Hero vs Hero, The Munjal’s Legal Tiff For The Hero Brand

How many of you heard about Splendor, Passion pro or HF deluxe? Almost all? Yes, we are talking about the two wheeler range, provided by Hero Motocorp. Now, suppose you have to choose a good electric two wheeler available in the market, how many of you will buy Hero Electric? Many of those who nodded their heads in yes have done so because of the trust Hero Motocorp won by serving goods in the two wheeler category for a long time.

An interesting plot twist here is that both Hero Motocorp and Hero Electric are different companies and there is a court case over who will be using the name hero for the electric two wheelers. Hero Motocorp does not want anyone to use the Hero name and brand value to acquire the futuristic electric market while Hero Electric is proclaiming a family arbitration that gives it the right to use the Hero name for the Electric Vehicle Segment.

India’s Electric Vehicle Sector

In the Highly progressive Automobile sector, Electric Mobility plays a vital role. On 23 March, 2022, Parliament was informed that a total of 10, 60,707 electric vehicles have been registered in India. The forerunners of the electric vehicle industry in India are Ola Electric, Tata Motors, Simple Energy, Okinawa, Ather Energy, and Hero Electric.

Hero Motocorp

Hero MotoCorp Limited, formerly Hero Honda, is an Indian multinational motorcycle and scooter manufacturer headquartered in New Delhi. The company is the largest two-wheeler manufacturer in the world, and also in India, where it has a market share of about 37.1% in the two-wheeler industry.

Early steps for the Foundation of Hero group were taken in the 1940s, when Brijmohan Lall Munjal, along with his three brothers started his work as a bicycle maker. The group formed and started working officially from 1956.

Hero MotoCorp’ annual revenue was 31,517 crores INR US$4.2 billion in 2021. It trades with the name HEROMOTOCO in India’s NSE. Headquartered in New Delhi, it was founded on 19 January 1984 at Dharuhera by Brijmohan Lall Munjal. The name of its parent organisation is Hero Motors Company, and some of its subsidiaries are HMC MM Auto Limited, HMCL Americas Inc,Colombia  SAS, HMCL Netherlands B.V.,Niloy Bangladesh Limited, Hero Tech Centre Germany GmbH.

As the time passed, the brand, Hero, enabled itself into other sectors like Bicycles, Motorcycles, Healthcare, among others and became the most renowned and trusted name in India and other parts of the world.

An Innovation backed, New Delhi based company under hero group, Hero Motocorp, formerly Hero Honda, delivers some of the best two wheelers in India.

Having been the most successful two-wheeler manufacturer in the world since 2001, Hero Motocorp has maintained the title for the past 20 years. The name of the company was changed from Hero Honda Motors Limited to Hero MotoCorp Limited on 29 July 2011. The new brand identity and logo of Hero MotoCorp were developed by the British firm Wolff Olins.

Hero MotoCorp, headed by Dr. Pawan Munjal, has expanded to 40 countries across Asia, Africa, and South and Central America. With employees from India, Bangladesh, Colombia, Germany, Austria, Japan, France and Bangladesh, Hero MotoCorp is truly a global company.

The company claims to have over 100 million happy customers across the globe. Their website also mentions that Hero Motocorp is the biggest market leader in India having more than 50 per cent market share in the domestic market.

Hero Electric -The Ecotech part

In 2010, when all four brothers got their shares in the family business, Kross Bikes, Hero Exports and Mediva that comes under Hero’s EcoTech, was given to Vijay Munjal.

Hero Electric, as mentioned on their website, claims itself to be India’s first and largest manufacturer of two wheelers in the electric vehicles industry.

Hero Electric currently has 13 products in the market which helped it to achieve a market share of almost 42 per cent. It was also in headlines recently as it raised about INR 220 Cr in growth capital. The company claims to use this newly raised funding for expansion of the product line and establishment of new plants.

Hero Cycles from the Hero Group

Hero Cycle Limited is another company under the Brand name Hero. This division is led by Pankaj Munjal, son of Om Prakash Munjal. The company is based in Ludhiana, Punjab, India and works in the field of manufacturing bicycles and related accessories. Under the leadership of Chairman and Managing Director Pankaj Munjal the company has enabled itself to deliver more than 18, 000 bicycles per day. In 2016, this ISO ISO9001 and ISO14001 certified company exported to over 70 countries world-wide. Subsidiaries of Hero Cycle Limited are Firefox, Munjal Hospitality Pvt Ltd, Avocet Sport Limited and BSH Ventures.

A Family Agreement

In 2010, a pact was made to divide the multibillion-dollar Hero group’s business comprising a number of verticals including automotive among various family members.

As per the agreement, Naveen Munjal, cousin of Pawan Munjal Managing Director of Hero Electric Vehicles Pvt Ltd, was given the rights to use the Hero brand for selling electric vehicles in the domestic market.

The agreement also clears that any other member in the family shall not use the Hero brand for any new venture competing with the existing businesses of the other family members.

How the chaos started?

As the electric two-wheeler market is experiencing exponential growth, everyone from well settled players to start-ups, are looking to tighten their grip over the market. Some top names in the industry are Ola, Okinawa, Ather, Ampere etc. Two names, Hero Motocorp and Hero Electric can be seen trying to grab the market share and brand value of the Hero name.

Problem started when Hero MotoCorp, the flagship business of the Munjal family started developing two wheeler electric scooters. However the company has not yet announced plans for their commercial launch.

