TABLE OF CONTENT

TABLE OF CONTENT Serial no. Chapter Page No 1. OBJECT OF PROJECT 3 2. RESEARCH 53. INTRODUCTION INDIAN AUTO INDUSTRY 6 TWO WHEELER INDUSTRY 104. COMPANY PROFILE TVS MOTORS 25 HERO HONDA 30 5. COMPARATIVE ANALYSIS 346. HYPOTHESIS 47 7. DATA ANALYSIS 498. LIMITATION 569. FINDINGS 5910. SUGESTION & RECOMMENDATIONS 6211. BIBLOGRAPHY 6412. QUESTIONNAIRE FORMAT 65 RESEARCH METHODOLOGYPrimary Data:

The primary data collected through questionnaires administered to a sample of 50 consumers selectedfrom Raipur city the Questionnaire was pre-Designed and pre-tested before it was administered.n

For financial analysis money control .com has been considered

Annual report of Hero Honda TVS

Secondary Data :

Secondary data was collected through various publications of newspapers, magazines, books and magazines websites of Hero Honda, and TVS bikes.websitesSample Design :

A total of 50 consumers were selected from the Raipur city for this study to analyze the consumers behaviour with reference to select motor bikes i.e., Yamaha, Hero Honda, Bajaj and TVS bike. INDIAN AUTO INDUSTRYIndia is emerging as one of the worlds fastest growing passenger car markets and second largest two wheeler manufacturer. According to the International Yearbook of Industrial Statistics 2008 released by United Nations Industrial Development Organisation (UNIDO), India ranks 12th in the list of the worldstop 15 automakers. It is home to the largest two wheeler manufacturer and fifth largest commercialvehicle manufacturer in the world. The industry is producing about 19 lakh passenger vehicles, 4.5 lakh commercial vehicles, 90 lakh two wheelers and 5 lakh three wheelers per annum.

In order to make India a power to reckon with in the automotive sector the government launched theAutomotive Mission Plan (AMP) 2006-2016. As per the AMP, it is estimated that the total turnover of theautomotive industry in India would be in the order of USD 122 billion - USD 159 billion in 2016. It isexpected that in real terms, India would continue to enjoy its eminent position of being the largest tractorand three-wheeler manufacturers in the world and the world's second largest two-wheeler manufacturer. By 2016, India will emerge as the world's seventh largest car producer (as compared to the eleventhlargest currently) and retain the fourth largest position in world truck manufacturing sector.

Further 2016, the automotive sector would double its contribution to the country's GDP from current levels of five per cent to 10 per cent. The Indian automotive industry consists of the following five segments

FIGURE 1: INDIAN AUTOMOBILE INDUSTRYThe total two-wheeler sales of the Indian industry accounts for around 77% of the total vehicles sold inIndia. With 26,12,881 two wheelers already sold in India in the quarter from Jun-Sep 2009, the Indianwheeler industry is poised for high growth In the coming years. In terms of volume, about 6% of the two wheelers manufactured are exported. FIGURE 2: DOMESTIC MARKET SHARE FOR 2008-09

TWO WHEELER SEGMENTAL CLASSIFICATION AND ITS GROWTHThe three main product segments in the two-wheeler category are scooters, motorcycles and mopeds.However, in response to evolving demographics and various other factors, other subsegments emerged,viz. scooterettes, gearless scooters, and 4-stroke scooters. While the first two emerged as a response todemographic changes, the introduction of 4-stroke scooters has followed the imposition of stringent pollution control norms in the early 2000. Besides, these prominent sub-segments, product groups within these sub-segments have gained importance in the recent years.The two wheeler industry has been growing at a CAGR of 9.45% from 2004 to 2009, with the productionbeing about 63 lakh vehicles in 2004 to an estimated 100 lakhs in 2009. Motorcycles have always been the major contributor to the two wheeler industry in India. From a share of about 77.39% in 2004, it hassteadily grown to about 80.38%. The share of scooters has gone down from 16.63% in 2004 to 13.88% in2009. The following table gives the percentage share of motorcycles, scooters and mopeds in the two wheeler industry in IndiaDEMAND DRIVERSThe demand for two-wheelers has been influenced by a number of factors over the past few years. The key demand drivers for the growth of the two-wheeler industry are as follows:

Inadequate public transportation system, especially in the semi-urban and rural areas

Increased availability of cheap consumer financing in the past 3-4 years

Increasing availability of fuel-efficient and low-maintenance models

Increasing urbanisation, which creates a need for personal transportation

Changes in the demographic profile

Difference between two-wheeler and passenger car prices, which makes two wheelers entrylevel vehicle

Steady increase in per capita income over the past few years

Increasing number of models with different features to satisfy diverse consumer needs.PREMIUM SEGMENT

If we analyze the motorcycle sub-segments then it would be visible that Bajaj Auto has a significantpresence in the premium segment with a market share of ~55% followed by Hero Honda (~22%), TVS

Motors (~13%) and HMSI (10%).

