Declaration Acknowledgement The Indian Cycle Industry The beginning Profile Vision & Mission Career Company Profile 3 4 5 6 7 8 9 10

Hero Group Companies Hero Group Quality Milestones Hero Cycle continues on Growth Joint Ventures Key Financial Indicators Growth in revenue Movement of Return on Equity Rating History Of Bicycles

11 13 15 16 21 25 27 28 29 30 33

The lndian Cycle Industry
Bicycle was seen in India in the year 1890. Import of cycles, however, started in 1905 and continued for more than 50 years. Complete ban on imports was announced by the Government in July, 1953, but cycle kept on simmering in the country till 1961. In 1890, selling price of an imported bicycle was arround Rs. 45/-; in 1917, during the First World War the price jumped to Rs. 500/ - but dropped considerably, month by month and came down to Rs. 35/ - or so (U. K. makes) and Rs. 15/- or so (Japanese models). It would be interesting to mention that in 1919, five persons in Punjab imported cycles and used them on The Mall, Simla. These included one Bishop, Two military men and two contractors including S. Pala Singh Bhogal (Grand Father of Mr. M.S. Bhogal of Ludhiana). Under special permission of the Governor, they were allowed to use cycles on 'The Mall' only for one hour in a day. They imported B.S.A. Cross Bar Cycle from U.K. and it used to be a kind of Mela at that particular hour on the Mall in Simla, the scen e watched by hundreds of people everyday. Later, a firm was formed under the name of Singh & Co. with shops on Railway Road, Jalandhar and Bazar Vakillan, Hoshiarpur, which imported bicycles in the year 1930 onwards.

Over the next few years. what knit the men together was the wealth of will. hailing from a small town called Kamalia. The Hero Group. the operational base was shifted to Ludhiana. are the men who are behind the mission.The Beginning We look over our shoulders. we see the past. today. the brothers had began manufacturing key components of bicycles and as a logical way forward. it¶s another chance for us to better ourselves and to excel. the highest in global reckoning. With the 48% share of the Indian market.But the dark clouds of partition eclipsed their plans of the future. as tomorrow isn¶t just another day. is a vast conglomerate of companies. has diversified into newer segments like Information Technology. began to assemble the entire cycle at their manufacturing plant in Ludhiana. The philosophy that instills commitment. technocrats. and the Hero Group came into being. From a modest beginning of mere 639 bicycles in the year 1956. with more than Rs. this volume has catapulted Hero in the µGuinness Books of World Records¶ in 1986 and edge over global players is being maintained since then. In the year 1944. . The four Munjal brothers. 10000 Crore turnover annually. Its is modest beginning and t he next 3 years saw the business grow rapidly. Hero Cycles products over 18500 cycles a day today. integrity. administrators and entrepreneurs. joint ventures or fully owned subsidiaries. team work and foresight. ambition & determination. From cycle to two . Hero Cycles is a product of this philosophy. now in Pakistan. attracting skilled engineers. With renewed vigour and optimism. besides being the wo rld¶s largest manufacturers of bicycles. We use it to make a better present and a beautiful tomorrow. the plant had a capacity for 25 cycles per day. the Bicycle Unit started growing in stature and size. By 1956. Brotherhood apart. In the early days. motorcycles and chains to this date. Hero¶s colossal journey started before independence. either in the form of collaborations. they decided to start a business of bicycle spare parts in Amritsar. IT Enabled Services and Financial Services. Hero Group. A tiny acorn has now become a mighty Oak.wheelers was a natural step.

multi-product. make critical components such as free wheels for their bicycles. adopt faster technology an d create quality driven products to the utmost satisfaction of customers. and have the foresight to simultaneously diversify into myriad ventures. Hero's saga contains an element of spirit and enterprise. This philosophy has paid rich dividends through the years. the Munjals roll their own build long-lasting relationships with everyone. and at Hero the wheels of progress continue to turn . l ike product designing. The Hero Group philosophy is: "To provide excellent transportation to the common man at easily affordable prices and to provide total satisfaction in all its spheres of activity. Through fully integrated operations. coupled with vision and meticulous planning. the Hero Group and its members have displayed unwavering passion of setting higher standards for themselves and delivering simply the best to their customers. Hero. just to name a few. . the odyssey was fueled by one vision . came into being in the year 1956. geographically diversified Group of companies. a name synonymous with two wheelers in India is today a multi -unit. the brand name symbolizing the steely ambition of the Munjal brothers. dealers and vendors. finance and insurance. IT enabled services. Like every success story." Thus apart from being customer -centric. . partners. of achievement through grit and determination. the Hero Group also provides its employees with a fine quality of life and its business associates with a total sense of belonging. including workers. This is what drives the Group to seek newer vistas. Today the Hero Group has a number of accolades and achievements to its credit « yet consumer requirements and newer technologies provide fresh challeng es every day.Profile "Hero". From a modest manufacturer of bicycle components in the early 1940's to the world's largest bicycle manufacturer today.. Throughout its success trail. "Engineering Satisfaction" is the prime motive of the Hero Group and it has become a way of life and a part of the work culture of the Group. dealers and vendors.

shown to us by vis ionaries like Mr. to produce products and services that meet the quality. at the Hero Group are continuously striving for synergy between technology.Vision "We. systems and human resources. While doing so. and develop teams that keeps the momentum going to take the group to excellence in everything we do. Mr. Mr Brijmohan Lall Munjal. performance. " 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. constantly innovate products and processes." The Mission Statement "Its our mission to strive for synergy between technology. we maintain the highest standards of ethics and societal responsibilities. performance and price aspirations of our customers. Om Prakash Munjal. Raman Kant Munjal. Satyanand Munjal. We are committed to move ahead resolutely on this path. While doing so. the late Mr. Dayanand Munjal and late Mr. and price aspirations of the customers.THE HERO GROUP. systems and human resources to provide products and services that meet the quality. Chairman & MD . we maintain the highest standards of ethics and societal responsibilities. .

