Team Work
MR. UMAR SHAHID
063932-056
MR SHAKIR MUSTAFA
063932-061
MR. USAMA MEHMOOD
063932-026
MR. SOHAIL AHMED
063932-040
PREFACE
We want to know the economical transport wheeler for the
general public,so we choose the best company in field of
transport .we also want to know the share of the 2 wheeler
industry in the growth of economy. How it will knows the
need of the people and how it satisfy the customer demand
and how it is differ from others.
This project includes the complete detail and full knowledge
about the Pakistan largest transportation company Altas
Honda. It includes economic, marketing, management and
finance procedure prospective. It also include how we should
charge the prices of any good? Where we should place it?
And how to promote it?
In future it will prove very benefit for us. It will not only help
us but also helps others in making their projects.
TABLE OF CONTENTS
1 ..........................................................Automobile Industry
3. .....................................................Atlas Honda Motorbike
6. ..............................................................Company History
8 ......................................................................Management
10. .................................................................Swot Analysis
12. .....................................................................BCG Matrix
13. ..................................................Organization Hierarchy
18......................................................... Production Strength
21. ........................................................Demand And Supply
24. ...........................................................................Shifters
26. ............................Circular Flow Of Income And Product
27. ..........................Condition Of Honda In Product Market
30. .................................................................Factor Market
31..................................................................................Land
32.................................................................................Labor
33..............................................................................Capital
35....................................................................Entrepreneur
36........................................................................ Marketing
37..................................................................Marketing Mix
49. ...........................................................................Finance
52. ......................................................................Conclusion
ACKNOWLEDGMENTS
We would like to thank Ch. Muhammad Yousaf and Ch.
Muhammad Yaqoob, Owners Saleem Raza Goods
Transport Co. (official Atlas Honda’s Transportation) for
their continued support in completing the project and
cooperation in maintaining the high standard of excellence.
We would also like to give special thanks to Mr. Saadullah
Ejaz, Assistant Manager Admin & Industrial Relations
Atlas Honda Ltd. helped us in getting data and complete
information about company.
At the end we would also like to acknowledge Ms. Shehla
Shoaib, Resource Person, Who convinced our abilities,
enthusiasm and energy will secure a successful future. This
learning experience from this project will further help us in
throughout in educational career.
.
22
AUTOMOBILE INDUSTRY
The auto market is one of the largest segments in world
trade. The annual size of automotive export trade in the
world has grown to a massive level of over US$ 600 billion,
which accounts for about 10 per cent of the world export.
Changing models, improving fuel efficiency, cutting costs
and enhancing user comfort without compromising quality
are the most important challenges of the auto industry in a
fast globalizing world. Hence there is a need for exploring
the industrial complementarities in the region for better
quality, favourable costs, fuel efficiency and attractive
designs. Therefore, the requirement of information
exchange in the region is much more pronounced now than
ever before for keeping the auto industry afloat and
competitive.
Pakistan Overview
1
Since its independence in 1947, Pakistan has been able to
transform itself to a large extent, from a completely
agrarian economy to a fairly developed techno-industrial
base. Besides textiles, Pakistan’s exports are largely
manufactured items such as consumer durables and
engineering products. However, it is also a fact that
Pakistan has not been able to realize its potential due to
internal and external compulsions and thus it lags behind
many developing countries of the world. The following
economic indicators constitute the tell-tale of Pakistan’s
development performance:
Automobile Industry of Pakistan
22
The existing population of automotive vehicles in Pakistan is
3.9 million. The annual demand is estimated at 300,000, two
thirds of which is being met from local sources and imports
and the remaining one third is left unmet. The market value
of automotive vehicles in dollar terms is estimated at more
than 1 billion, out of which import constitutes around US$
200 million. The after market of auto parts is estimated at
US$ 500 million, imports and local production taken
together. Production figures of automobiles are given in the
following tables:
Pakistan’s strength of production elements lies in its vast
reservoir of land, labour and even capital. But technology and
purchasing power of the consumers are its major
weaknesses. Technology requirements are being met by joint
ventures and technology tie-ups with foreign players in
automotive sector. Japanese, Korean and European
entrepreneurs have invested almost US$ 1.5 billion in
33
Pakistan’s automotive sector. The local investment in the
automotive sector is approximately US$ 1 billion.
The GroupAtlas Honda Limited is a joint venture
between the Atlas Group and Honda Motor
Co., Japan. The foundation of the Atlas Group
was laid in 1962 with the establishment of
Shirazi Investments (Pvt) Limited with a capital of half a
million rupees and three men doing business in trading
shares and real estate. The growth of the Atlas Group is the
result of its focus on good corporate governance. Today Atlas
is a diversified group dealing in engineering, financial
services and trading. It consists of seven public limited
companies out of which six are quoted on the Stock
Exchanges in Pakistan, and five private limited companies.
