ACKNOWLEDGEMENT

The completion of any project is never a one man show and requires the inputs of
many people to drive the project towards successful closure. We would like to express
our gratitude to Dr Vinay Sharma, for providing us an opportunity to work on a report ,
and guiding us for this project. This project is a result of the opportunity,
encouragement and inputs in the numerous classroom hours invested on us. We would
also like to thank all the other staffs of the DoMS, IIT-R for their constant support,
continued encouragement and guidance throughout the period. We also take this
opportunity to express our gratitude for the conductive environment provided for the
preparation of this report.
Contents
ACKNOWLEDGEMENT...........................................................................................................................2
Introduction and Overview of Hero group............................................................................................6
History...............................................................................................................................................6
Overview...........................................................................................................................................7
Businesses of Hero group..................................................................................................................7
Products and Services............................................................................................................................8
Vision, Mission, Goals, Objectives and values of Hero group................................................................9
The Vision..........................................................................................................................................9
The Mission Statement......................................................................................................................9
Goals & Objectives.............................................................................................................................9
Values................................................................................................................................................9
Strategies of Hero group.....................................................................................................................10
Mode of entry in the international market......................................................................................10
International market....................................................................................................................11
Marketing Mix.....................................................................................................................................12
Product Strategies...........................................................................................................................12
Place or Distribution strategies........................................................................................................12
Pricing strategy................................................................................................................................12
Promotion Strategies.......................................................................................................................13
SWOT Analysis of HERO group............................................................................................................14
Strength...........................................................................................................................................14
Achievement................................................................................................................................14
High Sales Growth.......................................................................................................................14
Fuel economy..............................................................................................................................14
Quality policy...............................................................................................................................14
Service schedule..........................................................................................................................14
High financial performance.........................................................................................................14
Weakness........................................................................................................................................14
Less promotion............................................................................................................................14
Lack of recycling scrap.................................................................................................................14
Labor relations.............................................................................................................................15
Opportunities..................................................................................................................................15
 High GDP & increasing income level of consumer.......................................................................15
Good will of the company............................................................................................................15
Threats.............................................................................................................................................15
Finance assistance.......................................................................................................................15
Inflation.......................................................................................................................................15
Technical renovation aspect........................................................................................................15
HERO HONDA: ORGANISATIONAL CONSTITUTION AND POSITIONING...............................................16
Overview.........................................................................................................................................16
Hero Honda.....................................................................................................................................16
FINANCIAL PLANNING AND MANAGEMENT........................................................................................18
Corporate Finance...........................................................................................................................18
Strategic Planning & Projects...........................................................................................................18
Corporate Affairs.............................................................................................................................19
Diversification..................................................................................................................................20
WORK ORIENTATION...........................................................................................................................21
HR and TQM....................................................................................................................................21
Training And Development..............................................................................................................21
Employee Policy...............................................................................................................................22
Market Planning and Development.....................................................................................................23
Operations Management and Business Models of the Organization..................................................23
Ancillarisation..................................................................................................................................23
Dealer Network...............................................................................................................................24
Financial Planning............................................................................................................................24
Consolidated Family Business..........................................................................................................24
Diversification..................................................................................................................................24
Role of Individuals Associated with Hero Group..................................................................................25
Dr. Brijmohan Lall Munjal, Founder.................................................................................................25
Role in Hero Cycles Ltd................................................................................................................25
Role in Hero Honda......................................................................................................................25
Role in Other Ancillary units........................................................................................................25
Awards and Recognitions............................................................................................................25
Mr. Sunil Kant Munjal, Chairman.....................................................................................................26
Positions of Responsibility...........................................................................................................26
Positions in social and educational institutions...........................................................................26
 Mr. Anupam Bhasin.........................................................................................................................27
Awards and Recognitions............................................................................................................27
Mr. Ajay S Shriram...........................................................................................................................27
Positions of Responsibility...........................................................................................................27
Positions in social and educational institutions...........................................................................27
Mr. Pradeep Dinodia.......................................................................................................................28
Ms. Shefali Munjal...........................................................................................................................28
Roles and Responsibilities............................................................................................................28
Positions of responsibility............................................................................................................28
HERO & HONDA SPLIT!!!......................................................................................................................29
News about the Hero and Honda split.............................................................................................29
What if HERO & HONDA Split..........................................................................................................29
How the Hero Honda JV has worked out so far?.............................................................................29
So why is the need to split such a successful JV?.............................................................................29
Past Case From INDIA :: TVS Suzuki.................................................................................................29
What happens if the Split does really take place?...........................................................................30
Benefits for Hero and Honda.......................................................................................................30
Challenges for Hero and Honda...................................................................................................30
Opportunity for competition.......................................................................................................31
IN a NUTSHELL.................................................................................................................................31
REFERENCES........................................................................................................................................32
 Introduction and Overview of Hero group

History
After the partition in 1947, the Munjal family migrated to India and started a small business
of manufacturing bicycle components in Ludhiana, Punjab in North India at a time there
were great bottlenecks of industrial infrastructure and investments.

In 1956, Hero Cycles Limited started production in its Ludhiana plant to manufacture
bicycles. Along with this plant, the Munjal family lead by Dr. Brij Mohan Lal Munjal,
embarked on a journey to backward integrate into their supply chain, as well as closely
manage their distribution. By the 1970's, Hero Cycles was the world’s largest bicycle
manufacturing company and the Hero group had set up several ancillary units supplying to
the cycle plant. The group then ventured into other unrelated businesses, such as yarn
spinning, exports and auto components.

In 1984, Hero Honda Motors Limited was formed as a joint venture between Honda Japan
and the Hero Group promoters Brij Mohan Lal Munjal along his sons (Late) Raman Kant,
Pawan Kant, Suman Kant and Sunil Kant Munjal. The first plant was established at
Daruhera Haryana, on the outskirts of New Delhi. In the years to follow, large industrial
areas were created for additional manufacturing facilities for Hero Honda Motors Limited
along with their Ancillaries in Gurgaon, New Delhi and Sidcul, Haridwar.

In quick succession came the set up several other supply chain projects in Forgings, casting,
plastic injection moulding and other manufacturing technologies.

