Atlas Honda Limited

COMPANY INFORMATION

THE BOARD OF DIRECTORS

Mr. Yusuf H. Shirazi (Chairman)
Mr. Saqib Hussain Shirazi (CEO)
Mr. Aamir H. Shirazi (Director)
Mr. Motohide Sudo
Mr. Sanaullah Qureshi
Mr. Sherali Mundrawala
Mr. Takemi Ishikawa
Mr. Tariq Iqbal Ahmed

COMPANY SECRETARY
Mr. Sohail Ahmed

AUDITORS
Hameed Chaudhri & Company
Chartered Accountants

LEGAL ADVISORS
Mohsin Tayebaly & Co

BANKERS
Bank Al-Habib Limited
Credit Algricole Indosuez

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Deutch Bank AG
Emirates Bank International P.J.S.C.
Habib Bank Limited
Muslim Commercial Bank Limited
National Bank Of Pakistan
The Bank Of Tokyo Mitsubishi Limited
United Bank Limited

REGISTERED OFFICE
1-McLeod Road, Lahore.

FACTORY
F-36, ESTATE AVENUE, S.I.T.E., KARACHI
26-27 KM, LAHORE-SHEIKHOPURA ROAD, SHEIKHOPURA

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INTRODUCTION OF ATLAS HONDA LIMITED

Atlas Honda limited is a joint venture between the Atlas group and
Honda Motor Company, Japan. The company was created by the merger
of Punjdarya Limited Sheikhoopura successor to Atlas Epak Limited,
Dhaka. Since taken over by the government of Bangladesh and Atlas Autos
Limited in 1991.

Both these motorcycle-manufacturing concerns were established by the

Atlas group. Atlas Honda Limited manufactures and markets Honda
motorcycles in collaboration with Honda Motor Company. The company
also manufactures shock absorbers under a technical assistance agreement
with Showa Of Japan, world leaders in shock absorber company Honda
motor cycles are by far the best selling motorcycle in the country with an
unmatched reputation for high quality, reliability and after sales services.

Atlas has undertaken to develop local manufacturing capabilities to the

highest economically feasible level. While a major role in localization has
been assigned to vendor industries, atlas has the countries largest in house
manufacturing capacity in the industry at its Karachi and Sheikhupura
plants. To support the production facilities the company has established an
R&D (research and development) wing and tool making facilities, which are
growing rapidly in size and functions as the company expands.

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Atlas has managed to execute nine joint ventures / technical assistance

agreements between local venders and foreign manufacturer for transfer of
technology.
Atlas management is striving to modernize company operations by adapting
applicable aspects of research and theory and more specially Honda’s unique
philosophy of hard / soft technologies to the realities of Pakistani conditions.
Company management structures, system, and processes are changed
frequently to meet demand of customer needs, growth and new technology
efforts are being made to develop participation of all levels of personal in
decision making and substantial and effective delegation has been
established at levels where applicable. Various participation programs such
as “AALA MAYAR” Quality circles movements, launched in 1985, are
strongly encouraged to allow constructive self expression and team work.
The company training and development program encourage each member to
develop himself and contribute to his full potential.

Atlas Honda is playing a pioneering role in creating conditions for easy and
confident use of motorcycles all over the country.

A vast and growing network of over 1500 motorcycles sales service and
spare parts dealers has been established. To backup the system, atlas has
setup technical training statement centers in Karachi Lahore and Faisalabad,
which provide several courses of varying duration, and complexity for
motorcycles mechanics and users each year. Mobile training facilities take
the latest know-how, technology and maintenance of motorcycles to major
rural and urban centers around the country.

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VISION OF AHL

Atlas Honda limited, being Japanese, always believe in quality leadership

customer satisfaction and satisfaction of shareholders. The executives and
managers at AHL are keen about the staff cooperation and dedication. That’s
why promoting teamwork culture is the core activity of the company. The
vision of AHL as follows:

“To remain a market leader in the motorcycle industry and emerge

as a globally competitive center of production and exports.”.

The above statement clearly predicts the overall scenario of the management
at AHL.

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MISSION STATEMENT
Mission Statement, the statement that further reveals the practicalities of any
organization, comparable to its vision statement. The Mission Statement at
AHL is highlighted below:

“To be a dynamic profitable growth oriented company through market

leadership excellence in quality and service optimizing value for the
shareholders and maximizing exports
To give attractive return to business associates and shareholders as per
their expectations.
Be a responsible employer and reward employees according to their
abilities and performance.
To be a good corporate citizen in order to fulfill its social responsibilities.
To create and foster a network of researchers, engineers, who will make
unique contribution to the development of motorcycle industry ensuring
satisfaction of our valuable customers and protection of the environment
by producing emission friendly green products. ”.

