University of Education

Lower Mall campus, Lahore

Department of Economics and Business
Administration

Atlas Honda Limited

Submitted By:
<<BBA-F15-71>> <<M. Mohsin Yaqoob>>
<<BBA-F15-73>> <<M. Salman Farooq>>
<<BBA-F15-77>> <<Umer Sanaullah>>
<<BBA-F15-88>> <<Shaikh Abdul Manan>>
<<BBA-F15-89>> <<Shaikh Hamza Jameel>>
<<BBA-F15-95>> <<Tariq Mahmood>>
<<2015-2019>>
<<May24, 2019>>
 Automobile Sector
Industry Analysis
Introduction
The automobile industry in Pakistan includes companies involved the production/assembling
of passenger cars, light commercial vehicles, trucks, buses, tractors and motorcycles. The
auto spare parts industry is an allied of the auto industry.

History
When Pakistan was established in 1947, there were neither any automobile assembly plants
nor any industrial capability available for this important manufacturing of cars, Light
commercial vehicles, motorcycles, trucks and buses.
Investment in the automobile industry in Pakistan started in the mid 50s when Kandawallah
Industries established its units for assembling buses and trucks. The company’s name was
later changed to Naya Daur Motors. National Motors took the challenge to produce locally
manufactured automobiles in the 60s and is said to have reached above 80% deletion of the
Bedford Lorries and trucks before it closed down. Then Kandawallah Motors again made a
breakthrough by introducing “Nishaan”, a jeep copied on the pattern of Willeys Jeep of USA
used by the Pakistan army. However, the project died out before the commercial production
began. Iran used the same blueprint and developed the automobile under a different brand
name.

Significance
The automotive industry in Pakistan is the one of the most important and fastest growing
industries of the world, accounting for 4% of Pakistan's GDP and employing a workforce of
over 1,800,000 people. Currently there are 3200 automotive manufacturing plants in the
country, with an investment of ₨92 billion (US$870 million) producing 1.8 million
motorcycles and 200,000 vehicles annually. There are different companies that assemble the
motorcycles and other products for fulfill the demand of People. With the increase in
Population, People demand the more motorcycles and cars for their use. So companies
assemble the large quantity of products day by day and enhance the competition in the
market. Pakistan has to depend on import of auto parts cars from abroad and then cars are
assembled in Pakistan, which is not a very efficient way of running the country’s economy.
Time has come to manufacture cars and automobiles in Pakistan now.

Market Structure
The market structure of the automobile industry in Pakistan is concentrated. In economics
term, we could say it’s an oligopoly, which is characterized by imperfect competition in
which the industry is dominated by a small number of suppliers. This is because the auto
industry is highly capital-intensive requiring high investments and the products are
expensive. Hence the barriers to entry are high resulting in the presence of limited
number of suppliers. Moreover, the market can also be categorized as price-oriented. As
cars are luxury items, especially in developing countries (Pakistan being one of them), the
demand for them is elastic. Any prices change affects the sales of the company to a great
extent.
 Major Players and Competitors
In economics term, we could say it’s an oligopoly, which is characterized by imperfect
competition in which the industry is dominated by a small number of suppliers. The 10 listed
companies on PSX of automobile assembler are:
1) Atlas Honda Limited
2) Pak Suzuki Motors Ltd
3) Ghandhara Industries Ltd
4) Dewan Farooq Motors Limited
5) Al-Ghazi Tractors Limited
6) Ghandhara Nissan Limited
7) Honda Altas Cars (PAK) Ltd.
8) Indus Motor Company Ltd
9) Millat Tractor Ltd
Atlas Honda is the market leader in the automotive industry. It’s the biggest manufacture in
the automotive industry. Due to increase in demands it’s also double its production capacity.
Its motorcycles production capacity is 1.35 million, with 150,000 units from Karachi plant
and 1,200,000 units from sheikupura plant for year 2017-18. And sold 1,088,000 units in
2017-18 and act as market leader. The net sales are 77.8Bn and profit before tax is 6.3Bn and
after tax profit is 4.7Bn for the year 2017-18.
It’s selling the different models of motorcycles that are:
1) Honda CD 70
2) Honda CD Dream 70
3) Honda Pridor
4) Honda CG 125
5) Honda Deluxe
6) Honda CB150F
7) Honda CB250F
In the automotive industry different companies are competing with Atlas Honda, but due to
their excellence performance it’s enjoy the advantage of market leader. Companies that are
direct competing with the Atlas Honda are:
 Dawood Yamaha and Company
 Sehgal & Company
 Suzuki Motorcycle
 Sohrab Motorcycle
Chinese Brands also indirectly compete with the Atlas Honda to reduce its sales and sell the
Motorcycles at low price.
 Road Prince
 Metro
 Pak Hero
 Super Asia
 Super Star
 New Asia
 Ravi
 Barriers of Entering
 Large amount of capital Required
 Small number of suppliers is available in industry.
 All automobile industries also developed their brand image and intense competition.
 Few legal barriers that protect existing companies from new entrants.
 It’s very hard for companies to achieve the economy of scale usually for small
companies.
 Products are differentiated by design and engineering quality.
 Government often imposed the high taxes on imports in order to protect their home
products.
 People taste can also changed by promoting the public transport.