Atlas shareholders equity now stands over 25 billion rupees;
assets have increased to over 60 billion rupees; personnel
strength is over 7000 and annual sales have crossed 60
billion rupees. The Group paid taxes of Rs. 15 billion over 2%
of the total government revenues.
All this progress is due to the Group's reliance on the
intellectual capital, dedicated efforts and team spirit of all
44
the stakeholders. Every member is striving for excellence and
taking pride in the Group's motto:
Organization Development
Through Self Development
The Company
The company was created by the merge of Panjdarya Limited
and Atlas Autos Ltd. in 1988. 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 various hi-tech
components in-house in
collaboration with leading parts
manufacturers like Showa,
Atsumitech, Nippon Denso and
Toyo Denso. Honda motorcycles
5
SHIEKHUPORA
5
are by far the largest selling motorcycles in the country with
an unmatched reputation for high quality, reliability and
after-sales-service.
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 country’s largest in-house
manufacturing capability at its Karachi and Sheikhupura
plants. To support the production
facilities, the company has
established an R&D wing and tool making facilities through
CDA & CAM, which are growing rapidly in size and function
as the company expands. Atlas has managed to execute 14
Joint Venture/Technical Assistance Agreements between local
vendors and foreign manufacturers for transfer of
technology.
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 1600
motorcycles sales service and spare parts dealers has been
established. In order to back up this system, Atlas has set up
Technical Training Centers in Karachi and Lahore, which
provide several courses of varying duration and complexity
for motorcycle 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.
6
KARACHI PLANT
6
VisionMarket leader in the motorcycle industry, emerging as a
globally competitive centre of production and exports.
MissionA dynamic, profitable and growth oriented company through
market leadership, maximizing export and excellence in
quality and service; to ensure attractive returns to equity
holders; reward employees according to their ability and
performance; to foster a network of researchers and
engineers ensuing unique contributions to the development
of the industry; customer satisfaction and protection of the
environment by producing emission friendly green products
and to remain a good corporate citizen fulfilling its social
responsibilities in all respects.
Our slogan
For Honda to remain Honda, and for everyone to realize their
aspirations, we must believe in "The Power of
Dreams"
Company History
Since its inception the company has
experienced an unprecedented
77
growth in its operations from a small manufacturing company
to the leading motorbike manufacturer of Pakistan. Following
is the chronological order of the major events in the
company's history.
2004 Contribution to national exchequer reached Rs.
3.18 billion - 72% of wealth generated, out of
Group 7.56 billion (1.48% of the Government
total revenues). LPDC project completed (New
Generation Of Technology). Stared
implementation of GDC & Case Damper
Production Projects through Showa Corporation,
Japan. Launch 500 K Capacity Expansion
Project.
2003 Major re-adjustment of prices to pass on the
benefits to customers. Best Corporate Report
award by joint committee of ICAP & ICMAP.
Achievement of landmark sales of 100,000
motorcycles. Technical agreement with Keihin
(Japan) for Mgf. Of Fuel Cock Assembly. Switch
Assembly Light & Winker + Ignition Coil.
2002 Deletion level reached to 87% and 80% for CD70
& CG125 respectively. Introduction of Gratuity
Scheme for staff. Best Corporate Report award
by joint committee of ICAP & ICMAP.
2001 Concept of 5S dealership - Sales, Service, Spare
Parts, Second hand exchange and Special
(Credit) sales launched. New Block for hi-tech
88
engine plant.
2000 Investment in Crankshaft Project. TC Agreement
with Toyo Denso.
1999 ISO 9002 certification for both factories.
1998 New models (MMC) of CD70 & CG125 launched.
1997 Investment in Gear Project.
1995 Exports to Bangladesh. Export Agreement
signed with Honda Motor Company Limited.
1994 Mr. Kawamoto President, Honda Motor
Company Limited, visited AHL.
1992 Change of name to Atlas Honda Limited (AHL).
1991 Inauguration of CG125 Engine Project at
Sheikhupura Factory.
1990 Merger of Panjdarya Limited into Atlas Autos
Limited.
1989 Export of built up motorcycles to Nepal.
1988 Production capacity expansion III. Joint Venture
agreement signed with Honda Motor Company
Limited.
1987 Inauguration of CD70 Engine Project at Karachi
Factory.
1986 Technical Assistance Agreement with Showa
Corporation.
1982 Deletion Project financed by PICIC.
1981 Commercial Production started at Panjdarya
Limited. Production capacity expansion II.
1979 Incorporation of Panjdarya Limited as Joint
Venture with Honda Motor Company limited.
99
1976 Production capacity expansion I.
1965 Public offering of Shares.
1964 Commercial Production started.
1962 Technical Assistance Agreement signed with
Honda Motor Company Limited. Incorporation of
Atlas Autos Limited.