EXECUTIVE SEGMENT

Hero Honda dominates this segment with a market share of ~70% followed by Bajaj Auto (20%), HMSI(~6%) and TVS Motors (1%). This segment retrieves higher revenues from the rural areas, which are lessdependence on finance; therefore comparatively it is among the best performing segments

ECONOMY SEGMENT

This segment is a strong foothold for Bajaj Auto which has a market share of ~45% followed by Hero Honda (~34%) and TVS Motors (~24%). This is the most competitive segment as all the 3playersrelatively have a higher presence in the same. But this segment continues to be the worst hit due to thecredit unavailability and global slowdown. The industry has shown a CAGR of ~15% from FY04-FY07on account of finance availability from PSU Banks and private banks like ICICI Bank. But from FY08 FY09 YTD the industry has shown shrinkage as most of the banks reduced their exposure in the autofinance domain given the unfavorable macro economic situation.

SWOT Analysis

A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis. SWOT analysis of the Indian automobile sector gives the following points:

Strengths:-

Large domestic market Sustainable labor cost advantage Competitive auto component vendor base Government incentives for manufacturing plants Strong engineering skills in design etcWeaknesses:-

Low labor productivity High interest costs and high overheads make the production uncompetitive Various forms of taxes push up the cost of production Low investment in Research and Development Infrastructure bottleneck Opportunities:-

Commercial vehicles: SC ban on overloading Heavy thrust on mining and construction activity Increase in the income level Cut in excise duties Rising rural demandThreats:-

Rising input costs

Rising interest rates

Cut throat competition Industry present and future trends:- Automobile is one of the largest industries in global market. Being the leader in product and process technologies in the manufacturing sector, it has been recognised as one of the drivers of economic growth. During the last decade, well-directed efforts have been made to provide a new look to the automobile policy for realising the sector's full potential for the economy. Steps like abolition of licensing, removal of quantitative restrictions and initiatives to bring the policy framework in consonance with WTO requirements have set the industry in a progressive track. Removal of the restrictive environment has helped restructuring, and enabled industry to absorb new technologies, aligning itself with the global development and also to realise its potential in the country. The liberalisation policies have led to continuous increase in competition which has ultimately resulted in modernisation in line with the global standards as well as in substantial cut in prices. Aggressive marketing by the auto finance companies have also played a significant role in boosting automobile demand, especially from the population in the middle income group.

The composition of the two-wheeler industry has witnessed sea changes in the post-reform period. In 1991, the share of scooters was about 50 per cent of the total 2-wheeler demand in the Indian market. Motorcycle and moped had been experiencing almost equal level of shares in the total number of two-wheelers. In 2003-04, the share of motorcycles increased to 78 per cent of the total two-wheelers while the shares of scooters and mopeds declined to the level of 16 and 6 per cent respectively. A clear picture of the motorcycle segment's gaining importance during this period is exhibited by the Figures 1, 2 and 3 depicting total sales, share and annual growth during the period 1993-94 through 2003-04.

National Council of Applied Economic Research (NCAER) had forecast two-wheeler demand during the period 2002-03 through 2011-12. The forecasts had been made using econometric technique along with inputs obtained from a primary survey conducted at 14 prime cities in the country. Estimations were based on Panel Regression, which takes into account both time series and cross section variation in data. A panel data of 16 major states over a period of 5 years ending 1999 was used for the estimation of parameters. The models considered a large number of macro-economic, demographic and socio-economic variables to arrive at the best estimations for different two-wheeler segments. The projections have been made at all India and regional levels. Different scenarios have been presented based on different assumptions regarding the demand drivers of the two-wheeler industry. The most likely scenario assumed annual growth rate of Gross Domestic Product (GDP) to be 5.5 per cent during 2002-03 and was anticipated to increase gradually to 6.5 per cent during 2011-12. The all-India and region-wise projected growth trends for the motorcycles and scooters are presented in Table 1. The demand for mopeds is not presented in this analysis due to its already shrinking status compared to' motorcycles and scooters.

