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.

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

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

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

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

8 crore compared to R s. Post the family settlement. Till the recent restructuring of the businesses amongst the four tranches of the Munjal family. and an auto -component manufacturing facility located at the same facility in Ludhiana. 300.Incorporated in 1966. 1. the company reported a net profit of Rs.P Munjal & family own 100% stake in the company.7 crore and Rs.707. O. Hero Cycles has a manufacturing capacity of 55 lac bicycles annually.3 crore on a turnover of Rs. Hero Cycles· main business activities include manufacturing of bicycles. 1. The company also has 135. respectively Hero Group Companies Hero Group ranks amongst the Top 10 Indian Business Houses comprising 18 . cold rolled (CR) strips and auto components with bic ycles contributing over 58% of its revenues. the company was closely held with shareholding equally divided among the four families of the firstgeneration of Munjals. 57. For 2009-10. Mr.5 crore. Hero Cycles Limited (Hero Cycles) is the oldest company of the Hero Group of companies.490.000T CR mill. with facilities located in Ludhiana and Mangli in Punjab.

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 . with an estimated turnover of US$1.8 bil lion during the fiscal year 200-2004.companies.

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. .

vendors and dealers. In Hero Cycles Limited.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. The fact that most of the machines are either developed or fabricated in -house. Hero is the first company to have mastered the art of the just -in-time inventory principle. The Group boasts of superb operational efficiencies. style of management has earned the plaudits amid st investors. has resulted in low inventory levels. as also worldwide recognition. 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. employees. Every assembly line worker operates two machines simultaneously to save time and improve productivity. but focussed. . The Group's low key. 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 just-in-time inventory principle has been working since the beginning of production in the unit and is functional even till date.

Mr. satisfaction and extensive growth .home to some of lndia's finest workers and entrepreneurs. The flame kindled by the Munjal brothers in 1956 with the flagship company Hero Cycles.Men of Steel The success of the Hero Group lies in the determination and foresight of the Munjal brothers. Mr. Satyanand Munjal. .the City of Ludhiana. The Hero Group is a thriving example of three generations of a family working and striving together to ensure quality. P. 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. in Punjab . 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. O. Brijmohan Lall Munjal and Mr. The spirit of enterprise which dominates the progress of the Group is characteristic of the land where it all began . Munjal continue to carry the torch and are actively involved in the day -to-day operations of the Hero Group.

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

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

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

USA. USA. Easy Bill Established to offer utility bill collection & retail services. Fastener World Established. Tie up with Livebridge Inc. HeroITES. Tie up with Bombardier .07 million motorcycles and a market share of 48%.0 million motorcycles Hero Group celebrates Golden Jubilee year since inception. Tie up with Aprilia Scooters. Italy.000 outlets. Hero Cycles enters the launches 100cc "Pleasure" scooter segment.2002 2002 2002 2003 2004 2004 2004 manufacture high-end bicycles. HeroITES strengthens its relationship with ACS. Hero Group comprises of 20 companies. a division of HeroCorporate Service Limited hived off as a division of new company Hero Management Service Limited. 2004 2004 2005 2006 2006 Hero Cycles crosses a unit sales threshold of 3.0 billion market cap and Fortune 500 company. 2006 Today.000 + employee and has a turnover of US$ 3.Rotax GmbH for scooter engines. .20 billion (FY 2006). deep market penetration with over 5. 300 ancillary suppliers.. Hero Cycles continues as the World's largest manufacturer of two-wheelers with annual sales volume of 2. 23.USD 5. Retail Insurance business established.It was commemorated by sales of over 15 million motorcycles & over 100 million bicycles.

