values We live our brand by its values of Learning, Innovation, Perfection, Speed and Transparency. Bajaj will constantly inspire confidence through excitement engineering.
Product Mix: Bajaj has made motorcycles, scooters and cars. Motorcycles in production are the XCD, Platina, Discover, Pulsar and Avenger. Bajaj also distributes motorcycles in India for other manufacturers, such as theKawasaki Ninja 250R, the Ninja 650R and new for 2012, the KTM Duke 200.
To target lower level segment with bajaj platina(100cc) Bajaj Discover target middle level segment customers The premium segment is served by Bajaj Pulsar(200Cc)and Bajaj Avenger
Market Share In September, its market share had gone up to 28 per cent. In the first eight days of Dussehra festival, Bajaj Auto‘s retail sales witnessed a 6 per cent growth compared to the same Dussehra season last year. But the two seasons are not comparable since during last year, Diwali too was celebrated in October while this year there is a three-week gap between the two festivals. Srinivas attributed the growth during the Dussehra season this year to the slew of new launches the company had made so far in the current FYDiscover 4G, Pulsar 200 and Discover 125 ST. Last month, 40,000 Discover 125 ST were sold and this month he expected this to touch 45,000 units. He said this bike has been a runaway success because the commuter segment has a product that had all the trappings of a sports segment vehicle.
Strength 1. Excellent brand presence and marketing in India 2. Extensive research and development focus and highly experienced player in the motorcycle segment 3. Widespread distribution network across India 4. Wide product range in terms of price, quality and categories 5. Featured in the Forbes Global brands list
Weakness 1.Not a global brand despite high volume production 2.Lack of performance bikes like major international brands and sports bikes & cruisers 2.TVS TVS Motor Company - Mission We are committed to being a highly profitable, socially responsible, and leading manufacturer of high value for money, environmentally friendly, lifetime personal transportation products under the TVS brand, for customers predominantly in Asian markets and to provide fulfilment and prosperity for employees, dealers and suppliers.
Vision Statement TVS Motor - Driven by the customer TVS Motor will be responsive to customer requirements consonant with its core competence and profitability. TVS Motor will provide total customer satisfaction by giving the customer the right product, at the right price, at the right time.
TVS Motor - The Industry Leader TVS Motor will be one among the top two two-wheeler manufacturers in India and one among the top five two-wheeler manufacturers in Asia. Product Mix TVS Motor Company Ltd. Product Name Year End Mar 31, 2012 Mar 31, 2012 Mar 31, 2012 Mar 31, 2012 Mar 31, 2012 Mar 31, 2012 Sales Quantity 0 Issued Capital (Crores) 1,622.82 Sales Value (Rs. Crore) 22.77
Motorcycles Accessories & Spares Other Operating Revenue Automobile - 3 Wheelers Automobile Mopeds
Strength: 1. Huge brand equity and one of the biggest players in the two wheelers Indian market 2. Excellent R&D, and wide variety of products in every segment 3. Excellent distribution and good number of service centers 4. TVS Group has over 40,000 employees and a customer reach of over 15 million 5. Associating itself with celebrity brand ambassadors 6. ‗Scooty‘ as a brand has become a second name for the scooterrate segment Weakness: 1. Absence in the premium bike segment
3.HONDA Mission Maintaining a global viewpoint, Honda is dedicated to supply products of the highest quality, yet at a reasonable price for worldwide customer satisfaction. Honda's mission is to •Proceed always with ambition and youthfulness •Respect sound theory, develop fresh ideas, and make the most effective use of time •Enjoy work and encourage open communication •Strive constantly for a harmonious flow of work •Be ever mindful of the value of research and endeavor
Vision Developing a philosophy built on the experience of a practical engineer, Soichiro Honda created a corporate culture that would go on working towards his objective - nothing less than becoming and remaining the world's best motor manufacturer - long after his own active day. The corporate vision statement is like the founder himself, enormously practical *Quality in all jobs - learn, think, analyze, evaluate and improve * Reliable products - on time, with excellence and consistency *Better communication - listen, ask and speak up
