Hero MotoCorp Limited: history, ownership, mission, how it works & makes money

A Brief History of Hero MotoCorp Limited

Founded in 1984 as Hero Honda Motors Limited, Hero MotoCorp Limited emerged as a dominant player in the motorcycle segment in India. The collaboration between Hero Group and Honda Motor Co. was pivotal, leading to the production of popular models such as the Hero Honda Splendor and Passion. In 2010, this joint venture ended, and Hero Honda became Hero MotoCorp.

In the fiscal year ending March 31, 2023, Hero MotoCorp reported a revenue of ₹34,517 crores (approximately $4.2 billion), showcasing a strong recovery post-pandemic.

Hero MotoCorp's extensive distribution network comprises over 6,500 dealerships across India, maintaining its position as a leading two-wheeler manufacturer. As of March 2023, the company reported a cumulative production of over 100 million motorcycles and scooters, reflecting its significant market presence.

In terms of innovation, Hero MotoCorp has invested heavily in research and development. The R&D center at the Hero Global Center for Innovation and Technology (C-GIT) in Jaipur has played a crucial role in launching advanced models, such as the Xtreme 160R and the Glamour.

In late 2021, Hero MotoCorp expanded its footprint into international markets, acquiring a stake in the American electric motorcycle manufacturer, Zero Motorcycles. This move aims to diversify its product offerings and tap into the growing electric vehicle market.

As of October 2023, Hero MotoCorp's stock price stood at ₹3,050, with a market capitalization hovering around ₹60,000 crores. The company's robust dividend policy has also attracted investors, with a dividend yield of approximately 4.4%.

Hero MotoCorp continues to adapt to changing market dynamics, focusing on sustainable mobility solutions, and enhancing its portfolio in electric vehicles. With an eye on the future, the company aims to achieve net-zero carbon emissions by 2040, ensuring its commitment to environmental sustainability.

A Who Owns Hero MotoCorp Limited

Hero MotoCorp Limited, a prominent motorcycle manufacturer based in India, has a diverse ownership structure comprising both institutional and individual investors. As of the latest available data, the company's shareholding is distributed among various categories of stakeholders.

Promoters play a significant role in Hero MotoCorp's governance and operational direction. The company's promoters include the Munjal family, who have been instrumental in the company's growth since its inception. Their combined ownership stands at approximately 34.66%, reflecting a strong commitment to the company's long-term strategic goals.

Foreign Institutional Investors (FIIs) hold a substantial portion of the shares, totaling around 43.96%. This indicates a strong interest from global investors in the company's growth prospects, particularly in the context of the burgeoning motorcycle market in India and expanding international markets.

Domestic Institutional Investors (DIIs) contribute to 12.39% of the ownership, showcasing local confidence in the company’s performance. The remaining 8.99% is held by non-institutional investors, which includes individual shareholders and retail investors, who also play a vital role in the company's capital structure.

As of the most recent financial year, Hero MotoCorp has consistently delivered impressive performance metrics, with a Total Income of approximately INR 34,600 Crore and a Net Profit of INR 3,000 Crore for fiscal year 2022-2023.

The stock performance reflects investor sentiment and market conditions. Hero MotoCorp's shares have shown resilience, trading at around INR 3,000 per share as of October 2023, with a market capitalization close to INR 60,000 Crore.

The company's ability to maintain a balanced mix of ownership is pivotal in ensuring diverse perspectives in its strategic decision-making processes. Overall, the combination of institutional and promoter ownership underpins Hero MotoCorp's long-standing reputation in the automotive sector.

Hero MotoCorp Limited Mission Statement

Hero MotoCorp Limited, a leader in the two-wheeler segment, expresses its mission through a commitment to creating superior value for stakeholders while maintaining the highest standards of quality and innovation. The company’s vision extends beyond merely manufacturing motorcycles; it aims to foster a culture of innovation, reliability, and sustainability.

According to their 2022-2023 annual report, Hero MotoCorp aspires to enhance mobility solutions across various markets, emphasizing sustainability and eco-friendly practices in its operations. The company aims to contribute to the communities it serves by promoting safety and sustainability in transportation.

Hero MotoCorp focuses on innovation and sustainability in their products. The company is investing heavily in electric vehicles (EVs) to meet the growing demand for eco-friendly transportation solutions. In FY 2022-2023, they announced a capital expenditure of INR 1,200 Crores towards expanding their EV portfolio and enhancing production capabilities.

The company’s mission also involves ensuring customer satisfaction through quality products. Hero MotoCorp has established numerous customer service touchpoints with over 6,000 dealerships operating across the country, aimed at enhancing customer engagement and satisfaction levels.

In line with their mission, Hero MotoCorp has taken initiatives like the 'Hero Eco' program, promoting the use of biodegradable materials in manufacturing. This move aligns with their goal of reducing the carbon footprint and contributing positively to the environment.

Additionally, Hero MotoCorp places a significant emphasis on community development. They have initiated various CSR programs that focus on health care, education, and vocational training, contributing over INR 50 Crores to these initiatives in the last financial year.

