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“A STUDY ON THE IMPACT OF ADVERTISEMENTS,

REFERENCE GROUP AND BRAND PERCEPTION IN

THE PURCHASE INVOLVEMENT OF CUSTOMERS IN

CHENNAI WITH REGARD TO TVS TYRES.”

ORGANIZATION STUDY

Submitted to

MAHATMA GANDHI UNIVERSITY, KOTTAYAM

In partial fulfillment of the requirement for the award of the

Master’s Degree in Business Administration (MBA)

(2009-2011)

BY

NAKUL GANGADHARAN

Register No: 10802

RAJAGIRI COLLEGE OF SOCIAL SCIENCESRAJAGIRI VALLEY

KOCHI-683104



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DECLARATION DECLARATION DECLARATION DECLARATION

I, Nakul Gangadharan, Student of Rajagiri College of Social Sciences, Kochi, here by declare

that this project report titled “A study on the impact of advertisements, reference group and

brand perception on the purchase involvement of customers in Chennai with regard to TVS

tyres.” is an original work done by me and submitted to the Rajagiri College of Social

Sciences, for the award of Masters Degree in Business Administration.

I further declare that any part in this project itself has not been submitted elsewhere for award

of any other degree.

PLACE: Kakkanad Nakul Gangadharan

DATE: Rajagiri College of Social Sciences.

(Reg. No. 10802)



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ACKNOWLEDGEMENT ACKNOWLEDGEMENT ACKNOWLEDGEMENT ACKNOWLEDGEMENT

First and foremost, I would like to express my sincere gratitude to my faculty guide, Prof.

K.Tharu Benny. I was influenced by his style of functioning and the specific guidelines that he

gave us helped me to go about this project with great ease. This kindled my enthusiasm further

and encouraged us to boldly step into what was a totally dark and unexplored expanse called

research.

I would also like to thank my guide at TVS SRICHAKRA LTD, Mr. J Karunakaran, (Jr.Manager, Technical Services) who was there with a positive comment all the time and with his

sense of humour made me feel comfortable.

Last but not least, I would like to thank God Almighty for instilling me with belief, joy

and compassion and for helping me learn new things in this endeavour.



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LIST OF CONTENTS.

Sr. No. Particulars Page No.

1. Title Page 01

2. Acknowledgement 02

3. ABSTRACT 03

4. SECTION I

Industry Profile

Company profile: a) TVS

b)TVS SRICHAKRA LTD

Products/Services

Financial results

Mc Kinsey’s 7S Model of TVS Srichakra Ltd

SWOT Analysis

06 – 09

10

11-12

13-16

15-16

17-22

23

5. SECTION II

Title & Back ground of study

Research Methodology

Theoretical frame work

Presentation & Data Analysis

Findings & Conclusions

25

26 – 27

28 – 30

32 – 34

34-38

6. Bibliography 40

7. Annexure 41-46



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EXECUTIVE SUMMARY EXECUTIVE SUMMARY EXECUTIVE SUMMARY EXECUTIVE SUMMARY

The project intends to find out what are the decisive factors that influence the purchase

involvement of a customer with respect to TVS TYRES in the city of CHENNAI. There are

several factors on which this depends. Of these advertisement impact, reference group impact

and brand perception are chosen for the study.

It is widely accepted nowadays that an existing customer is more valuable to a company

than inducing a new customer. Hence the study of buying decisions and his perceptions are

extremely relevant in this competitive scenario.

The study intends to reveal which among the above stated factors influence the purchase

involvement of a customer thus helping the company to concentrate its efforts in the right

channel.



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Section I

INDUSTRY & COMPANY

PROFILE



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INDUSTRY PROFILE Dunlop Rubber Limited set up the first tyre company in West Bengal in 1926. Thus starts thehistory of tyre industry in India. MRF started its operations in 1946. Since then, the Indian tyre

industry has grown rapidly.

Capital Intensive Industry

Tyre Industry is one of the raw material intensive industries in India. Raw material cost accounts

for nearly 62% of tyre turnover and 70% of the production cost. Natural Rubber is the key raw

material for the tyres followed by Carbon Black. The Tyre Industry consumes 58-60% of thedomestic Natural Rubber produced, and the Carbon Black accounts for the rest of the raw

material cost of the industry.

Apart from being capital intensive, the tyre industry is highly raw material intensive. Any change

in the prices of raw materials directly affects the profitability of tyre companies. The raw

materials used in the manufacture of tyres are rubber and petroleum derivatives like nylon tyre

cord, carbon black, styrene butadiene rubber and poly butadiene rubber. The most important raw

material is rubber-natural and synthetic. Natural rubber (NR), with 29% weightage in the cost of

raw materials used by tyre industry, is the highest cost item. Annual consumption of Natural

Rubber by tyre industry is 3.50 lakh tonnes, valued at Rs. 14 billion. Over 85% of Natural

Rubber consumed by the industry is procured domestically. 15% of Natural Rubber is imported.

Industry Performance

Industry was on a smooth ride till Fiscal Year 08. The industry tonnage production

registered a 5-category of Truck & Bus (T&B) tyres recorded a 5-year CAGR of 5.90% while

Light Commercial Vehicle (LCV), motorcycle and car tyre categories grew at 13.34%, 12.27%

and 13.98%, respectively in this period.

However, as the economy in general; and automobile industry in specific slowed

down in FY09, the tyre demand too came under pressure. In the first nine months of FY09, the

industry managed a tonnage growth of only 2.19% against a growth of 7.38% in the same period



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last year. The tyre offtake to the Original Equipment

Manufacturers (OEMs) declined by 6.17% during this period. Also in the face of global

slowdown and stiff Chinese competition, the export market offtake declined by 9.82% during

this period.

Government steps in

The tyre industry saw production adjustments from all the major players in the last couple of

months. The government too tried to provide external stimulus by effecting 6% excise duty cut

across industries (the excise duty for tyres was brought down from 14% to 10% w.e.f. December

7, 2008, and then further reduced to 8% w.e.f. February 25, 2009). One silver lining for the

industry has been the easing of the raw material prices from September 2008 onwards. However,

the impact of the fall in commodity prices was not visible in the nine months results of the

companies, as the companies were laden with high-price inventories. The benefits of the sublime

raw material prices will become visible only in the last quarter of FY09, provided, the demand

too is high.