The Honda Company’s purpose is indispensable to all Honda associates,

when it comes to understanding the reason for the existence of the company.
Top management at AHL try to ensure that mission statement:
a) Is appropriate to the purpose of organization.
b) Includes commitment to comply with requirements and to continually
improve the effectiveness of quality management system.

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c) Provides a framework for establishing and reviewing the specified

objectives.
d) Is communicated and understood within the organization.
e) Is reviewed for continual suitability.

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COMPANY POLICY

CUSTOMER
Our customers are the reason and source of our business , it is our joint aim
with our dealers to ensure that the customer enjoy the highest level of
satisfaction from use of Honda motorcycle.

QUALITY
To ensure that our product and service meet the set standards of excellence.

LOCAL MANUFACTURING
To be the industry leader in indigenous of motorcycle parts.

TECHNOLOGY
To develop and maintain distinct business advantage through continuous
induction of improved hard and soft technology.

SHAREHOLDERS
To ensure health and viability of business and the safeguarding shareholder
by maximizing profit, payment of regular satisfactory dividend and adding
values of the shares.

EMPLOYEE
To enhance and continuously update each member’s capabilities and
education and to provide an environment to encourage practical expressions

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of individual potential in goal directed team efforts and compensate them

attractively, according to their abilities and performance.

CORPORATE CITIZEN
To comply with all government laws and regulations and to maintain high
standards of ethics in all operations, and act as a responsible member of
community.

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QUALITY POLICY

 Commitment to provide the high quality motorcycles & parts

 Right work in first attempt and on time

 Maintain and continuously improve quality

 Training of manpower and acquisition of latest technology

 Safe, clean and healthy environment

 Market leadership and prosperity for all.

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PHILOSOPHY AT AHL

The center of AHL’S philosophy is based on the company’s principle.

Underlying the company’s principle are two fundamental beliefs:
1. Respect for individuals and
2. Three Joys.

1. RESPECT FOR INDIVIDUALS

At AHL individuals are counted as a member of team that is working for the
achievement of specific targets. So here every individual from the top
management to the employees is categorized as an important part of the
company. Also every associate is honored for his or her efforts and
contribution.
Associates at Honda are motivated to think creatively and act on their
judgment and initiative.
All members at AHL are equally recognized, no discrimination is made on
the basis of race, age, sex, religion, national origin, educational background
and social and economic status.

2. THREE JOYS
AHL believe that each person working, or coming in touch with our
company directly or through our products, should share a sense of joy
through the experience. This feeling is expressed as “ Three Joys”.
AHL’S goal is to provide joys to those who:

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 Produce their Products.

 Sell their Products.
 Buy their Products.

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CULTURE OF ATLAS HONDA

During my stay at atlas Honda Limited Karachi I have found a unique blend
of different valuable cultural variables that includes

 There is egalitarian system in the whole organization i.e. there are

equal opportunities and chances of progress for all employees.

 There is power delegation at every level.

 There is lesser power distance between top-level management and

lower level management for example each and every employee can
have an easy access to even the CEO of organization.

 There is room for innovation. Each employee is encouraged to pave a

better way for innovation.
 There is practical implementation of TQM (total quality
management) and continuous improvement which is inherited in
Japanese culture , in the form of KAIZEN ( a slight change towards
improvement ) and AALA MAYAR.

 There exists equality in overall organization, which is well

represented by the thing that the lower level workers and top level
management even the CEO of the organization wear the same
uniform.

 Employees are very much cooperative with each other.

 Management and employees are open to market challenges.

 There are no unnecessary bindings of excessive rules and regulations.

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 There is effective interdepartmental communication between all the

departments.

 There are no communication gaps between top-level management and

lower lever workers.

 There is almost 100% job security for employees, so employees are

devoted towards their jobs and are well satisfied with their jobs. There
is almost zero percent job turn over.

 Customers’ satisfaction is the major focus of the organization.

Customer is king for the organization.

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DEPARTMENTS
I have visited following departments of ATLAS HONDA LTD, Karachi.

 Human resource
 Finance
 Maintenance
 Vender procurement
 Production
 Information technology
 Marketing

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HUMAN RESOURCE DEPARTMENT

This department has three sections
1. Human resource
2. Administration
3. Industrial relations

HUMAN RESOURCES
This section performs following functions
 Recruitment & selection of employees
 Training & development of employees
 Succession planning of employees

ADMINISTRATION
This section performs following functions
 Facilitation of company guests and executives
 Employees’ Mess management
 Utilities administration
 Miscellaneous administrative activities

INDUSTRIAL RELATIONS
This section performs following functions
 To build a healthy cooperation between management and workers.

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FINANCE
Atlas Honda has a well established finance department. It is totally
computerized .it has its own system which is prepared by IT department.
Finance department has further following sections.

