Hero MotoCorp

The 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 relied on their Japanese partner Honda for the technology in their bikes.[13]

The Japanese auto maker exited 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, wanting to focus only on its independent fully owned two-wheeler subsidiary—Honda Motorcycle and Scooter India (HMSI)—, exited Hero Honda at a discount and get over ₹64 billion (US$900 million) for its stake. The discount was 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 expired 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, HMSI.[14]

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

Formation of the new company

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 ₹2.540 billion (US$36 million) 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 under the name "HMCL Niloy Bangladesh Limited". Hero MotoCorp owns the 55% of the manufacturing company and rest 45% is owned by Niloy Motors (A subsidiary of Nitol-Niloy Group).[17] Hero also updated its 100cc engine range in 2014 for 110cc bikes except Hero Dawn.

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 ₹182 million (US$2.6 million).[20],

HMC invested US$30.5 million (₹2.05 billion) 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 (₹1.3 billion) in 2018.[21][22]

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 over 7.6 million 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 ₹640 billion (US$9.0 billion) and volumes of 1 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. Hero motocorp launched XPulse 200 adventure motorcycle in India on May 1, 2019 along with the XPulse 200T touring motorcycle.

The company has sold over 70 million 2-wheelers since its inception in 1984 till March 2013.[3] 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.[3] Its most popular bike Hero Honda Splendor sells more than one million units per year.[26]

In 2013, Hero MotoCorp registered the 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 600,000 unit sales in a month. In the last quarter of the year (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 1.1 million units.[27][28], [29]

The equity shares of Hero Motocorp are listed on the Bombay Stock Exchange,[30] where it is a constituent of the BSE SENSEX index,[31] and the National Stock Exchange of India,[32] where it is a constituent of the S&P CNX Nifty.[33]

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.[34] Foreign Institutional Investors hold approx. 30% shares in the company.[34]

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 ₹8.21 billion (US$120 million) on employee benefits during the FY 2012–13.[3]

• The Brand Trust Report published by Trust Research Advisory has ranked Hero Honda in the 7th position among the most trusted brands in India.[35]
• It received the 'Best value for Money Bike Maker' and 'Best Advertising' in Two Wheelers Category at the Auto India Best Brand Awards 2012.

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)
• BML Munjal University

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

Currently a Sponsor of the Caribbean Premier League Twenty-20 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. They are also the principal sponsors of Indian football team's training kit and the developmental team Indian Arrows. Since 2014, Hero has sponsored the Hero World Challenge golf tournament.

• Hero FinCorp
• Ather Energy
• List of companies of India

• Official website