Having split with its 26-year old joint-venture partner, Japan?s Honda Motor, the Hero group is set to unveil a new strategy to maintain its dominant position in the two-wheeler market. Sources privy to the discussions within the company told FE that in less than a fortnight, the erstwhile joint venture company Hero Honda would make at least three key announcements.
The company would share the list of new export markets, announce its new brand name and finally, much to the relief of its shareholders, would make public the terms of separation from Japanese Honda Motors including possibly the exact royalty rates.
? The announcements would be made following a board meeting. All this could be wrapped up before April 13,? an industry source said. Interestingly the day coincides with the popular North-Indian festival Baisakhi that marks the beginning of the New Year. ?Traditionally the company has made bike launches on this day. It is considered highly auspicious by the promoters,? the source said.
To explore new export markets Hero Honda has also formed a core team which is headed by its senior vice-president (sales & marketing) Anil Dua. As per the terms of its JV with Honda, it had debarred the company from exporting its products globally since it came into direct conflict with Honda?s markets. However, post the split Hero Honda is free to export to any part of the globe it wishes. The company has also announced its tie-up with globally renowned marketing and branding firm Wolff Olins.
A Hero Honda spokesperson said that the company has been working on developing a new brand identity which is an ?elaborate exercise.? He said that the process is being followed rigorously. He also said that the company?s dedicated cross-functional team is exploring newer markets like Latin America and Africa. The spokesperson however did not comment on whether the company would make public the shareholder?s agreement or not.
In February when the company announced that it would be buying back Honda?s 26% stake through its investment company, Hero Investments (HIPL), in the company for around Rs 750 per share it created jitters among various analysts in brokerage houses, since it was half the current trading price of its shares. On Thursday Hero Honda?s shares closed at Rs 1,586.55 ? up 2.2%. Industry experts said that the Munjals may have to fish out a higher royalty payout for the heavy discount on the buyback. ?If the company shares more details on this front it would be appreciated by the market,? the analyst said.