MANAGEMENT
Maintaining a global viewpoint we are dedicate to supplying product of the `highest quality yet a reasonable point for worldwide customer satisfaction. Honda remains its rich culture of customer satisfaction, it being serving nation. For management we have following our management strategy.
Proceed always with ambition and youthfulness. Respect sound theory, develop fresh ideas, and
make the most effective use of time. Enjoy your work and encourage open
communications. Strive constantly for a harmonious flow of work. Be ever mindful of the value of research and
endeavor. Respect for all – man has priority over others.
MANGEMENT LIFE CYCLE
PLANNING
1010
CONTROLLING
ORGANIZING
LEADING
PLANNING
Transportations Purpose
Two Wheeler Road
Transportation Strategy
Better quality at
economical rates Objective
Produce different
models for different
customers
Programs
1111
CD 70,CD 100, CG
125
CD 100 Economical
with speed specially
for middle-aged, CG
125 Speed specially
for Youngsters, CD
70 economical
specially for oldies
Policies
Always on time
delivery and return
of defected products
entertained
RULES
SWOT
STRENGHTS WEAKNESSES
OPPORTUNITIES THREAD
1212
Strengths: Qualified and well trained staff
Biggest sale network
Best production plant in the world
Financial Strong
Biggest market share
People Trusted Products
High Quality Products
ISO Certified
Resale value
Customer Care
Customized products
Brand Image
Availability of Spare parts
Best delivery system (Transportations)
Weaknesses
High Price of Products
Political instability
Low per capita income of public
Less overhead rates of competitors
Increasing Prices of Oil
1313
Rising inflation
Opportunities
Industry expansion
Technology upgrading
Strong Position
Market Integration opening up
Opportunity growing in other countries
Newly developed Areas/Markets (e.g. Gawader)
Favorable govt. policies
Big Market
Economy is expanding
Threats
Chinese cheaper products challenges
Free Trade & WTO
Strong competition from competitors in near
future
Instability of Government
High rate of Taxation
Bad infrastructure
BCG MATRIX
1414
ORGANIZATION HIERARCHEY
15
CHINESE BIKES
HIGH
LOW
HIGH
LOW
15
The above chart shows the centralization in the industry. The
main decision comes from the Chairman of the company
while Board of Directors approves his decisions and this
implement in organization by respective committees. The
Board of directors is committed to good corporate
governance. The company is managed and supervised
responsibly and proper internal controls and risk
management policy. Its procedures are in place for efficient
and effective operations of the company, safeguarding of
assets of the company. This is compliance with laws and
regulations and proper financial reporting in accordance with
International Financial Reporting standards.
As a part of group corporate strategy it has five committees
at group level to guide the management in various key areas
of the company’s operations ranging from Human Resource,
Information Technology, Audit , Environment Safety and
health.
16
Chairman
Group Executive Committee
Group Human Resource Committee
Group System & Technology Committee
Audit Committee
Management Committee
Board of Directors
16
Following is summary of role and responsibilities of each
committee;
MANAGEMENT PROFILE
BOARD OF DIRECTORSChairman Yusuf H. Shirazi
Chief Executive Officer Saquib H. Shirazi
Directors Koji Nakazono
Nurul Hoda
Sanaullah Qureshi
Sherali Mundrawala
Toshitsugu Kaneko
Yoshitaka Kitamura
Company Secretary Zaryab Tarique
________________________________________
GROUP EXECUTIVE COMMITTEE
This is responsible for setting overall corporate objectives
and strategies, identifying opportunities, monitoring group
business strategies & plans and developing its group
members as leaders of their respective fields.
GROUP EXECUTIVE COMMITTEE
Chairman Aamir H. Shirazi
Members Frahim Ali Khan
Iftikhar H. Shirazi
Jawaid Iqbal Ahmed
Saquib H. Shirazi
1717
Secretary Theresa Dias
__________________________________________
GROUP HUMAN RESOURCE COMMITTEE
It determines the compensation package for the management
staff. The committee has also responsibility to create and
maintain conducive work environment that instills trust and
ensures respect fair treatment, development opportunities &
grooming and make succession plan for all employees.
GROUP HUMAN RESOURCE COMMITTEE
Chairman Yusuf H. Shirazi
Members Aamir H. Shirazi
Bashir Makki
__________________________________________
GROUP SYSTEMS AND TECHNOLOGY COMMITTEE
The Group system and Technology committee is responsible
to provide an insight towards the various technological
aspects of information systems. The objective of the
committee is to introduce leading edge technology and IT
initiative to automate information delivery and accessibility
of data for enhancement of time and cost efficiency.