Import Threats

The tyre industry faces competition from China in the domestic market. Imports as a

percentage of total T&B tyre production stood at 10% in FY08, with more than 90% of these

imports coming from China. While the anti-dumping duty is levied on the import of Chinese

T&B bias tyres, the industry now wants it to be extended to Chinese T&B radial tyres to alleviate

the import threat. In addition, the industry is also keen on customs duty relief on raw materialsnot produced/manufactured in the country so as to compete with the Chinese tyres.

India has entered into some regional trade agreements, which make the customs duty on

import from select countries even lower. The Asia Pacific Trade Agreement permits tyre

imports at 8.5% for passenger car tyres and at 8.6% for two wheeler tyres.



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Likewise, South Asian Free Trade Agreement (SAFTA) facilitates nil customs duty on

tyres imported from Bangladesh, Bhutan, Maldives & Nepal and at 5% from Pakistan and Sri

Lanka. Similarly, Indian – Singapore Agreement provides for tyre imports without any customs

duty. Thus, the effective customs duty on total tyre imported is far less than 10%, and hence

ATMA seeks cut in customs duty on Natural rubber from 20% to 7.5%.

o Besides rubber, the Industry imports much of the proportion of other key raw materials

like PBR, Steel Tyre cord, Nylon Tyre cord and Rubber chemicals. As much of the

industry's demand for the above raw materials was not met locally, industry seeks

reduction of customs duty on Nylon Tyre Cord, Steel tyre cord fabric and PBR from

existing 10% to 5% each, and slash customs duty on Rubber chemicals from 7.5% to

2.5%.

o The industry is looking for wavier on customs duty on some materials which were not

produced domestically like; Butyl Rubber, Polyester Tyre Fabric, and Styrene Butadiene

Rubber.

o The industry has also asked for waiver of Customs Duty on Tyre manufacturing

machinery, (like Machinery (for working rubber), Extruders, Moulding / retreading tyres

/ inner tubes and other machinery along with parts) which will accelerate the pace of

radialization in the country.

o Besides these, any measure taken for Automotives will also help tyre industry.

Growth Estimates

Though in FY09, we expect the industry to register a tonnage growth of only 4.27%, the growth

is expected to be higher in the medium and long run. In FY10, CARE Research expects the

industry to post a growth of 6.81% and the industry growth is expected to touch 8.21% on a

CAGR basis between FY08-13. The T&B and LCV tyre categories are expected to register a 5-

year CAGR of 6.83% and 8.97%, respectively during this period.



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The tyre industry in India stands at around Rs 22,500 crore in FY 09. Truck and bus tyres

account a major portion (65%) of the industry's turnover. According to the statistics of ATMA --

Automotive Tyre Manufacturers Association, tyre production in November 09 has jumped up by

23% to 85.63 lakh tyres as against 69.61 lakh in the corresponding previous year.

Truck and bus tyres grew by 17% to 12.19 lakh tyres, passenger car tyres grew by 33% to

18.51 lakh tyres, and motorcycle tyres grew by 29% to 32.38 lakh tyres in November 09.



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TVS- COMPANY PROFILE

TV Sundaram Iyengar & Sons Limited established in 1911, is the parent company of the TVS

Group and is a leading automobile distribution company in India. During the year 2006-07, the

company attained a turn-over of Rs.4090 crores and has employee strength of 5000. It operates

through its three divisions namely TVS, Sundaram Motors and Madras Auto Service.

Being the trading & distribution arm of the group , the business activities of TVS & Sons include

dealerships for automobile vehicles, distribution of spares for after-market, sales and service

support for garage equipment, sales and service of products for special applications like

construction of material handling and providing customer centric services for car customers

under the brand “My TVS”.

The global business operation of the company includes managing joint ventures/alliances in

Africa, Bangladesh, Sri Lanka, Thailand, UK, USA & Europe for automobile

distribution/dealership business, sourcing and supply chain related activities.

TVS & Sons distributes commercial vehicles, utility & sports utility vehicles, passenger cars

representing various leading automobile vehicle manufacturers such as Ashok Leyland, Daimler

Chrysler, General Motors, Honda & Mahindra. The company has more than 150 outlets and sells

over 50,000 vehicles per annum being the leading automobile distribution company in India.

The company is also the largest distributor of automobile spare parts in the country, handling

more than 80 suppliers, 5000 customers and 35,000 part numbers and also markets TVS Quality

branded products.

There are altogether 44 companies under the umbrella of the TVS Group.



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TVS SRICHAKRA LTD.

TVS Srichakra Ltd is a member of TVS Group of companies, the largest auto ancillary group inIndia was found in 1982. TVS Srichakra, the no.1 in motorcycle tyres, is a leading manufacturer

of tyres and tubes for two and three wheelers in India and has a large programme of off the road

tyres for the export market.

TVS Srichakra has large share with the vehicle manufacturers which include Bajaj Auto, Hero

Honda, TVS Motors, Yamaha Motors etc. TVS Srichakra has a significant presence in the

aftermarket across the country and has carved out a fine reputation in service and support to the

dealers, mechanics and consumers.

Backed up by excellent R&D, availing service of renowned technologists and test riders from

Japan, TVS Srichakra brings out innovative patterns of their newer tyres including single

radius/uni-directional tyres for series of new vehicles being brought out.

Accredited in 1990 with ISO 9001 certification; TVS Tyres adopted strong quality standards

from its inception and these benchmarks were further strengthened with the certification of ISO

14001, ISO 9001-2000 and TS 16949. The company has other practices like six-sigma and lean

manufacturing techniques in place to abide by their high quality standards. TVS Tyres was also

the winner of prestigious TPM excellence award in 2003 and TPM consistency award in 2005.

TVS Srichakra with their ‘EUROGRIP’ programme for overseas market on it’s off the road tyres

has been expanding consistently over the years. TVS Srichakra is a global player and has major

OEM accounts in Europe and is exporting to over 50 countries in all the 6 continents.

ISIN Code INE421C01016

BSE Demat Code 509243

BSE Listing group S



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NSE Scrip Code TVSSRICHAK

Face value (Rs) 10.00

Beta 0.93

Listed On Bangalore, Bombay, Madras, National Stock Exchanges

MARKETING

Two Wheeler Industry which has shown a negative growth in the last year has moved to a

positive growth of around 5% in the year ending 31.3.09. The growth has been in both

motorcycle and scooter segments.