It is important to remember that the above-mentioned forecast presents a long-term growth for a period of 10 years. The high growth rate in motorcycle segment at present will stabilise after a certain point beyond which a condition of equilibrium will set the growth path. Another important thing to keep in mind while interpreting these growth rates is that the forecast could consider the trend till 1999 and the model could not capture the recent developments that have taken place in last few years. However, this will not alter the regional distribution to a significant extent.

Table 1 suggests two important dimensions for the two-wheeler industry. The region-wise numbers of motorcycle and scooter suggest the future market for these segments. At the all India level, the demand for motorcycles will be almost 10 times of that of the scooters. The same in the western region will be almost 20 times. It is also evident from the table that motorcycle will find its major market in the western region of the country, which will account for more than 40 per cent of its total demand. The south and the north-central region will follow this. The demand for scooters will be the maximum in the northern region, which will account for more than 50 per cent of the demand for scooters in 2011-12.

--------------------------------------------------------------

Source: Indian Automobile Industry: Optimism in the Air, Industry Insight, NCAER

The present economic situation of the country makes the scenario brighter for short-term demand. Real GDP growth was at a high level of 7.4 per cent during the first quarter of 2004. Both industry and the service sectors have shown high growth during this period at the rates of 8.0 and 9.5 per cent respectively. However, poor rainfall last year will pull down the GDP growth to some extent. Taking into account all these factors along with other leading indicators including government spending, foreign investment, inflation and export growth, NCAER has projected an average growth of GDP at 6.7 per cent during the tenth five-year plan. Its mid-term forecast suggests an expected growth of 7.4 per cent in GDP during 2004-05 to 2008-09. Very recently, IMF has portrayed a sustained global recovery in World Economic Outlook. A significant shift has also been observed in Indian households from the lower income group to the middle income group in recent years. The finance companies are also more aggressive in their marketing compared to previous years. Combining all these factors, one may visualise a higher growth rate in two-wheeler demand than presented in Table 1, particularly for the motorcycle segment.There is a large untapped market in semi-urban and rural areas of the country. Any strategic planning for the two-wheeler industry needs to identify these markets with the help of available statistical techniques. Potential markets can be identified as well as prioritised using these techniques with the help of secondary data on socio-economic parameters. For the two-wheeler industry, it is also important to identify the target groups for various categories of motorcycles and scooters. With the formal introduction of secondhand car market by the reputed car manufacturers and easy loan availability for new as well as used cars, the two-wheeler industry needs to upgrade its market information system to capture the new market and to maintain its already existing markets. Availability of easy credit for two-wheelers in rural and smaller urban areas also requires more focussed attention. It is also imperative to initiate measures to make the presence of Indian two-wheeler industry felt in the global market. Adequate incentives for promoting exports and setting up of institutional mechanism such as Automobile Export Promotion Council would be of great help for further surge in demand for the Indian two-wheeler industry.

TVS

TV Sundaram Iyengar and Sons Limited (TVSs) is the holding company for the TVS Group of companies engaged in the manufacturing of almost all kinds of automotive components, best two wheelers and a few other industrial products. They are also into the financial services sector. The turnover of the entire group was close to $2 billion in 2003. The TVS group of companies is mainly situated in Padi, Tamil Nadu, in the outskirts of Chennai (formerly Madras).

The company has many first to its credit like the introduction of the first indigenous moped and a 100 cc motorcycle in collaboration with Japanese auto giant Suzuki. When the collaboration ended in 2003, many thought that the company would die a natural death due to the exit of the foreign collaborator. However the company proved its detractors wrong by introducing the TVS Victor and rest as they say is history. The company roped in master blaster Sachin Tendulkar for the promotions and the sales went northwards after that. TVS company is aiming to capture a quarter of the total two wheeler market in the country.

TVS group was a pioneer in mopeds but slowly they have shifted focus to the motorcycle segment since the entire market seems to be moving in that direction as consumer preferences and choices have changed with the changing times.The company has been able to outdo it self and spring a surprise, as many analysts felt that the company would be pushed to the periphery of the two wheeler market. With the exit of Suzuki, many felt TVS would have to limit itself to the moped market in the country. The company did not have a good track record of in-house product development as most of its' earlier ventures like the Shaolin, Shogun and the Supras failed to take off.