 Finance
 General ledger
 Costing
 Taxation
 Sales
 Payables
 Payroll

FINANCE
This section deals with the
• Banking matters
• Fund management
• Import accounting.

COSTING
It is an important section of finance department, which deals with all costing
matters including all material, labor, and overhead costs.

TAXATION

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It deals with all tax and custom duty related affairs.

PAYABLES
This section deals with the following activities.
 Vender payables
 Utility payables
 Insurance payables
 Tax payables
 Club payments
 Other payable

PAYROLLS
This section controls the salary system of the organization. All the system is
computerized. First of all the attendance of all employees is recorded and at
the end of the month salary of all employees are paid after all deductions*
* Tax deductions, absenteeism deductions and all other deductions

GENERAL LEDGER
Finally all the transactions are recorded in general ledgers. General ledger
for each account is maintained separately. There is a computerized system,
which then produce different statements.

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VENDOR PROCUREMENT DEPARTMENT

At present, 82 vendors are working with the company.

This department performs following functions
• This department is responsible for all the relations and dealing with
different vendors.
• This department motivates vendors to produce excellent quality and
train them to achieve the highest level of quality.
• This department also deals with the CKD (complete knock down).
• This department performs VIP (vendor improvement programe).
Under this programe, the department representatives go to the vendors
and train them for new methods to produce better quality at
reasonable price.

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PRODUCTION DEPARTMENT
It is very important department as it produces the main product of the
company, which will eventually generate revenue. The production
department has twelve different shops. Each shop is responsible for different
production functions. These shops include
• Raw material shop
• Cutting shop
• Press shop
• Dying shop
• Welding shop
• CKD shop
• Switch assembly shop
• Tire shop
• Engine shop
• Washing shop
• Final assembling shop
• Inventory shop

The productions department is very efficient. The average per

motorcycle assembling time is four minutes. The production department
of Karachi plant can produce 250 motorcycles per day.

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INFORMATION TECHNOLOGY DEPARTMENT

Atlas Honda has a sophisticated IT system. All the departments are

linked through network. Each and every department is computerized. This
computerization has reduced the burdens on employees. Particularly the
employees of finance department have different soft wares to support their
work. All these soft wares have been developed by company’s own IT
department. Mostly soft wares are developed in-house and in some special
cases outsourcing is also being used.

VISION STATEMENT OF IT DEPARTMENT

I.T Department is dedicated to provide reliable information base using most

modern technology to potential users at all levels. Our professionals individually
and collectively, will constantly improve their competitive skills and excel in
providing quality service covering all the aspects of the technology.

By embarking into the digital age we will accelerate the positive effects and
mitigate the challenges as knowledge grows when shared.

We will innovate in a research-oriented manner with technologies to create our

own future and value added activities for profitable relationships with our
stakeholders, thus encouraging intellectual curiosity for our products, service
and insight that will help people around the world, shape the ways business and
education will be done in future. Our professionals and their competitive skills
will be the hallmark, that combined with technology innovation, expert skills
and teamwork, will keep us leaders in "CHANGE" to open new doors.

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MAINTENANCE

This department is responsible for all the maintenance of the whole factory,
offices and even the houses of top management. In order to provide
effective, efficient and timely maintenance this department has two type of
information.
 It has Machine wise spare parts report
 Machine and equipment list
Seventeen employees are there in this department. Three are engineers and
others are workers.
It provides two types of maintenance.
 Corrective/ Breakdown maintenance
 Preventive maintenance

CORRECTIVE/BREAKDOWN MAINTENANCE
The same department also carries out Emergency/breakdowns of
machines & equipments and plant maintenance work. If any of the above
problems occur then the concerned department sends a Work Request to this
department, then this department resolves the problems according to the
Work Request.

PREVENTIVE MAINTENANCE

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In this maintenance system department tends to provide and follows a

comprehensive preventive maintenance program. According to this program
the department set a sequence of maintenance activities for all the machines
of different production shops on continuous basis. Some machines are
checked on monthly basis and others are maintained on some other fix
intervals in order to prevent any breakdown and to streamline the production
process.

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MARKETING DEPARTMENT
Marketing department is divided into three parts on behalf of its functions.
• Sale
• Service
• Spare parts

SALE
It is an important division of marketing department. It is the profit centre of
the company. It deals with three types of sales.

1. INSTITUTIONAL SALE
The company provides the direct sale to the institutions. Company provides
the motorcycle to following institutions.
• Police departments
• CSD (canteen store department)
• TCS (technology communication supplies)
• Pesticide companies
• Many others

2. INDIVIDUAL SALE
This is the usual sale to the individuals. This usually follows the following
path.

Company Dealer Customer

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3. EXPORTS
Company also exports CG 125 to Sri Lanka, Nepal and Bangladesh.

