Pedalling to new Markets

From a modest beginning of mere 639 bicycles in the year 1956, Hero Cycles produces over 19,000 cycles a day, the highest in global reckoning. With 48% share of the Indian market, this volume has catapulted Hero in the 'Guinness Books of World Records' in 1986. Since then Hero Cycles has been able to maintain its leadership in the cycle manufacturing industry. Rolling out one bicycle every nine seconds, Hero Cycles has been setting new sales records every year. Pankaj Munjal, Chairman & MD, Hero Cycles is on the driver’s seat to take the global growth trajectory ahead as he says, “We are now looking forward towards global dominance and have already set the balls rolling into that direction. My focus is to ensure that the business I have inherited conquers new boundaries and tails new horizons every day.” Here’s an excerpt from the exclusive interaction with the visionary himself on his envious plans to make Hero Cycles the global leader…

Hero Group as a whole has had a very inspirational growth story. Kindly highlight pathbreaking transformations of Hero Cycles?

Hero Group has been one of India’s most trusted brands for several decades now. Hero Cycles has been a market leader in the standard bicycle category for three decades. It was in 1986 when Hero Cycles was first named as the largest producer of bicycles by the Guinness Book of world records. Since then, the company has not only maintained its lead in the market but has constantly endeavoured to improve its products through persistent research and innovation. Hero Cycles currently rolls out one bicycle every nine seconds and has been setting new sales records each year.

Keeping pace with the changing needs of the time, Hero Cycles has entered the premium bicycle segment in recent years. In 2012, we launched UT Edge lifestyle brand; in 2015 we acquired 'Firefox Bikes' further cementing the company’s position in the premium bicycle segment. In 2016, the launch of premium Hero Sprint Pro series augmented Hero’s position in the lifestyle biking segment. With these strategic moves, the company now commands dominance in the double-digit growing premium segment while continuing to maintain its leadership in the mass segment with over 45% share. In March 2016, Hero Cycles acquired a majority stake in Sri Lankan bicycle maker BSH Ventures. This acquisition has given us a plant that will manufacture for most of our overseas brands. Earlier in 2015, Hero Cycles had acquired a majority stake in UK-based Avocet Sports to enter the high-end bicycle market of Europe. We have clearly set our sight at global markets.

With such a strong lineage, how difficult is it to create a niche for yourself and ride the growth bandwagon?

Lineage or not, it is always difficult to create a niche for yourself in a highly competitive market, and it requires a high degree of passion and commitment to your business. It requires constant thinking and re-thinking of ideas and objectives, constant innovation, a far-reaching vision that takes several horizons into account and a regular tab on the pulse of the global market. You can never be complacent and rest on your laurels. If you have a strong lineage, expectations are even higher. 

At Hero Cycles, our motto is to never rest on our laurels. We keep re-inventing ourselves. We are a market leader in India with a clear lead but we do not want to stop at this. We are now looking forward towards global dominance and have already set the balls rolling into that direction.

How was your entry into the business? How difficult has been the journey to follow the footsteps of your forefathers and carry forward the legacy?

When you are entrusted with a great legacy, it puts a lot of onus and responsibility on your shoulders to not founder it. While my entry into the business was smooth, given that Hero has been our family business, the journey has been full of challenges. In fact, every day poses a new challenge. Our competition is not only with other industry players but more so with our own self. How much forward can we take the legacy is a question I ask myself frequently; and the answer I receive is ‘infinitely ahead’. My focus is to ensure that the business I have inherited conquers new boundaries and tails new horizons every day.

Hero Cycles is touted as the number one cycles manufacturing company. What are the USPs and how do you plan to keep the momentum going? Who would you give the credit to?

The USP is innovation and original designing. Our products are designed and created after intensive research on the ground that seek to lay down in minute detail what the customer is looking for. Keeping the customer comfort at the top of our innovation priority has helped us maintain a clear edge. The credit for this goes to our researchers and innovators who constantly strive to improve our products and add new dimensions to it.

Cycling is not mere a hobby these days. It has become a way of healthy living. With never seen before growth projections, how are you poised to march ahead?

Some major social issues that concern all of us today include congestion on our roads; India being the diabetes capital of the world; and environmental degradation. Bicycles eliminate all these problems. Several European cities have made great strides towards encouraging use of bicycles on roads. Amsterdam, Copenhagen and Berlin are some examples. Stockholm has become a car-free city. Urban mobility is going to see a shift towards greener transport in India as well as there is greater realization today about the environmental impact fossil fuel burning is having.

At the same time, sports and lifestyle cycling is also catching up in a big way. A large number of urban dwellers are shunning their gym memberships and turning to the eco-friendly two-wheeler instead. A lot of it has also to do with the availability of premium bicycles that are highly comfortable and ride worthy. The way we have known cycles and their shapes are constantly evolving. We have cycles ranging from Rs 3,000 to Rs 4 lakh. We are at the cusp of a major cycling revolution in India, and Hero Cycles is ready to meet the need arising therefrom, with products for all age and financial brackets.

What’s your marketing strategy or brand positioning to spread this message and reach out to a larger audience with varied product range?

We position our brand as a provider of an environment and health friendly transport facility. As part of our initiatives to promote cycling as a clean and healthy activity, we have also partnered IIFA in recent times where leading Bollywood personalities endorsed the need for clean transport alternatives.

Cycling industry as a whole is growing by leaps & bounds. Undoubtedly you are the leader to traverse that growth. How do you see the industrial dynamics shaping up in the years to come?

