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Most of the tributes pouring in for Brij Mohan Lall Munjal, founder and chairman emeritus of Hero Motocorp who passed away this week, talk about how this self-made man rose to become one of the 30 richest Indians. What’s more remarkable is how he managed to enrich ordinary shareholders. The Hero Motocorp (formerly Hero Honda) stock has been one of the top wealth-creators in the Indian market over the last 30 years. Those who bought into the firm during in 1984, would today find their investment of ₹1,000 is worth ₹6.4 lakh. That’s truly remarkable in a market in which many businesses don’t even survive a decade.
Munjal’s business success, which positioned Hero Motocorp as the largest two-wheeler manufacturer in the world, came mainly from his astute reading of the marketplace and his focus on one chosen line of business. As a bicycle-maker, Munjal was the first to spot the huge unmet demand for an inexpensive commuter bike in cities and towns hamstrung by poor public transport. Pioneering the concept of commuter motorcycles, Hero flagged off the extremely fuel efficient CD 100 — the first 100 cc motorcycle using four-stroke technology — and with savvy marketing (remember ‘Fill it, Shut it, Forget it’?) went from strength to strength. The Munjals resisted all temptations to diversify into unrelated businesses or make global acquisitions. The joint venture with Honda (which lasted from 1984 to 2011) is a case study on successful partnerships. This organic route to growth has helped the company hone its manufacturing efficiencies and build brands like Splendor (one of the largest selling vehicle brands in the world). The business has also avoided debt and churned out prodigious amounts of cash year after year, making the stock an institutional investor favourite.
Munjal’s story is proof that it doesn’t take a complicated business model or strategy to build a world-scale manufacturing outfit and generate opportunities for your employees, shareholders and suppliers. Simply stick to your knitting.
Editorial Consultant
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