The Company has grown by around 8.5% against the Industry growth of 5%. This was

possible by increasing presence in market by way of increasing the share of business with thevehicle manufacturers.

The After Market continues to be buoyant. Strengthening our dealer network and intense

focus through the sales

EXPANSION

The Company has increased its installed capacity by approximately 1,00,000 tyres and

tubes per month, during the current year.

The Company has commissioned a plant at Uttrakhand and commercial production from this

plant is expected to boost the prospects of the company in the years to come.



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MANAGEMENT DISCUSSION AND ANALYSIS REPORT FOR THE

YEAR ENDED 31ST MARCH 2009.

1. Industry Structure and Development

Automobile industry will continue to be the growth engine for economies and Tyre industry

demand depends primarily on the automotive industry. The off take and growth in the OEM

market of the Company is directly related to new vehicle sales and the market share.

Manufacturing, Distribution and Sales of Tyres, Tubes and Flaps primarily for the Two / Three

Wheeler segments in the Domestic market, and larger tyres for Agricultural and different

Industrial segments in the Export market, are the main business functions of the Company.

The year ended, threw a difficult and complex business scenario, mainly because of downturn in

global economy, spiraling raw material prices and fluctuating demands. Though, Two Wheeler

industry registered a growth of 5%, thanks to the rural sector of our country still having money

power to spend, high interest rates, postponement of purchases by consumers due to global

recession in the second half of the year, the first three quarters of the year ended seeing steep

increase in raw material prices and fluctuation in exchange rates, did have its impact in overall

business.

Unprecedented increase in the price of Natural Rubber and Synthetic Rubber in particular, as

well as other Petroleum based raw materials necessitated the manufacturers to hold higher

inventories and opt for spot purchases. Since Tyre industry is not only a highly capital intensive

industry as well as a labour-oriented industry, power scarcity has also been of a great concern, in

addition to high material cost.



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2. Discussion and Analysis Market:

Original Equipment Manufacturers:

Last year, though Company could register a growth in volume and value, higher than the

industry growth, contribution continued to be a point of concern, in view of sustained fluctuation

in raw material prices. Innovative technologies, entry into premium segments and increased

market share have helped the company to withstand to an extent the cost pressures.

After Market:

The Company continues its good performance by registering a significant growth in both value

and volume during the year also, through its concentration in Semi-Urban and Rural markets,

involvement in Sales Promotion Activities and bringing in newer products in Motorcycle tyre

segment.

Export:

Exports showed a good growth in the first half of the year ended, but as the global recession

started in October 2008, demand and sales dropped down. The Company embarked upon newer

products in Agricultural segment, new Distribution Channels and an increase in Motorcycle tyres

exports, thereby the overall Export revenue showing an increase last year.

Manufacturing:



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The Company continued its initiatives in sustaining the manufacturing excellence, derived

through TPM recognitions by working on increased productivity, lean and flexible

manufacturing systems and Empowered work teams for Workmen and targeting continuous cost

compression. The Company won for the 4th successive year, the Energy Conservation Award,

from the Government of India, and also IMEA Award for manufacturing excellence in the Tyre

industry.

3. Outlook

Two-Wheeler Industry recorded a growth of around 5% in the year ended on 31st March'09. The

Company recorded a higher growth than the average industry growth.

Market indications are that this year will see the Two Wheeler industry sustaining its growth and

quite a few newer models will be launched in 2009-10. The Company continues to enjoy the

highest market share with the vehicle manufacturers and most of the newer models will sport

TVS Tyres.

After Market continues to throw open greater opportunities in this year also with increased

demand, more so in Semi-Urban and Rural markets of the country. The Company will continue

its focus in strengthening the Dealer Network, sustaining the Promotional Activities through a

close interaction with Dealers, Mechanics and Consumers, thereby aiming towards increased

market share and expanded volumes in this year.

As overseas markets, primarily Europe and USA, continue to reel under recession. The Company

expects to sustain the export turnover of the year under review during the year 2009-10 also,

through introduction of new products and adding more Distribution Channels.



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The Company is confident of showing an overall growth in this year also.

4. Risks and Concerns External Risks:

Fluctuating raw material prices would necessitate constant price revision with vehicle

manufacturers.

Fear of continued down turn in global economy, thereby postponing the new vehicle purchase

and lower support from Banks on loans could result in drop in vehicle sales.

Highly Volatile Foreign Exchange fluctuations.

Power scarcity resulting in increased Conversion Cost.

Strategic sourcing and spot purchasing necessitating higher funds availability.

The Company has a structured FOREX Policy in place with the following objectives:

1) Ensuring adequate hedging of the Company's exposure in Forex, viz. exports, imports and

loans. Hedging is done up to a certain level of total exposure and certain portion of exposure is

left uncovered to take care of market dynamics.



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2) Hedging / covers are taken based on Bench mark rate, for various currencies.

Internal Risks:

* Dependence on OE Customers, though After Market share in overall sales has gone up.

* Competition from low cost manufacturers in After Market.

* Continued recession in USA and Europe affecting the Export Market.

The past years have seen the share of After Market sale going up, thereby reducing the

Company's dependency on a few OEMs. Developing tyres for premium segment of vehicles,

launch of high technology tyres for Motorcycles such as Tubeless tyres, increased fitment of the

tyres of The Company in Export vehicles, added to the positive steps for the future.

Risk Assessment Study across the Company is being continued through outside consultants and

actions initiated then and there.

Adequate insurance cover, wherever the risk exists, has been done by The Company.

All safety requirements and norms of various Governmental Agencies are being fully applied

with by The Company.



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5. Internal Control Systems

The Company has an adequate system of internal control, designed to provide reasonable

assurance on the achievement of the objectives relating to efficiency and effectiveness of

operations, reliability of financial reporting, compliance to applicable laws and regulations and

for safe guarding of assets. The Company's internal auditors evaluate the internal control in

design and in operation; their observations are reviewed by the Senior Management and the

Audit Committee.