Technological Affects
With the passage of time, there’a improvement’s in the technology. Now the automotive
industry manufactured the highly innovative products that can attract the customers.

 Fully Automatic
 Self Start
 Digital Meter
 Fuel Efficient
 Electronically Controlled
 Gas-electric Hybrid and Hydrogen Powered fuel

Government Regulations
Government regulations also affect the automobile industry in different ways:
 Government imposed the high amount of taxes and tariffs on imports that create
the difficulty for the companies because it’s increased the cost of production.
 Government increased the sale tax on automobiles such as Motorcycles, cars,
Buses and Trucks etc.
 Every new sitting Government increased the tax ratio on behalf of filer and Non-
Filer.
 Government also protects the companies from unfair selling of Vehicles.
 Fluctuations on exchange rate also affect the automobile industry.
 Government imposes on companies that the limited number of parts to be
imported.
By Government regulations the imports of vehicles fell in last few years one of the major
reason which is increased in the custom duties. In order to provide an enabling, conductive to
development & growth of the automotive industry a stable & consistent tariff regime is
essential which creates a balance between imports & local manufacturing.

Main Modes of Marketing

 Advertisement
 Sales Promotion
 Personal Selling
 Direct Marketing
 Seasonal Trend
The boom in automobile industry is observed during the months of May and October-
November when the purchase is galvanized by impending Budget and increase in cash flows
after cotton crop harvest respectively. The expected changes in government policies
regarding taxes and duties in the budget lead to increase in Bikes and car sales during May
and slump in July.

Demographic Shift
Migration of the population from the rural to the urban areas affects the automobile sales
indirectly. In cities, the need for travelling longer distances between places of residence and
work has created the need for using automobiles. Moreover, urbanization of the country has
also contributed to the growth of this industry.
Population Growth: With the population growth of 2.7% per annum and the changing
lifestyles of the people, so it’s became a part of life for People.

Lack of Structure
The transport system of our country, if it could be described as a system, is coupled with a lot
of its malaises. The ever-growing vehicle population, increasing at a rate of 10% per annum,
is completely topsy-turvy in the face of corrupt traffic police, dilapidated roads with poor
infrastructure and transport mafia which altogether have literally turned the country into a
traffic mess. Congestion & traffic jams, pollution and other such problems are increasing
with the increasing population of cars. This poses a threat to the future of the automobile
industry. You need roads to run cars. With the present scenario, it seems that there would be
more cars than the roads can sustain.

Environment Factor
One of the major weaknesses for this sector is related to environmental concerns. Vehicles
are the main reason for air pollution in Pakistan’s main cities in particular. Mainly vehicles
that run on diesel, pollutes the air in large level therefore a vigilant environmental regulator is
required with good skill set.

Sale Trend in Automobile Industry

Pakistan’s auto industry is off to a good start in 2018. According to a production versus sales
data compiled by Pakistan Automotive Manufacturer’s Association (PAMA), local
assemblers sold 23,700 units of SUV’s, Sedans and CUV’s in January 2018.

This is a 13 percent climb compared in a year-on-year analysis with the corresponding

month in 2017. According to statistics, this was the highest monthly unit sale recorded
for the start of the year, which is usually not as progressive.