FUNCTIONS PERFORMED BY SALE SECTION

The sale section of the marketing department performs the following
functions
• Forecasting of sale
• Booking of motorcycles through dealers
• Managing the payment
• Manage the dealership network

The company follows the policy of advance booking which means company
first receive the payment and then produce the product according to demand
and this is the reason that the company has a very low amount of receivables
and most of the receivables are based on the sale made to institutions.

SHOW ROOM
Sale section also deals with the showroom. There is only one company
owned showroom in Karachi and this showroom is meant only for the
display of motorcycles. In the past the company used to sell the motorcycles
from the showroom but now a days company doesn’t sell the motorcycles
through its showroom. But in some special cases the company sells the
motorcycles from showroom to the persons that have relationship to the
company employees.

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SPARE PARTS
This is another important division of the marketing department.
Basically company doesn’t consider it as profit center rather a supportive
section to produce better customer service. It has separate distribution
system and different parts dealers in different regions.

SERVICE
The second major section of the marketing department is service section.
The service section deals with
• Antenna or service dealers
• Warranty and training centre

ANTENNA OR SERVICE DEALERS

These are the authorized dealers of the company. The company provides
them autonomy while dealing with the claims and these dealers have the
autonomy to replace the defected part without consultation with the
company. Company provides two free tunings after the sale of motorcycle.
Basic reason for the establishment of these dealers is to satisfy their
customer and increase the customer loyalty.

WARRENTY CENTRE
In Karachi the company has a well-established warranty and training centre.
this centre handles the service section. Warranty and training section
performs the following functions

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• Deals with the claims

• Training to different service dealers

CLAIMS
The company has a policy that customers’ claims will be settled if these are
made within the six months or 1000 km coverage (whatever occurs first)
warranty conditions.

TRAINING
Warranty center not only provides training to their antenna and service
dealers but also the mechanics of ordinary workshop in order to develop the
skilled four stroke mechanics. Company organizes the workshops on regular
basis and invites antenna and service dealers from all over the Pakistan to
participate in these workshops and training program.

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MARKETING MIX
There are four elements of marketing
• Product
• Price
• Place
• Promotion
PRODUCT
Atlas Honda has two basic products
• Honda CD 70
• Honda CG 125
Both of them are the four stroke motorcycles. Both the products have a good
repute in the market and that is the reason that Honda has approximately
63% market share now a days.
The basic reason of the success is the quality maintained by the company
throughout its career.
These two models of HONDA are being manufactured in Sheikhupura and
Karachi. Each plant has a capacity to produce 250 motorcycles per day, but
still the market demand is not being fulfilled.
In order to increase market share marketing department perform following
activities
• New model
• Changes in design
• In-house production

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NEW MODEL
In order to get more market share atlas Honda has been introducing new
models over the time. The latest model was launched by company in 1992-
93. Previously there was a small fuel tank but in the new model company
introduced a large fuel tank as compared to the previous one. But the
company always maintained the quality of its motorcycle.

CHANGES IN DESIGN
There was a great demand from the customers to launch a new model but it
is a difficult job to launch a new model so in order to fulfill the customer
wants the company has a policy to change the stickers of fuel tank and side
covers and some other nominal changes in indicators headlights etc. time by
time, in order to satisfy customers needs. But the engine and other main
accessories are the same.

INHOUSE PRODUCTION
At the outset of company 90-95% parts were imported from Japan and were
assembled in Pakistan. With the passage of time company introduced the
concept of localization. Company encouraged the local vendors and
suppliers to produce the parts of motorcycle according to the level of Honda
international. So in order to maintain the quality, the parts made by local
vendors were approved by the Honda international and then they were used
in local production. So now Atlas Honda has managed to localize almost
89% of the parts. Still 11% parts are being imported from Japan. Atlas
Honda also provides assistance to their vendors to maintain high quality.
They send their engineers to check the quality and to train the vendors in

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order to produce the required qualitative product. This all is done under the
head of marketing department.

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COMPETITORS BRANDS & MODELS

Yamaha
Yb-100
Excellence
Yama-4
Suzuki
SD-110
SD-Flash
Sohrab
JS-70
JC-125 (china)
• Pak hero
PH-70

• Hero
RF-70
RF-125
• Star
DS-70
C-70 (CBU)
• Lifan
LF-70
LF-150
• Jailing
JH-70 (Remot-Self)
JH-70 (Without)

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PRICE
Atlas Honda has two products and their prices are as under
Honda CD70 Rs. 58500
Honda CG 125 Rs. 73000
The company uses the single price strategy. It means the product has the
same price all over the Pakistan.
Initially Atlas Honda was the only producer of qualitative four-stroke
motorcycle in Pakistan. So they were taking the advantage of this
monopolistic situation and using the price skimming strategy and were
charging higher prices.
Till 17th may 2003 company had the high prices for its motorcycles.
Due to these high prices the competitors found a gap and entered into the
market with low prices and start capturing market share. After the intense
research work Atlas Honda was in a position to reduce prices. The major
objective to reduce the prices was to increase the market share and to utilize
full production capacity. So company has reduced Rs. 10,000 in HONDA
CD70 and almost Rs. 5000 in CG 125.