Over the next two decades the Hero Group through Hero Corporate Services set up several
companies to supply to Hero Honda Motors, partly or wholly owned by the Hero Group.
With its keen sense on relationship management, the Hero Group has been successful in
creating a unique model of backward integration that has been recognized the world over.

In 1995, Hero Corporate Service Limited was set up as a separate entity to provide services
to the group companies and ancillaries. The corporate services group has played a unique
role in shaping the future of the Hero Group. Its primary role has been to provide services
ranging from strategic advisory to complete Greenfield project set up for the Dr.Brij Mohan
Lal Munjal owned Hero Group.

In having created a warehouse of knowledge over the past few decades, Hero Corp has also
been successful in its entrepreneurial ventures of business building in the Information
Technology enabled services sector, Manufacturing, Real estate project management,
Insurance services, Engineering, Trade and other Services areas.
Overview
The Hero Group structure has three corner stones 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 Honda Motors
Limited. Hero Honda Motors Limited is a joint venture with Honda Motors, Japan for
Motorcycle & Scooter manufacture with plants in Daruhera, Gurgaon and Haridwar.

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.

Businesses of Hero group

1. Infrastructure development sector
1.1. Arrow Infra ltd.
1.2. Haridwar greens
1.3. Survam IT infra
2. Integrated learning and education sector
2.1. Hero Mindmine Institute ltd
2.2. BML munjal green meadow school
3. Automotive sector advisory
4. Financial services and distribution
4.1. Nsure plus
4.2. Insurance advisory
5. IT sector
5.1. Hero management services ltd
5.2. Technology cell
6. Engineering and design sector
6.1. Weave Engg. & Design
6.2. Hero Auto parts
Products and Services
 Vision, Mission, Goals, Objectives and values of Hero group
The Vision
"We, at the Hero Group are continuously striving for synergy between technology, systems
and human resources to provide products and services that meet the quality, performance,
and price aspirations of the customers. While doing so, we maintain the highest standards of
ethics and societal responsibilities, constantly innovate products and processes, and develop
teams that keep the momentum going to take the group to excellence in everything we do."

The Mission Statement

"Its our mission to strive for synergy between technology, systems and human resources, to
produce products and services that meet the quality, performance and price aspirations of
our customers. While doing so, we maintain the highest standards of ethics and societal
responsibilities. "

This mission is what drives us to new heights in excellence and helps us forge a unique and
mutually beneficial relationship with all our stakeholders. We are committed to move ahead
resolutely on this path, shown to us by visionaries like Mr. Satyanand Munjal, Mr. Om
Prakash Munjal, the late Mr. Dayanand Munjal and late Mr. Raman Kant Munjal.
Mr Brijmohan Lall Munjal, Chairman & MD - THE HERO GROUP.

Goals & Objectives

To provide excellent transportation to the common man at easily affordable prices
and to provide total satisfaction in all its spheres of activity." The group philosophy clearly
states what the group objectives are and stresses the focus on – customers, providing
reliable and affordable mobility for the masses and other stakeholders like employees,
suppliers, distributors, society and environment at large.

Apart from being customer-centric, the Hero Group provides its employees with a fine
quality of life and its business associates (suppliers & distributors) with a total sense of
belonging, thus strengthening the bond that is already deep-rooted.

Values
 Respect for Human Beings.
 Is a responsive organization?
 Is a boundary less organization?
 Is striving for excellence.
 Provide fearless, enjoyable working environment.
 Is self-reliant.
 Providing learning environment.
 Is a caring organization?
 Enables relationship buildings.
 Prompts transparency & trust.
 Is creativity promoting.
 Is performance oriented?
 Strategies of Hero group

According to the Greg Fisher, many International businesses, especially MNCs, develop
strategies for three distinct levels within the organization to cope with the complexities of
the international strategic management.

These levels of strategies are:

1. Corporate strategy
2. Business strategy
3. Functional strategy

Throughout the years of its growth, Hero Group has actively looked at diversification. The
use of Related Corporate Diversification strategy after company’s growth in manufacturing
activities led to the establishment of the Hero Cycles Cold Rolling Division, Munjal and
Sunbeam Castings, Munjal Auto Components and Munjal Showa Limited amongst other
component-manufacturing units.

Then there were the expansion into the automotive segment with the setting up of Majestic
Auto Limited, where the first indigenously designed moped, Hero Majestic, went into
commercial production in 1978. Then came Hero Motors which introduced Hero Puch, in
collaboration with global technology leader Steyr Daimler Puch of Austria.

Mode of entry in the international market

In the domestic market, Hero cycles soon started giving good competition to already well-
established players in the market such as Hind cycles and Atlas cycles. The major reason
behind this was the fact that the Hero cycles were comparatively cheaper and was sturdy
and reliable,giving the customers value for their money.

After the group success in the domestic market, Munjal brothers looked for International
market for further growth, to achieve additional sales, and to extend its product’s life cycle.
To enter into the Global market, Hero Groups used one of the simpler and common modes
of market entry i.e. exporting

Until 1960s there were not many Indian companies, into exporting bicycles. But, after 1963,
when the Hero Group started exporting bicycles, a new era of export started in the Indian
bicycle segment. The Hero Group initially started exporting to Africa and Middle East, but
now there major export is to Europe and America.

To meet the requirements in the international market, this group has been constantly
changing to newer and better technologies. It has also taken some extra measures like setting
up a special Export Oriented Unit (EOU) named Gujarat Cycles Limited (now Munjal Auto
Industries Limited), to cope up with requirements for international standards. The main
areas where this unit exports its manufactured products is in the markets of developed
countries like France, Germany, United Kingdom, etc , where the requirements are of high
standard.
Not only in the cycle’s segment, but the group also excelled in other fields in the
international market, like the Hero Majestic Moped was a huge success not only in the
Indian market, but also in the International market. This eventually made the Hero group
moped as the largest exported moped from India. Another bike “Hero Puch” was the first
Indian bike to be assembled outside India. It was first assembled in Spain, and then had its
assembly plants in Mauritius and Egypt. Now it has become quite popular in various
countries like Paraguay, Mexico, Argentina, Turkey and Holland. The Group’s company,
Munjal Showa Limited is one of the largest suppliers of shock to major auto giants in Japan,
U.S., and the U.K. in developed markets. Another division of the group was formed in 1993,
“Hero Exports”, which was responsible for the International trading of the group for all the
segments, and was also recognized by the Government of India as a trading house.