Product Mix 1.Honda CBR 250R 2.Honda VTR 3.Honda CB Dazzler Honda Two-Wheeler now prefixing 'CB' with every bike, it started using this with Honda CB Twister, Honda Shine and Honda Unicorn. Its new bike Honda CB Dazzler is also having the same prefix. 4.Honda CB Twister Honda two wheelers recently launched its very first entry-level motorcycle in India-Honda CB Twister. The new mass bike is powered by a 110cc mill that belts out 9 bhp of peak power and churns 9 Nm of peak torque 5.Honda CBF Stunner PGM FI Honda India has launched its Fuel Injected variant of Honda CBF Stunner PGM FI in the Indian market recently. The new variant is aimed to increase the sales of the company. This 125cc model is already popular in youth. 6.Honda Unicorn Alloy Honda Unicorn (Alloy Wheel) is the first motorcycle developed by Honda Motorcycle and Scooters India Pvt. Ltd. This bike is marked for its cuttingedge technology, adequate power, and mono suspension at the rear Market Share Growing 49%, HMSI is ‗Fastest Growing 2W Company in India‘ for straight 18 months • HMSI domestic market share up from 13% to 19% in Apr-Sept‘12 • Dream Yuga sales cross 1 lac unit mark • Expanding as export hub – new CKD exports to Bangladesh in 2013
Strength 1. Honda is the sixth largest automobile manufacturer in the world selling cars in over a 100 countries 2. Excellent branding, advertising and after sales servicing 3. Honda has over 180,000 employees globally 4. Production System that is refined over the years along with High and powerful research and development R&D 5.High brand equity and brand loyalty amongst customers 6. Strong presence in motorsports like F1 7. Eco-friendly Honda Prius enhanced the brand image Weakness 1. Cost structure of Honda is high as compare to other automobile manufacturers 2. Caters to only the upper middle segment which limits the customer base 3. Honda has to recall a few of their models for corrective measures which caused a lot of hue and cry.
Organization’s Human Resource Practices
Performance Appraisel Hero MotoCorp, was encumbered by a manual HR processes to manage performance and organizational talent development. The whole cycle starting from the identification of employee training to imparting training was a manually-driven exercise and involved vast amounts of effort in compilation, monitoring and tracking. The lack of integration between the learning process and performance management process sometimes resulted training that was not aligned to real need. Vijay Sethi, vice president and CIO, Hero MotoCorp, identified a way out of this quandary. He automated the performance appraisal and training processes. Project ‗Online HR System‘ ensured that whatever development needs were identified for employees during periodic performance review cycles were catered to and that employee training was imparted in that area. The project, which was the result of an organizational focus on talent development, helps Hero MotoCorp identify, track, monitor and analyze its progress on the talent development front. Employee Engagement When the new logo of the now – Hero Moto Corp was unveiled then Brijmohan Lall, Chairman, Hero MotoCorp Ltd, said ―Today is a historic day. It is not just a change of name; it marks the ushering in of a new era that will unlock the immense potential of this company to build its own capabilities to grow beyond boundaries and set new benchmarks. As we set out on this exciting new journey, we look forward to the continued support of all our stakeholders including dealer friends, suppliers, employees and all our associates.‖ he latest campaign of Hero Moto Corp featuring the theme song – ‗Hum Mein Hain Hero‘, composed by the Oscar winning A.R. Rahman has become quite a hit. The credit goes to the innovative strategy of ‗engaging‘ with the customers and the society at a tangible level. The company has solicited videos from the public-in-general singing the song (whose lyrics are uploaded on the website in various languages). Fresh TV ads are being prepared by editing & combining the videos uploaded by the people.In this age of social networking people seem to be loving it, for it gives them an opportunity to be on television and gain instant fame. The company 28
is loving it, since it gives them an opportunity to actually connect to millions of people and also to maintain the freshness of their advertisements without almost spending a penny. The resulting ROI must be very high. The lessons of engaging employees can come from anywhere and as we look at the Hero Moto Corp today, the lessons are five – • Get the communication right. • Get the target (the ones to be engaged) to participate. • Give the target instant yet tangible takeaways. • Zero or minimal investments can also give very very high ROI. • Many times investment is leadership rather than money.