Commentators attribute this growth to taxation policies, buying power and the ever growing
demand from online cab hailing services, Uber and Careem. Online cab hailing services
have made a serious mark on the auto industry in the past two years. From Suzuki resorting to
halt production of the Wagon R in light of a backlog of orders to a whopping 30 percent raise
in 1000cc and below cars, Uber and Careem seem to have affected a lot of areas.
Cumulatively, industry sales during the seven months of the fiscal year 2018 posted 29
percent growth to 147,838 units.

Sale of Honda Atlas Cars’ Honda Civic and Honda City went up from 2464 units in
December to 3,888. In a year on year analysis, there was a 33 percent climb. Compared to
January 2017 sales for Honda went down 28 percent in a month on month comparison. The
7-month fiscal year (from July 2017 – present) sales went up by 50 percent in a year on year
comparison to 24,780 units due to the success of new models Civic/BRV and surprisingly.

Toyota’s Indus Motors Company went down a notch with a decrease of 3 percent in a year on
year comparison and 14 percent in a month on month comparison. Toyota’s Corolla, as
reported earlier, was the most popular sedan in 2017.

Motorcycle/three-wheeler sales for December 2017 grew by a 9 percent year on year

comparison, due to rising disposable income of the lower middle class, while 7 month fiscal
year 2018 sales were up 19 percent in a year on year comparison.

Pakistan Automotive Manufacturers Association (PAMA) recorded tractor sales in a positive

trend with sales growing by 5 percent in a year on year comparison in December 2017.
According to a local publication, Millat Tractors outperformed with a 53 percent year on year
growth. During the 7 month period, tractor sales reached 32,310 units and showed an upward
trajectory with a 54 percent year on year comparison.

The expectation was that with lower GST on tractor purchase, fertilizer cash subsidy, along
with Rs. 2bn subsidy for farmers on tractor purchase recently announced in FY18 Sindh
provincial budget would improve farmers’ purchasing power and thus support overall tractor
sales will go forward.
 Atlas Honda

Overview of Organization

History
Atlas Honda Limited (AHL) is a joint venture between the Atlas Group and Honda Motor Co.
Ltd., Japan. The company was created by the merger of Panjdarya Limited and Atlas Autos
Ltd. in 1988. Both these motorcycle manufacturing concerns were established by
the Atlas Group. In addition, a third concern, Atlas Epak Ltd. was taken o v e r b y t h e
Government of Bangladesh in 1971 after the fall of
D h a k a . A H L m a n u f a c t u r e s a n d m a r k e t s H o n d a m o t o r c yc l e s i n
c o l l a b o r a t i o n w i t h H o n d a M o t o r Company. Atlas Honda is a Pakistani
motorcycle manufacturer owned by Atlas Group and Honda Motor Company and based in
Karachi, Sindh, Pakistan since 1962. It is the largest motorcycle assembler and a market
leader in Pakistan. The company was created in 1988 after Panjdarya and Atlas Autos
merged. AHL 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. The company also exports motorcycles to Sri Lanka, Afghanistan and
Bangladesh. Atlas Honda has Pakistan's largest in-house manufacturing capability at its
Karachi and Sheikupura plants, which include an R&D wing and tool making facilities
through CAD/CAM. The annual assembly production capacity of AHL is 1.35 million units,
with 150,000 units from the Karachi plant and 1.2 million units from the Sheikupura plant.

Vision
“Market leader in the motorcycle industry, emerging as a global competitive centre of
production and exports.”

Mission
“A dynamic growth oriented company through market leadership, excellence in quality and
service and maximizing export, ensuring attractive returns to equity holders, rewarding
associates according to their ability and performance, fostering a network of engineers and
researchers ensuing unique contribution to the development of the industry, customer satisfaction
and protection of the environment by producing emission friendly green products as a good
corporate citizen fulfilling its social responsibilities in all respects.”

Introduction
Atlas Honda Limited is a public listed company which was incorporated on October 16,
1962. It is a joint collaboration between Honda Motor Company Limited Japan, the largest
and most reputed motorcycle brand in the world, and Atlas Group, one of Pakistan’s most
renowned business conglomerates. The Company is principally engaged in progressive
manufacturing and marketing of motorcycles and spare parts.

Atlas Honda Limited is the largest motorcycle manufacturer in Pakistan with the strongest
brand value and highest customer loyalty. The Company is considered a pioneer of
motorcycle industry in the country and has been leading two wheeler market successfully for
over 50 years.

