Sei sulla pagina 1di 78


‘Fancy Bi-Cycles in Punjab-

Selected insight into Market

Submitted to Punjab Technical University, Jalandhar

in partial fulfillment of the requirement of the degree of

Masters in Business Administration

Rajat Walia
Student (MBA-1I)

Department of Business Management

Punjab College of Technical Education, Ludhiana


We all marvel at beautiful rose. The rose with all its beauty and grandeur, but seldom we
pause and thank the kind gardener who patiently manures and watered it. The research
project which we undertake successfully completed. It is result of many such unseen
helping hands.

On every step there is a need of guidance and support. I therefore would like to thank
from my heart to all of them who support me in completion of project. There is always a
sense of gratitude towards those who helped me directly or indirectly. I take an
opportunity to thank all those who helped me directly inspires of directed and helped me
towards completion of this project report. While conducting the survey I gained a handful
knowledge that would help me in future.

No great endeavor in any field is possible in solitude. it needs inspiration, guidance and
help at every step. So I must preface my report by expressing sincere and deep gratitude
to those who made it possible for me to complete my project work.

It is my profound privilege to express my deep sense of gratitude to my director

Dr. K.N.S KANG for providing me such a great opportunity and I would also like to
thanks MR P.P SINGH(DEAN,P.C.T.E) for helping me in making my project and I am
grateful to Mr. G.D Kapoor for permitting me to take training at HERO CYCLES Ltd.,
LDH. His perceptive criticism kept me working to make this project more full proof.
Working under her was an extremely knowledgeable and enriching experience for me. I
am very thankful to her for all the value addition and enhancement done to me.

I also want to express our sincere gratitude to all the staff members of Hero Cycles Ltd.
for spending time and valuable information they have shared with us and helped us in our
project to be a success. At last but not least I am very thankful to my parents and all my
friends for their consistent guidance and constructive criticism and encourage me and
blessed me so as to enable to do the work successfully.
Rajat Walia


This Project Report is result of my six weeks summer training at HERO CYCLES Ltd.
Summer training is an integral part of our courses and its aim is to provide a practical
experience of the industry to the students. This helps the students to view the real
business world closely. They also come to know about the conditions under which they
have to work in the near future.

Keeping all this in view, this project report “Fancy Bi-Cycles In Punjab –selected insight
into Market Behavior” is prepared by me. Although I’ve tried to keep this report free
from errors but as we all know the maxim ‘To Err Is Human’. Therefore there is a chance
of some mistake. A critical appraisal by anyone will be heartily welcomed.

This is to certify that the research project entitled “Fancy Bi-Cycles In Punjab –selected
insight into Market Behavior” submitted for the partial fulfilment of requirement for the
degree of MASTERS OF BUSINESS ADMINISTRATION at Punjab college of
Technical Education, Ludhiana affiliated to PUNJAB TECHNICAL UNIVERSITY,
JALANDHAR is a bonafied research work carried out by Rajat Walia of MBA under my
supervision and that no part of this has been submitted for any degree.

The assistance and help received during the course of the investigation have been fully

Mr. Manish Kumar
Assistant Professor
Punjab College of Technical Education

Table of Contents

Particulars Page No
Chapter No.
Introduction 6-8
Fancy cycle 9-14
Profile(Hero group) 15-21
1.2 Profile (Hero Cycle LTD) 22-25
1.3 Mission And Vision 26-30
1.4 Milestone 31-38
1.5 Global Gearing 39
1.6 History Of Atlas 40-41
1.7 History Of T.I (Murrugappa Group) 42
2 Ratio Analysis 43-57
3 Research Methodology 58-61
4 Data interpretation and Analysis 62-71
5 Questionnaire 72-74
6 Conclusion 75-76
Recommendations 77
Bibilography 78



Bicycle, bike, or cycle,, is a pedal-driven, human-powered vehicle with two wheels

attached to a frame, one behind the other.

First introduced in 19th-century Europe, bicycles now number over one billion
worldwide, providing the principal means of transportation in many regions, notably
China and the Netherlands. They are also a popular form of recreation, and have been
adapted for use in many other fields of human activity, including children's toys, adult
fitness, military and police applications, courier services, and cycle sports.

The basic shape and configuration of a typical bicycle has hardly changed since the first
chain-driven model was developed around 1885 , although many important details have
been improved, especially since the advent of modern materials and computer-aided
design. These have allowed for a proliferation of specialized designs for individuals who
pursue a particular type of cycling.

The bicycle has affected history considerably, in both the cultural and industrial realms.
In its early years, bicycle construction drew on pre-existing technologies; more recently,
bicycle technology has, in turn, contributed ideas in both old and newer areas.

The Indian Cycle Industry

Bicycle was seen in India in the year 1890. Import of cycles, however, started in 1905
and continued for more than 50 years. Complete ban on imports was announced by the
Government in July, 1953, but cycle kept on simmering in the country till 1961. In 1890,
selling price of an imported bicycle was around Rs. 45/-; in 1917, during the First World
War the price jumped to Rs. 500/- but dropped considerably, month by month and came
down to Rs. 35/- or so (U. K. makes) and Rs. 15/- or so (Japanese
It would be interesting to mention that in 1919, five persons in Punjab imported cycles
and used them on The Mall, Simla. These included one Bishop, Two military men and

two contractors including S. Pala Singh Bhogal (Grand Father of Mr. M.S. Bhogal of
Ludhiana). Under special permission of the Governor, they were allowed to use cycles on
'The Mall' only for one hour in a day. They imported B.S.A. Cross Bar Cycle from U.K.
and it used to be a kind of Mela at that particular hour on the Mall in Simla, the scene
watched by hundreds of people everyday. Later, a firm was formed under the name of
Singh & Co. with shops on Railway Road, Jalandhar and Bazar Vakillan, Hoshiarpur,
which imported bicycles in the year 1930 onwards. With an annual turnover of 12
million bicycle in an year, Indian bicycle industry stand at no-2 position in the




• KW


The changing cycle

India may be the second largest producer of bicycles in the world but precious little has
been done to promote the cause of cycling in the country. Shveta Pathak reports that the
cycle industry is today churning out beauties that could easily make a style statement but
the road ahead is rough for the two-wheeled bikes. And, the status-conscious still refuse
to adopt them as a DO you remember the tinkle of the bell as daakiya Rajesh Khanna
delivers the post in the song Daakiya daak laya? Or, the very urbane Aamir Khan making
your breath stop for a while as he competes for the famous race in Jo Jeeta Wohi
Sikander? If you do, you mustn’t have forgotten the spirit lent to these moments by the
good old bicycle.

India is the largest cycle manufacturer in the world after China. The Indian industry doles
out 1.25 crore bicycles every year — with almost each day witnessing new designs,
colours and features. Even as environmentalists and the health-conscious worry about the
rising number of motorised vehicles on our roads, the easy-on-pocket two-wheeled
vehicle still pedals its way to almost every Indian household.

The good old black or green cycle bought by your grandpa and passed on to your father
has now given way to a mind-boggling range to choose from. In short, today you could
make a style statement with your bike.

Mode of Transport

Market players say they are bringing varied innovations to cater to the changing demands
of the consumers. Onkar Singh Pahwa, managing director, Avon Cycles India, one of the
leading cycle producers in the country, says: "The regular black or green bicycles
dominated the market a few years ago and the customers ranged from workers and office-
goers to school and college students. However, the customer profile has enormously

changed and the proportion of those relying on cycles as a mode of transport is declining.
A significant number of buyers now are school-goers and to attract them, we are coming
out with a large number of models with variations in colours, shapes, accessories, key
features and the type of material used."

As per estimates, the proportion of those going in for standardised bicycles has come
down from 90-95 per cent to 50-55 per cent in the last five-10 years. The consumer
segment that is speedily getting bigger comprises kids. This brings relief to cycle-makers
as the affordability range is higher and there is more scope for innovations. Thanks to this
segment, the loss in terms of volumes is covered up by the revenue inflow.

No wonder school-goers on fancy bikes are a common sight. To attract the young, there
are all kinds of attractive colours to choose from: silver, golden, red, hot pink, turquoise,
fluorescent shades, etc. The same applies to designs that could have a K, R, Y or a
diamond-shaped frame; raised handles, handles with elbow rest, bar ends; brakes with a
side pull system; foam-padded saddles; wheels with plastic discs; and an in-built dress
guard for ladies’ bikes.