Organization’s Financial Health
Balance Sheet of Hero Moto Corp
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 39.94 39.94 0.00 0.00 4,249.89 0.00 39.94 39.94 0.00 0.00 2,916.12 0.00 39.94 39.94 0.00 0.00 3,425.08 0.00 39.94 39.94 0.00 0.00 3,760.81 0.00 3,800.75 0.00 78.49 78.49 3,879.24 39.94 39.94 0.00 0.00 2,946.30 0.00 2,986.24 0.00 132.00 132.00 3,118.24
Net Current Assets Miscellaneous Expenses Total Assets
-4,886.95 -2,101.58 2,659.04 0.00 0.00 0.00
-1,183.76 -1,013.33 0.00 3,879.24 0.00 3,118.24
5,284.68 4,447.22 3,531.05
Contingent Liabilities Book Value (Rs)
Chairman’s/Vice President Report Dr. Brijmohan Lall, Chairman, Hero MotoCorp Ltd. said, “Last quarter has been particularly satisfying as we have set new benchmarks of excellence. This should help us realize our larger vision of building a truly global company with a strong Indian foundation. We are optimistic about the New Year and will continue to provide the best of technology and products to our customers.” Mr. Pawan Munjal, Managing Director & Chief Executive Officer, Hero MotoCorp Ltd.,said ―It is heartening to see that our sales have been in excess of half a million twowheelers in every month of the quarter, thus further strengthening our leadership. We are well in line to meet our guidance for over six million unit sales in the fiscal 2012. “In FY’12 the industry has been facing constraints of rising fuel prices, high interest rates and a sharp rupee depreciation, leading to increased input costs impacting the margin. In these challenging times, while the domestic industry is witnessing a growth of 15 per cent, we at Hero MotoCorp are growing faster than that. We have also seen a softening in commodity prices of late, which has, however, been off-set by the rupee depreciation. Therefore, while we expect market demand for two-wheelers to remain stable, a lot will depend on the overall economic and political scenario going forward.”
BOARD OF DIRECTORS In terms of the provisions of the Companies Act, 1956 & the Articles of Association of the Company, Mr. Ravi Nath, Dr. Anand C Burman and Mr. Suman Kant Munjal, Directors of the Company, shall retire by rotation and being eligible, offer themselves for re-appointment.
DIRECTORS'' RESPONSIBILITY STATEMENT To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956:
1. that in the preparation of the annual accounts for the year ended March 31, 2012, the applicable accounting standards have been followed; 2. that appropriate accounting policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs as at March 31, 2012 and of the profit of the Company for the financial year ended March 31, 2012; 3. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and 4. that the annual accounts for the year ended March 31, 2012 have been prepared on a going concern basis.
MANAGEMENT DISCUSSION & ANALYSIS REPORT A detailed chapter on, "Management Discussion and Analysis" (MDA), pursuant to Clause 49 of the Listing Agreement is annexed and forms part of this Annual Report.
CORPORATE GOVERNANCE At Hero Moto Corp Ltd., it is our firm belief that the essence of Corporate Governance lies in the phrase "Your Company". It is "Your" Company because it belongs to you - the shareholders. The Chairman and Directors are "Your" fiduciaries and trustees. Their objective is to 34
take the business forward in such a way that it maximizes "Your" long-term value.
Your Company is committed to benchmarking itself with global standards for providing good Corporate Governance. It has put in place an effective Corporate Governance System which ensures that the provisions of Clause 49 of the Listing Agreement are duly complied with.
The Board has also evolved and adopted a Code of Conduct based on the principles of Good Corporate Governance and best management practices being followed globally. The Code is available on the website of the Company www.heromotocorp.com. A Report on Corporate Governance along with the Auditors'' Certificate on its compliance is annexed hereto as Annexure - I INTERNAL CONTROL SYSTEMS The Company has a proper and adequate system of internal controls. This Ensures that all assets are safeguarded and protected against loss from unauthorized use or disposition and those transactions are authorized, recorded and reported correctly. An extensive programme of internal audits and management reviews supplements the process of internal control. Properly documented policies, guidelines and procedures are laid down for this purpose. The internal control system has been designed to ensure that the financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets. Auditors report The Company also has an Audit Committee, comprising 4 (four) Non-Executive & Independent, professionally qualified Directors, who interact with the Statutory Auditors, Internal Auditors, Cost Auditors and Audi tees in dealing with matters within its terms of reference. The Committee mainly deals with accounting matters, financial reporting and 35
internal controls. During the year under review, the Audit Committee
1. We have audited the attached Balance Sheet of HERO MOTOCORP LIMITED (the Company) as at March 31, 2012, the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company''s management. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor''s Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows:
(a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; 36
(b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;
(c) the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;
(d) in our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956;
(e) in our opinion and to the best of our information and according to the explanations given to us, they said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012;
(ii) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.