This further heightens the importance of the success of the TVS Victor, the company aims to become the number 2 two wheeler manufacturers in India and also want to crack the top five in Asia. The company has products across all categories from premium motorcycles to entry level mopeds and has recently launched Apache in the premium segment.

The major products TVS Fiero

TVS Samurai

TVS Shaolin

TVS Shogun

TVS Apache (150 cc,13.7 Ps @8500rpm)

TVS Apache RTR 160 EFI (Electronic Fuel Injection)

TVS Apache RTR 180 (17.3ps)

TVS Centra

TVS Flame TVS Flame (125 cc,ccvti technology)

TVS MAX 100

TVS Star

TVS Star City

TVS Star Sport

TVS Supra

TVS Victor (110 cc)

TVS Victor GLX (125 cc)

SHARE HOLDING PATTERN

HISTORYThe third largest two-wheeler company is the flagship company of the TVS Group (4billion USD) withan annual turnover of over a billion. It was the fiirst two-wheeler manufacturer in the world to behonored with the Japanese Quality award The Deming Prize for Total Quality Management.

Set up in the 1980s with its origin in Sundaram Clayton Ltd., launched an easy-to-use 50cc mopedfollowed by the launch of 7 new bikes on a single day. After the takeover by Suzuki Motorcycles in 1987its name changed to TVS Suzuki Ltd. This ended in 2001 when TVS Motor Company came to existence.

FINANCIAL SYNOPSIS

For the fiscal year ended 31 March 2009, TVS Motor Company Limited's revenues increased 13% to RS38.11B. Net loss totaled RS632M, up from RS282.5M. Revenues reflect an increase in income fromoperations. Higher loss reflects an increase in labour charges, increased depreciation charges, an increasein interest & finance charges, higher repair & maintenance expenses, increased audit fees, higher power& fuel expenses and increased other expenses.

Revenues

EBITDA Margins

PAT

SEGMENTAL PERFORMANCE

Source: Annual ReportThe increased growth in Ungeared Scooters is due to its independence from influence of availability of retail finances. Although sales grew in two wheeler segment at 5% growth its incomparable to that of Hero Honda at 30%.

Three wheeler, TVS King was introduced in six states and has achieved a 5% MS.

HERO HONDA

Hero Honda's company profileThe joint venture between India's Hero Group and Honda Motor Company, Japan has not only created the world's single largest two wheeler company but also one of the mostsuccessful joint ventures worldwide.During the 80s, Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generationmotorcycles that set industry benchmarks for fuel thrift and low emission. A legendary 'Fill it - Shut it - Forget it' campaign captured the imagination of commuters acrossIndia, and Hero Honda sold millions of bikes purely on thecommitment of increased mileage.Over 20 million Hero Honda two wheelers tread Indian roadstoday. These are almost as many as the number of people inFinland, Ireland and Sweden put together!Hero Honda has consistently grown at double digits since inception; and today, every second motorcycle sold in thecountry is a Hero Honda. Every 30 seconds, someone in India buys Hero Honda's top -selling motorcycle Splendor. Thisfestive season, the company sold half a million two wheelers i n a single montha feat unparalleled in global automotiveHERO HONDAIntroductionHero Honda Motors Ltd. started out in 1984 as a joint venture between the Hero Group of India and the Honda Motor Company of Japan, to manufacture 1000 cc motorcycles. The company enjoys a market share of 48 per cent and has catered to five million customers so far. Hero Honda sold 12,63,254 vehicles and recorded net profit of Rs 275 crore and turnover of Rs. 2795 crore in Q3 FY 07-08.

Corporate Profile

The Hero Honda story began with a simple vision the vision of a mobile and an empowered India, powered by Hero Honda. This vision was driven by Hero Honda's commitment to customer, quality and excellence, and while doing so, maintain the highest standards of ethics and societal responsibilities. Twenty five years and 25 million two wheelers later, Hero Honda is closer to fulfilling this dream. This vision is the driving force behind everything that company do at Hero Honda. Company understood that the fastest way to turn that dream into a reality is by remaining focused on that vision.

There were many unknowns but Hero Honda kept faith, and today, Hero Honda has been the largest two wheeler company in the world for eight consecutive years. Our growth has kept compounding. The company crossed the ten million unit milestone over a 19-year span. In the new millennium, Hero Honda has scaled this to 15 million units in just five years! In fact, during the year in review, Hero Honda sold more two wheelers than the second, third and fourth placed two-wheeler company put together. With Hero Honda, the domestic two wheeler market was able to show positive growth during the year in review. Without Hero Honda, the domestic market would have actually shrunk.