The designs cater to needs as well as the budget of cyclists. So besides the regular bikes
for routine cycling, the market offers sports bikes, mountain terrain bicycles, bikes with
gears, and roadsters that accommodate two riders. One of the latest offerings includes the
battery-operated bikes.

"Earlier purchase decisions were instant on account of the limited options. But these days
people like to know about the many varieties and are much more conscious," a dealer

Priced Rs 15,000 onward, the battery-operated bikes are the latest attraction. On a single
charge, they can run 40-60 km at a speed of 23 km an hour. These bikes, however, would
be preferred by those who are planning a purchase for reasons other than health

"Considering the rising fuel costs and pollution, these bikes are ideal. They are low on
maintenance cost too," says Pahwa. The company is targeting office-goers and students
for these slick bikes and is hopeful of an encouraging response.

"Howsoever much might be the rise in number of cars, motor cycles et al, it remains
unlawful to hand them over to kids. In contrast, battery-operated bikes need no
registration and licence to ride them."

Indian companies, which have come out with a large variety of bikes, have a long way to
go even as they effectively combated competition that came from global market leader
China. The diminishing number of cyclists is a cause of worry for environmentalists and
economists. While manufacturers attribute the change in trend to rising income levels, the
other factors could be easy finance options for motorised vehicles, urbanisation and status
symbol attached to expensive vehicles. "Despite studies coming out with shocking details
on rise in diseases like heart attacks, people are more worried about their status," remarks
Pramod Sharma, co-ordinator, Yuvsatta, an NGO that has also launched a project to
promote cycling.

Sadly, efforts to motivate people to take to cycling remain negligible when compared
with the situation in other countries. Most countries provide separate tracks for cyclists,
have regular cycling tours and even film festivals promoting bicycles.

New York and London are celebrating the sixth annual bicycle film festival, and it is
quite common for various organisations in most countries to conduct cycle tours. This
phenomenon is rare in our country.

One might find a few tour operators giving an option to "foreign tourists" for cycle tours,
but there is no such attractive offer for domestic tourists and the general public.

The industry rues that the government is not taking measures to promote use of cycles.
Barring places like Chandigarh that have cycle tracks (which incidentally are not put to
much use), a cycle rider is not safe on Indian roads keeping in view the stupendous
increase in fast-moving motorised vehicles.

"Time and again we have been asking the government to take measures in this direction.
Come to think of it, the bicycle is the need of the day given the increasing pollution,
rising fuel costs and health hazards on account of leading a fast-paced life. Unfortunately,
efforts in this direction do not seem to be a priority with the government," says a leading

"Safety is a major concern when it comes to using the cycle as a mode of transport.
Unless people feel safe about the vehicle, the usage is unlikely to increase," says Tejinder
Singh, director, physical education, Sri Aurobindo College of Management and
Commerce, Baddowal.

If the cycle industry is to continue growing, India has to ensure the safety of cyclists and
popularise cycling as sport too besides generating awareness about its other benefits.
Otherwise, we would lose out on not just the industry but also on a healthier and cost-
effective means of transport, say industrialists.

A case for bikes

ONE of its kind in the country, Greentire, a project launched by Chandigarh-based NGO
Yuvsatta, is an endeavour to "motivate more and more people to ride bicycle more often".
Says co-ordinator Pramod Sharma, "We have got a good response and some of our
members, who include students and office-goers, have even taken to going to offices on

The NGO promotes use of cycles by forming cycle clubs, organising cycle tours around
Chandigarh and by holding cycle games.

Quoting a recent study, Sharma says: "Considering that every third death in a place like
Chandigarh is due to heart attack, using the cycle becomes all the more important."

A major hurdle is the mindset of the status-conscious against using the cycle. Sharma
insists that it is important to break this mind-set. "Unlike other countries where people do
not make a fuss about cycling and happily take to it, people here consider it below their

dignity to cycle to office. It is from here that excuses like time consumption arise."

Insisting on the need for efforts from the government, he says building cycle tracks would
be a step in the direction. "Barring Chandigarh, no other city has them, which is sad. We
are perhaps the only country that doesn’t even seem bothered about the issue."

Despite the odds, this NGO has had many successes in terms of various people, including
bank and corporate employees, shedding their initial hesitation and taking to cycling as a
mode of transport.

"While it would require a lot of effort to make people use it for transportation, we have
been quite successful in gathering people for cycle tours and games," he smiles.

For the status-conscious, Sharma suggests: "May be they could go in for the Mercedes
bicycle, priced at Rs 1.5 lakh plus. Even though the bike wouldn’t get the luxury of six-
lane metalled roads, the pleasure is every bit worth it."

Bicycle industry eyes urban market

If car manufacturers are flooding the market with luxury brands, why should the bicycle
industry lag behind? Bicycle companies in India are now focusing on urban markets and
are looking to expand their base in the professional and adventure categories.

The bicycle business is flourishing worldwide with the poor and the moneyed classes
alike are interested in using this mode to reach their destinations. It resulted in the global
companies experimenting with the change and spreading their wings across the globe.

“The latest bikes are for the urban kids. This sizable population has the tendency to
facsimile the West, especially in their lifestyles. And since the adventure sport is growing
rapidly there, we hope a good response in India too. The opening up of amusement parks
in Indian cities is a positive sign,” he added.

He further said the sales of hi-end products is expected to grow with the Commonwealth
games in 2010. Rajendra Varma, Coordinator, non motorised transport, Initiative for
Transportation and Development Programmes (ITDP), a Delhi based NGO, believes that
growing awareness among people about the benefits of cycling for body muscles could
be one reason for constant hike in the sale.

“As people don’t have much time for physical exercise nowadays, we have instituted an
organisation called Delhi Cycling Club with an aim to make people aware about the
benefits of cycling in keeping the body fit and also participate in minimizing air pollution
by not using heavy vehicles,” he adds.

He further said that we should promote culture of cycling in India by making stricter laws
for cyclist’s safety on roads. Demanding biking to be given the status of a professional
sport like cricket, a biker from Bangalore, Vibhor feels, “Cycling in India should be
promoted to make it a professional sport.”

A local club owner at Pune, Nilesh says, “Cycling has evolved from being a hobby to a
passion for me. With a group of few, we work with local cyclists, who also own biking
shops and try to make the people aware about the sport.” Gary Fisher introduced the
adventure sport ‘Mountain biking’ to the west for the first time in 1974. Since then it has
grabbed the attention of the youth.

An eco-friendly mode of transportation, bicycles are being revived across the world and
the steps are taken, especially by the symbols of modernization, like the Metro in the
capital in encouraging commuters to pedal their way to their destinations


"Hero", the brand name symbolizing the steely ambition of the Munjal brothers, came
into being in the year 1956. From a modest manufacturer of bicycle components in the
early 1940's to the world's largest bicycle manufacturer today, the odyssey was fueled by
one vision - to build long-lasting relationships with everyone, including workers, dealers
and vendors. This philosophy has paid rich dividends through the years.

Hero, a name synonymous with two wheelers in India is today a multi-unit, multi-
product, geographically diversified Group of companies. Through fully integrated
operations, the Munjals roll their own steel, make critical components such as free wheels
for their bicycles, and have the foresight to simultaneously diversify into myriad
ventures, like product designing, IT enabled services, finance and insurance, just to name
a few.

Like every success story, Hero's saga contains an element of spirit and enterprise; of
achievement through grit and determination, coupled with vision and meticulous
planning. Throughout its success trail, the Hero Group and its members have displayed
unwavering passion of setting higher standards for themselves and delivering simply the
best to their customers.

The Hero Group philosophy is: "To provide excellent transportation to the common man
at easily affordable prices and to provide total satisfaction in all its spheres of activity."
Thus apart from being customer-centric, the Hero Group also provides its employees with
a fine quality of life and its business associates with a total sense of belonging.

"Engineering Satisfaction" is the prime motive of the Hero Group and it has become a
way of life and a part of the work culture of the Group. This is what drives the Group to
seek newer vistas, adopt faster technology and create quality driven products to the
utmost satisfaction of customers, partners, dealers and vendors.