1818
GROUP SYSTEMS & TECHNOLOGY COMMITTEE
Chairman Iftikhar H. Shirazi
Members Mushtaq Alam
Zia Ullah Begg
Secretary Sarfraz Hassan
________________________________________________
AUDIT COMMITTEE
This is most prime committee of board, which reviews
financial, and internal reporting process, the system of
internal controls, management of risk and the internal and
external audit processes. It also proposes the appointment of
external auditors to the shareholders and is directly
responsible for their approval and oversights of their work.
An independent Internal Audit function reports to the
committee regarding risks and internal controls across
organization. The audit committee reviews reports from
external auditors on any accounting matters than might be
regarded as critical. The committee consists of three
members including chairman of committee are non-executive
directors. The audit committee meets three times a year and
review quarterly, half year and annual financial statements
besides internal audit plan, material audit findings and
recommendations of internal auditor.
AUDIT COMMITTEE
1919
Chairman Sanaullah Qureshi
Members Sherali Mundrawala
Nurul Hoda
Head of Internal Audit Aamir Shakoor Khan
Secretary Ashfaq Ahmad
MANAGEMENT COMMITTEE
It acts at the operating level in an advisory capacity to CEO.
It provides recommendations relating to the business and
other corporate affairs. The committee has responsibility for
reviewing and forwarding long-terms plans, capital and
expense budget development and stewardship of business
plans. It is also responsible for maintaining healthy
environment within and outside the company through its
environment friendly products.
MANAGEMENT COMMITTEE
Chief Executive Officer Saquib H. Shirazi
Vice President Marketing Nurul Hoda
Vice President Technical Toshitsugu Kaneko
Chief Financial Officer Suhail Ahmed
General Manager Plants Amir Awan
General Manager CAMA Maqsood A. Basraa
General Manager Development Yoshitaka Kitamura
General Manager Quality Assurance Lt. Col. (R) Sultan
Ahmed
General Manager Human Resource Raffat Iqbal
2020
General Manager IT Mushtaq Alam
General Manager Logistic Talha Saad
________________________________________
PRODUCTION STRENGTH
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 country’s largest in-house
2121
manufacturing capability at its Karachi and Sheikhupura
plants. To support the production facilities, the company has
established an R&D wing and tool making facilities through
CDA & CAM, which are growing rapidly in size and function
as the company expands. Atlas has managed to execute 14
Joint Venture/Technical Assistance Agreements between local
vendors and foreign manufacturers for transfer of
technology. Besides, Atlas has directly executed 5 Joint
Venture/Technical Assistance Agreements other than Honda.
In 1994, the plant was constructed with installed capacity of
5,000 units on single shift basis. This moderate capacity
continued to cater to the business requirements for some
years. For the last couple of years, due to rising demand, the
immediate expansion was inevitable. Thus the paint shop,
being bottleneck of the process, was expanded with
installation of another paint booth at a capital cost of Rs
185.0 million in order to enhance the production capacity.
Due to this expansion, coupled with the double shift
operation and extended process efficiency, now the plant has
annual capacity of 30,000 units on double shift basis against
12,000 units last year.
The expansion of the capacity was inaugurated on December
20, 2004. After running on trial basis for a couple of weeks,
the plant started operation on double shift basis from
September 2004 and gradually monthly production was
2222
increased to 2,403 units in December 2004. Now onward, on
an average, the company plans to produce 2,500 units
monthly. The paint shop expansion yielded dividend, as the
quarterly production showed 33.8% and 23.0% increase in
the third and fourth quarters respectively.
Production Capacity in Pakistan
The Atlas Honda has largest production capacity in Pakistan
about 400,000 annually. Following is Honda’s production
with ratio to other manufacturers in Pakistan.
Company Production Capacity
Atlas Honda Ltd. 400,000Dawood Yamaha
Ltd.200,000
Suzuki Motorcycles Pakistan Ltd.
65,000
Saigols Qingqi Motors Ltd.
100,000
Sohrab 42,000 Source: Pakistan Automotive Manufacturers Association
This is graphical representation of Production capacity of
Honda with respect to other manufacturers.
2323
Production Strength of Honda
Following is table showing its ten years production and sale.
Source: Pakistan Automotive Manufacturers Association
Here is chart of its past years performance of sales & production;
Demand and Supply Strategy
24
Year Production
Sale
1996-97
68,637 ~
1997-98
63,463 ~
1998-99
59,639 61,536
1999-00
59,357 58,579
2000-01
78,397 78,062
2001-02
90,111 90,027
2002-03
115,924 117,201
2003-04
190,679 190,424
2004-05
287,271 287,172
2005-06
360,561 360,110
2006-07
136,050 135,505
24
The two wheeler industry has continues to enjoy a period of
growth since 2000-01. The strength of the demand can be
judged from the fact that growth of 25 % on year to year
basis was recorded despite the poor agriculture cop. On an
annual basis, Industry sales now have crossed 650,000
marks.