The work culture at th e Hero Group revolves around building relationships . to provide products and services that meet the quality. techniques and manufacturing processes are constantly adapted. In the forefront of the two -wheeler and auto-components industry in India. While doing it with workers. At Hero. new management strategies. systems and human resources. In doing so its employs and scouts for state -of-the-art technology and systems. it has maintained the highest standards of ethics and social responsibility. performance and price aspirations of its customers. the Hero Group is driven by the vision of providing technolo gically advanced and affordable transport solutions.Career Hero has continuously strived for synergy between technology. has constantly innovated products and processes and developed teams that keep the momentum in order to take the Group to new heights. Company Profile . both personally and professionally . All those who come to work within the fold of the Hero Group are offered job security and growth opportunities. vendors or dealers.

Hero Cycles Limited (Hero Cycles) is the oldest company of the Hero Group of companies. cold rolled (CR) strips and auto components with bic ycles contributing over 58% of its revenues. with facilities located in Ludhiana and Mangli in Punjab. For 2009-10. Post the family settlement. Hero Cycles has a manufacturing capacity of 55 lac bicycles annually.7 crore and Rs.707. 1.490.3 crore on a turnover of Rs. Mr. 57. Till the recent restructuring of the businesses amongst the four tranches of the Munjal family.8 crore compared to R s. respectively Hero Group Companies Hero Group ranks amongst the Top 10 Indian Business Houses comprising 18 .000T CR mill. the company was closely held with shareholding equally divided among the four families of the firstgeneration of Munjals. 300. and an auto -component manufacturing facility located at the same facility in Ludhiana. 1.5 crore.Incorporated in 1966. the company reported a net profit of Rs. Hero Cycles· main business activities include manufacturing of bicycles.P Munjal & family own 100% stake in the company. O. The company also has 135.

companies. with an estimated turnover of US$1. Hero Cycles Limited Hero Honda Motors Limited Hero Cold Rolling Division Hero Motors Limited Hero Exports LO GO Majestic Auto Limited Rockman Cycle Industries LOG O Highway Cycle Industries LOG O Sunbeam Auto Limited LOGO Munjal Auto Industries Limited Munjal Showa Limited .8 bil lion during the fiscal year 200-2004.

Munjal Castings Munjal Auto Components Hero Global Design Hero Corporate Services Limited Hero ITES Hero Mind mine Hero Soft Munjal e-systems Easy Bill Limited. .

The vendors bring in the raw material and by the end o f the day the finished product is rolled out of the factory. The Group's low key. employees. . has resulted in low inventory levels. vendors and dealers. style of management has earned the plaudits amid st investors. 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.The Hero Group The Hero Group has done business differently right from the inception and that is what has helped us to achieve break -through in whatever product category we have ventured in. but focussed. In Hero Cycles Limited. This is the Japanese style of production and in India. The growth of the Group through the years has been influenced by the number of factors: The Hero Group through the Hero Cycles Division was the first to introduce the concept of just-in-time inventory. the just-in-time inventory principle has been working since the beginning of production in the unit and is functional even till date. The Group boasts of superb operational efficiencies. Hero is the first company to have mastered the art of the just -in-time inventory principle. as also worldwide recognition.

The saga is being continued with the same zeal by the second and third generations of the family and by the large working force of the Hero Group. satisfaction and extensive growth . in Punjab . O.home to some of lndia's finest workers and entrepreneurs. who shared their vision with their workers and led the Group to a position where its name has become synonymous with top -quality two wheelers. . Mr. Brijmohan Lall Munjal and Mr. Mr. Munjal continue to carry the torch and are actively involved in the day -to-day operations of the Hero Group. The Hero Group is a thriving example of three generations of a family working and striving together to ensure quality. The flame kindled by the Munjal brothers in 1956 with the flagship company Hero Cycles.the City of Ludhiana. The spirit of enterprise which dominates the progress of the Group is characteristic of the land where it all began . P.Men of Steel The success of the Hero Group lies in the determination and foresight of the Munjal brothers. Satyanand Munjal.

Every worker ensures at each stage of manufacturing that any of the faulty products are not allowed to go through further manufacturing and distribu tion cycles. during the manufacturing process. the Group goes onto strengthen its quality measures as per the book." . the core competence continues to be derived from the Group's philosophy . of course. The Group also employs the services of independent e xperts from around the world to assist in new design and production processes. but by enforcing a strict discipline. Each component goes through numerous tests at the stages of design. raw material procurement and.change in consumers' perceptions about products and new aspirations arising from a new generation of buyers.Quality Quality at Hero is attained not just by modern plants and equipment and through latest technology. It is an attitude that masters the challenge of growth and change . It comes from an amalgamation of the latest technology with deep rooted experience derived from nearly four decades of hard labour. Today quality is ensured from steel processing to the finished product."To Engineer Satisfaction. At the Group factories. With each of its foreign collaborations.a strictly pursued discipline. Constant technology upgradation ensures that the Group stays in the global mainstream and maintains its competitive edge. in this race to acquire the most modern techniques and technologies and to collaborate with the most advanced players in the market. Conformance to quality at Hero begins on the shop floor. attaining quality standards is an everyday practice . Nevertheless.