Today the Hero Group has a number of accolades and achievements to its credit … yet
consumer requirements and newer technologies provide fresh challenges every day, and
at Hero the wheels of progress continue to turn

Men of Steel

The success of the Hero Group lies in the determination and foresight of the Munjal
brothers, who shared their vision with their workers and led the Group to a position
where its name has become synonymous with top-quality two wheelers.

The flame kindled by the Munjal brothers in 1956 with the flagship company Hero
Cycles; Mr. Satyanand Munjal, Mr. Brijmohan Lall Munjal and Mr. O. P. Munjal
continue to carry the torch and are actively involved in the day-to-day operations of the
Hero Group.

The saga is being continued with the same zeal by the second and third generations of the
family and by the large working force of the Hero Group. The spirit of enterprise which
dominates the progress of the Group is characteristic of the land where it all began - the
City of Ludhiana, in Punjab - home to some of lndia's finest workers and entrepreneurs.

The Hero Group is a thriving example of three generations of a family working and
striving together to ensure quality, satisfaction and extensive growth.


Dr.Brijmohan Lall Munjal, patriarch of the US$ 3.19 billion Hero Group was born in
1923, in what is now Pakistan. After partition, the Munjal brothers started a small
business of manufacturing bicycle components in Ludhiana in North India in the face of
the bottlenecks of industrial infrastructure and investments. Dr Lall led a small time
manufacturer of 60 cycles a day to become a manufacturing giant, which churns out not

only over 17,000 cycles per day but is also diversified into various domains.
Undoubtedly, Dr.Lall is a first generation business entrepreneur of the 1950s'.

Dr.Lall has enriched the Hero Group with his vision of sound business governance and
value driven management practices. His foresight has made the Hero Group a leader in its
business. Dr Brijmohan Lall is a role model for Indian Industry in corporate governance
and ethical and value-driven management practices. His principle-based leadership has
led the Group companies to receive the best industrial governance and safety awards and
acquire stringent value certifications.

Dr.Lall was amongst the first Indian industrialists to effectively implement backward
integration and he is acknowledged as the trend setter in the area. Apart from the
promotion of the Indian industry, he is the actively involved in many national
associations such as CII, SIAM, ASSOCHAM and PHD and is a member of the Regional
Board of the Reserve Bank of India. He is Honorary Fellow of the Indian Institute of
Industrial Engineering.

In 1995, Dr.Lall received the National Award for outstanding contribution to the
Development of Indian Small Scale Industry. (NSIC award - presented by the President
of India)

In 1999, the Business Baron recognized him as the "Most Admired CEO."

The PHD Chamber of Commerce and Industry presented him with the Distinguished
Entrepreneurship Award in 1997, in recognition of his outstanding exemplary

Banaras Hindu University, Varanasi one of the most prestigious Universities of India
conferred him with a Doctrate; degree of " Doctors of letters" Honoris Causa in October

The Government Of India honoured him with the prestigious " Padma Bhushan"in March
2005 for his contribution to Trade and Industry

Dr.Lall has made an unfailing commitment of his time, energy and resources to strive for
the upliftment of the communities and villages around the Group's manufacturing units.
He has encouraged the setting up of numerous medical, educational and infrastructure
facilities. Amongst his notable contributions to his adoptive city, Ludhiana, are the
Ludhiana Stock Exchange, the Ludhiana Aviation Club - of which he is still the president
- and the Dayanand Medical College and Hospital.

Hero Group Companies

Hero Group ranks amongst the Top 10 Indian Business Houses comprising following
companies, with an estimated turnover of 5600 Crores during the fiscal year 2006-2007.

The spirit to manufacture outstanding quality products at affordable prices and to manage
the perfect balance of fine quality and engineering satisfaction, is the Hero Group
philosophy that drives the wheels of progress for the Group Companies and the Hero
Group, as a whole …

A brief overview of the ever progressing and highly success-oriented Hero Group
Companies are:

1. Hero Honda Motors Limited

2. Hero Cycles Limited
3. Hero Cycles Limited (Unit II)
4. Munjal Showa Limited
5. Majestic Auto Limited
6. Hero Exports
7. Munjal Auto Industries Limited
8. Sunbeam Auto Limited
9. Munjal Castings
10. Highway Industries Limited
11. Rockman Cycle Industries Limited
12. Hero Cycles Cold Rolling Division
13. Munjal Auto Components
14. Satyam Auto Components Limited
15. Hero Global Design
16. Easy Bill Limited
17. Hero Motors Limited (Hero Puch
18. Herosoft
19. Hero Corporate Service Limited
20. Hero Mindmine

Turnover of the group (2006-07): Rs. 5600 Crores

Hero Cycles Limited

Hero Honda Motors


Hero Cold Rolling Division

Hero Motors Limited

Hero Exports

Majestic Auto Limited

Rockman Cycle Industries


Highway Cycle Industries

Sunbeam Auto Limited LOGO
Munjal Auto Industries

Munjal Showa Limited

Munjal Castings

Munjal Auto Components

Hero Global Design

Hero Corporate Services

Limited -

- Hero ITES

- Hero Mind mine

- Hero Soft

Munjal e-systems

1.2 Profile (HERO CYCLES)

Hero Cycles Limited

Type Private company

Founded 1956
Headquarters Ludhiana
Key people Brijmohan Lal Munjal
Industry Bicycles
Revenue 10,0000 crores Rs 2004-2005

Hero Cycles Limited, based in Ludhiana Punjab, India, is the largest bicycle and related
product manufacturing company of India. The Hero Cycles Factory in Ludhiana is
considered to be the largest and the most efficient factory in the world


Hero group was started by the four Munjal brothers, hailing from a small town called
Kamalia, now in Pakistan in the year 1944 by establishing bicycle spare parts business in
Amritsar. After independence and partition of India, they moved to Ludhiana and started
a bicycle unit called Hero Cycles in 1956. By 1975, Hero cycles became the largest
bicycle manufacturer in India. In 1984, Hero group joined Honda Motors of Japan to
create Hero Honda Motors Limited which soon became one of the market leader in
motor-cycle sales in India. By the year 2004, Hero Honda became the world' largest
manufacturer of two-wheelers with over 48% market share in India. In year 2006, Hero
Honda entered the scooter production with launch of its new model - Pleasure.

Company’s Profile
Year of establishment: 1956
Registered Office: Hero Nagar G.T. road, Ldh
No. of employees: 3155 (513 staff &2642 workers)
Turnover of the company: 1400 crores
Net profit: 63 crores
Products: mfg. of Bicycles & Bicycles parts
Constitution Closely Held Public Company
Works / Plant Unit no.I (cycle and C.R Division);
Hero Nagar, G.T road, ldh

Unit no. II;

Plot no.8, site IV,
Sahibabad Industrial Area,
Ghaziabad (U.P)

Unit No.III; (New Hero Auto Rim Division &New

Cycle Division) Focal Point, Phase VIII,
Mangli, Chandigarh Road,ldh

Promoters of the hero cycles
Mr. Dayanand Munjal founded the Hero Group of companies. The mission of the hero
Group was to establish themselves as the leaders in the bicycle industry in India and
strive to sustain this position continuously looking for technology and product innovation
Hero Group has come a long way. The Hero Group is a multifaceted group of companies,
which has been successfully operating in the areas of bicycles, motor cycles, mopeds,
ancillary units and cold rolled steel. It is uncompromising quest for leadership, not just in
numbers but also in huge number.

Leadership in Hero is a way of word “the Spirit of Hero”. It is the spirit that keeps the
group moving all the way. It manifests it-self in whatever the group does and it is every
where, in the company, whether its employees, customers, vendors, suppliers etc. Munjal
brothers run the company with great dedication and sincerity. Hero is the largest selling
company of bicycles and motor cycles. Sh. BrijMohan Lall munjal is chairman of the
company, and his two brothers Sh. Satyanand munjal and Sh. Omparkash Munjal are co-
chairman cum managing directors of the company.

1.3 The Mission Statement

"Its our mission to strive for synergy between technology, systems and human resources,
to produce products and services that meet the quality, performance and price aspirations
of our customers. While doing so, we maintain the highest standards of ethics and
societal responsibilities. "

This mission is what drives us to new heights in excellence and helps us forge a unique
and mutually beneficial relationship with all our stakeholders. We are committed to move
ahead resolutely on this path, shown to us by visionaries like Mr. Satyanand Munjal, Mr.
Om Prakash Munjal, the late Mr. Dayanand Munjal and lateMrRamanKantMunjal.
Mr Brijmohan Lall Munjal, Chairman & MD - THE HERO GROUP.

