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HERO GROUP

Overview The Hero Group structure has three cornerstones through which it has

contributed to Indian Industry i.e., Automotive Manufacturing, Services Businesses and the Auto-Ancillary Businesses.

The flagship company in the automotive manufacturing sector is Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.,). The new "Hero" is rising and is poised to shine on the global arena. Company's new identity "Hero MotoCorp Ltd." is truly reflective of its vision to strengthen focus on mobility, technology and creating global footprint. Building and promoting new brand identity will be central to all its initiatives, utilizing every opportunity and leveraging its strong presence across sports, entertainment and ground- level activation.

Hero MotoCorp two wheelers are manufactured across three globally benchmarked manufacturing facilities. Two of these are based at Gurgaon and Dharuhera which are located in the state of Haryana in northern India. The third and the latest manufacturing plant is based at Haridwar, in the hill state of Uttrakhand.

The Services Businesses of the Hero Group are managed by Hero Corporate Service Limited which is the holding company for all the services businesses for the group. Hero Corporate Service Limited manages the Real Estate, Financial Services, Information Technology Enabled Services, Consulting & Advisory, Integrated Learning & Education businesses.

The Hero group also owns a large Auto ancillary company called Rockman Cycles Limited which supplies auto components to both the Hero Automotive businesses as well as leading auto makers in India and overseas.

History

Hero group was established by the four Munjal brothers namely Satyanand Munjal, Om Prakash Munjal. Late Dayanand Munjal and Late RamanKant Munjal. The brothers hailed from a small town called Kamalia, now in Pakistan. The brothers established a business of bicycle spare parts in the year 1944 in Amritsar.

After partition and independence of India, the brothers moved to Ludhiana and started a bicycle unit called Hero Cycles in 1956. By 1975, Hero cycles became the largest bicycle manufacturer in India .In 1986 Hero Cycles Limited entered the Guinness Books of World Records as the largest bicycle manufacturer in the world.

India has the largest number of two wheelers in the world with 41.6 million vehicles. India has a mix of 30 percent automobiles and 70 percent two wheelers in the country. India was the second largest two wheeler manufacturer in the world starting in the 1950’s with the birth of Automobile Products of India (API) that manufactured scooters. API manufactured the Lambrettas

But, another company, Bajaj Auto Ltd. surpassed API and remained through the turn of the century from its association with Piaggio of Italy (manufacturer of Vespa scooters). The license raj that existed between the 1940s to 1980s in India did not allow foreign companies to enter the market and imports were tightly controlled. This regulatory maze, before the economic liberalization, made business easier for local players to have a seller’s market. Customers in India were forced to wait 12 years to buy a scooter from Bajaj. The CEO of Bajaj commented that he did not need a marketing department, only a dispatch department.

By the year 1990, Bajaj had a waiting list that was twenty-six times its annual output for scooters. The motorcycle segment had the same long wait times with three manufacturers: Royal Enfield, Ideal Jawa, and Escorts. Royal Enfield made a 350cc Bullet with the only four-stroke engine at that time and took the higher end of the market but there was little competition for their customers. Ideal Jawa and Escorts took the middle and lower end of the market respectively.

In the mid-1980s, the Indian government regulations changed and permitted foreign companies to enter the Indian market through minority joint ventures.In 1984, Hero group joined Honda Motors of Japan to create Hero Honda Motors Limited .Hero Honda is worlds third largest two wheeler maker and it became the world's largest manufacturer of two-wheelers with over 48% market share in India.. The 2006 Forbes 200 Most Respected companies list has Hero Honda Motors ranked at #108. The Brand Trust Report published by Trust Research Advisory has ranked Hero Honda in the 13th position among the brands in India. In year 2006,Hero Honda entered the scooter production with launch of its new model -Pleasure .

The two-wheeler market changed with four Indo-Japanese joint ventures: Hero Honda, TVS Suzuki, Bajaj Kawasaki and Kinetic Motor Company (Kinetic Honda). The entry of these foreign companies changed the Indian market dynamics from the supply side to the demand side.

In Dec 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. 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 .On June 4, 2012,Hero Motocorp approved a proposal to merge the investment arm of its parent Hero Investment Pvt. Ltd. into the automaker. The decision comes after 18 months of its split from Honda Motors.

Company Profile

“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. It is reported Hero Honda 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.