6. Discussion on Financial Performance With Respect To Operational Performance

Particulars Rs. in lakhs

Sales and Labour charges 64289

Other Income 143

Net profit 901

7. Cautionary Statement

Certain statements in the Management Discussion and analysis describing the Company's views

about the industry, expectations, objectives etc. may be forward looking within the meaning of

applicable laws and regulations. Actual results may differ materially from those expressed in the

statement. Factors like supply and demand situations, input prices and their availability, changes

in Government regulations, tax laws and other factors such as industrial relations and economic

developments etc. may influence the Company's operations or performance.



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PRODUCTS/SERVICES

Tyres &Tubes for 2& 3 wheelers.

A wide range covering industrial forklift tyres, lawn and garden tyres, Agro industrial tyres,

farm and implement tyres, multipurpose tyres, tractor tyres, floatation tyres, Motor grader tyres,

sand tyres, vintage tyres and special purpose tyres.

Features are

Specially engineered design according to specified norms gives superb road grip.

Optimised radius for excellent driveability.

Rugged looking tyres suitable for all track conditions.

Studs extended up to shoulder for better cornering.

Re-inforced casing for absorbing shock impacts.

Good aesthetic appearance

VARIOUS 2 WHEELER TYRE PRODUCTS

ATT 400

RIB Front in the sizes of 2.5-18,2.75-18

ATT 325

ATT 425

ATT 175 Rear

ATT 250 Rear

STAR

STAR +



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STUD

ATT 525

JUMBO

DRAGON

RAKSHA (moped)

STYLO (moped)

CONTA 250 (moped).

These are the popular products from the range of products that SRICHAKRA offers.

These tyres are again classified on use for FRONT/ REAR, on the ply rating, again on size(2.75-

18”,3-18”..).

Each tyre has a permissible maximum load and permissible inforcible pressure.



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CENTRAL MARKETING OFFICE

5TH

FLOOR, SUDHARSHAN BUILDINGS

15, WHITES ROAD

ANNA SALAI-CHENNAI-14.

HEAD OFFICE

TVS SRICHAKRA LIMITED.

Regd. Office: TVS Building, 7-B, West Veli Street, Madurai 625001.

PLANT :1

Vellaripatti Village, Melur

Taluk

Madurai District - 625122

Tamil Nadu – India

PLANT :2

Plot No.7, Sector - 1, Integrated Industrial Estate, SIDCUL, Rudrapur, Tehsil - Kichha,

Pantnagar - 263153

Uttaranchal – India



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Rs.in lakhs

PARTICULARS 9 months

ended

31.12.2009

Quarter

ended

31.3.2010

Quarter

ended

31.3.2009

Year ended31.3.2010

Year ended31.3.2009

Unaudited Unaudited Unaudited Audited Audited(1) (2) (3) (4) (5) (6)

1 (a) Net Sales/Income from Operations 49902.62 20167.92 14148.54 70070.54 57635.07

(b) Other Operating

Income 458.26 110.23 (12.99) 568.49 143.09

2 Expenditure

(a) (Increase) / Decrease in Stock in Trade and work in

progress

874.97 486.85 22.96 1361.82 (635.43)

(b) Consumption of Raw Materials 29782.88 11960.22 8773.05 41743.10 39610.61

(c) Purchase of Traded Goods -

53.02 -

53.02 63.51 (d) Employees Cost 3673.19 1815.89 1151.72 5489.08 4288.42

(e) Depreciation 877.81 301.08 243.06 1178.89 987.66

(f) Other Expenditure 10942.24 3972.37 2993.23 14914.61 10288.60

(g) Total 46151.09 18589.43 13184.02 64740.52 54603.37

(Any item exceeding 10% of the total expenditure to be

shown separately)3 Profit from Operations before Other Income, Interest

and Exceptional Items (1-2) 4209.79 1688.72 951.53 5898.51 3174.79

4 Other Income -

-

-

-

- 5 Profit before Inerest and Exceptional Items (3+4) 4209.79 1688.72 951.53 5898.51 3174.79

6 Interest 1018.00 543.32 471.69 1561.32 1859.08

7 Profit after Interest but before Exceptional Items (5-6) 3191.79 1145.40 479.84 4337.19 1315.71

8 Exceptional Items -

-

-

-

- 9 Profit (+)/Loss (-) from Ordinary Activities before tax

(7+8) 3191.79 1145.40 479.84 4337.19 1315.71

10 Tax Expense 997.54 357.85 112.96 1355.39 415.00

11 Net Profit (+)/Loss (-) from Ordinary Activities after tax

(9-10) 2194.25

787.55 366.88 2981.80 900.71

12 Extraordinary Items ( Net of Tax Expenses) -

-

-

13 Net Profit (+)/Loss(-) for the period (11-12) 2194.25 787.55 366.88 2981.80 900.71

14 Paid -up Equity Share Capital 765.70 765.70 765.70 765.70 765.70

( Equity Share Capital of Rs.10 Each)

15 Reserves excluding Revaluat ion Reserves as per

Balance Sheet of Previous Accounting Year -

-

-

7817.20 5731.23

16 Earnings per Share ( EPS)(a) Basic and Diluted EPS before Extraordinary Items for

the period, for the year to date and for the previous

year (Non annualised)

28.66 10.29 4.79 38.94 11.76

(b) Basic and Diluted EPS after Extraordinary Items for the period, for the year to date and for the previousyear (Non-annualized)

28.66 10.29 4.79 38.94 11.76

17 Public S hareholding

-Number of Shares 4458775 4440647 4577713 4440647 4577713

-Percentage of Shareholding 58.23% 57.99% 59.78% 57.99% 59.78%18 Promoters and promoter group shareholding

(a) Pledged /Encumbered

-Number of shares Nil Nil Nil Nil Nil

- percentage of shares (as a % of the totalshareholding of promoter and promoter group) Nil Nil Nil Nil Nil

- percentage of shares (as a % of the total share

capital of the company) Nil Nil Nil Nil Nil

(b) non -encumbered

- number of shares 3198275 3216403 3079337 3216403 3079337

- percentage of shares (as a % of the totalshareholding of promoter and promoter group) 100.00% 100.00% 100.00% 100.00% 100.00% - percentage of shares (as a % of the total share

capital of the company)41.77% 42.01% 40.22% 42.01% 40.22%

Notes : 1. Presently the Company operates only in one segment.