The Company currently has a production capacity of over 1.35 million units per annum and
continues to maintain its status as market leader both in terms of volume and quality. It also
exports its motorcycles and spare parts to Bangladesh and Afghanistan.

With highest quality products, state of the art manufacturing facilities, largest dealership
network & impeccable after sales service, Atlas Honda Limited is today considered a
benchmark for two wheeler manufacturing. It has been proudly and successfully fulfilling its
role as the flag bearer of motorcycle industry in Pakistan.

As one of the largest tax payers in the private sector and being one of the best employers in
the country, Atlas Honda Limited stands as a beacon of light for the corporate, social and
intellectual sectors of Pakistan.

Corporate Objectives

Customers:

Our Customers are the reason and the source of our business. It is our joint aim with our
dealers to ensure that the customers enjoy the highest level of satisfaction from use of Honda
motorcycles.

Quality:

To ensure that our products and services meet the set standards of excellence.

Local Manufacturing:

To be the industry leader in indigenization of motorcycle parts.

Technology:

To develop and maintain distinct business advantages through continuous induction of

improved hard and soft technologies.

Shareholders:

To ensure health and viability of business and thus safeguarding shareholders’ interest by
maximizing profit. Payment of regular satisfactory dividends and adding value to the shares.
Employees:

To enhance and continuously update each member’s capabilities and education and to
provide an environment which encourages practical expression of the 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, rules and regulations and to maintain a high standard
of ethics in all operations and to act as a responsible member of the society.

Market Standing

Atlas Honda work as a market leader in the industry due to its quality and Production. Its
quality encourages the customers to buy it. Now other brands also directly and indirectly
compete with Atlas Honda to reduce its sales. But Atlas Honda developed the positioning in
the mind of People that it’s a best two wheeler. People also satisfy with them and ready to
pay high price instead of china bikes who are indirectly competing. Company manufactures
1.35 million units per year to fulfill the need of their customers. Due to increase in number of
Population, demand of motorcycles increases every year. Atlas Honda produces various
value-added auto parts for in-house consumption and catering to the after-sale market. The
company also exports motorcycles to Sri Lanka, Afghanistan and Bangladesh, currently,
exporting between 4,000 and 5,000 motorcycles a year. It also has an established wide
network of over 1,600 sales services and spare parts dealers.

Atlas Honda is now well poised to serve the needs of the customers in a timely manner. The
successful partnership between Honda Motors and Atlas Group is now in its 53rd year and is
a symbol of the Pakistani market’s resilience and future potential. AHL produces motorcycles
at two plants – the Karachi Plant in the southern part of the country and the Sheikhupura
Plant in the northeastern part of the country. The annual assembly production capacity has
now become 1.35 million units, with 150,000 units from the Karachi Plant, and 1.2 million
units from the Sheikhupura Plant.

Policy of the Organization

Quality Policy

 Commitment to provide 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.
 Competitors
Atlas Honda is the market leader in the automotive industry. It’s the biggest manufacture in
the automotive industry. Due to increase in demands it’s also double its production capacity.
Its motorcycles production capacity is 1.35 million, with 150,000 units from Karachi plant
and 1,200,000 units from sheikupura plant for year 2017-18. And sold 1,088,000 units in
2017-18 and act as market leader. The net sales are 77.8Bn and profit before tax is 6.3Bn and
after tax profit is 4.7Bn for the year 2017-18.
 Dawood Yamaha and Company
 Sehgal & Company
 Suzuki Motorcycle
 Sohrab Motorcycle
Chinese Brands also indirectly compete with the Atlas Honda to reduce its sales and sell the
Motorcycles at low price.
 Road Prince
 Metro
 Pak Hero
 Super Asia
 Super Star
 New Asia
 Ravi

Business Volume

Sales
RS. 77.5 BN
We have achieved the highest ever sales during the year, an increase of 20% from last
year.

Profit before Tax

RS. 6.3 BN
Volume growth & effective cost management measures resulted in an increase of profit
by 23% from last year.
 Profit after Tax
RS. 4.7 BN
Improved results and tax efficiency has resulted in encouraging growth in profit after
tax, an increase of 24% from last year.

Return on Equity
31.90%
Improving profitability and optimum equity increase the return on equity by 3% from the
last year.

Earnings per Share

RS. 45.1
Improved profitability generates higher EPS for shareholders, an increase of 24% from
last year.

