Hero Honda Demerger

7657 Words Nov 3rd, 2012 31 Pages
Table of Contents

1. ABSTRACT 3 2. INTRODUCTION 4 3. MATERIALS ANS METHODS 5 4. ANALYSIS 5 5. Conclusion 14 6. References 15

1. ABSTRACT
THE JOINT VENTURE

A joint venture between Hero Group and Honda Motor Company was established in 1984 as the Hero Honda Motors Limited at Dharuhera Haryana. Hero is the brand name used by the Munjal brothers for their flagship company Hero Cycles Ltd. Honda is world’s largest selling two wheeler company based in Japan. Munjal family and Honda group both own 26% stake in the joint venture Hero Honda motor Corporation. However the Hero Honda group was set for a split at the end of 2010. After the split Munjal family will buy Honda Motor’s 26% stake for around $1 billion, or a little less
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* Vendor issue to supply parts. * Export market.

Latest and successful technical capabilities of Honda motors and the reliability of Hero Group with pan India presence made an effective combination. Honda motors technical expertise provided better fuel efficient motorcycles and was easily sold through Hero Group‘s deep distribution network. Absence of any major competitor in the initial years helped the Company make the best of the growing market demand for motorcycles. With the decrease in price difference in comparison with scooters, that were the more popular choice earlier, the Company was able to successfully stabilize in the Indian market.

Fallout of the joint venture all begin with personal interest coming into picture more than the joint venture. On December 26th 2010 when in a joint press conference both companies made public, selling of HM Japan‘s holding of 26% in the Company to Hero Group. Company also disclosed a Memorandum of Understanding signed between the Company, HM Japan and Hero Group pursuant to which the parties would enter into a new license agreement. This proposal was rolled out keeping with the plan and taking the first step in the phased process of the HM Japan‘s exit from the Company. This decision meant curtains for the 26 year old Indo-Japanese partnership.

3. MATERIALS AND METHODS

The research methodology applied in this project has been of secondary research because most

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