2.

3.

4.

5.

6. Figures for the corresponding previous period have been recast/regrouped, wherever necessary, to make them comparable.

TVS SRICHAKRA LIMITED. Regd. Office: TVS Building, 7-B, West Veli Street, Madurai 625001.

An interim dividend of Rs.10/- per share has been paid during the year. No further dividend has been recommended by the

Board of Directors.

The Plant capacity in respect of tyres and tubes have been increased from 122.05 lakh nos of tyres and 128.66 lakh nos of

tubes respectively, to 321.53 lakh nos of tyres and 300.5 lakh nos of tubes, per annum.Status of investor grievances for the quarter ended 31.3.2010: No.of complaints pending as at 1.1.2010 - Nil; Received

during the quarter - Nil; Disposed during the quarter - Nil; Lying unresolved as at 31.3.2010 - Nil.

The above Audited Financial Results were reviewed by the Audit Committee, approved by the Board of Directors on 28th May

2010

FINANCIAL RESULTS (AUDITED) FOR THE YEAR ENDED 31.3.2010

FINANCIAL RESULTS



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Rs. In lakhs

Particulars

Audited Audited

SHAREHOLDERS' FUNDS

(a) Capital 765.70 765.70

(b) Reserves and Surplus 7817.20 5731.23

LOAN FUNDS 17445.53 15721.69

DEFERRED TAX LIABILITY (Net) 747.42 742.03

TOTAL 26775.85 22960.65

FIXED ASSETS 11538.14 7229.29

INVESTMENTS 261.04 124.50

CURRENT ASSETS, LOANS AND ADVANCES

(a) Inventories 15543.59 6539.30

(b) Sundry Debtors 11893.60 10658.66

(c) Cash and Bank balances 858.35 1326.01

(d) Loans and Advances 3240.78 2732.85(A) 31536.32 21256.82

Less : Current Liabilities and Provisions

(a) Liabilities 16351.56 5058.41

(b) Provisions 208.09 591.55

(B) 16559.65 5649.96

Net Current Assets 14976.67 15606.86

TOTAL 26775.85 22960.65

By Order of the Board

Place : Chennai

Date : 28.5.2010 MANAGING DIRECTOR

As on

31.3.2010

As on

31.3.2009

SHOBHANA RAMACHANDHRAN

STATEMENT OF ASSETS AND LIABILITIES - YEAR ENDED 31.3.2010



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McKinsey’s 7s model of TVS SRICHAKRA LTD.

Strategy:

• What is our strategy?

Strategy is to extensively use the available network of the parent company and to focuson the Original Equipment Market.

However, nowadays company is venturing to replacement market as well.

ONUS is on gaining market share and more money is pumped in to the R&D segment.

• How are changes in customer demands dealt with?

TVS SRICHAKRA was the first in INDIA to launch “tube-less puncture resistant tyres”.

The company is the first to analyse change in customer trends and evolve new products.

• How do we deal with competitive pressure?

Company has more partnerships with two wheeler manufacturers for stock tyres. Now

focusing more on Advertising.

• How is strategy adjusted for environmental issues?

Company has implemented ISO 14001. Environmental Management System.

Structure:

• What is the hierarchy?



`

The company has various divi

Marketing(Domestic, Internat

• How do the team me

They work on a tight

work extensively and

• How do the various de

Extensive telecommu

ordination of various

umbrella often we canon all walks of life.

• Is decision making an

Decision making and

concerned authorities

communication techni

V

(subr

GM(

AGM(Domestic)

(Mr.R S PILLAI)

Regional Mgr(Mr. V

Natarajan)

District Mgr

Sales executive

sions such as strategic Planning & Develop

ional), Finance , production etc.

bers organize and align themselves?

oose by reporting to the top brass all the tim

upport is obtained from sister concerns like

partments coordinate activities?

ications and the use of emails and internet m

ctivities. As the TVS Group has more than 4

find their operations going hand in hand. Th

controlling centralized or decentralized?

ontrol is centralized and all actions require f

t the helm. Since all the top brass work hard

ques this does not hinder the progress of the

MD

Mrs.ShobanaRamachandran

(Mktg)

r. Sivamaniam)

r.William )

AGM(Intnl)

VP(strategi

G

AG

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Region

Dist

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ent, HR,

. The team members

VS MOTORS.

ake possible the co-

4 companies under its

y have made a mark

ag off from the

and use latest

ompany.

planning)

M

l Mgr

rict



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Systems:

• What internal rules and processes does the team use to keep on track?

Strict reporting on a timely basis and maintenance of status quo.

Extensive and fast communication.

• What are the main systems that run the organization?

Production facilities incorporates Lean manufacturing and six-sigma techniques. The

other systems are EMS- environmental Management Systems.(ISO 14001 and ISO TS

16949:2002)

• Where are the controls and how are they monitored and evaluated?

Management handles the control and strict hierarchical models are in place for the

monitoring of all processes and transactions.

Shared Values:

• How strong are the values?

They are rooted to their core values and believe in loyalty and truthfulness. Commitment

of the employees brings in rich rewards whereas fraud and foul is not all tolerated.

• What are the fundamental values that the company/team was built on?

TVS SRICHAKRA - 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 fulfillment and prosperity for employees, dealers and suppliers.

• What are the core values?

Trust , reliability, values , service and ethics.

• What is the corporate/team culture?

Vibrant, transparent and entrepreneurial culture.

Style:

• Do employees/team members tend to be competitive or cooperative?

They tend to be co operative in all the endeavours. They believe in team work.



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• How participative is the management/leadership style?

The management is participative indeed, innovative and inspiring.

Staff:

• Are there gaps in required competencies?

NO. The best persons for the job are sitting in the posts. There are about 3830 persons

working for the company.

Skills:

• Are there any skills gaps?

The company is doing extensive R&D on its own to increase it’s technological prowess

and quality.

RESEARCH & DEVELOPMENT (R&D)

1. Specific areas in which R & D carried out by the Company :

a) Introduction of Tubeless tyres for Motorcycles.

b) Range expansion in Export segment.

c) Newer, application oriented patterns for the After Market and Export, to satisfy various

customer needs.

d) Product quality improvement through continuous process improvements.