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COMPETITORS’ BRAND PRICES

Yamaha Rupees
Yb-100 61800
Excellence 62500
Yama-4 63300

Suzuki
SD-110 64000
SD-Flash 76500

Sohrab
JS-70 43500
JC-125 (china) 62000

Pak hero
PH-70 42500

Hero
RF-70 46000
RF-125 70000

Star
DS-70 40400
C-70 (CBU) 52000

Lifan
LF-70 40000
LF-150 85000

Jailing
JH-70 (Remot-Self) 46000
JH-70 (Without) 42000

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PROMOTION

Promotion mix is
• Advertisement
• Sales promotion
• Personal selling
• Publicity

ADVERTISEMENT
Atlas Honda uses the print media as well as electronic media for
advertisement. In print media the company gives advertisements in
newspapers and it also uses billboards on the road side for the promotion of
the product.
On electronic media, company gives their advertisement on GEO channel
during hourly news. Company has a contract with AdCom (advertising
agency) for all of its advertising activities.

SALES PROMOTION
Atlas Honda also promotes its product through different sales promotional
activities.
• Company sponsors different functions and activities in main cities.
• Company provides rewards and incentives to their dealers on
achieving targets. Company send their successful dealers to different
trips all over the world.

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PERSONAL SELLING
The company does personal selling as well, not to individuals but to
institutional customers.

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DISTRIBUTION
Atlas Honda gained good market share due to its strong distribution
network. For distribution atlas Honda has divided the whole country into
two regions.
1. South region
2. North region

SOUTH REGION
It includes following territories
• Karachi
(Karachi region covers whole Sindh province)
• Quetta
(This covers whole Baluchistan province)

NORTH REGION
It includes following three territories
• Multan
(Its includes all lower Punjab cities)
• Lahore
(It covers cities from upper Punjab)
• Rawalpindi
(It covers Islamabad and NWFP.)

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“5S” DEALERS
This is a new emerging trend set by atlas Honda. Now days the company is
emphasizing on “5S” facilities to their customers through “5S dealers”.
5s stands for the following five facilities
1. Sale
2. Service
3. Spare parts
4. Special sale
5. Second hand sales

SALE
It includes only the sale of new motorcycles.

SERVICE
It includes after sale service to the customers like Warranty claims, Tuning
of motorcycles, Repair of motorcycles etc.

SPAREPARTS
Company provides spare parts facility to their customer
.
SPECIAL SALE
It deals with the credit facility. In special sale, the dealer provides the
customer with credit facility at his own behalf. Atlas Honda does not
provide any support for credit sale.

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SECOND HAND SALE

Dealer also deals in second hand Honda motorcycles. The company wants
that the customer might not switch to other brand even in second hand
motorcycles.

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SALES PROFILES

MARKETING PERFORMANCE
HIGHLIGHTS OF 2002 / 2003

SALES

CATEGORY 2001/2002 2002/2003 difference %

MARKET 76800 101800 25000 33
INSTITUTION 8400 11400 3000 36
POLICE 2300 - -2300 -
EXPORT 2500 3800 1300 52
TOTAL 90000 117000 27000 30

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SALES TRENDS

ATLAS HONDA LTD

SALES TREND
2001/02-2002/03

150,000

100,000

50,000

0
HONDA YAMAHA SUZUKI CHINESE

2001/02 90,064 22,024 8,062 8,000

2002/03 117,209 28,000 14,000 36,000

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SALES GRAPH

ATLAS HONDA LIMITED

SALE 1999 ~ 2003

130000
110000
90000
70000
50000
30000
10000
1999~00 2000~01 2001~02 2002~03

CD70 43073 57791 62828 80000

CG125 15524 20330 27236 37000
TOTAL 58597 78121 90064 117000

CD70 CG125 TOTAL

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MARKET SHARES

2 WHEELER MARKET SIZE IN PAKISTAN

2002-2003

BRAND JULY~JUNE 2002-03

HONDA 117000 60%

YAMAHA 28000 14%
SUZUKI 14000 07%
CHINESE 36000 18%
TOTAL 195000 100%

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FINANCIAL ANALYSIS

In order to know whether a firm is using its resources efficiently or not,

financial analysis is necessary. The information derived from these types of
analysis is used to determine the overall financial position of the company. I
have calculated certain ratios which will be helpful to determine the existing
financial position of AHL.