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. The technology in the bikes of Hero Honda for almost 26 years (1984–2010) has come from the Japanese counterpart Honda

Today every second motorcycle sold in the country is a Hero Honda. Every 30 seconds, someone in India buys Hero Honda's top -selling motorcycle - Splendor. Hero Honda bikes currently roll out from two globally benchmarked manufacturing facilities based at Dharuhera and Gurgaon in Haryana. These plants together are capable of churning out 3.9 million bikes per year. A third state of the art manufacturing facility at Hardwar in Uttranchal will soon be commissioned to cope with sustained customer demand. Hero Honda's extensive sales and service network now spans over 3000 customer touch points.

These comprise a mix of dealerships, service and spare points, spare parts stockists and authorized representatives of dealers located across different geographies. Hero Honda values its relationship

with customers. Its unique CRM initiative - Hero Honda Passport Program, one of the largest programs of this kind in the world, has over 3 million members on its roster. The program has not only helped Hero Honda understand its customers and deliver value at different price points, but has also created a loyal community of brand ambassadors.

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., The company was going to build their fourth factory in South India and their fifth factory in Western India.

During the fiscal year 2008-09, the company sold 3.7 million bikes, a growth of 12% over last year. In the same year, the company had a market share of 57% in the Indian market. Hero Honda sells more two wheelers than the second, third and fourth placed two-wheeler companies put together.Hero Honda's bike Hero Honda Splendor sells more than one million units per year. On 1st June 2012, Hero MotoCorp reported its highest ever monthly sales at 5,56,644 units in May, registering a growth of 11.28%.

Growth-

Hero Honda experienced great growth throughout its early days. The Munjal family started a modest business of bicycle components. By 2002 Hero Group had sold 86 million bicycles producing 16000 bicycles a day. Today Hero Honda has an assembly line of nine different models of motorcycles available. It holds the record for most popular bike in the world by sales for Its Splendor model. Hero Honda Motors Limited was established in joint venture with Honda Motors of Japan in 1984, to manufacture motorcycles. It is currently the largest producer of Two

Wheelers in the world. It sold 3 million bikes in the year 2005-2006. Recently it has also entered in scooter manufacturing, with its model PLEASURE mainly aimed at girls. HUNK is the latest offering from the HHML stable.

Just-in-Time Manufacturing-

The Hero Group through the Hero Cycles Division uses just-in-time manufacturing. The Group boasts of superb operational efficiencies. Every assembly line worker operates two machines simultaneously to save time and improve productivity. The fact that most of the machines are either developed or fabricated in-house, has resulted in low inventory levels. In Hero Cycles Limited, the just-in-time inventory principle has been working since the beginning of production in the unit. This is the Japanese style of production. In India, Hero is probably the only company to have mastered the art of the just-in-time inventory principle

Ancillarisation-

An integral part of the Group strategy of doing business differently was providing support to ancillary units. There are over 300 ancillary units today, whose production is dedicated to Hero's requirements and also a large number of other vendors, which include some of the better known companies in the automotive segment.

Labor relations-

In Hero Group there is no organized labor union and family members of employees find ready employment within Hero. The philosophy with regard to labor management is "Hero is growing, grow with Hero." Hero workers receive a uniform allowance, as well as House Rent Allowance (HRA) and Leave Travel Allowance (LTA). Extra benefits include medical check-ups not just for workers, but also for the immediate

family members. For the majority of the production workers, who are hired through contractors, these benefits are out of reach. This and other problems lead to a strike and factory occupation by 4,000 temp workers in the Gurgaon plant in spring 2006.

Criticism-

There is a frequent complaint that the biking enthusiasts in India make in many Auto-related forums which is related to Hero Honda not making serious efforts to upgrade its models as frequently as its competitors like Yamaha,Bajaj and TVS. Many bike enthusiasts in India feel that Hero Honda only upgrades the "stickers" along with the names of its bikes.'Sticker' upgrading can be easily noticed by observing the technical specifications of the models Splendor, Splendor Plus, Passion, Passion Plus, Karizma, Karizma R

Another frequent complaint made by Bike enthusiasts is that Hero Honda has too many bike models with exactly same or similar engines despite of the company claiming that it caters to 'all segments'. While Bajaj rolls out new models with many improvements, there have been very less new or feature-upgraded models from Hero Honda.The latest bike from Hero Honda is Hunk which again has an engine more or less similar to CBZ-Xtreme and now Yamaha has launched two new bikes YFZ-R15 and FZ16 to compete with Hero Honda and Bajaj.

Models

1956-Formation of Hero Cycles in Ludhiana(majestic auto limited)

1975-Hero Cycles becomes largest bicycle manufacturer in India.

1983-Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan

1984-Hero Honda Motors Ltd. incorporated

1985-Hero Honda motorcycle CD 100 launched.

1989-Hero Honda motorcycle Sleek launched.

1991-Hero Honda motorcycle CD 100 SS launched.