5. On the basis of the written representations received from the Directors as on March 31, 2012 and taken on record by the Board of 37
Directors, none of the Directors is disqualified as on March 31, 2012 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
Having regard to the nature of the Company''s business/ activities/result, clauses 4(x) and (xiii) of Companies (Auditor''s Report) Order, 2003 (hereinafter referred to as the Order) are not applicable. In Rs cr Cash Flow Of Hero Moto corp Mar '12 Mar '11 Mar '10 Mar '09 Mar '08
Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents
Ratio Analysis Of Hero Moto Corp Key Financial Ratios of Hero Motocorp
Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) 15.46 10.77 10.81 13.56 13.56 10.04 13.40 11.26 11.33 11.36 11.36 9.89 17.32 16.01 16.11 14.00 14.00 14.00 14.22 12.64 12.75 10.84 10.84 10.30 13.22 11.57 11.67 9.59 9.59 9.27 2.00 45.00 182.69 1,181.19 212.83 59.98 2.00 105.00 130.06 969.86 146.03 59.98 2.00 110.00 137.40 793.22 171.52 59.98 2.00 20.00 87.79 617.23 188.33 59.98 2.00 19.00 68.50 518.06 147.55 59.98
Adjusted Net Profit Margin(%) Return On Capital Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excluding Revaluations Return on Assets Including Revaluations Return on Long Term Funds(%) Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax
10.04 49.83 55.43 49.27 214.83 214.83 49.83
9.89 52.13 65.21 61.34 148.03 148.03 52.13
14.00 75.07 64.41 58.87 173.52 173.52 75.07
10.30 43.33 33.72 30.73 190.33 190.33 43.33
9.27 41.57 32.41 28.14 149.55 149.55 41.57
0.42 0.28 0.23 0.23
0.24 0.15 0.50 0.50
0.58 0.49 0.02 0.02
0.46 0.31 0.02 0.02
0.48 0.32 0.04 0.04
123.65 0.23 111.61
146.73 0.50 96.48
1,262.36 0.02 255.15
664.40 0.02 142.76
648.15 0.04 108.14
Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition Expenses as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit 43.91 30.04 126.39 104.57 115.04 105.95 36.45 31.95 45.86 39.34 74.13 73.50 68.32 71.73 72.16 40.84 117.09 40.84 4.05 4.91 4.85 8.81 2.84 -40.58 43.88 162.08 43.88 3.70 4.68 3.70 9.53 1.52 -90.84 42.80 122.63 42.80 6.29 4.80 6.29 10.78 1.22 -47.76 47.53 55.10 47.53 5.34 3.36 5.34 8.27 2.16 -34.58 42.82 32.70 42.82 5.89 3.52 5.89 10.69 1.87 -35.26
Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times
50.59 67.48 0.31
-34.38 -9.98 0.67
-25.86 -15.06 0.03
60.01 65.36 0.06
47.19 55.65 0.13
Earnings Per Share Book Value
Organization’s Marketing Practices
Product Strategies/Service mix/Customer Segment Hero MotoCorp's key strategies are to build a robust product portfolio across categories, explore growth opportunities globally, continuously improve its operational efficiency, aggressively expand its reach to customers, continue to invest in brand building activities and ensure customer and shareholder delight. Its recently set up R&D facility and along with new technical partners — the US-based EBR, and a rumoured tie-up with Austrian power train expert AVL — the company is working on several new product strategies. Apart from larger engines for high-end models, downsizing engines below its current starting point of 100cc is also being looked at. Hero's increased interest in the mass segment is underlined by the fact that 88 per cent of its 4.53 million two wheeler sales (April-December 2011) came from the up to 125cc segment. As this segment represents 70 per cent of total domestic bike sales, Hero commands a 45 per cent market share overall. 42
―It's easy to make something like a moped, but does that serve your purpose. A moped is not as successful in this country since it is not rugged and sturdy as per the usage our consumers — the kind of loading patterns and driving habits. We have to have a real motorcycle,‖ Mr Munjal said. Industry sources said Hero had been eyeing this segment for the past few years but had been constrained from developing new technologies under the terms of its 27-year-old joint venture agreement with Honda. That partnership formally ended in March last year, paving the way for Hero to set up its own research and development facility and seek fresh alliances. As a world leader in the two-wheeler segment and a caring company, Hero MotoCorp has taken up the initiative to inculcate a sense of road safety and good riding habits amongst its customers and public at large assisting individuals in making the right judgments on the road, and helping them choose the right riding gear that can help save your life!