Gujarat Cycles Limited. a division of Majestic Auto Limited set up in collaboration with Steyr Daimler Puch of Austria. It pioneered bicycle exports from India . Hero Cycles Limited became manufacturer of bicycles in India. coupled with vision and meticulous planning. Highway Cycles was set up to meet the demands of Hero Cycles. It is the largest die casting plant in India. Rockman Cycles Industries Limited established. 1 among all motorcycles in India. Hero Cycles Limited entered the Guinness Book of Records as the largest bicycle manufacturer in the World. The 100 cc Hero Cycles Motorcycle arrived and by 1988 was the No. of achievement through grit and determination. Hero Cycles Limited established in joint venture with Cycles of Japan. 1985 1985 1986 1987 1987 1987 .a foray into the international market. 1956 1961 Hero Cycles Limited is established. Munjal Showa Limited established to manufacture shock absorbers and struts and is today among the top two shock absorber manufacturing companies in India. Munjal Castings established.Milestones Hero's success saga contains an element of spirit and enterprise. which is today the largest manufacturer of bicycle chains and hubs. the largest 1963 1971 1975 1978 1981 1984 Majestic Auto Limited was formed and the Hero Majestic Moped was introduced. established as an ancillary to Hero Cycles. to manufacture motorcycles. It is today the largest manufacturer of single speed and multi -speed freewheels. Sunbeam Auto Limited. now known as Munjal Auto Industries Limited was established to manufacture and export state-of-the-art bicycles and allied products in its fully automated plant at Waghodia. earlier a unit of Highway Cycles Limited. Hero .

a large-wheeled scooter was introduced by Hero Limited with a choice of 50 cc and 75 cc engines. part of Matsushita Group to 1992 1993 1993 1995 1996 1996 1998 1998 2000 20002001 2001 .Hero Briggs and Stratton Auto Private Limited was set up to produce 4-stroke two-wheeler engines in various cubic capacities. Engineering and Manufacturing. Hero Cycles receives Council's Award. Munjal Auto Components established to manufacture gear shafts and gear blanks for motorcycles.65 cc machines. suppliers. ancillaries. Hero Cold Rolling Division established and is one of the most modern steel cold rolling plants. The Hero Group diversifies into IT and IT enabled services through its service segment . Hero Global Design established to offer engineering services in CAD/CAM/CAE related to New Product Development. . Hero becomes Indias largest exporter of two wheelers Hero Corporate Services Limited as the service segment for the Hero Group Companies. Hero Cycles ties up with National Bicycle Industries. This revolutionary machine immediately set new records of petrol efficiency and usable power in 50 . Munjal Showa Limited receives National Safety Award. dealers and other associates. Design. National Productivity 1990 1991 1991 Hero Cycles receives the Economic Times Harvard Business School Association Award against 200 contenders.Hero Winner. . Hero Cycles emerges as the market leader in motorcycles with sales of over a million motorcycles and a strong market share of 47%. Munjal Showa Limited receives British Council's National Safety Award. Hero Exports established as the International Trading Division for Group and non -Group products.1988 Introduced "Hero Puch" from Hero Limited.Hero Corporate Services Limited.

. 300 ancillary suppliers.07 million motorcycles and a market share of 48%. Tie up with Livebridge Inc. Tie up with Aprilia Scooters.USD 5. Hero Group comprises of 20 companies.Rotax GmbH for scooter engines.It was commemorated by sales of over 15 million motorcycles & over 100 million bicycles. Retail Insurance business established. Easy Bill Established to offer utility bill collection & retail services.USA. Italy. deep market penetration with over 5.0 million motorcycles Hero Group celebrates Golden Jubilee year since inception.20 billion (FY 2006).2002 2002 2002 2003 2004 2004 2004 manufacture high-end bicycles. Fastener World Established. 23. 2004 2004 2005 2006 2006 Hero Cycles crosses a unit sales threshold of 3. Hero Cycles enters the launches 100cc "Pleasure" scooter segment.000 outlets. HeroITES strengthens its relationship with ACS. HeroITES. a division of HeroCorporate Service Limited hived off as a division of new company Hero Management Service Limited. Tie up with Bombardier . 2006 Today.0 billion market cap and Fortune 500 company.. Hero Cycles continues as the World's largest manufacturer of two-wheelers with annual sales volume of 2. USA.000 + employee and has a turnover of US$ 3.

he taught me business skills. another city industrialist who is now in his 90s. others were seen standing throughout the function.650 cycles. along with some other mega houses. Co-Chairman and CEO of the company. Today. The 10th crore bicycle was auctioned for Rs 10 lakh by the group. sitting amongst the spectators. the management gave 150 cycles to needy persons all over the state. More than 600 industrialists from Ludhiana and outer cities had come to attend the function. µµThe company was started by my three brothers and me.Racing ahead: Hero group sells 10th crore bicycle TO most Ludhianvis. the administration is trying to ensure that the workers are a satisfied lot. In a few years. even our third generation is working with us and contributing to expand the group. The company also organised a function at Hotel Park Plaza to mark the completion of 50 years. Today. So the news that Hero.¶¶ Jetwani. on his part. Speaking on the occasion. completes a record of selling 10 crore bicycles. the fourth generation will join us too. It is a business house that. the world¶s largest manufacturer of bicycles since 1986. it is as much a celebration for Ludhiana. stood up to acknowledge what Brij Mohan Munjal said.¶¶ It was revealed at the function that Hero now has 200 models of cycles. Municipal Commissioner S K Sharma. The cheque of Rs 10 lakh was presented to CM Captain Amarinder Si ngh. I feel happy tha t today. had this to say: µµDuring the days when I handled accounts for Johar Sahab. the family has a name on the world map. . revealed Chairman of Hero Cycles Brij Mohan Munjal. who was the chief guest on the occasion. more than 5 lakh families are associated with us. and are not misguided. Hero is not just a brandname. the entire Munjal family and many others were also seen on the occasion. . and their daily production is nearly 1. SSP A S Rai. as for the Hero group. Noted Om Parkash Munjal. I also used to visit Tulsi Das Jetwani Ji.000 workers and a strong network of dealers. which have stood me in good stead. and we are committed to our workforce of 4. Minister Harnam Das Johar said. µµBrij Mohan used to do accounts work for me in the 1950s. as per the list presented by the chairmen of the various Improvement Trusts in the state. have given Ludhiana the kind of clout it has on the commercial and industrial map of the country today. While many were seen searching for seats.¶¶ Munjal. Brij Mohan Munjal said that while some external forces are spoiling the industry environment. To celebrate the day. DC A K Gupta. The management did not divulge who had purchased the bicycle for Rs 10 lakh. for seeking answers to my queries. Talking about the labour unrest at the units.