The Vision
"We, at the Hero Group are continuously striving for synergy between technology,
systems and human resources to provide products and services that meet the quality,
performance, and price aspirations of the customers. While doing so, we maintain the
highest standards of ethics and societal responsibilities, constantly innovate products and
processes, and develop teams that keep the momentum going to take the

Globally, a select few, exceptionally powerful brands, are recognized as Super Brands.
Some of the Indian brands have made it into this unique hall of fame, and amongst that
coveted group features Hero Cycles. Super Brands are actually the big ideas which
provoke us to explore the realms of our dreams and inspire us to live satisfying life styles.
Anchored in omnipotent consumer insights, the super brands go beyond mere functional
promises as they trigger deeply embedded emotional chords.

Hero Cycles has been one of the most progressive and dynamic brands for the decades
now. More than 3200 dealers, 4800 employees and more than 9.6 Crore satisfied
customers, have directly or indirectly, endeavoured tirelessly to make Hero Cycles a
phenomenal success and are the true guardians of this brand.

Ambitions, belief, empathy and a strong culture of sensitivity are at the heart of Hero
Cycles brand. Each of these values is reflected in the company’s products, its
communication and its dealings with suppliers, employees, dealers and customers. Be it
company’s environment friendly manufacturing processes or the brand initiatives for the
lower income customers, leadership is all about capturing the hearts & minds of the
people- the way a true Hero always does.

Born out of Passion

The ore goes into fire only to shed off its impurities. Similar is the man whose virtues
shine when he is tried by the fire of life. Taking upon ‘Novelty’ itself as a competitor, the
Hero Cycles, has been always striving for perfection and innovation in every aspect of
their dealings. The pursuit to innovate is endless at Hero, so much so that ‘innovation’ has
become a buzz word in Hero premises. Hero Cycles has been able to use changes and
new trends to its advantage by identifying emerging need gaps and expanding its product
portfolio to appeal to different kinds of customers. In its endeavour to keep a step-ahead
of times, Hero’s most advanced & modern R & D department continuously creates
innovative products having functional attributes & aesthetics, meeting the aspirational
needs of its proud customers around the globe. As a result, Hero Cycles was able to
launch several new concepts and models in bicycles like the Mountain Bikes, Racer
Bikes, Dirt Terrain Bikes & D-frame bikes besides creating a variety of cycles for
different user segments and sub-segments – including women and children, students,
adventure seekers, labourers, city customers and fitness conscious. Rolling out nineteen
new models in just one year, itself speaks volume for Hero’s emphasis on innovations &

Quality : The Driving Force

At Hero Cycles, quality is a tradition, be it in the form of well trained labour, technically
superb machines or world class quality. The conformance to quality at Hero begins on
shop floor, with every worker ensuring at each stage manufacturing, that only perfect
product passes through his hands. Hero’s production department too believes in following
the zero-defect approach and continuous upgradation of its manufacturing systems. The
marketing and operations teams are also constantly creating new and effective strategies
using modern management techniques. And finally, every Hero cycle goes through a
series of rigorous quality checks before it leaves the factory. No wonder, Hero is in proud
possession of ISO-9001, ISO-9002 & BVQI certifications and also ISO 14001,
environmental compliance endorsement from the Ministry of Environment.

Constant quality upgradation ensures that the company stays in the global mainstream
and maintains its edge, through excellence. A technology tie-up with National Bicycle
Industries of Japan led to the launch of the ‘World 1’ series of cycles, besides introduction
of new frame designing and features like- A-frame, D-frame, Y-frame, Swan shaped
frame, speedometers & indicators among others

Heroes moving the Globe

Today Hero Cycles is one of the handful companies in India which can boast of the
global scale of operations, not just in size or superior technology, but also its innovative
marketing strategies. True to its leadership stature, Hero has not only achieved a volume
of production that can be matched by no other cycle manufacturer in the world, but has
also started exporting bicycles to countries like US, Germany and Japan, which is a
manifestation of Hero’s quality and marketing capability. Hero’s forays into the overseas
markets pioneered the Indian export in bicycle segment as early as 1963. While initial
exports were restricted to the Africa and the Middle-East, today more than 50% bicycle
exports meet the demands of sophisticated markets in Europe and America. Indeed, to
dare to explode from a small town of Ludhiana to world’s best and household name in 89
countries, it has Herculean task by any standards.

This Super Brand has still a long way to go but there is no hurdle too big and no
accomplishment permanent as this super brand thrives on the philosophy that Heroes in
the market-place are the ones, who forge strong relationship by being relevant, constant
and persistent, ...the True Heroes - in spirit and in form.

At Hero, it’s always believed that there is much more to life than just business. As a
company with a heart, it has certain commitments towards its employees, the society and
the nation. Though growing incomes, changing life styles and availability of cheap
customer finance has changed the market scenario enormously, Hero believes that cycles
can still be the driving force of the rural economy. By introducing the loan facilities under
‘Hero Cycle Loan Yojana’ through Corporation Bank and Oriental Bank of Commerce,
Hero Cycles has enabled low income customers to purchase cycles on easy terms.

Commitment to its employees is just as important as commitment to the society. All

efforts are taken to make sure that employees are provided the best working conditions as
work culture at Hero revolves around the philosophy-if there’s one way to work, it’s with
the heart. At Hero Cycles, there is a strong affinity towards building the relationships
with employees, workers, vendors and dealers. Job security, growth opportunity and
respect are the unspoken, yet understood components of every man’s package who
chooses to work within the fold of Hero family. It is quite common to find two
generations of the same family working together in the company, or the workers sharing
their skills with other family members and passing on finest training to each other. It goes
without saying that people at Hero are its largest investment and easily the largest asset.

At customer front too, Hero’s perception of customer relationship management (CRM)

does not end with merely meeting their expectations and aspirations or by ensuring
complete customer delight by overnight turnaround of customer complaints, but it goes
several steps beyond that horizon. The company believes in delivering value to the
customers even before they feel the need. This has helped Hero Cycles develop immense
brand loyalty and customer satisfaction. Like a true Super Brand, Hero has been able to

attract the respect and awe of not only its users, but also those who are directly or
indirectly exposed to it


Until 1986, the company had no need for mass communication. But as competition
started growing, Hero Cycles begun to feel the need for creating lasting impression on the
customer’s mind. In the mid 1980s Hero was perceived to be the manufacturer of the
basic black bicycles. The company required an image change. It needed to communicate
to customers the vast portfolio of products that it had, particularly in the recreational
segment. The launch of innovative products and their use as image builders happened
simultaneously. Since 1986, the communication strategy has been to build each product
separately and create a unique positioning for them. In this way the Ranger was
positioned as the bike for outdoor fun, Impact was the preferred choice among city riders
and Jet was projected as the lightest running roadster while Hawk was the racer’s edge.
Each of these launches and their promotion, gave the Hero brand a new meaning. The
brand has also used celebraties - including film stars Sanjay Dutt, Rani Mukherjee,
Hrithik Roshan and Ameesha Patel. The latest is India’s new bowling sensation, Irfan
Pathan who has also been a real life Hero cycle user.

1.4 Milestones

Hero's success saga contains an element of spirit and enterprise; of achievement through
grit and determination, coupled with vision and meticulous planning.