The recent development in International market for the group is in the field of Software
Development and the ITES industry through Hero Corporate Service Limited. It provides
services to various corporations in the USA, UK, and Australia. To further facilitate its
exports it has set up its offices in UK and USA to manage their corporate relationships.

International market
Other then exporting, hero group has also actively participated in joint ventures with many
companies located in international as well as local market; Hero entered a joint venture for
technical and financial participation with one of the world's largest automotive makers,
Honda Motor Company Limited, Japan, in 1984. This joint venture was formed to
manufacture the companies’ first 100cc motorcycle for the Indian market. In order to provide
low-cost and fuel efficient two-wheeler for the market hero group entered into technical
collaboration with Steyr Damiler Punch, Austria in 1987

Another company of hero group which is named as Munjal Showa Limited was formed
when group collaborates financially and technically with Showa Corporation, Japan in order
to manufacture front forks, shock absorbers, and gas struts.

In order to grow its bicycle segments and to improve its production hero cycle’s cold rolling
division was set up with technical collaboration with Wean United, USA. And Kawasaki
Steel Corporation, Japan.

After the successful joint ventures and market growth in bicycles and two-wheelers, Hero
Group’s Munjal-eSystems, which is a Microsoft Gold certified partner and also a ISO
9001:2000 certified company, started expanding in Enterprise-oriented and Software
Solutions division.

It also has various alliances in Production Engineering industry. Hero Global Design is the
exclusive representative of Porsche Design GesmbH (studio) in India. For industrial and
automobile design, it has venture with German company Target Design.
 Marketing Mix

To appeal to the customer in a powerful way, it is necessary to analyze the marketing mix or
the four P’s of marketing,

1. Product Strategies
2. Place or Distribution Strategies.
3. Pricing Decision.
4. Promotion Strategies.

Product Strategies
In order to develop its product strategy the group relies on the 3 R's-- Reach, Research and
Reliability as its basic building blocks. Using feedback from the market, a fully-equipped
R&D center has consistently created best practices in designing, testing and harmonization.
This emphasis has helped Hero group to build the products that are ahead of their time.

Place or Distribution strategies

Distribution is nothing but the link between the company and the end users. Place strategy
involves consideration of distribution, that the product or service takes between the
production and the final consumer. This strategy is different for different countries, so group
spends a considerable amount of time in examining the different systems that are in place,
criteria to choose distributors and channels and how the distribution segmentation can be
accomplished.

However it is difficult to standardize the distribution system and to use the same approach
in ever country, so there are many differences to be considered while developing the
distribution strategy. Some of the approaches that the group considers for developing this
strategy are consumer spending habits, location where consumers are used to buying,
selecting the best possible distributor to carry their product, checking the financial strength
of the distributor, considering the nature of the market and the competition etc.

Pricing strategy
Again pricing strategy of the group differs from country to country. The different factors
that the group considers for developing there pricing strategy are government control,
market diversity, currency fluctuations, and price escalation forces.

For developing countries like India, they have come up with special economical product to
suit everyone’s need. For instance, they manufacture motorcycles for different sections. To
attract more customers and make it accessible to everyone the pricing for these bikes starts
from as low as AUD $800 for CD 100 bikes and varies to high-end bikes such as Karizma
which is worth AUD $2500 and so on.

Promotion Strategies
The Hero Group promotes their goods and services through advertising and personal selling
However, specific approach differs as per the products nature. They have promoted their
product with advertising in different ways right from print media to
slogans and campaigns. Through sponsoring different events, such as Hero Honda Sa Re Ga
Ma Pa or Campus Rock Idols, which generally involve common people, they have become
very popular in the public.

They also actively participate in social activities, to gain the trust and confidence of their
customers. They have done a lot of work of socio-humanitarian nature in different fields
such as healthcare, education, environment, public amenities, sports and entertainment,
donations in both cash and kind, employment generating programs, adult literacy mission,
rural health care and safety awareness programs
SWOT Analysis of HERO group
Strength
Achievement
Retained the coveted position of World No 1 two-wheeler company for the seventh
consecutive year.

High Sales 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.

Fuel economy
Over all fuel consumption by its products is less in compare to other brand’s product. They
have so far been able to give better mileage output. Because of this Hero Honda splendor
has magical sales record.

Quality policy
Total quality management is the chore philosophy of the company and it is thus always
focussed on product innovation and performance.

Service schedule
Hero Honda offers free services on all its two-wheelers. Customer should avail all these
service within the stipulated time period or km range, whichever condition gets satisfied
earlier from the date of purchase. After the completion of free services or its validity period
one must continue availing paid services as per the recommended service schedule

High financial performance

The Hero Honda financial chart clearly shows that it has strong financial background in
terms of asset, sales, profit more over, Hero Honda Motors Ltd. (HHML), the world’s largest
two-wheeler manufacturer, today reported 31% per cent growth in profit after tax (PAT) at
Rs 275 crore for the third quarter (October-December) of this financial year (2007-08). Hero
Honda’s profit after tax in the corresponding period last fiscal stood at Rs 209.18 crore.

Weakness
Less promotion
The promotions and ads of Hero Honda are very less as compared to its competitors.

Lack of recycling scrap

It expected that by 2020 scrap generated by end of life vehicles in India would be about 2.5
million tonnes and 40% of it will come from two wheelers. But hero honda is not capable
enough to recycle the scrap generated and may impose environmental threat. TVS Company
has this facility and is future threat to this company as it can affect the future sales as well.

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

Opportunities
High GDP & increasing income level of consumer
Supported by strong demand impulses, especially in the manufacturing and service sector,
India’s gross domestic product grew at 8.0 per cent and India is now in a select club of 12
countries with a trillion dollar plus economy.
As a nation, India has prospered. People living in households with incomes ranging from 2
lakh – 10 lakh a year has grown from 15 million in 1991 to 100 million in 2005-06. More
incomes per person, more persons will lead to a quadrupling of India’s consumer markets in
the next two decades, a 2007 study by McKinsey Global institute has projected. And this will
provide Company the ballast to sustain and consolidate its leadership position.

