Hero To Launch Own Models Overseas

The break away of the partners from the Hero Honda Motors has not made much impact on the Hero group. The long stint of 26 years has been made to a halt with Honda leaving the JV. The move has given way for Hero Motors to sail along the sea waters to step into overseas markets. More than anything else, Hero motors is now devising its strategy to enter overseas with the launch of its own models. The initial entry will be into the markets of Africa and the Middle East, said a company report. Hero motors VP for sales and marketing said the initiatives will cover all aspects - marketing, service and overseas network. He expressed the urgency in implementing such schemes noting the huge potential that the South East Asia, Africa and the Middle East markets possess. He said the timing could not be disclosed but the moves are already on for such implementations.

Under the new set up in the Hero Honda Motors Limited the Munjals will take possession of major share to launch its own models both for domestic and for the export markets. For launching its own models into new markets the Hero motors may join hands with prospective partners. The company has the valid technology license from Honda up to 2014 as of now. It is to be seen whether there might be further extension of this agreement after 2014. Hero group will not hereinafter face any constraints regarding overseas markets since Honda had objected to such moves during the JV. The least number of export potential have been made to countries like SriLanka, Bangladesh and some Latin American countries.

With these constraints, the company was able to raise its export by 39% during November 2010 by selling 91177 units compared to the increase of domestic market by 13% with sale of 3.35 million units of two wheelers. The VP said the company will try its best to overcome the major hurdle of R&D in coming days, which has all along been a point of crisis. For this the company will do on its own by investing huge amount of money and utmost care. Even the right partners are welcome he said. The company"s CFO said the exact amount to be involved in the transfer of shares from Honda to Hero group will be disclosed to SEBI after the transaction was over. He further said the royalty payable to Honda will go on till 2014 and after that the money save thus would be invested for further R&D in future. Currently Honda is receiving 2.5 and 3 percent royalty on unit basis.

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