Hero Cycles said. whic h offers Rs1001 off on each of its models has met with huge success across the country. The CM said. The company's festive promotion.731.071 units. the CM categorically said that the Reliance project will be okayed within this week. . it added. a jump from 1. The company's sales during October is up 13. said on Monday that its cycle sales were up 23. This is the first time any Indian two-wheeler company has clocked retail sales of 4 lakh units. the company is confident of continuing its upward movement in sales. all will come to know the benefits of this project themselves. With the recent launch of Achiever towards the end of October and the forthcoming launch of Pleasure in mid -November. come what may.Reliance will be okayed.02% last month at 302.87% over the corresponding period in the previous year. By december 31. The company's cumulative sales tally has thereby increased to 1. The world's largest motorcycle maker registered yet another precedent for the Indian two-wheeler industry in October by recording retail sales of over 4 lakh units.469. representing a jump of 23.000 units.394 units in 2009.02% compared to the corresponding month last year. Hero cycles has sold 4 lakhs unit in the month of October Hero Cycles Ltd. as it is going to boost the economy of small farmers.475 bikes in October 2009. Hero Cycles's cumulative sales for the period April -October 2005 has registered a significant growth of 17.5% compared with the previous month (September). The company had so ld 245. µµLet people shout. says CM Speaking at the function. when the company had recorded sales of 266.992 units.

Brijmohan Lall. the µWorld No.´ . Hero Cycles Ltd.6 % over last year¶s Rs.63 crore.567 motorcy cles during April-June 2009. PROFIT AFTER TAX (PAT) increased to Rs.6 % · Volume sales increases by 13% · EPS shows consistent growth at 7.³With the first quarter ending.JuNE. the new offering in the premium executive segment.18. July 18th 2005: Hero Cycles. 298. NET SALES (Income from Operations) showed a remarkable growth of 14. Hero Cycles sold over 200. New Delhi . 2007.04 crore recorded in the corresponding period last year. 288.000 units for each of the months in the quarte r. 190.8%. The company sold 6. 1977.. having established the benchmark for the industry in the previous FY.Hero Cycles Continues Consistent Growth in Q1 PTI. registering a increase of 3. I feel we have made a good beginning to the current financial year.07 crore. as compared with 16. net of excise) grew to Rs.6 % in the corresponding period last year. Announcing the results.1722. The PROFIT BEFORE TAX went up to Rs.45 crore.21 crore recorded in the corresponding period la st year.06 crores. as compared with sales during the corresponding quarter in the last FY. We are confident that with the support of our customers and business associates we would be able to continue on the growth path in the coming months as well. TOTAL TURNOVER (sales turnover plus other income.87.e 14. The reduction in EBIDT margin is very marginal considering the impact of steel price increase in April 2009 and disruption of production due to constraints in supplies of some components during the quarter.12 crore.6% · Glamour. Mr.28 crores to Rs. 1745. demonstrating consistent growth quarter over quarter. as compared with 6. said. introduced in South India New Delhi. Chairman.09. 204.8 % i. OPERATING MARGIN (EBIDT) for the first quarter saw a marginal decline of 1. Net Profit increases by 7. a significant growth of 15% over Rs.8 % over the corresponding period. Our consistent growth performance in the last quarter demonstrates our continued efforts to deliver the best products and service to our customers. 2010 on the Growth Path. an impressive growth of 7. Demonstrates Q1 result highlights:· Total turnover up by 15 %.5% over Rs. 1¶ motorcycle manufacturer today announced its first quarter results for t he FY 2009-10.123 motorcycles during April-June 2008. The company recorded an increase of 13% in its sales volume during the quarter. from Rs.

with the la unch of Glamour. The company¶s Total Turnover (sales turnover plus other income. Market capitalization crosses Rs.1 for the third year in a row 5 successful model launches drive 4% growth in market share to 48% Announces 500% final dividend. today announced outstanding financial results for the year 2009-10. moving up from Rs. In the first four months of its launch the company has already sold 150418 units´. a growth of 15% over Rs. y y y y y y y in 200 9-10 Total Turnover for the year up by15 % to Rs 5997 crores. in a short period. ³During the last quarter we focused on consolidating our undisputed leadership in the executive segment.Mr. During the first quarter of the FY 2005 ± 06 the company also established a landmark figure of over 2 million members for the Hero Cycles Passport Programme. The model. net of excise) grew to Rs. firmly establishing its world leadership for the third year in a row. The Profit Before Tax went up to an impressive four digit figure of Rs.´ ³Super Splendor. With this accomplishment.000 crores mark Hero cycles Ltd. Managing Director. Q4 sales up by 50% World No.1¶ cycles company. the µWorld No. The company¶s Profit After Tax (PAT) soared to Rs. he added. from 1 million in 2007-08 to over 2 million in 2008-09. This is the highest turnover ever recorded in the history of the Indian twowheeler industry. 728 crore. Profit After Tax (PAT) for the year increases by 25% Total motorcycle sales for the year up by 23%. making it Asia¶s biggest CRM programme. our new 125 cc offering.its unique CRM initiative. Total dividend 1000% for the year. 5997 crore. We will continue to launch Glamour in the other regions in the coming months. 1072 crore.10. 581 crore. HERO CREATES NEW PERFORMANCE RECORDS Sells over 2 million motorcycles Highest turnover in the Indian two-wheeler industry. said. The year 2008-09 has been yet another year of landmark achievements for Hero Cycles. a growth of 25% over previous year¶s Rs. Pawan Munjal.. Hero Cycles Ltd. .. 885 crore. which has been launched in only South India so far. which was launched in March this year has also received a very encouraging response from our customers. Hero Cycles has been able to double its annual sales of motorcycles. registering a remarkable increase of 21%. especially the feat of selling over 2 million motorcycles in a single year. has been really appreciated by our customers. which has not been achieved in the two -wheeler industry so far. 5195 crore recorded in 200607.

