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By:

TAMMINA AVINASH

MBA 09MO45

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` Hero Cycles manufactured Over 16000 Bicycles aday.

` They Sold about86 million bicycles in aggregate as

of 2002.` They had nurtured an excellentnetwork of dealersto serve Indias expansive markets.

` Over the years Hero Group had entered multiple

business areas.

What Was Hero Before JV ?

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` HMC initial plans called for both two-wheelermarketand the electric generator market.

` HMC firstchose Kinetic Engineering Ltd. Andformed KineticHondaMotors Ltd. Butthis JVwould work in field of ScootersManufacturing.

` HMC came toHero Group as the Lastcompromise

choice for its motorcycle venture.

Some Facts About Honda

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` Its engineering capability

` Relevance and salience ofHERO brand.

` Distribution network.

` Commitmentto Quality.` Know-how and experience in handling large volume

production and distribution.

` Tightfocus on financial and raw material processes.

` Cordial Industrial Relations.

Honda selected the Hero Group for avariety of reasons, which included:

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` Honda agreed to provide tech. know-how to HHMand setting up manufacturing facilities. Thisincluded the future R & D efforts.

` H

onda agreed for a lump sum fee of $500,000 & 4%royalty on SP.

` Both Partners held 26% ofthe equity with other26% sold to the public and the restheld to financialinstitutions.

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` HHM had grown consistently, earning the title ofthe worlds largestmotorcycle manufacturer afterhaving churned out1.3 million vehicles in 2001.

`

Worlds largesttwo-wheeler manufacturer withannual sales volume of over 2 millionmotorcycles.

` Owns worlds biggestselling motorcycle brand HeroHonda Splendor.

` Over 9 million motorcycles on Indian roads.

` Deep marketpenetration with 5000 outlets.

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` The deep penetration network of hero largelybenefited the sales.

` Absence of major competitors in initial years.

` Sound and proven technical capabilities ofHondaand the reliability ofHero.

` Increased marketfor motorcycles: Better Fuel efficiency.

Change in peoples perception.

Decrease in price difference with scooters.

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` In August1999, HMC announcedHondaMotorcycle & Scooter India (HMSI) to initiallymake scooters and later, motorcycles as well.HHMs stock plummeted by30% on the day oftheannouncement.

` Possible hike in royalty.

` Competition hotting Up.

` Recovery in the Scooter segment

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Thank You

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Presented by :

Tammina Avinash