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

says CM Speaking at the function. whic h offers Rs1001 off on each of its models has met with huge success across the country. representing a jump of 23. This is the first time any Indian two-wheeler company has clocked retail sales of 4 lakh units.731.071 units.394 units in 2009. The CM said.000 units.Reliance will be okayed. Hero cycles has sold 4 lakhs unit in the month of October Hero Cycles Ltd. The company's festive promotion. With the recent launch of Achiever towards the end of October and the forthcoming launch of Pleasure in mid -November.992 units. µµLet people shout. Hero Cycles said. a jump from 1. as it is going to boost the economy of small farmers. By december 31. the company is confident of continuing its upward movement in sales.469. The company's sales during October is up 13.02% last month at 302. said on Monday that its cycle sales were up 23. it added. The company had so ld 245. Hero Cycles's cumulative sales for the period April -October 2005 has registered a significant growth of 17. come what may. . the CM categorically said that the Reliance project will be okayed within this week. The company's cumulative sales tally has thereby increased to 1. all will come to know the benefits of this project themselves.5% compared with the previous month (September). when the company had recorded sales of 266.02% compared to the corresponding month last year.475 bikes in October 2009. 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.87% over the corresponding period in the previous year.

123 motorcycles during April-June 2008. Announcing the results. 1¶ motorcycle manufacturer today announced its first quarter results for t he FY 2009-10.45 crore. 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. an impressive growth of 7.28 crores to Rs. New Delhi .04 crore recorded in the corresponding period last year.18.e 14. 1977. said.. 190. Hero Cycles Ltd.8%.5% over Rs.8 % i. registering a increase of 3. 204. net of excise) grew to Rs. a significant growth of 15% over Rs.³With the first quarter ending. the new offering in the premium executive segment. introduced in South India New Delhi.09. Chairman.87. 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.´ .000 units for each of the months in the quarte r.1722.6% · Glamour. 2007.63 crore. having established the benchmark for the industry in the previous FY. OPERATING MARGIN (EBIDT) for the first quarter saw a marginal decline of 1.21 crore recorded in the corresponding period la st year. demonstrating consistent growth quarter over quarter.Hero Cycles Continues Consistent Growth in Q1 PTI. The company sold 6. NET SALES (Income from Operations) showed a remarkable growth of 14. as compared with sales during the corresponding quarter in the last FY.8 % over the corresponding period.6 % over last year¶s Rs. The PROFIT BEFORE TAX went up to Rs. Mr. 288. 1745. TOTAL TURNOVER (sales turnover plus other income. Net Profit increases by 7.JuNE. the µWorld No. PROFIT AFTER TAX (PAT) increased to Rs. 2010 on the Growth Path.6 % in the corresponding period last year.12 crore. The company recorded an increase of 13% in its sales volume during the quarter.07 crore. as compared with 6. from Rs. Our consistent growth performance in the last quarter demonstrates our continued efforts to deliver the best products and service to our customers.567 motorcy cles during April-June 2009. July 18th 2005: Hero Cycles.6 % · Volume sales increases by 13% · EPS shows consistent growth at 7. I feel we have made a good beginning to the current financial year. Hero Cycles sold over 200. Brijmohan Lall. Demonstrates Q1 result highlights:· Total turnover up by 15 %. 298.06 crores. as compared with 16.

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

It has always been our endeavor to offer enhanced value to our stakeholders by adhering to world standards.147 motorcycles during the year. The support of our partners Cycles Motor Co.Widely acknowledged as one of the most investor -friendly companies.1724 crores. 1248 crore in the fiscal 2002-03 to Rs.193 units sold during January . The improvement in operating margin reiterates the compan y¶s continued and dedicated efforts towards cost rationalization. Pawan Munjal. The company¶s volume sale of 20. better working capital management and improved manufacturing efficiencies. significantly up from 3. the total dividend for the year is also a four digit figure of 1000% The Operating Margin was an impressive 15. Thus.535 cycles. 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.70.a remarkable increase of 4 per cent over preceding fiscal. 211 crores during the same period. the company has ended the year with 48% market share in motorcycles . Chairman.. Managing Director. Hero Cycles Ltd. 221 crores during the last quarter of 2002 -03 to Rs. The company¶s market share in the two-wheeler category has also increased to 37 %. marks a splendid jump of 23 % over previous year¶s sale of 16..92. 149 crores during January .´ Enthused by the world record performance Mr. have greatly helped in our success.March 2004 grew by a remarkable 50 per cent as compared with the corresponding period in the previous FY. Japan and Hero Cycles Ltd. said. versus 15. ³The key reason for our success has been our continuous pursuit of pro-actively delivering value and delight to our customers.March 2003. Mr. Commending the company¶s excelle nt performance and the achievement of the 2 million plus sale milestone. from Rs. This achievement once again demonstrates our intrinsic capability to comprehend changing customer needs and fulfilling them with matching products.77. While the Profit After Tax during the quarter registered a splendid jump of 42%. an increase of 4 %.. with the interim dividend of 500% paid earlier. With the voluminous success of CD-Dawn. Ltd. Brijmohan Lall.96.52 % in the previous fiscal. the company announced a final dividend of 500%.718 motorcycles in the quarter. Buoyed by the tremendous response received by all its new models launched during the previous financial year. said.March 2003 to Rs. The motorcycle sales for the period January . The Total Turnover of the company for the same period also zoomed 38% from Rs. higher indigenisation. Hero Cycles Ltd. the Profit Before Tax showed an impressive upward trend.56%. Splendor+ and Passion .. The performance of the company in the fourth quarter of the FY 2003 -04 was also par excellence. The company sold 5. growing 41% from Rs.. 311 crores during the same period in 2003-04.