While the Profit After Tax during the quarter registered a splendid jump of 42%. Chairman. The company¶s market share in the two-wheeler category has also increased to 37 %.March 2003 to Rs. ³This landmark achievement could not have been possible without the excellent support of our esteemed stake holders and custome rs and especially our very efficient and resourceful supply chain. Splendor+ and Passion . higher indigenisation.193 units sold during January . The company sold 5. Managing Director. The company¶s volume sale of 20.. 211 crores during the same period. significantly up from 3.92.. said.1724 crores. have greatly helped in our success. This achievement once again demonstrates our intrinsic capability to comprehend changing customer needs and fulfilling them with matching products. It has always been our endeavor to offer enhanced value to our stakeholders by adhering to world standards. 221 crores during the last quarter of 2002 -03 to Rs. with the interim dividend of 500% paid earlier.´ Enthused by the world record performance Mr.147 motorcycles during the year. The performance of the company in the fourth quarter of the FY 2003 -04 was also par excellence. growing 41% from Rs. The motorcycle sales for the period January .Widely acknowledged as one of the most investor -friendly companies. Ltd.77. Hero Cycles Ltd. With the voluminous success of CD-Dawn. Commending the company¶s excelle nt performance and the achievement of the 2 million plus sale milestone.56%. Pawan Munjal. The support of our partners Cycles Motor Co.March 2004 grew by a remarkable 50 per cent as compared with the corresponding period in the previous FY. 149 crores during January .52 % in the previous fiscal. The Total Turnover of the company for the same period also zoomed 38% from Rs. Mr. ³The key reason for our success has been our continuous pursuit of pro-actively delivering value and delight to our customers. the company has ended the year with 48% market share in motorcycles . The improvement in operating margin reiterates the compan y¶s continued and dedicated efforts towards cost rationalization. marks a splendid jump of 23 % over previous year¶s sale of 16.. Thus.96. Brijmohan Lall. 1248 crore in the fiscal 2002-03 to Rs. versus 15.. the total dividend for the year is also a four digit figure of 1000% The Operating Margin was an impressive 15. from Rs.535 cycles. said. 311 crores during the same period in 2003-04..70. Hero Cycles Ltd. Japan and Hero Cycles Ltd.March 2003.718 motorcycles in the quarter. the company announced a final dividend of 500%.a remarkable increase of 4 per cent over preceding fiscal. an increase of 4 %. the Profit Before Tax showed an impressive upward trend. better working capital management and improved manufacturing efficiencies. Buoyed by the tremendous response received by all its new models launched during the previous financial year.

styling and performance. Several new and exciting product launches are lined up for the future.´ .´ Talking about the company¶s future plans.Plus.the core of the Indian motorcycle industry. ³We are committed to continue our world class performance. by delivering even better value to the customers in the years ahead by offering products with the latest technology. we have ended the year with an undisputed leadership in the entry and executive segments . Ambition135 has strengthened our position in the premium segment. he added.

elimination of defects. Hero Group has strengthened its joint ventures. Japan . powerful fuel -efficient engines. Hero's quest for a low-budget. the pioneers in the world for manufacturing high -strength lightweight pistons used in light. in 1984 for the manufacture of 100cc motorcycles in India. reduction of customer returns and enhancement of maintenance operations against certain predetermined targets. forged profitable relationships with its partners and allied itself with some of the best players in the market.Technology Related Partnerships/ Alliances and Joint Ventures y y y y y y y y y Hero entered a joint venture for technical and financial participation with one of the world's largest automotive makers. Munjal Showa Limited was formed in Technical and Financial Collaboration with Showa Corporation. Hero Cycles CR Division was set up in consultation with MECON. Porsche-design minimotorcycles. develop and manufacture of front forks. Technology assimilation through wide sourcing has been and will continue to be an integral part of the progression of the Hero Group. Munjal Auto Industries Limited has a joint venture with the State owned Gujarat Industrial Investment Corporation . USA. Japan for the improvement of production yield. to design. Sunbeam Auto Limited has set-up a state of the art piston manufacturing facility in technical collaboration with M/S Cycles Foundry Company Limited of Japan. to cater to the needs of the overseas market. Alliances Over the years. shock absorbers. Asia's largest engineering consultants and in Technical Collaboration with Wean United. Hero Cycles Cold Rolling Division has also entered into a technical collaboration withKawasaki Steel Corporation. fuel-efficient and environment-friendly twowheeler led Hero to enter into a Technical Collaboration with Steyr Daimler Puch of Austria in 1987 for the manufacture of the 65cc. struts and gas struts. Honda Motor Company Limited of Japan. .

2% 12.39 2.3 4.5% 3.3 317.3 952.490.6% 34.0 1.2 1.5 111.5 268.0 7.8 66.5 253.701.78 6.7 300.285.3 82.28 9.701.490.5 53 35 56 56 22 45 55 24 42 .6% 0.5 674.0% 5.21 33% 5.8 183.9% 1.8% 17.9 10.Key Financial Indicators ‚ Net Sales Operating Income (OI) OPBDIT Profit After Tax (PAT) Net Cash Accruals Total Debt Tangible Net worth OPBDIT/OI PAT/OI PBIT/Avera ge (TD+TNW+ DTL) Total Gearing OPBDIT/Int erest & Finance Charges (GCF+ Interest)/Int erest NCA/Total Debt Total Debt/OPBDI TA Debtor days Inventory days Creditor days 1.93 0.42 0.36 3.8 1.9% 14.42 2.3 241.79 2.2 118% 1.8 599.0 50.7 74.0 31% 2.285.6 57.6% 1.