1956 Hero Cycles Limited is established.

1961 Rockman Cycles Industries Limited established, which is
today the largest manufacturer of bicycle chains and hubs.
1963 It pioneered bicycle exports from India - a foray into the
international market.
1971 Highway Cycles was set up to meet the demands of Hero
Cycles. It is today the largest manufacturer of single speed
and multi-speed freewheels.
1975 Hero Cycles Limited became the largest manufacturer of
bicycles in India.
1978 Majestic Auto Limited was formed and the Hero Majestic
Moped was introduced.
1981 Munjal Castings established.
1984 Hero Honda Motors Limited established in joint venture
with Honda Motors of Japan, to manufacture motorcycles.
1985 Munjal Showa Limited established to manufacture shock
absorbers and struts and is today among the top two shock
absorber manufacturing companies in India.
1985 The 100 cc Hero Honda Motorcycle arrived and by 1988
was the No. 1 among all motorcycles in India.
1986 Hero Cycles Limited entered the Guinness Book of
Records as the largest bicycle manufacturer in the World.
1987 Hero Motors, a division of Majestic Auto Limited set up
in collaboration with Steyr Daimler Puch of Austria.
1987 Gujarat Cycles Limited, now known as Munjal Auto
Industries Limited was established to manufacture and
export state-of-the-art bicycles and allied products in its
fully automated plant at Waghodia.
1987 Sunbeam Auto Limited, earlier a unit of Highway Cycles

Limited, established as an ancillary to Hero Honda. It is
the largest die casting plant in India.
1988 Introduced "Hero Puch" from Hero Motors Limited. This
revolutionary machine immediately set new records of
petrol efficiency and usable power in 50 - 65 cc machines.
1990 Hero Cold Rolling Division established and is one of the
most modern steel cold rolling plants.
1991 Hero Honda receives National Productivity Council's
1991 Hero Honda receives the Economic Times - Harvard
Business School Association Award against 200
1992 Munjal Showa Limited receives National Safety Award.
1993 Hero Exports established as the International Trading
Division for Group and non-Group products.
1993 Hero Motors becomes Indias largest exporter of two
1995 Hero Corporate Services Limited as the service segment
for the Hero Group Companies, ancillaries, suppliers,
dealers and other associates.
1996 - Hero Winner, a large-wheeled scooter was introduced by
Hero Motors Limited with a choice of 50 cc and 75 cc
1996 Munjal Showa Limited receives British Council's National
Safety Award.
1998 - Hero Briggs and Stratton Auto Private Limited was set
up to produce 4-stroke two-wheeler engines in various
cubic capacities.
1998 Munjal Auto Components established to manufacture gear
shafts and gear blanks for motorcycles.
2000 The Hero Group diversifies into IT and IT enabled

services through its service segment - Hero Corporate
Services Limited.
2000-2001 Hero Honda emerges as the market leader in motorcycles
with sales of over a million motorcycles and a strong
market share of 47%.
2001 Hero Global Design established to offer engineering
services in CAD/CAM/CAE related to New Product
Development, Design, Engineering and Manufacturing.
2002 Hero Cycles ties up with National Bicycle Industries, part
of Matsushita Group to manufacture high-end bicycles.
2002 Fastener World Established.
2002 Easy Bill Established to offer utility bill collection & retail
2003 Tie up with Livebridge Inc., USA.
2004 Tie up with Bombardier - Rotax GmbH for scooter
2004 Tie up with Aprilia Scooters, Italy.
2004 Hero Honda continues as the World's largest manufacturer
of two-wheelers with annual sales volume of 2.07 million
motorcycles and a market share of 48%.

Retail Insurance business established.

HeroITES, a division of HeroCorporate Service Limited

hived off as a division of new company Hero Management
Service Limited.

HeroITES strengthens its relationship with

ACS,USA,USD 5.0 billion market cap and Fortune 500

Hero Honda enters the scooter segment, launches 100cc

2006 Hero Honda crosses a unit sales threshold of 3.0 million


Hero Group celebrates Golden Jubilee year since

inception.It was commemorated by sales of over 15
million motorcycles & over 100 million bicycles.

Today, Hero Group comprises of 20 companies, 300 ancillary suppliers, deep market
penetration with over 5,000 outlets, 23,000 + employee and has a turnover of US$ 3.20
billion (FY 2006).

Board of directors
Sh. Brijmohan lal munjal (Chairman)
Sh. Satyanand munjal (Co- Chairman cum M.D. of works)
Sh. Om parkash munjal (Co- Chairman cum M.D. of mktg. & admn.)
Sh. Vijay kumar munjal (M.D. of international marketing)
Sh. Suresh chandra munjal (M.D. of domestic mktg.)
Sh. Ashish kumar munjal (M.D. of unit-II Sahibabad)
Sh. Sunil kant munjal (M.D. of C.R..division)
Sh. Pankaj munjal (M.D. of new hero auto rim division)
Sh. S.k. rai (M.D. of works)
Dr. M.a. zahir (Director)
Dr. D.r. singh (Director)

Organization Chart: Hero Group

Board of Directors

Mr. Brij Mr. O.P. Mr. Mr. Mr. Mr. Mr.

Mohan Munjal Yogesh Vijay Sunil Suresh Ashish
Lal Munjal Kumar Kant Chandra Kumar
Munjal Munjal Munjal Munjal Munjal

Mr. G.D.Kapoor

Mr.KJS Mr. Bharat Mr. YN Mr. SK

Bindra Goel Gupta Bhandari

Mr. SS Mr.Ashok Mr. AK Mr. MR Mr. AC

Saini Abrol Mathur Munjal Tiwari
(VP) (VP) (VP) (VP) (VP)

Mr.VL Mr.Nipun Mr. KN Mr.RK

Mr. Anil Vijay Sehgal
Sehgal Dang Bhatia
(Sr.GM) (GM) (AVP) (AVP)

Mr. Dalip Mr. Jit Lt Col TK Mr.

Kumar Singh Anand Swran
(GM) (GM) (GM) Singh
(GM) 36
Physical Layout of Hero Cycles Ltd.



8 4
7 21 14

5 15
2 16


Key to the physical Layout

1. Security 12. Scrap Yard
2. Admn, Block and systems 13. Rim plant
3. Lawn 14. Boiler house
4. Tabular 15. Paint shop
5. Generator Room 16. Main store
6. Scrap Yard 17. Polish Shop
7. Export Store 18. Effluent Treatment plant
8. Export packing 19. Main Shed
9. Canteen 20. Stores
10. Ranger 21. Receipt and dispatch Store
11. Unit V

Major Products
The Hero Cycles Ltd. Manufactures cycles, rims, free wheels, hubs & chains and cold
rolled strips as a main product. Company has long portfolio of different range of cycles.
Company has 132models in the list, covers all the three section-gents, ladies and kids. It
also manufactures cycle parts for its own requirements. After fulfilling the requirements
of company, it can export its remaining quantity.
The main products are:-
i) Cycles
ii) Rims
iii) Free wheels
iv) Hubs and Chains
v) Cold Rolled strips

.Another feather in the cap

'Hero Cycles Limited'- has added another feather in the cap by entering into strategic tie
up with a leading bicycle manufacturer of Japan namely “National Bicycle Industries of
National Panasonic in august 2002 to provide on technology transfer for up gradation in
phased manner.
After its tie up with national Bicycle industries, it has introduced new models as Cross
fire , razorback, Synergy, Ranger Max, Hawlk NU Age, Nitrogen and Princess.

Customer satisfaction
HERO has been consistently keeping pace with the time, by steady adhering to
consumer's aspiration. Over the year, the company has created market segments through
product innovation, meeting the aspirations of the youth and middle class the company is
honoring the watchword “Customer Satisfaction”. With its human approach, the company
is manufacturing an environment-friendly range of products.

1.5 Global Gearing - Alliances

Over the years, Hero Group has strengthened its joint ventures, forged profitable
relationships with its partners and allied itself with some of the best players in the market.
Technology assimilation through wide sourcing has been and will continue to be an
integral part of the progression of the Hero Group.

Technology Related IT Related Alliances Product Engineering

Partnerships/ Related Alliances
Alliances & Joint
Microsoft, PTC
Porsche Design
Target Design

Universal Cycles Plc,



1.6 Atlas: A Journey of Achievements

A man had a dream. To provide quality bicycles to his countrymen at reasonable prices.
The man was Late Janki Das Kapur. The dream : Atlas Cycle Industries Ltd.

A modest beginning in an improvised shed at Sonepat. This was transformed into a 25

acre factory complex in a record period of 12 months.

In the very first year of operation 12000 Atlas Cycles rolled out of the plant. Soon, the
first consignment of Atlas Cycles was sent overseas. Atlas has since then exported to over
35 countries.

By 1965, Atlas had emerged as India's largest cycle manufacturer. Greater demand,
higher production and ever-expanding markets made Atlas a name to reckon with.