Over the course of two and a half decades, and three successive joint venture agreements later, both partners have fine-tuned and perfected their roles as joint venture partners. What the two partners did was something quite basic. They simply stuck to their respective strengths. As one of the world's technology leaders in the automotive sector, Honda has been able to consistently provide technical know-how, design specifications and R&D innovations. This has led to the development of world class, value - for- money motorcycles and scooters for the Indian market. On its part, the Hero Group has taken on the singular and onerous responsibility of creating world-class manufacturing facilities with robust processes, building the supply chain, setting up an extensive distribution networks and providing insights into the mind of the Indian customer. Since both partners continue to focus on their respective strengths, they have been able to complement each other. In the process, Hero Honda is recognized today as one of the most successful joint ventures in the world. It is therefore no surprise that there are more Hero Honda bikes on this country's roads than the total population of some European countries put together! .The company's meteoric growth in the two-wheeler market in India stems from an intrinsic ability to reach out and come closer to its customers, with every passing year. Hero Honda's bikes are sold and serviced through a network of over 3500 customer touch points, comprising a mix of dealers, service centres and stockists located across rural and urban India. Hero Honda has built two world-class manufacturing facilities at Dharuhera and Gurgaon in Haryana, and its third and most sophisticated plant at Haridwar has just completed a full year of operations. It is difficult to imagine that all this has happened in the span of just two and a half decades!

The best is yet to come. During the year in review, Hero Honda powered its way in a market that, for all practical purposes, was feeling the full effects of the economic slowdown in India. With an economic recovery now clearly on the cards, Hero Honda is all set to ride into another summit.

Type

Public company BSE:

HEROHONDA M

Founded

January 19, 1984 in Gurgaon, Haryana,

India Headquarters

New Delhi,

India Key people Brijmohan Lal Munjal (chair and founder)Toshiaki Nakagawa (joint managing director)Pawan Munjal (Managing Director & CEO)

Industry

Automotive

Products

Motorcycles, Scooters

Revenue

U$ 2.8 billion Hero Honda Bikes

Achiever Ambition 133, Ambition 135

CBZ, CBZ Star, CBZ Xtreme

CD 100, CD 100 SS, CD Dawn, CD Deluxe, CD Deluxe (Self Start)

Glamour, Glamour F.I

Hunk Joy

Karizma, Karizma R, Karizma ZMR FI

Passion, Passion+, Passion Pro

Pleasure

Street

Splendor, Splendor+, Splendor+ (Limited Edition), Super Splendor, Splendor NXG

SALES GROWTH ANALYSIS 200420052006200720082009

TVS2826.212875.913234.93854.93219.53670.9

GROWRH RATE 1.98%12.48%19.4716.4814.02

HERO HONDA5832.427421.658713.989899.9610331.812319.1

GROWTH RATE2.72517.4113.614.3619.23

TVS Motors showed a healthy growth in sales from FY 2004 to FY 2007 due to a booming automobile industry and rising demand, with sales rising from Rs. 2820 Cr in FY 2004 to Rs 3219.5Cr in FY 2007. Due to the global recession, and the high interest costs and interest rates, the automobile industry was severely impacted in FY 2008, resulting in a sharp drop in TVSs sales of16.5%. 2 Wheeler sales jumped back again in FY 2009, with a rise in sales of 14.02% for TVS. ThusTVS has had a healthy increase in turnover from FY 2004 to FY 2009, except for FY 2008, when itwas impacted due to the global recession and slackening demand. Corresponding 2-wheeler sales figures from The Society of Indian Automobile Manufacturers(SIAM) indicate that that the 2 wheeler sales in the industry fell from 7,872,334 units in FY 2007 to7,249,278 units in FY 2008 thus indicating the slackening demand due to adverse financialconditions in FY 2008

