Chapter 6

Swot Analysis, Data

Analysis & Interpretation
Strength of Heromoto Corp Ltd.

> Huge brand equity and the biggest player in the two

wheeler's in Indian market.

> Excellent R and D, wide variety of products.

> Excellent distribution, over 3,000 dealership and service

centre.

> Good advertising & Excellent rebranding from Hero Honda

to Hero Moto Corp.

Weakness of Hero Moto Corp Ltd.

> Absence in the premium bike segment.

> High import for its parts i.e. over 30% imports.

> Most of products have similar features and low on design

and innovation.

Opportunities of Hero Moto Corp Ltd.

> Two wheeler segment is one of the most growing industries.

> Export of bikes is limited i.e. untapped international market.

Threats of Hero Moto Corp Ltd.

> Strong competition from Indian as well as International

brands.
> Dependence on governance policies and rising fuel prices.

> Better public transport will affect two wheeler sales.

58
 Porter's 5 Force Module
of
Hero Moto Corp Ltd.

Power of
Buyer

Competition:
> Humber & size of firm

> Industry size

> Different strategy to sell product

> Product range

59
Power of Buyer:
> Buyer choice

> Buyer size

> Product

> Change in cost frequency

Power of Substitutes :

> Alternative price

> Fashion & Trend

> New Technology

> Legislative Effect

Power of Supplier:

> Brand reputation

> Geographical Coverage

> Product

> Relationship with customer

> Hiding processes

60
 BCG Matrix
of
Hero Moto Corp Ltd.

Splendor Hunk

Passion CBZ Extreme

Karizma Pleasure

CD-Deluxe

CD-IOOSS

CD-Danen

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Data Collection

1. Which type of Hero two wheeler model owned by you?

Number Models Respondents

1 Splendor 20
2 Glamour 12
3 Karizma 4
4 Maestro 4
5 Pleasure 9
6 Impulse 1
Total 50

Using Model
2%
Splendor
Glamour
I Karizma
I Maestro
I Pleasure
llmpulse

Interpretation : From the above table it is inferred that,

40% of respondents are using splendor and 24% of

respondents using Glamour, 18% use pleasure, 8%o use

Karizma, 8% use Maestro and only 2% of respondents use

Impulse.

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2. Who Influence you to make purchase of Hero Moto
Corp?
a) Friends b) Family c) Sales People

1 Influence Response 1
Friends 21
1 Family 18
1 Sales People 11
Total 50

Interpretation :

From the above interpretation, it is observed that the

purchase is mostly influenced by friends 42%, family 35%,

and by sales people is just 22% which is least of the others.

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3. What do you think is reliability of Hero vehicles?
a) Excellent b) Good c) Average

Reliability Response
Excellent 20
Good 22
Average 6
Poor 2
Total 50

Reliability
25

20

15

10

0
Excellent Good Average Poor

Interpretation : From the above table it is clear that

maximum respondent feel that reliability of hero vehicle is

Excellent and Good i.e. 40% and 44% and 12% feel average

and only 4% feel poor.

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4. What is the source from which you found the
advertisements about Hero Motors :

No. Source Response

1. Television 20
2. Newspapers 12
3. Radio 6
4. Hoardings 12
Total 50

Advertisement
25

20

15

10

0
Television Newspapers Radio Hoardings

Interpretation :

From the above table it is very clear that most of the

respondents watched the advertisements of Hero in

Televisions i.e. 40% and newspapers, Hoardings combinely

48% and radio is very less i.e. 12%

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5. What is your preferred capacity and color about your
motor cycle
A) lOOcc B) 125cc C)150cc D) 200cc

A) Red B) Black C) Blue D) Other

1 Capacity Response Colour Response

lOOcc 5 Red 12
1 125cc 15 Black 22
150cc 20 Blue 10
200cc 11 Others 6
Total 50 Total 50

Interpretation :

From above table it is observed that most of the two

wheeler users are interested in 150cc bikes i.e. 40%, 125cc is
28%, 200c is 22%, lOOcc is just 10%

66
Interpretation:
Maximum people prefer black colour 44% followed by rd

24%, blue and the other.