2. Benefits derived as a result of the above R & D:

a) Entry into more Export markets.



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b) Improved replacement market share.

c) Ability to introduce products as required by market.

d) Entry into new OEM for Motorcycle tyres.

3. Future Plan of Action:

a) To introduce increased automation for capability improvement, and manufacture of superior

products.

b) Introduction of futuristic new products for Domestic After Market

c) Diversification of product range in export with technology up-gradation.

d) New pattern for different class of customers for both Original Equipment and After Market.

4. Expenditure on R&D: Rs. in lakhs

a) Capital 27.67

b) Recurring 574.45

c) Total 602.12

d) Total R & D expenditure

(percentage of total turnover ) 0.94%



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TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:

1. Efforts in brief, made towards technology absorption, adaptation and innovation :

• Introduction of new products resulted in higher growth in all markets.

• Improved consistency in quality of product.

2. Benefits derived as a result of the above efforts:

Company was able to develop a whole range of new products for OEM,

Replacement Market and Export Market, in the shortest development cycle time.

• What are the strongest skills represented within the company/team?

Good and pleasant inter personal skills, highly devoted and committed personnel.

• Do the current employees/team members have the ability to do the job?

They are efficient and effective in their job.

• How are skills monitored and assessed?

The HR department monitors and does the performance appraisal.



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LIST OF BOARD OF DIRECTORS

Board of Directors for the Year : 31-Mar-09

T V S Srichakra Ltd.

Directors Name Designation Board Meetings Attended

S Narayanan Ch 5

R Naresh Exec. Vice Ch 4

Shobhana Ramachandhran Md 5

M S Viraraghavan Director 4

N H Atthreya Director 5

J V Raghavan Director 0

Sitaram Rao Valluri Director 5

P Vijayaraghavan Director 2

S Ravichandran Addnl. Director 0

T Chinnadurai Addnl. Director 0

L R Subramanian Secretary 0

GROUP DISTRIBUTORS

Madras auto Service.

IMPAL- Indian Motor Parts & Accessories Services Limited.

Sundaram Motors.

TVS Iyengar & Sons.

MAJOR COMPETITORS

MRF, Dunlop, Birla Tyres, Ceat.



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SWOT ANALYSIS

STRENGTHS

Part of TVS Group.

Interconnected business network and dealership network of parent company.

Stronghold in South India, especially Tamil Nadu.

Expertise in auto components.

Market leader in OE 2 wheeler tyres.

Tie up with Many companies like Bajaj, Yamaha, Hero Honda.

Recently opened state of the art production plant.

WEAKNESSES

Misconception about quality of TVS Tyres in the minds of people.

Not ventured in to Truck and Bus tyre segment.

More complaints reported on bad performance of tyres.

Technological knowhow is less.

Lesser expenditure on advertising.

OPPORTUNITIES

Truck and Bus tyre segment.

Radial tyre segment.

Hydrogen and other inert gas filled tyres segment.

Improve upon quality.

Research and development opportunities.

THREATS

Mega advertising campaigns of other companies.

Government regulations and rules from time to time.



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SECTION II

PROBLEM CENTERED

STUDY



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TITLE OF THE STUDY A Study on the Impact of Advertisements, Reference Group and Brand

Perception in the purchase involvement of Customers in Chennai with

regard to TVS TYRES.

BACK GROUND OF THE STUDY

The company is now focusing heavily on advertising with its “RIDE SMART WITH ROAD

SENSE” campaign roping in top industry ad-makers like M/s Ravi Udyawar films ltd.

These advertisements are being aired from early 2010 onwards in all leading Television

channels. Hence the company would like to know the impacts of these advertisements on the

buying perceptions of the company.

Most of the buying decisions in the tyre segment are influenced by reference groups especially

mechanics or friends. Hence it is good for the company to find out the impact of reference

groups as well on the buying preferences of the customer.

TVS SRICHAKRA falls under the umbrella of TV SUNDARAM IYENGAR & SONS which is

a huge brand in CHENNAI and South India. Hence any study would be incomplete if we do not

incorporate the impact that the whole brand makes on the buying perceptions of the customer.



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RESEARCH METHODOLOGY

OBJECTIVE OF THE STUDY

• To study the impact of advertisement of TVS TYRES on the purchase involvement of

customers.

• To study the impact of reference groups on the purchase involvement of customers.

• To study the impact of brand perception of the company on the purchase involvement of

customers.

SAMPLING METHOD

Convenience sampling.

SAMPLE SIZE

150 two wheeler owners from the city of Chennai.

POPULATION

The two wheeler owners of the city of Chennai.

DATA COLLECTION METHOD

Questionnaires were used to collect primary data from the respondents.

Data Analysis

Data Analysis is done using multiple regression and other statistical methods.



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LIMITATIONS OF STUDY

Constraints of time. The study is restricted to the city of Chennai.

THEORETICAL FRAME WORK

Perception is the process by which organisms interpret and organize sensation to produce a

meaningful experience of the world. Sensation usually refers to the immediate, relatively

unprocessed result of stimulation of sensory receptors in the eyes, ears, nose, tongue, or

skin. Perception, on the other hand, better describes one's ultimate experience of the world and

typically involves further processing of sensory input. In practice, sensation and perception are

virtually impossible to separate, because they are part of one continuous process.

Thus, perception in humans describes the process whereby sensory stimulation is translated into

organized experience. That experience, or percept, is the joint product of the stimulation and of

the process itself. Relations found between various types of stimulation and their associated

percepts suggest inferences that can be made about the properties of the perceptual process;

theories of perceiving then can be developed on the basis of these inferences. Because the

perceptual process is not itself public or directly observable (except to the perceiver himself,

whose percepts are given directly in experience), the validity of perceptual theories can be

checked only indirectly.

Perceptions can comprise just about anything: fact, fiction, fantasy, whatever. If customers

believe their perceptions, though, the perceptions have the weight of fact. That is why it is so

important to reach out to customers and specifically ask them what they think. By their very

nature, they probably won’t agree with all the perceptions. A perception equals fact in the mind

of the customer, though. You must act on these perceptions and let the customer know what

you’ve done.