Good will of the company

If the company utilizes the good will they have gained so far from their customers, they can
increase the sales performance by economizing the cost and few technical renovation of the
product. With new launch they can be benefited at present market scenario like Karizma,
Hunk has huge attraction towards the younger generation because of its style, sporty look,
and high accelerating power and is stable at its feet even at high speeds.

Threats
Finance assistance
Easy availability of finance is the main cause of sales growth and any restriction will hamper
its growth prospects.

Inflation
If inflation increases cost of raw material used in production will go high and selling price
may go high that may decrease demand for the two wheelers.

Technical renovation aspect

Competitor bike like pulsar and apache are threat to Hero Honda product like Karizma and
Hunk in respect to fuel economy. So if they don’t short out in the new launches and give
something extra in its engineering performance it may affect in demand of this company
product.
 HERO HONDA: ORGANISATIONAL CONSTITUTION AND POSITIONING

‘Hero’ has been a household name since the 1950’s in India, synonymous with the words
reliability and quality. With over 10,000 retail touch points in India and over 22 million
motorcycles and 100 million bicycles sold, Hero continues to touch the lives and hearts of
millions in India.

As a leader amongst Indian Brands with its customer centric products ranging from simple
two wheeler transportation such as bicycles to complex product definitions with its
engineering businesses, Hero has a keen sense of valuing relationships with both partners
and customers.

With a track record of over 50 years of successful business operations and revenues of over
USD 4 Billion in 2008-09, the Hero Group is amongst the most respected Indian business
houses with a world leadership position in several of its businesses. Today the BML Munjal
Hero Group promotes businesses as varied as Engineering design services and Institutional
education & learning to its traditional Two wheeler transportation solutions.

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 Honda Motors
Limited. Hero Honda Motors Limited is a joint venture with Honda Motors, Japan for
Motorcycle & Scooter manufacture with plants in Daruhera, Gurgaon and Haridwar

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.

Hero Honda
Hero Honda Motors Limited, a joint venture of the Hero Group of India and Honda Motor
Company, Japan, began operations in India in 1984, with a stated commitment to providing
technologically advanced, fuel-efficient and environment-friendly two-wheelers to the
Indian customers. The company, headquartered out of the capital city of New Delhi,
currently has three state-of-the-art manufacturing plants - one at Dharuhera and the other at
Gurgaon, in the north Indian state of Haryana, and the new plant at Haridwar, Uttarakhand,
which became operational in April last year. As Hero Honda celebrates its 25th year this
year, the company is set to cross the landmark 25 million two-wheelers in cumulative sales.
Hero Honda currently has more than 56 per cent share in the domestic motorcycle market.
Hero Honda pioneered the introduction of fuel-efficient, environment friendly four-stroke
motorcycles in the country. The company's tremendous success and commitment can be
attributed to its endeavor to have the Best Practices in the Indian auto industry. This
commitment has earned Hero Honda the status of being the largest joint venture for two-
wheelers in the world for Honda Motor Co.

In 2001, the company achieved the coveted position of being the largest two-wheeler
manufacturing company in India and the ‘World No.1’ two-wheeler company in terms of
unit volume sales in a calendar year by a single company. Hero Honda has retained that
coveted position for the eighth consecutive year this year.

Hero Honda has been a technology pioneer. Amongst other achievements, it was the first
company to introduce the four-stroke technology in India, and is the first company to launch
the Fuel Injection (FI) technology in Indian motorcycles, with the launch of the Glamour FI
in June 2006.Hero Honda's product range includes successful models that have redefined the
Indian two-wheeler market: Karizma, Hunk, CBZ X-treme, Achiever, Super Splendor,
Glamour FI, Splendor+, Splendor NXG, Passion Plus, CD Deluxe and CD Dawn, and the
scooter Pleasure.

Hero Honda has been actively promoting various disciplines of sports such as cricket and
golf. Besides promoting sports and sportspersons at the highest level, the company has also
been committed to the promotion of various sports at the grass root level. Hero Honda,
which has more than two decades of association with cricket, is one of the Partners of the
path-breaking DLF Indian Premier League (IPL) Twenty20. Additionally, Hero Honda is
also the Team Sponsor of Delhi Daredevils.

Highly-popular cricketers such as Virender Sehwag, Suresh Raina, Irfan Pathan, Gautam
Gambhir, Ishant Sharma and Manoj Tiwary are brand ambassadors of the company. Hero
Honda had earlier been one of the Main Global Partners of the International Cricket Council
(ICC) for all ODI championships including the World Cup cricket and the Champions
Trophy.

The company is also committed to the promotion of Golf in the country, hosting the annual
Hero Honda Indian Open Golf tournament with participation from international marquee
players.

Ace shooter and Athens Olympic silver medalist Lt. Col Rajyavardhan Singh Rathore is also
one of the brand ambassadors of the Company. Hero Honda and its brands have
consistently received awards and recognitions at various forums. The company pioneering
efforts in the two-wheeler industry have also been acknowledged by various entities. Mr.
Pawan Munjal, MD & CEO of the company, was recently awarded the "CNBC TV18
Overdrive Man of the Year Award". The company also recently won three coveted awards -
"The Most preferred Brand of two-wheelers" award at the CNBC Awaaz Consumer Awards
2008, and the "NDTV Profit Business Leadership Award" for two-wheelers.
 FINANCIAL PLANNING AND MANAGEMENT

Corporate Finance

The Corporate Finance Group at Hero Corporate Services works as an in-house investment
bank to the group. Its major activities include strategic advisory and supporting growth for
existing businesses, and entry into new areas through both organic and inorganic models.
The team reviews value management for the Group and is the process driver for financial
performance measurement of group businesses. It offers strategic advisory services on
domestic and international capital-raising, expansion projects for existing businesses,
mergers & acquisitions and divestitures. The Hero Group benefits from the Group
Chairman's financial acumen and his grasp on technology, manufacturing and marketing.
Group Company, Hero Cycles Limited has one of the highest labour productivity rates in
the world. In Hero Honda Motors Limited, the focus is on financial and raw material
management and a low employee turnover.