Safety riding education is made an integral part of the motorcycle delivery at the 4S dealerships (Sales, Service, Spares and Safety). These dealerships have a specially designed interface called the Safety Corner where advisors educate the customers on correct riding techniques and provide important facts and information related to health, safety, environment, road signs, first aid, etc. using specially designed audio visual communication.
These programs are conducted in Hero MotoCorp adopted traffic training parks and locally in various towns and cities in association with the local administration, traffic police and the Registered Transport Authority. The participants undergo a two hour practical training session on safety riding skills under guidance from our safety instructors. Our 4S dealers regularly conduct such programs for customers, students, traffic police, defense personnel & institutions.
Sleek Street Achiever Ambition 133, Ambition 135 CBZ, CBZ Star, CBZ Xtreme CD 100, CD 100 SS, Hero Honda Joy, CD Dawn, CD Deluxe, CD Deluxe (Self Start) Glamour, Glamour F.I Hunk Karizma, Karizma R, Karizma ZMR FI Passion, Passion Plus, Passion Pro Pleasure Splendor, Splendor+, Splendor+ (Limited Edition), Super Splendor, Splendor NXG,Splendor PRO
Hero Impulse launched in 2011 after the separation of hero and Honda. Its India's first offroad and on road Bike.
Pricing Strategies: Hero MotoCorp will have to maintain an aggressive strategy to drive sales in a tougher market, which is slowing, while competition is increasing. We are projecting a 10% lower growth in the next fiscal, down from the 18% growth posted in the first nine months of the fiscal," Surjit Arora, analyst Prabhudas Lilladher said. Shares of Hero rose 2.4% to Rs 1,905.10 at close at the Bombay Stock Exchange, the highest level since December 30. The result was declared after close of trade at BSE. Hero had showcased three new motorcycles and a 110cc scooter Maestro earlier this month to take on Pune-based Bajaj Auto and its former partner Honda Motor Company. Demand for two-wheelers remains buoyant in India and a total of 130.9 lakh motorcycles and scooters were sold here in 2011, up 16% from the previous year. To keep pace with the rising
demand, Hero MotoCorp plans to increase its annual capacity from the current 62 lakh vehicles a year at its three factories in north India to 65 lakh units a year by the end of this financial year. Honda agreed to provide licensing technology, including future bikes and scooters to Hero, and all new products are still sourced from the erstwhile Japanese partner. The Munjals have already started scouting for a global technology partner to develop future products. Distribution Channels Every village, household In the last financial year, four million motorcycles were sold outside the metros and big cities, giving 45 per cent of the total sales to rural and semi-urban areas. These are markets where it is not easy to outpace a company which made its bones in cycles. If this outlet does not get you, the next one will. Hero has more than 4,500 touch points across the country, almost double the 2,300 it had in early 2006, and expects to have 5,000 by March next year, including over 800 fullfledged dealers (several dealers own multiple outlets). In villages where Hero does not have direct presence, it has authorised representatives of dealers - Dua calls them opinion makers - who travel from place to place extolling the virtues of its motorcycles. Hero dealers even send mechanics every month to repair and service motorcycles in far-flung villages. Vivek Goyal, owner of Autoneeds, a Hero dealer for 22 years with outlets in Delhi's middle-class borough of Patparganj and in Gurgaon, says word of mouth is always positive for Hero. "If we can sell a bike to one major household in a village, we can crack the village," he says.
