Hero Honda Merger & Demerger

Hero Honda Merger & Separation

1. SECTION B - GROUP #7 Raj Gopal Basetty PGP15072 Ashwin Khade PGP15087 Pratika Saini PGP15100 Rizwan Firdous PGP15106 Sunil Kumar PGP15116 Varun Verma PGP15118

2. MILESTONE IN HERO & HONDA’S JOURNEY 1956 2000-2001 1984 1975 Hero Cycles Limited became the largest manufacturer of bicycles in India Hero Honda Motors Limited established in joint venture with Honda Motors of Japan, to manufacture motorcycles Hero Honda emerges as the market leader in motorcycles with sales of over a million motorcycles and a strong market share of 47% Hero Cycles Limited is established 1993 Hero Motors becomes India’s largest exporter of two wheelers

3. WHY HERO & HONDA WENT FOR JOINT VENTURE ? Wide distribution network through dealers Better Understanding Of The Market Dynamics Cordial Industry Relation Focus On Financial And Raw Material Processes Salience Of Hero Brand Wide Experience In Manufacturing Of Vehicles Commitment To Quality Engineering Capabilities Limited Options With Honda

4. JOINT VENTURE Honda would provide technical know how and assist in setting manufacturing facilities Honda agreed for $500000 as one time lump sum fees and 4% loyalty Joint Venture had 26% equity each with 26% to the public and rest with the financial institutions This is a sample text. Enter your text here SUCCESS STORY Hero Honda Motors had grown consistently, earning the title of the world’s largest motorcycle manufacturer with annual sales volume of over 2 million Every 30 seconds, someone in India buys Hero Honda's top-selling motorcycle – Hero Honda Splendor Over 9 million motorcycles on Indian roads Deep market penetration with 5000 outlets Company lead in both domestic two wheeler industry with nearly 48 % and motorcycle segment, with the shares of 59%

5. CONCERNS & ISSUES Announcement regarding formation of Honda Motorcycle and Bicycle India (HMSI) in August, 1999 Hero Honda Motor Company stock plunged by 30 % on the day of announcement Overlapping of products had already started - Honda Unicorn and Hero Honda CBZ Extreme in 150cc segment, Honda Shine and Splendor Plus in 125cc segment This is a sample text. Enter your text here Entry of new entrants increasing competition REASONS FOR SPLIT Higher Royalty Payments Honda's reluctance to fully and freely share technology Refusal of Hero Honda to merge the company's spare parts business with HMSI This is a sample text. Enter your text here Partners turning into Competitors

6. SPLIT 2011 In August Hero and Honda parted company, thus forming Hero MotoCorp and Honda moving out of the Hero Honda joint venture Paid 2,479.33 Crores for assembly, manufacture, selling, distribution and exports licenses, which have been amortized over a period of 42 months up to 30th June 2014 Entered into a share transfer agreement Entire share holding of 26% transferred to Hero, bringing an end to the joint venture 2011 WHAT HERO DID? Paid 2,479.33 Crores for assembly, manufacture, selling, distribution and exports licenses, which have been amortized over a period of 42 months up to 30th June 2014 WHAT HONDA DID? Entered into a share transfer agreement Entire share holding of 26% transferred to Hero, bringing an end to the joint venture

7. REASONS FOR SPLIT Higher Royalty Payments Honda's reluctance to fully and freely share technology Refusal of Hero Honda to merge the company's spare parts business with HMSI Partners turning into Competitors REASONS FOR SPLIT Higher Royalty Payments Honda's reluctance to fully and freely share technology Refusal of Hero Honda to merge the company's spare parts business with HMSI Partners turning into Competitors