Strategic Planning & Projects

SP&P under the aegis of Hero Corporate Service Limited evaluate projects and develop
financially viable business plans for Greenfield projects in the management segment as well
as Business Process Re-engineering, change management and product development, within
the Hero Group.

SP&P embodies the Hero Group’s core competence in having vast experience of the
automobile and ancillary business with an ability to cost effectively mass produce products
to quality standards and reverse engineer or adapt ideas, imbibe technology.

The key objective of this department is to identify and evaluate new business opportunities
through its resource base. This business unit has played a key role in the set up of several
businesses in the Real estate, Software, Bill Payment, Business Process Outsourcing, Design
Engineering, Auto Component manufacturing, and Vehicle Manufacturing sectors.

Using robust planning and diagnostics mechanisms for evaluation, market research, skill
transfer and identification of key areas, the SP&P cell is the think-tank for all new projects.

Corporate Affairs
The Hero Corporate Affairs team plays a key function in bridging the gap between the
Group’s requirements and the current policy and political environment. This is the Group’s
hub for all key relationships with both State and Central polity and bureaucracy. It acts as a
catalyst in managing the relationship between Group companies on intrinsic and extrinsic
matters with the State, legislators, administrators, diplomatic community and trade
chambers.

The Team works as a sounding board to the internal and external stakeholders and acts in
an advisory capacity to promote, protect and uphold the Groups business interests.

The underlying philosophy at the Corporate Affairs cell is to uphold the Hero’s Corporate
values of fair play, customer delight, and continued employee satisfaction in all its business
transactions.

The Hero Group has done business differently right from the start and that is what has
helped us to achieve break-through in the competitive two-wheeler market. The Group's
low key, but focussed, style of management has earned the company plaudits amidst
investors, employees, vendors and dealers, as also worldwide recognition.

The growth of the Group through the years has been influenced by a number of factors:

The Hero Group through the Hero Cycles Division was the first to introduce the concept of
just-in-time inventory. 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 and is functional even till date. The raw materials
vendors bring in the goods get paid instantly and by the end of the day the finished product
is rolled out of the factory. This is the Japanese style of production and in India; Hero is
probably the only company to have mastered the art of the just-in-time inventory principle.

Sales agents from Hero travels to all the corners of the country, visiting dealers and send
back daily postcards with information on the stock position that day, turnover, fresh
purchases, anticipated demand and also competitor action in the region. The manufacturing
units have a separate department to handle dealer complaints and problems and the first
response is always given in 24 hours.

Diversification
Throughout the years of mammoth growth, the Group Chairman, Mr Lall has actively
looked at diversification. A significant level of backward integration in its manufacturing
activities has been substantial in the Group's growth and led to the establishment of the
Hero Cycles Cold Rolling Division, Munjal and Sunbeam Castings, Munjal Auto
Components and Munjal Showa Limited amongst other component-manufacturing units.

Then there were the expansion into the automotive segment with the setting up of Majestic
Auto Limited, where the first indigenously designed moped, Hero Majestic, went into
commercial production in 1978. Then came Hero Motors which introduced Hero Puch, in
collaboration with global technology leader Steyr Daimler Puch of Austria. Hero Honda
Motors was established in 1984 to manufacture 1000 cc motorcycles.

The Munjals also took a foray into other segments like exports, financial services,
information technology, which includes customer response services and software
development. Further expansion is expected in the areas of Insurance and
Telecommunication.
 WORK ORIENTATION

HR and TQM
Hero’s Corporate Human Resources & Total Quality Management function is focused on
creating stakeholder value through superior organizational and personnel development, in
line with the fundamental values of the Hero Group. Hero Corporate Service Limited is the
vehicle for human resource development programmes and it maintains a tab on the Time
and Quality Management of all the Group Companies.

With a keen eye on future growth of the Hero Brand as well as globalization, the HR & TQM
function is the key process owner for the Hero Employer brand, induction and development
of senior talent in the group, guiding its people vision through well articulated group
values.

It provides a specialist function to various businesses on employee handbook creation,

staffing & management development, job analysis & role definition, performance
management and rewards programs.

The team also monitors all labor related issues, thus providing HR services to both ends of
the spectrum.

Training And Development

The Hero Corporate Training & Development team has developed content and trained over
5000 employees in the Hero Group in both the shop-floor in manufacturing units, as well as
in the board room. The underlying philosophy of this cell is to enable sharing of best
practices through the creation of a platform to exchange ideas and continuous learning for
all stakeholders.

The cell arranges for world-class speakers and experts in various areas of economy to
address different groups of individuals. This provides a platform for inter-disciplinary
learning, brainstorming as well as knowledge creation and sharing. The key success factor
for the ongoing Training & Development cell at Hero Corporate is to understand the need of
the hour at both ends of the spectrum.

At the board level, video based and class room teaching methods for a variety of topics
ranging from Quality management, Benchmarking to Transcendental Meditation and
Personality management programmes are used across the Hero Group, senior professionals.

The shop-floor level initiatives across various ancillaries and manufacturing companies in
the Hero network have created uniformity in understanding amongst personnel, as well as a
transition across companies of best practices.

Peer-to-Peer learning, as well as inter-company learning have been encouraged through

several programmes such as Time management, Supervisory development, Kaizen, Train
the Technical Trainer, Auditing for ISO 9002, 7 QC, QS 9000 Awareness Training, Self
Development Workshops etc.

Employee Policy
Another striking feature within the Hero Group is the commitment and dedication of its
workers. There is no organised labour union and family members of employees find ready
employment within Hero. The philosophy with regard to labour management is "Hero is
growing, grow with Hero."

When it comes to workers' benefits, the Hero Group is known for providing facilities,
further ahead of the industry norms. Long before other companies did so, Hero was giving
its employees a uniform allowance, as well as House Rent Allowance (HRA) and Leave
Travel Allowance (LTA). Extra benefits took the form of medical check-ups, not just for
workers, but also for the immediate family members.
 Market Planning and Development

Hero Group has a completely customer-driven approach. A nation-wide dealer network

comprising of over 3,500 bicycle dealers, 350 dealers for mopeds and 225 franchise holders
for motorcycles, ensures convenient access to the Group's products across the country.