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Customer perceptions are what indicate whether you have achieved satisfaction or not. In other

words, they represent stepping stones along a continuum. Perceptions accumulate over time and

gradually equate to either satisfaction or dissatisfaction. The job is to understand and act on these

perceptions so the final result is customer satisfaction.

BRAND PERCEPTION- Independent Variable

Brand perception/awareness, In general, means the extent to which a brand associated with a

particular product is documented by potential and existing customers either positively or

negatively. Creation of brand awareness is the primary goal of advertising at the beginning of

any product's life cycle in target markets. In fact, brand awareness has influence on buying

behaviour of a buyer. Brand awareness can be measured by showing a consumer the brand and

asking whether or not they knew of it beforehand. However, in common market research practice

a variety of recognition and recall measures of brand awareness are employed all of which test

the brand name's association to a product category cue, this came about because most market

research in the 20th Century was conducted by post or telephone, actually showing the brand to

consumers usually required more expensive face-to-face interviews (until web-based interviews

became possible). This has led many textbooks to conceptualise brand awareness simply as its

measures, that is, knowledge that the brand is a member of a particular product category, e.g.

soft-drinks. Examples of such measures include:

• Brand recognition - Either the brand name or both the brand name and category name are

presented to respondents.

• Brand recall - the product category name is given to respondents who are asked to recall

as many brands as possible that are members of the category.

• Top of mind awareness - as above, but only the first brand recalled is recorded (also

known as spontaneous brand recall). Aggregate (brand) level, it refers to the proportion

of consumers who know of the brand.

There has been discussion in industry and practice about the meaning and value of various brand

awareness metrics. Recently, an empirical study appeared to put this debate to rest by suggesting



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that all awareness metrics were systematically related, simply reflecting their difficulty, in the

same way that certain questions are more difficult in academic exams.

The questions for measuring brand perception are taken from HESS (1997): PERCEIVED

BRAND TRUST.

ADVERTISEMENT IMPACT- Independent Variable

The effect that advertisements plays in the decision making process in the mind of a customer is

proven already. TVS SRICHAKRA had recently come out with a series of new ads.

Hence the buying perception of the customer will certainly be affected.

For measuring advertisement impact PDI (Persuasive Disclosure Inventory) (FELTHAM: 1994)

was considered. Some of the elements in the ethos, pathos & Logos scale were incorporated.

Leavitt’s reaction profile (Leavitt: 1971) was also kept in mind while framing the questions.

REFERENCE GROUP IMPACT-Independent Variable

Reference groups make a definite impact on the buying decisions of the customer.

The main impact is thought to be made by the mechanics who attend to the two wheelers.

Friends and relatives also influence the buying decisions. The studies of William.O.Bearden,

Michael.J.Etzel were considered for framing the questionnaires.



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BUYING PREFERENCES- The Dependent Variable.

The customer buying decisions will be graded against the other independent variables

namely advertisement impact, brand perception and reference group impact.



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PRESENTATION

AND

DATA ANALYSIS



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ANALYSIS

Multiple regression technique is used to find out the relation between the variables.

MULTIPLE REGRESSION

More than one independent variables to estimate the dependent variable were used and it

is an attempt to increase the accuracy of the estimate. In multiple regression, we can look at each

individual variable and test whether it contributes significantly to the way regression describes

the data. The number crunching is done with the help of SPSS statistics packages software.

Multiple regression analysis involves a three-step process.

1. Describe the multiple regression equation.

2. Examine the multiple-regression standard error of the estimate.

3. Determine how well the regression equation describes the observed data.

FINDING THE MULTIPLE REGRESSION EQUATION

Variables were selected based on already available standard study reports and

questionnaires. All the eight variables used in the study of advertisement were taken and their

average was defined as a new variable average ad impact (avgad) which is an independent

variable.

Similarly all the four variables used in the study of reference group were taken and their average

was defined as a new variable called average reference group impact (avgrefgp), and the four

variables used for measuring brand perception were taken and their average was defined as a

new variable called average brand perception impact (avgbp).

All the above defined variables are independent variables.

The average of the variables used to measure customer buying perceptions is defined as the

dependent variable (avgbuyp).



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ý =a+b1X1+b2X2+b3X3

is the estimating equation describing the relationship among the three variables

where the independent variables are denoted by X1, X2, X3

and the dependent variable is denoted by ý,

b1,b2,b3 are the slopes associated with X1,X2,X3 respectively

and a is the y-intercept

STANDARD ERROR OF ESTIMATE FOR MULTIPLE REGRESSION

It gives a measure of dispersion around the multiple-regression plane. The estimation

becomes more accurate as the degree of dispersion around the regression gets smaller. By using

more variables and by doing multiple regression the standard error of estimate has come to a

lower value. Thus the estimate has become more accurate.

THE COEFFICIENT OF MULTIPLE DETERMINATION (R2)

This coefficient of multiple determination is also the proportion of the total variation of ý

that is explained by the regression plane.

Note that the output in the Model summary table depicted below has the value of R2

as 0.405.

This means that 40.5 percent of the total variation in the customer purchase involvement is

explained by the three independent variables. It gives the proportion of the total variation in the

dependent variable that is explained by the independent variables.

TEST OF WHETHER A VARIABLE IS SIGNIFICANT OR NOT

This is done by checking –tc<t0<tc where tc is the critical value that is obtained from the

students t-ratio table and t0 is the observed or computed t value.

It is only necessary to check that t0>tc and if that is true it is assumed that the variable is a

significant explanatory variable.



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For the variable avgad, testing at 90% confidence level i.e., α= 0.10 and n=150-3-1=146

tc=1.645

t0=1.918>1.645. Hence the variable avgad , impact of advertisements is a significant explanatory

variable of the consumer purchasing involvement.

For the variable avgbp, testing at 95% confidence level, i.e., α=0.05 and n=146

Critical t value= 1.960 and obtained t value =6.498

Hence the variable avgbp, impact of brand perception is also a significant explanatory variable of

the customer purchasing involvement.

Similarly for variable avgrefgp at α=0.05, n=146 the critical value of t from table is 1.960 and

obtained t value is 2.696.

Hence the variable avgrefgp, impact of reference groups is also a significant explanatory variable

of the customer purchasing involvement.

INFERENCES ABOUT THE TEST AS A WHOLE (Using an F Test)

It is natural to ask whether the R2

value of the given multiple regression really indicates

that the independent variables explain the dependent variable, or might have happened just by

chance.

