Hero Hero Honda Motors Ltd.

Public company Type BSE:HERO HONDA January 19, 1984 in Founded Gurgaon, Haryana, India Headquarter New Delhi, India s Brijmohan Lal Munjal (chairmain and founder)

Toshiaki Nakagawa Key people (joint managing director)

Pawan Munjal (CEO) Industry Automotive Motorcycles, Products Scooters Revenue U$ 2.8 billion Website www.Herohonda.co m

Hero Honda Motors Limited, based in Delhi, India, is the world's third largest manufacturer of motorcycles after Honda and Yamaha. Hero Honda is a joint venture that began in 1984 between the Hero Group of India and Honda of Japan. It has been the world's biggest manufacturer of 2-wheeled motorized vehicles since 2001, when it produced 1.3 million motorbikes in a single year. During the fiscal year 2008-09, the company has sold 3.28 million bikes and the net profit of the company stood at Rs.1281.7 crore, up 32% from the previous fiscal year.

Hero Honda's Splendor is the world's largest selling motorcycle. Its 2 plants are in Dharuhera and Gurgaon, both in India. Third plant at Haridwar, Uttaranchal has also started production by April, 2008. It will have production facilities such as Lean Manufacturing concept, more flexible lines & stream line material flow, within & proximity (planning to set vendors in nearby locations constituting HHML Park) to achieve just-in- time manufacturing. It specializes in dual use motorcycles that are low powered but very fuel efficient.

Company profile

“Hero” is the brand name used by the Munjal brothers in the year 1956 with the flagship company Hero Cycles. It is a joint venture between India's Hero Group and Honda Motor Company; they are related to Jagdish Lal Munjal. During the 1980s, Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. A legendary 'Fill it - Shut it - Forget it' campaign captured the imagination of commuters across India, and Hero Honda sold millions of bikes purely on the commitment of increased mileage

Hero Honda has consistently grown at double digits since inception; and today, every second motorcycle sold in the country is a Hero Honda. Every 30 seconds, someone in India buys Hero Honda's top-selling motorcycle: Splendor. Hero Honda bikes currently roll out from two globally benchmarked manufacturing facilities based at Dharuhera and Gurgaon in Haryana. These plants together are capable of churning out 3.9 million bikes per year. A third state-of-the-art manufacturing facility at Haridwar in Uttranchal will soon be commissioned to cope with sustained customer demand.

Hero Honda's extensive sales and service network now spans over 3,000 customer touch points. These comprise a mix of dealerships, service and spare points, spare parts stockists and authorized representatives of dealers across different areas.

Hero Honda values its relationship with customers. Its unique CRM initiative, Hero Honda Passport Program, one of the largest programs of this kind in the world, has over 3 million members on its roster. The program has not only helped Hero Honda understand its customers and deliver value at different price points, but has also created a loyal community of brand ambassadors. History Hero Honda is worlds third largest two wheeler maker. India has the largest number of two wheelers in the world with 41.6 million vehicles. India has a mix of 30 percent automobiles and 70 percent two wheelers in the country. India was the second largest two wheeler manufacturer in the world starting in the 1950’s with the birth of Automobile Products of India (API) that manufactured scooters. API manufactured the Lambrettas but, another company, Ltd. surpassed API and remained through the turn of the century from its association with Piaggio of Italy (manufacturer of Vespa scooters).

The license raj that existed between the 1940s to 1980s in India did not allow foreign companies to enter the market and imports were tightly controlled. This regulatory maze, before the economic liberalization, made business easier for local players to have a seller’s market. Customers in India were forced to wait 12 years to buy a from Bajaj. The CEO of Bajaj commented that he did not need a marketing department, only a dispatch department. By the year 1990, Bajaj had a waiting list that was twenty-six times its annual output for scooters.

In the mid-1980s, the Indian government regulations changed and permitted foreign companies to enter the Indian market through minority joint ventures. The two-wheeler market changed with four Indo-Japanese joint ventures: Hero Honda, TVS Suzuki, Bajaj Kawasaki and Kinetic Motor Company (Kinetic Honda). The entry of these foreign companies changed the Indian market dynamics from the supply side to the demand side. With a larger selection of two-wheelers on the Indian market, consumers started to gain influence over the products they bought and raised higher customer expectations. The industry produced more models, styling options, prices, and different fuel efficiencies. The foreign companies new technologies helped make the products more reliable and with better quality. Indian companies had to change to keep up with their global counterparts.

