Hero MotoCorp

History

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. In 2010, when Honda decided to move out of the joint venture, Hero Group bought the shares held by Honda. Subsequently, in August 2011 the company was renamed Hero MotoCorp with a new corporate identity.
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.

"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 largest two-wheeler manufacturing company in India and globally. It maintains global industry leadership to date. The technology in the bikes of Hero Motocorp (earlier Hero Honda) for almost 26 years (1984–2010) has come from the Japanese counterpart Honda.

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.

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. Since the beginning, the Hero Group relied on their Japanese partner Honda for the technology in their bikes. Now there are concerns that the Hero Group might not be able to sustain the performance of the joint venture by itself.

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 $1 billion 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 December 16, 2010.

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).

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.

Honda will continue to provide technology to Hero Honda motorbikes until 2014 for existing as well as future models.

Sports Association

Formation of Hero MotoCorp

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

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

On 21 April 2014, Hero MotoCorp announced their plan on a US$40 million joint venture with Bangladesh's Nitol Niloy Group in the next five years. also hero updated its 100cc engine range in 2014 for 100cc bikes except hero dawn.

49% stake in Erik Buell Racing

In July 2013, HMC acquired 49.2% 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 and Hero Motocorp proceed to acquire certain assets for US$2.8 million.

Operations

Hero MotoCorp has four manufacturing facilities based at Dharuhera, Neemrana and Gurgaon in Haryana and at Haridwar in Uttarakhand. These plants together have a production capacity of 7.6 million 2-wheelers per year. Read More 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. Hero GoodLife

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.

The company has a stated aim of achieving revenues of $10 billion and volumes of 10 million 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.

Scooters

Motorcycles

Scooters

Motorcycles

Hero Majestic/Hero Puch(Mopeds & Scooters)

Company performance

The company has sold over 47 million 2-wheelers since its inception in 1984 till March 2013. It sold 6.07 million 2-wheelers in 2012, out of which 5.5 million were motorcycles. Hero Motocorp sells more two wheelers than the second, third and fourth placed two-wheeler companies put together. Its most popular bike Hero Honda Splendor sells more than one million units per year.

In 2013, Hero MotoCorp registered best ever calendar year performance of more than 6.1 million unit sales. By selling 625,000 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 1.6 million units, while in non festive time in April–May 2013, it managed to sell out quite good numbers of units—1.1 million.

Listings and shareholding

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

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. Foreign Institutional Investors hold approx. 30% shares in the company.

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. The company spent ₹8.21 billion (US$120 million) on employee benefits during the FY 2012-13.

Awards and recognition

Initiatives

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

During the financial year, the company spent ₹14 million (US$210,000) on corporate social responsibility.