1994 - Hero Honda motorcycle Splendor launched.

1997-Hero Honda motorcycle Street launched.

1999 - Hero Honda motorcycle CBZ launched.

2001 - Hero Honda motorcycle Passion and Hero Honda Joy launched.

2002-Hero Honda motorcycle Dawn and Hero Honda motorcycle .

Ambition launched

2003-Hero Honda motorcycle CD Dawn, Hero Honda motorcycle

Splendor, Hero Honda motorcycle Passion Plus and Hero Honda

motorcycle Karizma launched.

2004-Hero Honda motorcycle Ambition 135 and Hero Honda

motorcycle CBZ* launched.

2005-Hero Honda motorcycle Super Splendor, Hero Honda

motorcycle CD Deluxe, Hero Honda motorcycle Glamour,

Hero Honda motorcycle Achiever and Hero Honda Scooter

Pleasure.

2007 - New Models of Hero Honda motorcycle Splendor NXG, New

Models of Hero Honda motorcycle CD Deluxe, New Models of

Hero Honda motorcycle Passion Plus and Hero Honda

motorcycle Hunk launched

2008-New Models of Hero Honda motorcycles Pleasure, CBZ Xtreme,

Glamour, Glamour Fi and Hero Honda motorcycle Passion Pro

as launched

2009-New Models of Hero Honda motorcycle Karizma:Karizma

ZMR and limited edition of Hero Honda motorcycle Hunk

Launched

2010-New Models of Hero Honda motorcycle Splendor Pro and

New Hero Honda motorcycle Hunk and New Hero Honda

Motorcycle Super Splendor launched.

2011- New Models of Hero Honda motorcycles Glamour, Glamour FI,

CBZ Xtreme, Karizma launched.

New licensing arrangement signed between Hero and Honda. In

August Hero and Honda parted company, thus forming Hero

MotoCorp and Honda moving out of the Hero Honda joint

venture.

In November, Hero launched its first ever Off Road Bike Named

Hero "Impulse".

2012-New Models of Hero Motocorp Maestro the Musculine scooter

and Ignitor the young generation bike are launched

MANAGEMENT

Traded as BSE: 500182NSE: HEROMOTOCOBSE SENSEX Constituent

Industry Automotive

Founded January 19, 1984

Founder(s) Brijmohan Lall Munjal

Headquarters New Delhi, India

Area served India, Sri Lanka

Key people Brijmohan Lall Munjal (Chairman)Pawan Munjal (MD & CEO)

Products Motorcycles, Scooters, Three-Wheeler vehicles

Revenue   235.7903 billion (US$4.46 billion)

Operating income

25.9707 billion (US$490.85 million)(FY 2010–2011)

Net income 23.7813 billion (US$449.47 million)(2011)

Parent Hero Group

Website www.heromotocorp.com

S.No Name Designation

1 Brijmohan Lall Munjal Chairman

3 Pawan Munjal Managing Director

2 Ilam C Kamboj Company Secretary

4 Suman Kant Munjal Non Executive Director

5 Paul Edgerley Non Executive Director

6 Sunil Kant Munjal Joint Managing Director

7 Pradeep Dinodia Non Executive & Independent Director

8 Pritam Singh Non Executive & Independent Director

9 Anand C Burman Non Executive & Independent Director

10 V P Malik Non Executive & Independent Director

11 M Damodaran Non Executive & Independent Director

12 Ravi Nath Non Executive & Independent Director

Bankers-

ABN Amro Bank, Bank of America, Bank of Tokyo

Mitsubishi , Canara Bank , Citi Bank, HDFC Bank, HSBC Bank, ICICI

Bank, Punjab National Bank, Standard Chartered Bank

"Trust  and relating to people are the cornerstones of our business philosophy. In whatever we do, we try to keep our promises, and with whoever we partner, we focus on the long term. Irrespective of what we do, we follow these two simple rules "Brij Mohan Lall Munjal Chairman,Hero Group

Milestones Hero Group-

Mr Brijmohan lall

munjal

 

Mr. Brijmohan lall Munjal is the founder Director and Chairman of the Company and the $3.2 billion Hero Group. He is the Past President of Confederation of Indian Industry (CII), Society of Indian Automobile Manufacturers (SIAM) and was a Member of the Board of the Country's Central Bank (Reserve Bank of India). In recognition of his contribution to industry, Mr. Munjal was conferred the Padma Bhushan Award by the Union Government. Mr. Munjal is currently on the board of the following Public Limited Companies: Dr. Brijmohan Lall Munjal is currently on the board of the following Public Limited companies:

         No. Name of Company Nature of Office

1 Hero MotoCorp. Ltd. Chairman and Whole-time Director

2 Hero FinCorp Ltd. Chairman

3 Easy Bill Limited Director

4 Hero InvestCorp Limited

Director

5 Munjal Showa Limited

Director

6 Rockman Industries Ltd.

Director

7 Shivam Autotech Limited Director

8 Survam Infrastructure Ltd. Director

  

Mr. Pawan Munjal

Mr. Pawan Munjal is the Managing Director and CEO of the Company. He is responsible for growth and strategic planning for the entire Group. A graduate in Mechanical Engineering, Mr. Munjal has been instrumental in bringing about technological and managerial excellence in the Company's operations. He has been the Chairman of several Committees of CII.