Hero HondaHero Honda has been a dominant player in the Indian 2-wheeler industry and has had healthy salesgrowth with sales rising from Rs. 7421.6 Cr in FY 2005 to Rs 12319.12 Cr in FY 2009, but as compared to TVS, its sales growth numbers have progressively declined from 27.25% in FY 2005 to 4.36% in FY 2008. Hero Honda being the marquee player in the industry has been able to withstandthe slackening demand in FY 2008 and shown positive sales growth during FY 2008 as compared toTVS, which had a negative sales growth during the corresponding period. Sales got a tremendousboost in FY 2009, with a sharp jump in sales of 19.2% for Hero Honda in FY 2009 LIQUIDITY RATIOFor TVS, the current ratio is constantly increasing, which is a good indicator that managements efforts are increasing the ratio. Even during the recession time of FY2008, the ratio increased as aresult of better management of liabilities. For Hero Honda, the values are always less than 1 andmuch less than TVS current ratios. None the less, both firms show values that are less than the rule-of-thumb indicator. Total outstanding dues of creditors other than small scale industrial undertakings increased in 08, bringing down the current ratio value for Hero Honda. The drop in thecurrent ratio of Hero Honda, from FY 2008 to FY 2009 is due to a steep increase in the currentliabilities and this increase can be attributed to an entry in the balance sheet called Other Liabilities

By rule of thumb, the quick ratio should ideally be 1:1. This condition is not met by Hero Honda. As expected, because of the downturn, the quick ratio of Hero Honda has decreased in FY 2007.

3.Inventory turn over ratioThe inventory management of TVS does not appear to be good. Instead of an increase in the values, we see a decrease from FY 05-08. In FY 09, there is a slight improvement. But, there is still room for improvement. There is a 19.1% dip in the ratio for FY08 as compared to FY 07 which may be attributed to a drop in COGS (~14%). Hero Honda has a good i COGS. But, there has been a dip in the ratio showing that inventory management is not good nventory turnover ratio. In the FY 08, there is a positive change of 3% in In comparison to TVS, Hero Honda has a much better inventory management strategy value during FY08 due to the dip in sales owing to the recession. But, in FY2009, probably due to 4 DEBTOR TURNOVER RATIO Generally, a debtor ratio indicated a better debt collection strategy of the company. But, in the current case, it may indicate that the companies became more willing to sell on credit than they were before. This is substantiated by the fact that the increase in the accounts receivables is mainly due to increase in unsecured short term debtors which may indicate credit line to customers. The debtor turnover ratio for TVS has been decreasing since FY 06. The increase as compared to FY05 is due to the higher sales growth without corresponding increase in debtors. The debtor turnover ratio for Hero Honda was at a very good value in FY 05, but there has been a considerable decrease ever since. Comparatively, Hero Honda has a much better debt turnover ratio indicating that their strategy of debt collection is much more effective than TVSs 5. Average Inventory Holding Period INTERPRETATION

The average inventory holding period for TVS has been on the rise since FY2005. Particularly in FY08, there has been a greater inventory holding period which could be attributed to the decrease in sales during recession leading to more inventories for more time For Hero Honda, the period had been decreasing from FY05 till FY07. There was an increase in the value during FY08 due to the dip in sales owing to the recession. But, in FY2009, probably due to better inventory management, the value of the inventory holding period has come down In comparison to TVS, hero Honda has a much better inventory management strategy.

6.OPERATING CYCLE INTERPRETATION:The operating cycle for both the companies has increased in FY08 due to an increase in both inventory holding period and debt collection period owing to the recession. That the inventory management of Hero Honda is much better than that of TVS can be clearly seen from the values in the table. 7.CAPITAL MARKET ANALYSIS P-E RATIO Hero Honda is operating at higher P/E Ratio relatively to TVS motor. 8. Cash flow statement analysis

INTERPRETATION:

For TVS Motors, analysing the cash flow statement of the firm from FY 2005 to FY 2009, we see that TVS generates a large amount of cash from operating activities, signifying a higher earnings quality. It has had a sig signifying that the company is investing heavily in its plant, machinery and capacity expansion. Also signifying that the company is investing heavily in its plant, machinery and capacity expansion. the company has a smaller proportion of positive cash flows from financing activities (except for FY and FY 2007 when financing cash flow contributed a large proportion) indicating that the company is able to generate cash from loans availed after disbursing interest and dividend payments But the net increase in cash and cash equivalents is still negative and contributing towards a negative cash balance, indicating a cash crunch for the company. From FY 2005 to FY 2009 (except for FY 2008 and FY 2006), cash flow from operating activities is significantly greater than net profit of the firm, indicating a higher earnings quality and indicating that the firm has been growing with increasing cash from operating activities. As cash is king increasing cash from operating activities signify that the firm has been growing. In FY 2008, operating cash flow was significantly smaller than Net Profit, indicating a lower earnings quality for FY 2008 Dividend payments for TVS have followed no specific trend and dividend payments have been in manageable proportions with respect to cash flow from operations. Only in FY 2008, when operating cash flow was strained, the company chose to pay out dividend close to 66% of their operating cash flow, indicating excessive dividend payment to keep shareholders happy

