1. Termination of Honda joint venture

2. Formation of Hero MotoCorp

3. Equity Investments

4. Operations

5. Company performance

6. Listings and shareholding

7. Employees

8. Awards and recognition

9. Initiatives

10. Sponsorship

11. See also

12. References

13. External links

Hero Honda started its operations in 1984 as a joint venture between Hero Cycles (sometimes called Hero Group, not to be confused with the Hero Group food company of Switzerland) of India and Honda of Japan.^[7] In 2010, when Honda decided to move out of the joint venture, Hero Group bought the shares held by Honda.^[8][9]

In June 2012, Hero MotoCorp approved a proposal to merge the investment arm of its parent Hero Investment Pvt. Ltd. with the automaker. This decision came 18 months after its split from Hero Honda.^[10]

"Hero" is the brand name used by the Munjal brothers for their flagship company, Hero Cycles Ltd. A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda Motors Limited at Dharuhera, India. Munjal family and Honda group both owned 26% stake in the Company.

During the 1980s, the company introduced motorcycles that were popular in India for their fuel economy and low cost. A popular advertising campaign based on the slogan 'Fill it – Shut it – Forget it' that emphasised the motorcycle's fuel efficiency helped the company grow at a double-digit pace since inception. In 2001, the company became the second largest two-wheeler manufacturing company in India and globally.^[3] It maintains global industry leadership to date.^[3] The technology in the bikes of Hero Motocorp (earlier Hero Honda) for almost 26 years (1984–2010) has come from the Japanese counterpart Honda.^[11]

Termination of Honda joint venture

By December 2010, the board of directors of the Hero Honda Group had decided to terminate the joint venture between Hero Group of India and Honda of Japan in a phased manner. The Hero Group would buy out the 26% stake of the Honda in JV Hero Honda.^[12]

Under the joint venture Hero Group could not export to international markets (except Nepal, Bangladesh and Sri Lanka) and the termination would mean that Hero Group could now export. From the beginning, the Hero Group rely on their Japanese partner Honda for the technology in their bikes.^[13]

The Japanese auto maker will exit the joint venture through a series of offmarket transactions by giving the Munjal family—which held a 26% stake in the company—an additional 26%. Honda, which also has an independent fully owned two-wheeler subsidiary—Honda Motorcycle and Scooter India (HMSI)—will exit Hero Honda at a discount and get over ₹6,400 crore for its stake. The discount will be between 30% and 50% to the current value of Honda's stake as per the price of the stock after the market closed on 16 December 2010.^[14]

The rising differences between the two partners gradually emerged as an irritant. Differences had been brewing for a few years before the split over a variety of issues, ranging from Honda's reluctance to fully and freely share technology with Hero (despite a 10-year technology tie-up that expires in 2014) as well as Indian partner's uneasiness over high royalty payouts to the Japanese company. Another major irritant for Honda was the refusal of Hero Honda (mainly managed by the Munjal family) to merge the company's spare parts business with Honda's new fully owned subsidiary Honda Motorcycle and Scooter India (HMSI).^[14]

As per the arrangement, it will be a two-leg deal. In the first part, the Munjal family, led by Brijmohan Lal Munjal group, will form an overseas-incorporated special purpose vehicle (SPV) to buy out Honda's entire stake, which will be backed by bridge loans. This SPV would eventually be thrown open for private equity participation, and those in the fray include Warburg Pincus, Kohlberg Kravis Roberts (KKR), TPG, Bain Capital, and Carlyle Group.^[15]

Formation of Hero MotoCorp

The name of the company was changed from Hero Honda Motors Limited to Hero MotoCorp Limited on 29 July 2011.^[3] The new brand identity and logo of Hero MotoCorp were developed by the British firm Wolff Olins.^[16] The logo was revealed on 9 August 2011 in London, to coincide with the third test match between England and India.^[16]

Hero MotoCorp can now export to Latin America, Africa and West Asia.^[16] Hero is free to use any vendor for its components instead of just Honda-approved vendors.^[16]

On 21 April 2014, Hero MotoCorp announced their plan on a {{INRConvert|254|c}} joint venture with Bangladesh's Nitol Niloy Group in the next five years to set up manufacturing plant in Bangladesh. The plant started production in 2017. Hero MotoCorp owns the 55% of the manufacturing plant and rest 45% is owned by Niloy Motors(A subsidiary of Nitol-Niloy Group) ^[17] also hero updated its 100cc engine range in 2014 for 110cc bikes except hero dawn.

