21 Sep, 2010, 01.

23AM IST,PTI

Hero Honda says market share may face

pressure
NEW DELHI: With arch rival Bajaj Auto gaining ground in the entry level bike segment,
India’s largest two-wheeler maker Hero Honda has acknowledged that its leadership position
will come under pressure.

The company, which is currently a subject of speculation over a possible exit of Japanese
partner Honda from the joint venture with Munjals, has been witnessing a decline in market
share in motorcycles of the 75-125cc category. Its market share declined to 68.9% in the
April-August period this fiscal, from 81.8% in the same period of 2009-10.

“Increasing competition across all key segments, including the bread-and-butter deluxe
segment, will put some pressure on market share,” said the company said in its annual report
for 2009-10.

The company has lost ground to arch rival Bajaj Auto, which had re-entered the volume-
driven 100cc segment in July last year with its ‘Discover’ brand that came with a price tag of
Rs 40,000 (ex-showroom, Delhi). Since the launch of the 100cc Discover, Hero Honda’s
sales in the segment were affected.

Bajaj Auto’s share in this segment increased to 19.5% in the last five months. Its sales soared
to 5,05,724 units from 1,99,790 units in the year-ago period. Hero Honda offers six products
in the volume-driven 100cc segment — CD Deluxe, CD Dawn, Splendor+, Splendor NXG,
Passion Pro and Passion Plus.

The company sold 17,87,869 units in the total market of 25,95,516 units for this segment.
Last year, it had sold 16,78,570 units in the total market of 20,51,656 units.

Besides Bajaj Auto, Hero Honda’s market share is also being affected by the entry of Honda
Motorcycle & Scooter India (HMSI) with ‘CB Twister’. The wholly-owned subsidiary of
Honda sold 77,447 units so far this fiscal, compared to just 2 units in the year-ago period.

Apart from the market share, Hero Honda also pointed out that capacity constraint is a major
concern for the company.
“In a growth market, capacity constraints are always a concern and the company will
continue to explore various opportunities of capacity enhancement,” the report said.

Hero Honda has three production facilities at Dharuhera and Gurgaon in Haryana and at
Haridwar in Uttarakhand with a total annual installed capacity of 50 lakh units.

The company is scouting for locations to set up its fourth facility. It conducted a feasibility
study in more than 10 states in the last six months, but nothing has been finalised.
History of Hero Honda

company History - Hero Honda Motors

1983
- Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan
signed

1984

- The Company was Incorporated on 19th January, at New Delhi. The

Company Manufacture motor cycles upto 100 cc capacity. The Company
was
promoted by Hero Cycles (P) Ltd. (HCPL).

- The Company entered into a technical-cum-financial collaboration

agreement with Honda Motor Co. Ltd., Japan (HML). As per this
collaboration agreement, HML was to furnish complete technical
information and know-how and trade secrets and other relevant data.

- Hero Honda CD-100 is the first four stroke motorcycle to be

introduced in India in 100cc range. Its most attractive features
are
fuel efficiency and its light weight. CD-100 will be equipped with
electronic ignition system, illuminated speedometer, 4 speed gear
box,
neutral and flasher indicators, etc.

- 15 No. of equity shares subscribed for by the promoters, etc. In

November, 119,99,985 No. of equity shares issued at par of which
71,99,985 shares reserved for allotment as under:

- (i) 31,19,998 shares to Hero Cycles (P) Ltd., Hero Investments (P)
Ltd., and Bahadur Chand Investments (P) Ltd.

- (ii) 31,20,000 shares to Honda Motor Co. Ltd., Japan and

- (iii) 9,59,987 shares to friends and association of promoters.

Out
of the balance 48,00,000 shares, 2,40,000 shares were reserved for
subscription by the employees of the Company and 96,000 shares by
business associates. The remaining 44,64,000 shares were offered at
par for public subscription during November.

1985

- The Company embarked on its 2nd phase of expansion of increasing

its
installed capacity from 1,20,000 to 1,50,000 vehicles per annum by
the
addition of several critical aliminium and steel components.
1986

- 36,00,000 rights equity shares issued at par in prop. 3:10.

1987

- The Company offered 6,00,000 - 15% secured redeemable

non-convertible
debentures of Rs 100 each for cash at par on rights basis in the
proportion 1 debenture: 18 equity shares.

- Another 3,00,000 - 15% debentures were allotted to retain

oversubscription. The debentures were to be redeemed at a premium
of
Rs 5 per debenture on the expiry of the 7th year from the date of
allotment of the debentures.

- 3,75,000 rights equity shares issued at par in prop. 3:10.

1989

- The Company introduced a new model Sleek during July.

- 850 No. of equity shares forfeited.

1990

- The Company was planning to launch a new model motor cycle-CD 100
SS
sutiable to semi-rural conditions. In the domestic market the
Company
was reported to have a market share of 46%.

- 850 forfeited shares reissued.

1994

- The Company proposed to expand the capacity of existing plant at

Dharuhera to 2,40,000 nos. per annum. Another plant with an
installed
capacity of 1,50,000 nos. per annum at Gurgaon Industrial Estate was
being set up.