It was time for accolades. Atlas was presented with the FICCI Award for 'Best Industrial
Relations'. Atlas' growing importance in the international arena did not go unnoticed
either. Italy's Gold Mercury International Award was conferred on Atlas. Subsequently, At
also received the prestigious EEPC Award for export excellence for the year 198O-81 and
several times later on.

The innovations and the constant quest for perfection continued. Atlas Goldline was an
instant success all over the country. Then came the Funfleet range of sports bikes which
took the market by storm. The racer bike of international class, Atlas Pro-10, was the new
breed of cycles to roll out of the Atlas plant.

The honour of being appointed official supplier of bicycles to the IXth Asiad, at Delhi,
added another feather to Atlas' cap.With growing demand for its products came the need
for achieving self-sufficiency in specialised bicycle components.

To meet its entire steel tube requirements the Atlas Steel Tube mill was set up at Gurgaon.

Not only was dependence on external suppliers broken but the stringent quality controls,
synonymous with Atlas, could be maintained.

The frontiers kept expanding. A second cycle plant at Sahibabad raised the production
capacity to meet ever growing demand.

New expansions. New entrants. At Atlas this is a process that never seems to stop. An
Atlas cycle to suit every individual taste and requirement. The promise of Atlas. The
dream of one man fifty years ago. The dream continues. To clock new records, new
innovations, new ventures.

1.7 T.I Murugappa Group

Type Public (NSE, BSE)

Founded 1900
Headquarters Chennai
Key people M.A. Alagappan (Executive Chairman)
sanitaryware, Life Insurance, General
Insurance, fertilisers, abrasives,
automotive chains, car door frames &
steel tubes
Revenue $ 2 billion
Employees 28,000

Murguppa Group is an Indian conglomerate with interests in engineering, abrasives,

sanitaryware, fertilisers, finance, bio-products and plantations.

The group started in early 20th century. Started at the same Tiruvottriyur, Chennai (Now
Carborundum Universal Ltd)in the name of Ajax India Ltd and made hardwares.

The Murugappa Group, headquartered in Chennai, India, is a $ 2 billion (Rs 8,500 crore)
conglomerate with interests in engineering, abrasives, sanitaryware, fertilisers, finance,
bio-products and plantations. It has 29 companies under its umbrella, of which eight are
listed and actively traded on the National Stock Exchange and the Bombay Stock
Exchange. Together, they have over 28,000 employees.

Ratio Analysis
Meaning and concept of ratio analysis

Ratio analysis is a technique of analysis and interpretation of financial statements. It is the
process of establishing and interpreting various ratios for helping in making certain decisions.
However, ratio analysis is not an end itself. It is only a means of better understanding of
financial strength and weakness of a firm. Calculation of ratios does not serve any purpose,
unless several appropriate ratios are analyzed and interpreted. There are a number of ratios
which can be calculated from the information given in the financial statements, but the
analyst has to select the appropriate data and calculate only a few appropriate ratios from the
same keeping in mind the objective of analysis. The following are four steps involved in the
ratio analysis:-

1. Selection of relevant data from financial statement depending upon objective of

2. Calculation of the appropriate ratios from the above data.
3. Comparison of the calculated ratios with the ratio of same firm in the past, or the
ratios developed from projected financial statements or the ratios of some other
firms or the comparisons with ratios of the industry to which the firm belongs.
4. Interpretation of the ratios

Functional Classification in view of financial management
Or Classification According to Tests

Liquidity ratios Long-term solvency & Activity ratios Profitability


Leverage ratios

1)Current Ratio 1) Debt Equity Ratio 1)Stock Turnover Ratio 1) G.P ratio
2) Liquid Ratio 2) Debt to total 2) Debtors Turnover 2) N.P ratio
capital ratio ratio
3) Absolute Liquid 3) fixed asset 3) Return on investment
turnover ratio

B.1) Debtors turnover ratio 4) Working Capital 4) Return

Turnover ratio on capital
2) Inventory turnover ratio 5) Creditors turnover 5) Earning
ratio per share
6) Total asset turnover 6) Divivend
ratio yield ratio

Ratio analysis of Hero Cycles Ltd

It refers to the ability of a concern to meet its current obligation as and when these become due.
The short-term obligations are met by realizing amounts from current, floating or circulating
assets. These should be convertible into cash for paying obligations of short – term nature. The
sufficiency or insufficiency of current assets should be assessed by comparing them with short-
term liabilities. If current assets can pay-off current liabilities, the liquidity position is
satisfactory. On the other hand, if current liabilities may not easily met out of current assets
then the liquidity position will be bad.

1. Current ratio
It is known as working capital ratio. It is a measure of liquidity and used in making analysis
of short term financial position. Current Ratio may be defined as the relationship between
current assets and current liabilities.

Current Ratio= Current Assets

Current Liabilities

(Amt. in Rs.)
Particulars 2003-04 2004-05 2005-06 2006-07
Current Assets 3,121,540,762 2,972,798,798 2,946,438,723 3,034,177,090
Current Liabilities 1,949,300,805 1,477,718,304 1,434,230,422 1,864,132,505
Current Ratio 1.60 2.01 2.05 1.63

The current ratio represents a margin of safety for creditors. As a conventional rule, a current
ratio of 2:1 or more is considered as idle. From above calculations, it can be seen that before
current ratio has improved from years but in 05-06 it is 1.62.on account of increase in
liabilities comparatively less increase in assets.

2. Quick ratio
Quick ratio is more rigors test of liquidity than current ratio. It is the ratio between quick
assets and current liabilities. Quick ratio refers to all the current assets except Inventory &
prepaid expenses.
Quick ratio= Quick assets( current assets – inventory - prepaid expenses )
Current liabilities

Particulars 2003-04 2004-05 2005-06 2006-07

Quick Assets 2547053655 2,370,091,900 0 2,267,655,948
Current Liabilities 1,949,300,805 1,477,718,304 2 1,864,132,505
Quick Ratio 1.31 1.60 1.60 1.22

As a rule of thumb quick ratio of 1:1 is considered satisfactory. In above case, quick ratio
is satisfactory throughout but before 2005-06 was better. Hence, it indicates that Hero
Cycles Ltd. is liquid enough to meet its current liabilities in time.

3. Absolute quick ratio
Cash is the most liquid ratio asset. Absolute liquid assets include cash in hand, cash at
bank, marketable securities or temporary investments.
Absolute quick ratio = Cash + marketable securities
Current liabilities

Particulars 2003-04 2004-05 2005-06 2006-07

Absolute Liquid 56,399,581 63,077,248 77,168,419
Assets 69,481,654
Current Liabilities 1,949,300,805 1,477,718,304 1,434,230,422 1,864,132,505
Absolute Liquid Ratio 0.03 0.04 0.05 0.04

The acceptable norm for this ratio is 0.5:1. From above calculations it can be interpreted that
absolute liquid ratio was very poor in 2002-03, 2003-04. it was satisfactory in 2004-05. It has
slightly improved in 2005-06 but still it’s not satisfactory.

Efficiency ratios or activity ratios:

Activity ratio measures the efficiency and the effectiveness with which a firm can
manage its resources. These are known as the turnover ratios, because they indicate the
speed with which assets are converted into cash.

4. Inventory turnover ratio

It indicates whether the inventory has been efficiently used or not. It indicated the number
of times the stock has been turned over during the period and evaluates the efficiency
with which a firm is able to manage its inventory.
Inventory turnover ratio= Cost of goods sold
Avg. Inventory at cost

Inventory conversion period

It is calculated to see the average time taken for clearing the stocks.
Inventory conversion period= Working Days in a year

Inventory Turnover ratio

Articulars 2003-04 2004-05 2005-06 2006-07

COGS 6,905,102,339 7,763,825,072 9,037,352,309 9,197,560,602
Average Inventory 542,671,258 588,597,003 626,374,391 708,281,513
Inventory Turnover
Ratio(in times) 12.72 13.19 14.43 12.99
Inventory Conversion
Period(in days) 23.58 22.74 20.79 23.10

Usually a higher turnover indicates efficient management of inventory. A low turnover ratio
indicates over-investment in inventories, dull business. Here company has shown upward trend
till 2005 but in 2006 it declines to 22.05 due to more increase in average inventory than cost of
goods sold.