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

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

42 2.490.0 7.8 1.5% 3.2 1.3 952.9 10.3 241.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 1.5 674.79 2.36 3.0% 5.28 9.5 253.5 53 35 56 56 22 45 55 24 42 .21 33% 5.701.6 57.78 6.7 74.39 2.0 31% 2.7 300.3 4.8 183.6% 0.701.0 1.2% 12.490.8 599.5 268.93 0.42 0.3 317.285.5 111.2 118% 1.6% 34.9% 14.285.6% 1.0 50.8% 17.3 82.8 66.9% 1.




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. 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. backward integration and strong brand identity supports its strong business position. . Cold Rolled (CR) strips business could help improve profitability indicators going forward and reduce working capital borrowings. comfortable capital structure and strong liquidity position aided by a large portfolio of liquid investments. In addition to being the market leader. Credit Challenges Bicycle business is characterised by relatively low margins. Its large scale of operations. bicycles business. Besides. which accounts for over 55% of its revenues. Hero Cycles· business profile is characterised by strong brand equity. Hero Cycles is also the most cost competitive and profitab le bicycle company among the organized players.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. its strong financial pro file supported by healthy cash flow generation.

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

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

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

Reynolds takes out a patent on "butted" steel bicycle tubes. England John Kemp Starley (James Starley's nephew) markets the revolutionary Safety Bicycle (the "Rover") with a chain/rear-sprocket drive and tangentially-spoked. Italy Tullio Campagnolo intriduces the bicycles hub quick release. England Grout patents a folding High Wheeler. a leaf spring at the bottom bracket. John Boyd Dunlop. H. William Van Anden had obtained the first freewheel patent in 1869. the "Bicyclette" (his earlier models were lever driven). easy-to-use derailleur is invented by Paul de Vivie (Velocio) that shifted among four gears at the pedals. England Alfred M. the first "portable" bicycle. Hodgkinson patents a 3-speed Gradient gear. France The first. Lawson patents a rear wheel. similar sized wheels. England James Starley patent a differential gear. England Thomas Humber adapts the block chain for use with his range of bicycles. Includes many of the major features of modern bicycles. France Cycles Aluminium becomes one of the earliest manufacturers of an aluminium bicycle. Italy Bianchi produced a folding bicycle for the Italian Army with telescoping seatstays. probably the first for a bicycle but the principle was not new. Germany First major commercialization of the freewheel by Ernst Sachs. . 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. Germany The Mannessman brothers are credited with the invention of the process to manufacture seamless steel tubing.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. England E. His later 3-speed version was put into production by Sturmey Archer in 1902. France Charles Mochet designs the Velocar. France Peugeot markets their production recumbent bicycle. Scotland Commercial development of the pneumatic bicycle tire by Dr. patented by Jules Suriray in 1869. a recumbent bicycle on which Francois Faure breaks both the mile and kilometer records. England William Reilly patents a two-speed hub gear. England Browett and Harrison patent an early caliper brake. England Henry J. a pre-cursor of the modern derailleur. chain-driven safety bicycle. a spring fork and large profile pneumatic tires. Charles Challand had exhibited his "Horizontal Bicyclette Noemale" in Geneva in 1895.

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

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