Equity Investments

In July 2013, HMC acquired 49.2%^[18] shareholding in Erik Buell Racing, a motorcycle sport company which produced street and racing motorcycles based in East Troy, Wisconsin, United States. EBR filed for bankruptcy in 2015^[19] and Hero Motocorp proceed to acquire certain assets for {{INRConvert|18.2|c}}.^[20]

HMC invested US$ 30.5 million (Rs. 205 crore) as Series B round of funding in October 2016 and gained a 32.31% stake in Ather Energy, a startup company manufacturing electric scooters. It invested a further US$ 19 million (Rs. 130 crore) in 2018.^[21][22]

Operations

Hero MotoCorp has five manufacturing facilities based at Dharuhera, Gurgaon, Neemrana, Haridwar and Halol under Green Field stage. These plants together have a production capacity of 76 lakh+ 2-wheelers per year.^[23] Hero MotoCorp has a sales and service network with over 6,000 dealerships and service points across India. It has a customer loyalty program since 2000, called the Hero Honda Passport Program which is now known as Hero GoodLife Program.^[24]

It is reported that Hero MotoCorp has five joint ventures or associate companies, Munjal Showa, AG Industries, Sunbeam Auto, Rockman Industries and Satyam Auto Components, that supply a majority of its components.^[25]

The company has a stated aim of achieving revenues of {{INRConvert|64000|c}} and volumes of 10 lakh two-wheelers by 2016–17. This in conjunction with new countries where they can now market their two-wheelers following the disengagement from Honda. Hero MotoCorp hopes to achieve 10 per cent of their revenues from international markets, and they expected to launch sales in Nigeria by end-2011 or early-2012.

Company performance

The company has sold over 7 crore 2-wheelers since its inception in 1984 till March 2013.^[3] It sold 60.7 lakh 2-wheelers in 2012, out of which 55 lakh were motorcycles. Hero Motocorp sells more two wheelers than the second, third and fourth placed two-wheeler companies put together.^[3] Its most popular bike Hero Honda Splendor sells more than ten lakh units per year.^[26]

In 2013, Hero MotoCorp registered best ever calendar year performance of more than 61 lakh unit sales. By selling 6,25,000 units in the month of October, it became the first-ever manufacturer to cross landmark 6 lakh unit sales in a month. In the last quarter of the year or say in the festive season, the company sold more than 16 lakh units, while in non festive time in April–May 2013, it managed to sell out quite good numbers of units—11 lakh.^[27]

Listings and shareholding

The equity shares of Hero Motocorp are listed on the Bombay Stock Exchange,^[28] where it is a constituent of the BSE SENSEX index,^[29] and the National Stock Exchange of India,^[30] where it is a constituent of the S&P CNX Nifty.^[31]

As on 31 December 2013, the promoters Munjal Family held around 40% equity shares in Hero Motocorp. Over 61,000 individual shareholders hold approx. 7.44% of its shares.^[32] Foreign Institutional Investors hold approx. 30% shares in the company.^[32]

Employees

As on 31 March 2014, the company had 6,782 employees, out of which 66 were women (1.1%). It also had approx. 13,800 temporary employees on that date. The company had an attrition rate of 5.1% in the FY 2012-13.^[3] The company spent {{INRConvert|821|c}} on employee benefits during the FY 2012-13.^[3]

Awards and recognition

• The Brand Trust Report published by Trust Research Advisory has ranked Hero Honda in the 7th position among the most trusted brands in India.^[33]
• It received the 'Best value for Money Bike Maker' and 'Best Advertising' in Two Wheelers Category at the Auto India Best Brand Awards 2012.

Initiatives

The company started Raman Kant Munjal Foundation (RKMF), in 1992 when it was known as Hero Honda Motors Ltd., that looks after:

• Raman Munjal Vidya Mandir (Educational Institution)
• Raman Munjal Memorial Hospital
• BML Munjal University

During the financial year, the company spent ₹1.4 crore on corporate social responsibility.

Sponsorship

Currently a Sponsor of the Caribbean Premier League T20 Cricket Franchise 2018, Hero also sponsors both of India's top-tier men's football leagues, the I-League and the Indian Super League, men's second tier league I-League 2nd division, women's top-tier league Indian Women's League and also the domestic football tournament Super Cup.

See also

• Hero FinCorp

• Ather Energy
• List of companies of India

References

External links

• {{Official website}}

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