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ENDOFAFRUITFUL

VENTURE

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ANINTRODUCTIONTOTHEJOINTVENTURE

Hero is the brand name used by the Munjalbrothers for their flagship company Hero CyclesLtd.

Honda is a Japanese automobile company.

A joint venture between the Hero Group and Honda

Motor Company was established in 1984.

Both own 26% stake in the Company.

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FIRSTINITIATIVEOFTHEJOINTVENTURE

During the 1980s, the company introducedmotorcycles that were popular in India for their fueleconomy and low cost.

The first model made by the joint venture was HeroHonda CD 100.

A popular advertising campaign to promote CD 100based on the slogan 'Fill it - Shut it - Forget it.

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POPULARMOTORBIKESBYJOINT VENTURE

Achiever Ambition 133, Ambition 135 CBZ, CBZ Star, CBZ Xtreme CD 100, CD 100 SS, CD Dawn, CD Deluxe, CD

Deluxe (Self Start) Glamour, Glamour F.I Hunk Karizma, Karizma R, Karizma ZMR FI Passion, Passion+, Passion Pro Pleasure Splendor, Splendor+, Splendor+ (Limited Edition),

Super Splendor, Splendor NXG,Splendor PRO

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MARKETSHAREOFTHEHERO HONDA

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REASONSOFTERMINATIONOFJV

The rising differences between the two partnersthat gradually emerged as an irritant.

Indian partner's uneasiness over high royaltypayouts to the Japanese company.

Another major reason was that Honda was the

refusal of Hero Honda (mainly managed by theMunjal family) to merge the company's spare partsbusiness with Honda's new fully-owned subsidiaryHonda Motors India (HMI).

http://timesofindia.indiatimes.com/topic/search?q=Honda%20Motors%20Indiahttp://timesofindia.indiatimes.com/topic/search?q=Honda%20Motors%20India

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CONTD.

The Terms and conditions of JV itself restrict theHero Honda to enter into 3 wheelers segment.

A bullish Honda wanted a solo say in the running ofits business, and HMSI's success gave it theconfidence to go for a split. HMSI has seen salesgrowing 42% in April-November this fiscal.

As per the agreement between the JV Honda itselfdoes not allow to enter into 100 cc bike segment.

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FINALIZATIONOFTERMINATIONDEAL

Its now confirmed that Honda Motor Corporation isexiting Hero Honda, the joint venture between IndianHero group (Munjal Family) and Honda MotorCorporation of Japan.

Hero to buy Honda stake for Rs. 740 per share.

Deal done at 50% discount to 8 march 2011 marketprice.

The Hero group, owned by the new Delhi- based munjalfamily will pay Rs. 3833 crore to acquire 26% stake fromHonda.

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FUTUREPLANSOFHEROGROUP

Hero Group to explore foreign markets.

Hero allowed $1 billion foreign investment.

Hero's new identity costs Rs 100 crore.

Hero to axe Honda from flagship brands.

Hero will have the freedom to set up its own R&Dfacilities to develop new products. It will also beable to buy technology from others which it cannotright now.

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IMPACT

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FUTUREPLANSOFHONDA

Honda Motors to make 100cc bike in India.

Honda to introduce more gear-less scooters indomestic market.

Honda India bike unit to sell 2.1 million units infiscal year 2012.

HMSI To Export Some 110,000 Units Of Two-wheelers.

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IMPACT

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CONCLUSION

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