5. Debtor turnover ratio

This ratio indicates the velocity of debt collection generally higher the ratio means the
more efficient management of debtors or more liquid are debtors and vice verse.
Debtor turnover ratio: net annual sales
Average trade debtors

Average collection period

It represents the average number of days for which a firm has to wait before its
receivables are converted into cash. It measures the quality of debtors.
Aver. Collection period = number of working days
Debtor turnover ratio

Particulars 2003-04 2004-05 2005-06 2006-07

Net Sales 8,958,744,266 9,715,341,692 10,944,819,048 11,369,337,410

Average Debtors 1,663,212,058 1,727,044,391 1,742,763,236 1,844,321,481
Debtors Turnover Ratio(in times) 5.39 5.63 6.28 6.16
Average Collection Period(in days) 55.70 53.33 47.77 48.67

Debtor turnover ratio of Hero Cycles ltd. shows irregular trend as it was increasing till
2005-06 but declined in 2006-07. It indicates less liquid debtors in that year. Average
collection period was quiet high in 2003-04 but it declined a good deal in 2004-05. But
again it increased a bit in 2006-07. It implies inefficient collection performance.

6. Creditor turnover ratio

This ratio indicates the velocity with which the creditors are turned over in relation to
purchases. Generally higher the ratio better it is or otherwise lower the creditor velocity,
less favorable are the results.
Creditors Turnover Ratio: Annual purchases
Average trade creditors
Average Payment period
It represents the average number of days taken by the firm to pay its creditors.
Average payment period = number of working days
Creditors turnover ratio

Particulars 2003-04 2004-05 2005-06 2006-07

Net Purchases 6,334,645,492 7,138,764,490 8,434,353,232 8,522,140,258
Average Creditors 1,286,366,791 1,371,725,862 1,202,784,000 1,345,833,421
Creditors Turnover Ratio(in times) 4.92 5.20 7.01 6.33
Average Payment Period(in days) 60.92 57.65 42.78 47.38

From above it can be interpreted that CRT has been increasing which is favorable. But it
decreased in 2006-07. Also AVP has reduced over years indicating better liquidity

7. Working capital turnover ratio
It indicates the velocity of utilization of net working capital. It indicates the efficiency
with which working capital is being used by the company.
Working capital turnover ratio = cost of sales
Average of net working capital

Particulars 2003-04 2004-05 2005-06 2006-07

Total cost of sales 1 8,750,834,271 9,832,216,567 10,867,966,519
Average working capital 9 1,333,650,163 1,503,644,398 1,341,126,443
Working Capital Turnover Ratio
(in times) 6 7 7 8

A higher ratio indicates efficient utilization of working capital. But a very high WCTR is
not a good situation for any firm. So overall in the years the working capital turnover ratio
is satisfactory.

Analysis of long term financial position of Hero Cycles ltd. or Tests of Solvency

8. Debt equity ratio

It shows the relationship between external and internal equities & it is calculated to
measure the claim of outsiders and owners against company’s assets
Debt equity ratio= outsiders fund
Shareholders funds

Particulars 2003-04 2004-05 2005-06 2006-07

1,566,465,19 1,775,398,08
Debt (outsiders fund) 1,488,245,715 9 2 1,576,254,791
3,299,592,58 3,780,685,82
Equity(shareholder's funds) 2,585,096,421 7 1 4,427,446,105
Debt Equity Ratio 57.57 47.47 46.96 35.60

As a general rule, there should be equal proportion of owner’s fund and outsider’s funds
in financing the firm’s assets i.e. 1:1. But in above case equity is more than outsider’s
funds which is favorable from creditor’s point of view as it provides margin of safety for
them. But again it is not considered satisfactory for shareholders indicating

Profitability ratios
These ratios measure the result of business operations or overall performance and
effectiveness of the firm.
14. Gross Profit ratio
Gross profit ratio indicates the relationship of gross profit to sales and it is usually
represented as percentage.
Gross profit ratio: gross profit*100
Net sales

Particulars 2003-04 2004-05 2005-06 2006-07

Gross Profit 2,053,641,927 1,959,516,620 1,907,466,739 2,171,776,808
Net Sales 8,958,744,266 9,715,341,692 8 11,369,337,410
Gross Profit Ratio 22.92 20.17 17.43 19.10
Higher the gross profit ratio better is the result. In 2003-04 ratio was 22.92%. It declined
in next tw0 year and then increased in 2006-07 and was 19.10% which is satisfactory.

15. Net profit ratio

It establishes the relationship between net profit and sales. It indicates efficiency of the
management in manufacturing, selling, administrating and the other activities of the
Net profit ratio = net profit * 100

Particulars 2003-04 2004-05 2005-06 2006-07

Net Profit 520,799,861 830,190,920 585,898,709 664,931,302
Net Sales 8,958,744,266 9,715,341,692 8 11,369,337,410
Net Profit Ratio 5.81 8.55 5.35 5.85

Higher the ratio better is the profitability. In 2003-04, ratio was 5.81% but it improved in
2004-05 but afterwards it falls and then it started increasing in 2006-07 indicating
satisfactory overall performance of the firm.

16. Return on shareholder’s investment or net worth:
Popularly known as ROI, this ratio is the relationship between net profits and the
shareholder’s funds.
Return on Shareholder’s investment = Net profit (after interest & tax)
Shareholder’s funds

Particulars 2003-04 2004-05 2005-06 2006-07

Net Profit 520,799,861 830,190,920 585,898,709 664,931,302
Shareholder's Fund 2,585,096,421 3,299,592,587 3,780,685,821 4,427,446,105
Return on Shareholder's
Investment 20.15 25.16 15.50 15.02

Higher the ratio, better are the results. In 2003-04 ROI was quiet less but it
increased in 2004-05 due to increased profit. Again in 2005-06 it declined due to increased
shareholder’s funds. Hence ROI of HCL has irregular trend.

17. Earning per share:-
Earning per share is a small variation of return on equity capital and is calculated by
dividing the net profit after taxes and preference dividend by the total number of
equity shares.
EPS = Net profit after taxes & preference dividend
No. of equity share
Particulars 2003-04 2004-05 2005-06 2006-07
Net Profit after tax -
Pref. Div. 520,799,861 830,190,920 585,898,709 664,931,302
No. of Equity Shares 39,821,280 39,821,280 39,821,280 39,821,280
Earning per Share 13.08 20.85 14.71 16.70

EPS of Hero cycles Ltd. has irregular trend as it increased in 2004-05 then declined in
2005-06and then again increased in 2006-07

18. Return on capital employed:

It establishes the relationship between profits and the capital employed.
Return on capital employed = Adjusted Net Profit *100
Net Capital Employed
Particulars 2003-04 2004-05 2005-06 2006-07
Adjusted Net Profit 679,039,636 941,787,571 735,872,498 636,173,463
Net Capital Employed 4,393,411,821 5,168,215,068 5,836,698,226 5,995,322,537
Return on Capital
Employed 15.46 18.22 12.61 10.61

It is the prime ratio that measures which measures the efficiency of the business. A higher
percentage of return on capital employed will satisfy the owners that their money is
profitably utilized.
19. Dividend Pay out ratio

It is calculated to find the extent to which earnings per share have been retained in the
business. It is an important ratio because ploughing back of profits enables a company
to grow and pay more dividends in future.
Dividend pay out ratio = Dividend per equity share
Earning per share

Particulars 2003-04 2004-05 2005-06 2006-07

Dividend per share 5.54 1.56 1.56 1.56
Earning per share 13.08 20.85 14.71 16.70
Dividend Pay Out Ratio 0.42 0.07 0.11 0.09

In 2004 company has given highest dividends in the last 4 years. The company is giving
constant dividend i.e.Rs.1.56 per year ignoring fluctuations in the earning per share. It
shows that company is retaining enough profits and it is in position to meet

TITLE: Fancy cycles in punjab, a selected insight into market behaviour


• To study the factors influencing the choice of customers while buying hi-end
cycles .
• To study the satisfaction level of customers of geared cycles
• To study the performance of various cycle brands on selected parameters.