Decomposing the total variation in the dependent variable

SST=SSR+SSE

SST= TOTAL SUM OF SQUARES (111.693)

SSR=REGRESSION SUM OF SQUARES (45.263)

SSE=ERROR SUM/ RESIDUAL SUM OF SQUARES (66.430)

F Ratio is defined as

F= (SSR/K)/((SSE)/(n-k-1))



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The numerator is with k degrees of freedom and n-k-1 denominator degrees of freedom.

When calculated atα

=0.05 with k=3 degrees of freedom and denominator 146 degrees of freedom F=3.78 is obtained.

The calculated value of F=33.160 is way far above 3.78, so the regression is assumed to be

highly significant.

Also prominent is the fact that in simple regression , each variable is highly significant and in

multiple regression, they are collectively very significant, but individually not significant.

The relation between the independent and dependent variables can be explained as follows.

1. 22.2% proportion of the total variation in customer purchase involvement is

explained by the impact of advertisements alone.


explained by the impact of brand perception alone.


explained by the impact of reference group alone.



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TABLE OF SPSS OUTPUT

Model Summary

Model R R Square Adjusted R Square

Std. Error of the

Estimate

1 .637a .405 .393 .67454

a. Predictors: (Constant), avgrefgp, avgbp, avgad

ANOVAb

Model Sum of Squares df Mean Square F Sig.

1 Regression 45.263 3 15.088 33.160 .000a

Residual 66.430 146 .455

Total 111.693 149

a. Predictors: (Constant), avgrefgp, avgbp, avgad

b. Dependent Variable: avgbuyp

Coefficientsa

Model

Unstandardized Coefficients

Standardized

Coefficients

T Sig.B Std. Error Beta

1 (Constant) 1.067 .354 3.010 .003

avgad .222 .116 .159 1.918 .057

avgbp .453 .070 .508 6.498 .000

avgrefgp .509 .073 .513 2.696 .006

a. Dependent Variable: avgbuyp



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Findings:

• All the dependent variables are highly significant explanatory variables.

• The multiple regression as a whole is highly significant.

• The 3 independent variables together explain about 40% of the variation in the purchase

involvement of customers.

• Reference group is the variable with the highest impact on purchase involvement of

customers followed by variables of brand perception and advertisement impact

respectively.



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CONCLUSION



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CONCLUSION

This project brings forth the importance that reference groups play in the purchasing decision of

TVS Tyres with regard to the City of Chennai.

The reference group for tyres consists mainly of mechanics, friends and relatives.

The brand image of the company is helping it tremendously. TVS is a super brand in Chennai

and it has almost 44 companies in its umbrella. The stock tyre sale that TVS Tyres has with

different companies and its own subsidiary TVS Motors is helping the company.

The impact of advertisements lies last to all. The efforts put in the advertisement channel are in

the right direction it will take some more time to reap the rewards .

The impact of reference groups features first in the buying preferences of customers. Hence it

will be good for the company to focus more on earning the goodwill of reference groups.



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BIBLIOGRAPHY



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• Kotler, Philip, Kevin Lane Keller; Marketing Management, (2006), 12th ed.. Pearson

Prentice Hall

• Donald R. Cooper , Pamela S. Schindler; Business Research Methods, (2004),Tata Mc

Graw Hill

• Anderson P M and Robin L G, Marketing Communications: Advertising, Sales

Promotion, Public relations, display and personal selling, (1986), Prentice Hall

• Ganesan, S. (1994), “Determinants of long-term orientation in buyer-seller orientation

in buyer-seller relationships”, Journal of Marketing, Vol. 58.

• Ganesan, S. and Hess, R. (1997), “Dimensions and levels of trust: implications for

commitment to a relationship”, Marketing Letters, Vol. 8 No. 4

• William.O.Bearden, Michael.J.Etzel; Reference group influence on product and brand

purchase decisions, journal of consumer Research, vol9, Sep 1982.



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ANNEXURE



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QUESTIONNAIRE

A SURVEY ON IMPACT OF REFERENCE GROUPS, BRAND PERCEPTION AND IMPACT

OF ADVERTISEMENTS ON CUSTOMER BUYING PREFERENCE W.R.T TVS TYRES IN

CHENNAI CITY.

Name: Age:

Gender: M/F

1. Have you ever seen a Tyre Co. Advertisement in T.V? a)Yes b) No

2. Have you ever seen a TV ad on TVS Tyres? a)Yes b) No

3. What appeal in the ad attracted you the most?

a) Masculine appeal b) Emotional appeal c) Animation and graphics d) Brand Appeal

4. How do you think the following factors are portrayed in the ad of TVS TYRES on a scale

of 1-7?

(1-strongly disagree, 2- disagree, 3-slightly disagree, 4-neutral, 5-slightly agree, 6-agree,

7-strongly agree)Liveliness Factor

Amusing Factor

Sensitiveness Factor

1 2 3 4 5 6 7

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Familiarity Factor

Dependability Factor

Worth remembering

Trust worthy Factor

Informative

1 2 3 4 5 6 7

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For the following questions (5-16) mark your responses on a scale of 1-7 where the meanings of

numbers are (1-strongly disagree, 2- disagree, 3-slightly disagree, 4-neutral, 5-slighly agree, 6-agree, 7-

strongly agree)

5. TVS tyres is interested in more than just selling tyres and making a profit.

6. If TVS tyres make a claim or promise about its product, it’s probably true.

7. My TVS tyres is very reliable

8. If I bought another product from TVS tyres I feel like I would know what to expect.

1 2 3 4 5 6 7

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9. To make sure I buy the right product or brand, I often observe what others are buying and

using…

10. When buying products I generally purchase those products that I think others will

approve.

11. If I have little experience with a product, I often ask my friends about the product.

12. In selecting from many types and brands of product available in the market, I would care

a great deal as to which one I buy.

1 2 3 4 5 6 7

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13. Do you think that the various types and brands of a product available in the market are all

very different

14. It is extremely important for me to make a right choice of the product

15. In making a selection for the product I am extremely concerned about the outcome of the

choice

1 2 3 4 5 6 7

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a study on the impact of advertisements, reference group and brand perception in the purchase...

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