The 2006 Forbes 200 Most Respected companies list has Hero Honda Motors ranked at 108. Growth

Hero Honda experienced great growth throughout its early days. The Munjal family started a modest business of bicycle components. By 2002 Hero Group had sold 86 million bicycles producing 16000 bicycles a day. Today Hero Honda has an assembly line of nine different models of motorcycles available.

It holds the record for most popular bike in the world by sales for Its Splendor model. Hero Honda Motors Limited was established in joint venture with Honda Motors of Japan in 1984, to manufacture motorcycles. It is currently the largest producer of Two Wheelers in the world. It sold 3 million bikes in the year 2005-2006. Recently it has also entered in scooter manufacturing, with its model PLEASURE mainly aimed at girls. HUNK is the latest offering from the HHML stable.

A Hero Honda "Splendor" bike Models

Hero Honda Ambition 133 Hero Honda Ambition 135 Hero Honda CD 100 Hero Honda CD 100 SS Hero Honda CD Dawn Hero Honda CD Deluxe Hero Honda CD Deluxe (Self Start) Hero Honda Splendor Hero Honda Splendor+ Hero Honda Splendor+ (Limited Edition) Hero Honda Super Splendor Hero Honda CD Dawn Hero Honda Joy Hero Honda Street Hero Honda CBZ Hero Honda CBZ Xtreme Hero Honda Passion Hero Honda Passion+ Hero Honda Passion Pro Hero Honda Karizma Hero Honda Hunk (Limited Edition) Hero Honda Pleasure Hero Honda Glamour Hero Honda Glamour F1 Hero Honda Splendor NXG Labor relations In Hero Group there is no organized labor union and family members of employees find ready employment within Hero. The philosophy with regard to labor management is "Hero is growing, grow with Hero." Hero workers receive a uniform allowance, as well as House Rent Allowance (HRA) and Leave Travel Allowance (LTA). Extra benefits include medical check- ups not just for workers, but also for the immediate family members. For the majority of the production workers, who are hired through contractors, these benefits are out of reach. This and other problems lead to a strike and factory occupation by 4,000 temp workers in the Gurgaon plant in spring 2006. Diversification

Throughout the years of enormous growth , the Group Chairman, Mr. Lall has actively looked at diversification. A considerable level of vertical integration in its manufacturing activities has been ample in the Group's growth and led to the establishment of the Hero Cycles Cold Rolling Division, Munjal and Sunbeam Castings, Munjal Auto Components and Munjal Showa Limited amongst other component-manufacturing units.

Then there were the expansion into the automotive segment with the setting up of Majestic Auto Limited, where the first indigenously designed moped, Hero Majestic, went into commercial production in 1978. Then came Hero Motors which introduced Hero Puch, in collaboration with global technology leader Steyr Daimler Puch of Austria. Hero Honda Motors was established in 1984 to manufacture 100 cc motorcycles. The Hero Group also took a venture into other segments like exports, financial services, information technology, which includes customer response services and software development. Further expansion is expected in the areas of Insurance and Telecommunication. Hero Honda aims for 25% growth

Plans nine launches in next six months.

India’s largest motorcycle maker, Hero Honda Motors, is looking to sell more than a million units in each of the next three quarters, even though market conditions may not be in favour of the two-wheeler market.

The New Delhi-based two-wheeler company, also the world’s largest, is aiming for an overall growth of about 25 per cent in sales by the end of the financial year, which will take its tally to about 4.5 million units, up from 3.64 million units lastHowever, according to industry experts, the two- wheeler industry itself is expected to register less than double-digit growth due to continued lack of focus by financiers such as banks.

The two-wheeler industry, comprising motorcycles, scooters, mopeds and electric bikes, witnessed sales of 7.43 million units last financial year.