TYPES OF FINANCIAL RATIOS

Different ratios can be calculated from financial statements. Major
categories are as follows.
A. Liquidity ratios
B. Leverage ratios
C. Activity ratios
D. Profitability ratios

LIQUIDITY RATIOS
It measures the firm’s ability to meet its short-term obligations as they come
due. If a firm is unable to pay its current liabilities through its current assets
it can become insolvent in future. This ratio includes:
1) Working Capital = Current Assets-Current Liabilities
2002 2001
Rs. 347,904,000 Rs. 327,842,000
Working capital of AHL has increased in 2002 as compare to 2001, which is
a good sign for the company. It means firm has enough cash to meet its
short-term obligations.

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2) Current Ratio = Current Assets / Current Liabilities

2001 2002
1.48 1.38
A little bit decrease has occurred in year 2002 but still it is not good as it is
above 1.s

3) Quick (Acid-Test) Ratio = Current Assets – Inventory /

Current liabilities
2001 2002
64.8 % 83.5 %
It also shows an increase as compare to previous year, so AHL has enough
cash available to pay all its current assets.

Cash Ratio = Cash Equivalents + Marketable Securities / total assets

2001 2002
15.7 % 32 %
cash ratio has gone up in 2002. it’s a good indicator but company can earn
more by investing it in some other activities.

LEVERAGE RATIO
It measures a firm’s long-term solvency problems whether a firm is able to
pay its long-term debts or not.
This includes following Ratios:

4) Debt – Equity Ratio = Current Liabilities + Long Term

Liabilities / Stock Holder’s Equity

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2001 2002
0.57 0.616
This ratio has gone up from previous year. It is a good indicator as this ratio
is going up. It means company is making progress.

5) Debt Ratio = Total Liabilities / Total Assets

2001 2002
55% 56%
This ratio is almost same in both years. it means there is stability . this is a
good indicator.

ACTIVITY RATIO
It indicates how efficiently management utilizes its assets in generating
revenues. It can be measured by:

6) Total Asset turnover = Sales / Total Assets

2001 2002
3.16 3.015
Ratio has decreased from previous year.
Fixed Asset turn over = Sales / Fixed Assets
2001 2002
10.46 10.31
It has approximately the same as in 2001. AHL is more efficiently utilizing
its fixed assets, as fixed assets are more productive. So it is a good sign.

7) Inventory Turn over Ratio = Cost of Goods Sold /

Inventory

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2001 2002
7.92 times 10.36 times
There is increase in this ratio, which shows good performance. It shows that
company has increased its sales in this year to a great extent.

8) Average age of Inventory = 365 / Inventory Turn Over

2001 2002
45 days 35days
It shows that after how many days inventory is being sold out. It has also
reduced to 35 days in 2002, which shows that AHL is making progress. This
is because the sales have gone up in year 2002.

PROFITABILITY RATIOS
It measures the overall record of management in generating profit. If a firm
does not earn adequate profit, its long run survival will be threatened.

9) Gross Profit Margin = Gross Profit / Net Sales

2001 2002
9.7 % 13.31
This ratio has increased in 2002. It means that management is efficiently
controlling its variable cost, and the efficiency of the firm is increasing as
the gross profit margin is increasing.

10) Operating Profit Margin = EBIT / Net Sales

2001 2002
4.69 % 7.48%

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Atlas Honda Limited

It has increased in year 2002 it shows, AHL has a good control over its
expenditures.

11) Net Profit Margin = Net profit after Taxes / Net Sales
2001 2002
2.5% 4.9 %
Net Profit Margin has also increased. Profit margin is almost double in 2002
than in 2001. it shows that company is on its way to progress. If a company
is not able to earn profit, it will be no longer in the industry. It shows the
strength of the company.

12) Return on total assets = Net Profit / Total Assets

2001 2002
7.91% 14.76 %
It measures the firm’s ability to utilize its assets to generate profit. It has
been increased in year 2002; it means that the productivity of assets to
generate profit has been increased. Same assets are now generating more
profit.

13) Dividend payout Ratio = Dividends / Net Profit after

Taxes
2001 2002
44 % 40.9 %
Dividend pay out ratio has been reduced but it cannot be a bad indicator
always. Profit may be reinvested which is a good approach by management
to be successful in long run.

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SWOT ANALYSIS

STRENGTHS
Atlas Honda Ltd. has following strengths.

QUALITY PRODUCT
Atlas Honda Ltd. has quality products, which is one of its major
strengths.

GOOD IMAGE
Company has a good and favorable image in the market and in the
mind of customers.

EXCELLENT SERVICES
Company provides excellent services (after sales services) to its
customers.

FINANCIAL STRENGTH
Atlas Honda ltd. is financially strong company which is its another
strength.

INTENSIVE DISTRIBUTION NETWORK

Company has intensive distribution network (dealers) through out the
country which is it strength.

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COMMITTED EMPLOYEES
Company has committed and devoted employees that are loyal to the
company, which is another strength of the company.

