It’s all in the family, but all is not well. The spat brewing in the Munjal family over the future of ‘Hero’, the brand name as well as the business, shows signs of getting ugly and spilling over in the coming months.
The question is over the use of the invaluable ‘Hero’ brand name. On one side is Hero MotoCorp, the world’s biggest two wheeler maker, headed by Pawan Munjal (Sales in the last three months despite a Second Wave? Over a million). On the other side is his nephew Naveen Munjal, who heads Hero Electric, the electric bike wing of the family business.
The problem? Naveen argues that Hero Motocorp’s stated intent to enter the electric two-wheeler segment goes against the family division of businesses roughly a decade ago under the direction of patriarch and Hero MotoCorp founder Brijmohan Lall Munjal. Assigning of independent areas of business to different wings of the family had seen the then-lucrative two-wheeler business go to Pawan Munjal, while Naveen and his family got the then-nascent electric two-wheeler business.
“Today Hero MotorCorp is realising the possibility of an emerging market, which in reality is an alternate market to their own and might, in turn, affect their present market share. These factors, if known earlier, would definitely have affected the decisions made at the time of separation,” analyses Shriyance Jain, managing director, University of Engineering and Technology, Roorkee.
Cut to 2021, and the writing on the wall is clear — electric vehicles (EV) seem to be the future. And obviously Hero MotoCorp wants a finger, or perhaps the whole fist, in that pie. The company, which achieved a milestone of 100 million vehicles recently, reportedly has radical plans for the next 100 million, including products beyond two-wheelers, batteries, premium mobility solutions…and electric bikes and scooters.
That is where Naveen Munjal has a problem. He famously lashed out in an interview to an online financial news platform earlier this week. “There is a very clear agreement within the family which happened when we did the restructuring in 2010 on how the brands are going to be used. There was no non-compete (clause) as far as product segments are concerned, which means anybody could get into any segment but there exists a very strong non-compete clause for brand usage,” he said.
Naveen Munjal already produces electric two-wheelers under the ‘Hero’ brand, and is the market leader in this fast expanding category, by all estimates. He has about 13 different models in the market, and recently got an additional round of funding to up his game.
But all indications are that Hero MotoCorp will launch its electric two-wheelers under the ‘Hero’ brand only. The Gurgaon giant already has a tie-up with a Taiwanese firm for this, and the first of its electric two-wheelers could even be launched as early as 2022.
Naveen now says all options are open to him. “We will have to take our own necessary steps, whatever that is available to us by law,” he said in that interview.
An email sent to Hero MotoCorp did not elicit a response. Naveen Munjal said he will put forward his views to this correspondent, but the interview was postponed due to an emergency. His comments will be added to this piece accordingly.
Jain analyses Naveen's very real worry, “With the resources available to Hero MotoCorp, they can easily become a strong competitor which will be in direct violation of the ethical standpoint of the agreement.” He feels that while Naveen can fight his powerful uncle based on the original agreement, stopping Hero MotoCorp from expanding into profitable ventures will also not be fair. “I feel the only foreseeable solution to this issue is Hero MotoCorp willing to start the EV division with a new name and not use Hero MotoCorp,” he feels.