Hero motorcrop
Hero motorcrop

Hero Motocorp Ltd., formerly Hero Honda, is an Indian motorcycle and scooter manufacturer based in New Delhi, India. The company is the largest two-wheeler manufacturer in the world,[3] and also in India, where it has a market share of about 46% in the two-wheeler category.[3][4] The 2006 Forbes list of the 200 World's Most Respected Companies has Hero Honda Motors ranked at #108.[5] On 31 March 2013, the market capitalisation of the company was ₹308 billion (US$4.3 billion).[6]

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][8]

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.[9]

 

"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

.[10]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.[11] 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.[12]

 

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.[13]

 

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.[13]

 

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.[14]

 

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.[15] The logo was revealed on 9 August 2011 in London, to coincide with the third test match between England and India.[15]

 

Hero MotoCorp can now export to Latin America, Africa and West Asia.[15] Hero is free to use any vendor for its components instead of just Honda-approved vendors.[15]

 

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).[16] Hero also updated its 100cc engine range in 2014 for 110cc bikes except Hero Dawn.

0+ Comments