HERO HONDAThe cash flow statements of Hero Honda show an overall increase in the net profit over the six financial years considered except for a dip in the profits in FY 2007 owing to recession. From FY 2004 to FY2009, the cash flow from operating activities has remained at a value greater than the net profit excepting for FY 2005 and FY 2007. This proves the fact that Hero Hondas quality of earnings is significantly high. From FY 2004 to FY 2009 Hero Honda has consistently shown a negative value for cash flow from financing activities which is constituted by tax, dividends and interest payments and repayments for long term borrowings. So, we can infer that financing for investment activities is mainly derived from the cash from the operating activities. The net increase in cash and cash equivalents for all the six years is positive contributing towards the positive cash balance. Hence, the company is free from cash crunch. The trend of increase in the cash flow from operating activities leads to the inference that the firm has seen a healthy growth for the past six years (except for FY 2005 and FY 2007 when the quality of earnings are low due to the cash flow from operating expenses being lower than the net profit). Hero Honda has no particular pattern for dividend payments. The percentage of dividend payment was relatively high wi company witnessed a comparatively lower cash flow from operating activities, yet, the amount paid the 56.59% in FY 2004 and 63.37% in FY 2007. In the latter period, the as dividend was high Comparing the two companies, it can be seen that Hero Honda has a much better performance than TVS. Also, for Hero Honthere has always been a net increase in the cash and cash equivalentsHYPOTHESIS Sample size is taken to be 50

It is assumed that Hero Honda is the market leader among all other bikes.

It is assumed that the chosen sample is the representation of whole population.

It is assumed that information provided by the samples is accurate and

Best of knowledge Comaparative study of Hero Honda & Tvs DATA ANALYSIS 1Existing customer 2. Chart showing the customer satisfaction regarding their bikes

performance.

Total number of customer satisfied = 50

Total number of customer not satisfied = 0 3 Satisfaction level on basis of after sales service. Satisfied = 39 Unsatisfied= 11

5. Bikes spare part is easily available i

6. Resale value of bike 7 Bike preferable for female LIMITATIONSAlthough I have given my 100 percent for doing this project. But still were certain limitations while doing the research work. Some of the limitations were

as follows.

1. One of the biggest limitations with this project work is the time factor. Since we had got only 60 days for doing this project, therefore we think it was less time for doing this project work. Time was very much limited and as a result we were restricted with the time boundation.2. Another limitation was with the language. While doing the researchwork, I faced a lot of problem regarding the language. Since every person didnt understand English, therefore we had to make them understand in different languages like Hindi 3. Also due to the limited time period, we couldnt able to cover more area.Thats why we were also restricted with the area also.4. The research work is influenced by the exaggeration of some of therespondents.5. In some cases, the respondents were not giving us the proper reply.He/she might think that this was only westage of time or this might create some problem etc. And as a result he/she had given some fake answers and filled the questionnaire very casually.6. It was very difficult to take name, address and phone number of therespondents. Some of the respondents after filling the questionnaire didnt want to give their name, address and phone number. 7.The sample size for this research report is 50 only which may not dispute the actual picture of this study. The mood of the respondents while felling up of the questionnaire, can also have adverse impact on true finding of study. This research report is subject to Raipur city only. So the conclusion drawn cannot be applicable to whole of India or national level. There may be sampling error. The economic constraints of the researcher can also have impact on the result of the study

FINDINGS

The most likely scenario assumed annual growth rate of Gross Domestic Product (GDP)to be 5.5 per cent during 2002-03 and was anticipated to increase gradually to 6.5 per

cent during 2011-12.

Before getting into country law enforcement official insparsey populated two wheeler country

Two-wheeler segment is one of the most important components of the automobile sectorthat has undergone significant changes due to shift in policy environment.

The two wheeler industry current assets are decreased comparing between 2008-2009years.

The two wheeler industry fixed assets are decreased comparing between 2008-2009years.

The two wheeler industry current liabilities are also decreased because the two wheeler

industry short term debt and other current liabilities are also decreased comparing

between 2008-2009years.