67
6. Are you satisfied witii tlie delivery time of your motor
cycle

A) Yes B)No
Response
Yes 36
No 13
Total 50

Interpretation :
From the above table it is very clear that maximum

respondents are satisfied with the delivery time of the

motorcycle i.e. 72% and the remaining 28% were not satisfied

by the delivery time.

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7. What is your level of satisfaction of service with Hero
Motors
A) Excellent B) Good C) Average D) Poor

Satisfaction Response
Excellent 20
Good 22
Average 6
Poor 2
Total 50

Service Satisfaction
25

20

15

10

Excellent Good Average Poor

Interpretation:

From the above table it is very clear that maximum

respondents feel that they were satisfied with the service offered
by Hero Motors is excellent and good i.e. 40% and 44% and
12% feel average and only 4% of respondents feel its poor.

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8. What is the reason for your preference of Hero
A) QuaUty B) Fuel Efficiency
C) Economic D) Good Service

Preferences Response
Quality 10
Fuel Efficiency 20
Economic 8
Good Service 12
Total 50

Reason for Preference

Quality Fuel Efficiency Economic Good Service

Interpretation:

From the above table it can be concluded that maximum

respondents prefer Hero vehicles as they were satisfied with the
service offered by Hero Motors is excellent and good i.e. 40%
and 44% and 12% feel average and only 4% of respondents feel
its poor.

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 9. From how long are you using the Hero vehicle
A) < 6 months B) 6 - 9 months
C) 9 - 12 months D) more than year
Usages Response
Less than 6 months 5
6-9 months 10
9-12 months 13
More than year 22
Total 50

Usage Period
25
20
15
10
5
0
Less than 6 6 - 9 months 9-12 months More than
months year

Interpretation : From the above table it can be concluded that

maximum respondents i.e. 44% using Hero vehicles for more
than a year and 26% of respondents using from 9-12 months,
20%) using from 6-9 months and 10% are the new customers.

From this we can conclude that most of the Hero vehicles users
are using from long period so if hero motors concentrate on
providing better service after the purchase to the customers they
will keep using the Hero vehicles for longer period.

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10. How do you think Hero can improve on customer
service
A) Service in time B) Well trained mechanics
C) Less labor cost

Preference Response
Service in time 15
Well trained mechanics 24
Less labor cost 11
Total 50

Improving Service
30
25
20
15
10
5
0
Service in time Well trained Less labor cost
mechanics

Interpretation:

48% of respondents feel that the customer service at Hero

Motors can be improved by training the mechanics and 30%
feel by doing service in time, 22%) feel it by providing the
service for lesser costs.

Providing the satisfying service is very essential for any

company to keep its customers satisfied. Hero must take care of
all the three as they were important to increase service.

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11. Which age group do you belong
A) 20-25 B)25-35 C)35-45 D) above 45

Age Group Response

20 - 25 years 5
25-35 years 16
35-45 years 21
Above 45 8
Total 50

Age Group
25

20

15

10

0
20 - 25 years 25 - 35 years 35 - 45 years Above 45

Interpretation:

The maximum users of the Hero vehicles belong to the

age group of 35 - 45 followed by 25-35, 42% belongs to age
group of 35 - 45 and 32% belong to 20 - 35, \0% of respondents
are between 20 - 25 years of age and 16% are above 45.

From this is clear that the mid aged people are using the
Hero vehicles mostly. It has to produce different models for
younger population.

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12. Problems faced at the time of service
A) Higli spare parts cost B) Low quality
C) Delay in service D) No Problems

Problem Faced Response

High Spare Parts Cost 10
Low Quality 10
Delay in Service 14
No Problems 16
Total 50

Customer Issues
20

15

10

0
High Spare Low Quality Delay in No Problems
Parts Cost Service

Interpretation:

It was very good that 32% customers not facing any

problems with the service with the Hero but there were some
problems faced by the customers which should mostly
concentrate. 20% feel the spare parts cost it high and 20%) that
the quality of service is low, 28%) feel that the service is slow.

