Hero MotoCorp
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, and also in India, where it has a market share of about 46% in the two-wheeler category. The 2006 Forbes list of the 200 World's Most Respected Companies has Hero Honda Motors ranked at #108. On 31 March 2013, the market capitalisation of the company was.
Hero Honda started its operations in 1984 as a joint venture between Hero Cycles of India and Honda of Japan.
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 second largest two-wheeler manufacturing company in India and globally. It maintains global industry leadership to date. The technology in the bikes of Hero Motocorp for almost 26 years has come from the Japanese counterpart Honda.
The Termination of Honda joint venture and the renaming
The termination of Honda Joint ventureBy 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 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.
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 —, exited Hero Honda at a discount and get over 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.
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 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 to merge the company's spare parts business with Honda's new fully owned subsidiary, HMSI.
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 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, TPG, Bain Capital, and Carlyle Group.
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. 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 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. Hero also updated its 100cc engine range in 2014 for 110cc bikes except Hero Dawn.
Equity Investments
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.,HMC invested US$30.5 million 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 in 2018.
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 over 7.6 million 2-wheelers per year. 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.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 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.
Company performance
As of March 2013 the company has sold over 70 million 2-wheelers since its inception in 1984. 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, the Hero Honda Splendor sells more than one million units per year.In 2019, Hero MotoCorp sold more than 7.8 million units, which is the highest by any two-wheeler company in the world. It registered its best ever monthly performance by selling 769,000 units in the month of September in 2018. In the April - June, 2018 quarter, the company registered its best ever quarterly performance by selling more than 2.1 million units.
Listings and shareholding
The equity shares of Hero Motocorp are listed on the Bombay Stock Exchange, and the National Stock Exchange of India, where it is a constituent of the NIFTY 50.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.
| Shareholders | Shareholding |
| Promoter Group | 39.92% |
| Foreign Institutional Investors | 30.63% |
| Foreign Corporate Bodies | 12.29% |
| Individual shareholders | 06.44% |
| Insurance companies | 05.38% |
| Mutual Funds / UTI | 02.56% |
| Bodies Corporate | 01.60% |
| Financial Institutions / Banks | 00.53% |
| Others | 00.60% |
| Total | 100.0% |
Employees
As on 31 March 2014, the company had 6,782 employees, out of which 66 were women. 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 on employee benefits during the FY 2012–13.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.
- 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
During the financial year, the company spent ₹1.4 crore on corporate social responsibility.