- The Company issued 39,79,500 bonus shares to the existing

shareholders in the ratio of 1:4. The Company also issued 28,557
number of fractional coupons representing 14,250 shares against
which
shares shall be allotted to presenting the same for consolidation
and
allotment.

- The Company's production and turnover increased to 1,83,490

motorcycles and Rs.483.85 crores respectively due to growth in
demand
for two wheelers and declining inflation.

1995

- 14,420 bonus shares issued by way of consolidation of fractional

coupons.

- A new Technical Collaboration Agreement has been signed with Honda

Motor Co. Ltd., Japan for the period upto the year 2004 which
includes
technology related to models of higher Engine displacement.

- The Company alloted 39,79,500 No. of Equity Shares of Rs. 10/-

each
as Bonus shares on 7th February, by way of capitalisation of General
Reserves.

- The Company had issued 28557 No. of Fractional Coupons

representing
14.250 shares against which the Shares shall be alloted on
presenting
the same for consolidation and allotment.

1997

- Hero Honda Motors has launched its newest motorcycle, the Street,
a
100 cc bike designed for use in congested urban traffic conditions.

- Hero Honda Motors Ltd (HHML) has set up a new motorcycle plant in
Gurgaon, near Delhi for the manufacture of the Honda Super Cub 100
cc
stepthro bike.

- Hero Honda has set up a new state-of-the-art plant, heralding a

new
phase of development of motorcycle industry in India, to provide the
most modern and technologically advanced production facilities.

- Hero Motors of the Rs.1,600 crore Hero group, as part of its

globalisation plan, has set up a plant in Brazil for manufacturing
hero
winner scooters.

- A new step thru model `Street-100' with unique feature was

launched
on 24th January.

1998

- The company proposes to increase the share capital to 5 crore

equity
shares of Rs. 10 each, 4 lakh cumulative redeemable preference
shares
of Rs. 100 each and 4 lakh cumulative convertible preference shares
of
Rs. 100 each with power to increase or reduce it from time to time.

- The company further proposes to capitalise Rs. 19,96,87,500 from

general reserve to share capital through issue and allotment of
bonus
shares. Altogether, 1,99,68,750 fully paid bonus shares will be
allotted and distributed to members of the company holding equity
shares of the company in the proportion of one bonus share for every
fully paid equity shares of Rs.10 each.

- Motorcycles major Hero Honda is considering entry into scooters in

collaboration with partners, Honda Motors, after the Japanese
company
decided to walk out of Kinetic Honda, their scooter venture with the
Firodias of Pune.

- Honda Motors recently pulled out of its joint venture with the
Firodias in which it held a 51 per cent equity stake.

- Honda Motor Company Ltd of Japan (Honda) and Kinetic Honda Motor
Ltd
(KHML) have signed a five-year licence and technical assistance
agreement under which KHML will continue to receive the technical
knowhow, critical vehicle parts and access to Honda's markets even
after the sale of Honda stake in KHML to Kinetic Engineering Ltd
(KEL).

- The Company changed the paradigm in two-wheelers by launching the

most powerful and fast bike- CBZ(ee) with a unique feature of
Transient
Power Fuel Control (TPEC) system.

- 23,962,500 bonus shares issued in prop. 1:1.

1999

- Hero Honda Motors Ltd (HHML) and 20th Century Finance Corporation
Ltd
have signed a Memorandum of Understanding (MoU) for financing of
Hero
Honda motorcycles.

- The company, a joint venture between Honda Motor Company of Japan

and
Hero group of India to produce four-stroke motorcycles, also aims to
increase its share by 1 per cent to 38.6 per cent during the current
fiscal.

- Leading two-wheelers manufacturer Hero Motors has formed a joint

venture with Briggs Stratton of US to develop and manufacture
four-stroke engines for mopeds and scooters in India, a top company.

- Honda Motor Company of Japan has decided to re-enter the scooter

market in India as also foray into three-wheelers in a joint
initiative
with its existing joint venture company Hero Honda Motors Ltd.

2000

- Hero Honda Motors Ltd. and Tata Finance Ltd. have signed a
national
tie-up agreement. The Company is the largest manufacturer of
motorcycles in the country.

- The Company will relaunch its stepthru Stree Smart on Baisakhi

13th
April.

- Hero Honda Motors Ltd (HHML), has launched an upgraded version of

the
existing step-through motorcycle - the Hero Honda Street.

- The Company was ranked as the 9th Highest Value Creator among 12
industry groups within the Bombay Stock Exchange top 100 companies
over
a five year period (1994-99).

2001

- Hero Honda Motors Ltd. has launched a new 100cc motorcycle named
`Passion'.

- The Company has secured shareholders' approval for splitting one

equity share of Rs 10 each into five equity shares of Rs 2 each in
the
ratio of 1:5.

- Hero Honda Motors Ltd. has become the largest seller of

motorcycles
amongst all Honda companies and ventures in the world by selling one
million motorcycles during the current financial year.