Credit Challenges Bicycle business is characterised by relatively low margins. Hero Cycles· business profile is characterised by strong brand equity. backward integration and strong brand identity supports its strong business position. which accounts for over 55% of its revenues. In addition to being the market leader. bicycles business. . its strong financial pro file supported by healthy cash flow generation. Besides. comfortable capital structure and strong liquidity position aided by a large portfolio of liquid investments. competitive cost structure and well entrenched dealership network Financial profile remains strong as it benefits from the considerable portfolio of liquid investments and free cash flow generation of bicycle business Divestment of a relatively less profitable.Rating Key Rating Considerations Credit Strengths Leading market position in the domestic bicycle market with an estimated 34% share As the oldest and largest bicycle manufacturer. the company also g enerates business from processing of Cold-Rolled (CR) strips and manufacturing of auto components. Hero Cycles is also the most cost competitive and profitab le bicycle company among the organized players. Its large scale of operations. competitive pressures from small unorganised player and Chinese imports remain Increasing support to weaker group companies given its role as a holding company for Hero and its affiliates Rating Rationale The rating takes into account Hero Cycles· leadership position in the domestic bicycle market. Cold Rolled (CR) strips business could help improve profitability indicators going forward and reduce working capital borrowings.

which commenced cycle manufacturing as its first commercial facility. In terms of profitability. Hero Cycles will be positioned as pure bicycle manufacturer and holding stake in two group companies ²Hero Financial Services Limited. The company·s shareholding now vests with Mr. Diversification and Market Position: Hero Cycles is the oldest company of the over Rs. 12.M. and auto rims and components (6%). As a result of the divestment. Hero and subsidiaries/JVs of Hero with Munjal Kiriu being the major one. the company has been concentrating on the comparatively higher margin and fast growing specials segment by re-orienting its marketing and product development efforts. The company·s leadership in the bicycles market (estimated at ~1. Within the bicycle industry. with ~50% bicycle sales in that segment. although the company·s investment income is likely to be lower going forward. After the family restructuring which has recently been concluded. Munjal and his family members who have operationally been managing the company along with Hero (and its subsidiaries). Over the years. strong brand name and wide distribution network. It has regularly launched new products across categories an d age groups in this segment. since 2005-06. Scale. the company has generated business from three segments viz. as part of the restructuring exercise. Post restructuring. Majestic Auto (rated LA . the CR strips business is also being transferred to Mr. as p art of the family settlement. Hero Cycle was also positioned as the investment holding company for several entities of the group.5 crore bicycles per annum) stems from its large size (51 lacs cycles sold in 2009 10). Additionally. B. . IrAAA & A1+ by ICRA). followed by CR strips (36%). Munjal & family. Traditionally. However. These investments are likely to continue going forward given the capital expenditure and investment plans of the investee company. cold-rolled (CR) strips and auto components. the company has transferred stake in most of group companies including investments in listed entities such as HHML at book value to the other three sections of the Munjal family. O. However. the hive-off of the relatively low margin ² CR Strips business would aid in improvement in the operating profitability of the company. Munjal Auto (rated LAA -/Stable & A1+ by ICRA). Hero Cycles is positioned as the market leader in the domestic bicycle market with a market share of around 34%. Hero (LA/Stable & A1 by ICRA).P. the company is in the process of transferring its stake in most of the investee companies (except Hero and Hero Financial Services) in addition to the CR strips division to other sections of the Munjal family.500 crore Hero Group. Hero Cycles has been a clear leader in the standard segment. As the oldest and the largest manufacturers of bicycles in the country. Hero Cycles· investment profile has undergone a change.Being the oldest company of the Hero group. As part of the family settlement. which have been managing those business. bicycles were the largest contributor to the company·s turnover. In 2009 -10. bicycles division has even larger contribution. with the CR strips business generally being a low margi n business for the company.& A1+ by ICRA). Hero Cycles has also been supporting some of the weaker entities of group which have been in the investment phase. at 58%. manufacturing of bicycles. Munjal Showa and Highway Industries among others. the company has also provided start-up capital to several group comp anies and as a result was positioned as one of the holding companies for several group entities including Hero Cycles Limited or HHML (rated LAAA.

These entities are likely to see improvement in business profile in the medium term given the pick -up in business from existing customers and new business opportunities. 560 crore as on June 10). its credit profile is unlikely to deteriora te substantially given its large investment portfolio (~Rs. The impact of the same is expected to be positive both from the perspective improvement in RoCE (%) and reduction in debt levels (largely short term associated with higher working capital requirement in that business). Thus Hero Cycles· portfolio now comprises of investments in some of weaker group/subsidiary companies. which also mirrored the trend in volume sales in 2006 -07 and 2007-08. Hero Cycles is in the process of hiving-off its relatively low-margin CR Strips business to other family member. Over the years. which are currently incurring losses/marginally profitable. which provides cushion to the company from the point of view of meeting investment requirements. the company·s stake in HHML has been transferred to the other sections of the Munjal Family besides other investments. as a result of the family settlement. Hero Cycles has mainly been supporting some of weak entities of group. The operating profitability.6% in 2009 -10 driven by increasing thrust on specia ls segment and higher orders from State Governments to meet requirements of various initiatives such as the Surv Siksha Abhiyaan. The liquidity profile also remains comfortable marked by a large portfolio of liquid investments. Also as part of the settlement. .Revenue Growth & Profitability Indicators: In terms of performance of core operations. the company·s bicycle sales after remaining stagnant in 2007 -08 and 2008-09 grew by 13. 20-25 crore annually can also be funded comfortably from cash flow from operations. stable cash flow generation. The induction of establi shed JV partners in most the businesses of Hero (Hero Cycles· key holding now) is also a positive. and moderate utilization of bank lines. has improved substantially in the last two years owing to improvement in realisations and softening of input prices. Hero Cycles is likely to continue supporting these entities given the capital expenditure and investments plans of the investee companies. Nevertheless. providing both fund and non -fund support (inform of guarantees etc) to meet their growth plans. The company·s capital expenditure requirements estimated at Rs. However. which according to the management account for now 35-40% of the volumes. Capital Structure & Financial Policies: The company·s credit profile has been strong characterised by low leverage and comfortable coverage indicators. Improvement in margins has also been supporting by increasing share of special segment bicycles. That said.

