An international motorcycle and scooter producer with its headquarters in New Delhi is titled Hero MotoCorp Ltd (previously Hero Honda). The company is a major producer of two-wheelers both internationally and in India, where it holds a market share of roughly 37.1%. The company had a market value of 59,600 crore (US$7.5 billion) as of May 27, 2021.
As a joint project between Hero Cycles of India and Honda of Japan, Hero Honda started operation in 1984. A plan to join the automaker with the investment division of its parent company Hero Investment Pvt. Ltd. was accepted by Hero MotoCorp in June 2012. 18 months after its breakup with Hero Honda, this choice was made.
The Munjal brothers’ flagship business, Hero Cycles Ltd., is offered under the name “Hero.” The Hero Honda Motors Limited was founded in 1984 as a joint venture between the Hero Group and Honda Motor Company in Dharuhera, India. Both the Honda group and the Munjal family controlled 26% of the business.
The business introduced motorcycles in the 1980s that were well-liked in India due to their cost and fuel efficiency. Since its establishment, the company has grown at a double-digit rate thanks in part to a well-known advertising campaign with the tagline “Fill it – Close it – Forget it.” The business overtook all rivals to become the largest two-wheeler manufacturer in both India and the world in 2001. It still has leaders in the world industry. For about 26 years (1984-2010), Hero Motocorp’s (previous Hero Honda) motorcycles used technology that belonged with Honda in Japan.
By December 2010, the Hero Honda Group’s board of directors had resolved to permanently dissolve the joint venture between Honda of Japan and Hero Group of India. Honda’s 26% ownership investment in the JV Hero Honda would be acquired by The Hero Group. With the exception of Nepal, Bangladesh, and Sri Lanka, Hero Group was unable to export under the joint venture; the termination would allow Hero Group to resume exporting. The Hero Group has always gotten its technology from their Japanese partner Honda.
Honda left the joint venture by handing the Munjal family, which owned a 26% share in the business, a number of off-market transactions. Honda quit Hero Honda at a compromise and received more than 6,400 crore (equivalent to 120 billion or US$1.5 billion in 2020) for its investment in order to concentrate only on its own, completely owned two-wheeler business, Honda Motorbike and Scooter India (HMSI). Depending on the price of the shares after the market closed on December 16, 2010, Honda’s shareholding was discounted by between 30% and 50% from its current market value.
With time, the growing differences between the two couples started to irritate them. Before the breakup, disagreements had been boiling for a few years over a number of issues, including Honda’s reluctance to fully and freely share technology with Hero (despite a 10-year technology agreement that expired in 2014) and the Indian partner’s concern over high royalty payments to the Japanese company. Honda was also greatly irritated by Hero Honda’s (mostly run by the Munjal family) refusal to combine its spare parts division with Honda’s new fully owned subsidiary, HMSI.
It was a two-part agreement: in the first, the Munjal family, headed by the Brijmohan Lal Munjal group, created an overseas-incorporated special purpose vehicle (SPV) to buy out Honda’s full interest, which was supported by bridging loans. At some time, this SPV was made available to private equity firms, such as Warburg Pincus, Kohlberg Kravis Roberts (KKR), TPG, Bain Capital, and Carlyle Group.
FORMATION OF A NEW COMPANY
On July 29, 2011, Hero Honda Motors Limited was replaced with Hero MotoCorp Limited as the company’s name. The British company Wolff Olins created Hero MotoCorp’s new brand design and logo. To connect with the third test match between England and India, the logo was revealed on August 9 in London.
By the creation of the new firm, Hero MotoCorp is now able to export goods to West Asia, Africa, and Latin America. Hero is not restricted to using only Honda-approved suppliers for its components.
On April 21, 2014, Hero MotoCorp announced its intention to establish a manufacturing facility in Bangladesh in the next five years through a joint venture with Bangladesh’s Nitol-Niloy Group for 254 crore (equivalent to 345 crore or US$43 million in 2020). In 2017, the facility began operating as “HMCL Niloy Bangladesh Limited.” 55% of the manufacturing company is owned by Hero MotoCorp, and the remaining 45% is controlled by Niloy Motors (A subsidiary of Nitol-Niloy Group). [15] Hero changed its 100cc engine lineup for 110cc bikes in 2014, except for the Hero Dawn.
Awards and recognition
Hero Honda Motors was named No. 108 in the Forbes list of the 200 World’s Most Good Companies for 2006.
Hero Honda is ranked seventh among the most trusted brands in India according to the Brand Trust Report from Trust Research Advisory.