- Credit rating Agency Crisil has reaffirmed outstanding `AAA'

rating
assigned to the proposed Rs 15 crore non-convertible debenture
issue,
Rs 16 crore commercial paper programme and fixed deposit programme
of
Hero Honda Motors.

- Promoter-Chairman of the country’s largest motorcycle

manufacturing
company, Hero Honda Ltd, Brijmohan Lall Munjal has bagged the
prestigious Ernst & Young Entrepreneur of the Year (EOY) award here
on
September 27.

2002

-Company included in the 30 companies Bombay Stock Exchange index

(Sensex)

-Becomes the world's largest two wheeler company by selling 1.3

million vehicles in 2001

-Japanese automaker Honda Motor for the first time decides to source
motorcycles from its Indian joint venture Hero Honda to sell as
'Honda' brandname in Vietnam

-Royalty to the Japanese parent, Honda Motor Co, hiked to Rs 630 per
vehicle as compared to the flat royalty of Rs 200 on existing models
like Splendor and Passion

-Approves Foreign Institutional Investors (FIIs) to increase their

stake from the present 24 per cent to 40 per cent

-Comes out as the most profitable two-wheeler company in the country

during the trailing four quarters by overtaking second-largest
player, Bajaj Auto

-Launches Ambition, a 133 cc 11 BHP vehicle

-Unveils Smart, a 75 cc step-thru

-Comes out with a free insurance scheme worth Rs 1,000 for all its
bikes

-Bajaj Auto goes ahead of Hero Honda in market capitalisation (m-cap)

growth in the last fifteen months
2003

-Achieves a landmark sales turnover of over Rs 5,000 crore during

2002-03

-Launches its cheapest 100cc motorbike 'CD Dawn'

-Hikes production capacity at two of its manufacturing facilities to

three lakh units

-Hero Honda and SBI Cards launch co-branded credit card for Hero
Honda's customers

-Achieves milestone by producing five million bikes from its

Dharuhera plant in Haryana

-Launches its new 223-cc, 16.8 BHP Karizma at Rs 79,000

-Joins hands with Small Industries Service Institute (SISI) to train

the unemployed youth who have finished diplomas

-Initiates a new dealer credit system which will bring down its
receivable levels to around seven days and save the company Rs 100
crore

-Introduces Passion Plus, new version of Passion motorcycle

-Forges marketing pact with Aprilia, the Italian bike maker, to

introduce its range of motoscooters and top-end motorcycles in India

-The company has bagged two Total Customer Satisfaction (TCS)

Awards.

-Hero Honda Karizma bags BBC Bike of the Yr Award

2004

-Hero Honda retreats Ambition

-Hero Honda unveils new version of Ambition

-Hero Honda's Dawn emerges as largest entry-level bike

-Hero Motors introduces 'Sting' new 4-stroke bike

-Hero Motors has announced a licensing agreement with Austria-based

Bombardier-Rotax that will provide 125cc-175cc engines for the
upcoming `Hero Aprilia' range of scooters.

-Hero Honda renews alliance with Honda Motor

-Two-wheeler major Hero Honda and SBI Card, the credit card arm of
State Bank of India, have joined hands to launch India's first
co-branded credit card in the two-wheeler industry

2005

-New product launches widen HHML's product portfolio

-Two-wheeler major Hero Honda on October 5 announced launch of its

first scooter 'Pleasure'

-Hero Honda rolls out 150-cc motorcycle Achiever

2006

-Hero Honda launches CBZ variant X-treme

-Hero Honda announced the launch of two new variants the new
'Glamour' and 'Passion Plus' limited edition.
- Hero Honda is the World No. 1 for the 5th year in a row

- 15 million production milestone achieved

2007

-Hero Honda Motors Ltd. has appointed Mr. Yutaka Kudo as Director and
Whole-time Director of the Company in the category of Executive
Director w.e.f. April 1, 2007.

- Hero Honda is the World No. 1 for the 6th year in a row

- New 'Splendor NXG' launched

- New 'CD Deluxe' launched

- New 'Passion Plus' launched

- New motorcycle model 'Hunk' launched

- 20 million production milestone achieved

2008

- Hero Honda Motors Ltd has informed that Mr. Arun Nath Maira. has
been appointed as an Additional Director in the category of Non
Executive and Independent Director w.e.f. December 20, 2008 by the
Board of Directors by way of passing a resolution by circulation.

- Hero Honda Haridwar Plant inauguration

- New 'Pleasure' launched

- Splendor NXG lauched with power start feature

- New motorcycle model 'Passion Pro' launched

- New 'CBZ Xtreme' launched

- 25 million production milestone achieved

- CD Deluxe lauched with power start feature

- New 'Glamour' launched

- New 'Glamour Fi' launched

2009

- Hero Honda Motors Ltd has appointed Mr. Ravi Nath as an Additional
Director in the category of Non Executive and Independent Director
w.e.f. October 14, 2009 by the Board of Directors by way of Passing a
resolution by circulation on October 14, 2009.

- Hunk' (Limited Edition) launched

- Splendor completed 11 million production landmark

- New motorcycle model 'Karizma - ZMR' launched

- Silver jubilee celebrations