With a deep sense of belonging to the Hero fraternity, the Group's dealer network has
catalysed growth and acted as a strong bridge between the customers and the Group.

Conventionally, very few Indian bicycle manufacturers were interested in exports.

However, the Hero Group's foray into the overseas markets pioneered Indian exports in the
bicycle segment as early as 1963. It was a move prompted primarily by the need to be
attuned to the global marketplace.

While initial exports were restricted to Africa and the Middle East, today more than 50
percent of the Group's bicycle exports meet the demands of sophisticated markets in Europe
and America. This is primarily because of appropriate product development and excellent
quality that Hero offers.

The Group has undertaken a steady upgradation of technologies and there has been
diversifications and setting up of newer establishments to meet stringent international
standards.

Operations Management and Business Models of the Organization

The Hero Group through the Hero Cycles Division was the first to introduce the concept of
“just-in-time inventory”. 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 and is functional even till date. The raw materials
vendors bring in the goods get paid instantly and by the end of the day the finished product
is rolled out of the factory. This is the Japanese style of production and 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.

Dealer Network
The relationship of the Munjals with their dealers is unique in its closeness. A nation-wide
dealer network comprising of over 5,000 outlets, the Munjals have a formidable distribution
system in place.

Sales agents from Hero travels to all the corners of the country, visiting dealers and send
back daily postcards with information on the stock position that day, turnover, fresh
purchases, anticipated demand and also competitor action in the region. The manufacturing
units have a separate department to handle dealer complaints and problems and the first
response is always given in 24 hours.

Financial Planning
The Hero Group benefits from the Group Chairman's financial acumen and his grasp on
technology, manufacturing and marketing. Group Company, Hero Cycles Limited has one
of the highest labour productivity rates in the world. In Hero Honda Motors Limited, the
focus is on financial and raw material management and a low employee turnover.

Consolidated Family Business

The Hero Group is a strong family run business - there is no other Group that has so
successfully managed to stay together for nearly 50 years. The system is to bring in any new
family member, coming of age, within the fold of the existing business or set him up in a
new business. The third generation is already actively involved in existing as well as the
new initiatives within the Group. The Group's future is being consolidated with the same
zeal by the second and the third generations of the family, aided by workers who typify the
hardy spirit of the Punjab.

Diversification
Throughout the years of mammoth growth, the Group Chairman, Mr Lall has actively
looked at diversification. A significant level of backward integration in its manufacturing
activities has been substantial in the Group's growth and led to the establishment of the
Hero Cycles Cold Rolling Division, Munjal and Sunbeam Castings, Munjal Auto
Components and Munjal Showa Limited amongst other component-manufacturing units.

Then there were the expansion into the automotive segment with the setting up of Majestic
Auto Limited, where the first indigenously designed moped, Hero Majestic, went into
commercial production in 1978. Then came Hero Motors which introduced Hero Puch, in
collaboration with global technology leader Steyr Daimler Puch of Austria. Hero Honda
Motors was established in 1984 to manufacture 1000 cc motorcycles.

The Munjals also took a foray into other segments like exports, financial services,
information technology, which includes customer response services and software
development. Further expansion is expected in the areas of Insurance and
Telecommunication.
 Role of Individuals Associated with Hero Group

Dr. Brijmohan Lall Munjal, Founder

Brijmohan Lall Munjal was born in 1923 at Kamalia in unpartitioned India. Kamalia is now
in Pakistan. He was from a simple middle-class Hindu family. After completing his formal
education he worked at the Army Ordnance Factory, before moving his base to India after
partition. When Brijmohan was 20, he along with his elder brothers Dayanand Munjal,
Satyanand Munjal and his younger brother Om Prakash Munjal came to India and settled in
Amritsar. The brothers initially started a business by supplying components to
manufacturers of bicycles in and around Amritsar. After the partition in 1947 the Munjal
family completely shifted their base from Pakistan to Ludhiana. Slowly they expanded their
distribution network and by early 1950s they were supplying components of bicycles
throughout India.

Role in Hero Cycles Ltd

In 1954 Hero Cycles Ltd moved up the value chain by making a shift from supplying to
manufacturing. They started manufacturing handlebars, front forks and chains. In 1956, the
Punjab Government issued tender notices for twelve new industrial licenses to make
bicycles in Ludhiana. Brijmohan Lall Munjal and his brothers participated in the bid and
won the contract. Hero Cycles was registered as a large-scale industrial unit. The capital was
partly financed by the Government of Punjab. In 1961 Rockman Cycles Industries was
established to manufacture bicycle chains and hubs. Under his leadership Hero Cycles was
the first company to export bicycles in large scale. In 1975 they had earned the distinction of
largest bicycle manufactures in India. By 1986 Hero Cycles Limited entered the Guinness
Book of Records as the largest manufacturers of bicycles in the world.

Role in Hero Honda

Before entering into a joint venture with Honda Motors, Dr. Munjal started the Majestic
Auto Limited and started to manufacture Hero Majestic Moped. To manufacture motor
cycles in 1984 the Hero Group started a joint venture with Hero Honda. Hero Group
expanded so big that by 2002 they had sold 86 million bicycles producing 16000 bicycles a
day.

Role in Other Ancillary units

Munjal Castings was established. In 1984. In 1985, Munjal Showa Limited was established to
manufacture shock absorbers and struts.

Awards and Recognitions

 Awarded Businessman of the Year in 1994 by business magazine "Business India"
  Received the National Award for outstanding contribution to the Development of
Indian Small Scale Industry in 1995.
 In 1999 Featured in Most Admired CEO List of the magazine "Business Barons".
 Received The Distinguished Entrepreneurship Award from The PHD Chamber of
Commerce and Industry in 1997.
 Xavier Labour Relations Institute (XLRI), Conferred Sir Jehangir Ghandy Medal for
Industrial Peace in 2000.
 Featured as Ernst and Young Entrepreneur of the year in 2001.
 Received The Lifetime Achievement award for "Management" from All India
Management Association in 2003.
 Banaras Hindu University, Varanasi conferred him with a Doctorate; degree of
"Doctors of letters" Honoris Causa in October 2004.
 Awarded "Padma Bhushan"in March 2005 for his contribution to Trade and Industry
in 2005.