ANNUALY SUPPLY CHART
Traditionally, the motorcycle sale has been directly linked
to the performance of the agriculture sector.
However, during the past few years the product has
established itself as a necessity for a large segment of the
urban population too. It is now well recognized its sale as
an indicator of the economy’s performance. The growth in
sales has attracted all sorts of entrepreneurs to the arena.
In addition to the manufacturers with long standing, and
who are members of PAMA, new entrance from
2525
backgrounds and business interests have started
importing and assembling motorcycles. The difference in
business practices has also effected the environment of
“doing business”. Those who go strictly by the law are at
distinct advantages as the slack and selective applications
laws leave them competing with virtually an unorganized
that avoid duties and taxes with impunity. The difference
in cost structures that ensue leaves and uneven playing
field for the organized sector.
ANNUALY DEMAND CHART
The company accepts the realities of a growing market
and expects no more then a level playing field. One is glad
to see that the government is finally pursuing this
normally with vigour. A recent raid of ten units in the
unorganized sector, so far, has inearthed a huge tax
evasion scam over 1 Billion penalties have been assessed.
Your company continues insistence of tax evasion as the
main cause of price differences has been proved accurate.
One hopes that will not only to recover from the existing
2626
ones the past evasion but also from the close down
fraudulent assemblers. Atlas Honda has invested and is
continuation to invest heavily in localization. It has the
strongest vendor base as well as the state of the art in
house manufacturing capabilities. This is a result of
decades of strong commitment to the localization cause,
Motorcycle industry has now reached a point where it has
achieved production surpluses. Your company has already
established export markets but had production constraints
that kept is from serving these markets to their
satisfaction. The company has now received global export
rights for Honda CD 100. This is recognition of over 40
years of consistent performance. It is indeed a huge leap
forward for atlas Honda and is a larger commendation for
the potential of Pakistan’s auto industry .in next three
years. Atlas Honda is targeting at least10% of its sales to
come from exports. For this an enabling export policy is
being pursued at the highest levels of the government.
FACTORS EFFECTING DEMAND & SUPPLY
Demand Factors:
Population
As the population of the country is increasing the
demand of the bikes are also increasing.
Income
As income increasing, his purchase power will also
increase. It will effect demand to increase. The
2727
purchase of the newly launched CG 125 model is
decreased due to less per capita income.
Fashion
Honda motorbikes are in fashion of Pakistan society.
They are symboling of pride and good willing so its
demand increasing day by day.
Govt Policies
Since motorbike industry is emerging industry and 2.2
% of total economy depends upon Honda Industry. So
Govt always makes favorable policies for the company.
So its demand is upwards.
In short:
All factors of demand are favorable for
company
Supply Factors:
Cost of Production
The company has best plant of the world; it enables it
to produce more products which cover the people
needs by adopting concept of “Cost Effectiveness”.
Technology
As technology upgrade the quality of goods increases.
That’s innovate products which creates more demands
thus resulting more supply.
2828
External Environment Factors
Natural hazards and disasters badly damage product
delivery and production process which results in less
supply. We have seen recently the earth quack which
damaged the market.
Govt Policies
Govt policies are always favorable for the Market
leader in Pakistan. Which take its supply to peak.
Future expectations
Company is excepting strong competition with its
competitors especially cheap bikes of china. In future
they want to overcome the market so they will increase
their supply.
Taxation
Govt has imposed huge tax on Atlas Honda Company. It
is estimated that company pays 35 % annual as Tax to
government. This huge tax increases the production
cost which reduces its Supply.
2929
Source: Honda Annual Report 2006
CIRCULAR FLOW OF INCOM AND
PRODUCT
3030
Condition of Honda in Product Market
31
Production
Sector(Engine
& Chasis)
Customer
Sector(Provide Motorbi
kes)
Final services
Productive services
Intermediate services
Supply of Finished services
Factor Market (L,l,K,E
)MoneyMone
y
Product MarketAtlas
Honda
31
Atlas Honda is the leader in motorcycle industry. It is selling
three products named as CD 70, CG 125 and CD100
respectively. CD 70 and CG 125 are old brands while CD100
was launched on 11 October 2004 in Lahore on 13 October
2004 in Karachi.
MOTORCYCLE MARKET V/S HONDA MARKET SHARE
It has market share of 56 % currently. It is the biggest
manufacturer of motorcycles in the country. Last year it
produced 1,90,395 bikes. It means company achieved 62 %
growth in production. Now according to the increasing
demand and market it has doubled its production capacity.
The market size for two wheeler segment was around
340,000, while demand for Atlas Honda touched 230,000.
Parts of bikes are being manufactured 85 % locally.