The two wheeler industry current liabilities are also decreased because the two wheeler

industry account payable and other liabilities are also decreased comparing between

2008-2009years.

The two wheeler industry long term liabilities are also decreased.

The two wheeler industry long term liabilities are increased comparing between 2008-

2009years.

The two wheeler industry share holders equity is also decreased. The two wheeler industry has been on a strong growth trajectory in the past years. After a decline of 4.5% during 2007-08, the two wheeler industry grew by a modest 5% during 2008-2009 . Domestic motorcycle sales marginally grew by 1% while exports recorded a growth of 24%. TVS has had a healthy increase in turnover from FY 2004 to FY 2009, except for FY 2008 On the basis of that research we find that in case of bike, Hero Honda isthe market leader

It is found that Mileage is the main factor which influences to a consumer in his buying decision, and after the Mileage next preference goes to Price, people gives same weightage to Power and style and after that they are being influenced by Advertisements and Service respectively.

It is also found that consumers decision is influenced more bymileage.

By this research we come to know that almost 95% people are satisfied with their bikes performance and its after sales services.

TVS Motors showed a healthy growth in sales from FY 2004 to FY 2007 due to a booming automobile industry and rising demand TVS, the current ratio is constantly increasing, which is a good indicator Hero Honda is operating at higher P/E Ratio relatively to TVS motor.

The operating cycle for both the companies has increased in FY08 due to an increase in both inventory holding period and debt collectionSuggestions/recommendations Hero Honda should think about fuel efficiency in case of upper segment bikes.

TVS should target rural area as Hero Honda did Maintenance cost and the availability of the spare parts should also begiven due importance.

TVS should try to introduce some good finance/discount schemes for students.

TVS should focus on its advertisement and mileage to increaseits market share.

Company should also focus on its after sales service as well as the performance of the bikes.

Hero-Honda should also give some offers with their different models.This will help in increasing the market share of the Hero-Honda company.

The TVS should also launch some cheaper models so that the students can buy more. This will be beneficial for both i.e. the company and the consumers.

Since in the female bike category, TVS is the market leader with a total market share of 43%. Hero-Honda has a total market share of 35%.

Hero-Honda is maintaining a good customer loyalty. Therefore company should also focus on innovations and newer technologies. This will help

the company to capture more and more market and earn more and more profits.

TVS should focus on inventory management in order to reduce cost of production.

BIBLOGRAPHY1. SIAM2. WWW.HEROHONDA.COM3. WWW.TVSMOTORS.COM4. 4P MAGAZINE5. WWW.TWOWHEELERS .COM6. ANNUAL REPORT - HERO HONDA & TVS7. INDIAN AUTOMOBILE INDUSTRY: OPTIMISM IN THE AIR, INDUSTRY INSIGHT, NCAERQuestionnaire

Name :- ________________________________Sex a) MALE B) FEMALE

Respected Sir/Madam,

My name is MANVENDRA KUMAR the students of DSM RAIPUR. As per our course curriculum,

I am doing the market research on Consumer perception

about Hero Honda / other bikes. So I need your valuable

view for the questions given below. We will be grateful to you.Q1 :- Which bike do you have?

a. Hero-Honda b. Bajaj

c. TVS d. Yamaha Q2 :- Please prioritize the options that affects your purchasing

decision of bikes.[1 being the most important and 6 being

the less important].

a. Advertisement [ ] b. Price [ ]

c. Mileage [ ] d. Service [ ]

e. Style [ ] f. Power [ ]Q3 :- Are you satisfied with your bikes performance?

a. Yes b. NoQ4 :- Are you satisfied with your bikes after sales service?

a. Yes b. NoQ5 :- Rate your bike on the basis of safety and comfort level.

[1 being the highly safe and comfortable and 5 being the least

safe and comfortable. 1 2 3 4 5

Q6 :- To what extent do you think that your bike is durable?

a. Very strong b. Strong

c. Medium d. Weak

e. Very weakQ7 :- According to your perception which bikes spare parts are

easily available in the market?

a. Hero-Honda b. Bajaj c. TVS d. Yamaha

e. Any other (please specify) __________________Q8 :- Regarding resale value, what is your consideration?

a. Hero-Honda b. Bajaj c. TVS d. Yamaha

e. Any other (please specify) __________________Q9:- According to you, which bike is most preferable for

female?

a. Hero-Honda b. Bajaj c. TVS d. YAMAHA42 | Page