Hero started co-developing models with Gogoro and also independently at its R&D centres in Rajasthan in India and Stephanskirchen, Germany, Germany. The product range will include both fixed-battery electric scooters and swappable battery versions. Meanwhile, the manufacturer has also invested in Ather Energy, albeit does not share technology or components with the same seeing this Naveen Munjal pleaded Delhi high-court to stop Pawan Munjal, promoter and chairman of India’s largest ICE two-wheeler company, Hero, from using the Hero name for entering the electric vehicle segment under a Family Settlement Agreement of 2010.

Vijay Munjal and his son Naveen Munjal, own Hero Electric, the largest electric two-wheeler company in India right now. Vijay has sought an injunction on Pawan Munjal, promoter and chairman of Hero MotoCorp, who is using the brand name for electric two-wheeler products.

This action by Hero Electric is significant as NITI Aayog is considering a proposal to ban all internal combustion engine-driven two-wheelers under 150cc by 2025 and three-wheelers by 2023.

Hero MotoCorp, the biggest maker of two-wheelers below 150cc, along with Honda Motorcycle and Scooter India Pvt Ltd, will be hit the most, if such a blanket ban or a partial shift to electric wheelers comes into effect.

According to a 2017 study by the Automotive Component Manufacturers Association of India and German consulting firm Roland Berger, almost 34.5% of total two-wheeler sales volume in India has the potential to be converted into electric.

Hero MotoCorp planning to unveil its electric two-wheelers (E2W) under the ‘Hero’ brand was unbearable for Hero Electric. Currently, Hero MotoCorp is all set to open a manufacturing facility at Chittoor in Andhra Pradesh. The company has publicly stated that it aims to build an entire EV ecosystem from technology to products, manufacturing to sales, service, customer care, operations, and innovation.

Consequently, Naveen from Hero Electric stated that Hero MotoCorp’s entry into the electric two-wheeler segment is false and against the family division of businesses which was founded by Brijmohan Lall Munjal. He also named different areas of business that were given to different parts of the family. Formerly, the then-profitable two-wheeler business had gone in the hands of Pawan, while Naveen and his family had to somehow manage in the nascent electric two-wheeler business. When the family pact was made, nobody imagined that to what extent the electric two-wheelers industry would go to India. Hero Electric was the segment leader when the EV revolution hit Indian roads having sold about 46,260 electric two-wheelers in 2021.

Seeing Pawan try to use the Hero name for Electric two wheelers in India, Naveen took a safe yet defensive step. “We have the exclusive ownership of the brand ‘Hero’ for non-polluting, green and electric or environmentally friendly vehicles for personal or commercial use. Over the past decade and a half, we have worked tirelessly to further build the legacy of the brand ‘Hero’ by journeying into electric and empowering India towards a greener future,” Naveen stated in a public talk, earlier this year, adding that he will be doing his best to protect rights on the brand and stop any infringement of their family agreement. We have always worked as per the family agreements, needless to say that we will abide by the family pact and the law of the land.”

Latest development in the Munjal vs Munjal Hero brand case

Hero MotoCorp, the country's largest two-wheeler maker, had approached the honourable Supreme Court to challenge the Delhi High Court's order with the argument that it was not a party to the arbitration agreements. However the Supreme Court refused to interfere in the Delhi High Court order on arbitration.

An official at Hero MotoCorp after the order was passed said, "The Honourable Supreme Court after hearing counsel, has ordered that the Arbitral Tribunal should hear the objections of Hero MotoCorp, uninfluenced by the observations of the High Court. The Supreme Court accordingly, declined interference with orders of the Delhi High Court while maintaining that the arbitration tribunal should decide uninfluenced by the High Court's observations.”

In the month of February 2022 Naveen Munjal led Hero Electric had withdrawn its petition from the Delhi HC, seeking an injunction against Hero MotoCorp for using the brand 'Hero' for electric vehicles.

An arbitral tribunal was appointed by the Delhi High Court to resolve the dispute between Hero MotoCorp and Hero Electric. The tribunal was composed of  three retired judges, Indu Malhotra, Dipak Misra and Indermeet Kaur.

In the Supreme Court, Advocates Jaideep Gupta and Shally Bhasin were representing HeroMotoCorp, while Vijay Kumar Munjal was being represented by senior advocate Gopal Subramaniam and the law firm Khaitan & Co. Claims and counter-claims over brand use had begun after Hero MotoCorp announced plans to launch an EV. In March 2022 Hero MotoCorp unveiled 'Vida, Powered by Hero' as the new identity for its emerging mobility solutions amid the continuing legal battle over the use of the 'Hero' brand for electric vehicles. The first of the Vida products which was an electric vehicle is to be officially unveiled on July 1, 2022, to coincide with the birth anniversary of Brijmohan Lall Munjal the late founder of Hero MotoCorp.

On 24 March, 2022 Hero MotoCorp Ltd stock gained over 1% trade after the auto-industry submitted a clarification statement regarding  IT raid conducted at Hero MotoCorp Chairman Pawan Munjal's residence and office.

As per the clarification statement, the company said, "Officials from the Income Tax department visited two of our offices in Delhi and Gurugram and the residence of the Chairman & CEO Dr Pawan Munjal on Wednesday. We have been informed that this is a routine inquiry, which is not uncommon before the end of the financial year." The statement further read, "We reassure all of our stakeholders that it continues to be business as usual. We at Hero MotoCorp are an ethical and law-abiding corporate, and maintain the highest standards of impeccable corporate governance. In keeping with this philosophy, we are extending our full cooperation to the authorities.”