Niranjan Shah, a civil engineer, who pioneered famous high-rise buildings in Baroda, is a broadcaster in India and the USA and a prolific writer. Under “A Letter from Grandpa.” he has been writing since 2002 on India’s historical, philosophical, and literary heritage. He can be reached at firstname.lastname@example.org
By Niranjan Shah
My dear Snehi and Sohan:
Hero Cycles Limited of India is a Guinness Book Record holder since 1986 as the world’s largest manufacturer of bicycles.
Engineering Exports Promotion Council has awarded Hero Cycles with the Best Exporter Award for the last 28 years in succession. Hero Group Management style has been acclaimed by World Bank and BBC, UK. Hero Group is discussed as a case study at London Business School, UK, and INSEAD, France. World Bank has acclaimed Hero Cycles as a role model in vendor development based on a world-wide study. Boston Consulting Group has ranked Hero Group as one of the top 10 Business Houses on Economic Value, in India.
The Hero Group is recognized as a long-term partner and an ideal employer. Hero Group’s partnership with Honda Motors, Japan, is over 21 years old. Hero Group’s partnership with Showa Manufacturing Corporation, Japan, is over 19 years old. The Group chairman, received the coveted Ernst & Young Entrepreneur of the Year award for 2001. Hero Honda Motors was ranked third amongst top Indian companies in Review 2000 of recieved Asia’s leading companies award (2004) given by Far Eastern Economic Review.
During the 1980s, the company introduced motorcycles that were popular in India for their fuel economy and low cost. A popular advertising campaign slogan “Fill it — Shut it — Forget it” emphasized the motorcycle’s fuel efficiency and helped the company grow at a double—digit pace since its inception.
India became the second largest two-wheeler manufacturer in the world and starting in the 1950s with the Automobile Products of India (API) that manufactured the Lambrettas and Bajaj Auto Ltd. with its association with Piaggio of Italy (manufacturer of Vespa scooters) as the largest manufacturers within the country. The license raj that existed between the 1940s to 1980s in India did not allow foreign companies to enter the market and imports were tightly controlled. This regulatory maze, before the economic liberalization, made business easier for local players to have a seller’s market. Customers in India were forced to wait up to 12 years to buy a scooter from Bajaj. The CEO of Bajaj commented that he did not need a marketing department, only a dispatch department. By the year 1990, Bajaj had a waiting list that was 26 times its annual output for scooters.
The motorcycle segment had the same long wait times with three manufacturers — Royal Enfield, Ideal Jawa, and Escorts. Royal Enfield made a 350cc Bullet with the only four-stroke engine at that time and took the higher end of the market but there was little competition for their customers. Ideal Jawa and Escorts took the middle and lower end of the market respectively.
In the mid-1980s, the Indian government regulations changed and permitted foreign companies to enter the Indian market through minority joint ventures. The two-wheeler market changed with four Indo-Japanese joint ventures: Hero Honda, TVS Suzuki, Bajaj Kawasaki and Kinetic Motor Company (Kinetic Honda). The entry of these foreign companies changed the Indian market dynamics from the supply side to the demand side. With a larger selection of two-wheelers on the Indian market, consumers started to gain influence over the products they bought and raised higher customer expectations. The industry produced more models, styling options, prices, and different fuel efficiencies. The foreign companies and new technologies helped make the products more reliable and with better quality. Indian companies had to change to keep up with their global counterparts.
Expansion into the automotive segment started with the setting up of Majestic Auto Limited, where the first moped designed entirely in India, Hero Majestic, went into commercial production in 1978. Hero Motors, in collaboration with Steyr Daimler Puch of Austria introduced another moped, the Hero Puch, in 1980. Hero Honda Motors was established in 1984 to manufacture 100 cc motorcycles.
— Grandpa’s blessing