Monday, January 14, 2013

Game for the premium Prize?

this volume player stunned market watchers with its aggressive attack. pawan chabra finds out how hero honda achieved more than what was expected of it

The year 2008-09 hasn’t been too pleasing for Rajiv Bajaj. And not without reason, as his company Bajaj Auto registered negative y-o-y growth of 22% for the year ending March 31, 2009. On the contrary though, its arch-rival Hero Honda has been making merry, having strengthened its grapple hold over the two-wheeler industry during the year gone by.

A watershed year is how you would describe 2008-09 for Hero Honda, for in that time period, it not only crossed a significant landmark by selling 25 million units, but also consolidated its leadership with a 60% market share in the two-wheeler segment. And to understand that all this came at a time when all competitors were scrambling about, just to protect their bottomlines!

While on one hand, Hero Honda has proved its mettle as the indisputable leader in the Indian two-wheeler segment, it also became the world’s largest manufacturer of two-wheelers in a calendar year. And to talk about the joyride to the bank, the company recorded a healthy Rs.123.6 billion in revenues for FY’09 (registering a growth of 20%), while its bottomlines grew by 33% at Rs.12.8 billion y-o-y. Even during the most recent quarter ended June 30, 2009, the company posted net profits of Rs.5 billion. This figure was way higher than the Rs.2.7 billion profits posted during the same quarter a year back. The question to be asked here is – how did Hero Honda manage to achieve such greatness during times when all that the industry could stand witness to with respect to their bottomlines was ‘erosion’?

Source : IIPM Editorial, 2012.
An Initiative of IIPMMalay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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