Wealth Distributed
RS. 26.3 BN
Among Government, employees, providers of capital and retention for future growth, up
by 22% from last year.

Breakup Value per Share

RS. 154.7
Higher breakup value providing a stronger financial base of our future growth.
 Capital Expenditure
RS. 2.4BN
Incurred for capacity expansion and BMR of existing facilities, an increase of 20% from
the last year.

Proposed cash dividend per share

RS. 27.0
We have been following a consistent policy of paying high dividends, an increase of
46% from last year.

Cash generated from Operating Cycle

RS. 7.8BN
Effective working capital management resulting in higher operating cash flows.

Product Lines
 CD70
 CD70 Dream
 Pridor
 CG125
 CG125 Self
 CB125 F
 CB250 F
 CB250 F
 Organizational Hierarchy Chart

Shareholders

Board of Directors

Audit HR & Company

Committee Remuneration Sectary
Committee

Chief Executive Officer

Operations Support

Sales Finance

After Sales
Quality
Assurance
Production

HR
Production,
Planning & &
Control Administration

Supply Chain
Information
Engineering &
Technology
Projects
Commercial &
Planning
 Number of Employees

Number of Employees Factory Others

Year 2018 2017 2018 2017

Total Number of Employees 1,385 1,440 226 198

Average number of Employees 1,507 1,457 209 194

Main Offices

Karachi Plant: Company Mother Plant is based in the city of lights and provincial capital of
Sindh, The Karachi city. Atlas Group signed the technical agreement with Honda in 1963 and
plant started the commercial production subsequently. Plant spread over an area of 5acres. In
1964 Production began with 7 Motorcycles per day.

Sheikupura Plant: Another plant is located in sheikupura city, Punjab. It’s located at 26-27
Km from Lahore. The Plant was built in 1981 and spread over an area of 27 acres. The plant
manufactures all variants of motorcycles.

Regional Offices:

 Lahore: 1 Mecloed Road Lahore -54000 [(042) 111 -111-245,

3 7 2 2 5 0 1 5 - 1 7 , 37233515-17]
 Rawalpindi: 60-Bank Road, Sadder [(051) 5120494-6, 5120497]
 Multan: Azmat Wasti Road Multan-60000 [ (061) 4540054, 4540028, 4571989]
 Rahim Yar Khan: Atlas Honda Limited, 4-B Zamindara Colony [(068) 5888809]
 Introduction to all Departments
1) Human Resource
2) Admin & IR
3) Corporate Affairs
4) Finance
5) Stores
6) IT
7) PPC
8) Maintenance
9) Quality Assurance
10) Casting Plant
11) Engine Plant
12) Manufactured Plant

Human Resource
HR department is responsible for the recruitment of new staff and appraisal and training of
the existing staff. The HR department is working separately for Karachi and Sheikupura but
the policy is being made in Islamabad. The administration is responsible for managing the
major functions of the organization that include from security to transport and dining facility
of staff. The issuance of motorcycle to grade 13 on easy installments. It’s also running social
and welfare organizations.

Admin & IR

Admin department of Atlas Honda is responsible for making the several policies regarding
growth of the organization and security as well. The motive of Atlas is to provide with
customers high quality and gave a reasonable profit to the shareholders. This department is
responsible for the successful running of the organization.

Corporate Affairs
Corporate affairs department is the major backbone of any organization. In Atlas Honda, the
corporate affairs department is responsible for interlinking all other departments with one and
other. The department plays an important role in the promotion of concurrent engineering.

Finance

The finance department is responsible for carrying all the work related to accounts and
money. Finance department gives the salaries to the employers and managers the money
received from dealers after selling them bikes and given to the vendors.

PPC

PPC involves the entire production plan according to market demand. The production plan
for the entire month is given to the shops at the start of month. PPC involves the analysis of
market which determines how much production bikes as per demand.
 Information Technology
The IT department is responsible for maintaining the all records of the company. It’s
performing a lot of work for managing the computers, installing the software and managing
the LAN in the plant and head offices. It has the official license of MS-Office in 2004.

Maintenance

The maintenance department performs all the maintenance work whether it’s about
maintaining the machines or maintaining the plant. The production of electricity in the gas
and diesel plant also comes under maintenance department.

