New Delhi, December 17
The Hero group, with its roots in Ludhiana, and Honda of Japan, who had combined their names to build the world’s largest-selling two-wheeler company parted ways yesterday to end a 26-year-old journey. The Hero group is buying out the entire 26 per cent equity stake of Honda Motor Company in the joint venture company, Hero Honda Motors. The company and brand name will be changed over a period of time.

Hero Honda announced that the existing products will continue and a new licencing agreement has been signed with Honda to provide new models.

The Hero group was set up in Ludhiana in 1956 with Hero Cycles by the Munjal brothers: Satyanand Munjal, Brijmohan Lall Munjal, O P Munjal and late Dayanand Munjal.

Earlier this year, the $ 4.2-billion Hero group, with over 20 companies, was formally divided within the different families to end the cross holdings in group companies and provide a clear structure. Hero Honda is the jewel in the crown of the Group and by far the biggest company. Going it solo without Honda, will be a big challenge for Hero Honda and its promoters, Brijmohan Lall Munjal, chairman of the company and his son, Pawan Munjal, MD & CEO.

B M Munjal said yesterday, “Today is a new beginning- to broaden our horizon and to pursue our new dream.” There are concerns about the details of the stake sale including the price, which were not announced and also on the royalty payout.

Analysts are worried that the stake sale may happen at a discount to current market price and the bulk of the payout may be in the form of royalty payments, which will not be fair to the minority shareholders in the company. The company expects that the new arrangement enables it to bolster R&D capability, explore new product categories, enter large and emerging export markets and build a global presence.

Says Jagannadham Thunuguntla, head of research, SMC Global Securities, “The time has come in the Indian economy where the Indian partners and the international partners have started to believe that the market size has reached a level where both the partners can play independently. This is making partners to part ways from their joint ventures and operate the businesses on their own.”

A research report from Motilal Oswal Securities says, “Overall, this development is negative for the two-wheeler sector as a whole. New competition of Honda’s might is entering the field. Existing players will have to vacate some market share for Honda.”

Says Thunuguntla, “Going forward, it would be challenging for the Hero group to maintain the profit margins with the large royalty payouts and also to ensure their R&D efforts are adequate to maintain market share”.

The Motilal Oswal report adds, “Hero has agreed to pay a royalty of Rs 2,300-2,400 crore to be paid till March 2014. Honda will allow launching three new variants -two motorcycles and one scooter to Hero group with 5% as royalty on the new products. Hero will use the brand till Mar 2014; it will be stopped if any changes are made to its products.” 

For five years, the aviation sector has grown on the back of low fares. We can’t ignore this fact. The benefits of low fares have gone to the travelling public

— Civil Aviation Minister Praful Patel

Chandigarh, December 17
Chandigarh may soon emerge as a golf-tourism hub as players from around the world visit the city. The craze for the golf in this region and the trend among the city’s golfers to try out new golf courses has meant that other golf-toursim destinations are going all out to attract golfers from the region.

The world’s most famous golf destination Spain, is now attracting city golfers and attracting them to swing their clubs in the 300-odd golf courses there.

In town to sponsor the Sixth Chandigarh Golfing tour for NRIs, Francisco Amoros, golf director, Costa Del Sol, Spain, said that India was an emerging market for them, and they were eyeing huge business in golf tourism from India, especially Chandigarh.

“Golf tourism is big in Spain and we attract 30,000 golf tourists in the country each year. These golf tourists give us a direct business of 572 million euros, and an indirect business of 940 million euros. Though golf tourists account for just 3 per cent of the total tourists in the country, the revenue generation through them is over 10.3 per cent of the total tourism revenue,” said Amoros.

Talking to TNS here today, he said that since golf is a very popular sport in India, they were looking at India as an emerging market to promote their golf tourism. “Most golf tourists in Spain come from Great Britain, Scandinavia and Germany. As we eye a growth in this business, we are sponsoring events and spreading awareness about our golf courses in new markets like Japan, Korea, Argentina, Brazil and India,” he said.

Jagdeep Singh Cheema, president of the Chandigarh Golf Association, today said that most of the golfers participating in this tournament were now game to face the challenge of the golf courses in Spain, and they have now decided to host the next (Seventh Chandigarh Golfing tour) for NRIs in Spain, next year.

Interestingly, while Spain is looking at hardselling its golf courses to Chandigarh, Armenia, which is in the process of developing golf tourism, is examining the three golf courses in this region (Chandigarh, Chandimandir and Panchkula) so that they can set up similar courses in Armenia. 

We have decided to explore and emulate the design of the golf courses and the golf range here. Shortly, we will get a delegation here

Karen Hovhannisyan, representative, Golf Federation of Armenia

BRIEFLY

BSNL awarded
Chandigarh: BSNL Haryana has bagged three national awards for energy conservation in the office building section for the year 2010. The second prize has been given to the main telephone exchange building, Ambala city. — TNS

SBI Life
Chandigarh: SBI Life has launched a series of products that include low premium traditional plan - Saral Life, a child ULIP - Smart Scholar and Smart Elite - targeted towards high net worth individuals. — TNS

Food inflation rises
New Delhi: Rising for the second week in a row, food inflation reached 9.46 per cent during the week ended December 4 as vegetables turned expensive, even as RBI today paused further hike in policy rates in view of overall moderation in the price rise. — PTI