Sunil Munjal to Step Away From World’s Largest 2-Wheeler Maker to Chart His Own Destiny
Sunil Munjal decides to carve a niche for himself, steps down from Hero MotoCorp.
The Munjal family is undergoing its second family restructuring in six years. The family of late Brijmohan Lall Munjal will realign its businesses as the youngest son of the family, Sunil Kant Munjal, has decided to step away and pursue a new business interest. Sunil Munjal will step down as director and joint managing director of Hero MotoCorp, the flagship company of the Brijmohan Lall Munjal Group, on August 16 this year, the company said in a statement.
This realignment will not impact the overall promoter shareholding, strategic direction or operational management of the company.Hero MotoCorp statement to Bombay Stock Exchange
Hero MotoCorp Shareholding
As per the shareholding disclosed by the company at the end of June 30, 2016 to the stock exchanges, the promoter entities - partnership firm Brijmohan Lall Om Prakash and investment company Bahadur Chand Investments Private Ltd - together hold 34.64 percent in the group’s flagship, listed company,Hero MotoCorp. The four Munjal sons and their families each own an equal stake in the partnership firm and the firm owns 25.76 percent in Hero MotoCorp, and investment company Bahadur Chand Investments holds another 8.67 percent.
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Bahadur Chand Investments (BCI)
BCI is the holding company for the Munjal family’s investment in various sectors. Here too the shareholding is equally distributed between the families of the four brothers. The main source of revenue for BCI is interest earned on investments and dividends. For the financial year ended 2014-15, the company had a revenue of Rs 173 crore, and net profit of Rs 133.40 crore. The company’s investment book at the end of financial year 2014-15 stood at Rs 1,087 crore. According to a filing with the registrar of companies (RoC), BCI has subsidiaries or investments that are focused in the business of auto components, real estate, cold rolled steel and insurance brokerage.
Subsidiaries and Investments of BCI
- Rockman Industries Ltd.
- Easy Bill Pvt Ltd.
- Hero Realty Ltd.
- Pragati Parks Ltd.
- Unnati Industrial Park Ltd.
- Vikas Parks Ltd.
- Hero Mindmine Institute Pvt Ltd.
- Abhyuday Manufacturing and Automotive Ltd.
- Hero Steels Ltd.
- Hero Corporate Service Pvt Ltd.
- Hero InvestCorp Pvt Ltd.
- Munjal Acme Packaging Pvt Ltd.
- Hero Management Services Pvt Ltd.
The Future
Sunil Kant Munjal is the chairman of Hero Corporate Service, according to the company’s website. His daughter Shefali Munjal works closely with him in the company as executive director. In financial year 2014-15 Hero Corporate Service’s revenue was Rs 51. 46 crore and profit Rs 14.68 crore.
Hero Corporate Service has five strategic businesses:
- Insurance Distribution - in FY15 its interest income was Rs 27,700
- Hero Realty Ltd. (Real Estate) - in FY15 its revenue was Rs 91 crore and loss was Rs 40 crore
- Hero Management Service Private Ltd. (BPO) - in FY15 its revenue was Rs 55.4 crore and loss was Rs 61.3 lakh
- Hero Steels Ltd. - in FY15 its revenue was Rs 750.6 crore and profit Rs 2 crore
- Hero Mindmine Institute Pvt Ltd. - in FY15 its revenue was Rs 11.5 crore and profit Rs 11.5 lakh
This is also an exciting time for me to consolidate and strengthen some of the existing businesses and to explore new opportunities that are close to my heart.Sunil Kant Munjal, Joint Managing Director, Hero MotoCorp
His comment today suggests that Sunil Munjal may consolidate and grow some of the businesses that he has incubated as part of Hero Corporate Service Pvt Ltd. The largest among the five businesses is Hero Realty, that has three subsidiaries, according to the 2014-15 balance sheet of BCI filed with the registrar of companies.
- Pragati Parks Ltd.
- Unnati Industrial Park Ltd.
- Vikas Parks Ltd.
These subsidiaries are currently undertaking projects in Haridwar, Uttarakhand, and Ludhiana, Punjab.
Sunil Munjal is expected to announce his next moves in the coming weeks.
The First Restructuring
The Munjal family initiated the first restructuring in May 2010. The businesses and assets were realigned among members of the four founding members of the Munjal Group - Brijmohan Lall Munjal, Satyanand Munjal, Om Prakash Munjal and Dayanand Munjal (represented by his son, Vijay Munjal). The realignment also transferred the cold rolled steel division of Hero Cycles to the Brijmohan Lall Munjal Group.
After the restructuring, the Brijmohan Lall Munjal Group retained the lion share of ownership in Hero MotoCorp - 26 percent of the 29 percent stake that the Munjal family owned prior to the restructuring. The Brijmohan Lall Munjal Group gradually increased its stake in Hero MotoCorp to 34.64 percent at the end of June 30, 2016.