Hero Motors Limited Description

Hero Honda started its operations in 1984 as a joint venture between Hero Cycles (sometimes called Hero Group, not to be confused with the Hero Group food company of Switzerland) of India and Honda of Japan. When Honda decided to move out of the joint venture, Hero Group bought the shares held by Honda. By December 2010, the board of directors of the Hero Honda Group had decided to terminate the joint venture between Hero Group of India and Honda of Japan in a phased manner. The Hero Group would buy out the 26% stake of the Honda in JV Hero Honda. Under the joint venture Hero Group could not export to international markets (except Nepal, Bangladesh and Sri Lanka) and the termination would mean that Hero Group could now export. Since the beginning, the Hero Group relied on their Japanese partner Honda for the technology in their bikes. The rising differences between the two partners gradually emerged as an irritant. Differences had been brewing for a few years before the split over a variety of issues, ranging from Honda's reluctance to fully and freely share technology with Hero (despite a 10-year technology tie-up that expires in 2014) as well as Indian partner's uneasiness over high royalty payouts to the Japanese company. The other major irritant for Honda was the refusal of Hero Honda (mainly managed by the Munjal family) to merge the company's spare parts business with Honda's new fully owned subsidiary Honda Motorcycle and Scooter India