Mr. Sunil Kant Munjal, Chairman

Mr. Sunil Kant Munjal is the Chairman of the $ 4.2 billion Hero Group. He is also the
Chairman of Daimler Hero Commercial Vehicles Ltd., joint venture between the Hero
Group and the Daimler AG and Hero TSC, the fourth largest BPO/Call Centre company in
Europe.

 He is the Managing Director and Director on the boards of a large number of Hero
Group companies that include Hero Honda Motors and Hero Cycles. In addition to
group companies.
 Mr Munjal is on the boards various companies including DCM Shriram
Consolidated, Coca Cola India, Life Insurance Corporation of India Ltd and PNB
Gilts Ltd.
 Mr. Munjal was selected by 'India Today' - India's largest English newsmagazine, as
one of the "Faces of the Millennium" for business.

Positions of Responsibility
 Mr. Munjal was president (chairman) of Confederation of Indian Industry (CII),
India's premier business association, for the year 2004-05.
 Mr. Munjal has made significant contributions to the economic reform process in
India and has been member of Prime Minister's Council on Trade & Industry that
regularly advises Indian Prime Minister on economic issues.
 He is also a member of the consultative groups on industry and external sector set up
by the Planning Commission.
 Mr. Munjal has also been involved in Track II Diplomacy initiatives with a number of
countries.
Positions in social and educational institutions
 He is on the board of the Indian School of Business, Hyderabad
 On the President's Council at the University of Tokyo.
 He is President of the Dayanand Medical College and Hospital, Ludhiana (one of
North India's largest hospital cum medical colleges).
 He is also the President of the Ludhiana Sanskritik Samagam, an organisation that
promotes performing arts across North India.

Mr. Anupam Bhasin

Anupam Bhasin is at present working as Director (Human Resource & Total Quality
Management) for Hero Group of Companies and as Whole Time Director of Hero Corporate
Service Limited.

Anupam is Bachelor of Engineering (Electrical), Masters in Technology (Industrial

Engineering) and Masters in Business Administration from Faculty of Management Studies
(FMS), Delhi University. He is also a qualified lead assessor for ISO 9000 systems from CII-
Cranfield and has diplomas in Corporate Laws, Labour Laws and Taxation Laws from
Indian Law Institute, New Delhi.

Awards and Recognitions

 He was awarded Kewal Dubey National award by Computers Society of India for
his pioneering work on "Developing Software in HRD & Personnel Areas".
 Mr. Bhasin has taught Human Resource Management, Industrial Engineering, MIS
etc. as visiting faculty to various reputed Indian colleges including IMT Ghaziabad,
IIT Delhi and FMS.
 He has written many original articles which have been published in the leading
magazines and management books. He also acted as Chairman of CII HRM Summit
2005.

Mr. Ajay S Shriram

Mr. Ajay S. Shriram is Chairman and Sr. Managing Director of DCM Shriram Consolidated
Limited (DSCL) and Chairman of its subsidiary companies, DSCL Energy Services Co. Ltd.
and Shriram Bioseed Genetics India Ltd.

Positions of Responsibility
 Mr. Shriram is also Vice President & Director on the Board of International Fertilizer
Industry Association, Paris (IFA) and Director of Fertiliser Association of India.
 Mr. Shriram is Immediate Past Chairman, CII Northern Region and a member of the
CII National Council.
 He is on the Managing Committee of PHD Chamber of Commerce & Industry.
 He participated in the "Programme for Management Development" (PMD) at the
Harvard Business School, Boston, USA.
Positions in social and educational institutions
Mr. Shriram is Chairman of Governing Body of Shri Ram College of Commerce, New Delhi.

 Member - Board of Governors of The Doon School, Dehradun (India)

 Member - Board of Governors of Indian Institute of Management, Lucknow (India).
 He is also a Member of the Board of Management of Indian Institute of Foreign
Trade, New Delhi.
 He is a trustee of the SOS Children's villages of India.

Mr. Pradeep Dinodia

Mr. Pradeep Dinodia is Partner in S.R.Dinodia & Co. (Chartered Accountants). As a Senior
Partner, he is looking after Corporate, Legal, FEMA, Company Law, Accounting and Direct
Tax Issues. He is an expert in Direct Taxes & Senior Counsel in Income Tax Appellate
Tribunal, India.

A graduate in Economics (Hons), Delhi University, Mr. Pradeep Dinodia also hold LLB
degree from Delhi University and F.C.A. from - Institute of Chartered Accountants of India.
He received R.V.K. Umarjee Gold Medal for his meritorious performance in F.C.A. He has
authored several papers in Scientific and Academic Publications.

Ms. Shefali Munjal

Shefali, 32, is a focused, enthusiastic and energetic young leader from India's Hero group.
Having created a niche skill set in setting up and executing projects, she has been at the
forefront of developing some of the Hero group IT enabled services businesses over the last
few years.

Roles and Responsibilities

Besides these project set ups, she has been an integral part of the business development and
strategic decision making team at Hero Corporate. Shefali is actively involved in strategic
reviewing of operations and is a hands-on team player. Besides actively working towards
promoting women entrepreneurs, Shefali also plays an active role in leading the third
generation Munjals. She is currently doing a senior management program at Harvard
Business School, expected to graduate in 2011. She has independently promoted several
Rural Rehabilitation projects in the Delhi area.

Positions of responsibility
 She is currently a member of the CII's National Committee on Insurance & Pensions.
 Founding member of the CII Young Indians Council, the Entrepreneurs Organization
(Delhi Chapter).
 Member of “The Art of Living Foundation”.
 HERO & HONDA SPLIT!!!
News about the Hero and Honda split
If the news of the split between Hero and Honda is really true then this is a really BIG deal.
After all the 25 plus year old Joint Venture has resulted in making Hero Honda as the
"Largest Two Wheeler manufacturer in the world". But why would Hero and Honda want to
split one of the most profitable joint venture in the history of two wheelers? What could be
the implication for both Hero and Honda? Who might profit? Who might lose? Will the
competition stand to gain from this split?