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This is expected to expand to 8 million units this year. Hero Honda is heavily banking on the current quarter to make up for any dip in demand in the last quarter, when sales are generally sluggish. At present, every second two-wheeler sold in the domestic market is by Hero Honda. Hero Honda’s dominance may come under pressure later during the year due to increased aggressiveness by Japanese giants Honda Motorcycle and Scooter India and Yamaha Motor India.

Both have seen double-digit growth on the back of strong product line-up and powerful brand value. Now, Hero Honda dreams 'Nano'

Hero Honda, world's largest two-wheeler manufacturer, is all set to do a nano in the bike market.

The company which controls 60 per cent of the market share is now focussing on ultra low cost bike to be priced around Rs 20,000, that could easily alter the dynamics of the market.

The R&D department at Hero Honda is working overtime to bring a new range of bikes to the market that will sport smaller displacement engines. But the real scoop? These are motorcycles that will be priced at about Rs 20,000 and the timing could not be better as arch rival Bajaj readies its ‘Made in China’ cheaper bikes for first the African and then Indian market.

Hero Honda is planning two engines—one a 75cc and the other 110cc. The project is indigenous, which means unlike other Hero Honda products, it has no Honda R&D. Meanwhile, Hero Honda is also likely to move the manufacturing of some of its premium segment products like the Karizma and Hunk to its Haridwar plant to take advantage of tax breaks there. This would also free up capacity for the new small bikes at Gurgaon and Dharuhera.

Joint venture Hero Honda Motors Ltd. is a result of the joint venture between India's Hero Group and Japanese Honda Motors Company in the year 1983. This joint venture has not only created the world's single largest two wheeler company but also one of the most successful joint ventures worldwide. Hero Honda is globally known of being the most fuel-efficient and the largest CBZ selling Indian motorcycle company. This is a relationship so harmonious that Hero Honda has managed to achieve indigenisation of over 95 percent, a Honda record worldwide. The below chart shows the golden years in the history of HERO HONDA :- 1985 CD-100 1989 SLEEK 1991 CD-100 SS 1994 Spelendor 1997 Street 1999 CBZ 2001 PASSION 2002 DAWN, AMBITION CD-DAWN, SPLENDOR +, 2003 PASSION +, KARIZMA SUPER-SPLENDOR, CD- 2005 DELUX, GLAMOUR, ACHIEVER 2006 CBZ

The company is committed to provide the customer with excellence. A rich background of producing high value products at reasonable prices led the world's largest manufacturer of motorcycles to collaborate with the world's largest bicycle manufacturer. During 80s, Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. They company possess three manufacturing units based at Dharuhera, Gurgaon and Haridwar are capable to produce 4.4 million units per year. They introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission

The unique features like fuel conservation, safety riding courses and mobile workshops helped the group reach in the interiors of the country. Well-entrenched in the domestic market, Hero Honda Motors Ltd. turned its attention overseas, and exports have been steadily on the rise.

Over the years, the Company has received its share of accolades, including the National Productivity Council's Award ( 1990-91), and the Economic Times - Harvard Business School Association of India Award, against 200 contenders. The gross sales of Hero Honda by March end'2008 was 33,371,43 Crores

CORPORATE SOCIAL RESPONSIBILITY STAKEHOLDER TIES AT THE GRASSROOTS

Hero Honda Motors takes considerable pride in its stakeholder relationships, especially ones developed at the grassroots. The Company believes it has managed to bring an economically and socially backward region in Dharuhera, Haryana, into the national economic mainstream.

An Integrated Rural Development Centre has been set up on 40 acres of land along the Delhi-Jaipur Highway. The Centre-complete with wide approach roads, clean water, and education facilities for both adults and children- now nurtures a vibrant, educated and healthy community.

The Foundation has adopted various villages located within vicinity of the Hero Honda factory at Dharuhera for integrated rural development. This includes: • Installation of deep bore hand pumps to provide clean drinking water.

• Constructing metalled roads and connecting these villages to the National Highway (NH -8).

• Renovating primary school buildings and providing hygienic water and toilet facilities.

• Ensuring a proper drainage system at each of these villages to prevent water-logging.

• Promoting non-conventional sources of energy by providing a 50 per cent subsidy on biogas plants.