FOUR STROKE TECHNOLOGY

Four-stroke technology is being used in Honda motorcycles that is
again another strength of the company. This is the latest technology being
used in this industry.

AVAILABILITY OF PARTS
The Spare Parts OF the motorcycles are easily available all over the
country which is another strength of the company.

LARGEST SERVICE NETWORK

The company has the largest service network through out the country.

RESEARCH AND DEVELOPEMENT

The company has an R&D department which suggests the production
department to use latest technologies.

MARKET RESEARCH
Company has a sophisticated market research system. With the help of this
system company is able to get knowledge about competitors activities and market
trends.

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LATEST PRODUCTION FACILITIES

The company has latest production facilities which increases the
production level and quality.

INNOVATIVE CULTURE
The culture of the company is very rich which is supportive for
employees to innovate new ways to improve the things.

VENDOR IMPROVEMENT PROGRAM

Company has a vendor improvement program. With the help of this
program company is able to convince vendors to produce better quality
for the company productions.

LOCALIZATION
Till now company is in a position to localize its productions up to
89%. Almost 89% of parts to be used in production are in house.

LESS EMPLOYEE TURN OVER

Employee turn over is very less at Atlas Honda ltd. this shows that the
employees are well satisfied with their jobs.

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WEAKNESSES

HIGH PRICE
The price of Honda motorcycle is relatively higher than others.

LACK OF NEW MODEL

Company has not introduces any new model with major changes from
a long time.

LESSER PROMOTIONAL ACTIVITIES

Company has lesser promotional activities. Usually it do not use
electronic media to promote the motorcycle but now company is adopting
the strategy to use the electronic media as well for promotion.

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OPPORTUNITIES

“5S” CONCEPT
New concept of “5S” is an opportunity for company to develop. With
this new concept company has introduced two new “S” other than sales,
spare parts and service. These are special sales and second hand sale.
According to this new idea dealers will help the customers to replace their
second hand motorcycle with new one and customers can get motorcycle on
credit as well.

POOR QUALITY OF CHINESE BRANDS

Chinese brands that are available in the market are not comparable
with HONDA motorcycle in quality terms. So the poor quality of Chinese
brands is an opportunity for the company as the company believes that
people using Chinese brand will eventually switch back towards HONDA
because of relatively poor quality of Chinese brands.

GOVERNMENT RULE OF LOCALIZATION

Recently government of Pakistan has passed a rule for the motorcycle
industry in Pakistan. According to this rule, within few years only that
motorcycle company will be able to sell their brands which will localize its
production at a rate of 5% to 10 % each year. HONDA has localized its
production up to 89% till now. So the company is leading the industry in this
regard. This is an opportunity for company as it has more government
support because of this reason (localization).

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THREATS
MARKET CONDITIONS OF KARACHI
Karachi is most populated city of Pakistan. So it is a huge market for
the company. But now a days snatching of new HONDA motorcycle is very
common in Karachi. Because of this reason people are reluctant to buy new
motorcycle. So it is a great threat for the company.

NEW CHINESE BRANDS

There are more than 15 Chinese brands of motorcycle available in the
market. These are competing HONDA in price terms very badly. So it is a
threat for the company.

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SURVEY
(DURING MY STAY AT ATLAS HONDA LTD. I HAVE CONDUCTED A SURVEY (RESEARCH)

UNDER THE SUPERVISION OF NATIONAL MANAGER SALES AND MARKETING MANAGER .)

MARKETING RESEARCH PLAN

Objective:
What is the impact on sales of different brands of Motorcycles after price
reduction?

Topics:
Dealer Related:
 How much price has been reduced?
 Why prices have been reduced?
 Impact of price reduction on sales?
 Is there any chance for further price reduction?

Public Related:
Why do people prefer to buy specific brand of motorcycle?

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METHODOLOGY

I have conducted interviews of dealers and customers based one the

questionnaires given here. I have gone to dealers’ outlets in order to get
forms filled by the dealers and went to different markets in order to approach
customers.

TARGETED LOCATIONS

My main target market for dealers was “Akbar Road” and for
customers’ identification, we have chosen Zainab market, Tariq Road,
Akbar market and Karachi University.

TIME FRAME

I have spent three weeks for this research project.

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Atlas Honda Limited

QUESTIONNAIRES
QUESTIONNAIRE (FOR DEALERS)
1. Name of Dealer__________________________________________________
2. Name of dealership/outlet__________________________________________
3. Since how long are you in this industry_______________________________
4. Had you been dealing in other brands_________________________________
 Yes
 No
5. If yes, what are those brands________________________________________
6. Why have you chosen this specific brand to deal in______________________

7. What strategy have you used to cope with the decreased prices of the
motorcycle industry?
_______________________________________________________________
8. What was your old price and what is your new price?____________________
9. To what extent would you like to further reduce your prices? ______________
10. How much your sales have been changed?