In the Hero Honda JV, currently Hero Group owns 26 % of the shares and Honda owns 26
%, the rest 48% is owned by the general public. So according to current status quo both Hero
and Honda are equal owners of the Hero Honda JV.

What if HERO & HONDA Split

"Hero" Splendor, "Hero" Passion, "Hero" Karizma..!! How does it sound? After years of
Indian ears getting tuned to hearing the name "Hero Honda" being uttered in unison, it
really sounds quite odd. In any case, Hero can’t rely forever on Honda for technology.

Of late there has been a lot of press about an impending split between India’s Hero Group
and its Japanese technology partner Honda. Although there has not been any official
confirmation of the same, the signs of rift are more apparent than ever before.

How the Hero Honda JV has worked out so far?

In a business either of the parties would always like to have the upper hand. Honda has
provided the technology for the products. Hero Honda has manufactured and sold the
products through it dealership networks. Hero also pays royalty to Honda for every product
that it sells. The technological prowess of Honda along with Hero’s extensive dealer
network has made the JV one of the most successful in the history of bikes.

So why is the need to split such a successful JV?

Hero was always dependent on Honda for technology; in return Honda was earning huge
amounts in the form of royalty. Even though Hero Honda bikes were selling in millions in
India, the export market wasn’t totally opened for Hero Honda products. At the same time
Honda started it HMSI (Honda Motorcycles and Scooters India) and started selling scooters
and motorcycles independently.

Past Case From INDIA :: TVS Suzuki

Suzuki entered India through the TVS Suzuki joint venture, originally incorporated as
Indian Motorcycles Pvt. Ltd in 1982. In the 90’s when competition was intensifying in Indian
motorcycle market TVS approached Suzuki for more funds and technical support. Instead of
providing more technical support and funds Suzuki started creating road blocks in the
management. Finally, in September 2001, TVS group and Suzuki Motor Corporation
announced their break up. TVS bought the 25.97% stake of Suzuki for Rs. 9 crore increasing
its stake to 58.43%. TVS also ended the technical license agreement with Suzuki Motor
before the maturity date. The move benefitted in terms of royalty payment to Suzuki as it
has 30,000 booking orders for its bike TVS Victor.

Post stake sale TVS Suzuki was renamed as TVS motors Company. The company started
focusing on Research & development as its key to survive in the business. TVS Motor won
the Deming Application prize in 2002, becoming the first and only Indian two-wheeler
company to win the award given to companies that do outstanding work in the field of
Quality Management. It is considered to be one of the world’s most prestigious quality
awards Today it’s able to produce bike like Apache and scooter like Wego.

The same year, the work done for the TVS Victor motorcycle won TVS Motor the National
Award for successful commercialization of indigenous technology from the Technology
Development Board, Ministry of Science & Technology, Government of India. In 2004, TVS
Scooty Pep won the 'Outstanding Design Excellence Award' from BusinessWorld magazine
and the National Institute of Design, Ahmedabad. The effective implementation of Total
Productivity Maintenance practices won TVS Motor the TPM Excellence Award given by the
Japan Institute of Plant Maintenance in 2008. Innovative implementation of Information
Technology has won TVS Motor the Ace Award for Most Innovative NetWeaver
Implementation in 2007 awarded by technology major SAP AG and the Team Tech 2007
Award of Excellence for Integrated use of Computer-aided engineering Technologies

TVS is now among the top 10 two wheeler manufacturer in the world. It has good market
share in India and is highly profitable. In the last month it sold closer to 1.75 lakh
mototrcycles in India, which is about one third of what Hero Honda sold in India. It also has
a manufacturing plant and considerable market share in Indonesia. It also exports to many
more countries.

On the other hand according to mandatory lock in period of three years Suzuki Motor
Corporation was not able to enter into Indian two wheeler segment till 2005. In 2006 Suzuki
Motorcycle India Ltd was established. The company is rapidly expanding in Indian two
wheeler market.

What happens if the Split does really take place?

According to news Hero group seems to be looking at buying the 26% from Honda and thus
retain a total of 52% (majority) stake. For that Hero might have to spend around 9000 crores.

Benefits for Hero and Honda

Hero could save upto Rs. 5,500 crores on royalty for the financial year 2011. Hero would
also be free to explore new export markets. Honda could utilize the money from selling its
stake in further strengthening its dealer network.
Challenges for Hero and Honda
Without Honda’s technical assistance, Hero will have to build an R&D and fast. Honda will
also have to build its product line up fast to match up to Hero Honda 100 cc Superstars, the
Splendor and the Passion.

Opportunity for competition

Bajaj and TVS Motors can utilize the time that both Hero and Honda might take to
stabilize/establish and gain some extra market share with some good products. In any case,
Hero can’t rely forever on Honda for technology. Like Bajaj and TVS, Hero has to build its
own R&D. But that could take some time.

IN a NUTSHELL

Hero Honda will able to save Royalty which accounts for 2.5 to 3% of total Sale. The saving
in royalties could well be directed towards R & D. Also it will open up export market which
is currently restricted by the JV.

Although Hero Honda’s success contributed to Honda’s technology, the fact can’t be denied
that the Hero group’s marketing acumen and knowledge of the consumer has also played a
big role in the company’s success. The company has well established brand and distribution
centre.

Hero Honda’s technical agreement with Honda will expire in 2014 so the company still has 3
years time to build its own R & D.

It will result in more aggressive HMSI as Honda will able to directly compete with Hero
Honda, As Honda will get unrestricted access to Indian market through it subsidiary HMSI.

There are concerns about the ability of Hero to build product development facilities – like
Bajaj Auto and TVS – in a short span of time. On the other hand it will take time Honda to
build facilities in India. These both the factors could well serve to the competition.

What will happen with Hero Honda’s new product line after 2014 is still a question.
 REFERENCES

HERO HONDA –ANNAL REPORTS

www.herohonda.com
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http://en.wikipedia.org/wiki/Hero_Honda
http://en.wikipedia.org/wiki/Hero_Honda_Passion
http://en.wikipedia.org/wiki/Hero_Honda_Hunk
http://en.wikipedia.org/wiki/CBZ_Extreme
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