Even in cities, Hero is not about to slow down. Says Nikki Seghal, owner of Auto Riders, a dealership in Pune: "Was I apprehensive when I walked into that huge hall in London? Yes, I was, and so were several hundreds of other dealers. But when we saw the direction the company is taking and the new brand and the campaign, I felt quite relieved and many of the others were thrilled. I believe the problem may be one of supply in the near future. Promotion Strategies Hero Honda had the prestige of being the worlds largest two wheeler manufacturer for the last 10 years consecutively, and Hero MotoCorp hopes to carry forward and build on the rich legacy and
associations that it has built up during these highly successful preceding years with Honda. And it plans to go global with these. As part of its global branding program, it unveiled its new logo and brand identity in London on August 9th in the presence of many celebrities, Indian and international. But it seems that has been overshadowed by the ongoing riots there that may have put a dampener on the whole exercise. The old logo of ‗Hero Honda‘ was complicated and dated, and the font was uninspiring. The new logo of ‗Hero MotoCorp‘ is a stylized 3D ‗H‘ using the colours red, black and white. The lettering consists of ‗Hero‘ in red in a much cleaner and simpler font. Red has been a ‗Hero Honda‘ staple color and is strongly associated with it. But they have also used it to depict continuity, change and confidence. It‘s a simple logo, memorable, and quite classy. The old tagline of ‗Hero Honda‘ was ‗Desh Ki Dhadkan‘ (Hindi to English translation: Heart of the [Indian] Nation OR Pace of the [Indian] Nation). This was clearly India focused, and it generated a lot of following for the company in its promotional campaigns during events such as the Cricket World Cup and built up strong emotional patriotic associations for it. These associations have just been weakened if not broken by the new ‗Hero MotoCorp‘ as it launched itself internationally in London. It aspires to be seen as a global player. Not just Indian. This strategic change may have a detrimental effect on the company‘s fortunes in the Indian market. A slot just opened up for any other Indian motorbike company such as TVS Motor Company to position itself in the minds of people as ‗India‘s Biking Pride‘. Also now is not the best time for global expansion, and one of the best times for growth within India. The new tagline is ‗Hum Main Hain Hero‘ (Hindi to English translation: There is a Hero in each one of us) which is individualistic and personal. It does not have the collective feel of patriotism, although it is still in Hindi, one of the official languages of India which is widely spoken here. Considering they are planning to put a global face on their brand, I assume they will translate it in English and other languages when used abroad. But the new tagline sounds very cliched to me. It also sounds as if they are enticing their customers to drive around recklessly like crazy bikers who think they are heros. If you have driven on the roads of Mumbai, you‘ll know what I‘m taking about. 46
Despite the global flavor of all other things, they have enlisted two Indians as brand ambassadors: Ranbir Kapoor (a bollywood actor) and Irfan Pathan (a cricketer in the Indian Cricket Team). A potent combination for marketing and sales here in India. For those out of the Indian cultural loop, Bollywood and cricket are possibly the only two things that still keep India united, helping its people forget reality and their daily problems, keeping them comfortably numb. Using stalwarts from these industries can really ramp up their following and sales here. Add in a Hero MotoCorp anthem (which shares its name with their tagline) by the Oscar winning Indian musician AR Rahman (of Slumdog Millionaire fame internationally) and it should have been an almost perfect launch. Media Engagement/Media Agency Engaging the youth Dua feels that the youth are engaged into shopping and travel, sports, events, socialising and gaming, movies and music. Brands need to understand these activities and formulate plans to get into these areas to engage the youth. Hero Motocorp launched an auto dealership known as ‗Just 4 her‘ that was ex-clusively managed by women and was dedicated towards selling only scooters. In travel, the auto brand holds bike rallies to engage the community.
Effectively using socialising & gaming Socialising plays a crucial rule in the success of a brand. It provides an opportu-nity to get the customers together talking about the brand. One of the best ways is to socialise through cafes, believes Dua. Hero‘s Hunk tied up with Café Coffee Day (CCD), wherein the coffee froth had a Hunk Logo with Hunk visuals all around to subtly get the attention of the people. Dua thinks that in this up-coming era of virtual hangouts, a brand should not forget the physical hang-outs. Popular Advertisement The 'Hum Mein Hein Hero' campaign of HeroMotocorp, released onAugust 15 last year, became one of the most popular advertising jingles of 2011. The song composed by A.R. Rahman became a rage in no time and many YouTube users created their own videos with the Hero song as the background track.
Taking a leaf out of its online success, Hero, the world's biggest two-wheeler maker, is moving to thenext phase of its campaign by stitching together videos shot by young people from different parts of India. The ad and media industry calls such content user-generated content.
The second phase of the Hero campaign - released around January 26, India's Republic Day shows young people singing the song; well, without the audio. The Rahman track plays in the background. Hero campaign is a first of sorts in India, sourcing user-generated content for advertising has been popular internationally for a few years now.