Cycling industry is growing on two parallel tracks. As more people in rural areas move up the income chain, they tend to invest in purchasing a bicycle, which helps increase their efficiency. On the other hand, in urban areas, cycling is emerging as a fitness cum recreation activity. The first segment spurs growth for standard bicycles, while the second segment spurs growth for luxury bikes. Given concerns for the environment, urban mobility is also going to see a change. The industrial dynamics are shifting towards innovation to produce a very wide range of bicycles suitable for all kinds of users – standard, fitness, mountain bikes, EPAC, ladies and kids. We believe the bicycle industry will see huge growth in the near future.

How is technology spearheading the growth of the company?

Hero Cycles is not just a market leader, it is a leader in technology as well. Hero also has some of the best technology partners in the world. The company made a dazzling debut at the last Euro Bike Show where it launched new a series of new brands under the premium category: Ryedale, Denovo, Lectro, and Riddick. Adding another feather to its cap, Hero Motors’ transmission division has also bagged the pivotal business of Ducati Motorcycle for making gears of its premium bikes recently.

You are aiming to become the number one Recreation transmission company. How do you plan to do that?

At Hero Motors, we are working on tapping the best technology from across the world and channelising it, along with local R&D towards, towards producing world class components and parts. Hero has the best technology partners. In Germany, we have ZF (a joint venture with ZF Friedrichshafen, a worldwide supplier for driveline and chassis technology). Besides ZF, Sumitomo, Showa, Honda Foundry are our other technology partners. These partners give us an edge in technology know-how, while our manufacturing centres in India provide us low-cost manufacturing capability. We are nurturing our own R&D now. We have a small setup in Austria, and we have our engineers placed there close to the customer. That story is building up now, and promises to reap rich dividends in times to come.

Kindly elaborate on your stint abroad. How different are the dynamics overseas?

The dynamics of the industry vary from country to country depending upon which stage of development a country is in. We have an expanding business in Europe and I keep travelling to European countries to scout for new opportunities and business interests. In Europe (as in many other developed countries), the lifestyle bike segment is seeing a huge surge, spurred by a growing health consciousness and efforts to make cities bicycle friendly.

How can India work on skill development and remain competitive to be in line with ‘Make In India’ initiative?

Skill development is a key cornerstone of ‘Make in India’ initiative. Central Government must work with state governments to establish a series of skill development centres across the country, preferably in second tier towns and cities where there is a large latent population waiting for opportunities. By encouraging companies and investors to set up manufacturing units in smaller towns where cost of labour is cheaper than in large urban areas, we can retain our competitive edge.

Kindly give a sneak peek into the new launches from Hero Cycle’s stable…

Last year, we introduced a new lifestyle biking product line called Hero Sprint Pro, which is aimed at the urban fitness lovers. New products are being added to this product line, which has received a tremendous response in urban India. Recently, we also introduced the Lectro range, which is the first in a series of Hero’s European brand launches in the Indian market. Lectro offers a range of EPAC’s (Electric Pedal assisted cycles) for the Indian market. Our dedicated European brands under the premium category include Ryedale, Denovo, and Riddick. In future, we are planning to introduce these brands into India as well.

You have been creating milestones year on year in terms of performance, production and profits. It seems you are competing with yourself. What’s your ultimate vision and target?

Our vision is to spread our presence across the world and turn into a global bicycling major. 

Cycling superhighways seems to be an incredible concept. Your views on the same…

Uttar Pradesh recently unveiled India’s first cycling superhighway stretching over 200 kms. It is indeed a very good concept which can do wonders on the collective environmental and health conditions of Indians. However, for that to happen, this concept has to be embraced across cities and states. We sincerely hope such initiatives are replicated across India. With so much happening on the economic front, still we are yet to see the true results.

Where do you think, we are lagging and what can be done to achieve the tag of ‘Manufacturing Superpower’?

For India to become a manufacturing superpower, we need concerted efforts on multiple fronts. Liberalisation of the FDI regime is a welcome step. We also need to ensure that starting manufacturing units becomes highly easy, and that skilled workforce is abundantly available. Additionally, there is a need for radical improvement in physical infrastructure and concreted efforts to maintain a cost advantage.

Please comment on various initiatives taken by GoI and their slated impact on the economy…

The government’s initiatives such as Make in India, Skill India, Startup India, etc., are positive measures that if implemented according to the book can bring about a radical transformation of the economy in the next few years.

However, the government has to ensure that the promising initiatives on paper are effectively translated on the ground.

Your views on the impact of soon to be rolled-out GST…

GST has been a much-awaited economic reform that promises to boost economic growth significantly. It would help speed up movement of goods between states, as well as help reduce cost of capital goods. Additionally, it would also bring about a seamlessness when it comes to the taxation infrastructure.

What are the ambitious plans in the offing?

We have recently unveiled a Global Design Centre in Manchester, which aims to harness some of the best designers to work on creating new designs and innovations to bring about a revolution in the cycling industry. This is one among a series of ambitious plans that we hope will catapult Hero Group into the global major league in the coming years.

UP, CLOSE AND PERSONAL

How do you motivate your team? By leading them from the front and having a long-term vision on talent. I try to ensure that their efforts are recognised and valued, even if they do not yield any significant gains in the immediate future.

What’s your passion? Cycling has become one of my great passions in recent years. I have taken to cycling in a big way and this has helped me radically improve my fitness levels. I make sure I ride 5 to 10 kms every day. Believe me, it is cathartic.

What would be that one leadership lesson you would like to share with us? Leaders must practice not preach. What you want your team to do, you must first adopt it yourself.

Do you get time to ride bicycle? I make sure I do. I have cancelled my gym membership and have entrusted all my fitness routines to the two-wheeler.

What’s your priced possession? My Team. My Family.

What’s your success mantra? Never limit your horizons. Keep out-thinking your own self.

How do you manage the work life balance? By taking holidays with family as and when I can and by shutting down everything official when I am with my family members. I also love to cycle around with the fitness freaks in my family.