Last year an investment of 4 billion has come in the
motorcycle industry, form that Atlas Honda invested 2.5
billion alone. Honda is a popular brand in the market and
3232
people want to buy it because of its quality, durability, after
sale services and good resale value. In the motorcycle
industry Honda has become an aspiration group for those
who have some other brand.
Competitor Brands
In Pakistani motorcycle industry Honda is a leader. Although
there are 50 brands of bike are available yet many of them
have not got recognition among the people.
All these exist in different segments of markets.
Yamaha
It is a basically two stroke 100 CC
motorcycle. It is very popular in
villages because people consider it more durable and a
smooth driving bike on rough roads. It is second second
largest selling brand of Pakistan.
3333
Sohrab
It is first Pakistani brand that was introduced. First time it
introduced heavy bike look in a four stroke and 70 CC
motorcycle. Its price is low as compare to Honda but. It is not
direct threat for Honda. But to some extent people like it
because it is rapidly increasing its quality, after sales
services and resale value. It is getting popularity in villages.
SuzukiIt is third selling brand in
Pakistan and it also targets the
villagers. Its image is also approximately same as Yamaha in
the mind of people and it also targets the village areas
3434
FACTOR MARKET
3535
Land:
36
CAPITAL (K)
ENTERPENEUR
LABOUR(L)
LAND(l)
FACTOR MARKET
36
Atlas Honda has two plants in Pakistan at Shiekhupora and
Karachi. The area of Shiekhupora Plant is 27 Acres and the
area of Karachi plant is 5 acres. Sheikupura plant is newly
constructed.
Labour:
The company created a good
environment, new trees, green
belts and grassy lawn have
been planted and developed
which have been appreciated
by those who have attended
the factory
Honda Company believes that when the organization grows,
the employ should also grow. During the year 2006 the
company put up a new factory and as a result 131
management associates were recruited. To train them the
company arranged extensive in-house and external trainings.
Atlas Fundamental Course (AFC-1) and junior management
course for non-management and middle management
associates respectively. Such activities enable the new
associates to mash into Atlas culture as well as learn sharp
floor management skills. In all 436 employees AFC-1 & J
course during year 2006. During the same year 12 employees
were also sent abroad for training. The Traditional Family
Day functions are being held at both plants which are well
3737
attended by families of associates. Company also give good
performance awards to well performed employees.
The labour of company are fully trained and 93.4 % are
literate. Following is the table showing data about education
profile of company labour.
EDUCATION PROFILES
Sr.
Qualification Mgmt Non-Mgmt
Total
1 CA/FCMA/ACMA 26 - 262 Masters 143 - 143
3 Bachelors 283 4 287
4 Intermediate 85 5 90
5 Certificates Holder(T.T.C)
81 -- 81
6 Matric 67 219 286
7 Middle -- 88 88
8 Illiterate - 65 65
Total 685 381 1,066Literacy Percentage 93.91 %
Illiteracy Percentage 6.09 %
Presentation in Chart
3838
CAPITAL
Money:
The Atlas Honda company is part of
Atlas Group which is financially
strong group is Pakistan. The
company was established with a
small amount of money.
From first day to now Honda strive hard time. In the begging
company was established with a loan of 560,000 and only
three men working. Now Honda’s annual share is Rupee 60
Billion. Honda is sharing 2.2% of Pakistan’s GDP. This
indicates it has enough capabilities to face challenges and
39
TECHNOLOGY MONEY
39
hardships of Pakistan Market. Honda power lies truly in his
financial power and mass production which are from his
group.
Technology:
Atlas has the country’s largest in-house manufacturing
capability at its Karachi and Sheikhupura plants.
To support the production facilities, the company has
established an R&D wing and tool making facilities through
CDA & CAM, which are growing rapidly in size and function
as the company expands. Atlas has managed to execute 14
Assistance Agreements between local vendors and foreign
manufacturers for transfer of technology.
Honda has world’s upgraded Japanese technology production
plant. This enables them to enhance their production. By
adopting technology Honda is producing their best quality
products. Which helping them to increase their production
and this makes them Pakistan’s Market Leader.
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ENTERPENUER
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MARKETING
MARKETING STRAGETY
The marketing team rightly takes
pride in achieving an all time high
sales. The real achievement of the
company has been in shouldering
its responsibility as the market
leader in the growth of the total
motorcycle industry. Atlas Honda
has taken some tough decisions in
enhancing the total customer base
as well as dealing with the menace of the unorganized
sector. On the achievement of the landmark, Atlas Honda
with the support of its large supplier network readjusted its
prices to pass on the benefit to its customers. Other players
followed suit and the unprecedented adjustment of prices
changed the two wheeler market in the country in a way
that has never been seen before.