Stores

The store is the department which is situated in the front of security gate of the Atlas Honda
plant. Store is one of most important department for manufacturing, HPDC, LPDC, casting
and vendors. All the products that are made in a department are used in the store before being
passed to other departments. For example all the casting is moved to the stored before being
machined in the Hi-Tech plants.

Quality Assurance
The quality assurance department is playing an important role in providing the customers
high quality motor bikes. By providing high quality it has sustained their customers forever
and acts as market leader in the industry.

Casting Plant
In casting plant many of the parts are manufactured which are then used as parts in the
motorcycle. The parts that are casted include the crankcase, crank shaft and cylinder head.
The casting plant is divided into two parts:

 HPDC
 LPDC

Manufacturing Plant

The manufacturing plant includes the paint shop and shop that make the body of the bikes.
The sheets are brought here and are punched and stamped to form the body of the bikes. The
parts include the side cover of the bike. The sheet are then painted in the paint shop to give
the unique look to the bike and stickered to make it beautiful.

Engine Plant

The engine plant is one of the biggest departments and is still being expanded due to high
production rate. The engine plant collects all the parts of the engine in the raw form which are
then machined to form the finished products. The products are checked for high accuracies
and the parts which are upto mark and sent to assembly plant.
 Comments on Organizational Structure
No doubt AHL’s organizational structure is working properly; all the decisions are made by
the top management which gives the instruction to the middle management staff, its middle
management responsibility to implement these orders. Company also gets the feedback from
their employees mean the feedback also transfers from lower to the upper management. A flat
organizational structure exists in Atlas Honda Ltd as in contrast to a tall organization. This
means that the “chain of command” from top to bottom is short and the “span of control”
is wide. Due to smaller number of management layers, it has the greater communication
between management and employees with a better team spirit and less bureaucracy and easier
decision making.

Departmental Work
 Marketing Functions
There are the four elements of Marketing:

 Product
 Price
 Place
 Promotion

Products
Atlas Honda has two basic products:

 Honda CD 70
 Honda CG 125
And other products are:
 Honda Dream
 Honda Pridor
 Honda CG125 Self
 Honda 150F
 Honda 250F

Both of them are the four stroke motorcycles.
market and that is the reason that Honda
days. The basic reason of the success is
throughout its career. These models of
Sheikhupura and Karachi.
Both the products have a good repute in the
has approximately 63% market share now a
the quality maintained by the company
HONDA are being manufactured in

In order to increase market share marketing department perform following

activities:

 New model
 Changes in design
 In-House Production

New Model
In order to get more market share atlas Honda has been introducing
n e w 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.
B u t t h e company always maintained the quality of its motorcycle.

Change 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 t i m e , i n o r d e r t o s a t i s f y c u s t o m e r s n e e d s ,
B u t t h e e n g i n e a n d o t h e r m a i n accessories are the same.
 In-House 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 c o n c e p t
o f localization.
C o m p a n y e n c o u r a g e d t h e l o c a l v e n d o r s a n d 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 use local production. So now Atlas Honda has managed to localize
almost8 9 % o f t h e p a r t s . S t i l l 1 1 % p a r t s a r e b e i n g i m p o r t e d f r o m J a p a n .
A t l a s 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 order
to produce the required quality products. This is all done under the h ead of
marketing department.
Price
Atlas Honda has two main products and their prices are as under:
 Honda CD70 82,000 Rupees
 Honda CG125 116,500 Rupees
 Honda CG125 Self 136,500 Rupees

The company uses the single price strategy. It means the product has the same
price all over the Pakistan. I n i t i a l l y A t l a s H o n d a w a s t h e o n l y p r o d u c e r o f
qualitative four-stroke m o t o r c y c l e i n P a k i s t a n . S o t h e y w e r e
t a k i n g t h e a d v a n t a g e o f t h i s monopolistic situation and using the
p r i c e s k i m m i n g s t r a t e g y a n d w e r e charging higher prices.

Till 17 th may 2003 company have 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 HONDACD70 and almost Rs. 5000 in CG 125.

Promotion
Promotion involves the following strategies:

 Advertisement
 Sales Promotion
 Personal Selling
 Publicity

Advertisement
Atlas Honda uses the print media as well as
el e ct ro n i c m e d i a fo r advertisement. In print media the
c o m p a n y g i v e s a d v e r t i s e m e n t s i n 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 d u r i n g h o u r l y n e w s . C o m p a n y h a s a
c o n t r a c t w i t h A d C o m ( a d v e r t i s i n g 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
d e a l e r s o n achieving targets. Company sends their successful dealers to
different trips all over the world.
Personal Selling
The company doesn’t personal selling as well, not to the individuals but to the
institutional customers.