Scope of the study

Scope of the study is restricted to cities of Ludhiana. Bhandita, ferozpur

3.1Research Design

The research design is a pattern or an outline of a research project’s working, it is a

statement of only the essential elements study, those that provide the basic guidelines for
the details of the project. Further a research design is an arrangement of conditions for
collection and analysis of data in a manner that aims to combine relevance to the research
purpose with economy in procedure. It constitutes the blueprint for collection,
measurement and analysis of data. Research design stands for advance planning of the
methods to be adopted for collecting the relevant data and the techniques to be used in
their analysis, keeping in view of the objectives of the research.

The present study, being conducted, followed a descriptive design. It produces a picture
of the phenomenon in which the decision maker is interested. As the data would be
responses from a sample containing large number of source. Design of descriptive studies
includes the nature and source of the data, the nature of expected results and the
analytical method.

The research design for my research is descriptive, as I will be exploring some new facts
about the “Fancy CYCLES IN PUNJAB-selected insight into Market Behaviour.”

3.2Data Collection

For my research study the data has been collected by both the primary & secondary
means. The primary data has been collected regarding the different attributes to be

considered while preparing the questionnaire. The questionnaire was then designed
keeping in mind the objectives of the study.

For primary data collection I adopted the structured questionnaire, which was filled by 21
respondents. The questionnaire was filled personally by visiting the respondents at their
respective locations.
The secondary data of my research has been collected through magazines, journals and
some previous researches.. ”

3.3Sampling Plan

Sampling is an effective step in the collection of primary data and has a great influence
on the quality of results. The sampling plan includes the universe, population, sample size
and sample design.


Universe refers to all the eligible respondents for a particular research around the world.
The universe for my research is all DEALERS OF CYCLES IN INDIA. Universe &
population can be same in some researches

3.5 Population

Population refers to part of universe from which the sample for conducting the research is
selected. Universe & population can be same in some researches.
The population for my research is cycle dealers in the cities of Ludhiana. Bhandita,

3.6 Sample unit

Each and every cycle dealer of Hero Cycles Ltd..

3.7 Sample size

For this study 21dealers were selected .

3.8 Sampling technique

There were 30ealers in all these towns but a few of them were unavailable so
questionnaires were got filled from 21dealers.


Data Analysis And Interpetation



5% 5%
10% 5-10 YEARS

10-15 YEARS


A major chunk of current cycle dealers have been into this trade for a long time that is in
this case more than 80% of the dealers have been cycle dealers for more than 15 years
now. In fact there is just 2 dealer who has entered into this field in the last 5 years.








From the graph it has been clear that it is youngster which prefer to buy fancy bi-cycles



10% 51%
8% 8%


Price is the most important factor which affects a customers decision while buying a
Fancy cycle which is closely followed by looks . Comfort and brand are also important
but surprisingly price is not a very important factor for customers of fancy cycle as it is
not a product meant for the masses.


20 12

Q: 7 Do you think brand name of a company affects the buying

Decision of a customer?




Q: 8 Do you think extensive advertisement affects the buying decision of a
customer?(IN PERCENTAGE)

80 75






20 15


Q: 9 what kind of Marketing Strategies you have been following to increase the sale
of Fancy cycles?




Q: 10 In which company’s product (Fancy cycles) you are getting maximum no of






0 10 20 30 40

Q: 11 According to you which media will be effective for advertisement



Q13How will you rate Hero’s Fancy cycles as compare to others? (IN

40 79
0 5 4

Q: 16 Do you think there is a bright future of Fancy cycles in the market?





Almost 80% of the dealers expect that the future demand for Fancy cycles will be
low. Whereas 10% expect that the market would be higher than what it is at present.



AVON 2.39 II
HERO 1.29 I
TI 2.61 III

Hero is the frontrunner in the overall sales followed by Avon . TI , the ghaziabad bases
company is third followed by Atlas. Other unorganized manufacturers like Neelam , K.W
etc are fifth in the ranking in terms of overall sales.



HERO 1.28 I
TI 2.18 II
Hero has the most wide products range in the overall cycles segment which is followed
by TI. Then comes Avon followed by Atlas .


AVON 2.19 II
HERO 1.30 I
TI 2.55 III

The customers of hero Cycles Ltd are the most satisfied customers in the cycle market
followed by Avon and TI . Atlas comes fourth in the list followed by other unorganized


Q1: How long you have been associated with hero cycles
(a) 0-5 years (b) 5-10 years (c) 10-15 years (

d) More than 15 years

Q: 2 which company does you represent?

(a) Hero Cycles (b) Atlas (c) Avon (d) Neelam

(e)All of above (f) Any other

Q: 3what kind of Customers prefer to buy Roadsters types of BI-Cycles?

(a) Youngsters (b) Professional Racers (c) Both

Q: 5 what customers prefer while buying Roadsters bi-cycles?

(a) Price (b) Comfort (c) Design (d) Colour

(e) Safety Measures (f) Quality

Q: 6 what type of Cycles have more sales?
(a) Standard (b) Roadsters Cycles (c) Both

Q: 7 Do you think brand name of a company affects the buying decision of a

(a) Yes (b) No (c) Can’t Say

Q: 8 Do you think extensive advertisement affects the buying decision of a

(a) Yes (b) No (c) Can’t Say

Q: 9 what kind of Marketing Strategies you have been following to increase the sale
of Roadsters cycles?

(a) Free gifts (b) Discount (c) Warranties (d) Repair

Q: 10 In which company’s product (Roadsters cycles) you are getting maximum no

of complaints?
(a) Hero Cycles (b) Atlas (c) Avon (d) Neelam

(e)All of above (f) Any other

Q: 11 According to you which media will be effective for advertisement?

(a)Electronics (b) Print (c) Mouth to Mouth

(d) Boards, Holdings and Wall Painting

Q: 12 which factors account for brand switching?

(a) Price (b) After sale service (c) Design (d) Colours

(e) Safety Measures (f) Quality (g) Salesmanship

Q: 13 How will you rate Hero’s Roadsters cycles as compare to others company’s
(a) Excellent (b) Good (c) Average (d) Poor

Q: 14 which brand you prefer to sell more?

(a) Standard (b) Roadsters (c) Both

Q: 15 Rating on the basis of

Sale Customer Satisfaction PRODUCTroduct Range

Hero Cycles -------- ---------- --------------

Avon -------- ---------- -------------

Atlas -------- ---------- -------------

TI -------- ---------- --------------

Q: 16 Do you think there is a bright future of Roadsters cycles in the market?

(a) Yes (b) No (c) Can’t Say





 80% of the respondates are given response that they are in the business more than
15 years. Only 10% of respondates are in the business in between 10-15 years.

 From the graph no-2one can clearly see that hero cycle is no-1 in terms of sale

 From the graph no-4 we can clearly see that it’s the youngesters who prefer to buy
fany hi-end racing cycles.

 From the figure-5 one can clearly see that while purchasing hi –end bi-cycles
price is the most dominating factor followed by safety and quality.

 Hi-end fancy cycles has more sales as compare to standard cycles.

 80% of respondate agreed that brand name of a company effect the buying
decision of a customer.

 75% of respondate agreed that advertisment plays the important role while
influence the customer buying habit.

 45% of dealers used the free gifts followed by 35% of dealers discount as
marketing tool to inceresce their sales.

 Avon cycles got th maxmium no of complaints and hero cycles got the less no of

 I/3 of the dealers feels that elctroincs as a media is more effecting to promote their
respect products.

 79% of the dealers rate hero’s hi-end bi-cycles excellent in terms of quality.

 60% of the dealers have said that they will prefer to sell hi-end bi-cycles.

 Majority of dealers have givrn the response that there is a bright future for hi-end

 Not only in sales hero is no-1 in trms of customr satisfaction and product range.


 To increase their sales dealers are giving free gifts and discount from their on
pockets. Instead of that company shoud has to provide them free gifts and

 Some dealers sold local branded cycles with the name of hero cycles. Company
should has to take some affermative steps to that dealers which are selling local
branded cycles with the name of hero cycles

 To cater the competetion hero cycles has to concerate more on advertisment.


 Gupta Shashi et al, Management Accounting and Business Finance, 2005, Kalyani
Publishers, Ludhiana, Edition- 13, Pg- 4.1- 4..53.
 Panday, I.M.. Financial Management. New Delhi: Vikash Publications House.
 Sharma et al, Practical Problems In Management Accounting and Financial
Management, 2007, Kalyani Publishers, Ludhiana, Edition -4, Pg 2.1- 2.96.
 Company Brochures