Key Performance Indicators Related to Mission Statement

The mission statement of Hero MotoCorp is reflected in its performance indicators. The increase in customer satisfaction from 85% in 2020-2021 to 90% in 2022-2023 demonstrates their focus on quality and customer engagement. The expansion of their dealership network shows a commitment to accessibility and service enhancement.

Furthermore, the company's production volume growth aligns with its mission to innovate and cater to customer needs effectively. The transition to EVs is indicative of a strategic shift that embodies their commitment to sustainability, aiming for a market launch of two major electric models by the end of 2024.

How Hero MotoCorp Limited Works

Hero MotoCorp Limited, headquartered in New Delhi, India, is a leading two-wheeler manufacturer globally. As of 2023, the company commands a significant market share in the Indian motorcycle and scooter industry.

In the fiscal year ending March 2023, Hero MotoCorp reported a total income of approximately ₹36,900 crore, with a net profit of around ₹2,883 crore. This represents a growth of approximately 10% in total revenue compared to the previous fiscal year.

The company's business model is multi-faceted, focusing on manufacturing, assembling, and selling motorcycles and scooters. Hero MotoCorp operates eight manufacturing facilities across India and has a production capacity exceeding 9 million units annually.

Hero MotoCorp's extensive product lineup includes a variety of models catering to different segments, from entry-level motorcycles to premium offerings. As of the latest update, the company has launched several models in 2023, including the Hero Xtreme 200S and the Hero Maestro Edge 125. The sales of these models contributed significantly to the overall sales volume, with the company selling approximately 6.3 million units in the FY 2022-23.

Hero MotoCorp’s revenue distribution is notable, with scooters contributing approximately 30% and motorcycles around 70% of the total sales. This diversification into various product categories allows the company to mitigate risks associated with market fluctuations.

Moreover, Hero MotoCorp's strategy includes a robust network of over 7,000 dealers and service points, enhancing its reach across urban and rural markets. The company is also investing heavily in electric mobility, with plans to launch electric two-wheelers by 2024, targeting a market that is projected to grow substantially.

In terms of innovation, Hero MotoCorp has a dedicated research and development center that focuses on developing new technologies and enhancing fuel efficiency. The company has also implemented a strong supply chain management system, ensuring that it maintains quality and cost-effectiveness throughout its manufacturing process.

Furthermore, Hero MotoCorp has exhibited significant commitment to corporate social responsibility, investing in various community development projects and sustainability initiatives. In 2023, the company announced plans to reduce its carbon footprint by implementing greener manufacturing techniques and promoting electric mobility.

The stock performance reflects Hero MotoCorp's financial health and market positioning. As of October 2023, shares of Hero MotoCorp were trading at approximately ₹2,800, showing an increase of about 15% year-to-date, reflecting investor confidence following the robust earnings report.

In conclusion, Hero MotoCorp Limited operates through a strategic mix of product diversity, extensive distribution, and commitment to innovation, ensuring its leadership in the competitive two-wheeler market.

How Hero MotoCorp Limited Makes Money

Hero MotoCorp Limited, the largest two-wheeler manufacturer in India, generates revenue through various channels primarily centered around the production and sale of motorcycles and scooters. The company earned a revenue of ₹35,658 crores for the fiscal year ending March 2023, representing a growth of approximately 3.9% from the previous year.

The primary source of income is vehicle sales. Hero MotoCorp's diverse product portfolio includes models tailored for different segments, from economy models to high-end motorcycles. For FY 2023, the company sold over 6.5 million units, maintaining its position as a key player in the market.

The company also earns revenue through parts and accessories sales, contributing to approximately 5% of total revenue. This segment has been steadily growing, supported by the increasing focus on customer service and experience. The parts business generated around ₹1,783 crores in FY 2023.

Hero MotoCorp has also ventured into electric vehicles (EVs), which are expected to be a significant growth driver in the coming years. The company launched its first electric scooter, the Hero Vida, in late 2022, with a strategic target to capture a portion of the projected market size of ₹1.5 trillion in the Indian EV sector by 2030.

Hero MotoCorp’s global presence also boosts its revenue. The company exports motorcycles to over 40 countries, contributing significantly to its bottom line. In FY 2023, exports accounted for around 12% of total sales, with a target to enhance this to 20% in the coming years.

Additionally, the company has established a wide network of dealership and service centers, with over 7,000 dealerships across India, enhancing customer accessibility and after-sales revenue. This extensive distribution network is crucial for maintaining market penetration and customer loyalty.

Investments in research and development enable Hero MotoCorp to innovate and meet evolving consumer preferences, which helps sustain sales volumes and profitability. In FY 2023, R&D spending was around ₹500 crores, aimed at developing new models and improving existing ones.

Overall, Hero MotoCorp’s multi-faceted approach—rooted in strong product, service network, and geographical expansion—enables it to maintain resilient revenue streams in a competitive market environment.