He is also on the board of Indian Institute of Management, Lucknow and Indian School of Business. An avid golfer, Mr. Munjal is Past Chairman of the Asian PGA Tour Board of Directors and the Past President of Professional Golfers Association of

No.

Name of Company Nature of Office

1 Hero MotoCorp Ltd. Managing Director & CEO

2 Hero FinCorp Ltd. Director

3 Hero InvestCorp Limited Director

4 Hero Realty & Infra Limited Director

5 Rockman Industries Limited Director

"”Don't dream if you can't fulfill your dreams'' Brijmohan Lall Munjal is often fond of saying. The founder and patriarch of the $3.2 billion Hero Group is your classic first generation entrepreneur. He is a man who started small, dreamt big and used a combination of grit and perseverance to create one of the country's largest corporate groups and the World's No.1 Two Wheeler Company. 

Instinctive from a young age, Brijmohan Lall made a rather unusual start in life. Around the time when the freedom movement in India was taking shape in the late 1920s, he walked into a newly opened Gurukul (Indian heritage school) near his home in Kamalia (now in Pakistan). He was only six years old then.

Thus began an extraordinary tale of courage and perseverance. Brijmohan began his business story after partition in 1947, when he and his brothers relocated to Ludhiana. The family set up a company that provided poor people with basic transport (cycles). Three decades later, as India evolved, he added a second crucial chapter - which visualized affordable and technologically superior transport to millions of middle class Indians. The rest is history. 

Building Relationships-When Brijmohan and his brothers started out, there was no concept of organized dealer networks. Companies just produced, and most dealers functioned like traders. Brijmohan changed the rules of the business by trusting his gut instincts; introducing business norms that were ahead of their time, and by investing in strategic relationships. Brijmohan built a series of bonds and networks with hundreds of family members, vendors,

dealers and employees. Much like the Japanese keiretsu system, these networks are now the glue that holds the Hero Group together.

"Thanks to the relationships that we have nurtured so passionately in the Hero Family, the younger generations of some of our bicycle dealers have become dealers of Hero MotoCorp. These relationships have survived through generations - through bad times and good times'' the patriarch now reminiscences.

Besides bonding with his vendors and dealers, Brijmohan has been personally responsible for kindling a spirit of entrepreneurship amongst his employees, and today, 40 of his former employees are successful entrepreneurs.

Staying Ahead-Though not technically qualified in the conventional sense, few of his contemporaries have understood the dynamics of technology better than Brijmohan Lall has. He could always visualize the applicability of technology before others could. For example, in the 1980s, when all two-wheeler companies in India opted for two-stroke engine technology, Brijmohan preferred a four-stroke engine - a technology that dramatically increased fuel efficiency and reduced maintenance costs. This technology was one of the biggest reasons for Hero MotoCorp's stupendous success.

A Corporate Citizen-A frugal upbringing and a value system modeled on the famous Gurukul system - which stresses the sanctity of the teacher-pupil relationship - imbibed in Brijmohan a strong sense of social commitment and responsibility.

There is a special place in his heart for Ludhiana, the city where he took roots. Today, Ludhiana is a modern, bustling city, but Brijmohan has played no mean role in its evolution. Several schools and educational institutions in Ludhiana owe their existence to the Munjal family.

The Ludhiana Stock Exchange owes its existence to Brijmohan's vision as does the Ludhiana Flying Club. He's also set up the not-for-profit Dayanand Medical College and Hospital-an institute now rated as one of the best medical colleges in India, in terms of infrastructure, quality of staff and alumni profile.

In and around Dharuhera, near the first Hero MotoCorp plant, Brijmohan and his family have left their stamp of philanthropy. The Raman Kant Munjal Foundation - which Brijmohan set up in memory of his eldest son, today runs a higher secondary school and a very modern and well-equipped 100-bed hospital at Dharuhera. The group has also adopted numerous villages and provides education, vocational training, drinking water, roads, streetlights and sewerage.