The volumes that have now become possible will provide the
all-important base for more investment and even better
quality. In the process, Atlas Honda is now leading the two
wheeler industry towards a path that will enable it to
become globally Competitive. The Company will adopt the
middle way of push and pull strategy because due to
increasing demand pull strategy is not suitable. Similarly
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push strategy does not give a good impression to the
customer.
MAKETING MIX
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PRODUCTS
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PRODUCT
PROMOTION
PLACE
PRICE
MARKETPOSITIONIN
G
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Maintaining a global viewpoint, we are dedicated to
supplying products of the highest quality yet at a
reasonable price for worldwide customer satisfaction.
During the year 2006, the company launched new models. In
the 125cc segment Honda CG-125 Deluxe was launched.
Modern styling, added power and a disk brake function has
made it the choice purchase for a selected segment that was
looking for added value in the existing popular CG-125. In
addition to this, the regular CG 125 also underwent a Minor
Model Change (MMC) which proved to be huge success. A 53
growth in sales on year to year basis in the 125 cc category is
a testament to the success of the new model and the CG-125
MMC. The MMC has been a major success and Honda CD-70
is the best selling motorcycle in the market qwith sales of
over 300,00 annually. A 25 % increase to last year is a
measure of popularity of this model.
Currently we have following products to fulfill the needs of
market.
Honda CD 70
Honda CD 100
Honda CG 125
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HONDA CD 70
Honda CD 70 is the No. 1 choice in motorcycles. In addition
to its established superiority in terms of great speed and fuel
economy, the Honda CD 70 is presented with special
features;
The new attractively designed CD 70
Aerodynamic shape
Super econo-power
Smoke-free 4-Stroke engine
Special Honda 12-volt CDI
technology.
New eye-catching graphics,
Front and rear mud-flaps
Comfortable seat and the new
utility box
High resale value
Excellent petrol average makes
Easily available spare parts
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Honda CG 125
Honda CG 125 is the ideal combination of elegance and
power. Its speed and performance symbolizes the true
essence of modern life. It has following features;
125 cc 4-stroke engine
11-Horse Power
Low fuel consumption.
CDI Ignition System
12-volt battery (instead of
6-volt).
Brighter Headlight and
indicators
Easy starting-up of the
engine.
Ideal for
o High speed
o Long runs
o Rough pathways.
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HONDA CD 100
Honda Motorcycles are defined by Quality, Performance,
Speed, Economy Petrol and Re-sale Value. All these have
managed to successfully bag your trust on the New Honda
CD100.
It is a stunning result of
advanced Japanese
technology and right up
there as an outstanding
performer representing all
the qualities that make
Honda motorcycles so
special.
Bigger Headlight
Catching stylish look
Low oil consumption
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Easy go
PRICE
Atlas Honda products are well known due to its
quality and reliability. Company commitment is
not to just sale products for profits but quality
which enables us to win the confidents of people
and customer satisfaction.
Following are our prices of our products.
MODEL PRICE
Honda CD 70 Rs. 54000
Honda CD 100 Rs. 64000
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Honda CG 125 Rs. 71000
PLACE
Atlas Honda has developed Pakistan’s largest after sale
services network. The company has made its 1 to 5 S
dealers through out the country.
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These 5S stands for
Sales
Services
Spare Parts
Second Hand Exchange
Special Sales (credit)
According to the company these are not the simple selling
points but these are the complete HONDA Company. The
company has made Dealer Development Department, which
is responsible for the co-ordination with dealers and training
of mechanics.
The year 2006 saw improvement in almost all the major
marketing areas. The 5‘S’ dealer network was further
expanded dealers have upgraded their dealerships to a
modern, global standard. The resultant image enhancement
in the eyes of the public has generated more customers for
the company. The effective media promotion has made your
company and its products household names. The recall value
of the promotion has been rated as one of the highest ever.
This policy has further cemented the value of the product
and a greater number of first time users are now Atlas
Honda customers.
COVERS ALL PAKISTAN
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Atlas Honda has Pakistan’s
biggest sales network. The
company focused all over the
Pakistan, they sale their
products by their authorized
dealers.
Delivery System
Since Honda Company established, company has given the
contract to Saleem Raza Goods Transports Co. for delivering
their products to their sales points. They have very good
relation with the company and they are contributing their
best in growth of company.
PROMOTION
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The company focuses on its promotion campaign very
seriously. There are several internal and external programs
to increase its sale.
INTERNAL PROGRAMS
Service Development Department
The company has made Service Development Department,
which is responsible for the co-ordination with dealers and
training of mechanics. Department conducts massive
campaigns to familiarize and train the service and sales
dealers about the technical features of new models. In 2006,
there were different training programs. These attended by
931 Service dealers, 80 Antenna dealers and 3650 Honda 4
stroke mechanics. Moreover, 296 sales dealer’s staff and 85
Marketing staff of AHI were familiarized with the features of
new models.
The company is mostly using push strategy to promote its
motorcycles.