The Raman Munjal Vidya Mandir began with three classes (up to class II) and 55 students from nearby areas. It has now grown into a modern Senior Secondary, CBSE affiliated co- educational school with over 1200 students and 61 teachers. The school has a spacious playground, an ultra-modern laboratory, a well- equipped audio visual room, an activity room, a well-stocked library and a computer centre.

Raman Munjal Sports Complex

The Raman Munjal Sports Complex has basketball courts, volleyball courts, and hockey and football grounds are used by the local villagers. In the near future, sports academies are planned for volley ball and basket ball, in collaboration with National Sports Authority of India. Vocational Training Centre

In order to help local rural people, especially women, Hero Honda has set up a Vocational Training Centre. So far 26 batches comprising of nearly 625 women have been trained in tailoring, embroidery and knitting. The Company has helped women trained at this centre to set up a production unit to stitch uniforms for Hero Honda employees. Interestingly, most of the women are now self- employed.

Adult Literacy Mission

This Scheme was launched on 21st September, 1999, covering the nearby villages of Malpura, Kapriwas and Sidhrawali. The project started with a modest enrolment of 36 adults. Hero Honda is now in the process of imparting Adult Literacy Capsules to another 100 adults by getting village heads and other prominent villagers to motivate illiterate adults.

Marriages of underprivileged girls

Marriages are organized from time to time, particularly for girls from backward classes, by the Foundation by providing financial help and other support to the families.

Rural Health Care

Besides setting up a modern hospital, the Foundation also regularly provides doorstep health care services to the local community. Free health care and medical camps are now a regular feature in the Hero Group's community outreach program.

CORPORATE PROFILE FILL IT. SHUT IT. FORGET IT

The joint venture between India's Hero Group and Honda Motor Company, Japan has not only created the world's single largest two wheeler company but also one of the most successful joint ventures worldwide.

During the 80s, Hero Honda became the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. A legendary 'Fill it - Shut it - Forget it' campaign captured the imagination of commuters across India, and Hero Honda sold millions of bikes purely on the commitment of increased mileage.

Over 20 million Hero Honda two wheelers tread Indian roads today. These are almost as many as the number of people in Finland, Ireland and Sweden put together!

Hero Honda has consistently grown at double KEY MILESTONES OF HERO HONDA Year Event 1983 Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed

Shareholders Agreement signed 1984 Hero Honda Motors Ltd. incorporated 1985 First motorcycle "CD 100" rolled out 1987 100,000th motorcycle produced 1989 New motorcycle model - "Sleek" introduced 1991 New motorcycle model - "CD 100 SS" introduced

500,000th motorcycle produced 1992 Raman Munjal Vidya Mandir inaugurated - A School in the memory of founder Managing Director, Mr. Raman Kant Munjal 1994 New motorcycle model - "Splendor" introduced

1,000,000th motorcycle produced 1997 New motorcycle model - "Street" introduced Honda's new subsidiary begins operations Honda Motor India Pvt Ltd (HMI), a fully-owned subsidiary of Japanese auto major Honda Motor, began operations in the country on Friday with a view to integrating spare parts requirements of all Honda group companies. HMI is part of the overall strategy to strengthen and integrate operations of Honda companies in India with respect to spare parts, a company release said. However, its biggest joint venture subsidiary, Hero Honda, is not part of the arrangement at the moment. According to industry officials, while in the first phase HMI will explore synergies in spare parts procurements, this will expand to other areas subsequently. Similar Relationship The company would begin its functions by taking over the parts operations of Honda Siel Cars India and gradually integrate operations of Honda Siel Power Products and Honda Motorcycles & Scooters India Ltd, the release said. However, the company said it would study the possibility of establishing a similar relationship with the fourth Honda company, Hero Honda Motors Ltd, in the near future. Hero Honda is a joint venture company in which Honda and Munjals hold an equal 26 per cent stake each. Starting with a capital of Rs 15 crore, HMI has targeted a turnover of Rs 180 crore for 2007-08, it said. Honda Motor Company's Operating Officer, Mr Masahiro Takedagawa, will head the new company as its President & CEO.