1870 England James Starley products the "Ariel" High Wheeler (aka "Ordinary" or "Penny Farthing"). Possibly the first record of a "production" front wheel. W. Wire-Spoked 1870 England W. gets the backing of an investor. Crank-Driven 4. Historians still debate the claim of Pierre Lallement that he had previously invented the first pedal-driven machine. Innovation . Boneshaker 1864 France J. Thompson invents the pneumatic tire but with no commercial follow-up. now in the USA. possibly copied from the Macmillan design.1851 England Willard Sawyer exhibits his four-wheeled. nipple Wheel adjusted bicycle wheel (unlike prior load-bearing wheels). Some credit Meyer with this design two years previosly. Draisienne. J. James Carroll. Townsend Trench documents his purchase of a Bicycle velocipede from the Michaux family. H. Grout patents the radially spoked. It is questionable whether significant progress resulted from either. he took it to America twenty years later and it still exists in the "History San Jose" museum (the earliest extant bicycle?). Pneumatic Tire 1845 England R. 1866 USA Lallement. pedal -driven bicycle (but note that it was not presented untill 1895). an 1845 version is in the Dumfries Museum. Treadle Drive 1847 Scotland Gavin Dalzell builds a two-wheeled hobbyhorse with a treadle-drive. as with Drais' was never really followed up. 1839. probably the world's first public record of the pedal-powered two-wheeler. English version was the Hobby Horse (Denis Johnson). Velocipede. Hand Drive 1821 England Louis Gompertz adds a hand-driven. and their patent application is granted. in -line wheels and the ability to steer. Later versions had front wheel sizes of upto 5 feet.The History of Bicycle Industry Year Country Details 1817 Germany Baron Von Drais invents the "running machine" or Laufmaschine. Rear-Wheel1843 France Alexandre Lefebvre is credited with a rear-drive Drive Bicycle machine. Thomas McCall marketed copies. ratchet mechanism to the front wheel of a Hobby Horse but the innovation. This style became known as the "Boneshaker".Scotland Kirkpatrick Macmillan is traditionally credited with a 1840 machine in which power was supplied to the back wheel via rods connected to treadle-type pedals. Patented the following year. crank-driven Wheeler vehicle at the Great Exhibition and subsequently becomes established as a Velocipede manufacturer. Known in various forms as : Draisine. All have two.

England Alfred M. England James Starley patent a differential gear. probably the first for a bicycle but the principle was not new. Reynolds takes out a patent on "butted" steel bicycle tubes. France The first. easy-to-use derailleur is invented by Paul de Vivie (Velocio) that shifted among four gears at the pedals. France Peugeot markets their production recumbent bicycle. H. a recumbent bicycle on which Francois Faure breaks both the mile and kilometer records. Germany The Mannessman brothers are credited with the invention of the process to manufacture seamless steel tubing. England Grout patents a folding High Wheeler. England William Reilly patents a two-speed hub gear. similar sized wheels. His later 3-speed version was put into production by Sturmey Archer in 1902. John Boyd Dunlop. England Thomas Humber adapts the block chain for use with his range of bicycles. England Henry J. the "Bicyclette" (his earlier models were lever driven). Hodgkinson patents a 3-speed Gradient gear. Italy Bianchi produced a folding bicycle for the Italian Army with telescoping seatstays. Italy Tullio Campagnolo intriduces the bicycles hub quick release. Bianchi now calls it the first dual suspension mountain bike! There are earlier versions of military folding bicycles. England Scott and Phillott patent the first practicable epicyclic change-speed gear fitted into the hub of a front driving bicycle. England Browett and Harrison patent an early caliper brake. Scotland Commercial development of the pneumatic bicycle tire by Dr. William Van Anden had obtained the first freewheel patent in 1869. chain-driven safety bicycle. Charles Challand had exhibited his "Horizontal Bicyclette Noemale" in Geneva in 1895. patented by Jules Suriray in 1869. England John Kemp Starley (James Starley's nephew) markets the revolutionary Safety Bicycle (the "Rover") with a chain/rear-sprocket drive and tangentially-spoked. a pre-cursor of the modern derailleur. Includes many of the major features of modern bicycles.Ball Bearings 1872 Caliper Brake 1876 Differential Gear 1877 Internal Hub Gearings Folding Highwheeler 1878 1878 1879 Chain Safety Bicycle 1880 1885 Seamless Tubing 1886 1888 1890s Derailleur Internal Hub Gearing Butted Frame Tubes Freewheel 1896 1896 1897 1898 1910 Recumbent 1914 Dual-Suspension 1915 Mountain Bike 1930 Recumbent 1932 German Friedrich Fischer first mass-produces steel ball bearings. Germany First major commercialization of the freewheel by Ernst Sachs. a spring fork and large profile pneumatic tires. the first "portable" bicycle. France Cycles Aluminium becomes one of the earliest manufacturers of an aluminium bicycle. . a leaf spring at the bottom bracket. France Charles Mochet designs the Velocar. England E. Lawson patents a rear wheel.