As CD-100 is their new product to promote it they force
the dealers to keep a CD-100 bike with them so that
when customers come they offer him to try the new
bike.
The company is offering package to dealers that for
every ’x’ bikes of CD 70 or CG 125 you have to take “y”
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bikes of CD 100. This also forces the dealers to try to
sell this new product.
Dealer Promotion
For the promotion of its dealers the company arranges
meetings and buffet dinners. One promotion activity was held
on 27th of April 2006 in Mughal-e-Azam near university
campus.
Technicians Training
For the promotion of its products the company has
trained 7000 mechanics. These mechanics are not only
providing repairing services to the people but also publicize
the products of company by word of mouth.
EXTERNAL PROGRAMS
Honda Company organizes different types of promotion
activities, some of them are following;
For the promotion of its products the company arranges rallies.
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Print media
The company is giving different types of commercials on different print periodicals.
Some are following;
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FINANCE
The Company has strong financial position. The year 2005-
06 was a good year; The Company undertook several major
projects which were executed in a timely and cost efficient
manner. The sales revenue grew to Rs. 17.42 billion. This
represents an increase of 23.37 % as against the previous
year’s Rs. 14.12 billion. In the financial year 2005-06, your
company continued to build on the successes of the previous
year by selling 360,108 units as compared to 287,184 units in
the corresponding period of 2005 which shows 25 % growth.
The gross profit margin for the period slightly decreases to
9.35 % from 9.52 % of the corresponding period. This was
largely due to unprecedented rise in raw material prices and
utility costs. However, the net impact has been more or less
offset by an increase in sales, volume, benefits of localization
and efficient fund management.
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Operating Expenses
The operating expenses increased to Rs. 528.32 million as
against Rs. 445.27 million for the same period last year. This
escalation was in line with the increase in sales and the
launching of new CG-125 deluxe, a premium model. The
increase in interest rates and additional borrowing for
capacity expansion and new projects led to an increase in
financial expenses to Rs. 151.61 million. The company had
budgeted this rise feels comfortable with the current capital
structure ot finance its growth. The company earned ever
highest profit before tax of Rs. 1,047.06 million as against Rs.
905.63 million for previous year a bottom line growth of 15
%.
Govt. Expenditures
The company paid taxes to national exchequer amounting to
Rs. 5.034 billion which are higher ever. On account of sales
tax, income tax and custom duties as against Rs. 4.5 billion
contributed last year. Payment of these taxes was more than
7.5 times the net after tax earning. The company’s
contribution to the national economy by way of value
addition this year amounts to 7.04 billion 71.46 % of net
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receipts from operations 13.6 % higher as compared to last
year.
Cash Flow:
The cash flow generated through the operating activities
was Rs. 543.86 million in 2006 as compared with Rs.
1489.11 million during 2005. Net income after tax increased
to Rs. 676.83 million in 2006 from Rs. 597.12 million in
2005, reflecting higher volume and growth on impact of
Localization.
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The positive cash flow during the year was mainly deployed
for capital expenditure (Rs. 2,125.86), debt repayment (Rs.
231.98 million).
Conclusion:
The reduction in tariff rates liberalization and global image of
Pakistan has resulted in substantial growth in foreign
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investment and exports. At the same time, there are
significant challenges that can be a threat if not addressed
timely. The company is faced with a great cost increase
problem due to the continuous rise in input raw material
especially steel prices, rubber and petroleum products.
The year 2005-06 turned out much as planned, although the
task was made harder by the burden of global raw material
price hike. Next year will be a difficult year for the country
economy. The business environment and the economy are
becoming more open and the business environment more
difficult. The automobile industry policy of deletion and
“forced” localization have been abandoned by the
government. The implications are severe i.e. “survival of
fitness”. In this environment, competitiveness is the key
success factor. However, your company is well positioned in
terms of capacity & efficiency. Barring any unforeseen
economics adjustment, Atlas Honda should maintain its
growth momentum. There is excepted strong competition
from Chinese and its Japanese competitors. So Honda should
recover from its internal and external expenditures hence it
would reduce cost of production. Customers will buy more
Atlas Honda in case if price still low.
It is strongly believed that under WTO agreements the
developing countries economies will be seriously affected.
The auto industry, and especially the motorcycle industry, is
poised for growth. The results speak for themselves. This is
the time to further nurture the industry otherwise a great
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opportunity to diversify the industry will be lost to the
country.
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BIBLIOGRAPHY
Pakistan Automotive Manufacturer Association
Atlas Honda Annual Reports (2002 to 2006)
Ministry of Industry and Trade, Govt. of Pakistan
Honda Web Site www.atlashonda.com.pk
Administration & Industrial Relations Department Atlas
Honda Limited
Karachi Stock Exchange
Trade Development Authority
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