Distribution
Atlas Honda gained good market share due to its strong
d i s t r i b u t i o n network. For distribution atlas Honda has divided the whole
country into two regions:

1) South region
2) N o r t h r e g i o n

SOUTH REGION

It includes the following two territories:

 Karachi (Karachi region covers whole Sindh province)

 Quetta (Quetta region covers the whole Baluchistan province)

NORTH REGION

It includes the following three territories:

 Multan (Its includes all lower Punjab cities)

 Lahore (It cover cities from upper Punjab)
 Rawalpindi (It covers Islamabad and NWFP)
 Human Resource Management
Recruitment and selection
This includes activities like giving ads on appropriate media newspapers so that potential candidates are
attracted and after acquiring a pool deserving candidates are selected purely on merit base. The first and
foremost criterion for recruitment and career advancement is merit.

Atlas Honda is an equal opportunity employer. Company’s presence in all corners of Pakistan ensures a
diversified work force. Recruitment of people with varying geographical backgrounds makes Atlas Honda
one of the most diversified companies in the industry

Training and Development

Selecting a good employee is not good enough till he is trained to give his best for the organization. To make
him more useful for the organization an induction process is done by AHL. Atlas Honda puts a first and
foremost criterion for recruitment and career advancement is merit. Atlas Honda is an equal
opportunity employer. Company’s presence in all corners of Pakistan ensures a diversified
work force. Recruitment of people with varying geographical backgrounds makes Atlas
Honda one of the most diversified companies in the industry conscious effort in training and
development of its manpower. We firmly practice Atlas Group’s motto, i.e. “Organizational
Development through Self Development”.

For continuous learning and development in a structured manner, the company has its own
core development framework. It helps our associates to attend in-house as well as public
programs (including foreign training) as they progress within the organization. The Group’s
philosophy to encourage continuous education has helped many associates to step up their
qualification while on the job. Apart from it, Company Sponsored EMBA program from
LUMS and IBA has played a vital role in picking up rough diamonds and harnessing their
talent.

Atlas Honda’s hallmark program – Atlas-IBA Diploma in Business Administration has

contributed significantly in developing and refining talent for the key positions within the
Company and in Atlas Group. When it comes to Senior Management, the associates are sent
to well renowned institutions of learning such as Harvard, Wharton, Stanford, and IMD to get
them equipped for assuming higher roles.

Performance Appraisal
When a employee is trained and he has performed his job for a certain period then company has to identify if
that person is doing his work according to job description so they conduct performance appraisal.

Compensation Policy
On the basis of performance appraisal employee are compensated according to their performance. High
performance employees get encouragement certificates and cash reward.

All these function are performed by HR specialist team at Honda both collectively and individually.
 Ratio Analysis
In order to know whether a firm is using its resources efficientl y or
n o t , 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
s t a t e m e n t s . M a j o r categories are as follows.
 Liquidit y ratios
 Leverage ratios
 Activity ratios
 Profitability ratios
Liquidity Ratio
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: Rupees
1) Working Capital = Current Assets-Current Liabilities
Working Capital = 23,427,380 - 14,886,896
Working Capital = 8,540,484

2) Current Ratio = Current Assets / Current Liabilities

Current Ratio = 23,427,380 / 14,886,896
Current Ratio = 1.57

3) Q u i c k R a t i o = C u r r e n t A s s e t s – I n v e n t o r y / Current liabilities
Quick Ratio= 23,427,380-2,599,530/ 14,886,896
Quick Ratio= 1.4

4) Cash Ratio = Cash Equivalents + Marketable Securities / total assets

Cash Ratio =
Cash Ratio =

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:

5) Debt Ratio = Total Liabilities/ Total Assets

Debt Ratio = 15,826,619 / 31,827,339
Debt Ratio = 0.49
Activity Ratio
6) Total Asset turnover = Sales / Total Assets
Total Asset turnover = 77,478,845/ 31,827,339
 Total Asset turnover = 2.43
 Fixed Asset turn over = Sales / Fixed Assets
Fixed Asset turn over = 77,478,845 / 8,399,959
Fixed Asset turn over = 9.22