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13. Will you recommend Hero Motors to others
A) Yes B) No

Recommendation Response
Yes 41
No 9
Total 50

Interpretation :

From the above responses from the customers it is clear

that 82% of the respondents would like to recommend Hero to
others and only 18% don't want to recommend which is less
percentage but Hero should have to take measures to convert
the unsatisfied as satisfied customers who intum recommend
Hero products to others.

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14. Are you satisfied witli the overall service of Hero
A) Yes B) No

Recommendation Response
Yes 40
No 10
Total 50

Interpretation :

From the above responses from the customers it is clear

that 80% of the respondents were satisfied with the overall
service of the Hero Motors and 20% were not satisfied hero
should have to take measures to convert the unsatisfied as
satisfied customers.

76
Cash Flow Statement
for the year ended March 31, 2015
in Crores

Particulars For the year For the year

ended ended
March 31, March 31,
2015 2014

A. Cash Flow from Operating Activities

Net Profit Before Tax 3,328.82 2,867.25

Adjustments for:

Add: Depreciation and amortisation 539.97 1,107.37

Loss on fixed assets sold/discarded 22.84 13.98

Loss on sale of non-trade current 0.21 1.26

investments

Provision for diminution in value of

investment:

Exceptional item: Long term trade 155.04

investment - Non Current

Non Current

Long term non trade investment 0.72 0.45

Finance cost 11.09 11.09

Provision for doubtful debts 0.70 0.85

730.57 1,135.73

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Less: Interest on long term and current non-trade 50.37 53.10

investments

Interest on loans, deposits etc. 98.86 90.27

Profit on sale of fixed assets 0.68 0.68

Exchange differences (0.03) (3.02)

Dividend income:

On current Investments - Non-Trade 1.50 0.69

On long-term investments-Trade and Non 2.25 2.25

trade
Profit on sale of non-trade current 320.08 300.65
investments

473.71 444.62

Operating profit before working capital 3,585.68 3,558.36

changes

Changes in working capital:

Adjustment for (increase)/decrease in operating assets:

Add: Inventories (145.94) (32.79)

Trade receivables (469.74) (259.46)

Short-term loans and advances (237.35) (16.76)

Long-term loans and advances (23.00) (131.92)

Other current assets (30.78)

(906.81) (440.93)

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Adjustment for increase/(decrease) in operating liabilities:

Less: Trade payables 551.96 417.25

Other current liabilities (6.53) 52.74

Other long-term liabilities 6.88 3.47

Short-term provisions 2.95 2.15

Long-term provisions 15.64 19.82

570.90 495.43

Cash generated from operations 3,249.77 3,612.86

Less: Direct taxes paid 999.77 649.45

Net cash from operating activities 2,250.00 2,963.41

B. Cash Flow from Investing Activities

Proceeds from sale of fixed assets 2.71 4.05

Sale / (Purchase) of investments (net) 1,354.16 (8.66)

Investment in Associates (167.90) (0.16)

hivestment in Subsidiaries (87.49) (157.18)

hiter corporate deposits received back 515.00 625.00

hiter corporate deposits paid (295.00) (605.00)

hiterest received on long term and current non- 31.01 51.58

trade investments

Interest received on loans, deposits etc. 98.86 90.27

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Dividend income

On current Investments - Non-Trade 1.50 0.69

On long-term investments-Trade and Non 2.25 2.25

trade

Capital expenditure on fixed assets, including (1,155.68) (936.80)

capital advances

Payment of deferred credits (287.34) (685.36)

Net cash (used) in investing activities 12.08 (1,619.32)

C. Cash Flow from Financing Activities

Interest paid (11.09) (11.82)

Dividends paid (1,897.03) (1,199.29)

Tax on dividend (322.40) (203.82)

Net cash (used) infinancingactivities (2,230.52)) (1,414.93)