 Previous average sales_______________________________________

 New average sales__________________________________________

11. What impact does it has on the prices on second hand motorcycles?
Models 1999 2000 2001 2002
Before reduction ____ ____ ____ ____
After reduction ____ ____ ____ ____
Difference ____ ____ ____ ____

12. How do you see the future of your brand and other brands_______________

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QUESTIONNAIRE (FOR CUSTOMERS)

1. Name of respondent____________________________________________
2. Which Motorcycle do you have___________________________________
3. Which Motorcycle did you had before this one_______________________
4. Why have you kept/replaced the previous one _______________________
5. Why have you decided to buy this brand? __________________________

 Friends/Relatives suggestion

 Your own decision

6. If it was your own decision, why have you decided this brand

 Brand loyalty

 Better quality

 Lesser price

 Design

 Economy

 Others

7. Are you satisfied with this brand?

 Yes

 No

8. If no, why____________________________________________________
9. If you have to buy another motorcycle, will you choose the same brand
again?

 Yes

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 No

10. If no, why____________________________________________________

11. Please rank these brands in preference order (most preferred at # 1 and least
preferred at last)
Yamaha ______ Suzuki ______ Pak Hero ______ Hero ______
Sohrab ______ Honda ______ Super star ______ Jinan ______
Star ______ Lifan ______ Jialing ______
12. Suggestions for improvement, if any ______________________________

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RESULTS

SAMPLE SIZE

(I have chosen sample on the basis of random method)

Dealers = 13
Customers = 30

DEALERS

Among these 13 dealers, I have chosen four HONDA dealers and nine dealers of
other brands including Chinese.

 Dealers who have ever dealt in some other brands = 07 (54%)

 Dealers who have never dealt in some other brands = 06 (66%)
 Dealers who have been switched from HONDA to some other brands = 01
REASONS:
There was no sale of HONDA in Karachi market before price reduction, so
he has decided to deal in some other brand.
 Dealers who have switched from some other brand to HONDA. = 01
REASONS:
He has felt that in near future HONDA will capture the motorcycle market,
so he has left the dealership of VESPA and started dealing in HONDA.

 Impact of price reduction on sales of new Motorcycle:

HONDA = Sales have increased by 3 to 4 times after the price reduction.
OTHER BRANDS = Sales have decreased by one half.

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 Impact of price reduction on the prices of second hand Motorcycle:

Prices of all models of HONDA (from 1999 to 2002 model) have gone down
by Rs.7,000 to Rs.10,000.
There is no specific market price for second hand motorcycles of Chinese
brands.

 Future of different brands:

According to different dealers point of views, the HONDA may remain market
leader but the market will be in the hands of the brand, which will be able to
provide better quality at reasonable prices and will be able to provide services
as well.
Almost more than 80% of Chinese brands will be out of the market in near
future just because of poor after sale service.

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CUSTOMERS

Customers using HONDA = 22 (73.33%)

Customers using YAMAHA = 03 (10.00%)
Customers using SUZUKI = 01 (03.33%)
Customers using other brands* = 04 (13.34%)
Total number of customers = 30 (100%)

*All Chinese, Vespa and Kawasaki.

Customers who are satisfied with HONDA = 22(100%)
Customers who are not satisfied with HONDA = 00(0%)
Users of HONDA who want to repeat the same brand = 21(95.45%)
Users of HONDA who don’t want to repeat the same brand
= 01(05.55%)

Reasons
The person has told that he will not repeat Honda because he want to have
some new motorcycle at lower price, so he will like to have some Chinese
motorcycle because of its low price.

Ranking of different Brands by Customers

Position Brand
Number one = HONDA
Number two = YAMAHA
Number three = SUZUKI

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SUGGESTIONS BY CUSTOMERS:
During this research project we have found some major
demands from customers. Few of them are as follows.
 Customers are very happy because of the price reduction by HONDA.
But customers still want further price reduction by the company.
 It is a major demand from the customers that now company should
introduce some major change in model.
 Customers want the company to introduce some new models in
addition with CD 70 and CG 125.

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FINDING AND SUGGESTIONS

I have found the following things important during this project
 The company should try to improve the relations with dealers, as some
dealers are not satisfied and happy with some of the company’s policies.
 It is a better time to introduce some new model. There is an intense
competition in the market so major change in model will pave a better way
for the company not only to maintain the existing shares but also to increase
the number of market share.
 Company should increase its capacity in long run and in short run company
should start night shifts to fulfill the increasing market demands of their
products.
 Company should develop proper measures to eliminates the rumors from
the market regarding the company and its dealers
 Company should control the prices of the motorcycle in the markets. We
have observed some dealers at our own, selling the motorcycles to the
customers above the market price. Although the company has already a
system to control the price but it is not sufficient.

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