Marcelin petents "Le Petit Bi". metal lugged frame appears: the Exxon Graftek. Sun Tour launch their indexed shift lever. Alan (Italy) and Vitus (France) were producing their lugged aluminium frames arround the same time. Bayliss Wiley in England has also experimented with unit hubs as far back as 1938. J. Competed successfully in time trials and track pursuit events. A. remarkably similar to the Moulton and Bickerton of later years. The Hercules Herailleur is launched. a rear derailleur with indexed shift levers. and a combined freewheel-plus-rear hub. Suffered from frequent frame failure. The first carbon-tubed. organized BMX racing by 1974. Neither of them found a market. Teledyne markets the first titanium bike that was produced in any quantity (Speedwell of England had some Ti production frames as far back as the 1960s. This small spark eventually evolves into full-fledged. Introduction of Campagnolo's modern Gran Sport derailleur. The technology was later perfected by Look. Marketed for five years. a brief scene during the beginning of the movie shows kids on Sting-Ray bikes emulating motocross. Fomac Corporation designs the Avatar recumbent. a design that has held up till the present day. The aluminium Bickerton portable small-wheeler is developed. Gary Klein displays his welded and heat-treated aluminium frames at the International Bike show. Although it is a motorcycle documentary. Launch of the Moulton small-wheeled bicycle with separately sprung suspension and custom tires. and were abandoned. Schwinn introduces the Sting-Ray that subsequently helped launch the BMX craze.19331934 USA Mountain Bike 1938 USA Folding Bicycle 1939 France Shifter 1946 Italy Index Shifting Derailleur 1949 1951 1962 England Italy England String-Ray Rear Derailleur 1963 1964 USA Japan Index Shifting 1969 Japan 1970 England Bmx (Bicycle Motocross) 1970 USA Mass-Produced Titanium Frame/Fork 1974 USA 1975 USA Aluminium Frames/Bikes 1975 USA 1978 USA Introduction by Schwinn of the balloon tire and "streamlined" bikes which leads to rugged bikes that can take the abuse of teenage boys and which set a forty-year trend. welded by Lamborghini!) Litespeed brought titanium frames to a broader market in the 1980s. Cannondale launch their "Aluminium for the Masses" in 1983. The movie On Any Sunday by Bruce Brown debuts. It is . The Sun Tour Grand Prix is marketed as the first slant parallelogram derailleur. Resulted in what was to be the Grandfather of today's mountain bikes. "Cantilever Frame" and the "Spring Fork". Campagnolo markets the dual-rod "Cambio Corsa" gear shifter (over ten years after the prototype) widely used for atleast a decade. Trek and others. the FiveSpeed Click. the Unit Hub. Schwinn markets the "Fore-wheel" brake. Followed by the successful Brompton in 1976 and Dahon in 1980. a 16-inch wheeled folding bicycle.

Possible future follow -up by Campangnolo. (all of whom also produced earlier mountain bikes). Mass-Produced 1981 USA The specialized Stumpjumper mountain bike is Mountain Bike launched nationwide. Ceases Derailleurs production in 2001. no automatic release). Pete Pensyres had earlier used his own clip-on style bars in setting his RAAM record. 1998 Germany Rohloff develops the Speedhub. Tom Richey et of the many styles that constituted the 1980s renaissance of recumbents which included Lightning Cycle winning the HPV-RAAM relay and Easy Racers breaking the 65 mph barrier. the Positron. originally the brainchild of Boone Lennon. High-Quality 1978 USA Specialized introduce the first high -quality foldablr Folding Clincher clincher tire (the Turbo) which launches the demise of Tire the tubular. Hydraulic Disc 1994 USA Sachs (SRAM) introduces Power Disc. 30-Speed 2002 Italy Champagnolo offers a 30-speed derailleur drivetrain Derailleur with the Record 3-x-10a adrivetrain. Culminated in the American "Super Bike" Bicycles at the 1984 Los Angeles Olympics. Clipless Pedals 1984 France LOOK markets their clipless pedal (following on an earlier track model launched by Cinelli in 1970. carbon fiber frame and Trek market their first lugged carbon frame. Integrated 1990 Japan Shimano introduces integrated brake/gear levers. A Performance reasonably compact folding bicycle that matches the Folding Bike performance of conventional touring machines. Suspended 1987 USA Paul Turner demonstrates a full suspension bicycle Mountain Bike with front and rear shocks. the first massBrake produced hydraulic disc brake system. Index Shifting 1985 Japan Shimano introduces SIS indexed shifting (learning from their inferior product. Aerodynamic 1980 East Introduction of aerodynamic bicycles with a stable Road/Track Germany construction. 1986 USA Kestrel introduces their production non -lugged. Computer Moulton 1983 England Moulton launches his second generation of "space frame" small-wheeled bicycles. Diversified the sport of off-road biking. Aero Handlebars 1987 USA Scott USA manufactures the first modern aerobars. Eventually becomes a partner in Rock Shox. from 1977). capitalizing on the Marin Country vogue inspired by Calofornian icons. High1989 USA Hanz Scholz designs the Bike Friday "World Tourist". Electronic Cycle 1983 USA Avocet launch the first electronic cyclometer (bike computer). Drivetrain . Browning Research had invented a prototype electronic system in 1974. the "Death Cleats". 14 equally -spaced hub gears which are operated by a twist-grip with no overlapping ratios and a gear range as wide as a 27speed derailleur system. Joe Breeze. Brake/Shift Levers Electric 1993 France Mavic markets their ZAP electronic shifting. Gary Fisher.

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