D Increase/(Decrease) in Cash and Cash

Equivalents (A+B+C) 31.56 (70.84)

Cash and cash equivalents at the beginning of 66.41 134.95

the year

Add: on account of amalgamation (refer note - 2.30

36)

Cash and cash equivalents at the end of the year

Cash and bank balances 97.97 66.41

97.97 66.41

80
Reconciliation

Cash and Bank balances as per Balance Sheet 159.25 117.50

Less: Unpaid dividend current account with 61.28 51.09

Banks

Net Cash and cash equivalents at the end of 97.97 66.41

the year

81
Balance Sheet
for the year ended March 31, 2015
in Crores

Particulars Vote As at As at
No. 31st March, 31st March,
2015 2014

I. Equity and Liabilities

1. Shareholders' funds

(a) Share capital 3 39.94 39.94

(b) Reserves and 4 6,501.39 5,559.93

surplus

2. Non-current liabilities

(a) Long term liabilities 5 31.33 24.45

(b) Long-term 7 65.62 49.98

provisions

3. Current liabilities
(a) Trade payables 8 2,841.87 2,290.59

(b) Other current 9 307.49 588.08

(c) Short-term provisions 10 734.06 1,544.33

TOTAL 10,521.70 10,097.30

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II. Assets

1. Non - current assets

(a) Fixed assets 11

(i) Tangible assets 2,818.29 1,897.27

(ii) Intangible assets 94.40 345.98

(iii) Capital work-in-progress 712.55 854.11

(b) Non-current investments 12 863.78 812.88

(c) Deferred tax assets (Net) 73.54 105.98

(d) Long-term loans and advances 13 616.82 477.39

(e) Other non-current assets 14 60.19 47.81

2. Current assets

(a) Current investments 12 2,290.33 3,275.89

(b) Inventories 15 815.49 669.55

(c) Trade receivables 16 1,389.59 920.58

(d) Cash and cash equivalents 17 159.25 117.50

(e) Short - term loans and advances 18 567.66 550.31

(f) Other current assets 19 59.81 22.05

TOTAL 10,521.70 10,097.30

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Statement of Profit and Loss
for the year ended March 31,2015
In Crores

Particulars Note For the year For the year

No. ended ended
March 31, March 31,
2015 2014

I. Revenue from operations 20

(a) Gross sales of products 29,068.24 27,005.26

Less: Excise duty 1,717.64 1,880.35

27,350.60 25,124.91

(b) Sale of services and other 234.70 150.56

operating revenue

Net revenue from operations 27,585.30 25,275.47

II. Other income 21 492.74 446.38

III. Total Revenue (I + II) 28,078.04 25,721.85

IV. Expenses:
(a) Cost of materials consumed 22 19,783.88 18,221.53

(b) Changes in inventories of 23 (29.97) 8.36

finished goods and work-in-
progress

(c) Employee benefits expenses 24 1,172.87 930.04

(d) Finance costs 25 11.09 11.82

(e) Depreciation and amortization 11 539.97 1,107.37

expenses

84
(f) Other expenses 26 3,116.34 2,575.48

Total Expenses 24,594.18 22,854.60

V. Profit before exceptional 3,483.86 2,867.25

item and tax (III - TV)

VI. Exceptional item - Provision 155.04

for diminution in
value of non current
investment (refer note no.
39)
VII. Profit before tax after 3,328.82 2,867.25
exceptional item (V -VI)

VIII. Tax expenses:

(a) Current tax 898.91 828.21

(b) Minimum alternate tax - (28.02)

relating to earlier years

(c) Minimum alternate tax credit - 196.37

utilised

Net current tax 898.91 996.56

Deferred tax 44.27 (238.39)

943.18 758.17

IX. Profit for the year 2,385.64 2,109.08

(VII-VIII)

X. Basic and diluted earnings 27

per equity share (of Rs. 2
each):

(a) before exceptional items 127.23 105.61

(b) after exceptional items 119.46 105.61

85