7) I n v e n t o r y T u r n o v e r R a t i o = C G S / Inventory
Inventory Turnover Ratio=69,188,101/ 2,599,530
Inventory Turnover Ratio= 26.61

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

Average age of Inventory =365/ 26.61
Average age of Inventory = 13.71
Profitability Ratio
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

Gross Profit Margin = 8,290,744/ 77,478,845
Gross Profit Margin = 0.1

10) Operating Profit Margin = EBIT / Net Sales

Operating Profit Margin = 6,264,846/ 77,478,845
Operating Profit Margin = 0.083

11) Net Profit Margin = Net profit after tax / Net Sales
Net Profit Margin = 4,663,635/ 77,478,845
Net Profit Margin = 0.06

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

Return on Total Assets = 4,663,635/ 31,827,339
Return on Total Assets = 0.14

13) Dividend Payout Ratio = Dividends / Net profit after Taxes

Dividend Payout Ratio =
Dividend Payout Ratio =

https://www.scribd.com/doc/24223108/Zubair -Project-Atlas-Honda
 Swot Analysis
Strengths
Atlas Honda has the 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 Strengths: Atlas Honda Ltd is financially strong company which is it’s
another strength.

Intensive distribution Network: Company has intensive distribution network (dealers)

throughout the country which is it strength.

Four Stroke Technologies: Four-stroke technology is being used in Honda motorcycles that
are again 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 strength of the company.

Localization: Till now company is in a position to localize its productions up to89%. Almost
89% of parts to be used in production are in house.

Less Employee Turnover: Employee turnover is very less at Atlas Honda ltd. this shows
that the employees are well satisfied with their jobs.

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
System Company is able to get knowledge about competitor’s activities and market trends.

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 parts for
the company productions.
Weakness
High Price: The Price of Honda motorcycles is relatively higher than the other’s.

Lack of New Model: Company has not introduces any new model with major changes
from a long time.
 Opportunities

“5 S” 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; this new concept company
has introduced two new “S” other than sales, s p a r e p a r t s a n d s e r v i c e .
These are special sales and second hand sale. Spare parts and
s e r v i c e . T h e s e a r e s p e c i a l s a l e s a n d s e c o n d h a n d s a l e . According
to this new idea dealers will help the customers to replace their 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 second hand motorcycle with new one
and customers can get motorcycle on credit as well.

Poor Quality of Chinese Motorcycles: Chinese brands that are available in the
market are not comparable with HONDA motorcycle in quality terms. So the
poor quality of Chinese b r a n d s i s a n o p p o r t u n i t y f o r t h e c o m p a n y a s t h e
company believes that Chinese brands are an opportunity for the
c o m p a n y . 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).

Threats
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.

Higher rate of Taxation: Government imposes the high rate of taxes on imports that creates
threat for company and its vendors. Because it increases the production cost.

Energy Crisis: Electricity prices in Pakistan are increasing day by day. So by increasing the
electricity price it can also increases the cost of production. So when the cost increases it can
also increase the price of motorcycles. And results that purchasing power of customers or
consumers declined.
1 https://itc.umt.edu.pk/images/reports/16_Automobile%20Sector.pdf

2&3

https://www.slideshare.net/burhanazeem/atlas-honda-internship-report-2013-45264065

https://www.scribd.com/doc/143730321/Strategic-Analysis-of-Atlas-honda-motorcycles

https://www.scribd.com/doc/24223108/Zubair-Project-Atlas-Honda

https://www.atlashonda.com.pk/

4&5

https://www.slideshare.net/qazizohaibaqil/atlas-honda-internship-report-by-qazi-zohaib-aqil

https://www.scribd.com/doc/24223108/Zubair-Project-Atlas-Honda

https://www.slideshare.net/qazizohaibaqil/atlas-honda-internship-report-by-qazi-zohaib-aqil

https://www.scribd.com/doc/24223108/Zubair-Project-Atlas-Honda
 Questions
What’s the total industry sale volume? In units? And PKR?

What are the main modes of marketing? Simply describe as usual…

In what way’s consumer tastes affecting the industry?

What are key financial measures in your industry? (Average profit, Margins, Sales
Commissions)

Comments on Organizational Structure?

Department hierarchy

Number of employees working under HR, Finance and Marketing?

Mention any sub department exists?