Company Description: Hero
Cycles entered the Guinness Book of World Records in 1986 for manufacturing the
maximum number of bicycles. The top rank has since then been maintained by the
company. In 1999-2000, it hit another milestone by producing more than 5.1
million bicycles. Currently, the company is producing as many as 19,000
bicycles per day and exporting them to more than 75 countries worldwide apart
from catering to the needs of domestic market. The manufacturing facility is
located at Ludhiana in the State of Punjab. Hero Cycles is part of the Pankaj
Munjal-controlled Hero Motors group.
Has Hero Cycles plant
always been running at full capacity, considering that the company is the
leading cycle maker in the country?
This company has been in existence since 1956 and today
we are the number one company in the world. As far as capacities are concerned,
we have been running at optimum capacities. Ours is among the best supply chain
managed companies. Today we are manufacturing 19,000 bicycles a day. O.P.
Munjal has been the pioneer of the group who started this cycle business in
1956. Today this group comprises Hero Cycles as the parent company. Then we
have Hero Motors which is into automotive. Then we have a joint venture company
by the name of Munjal Kiriu. Kiriu is part of Sumitomo group of Japan. Then
there is ZF Hero Chassis Systems which is a JV with ZF Lemforder of Germany. Of late the group has also
diversified into hospitality. We are soon to announce a new company branding and
a nomenclature. In January 2012 we shall
be able to finalise this.
How has the progress been
for Hero Cycles in terms of the number of cycles sold? The company has figured
in the Guinness Book of World Records
too for being the largest manufacturer of cycles world-wide.
It has always been a positive growth for the company,
except during the 1990s when there was an industrial stagnation in the country
for a few years. The company was recognised by Guinness in 1986 for being the
largest manufacturer of cycles. Since then, we have been the largest single
brand in bicycles.
The last decade has seen a
very positive growth in motorised vehicles. Has this in any way dented the
sales of cycles?
The automotive industry growth does not in any way affect
the sales in the cycle industry. The two industries are not linked in any way
when it comes to demand for the products. The two industries cater to two
different products and two different customer segments. The cycle industry has
been evolving like any other industry. The plain looking black colour cycles
are giving way to fancier cycles. All this has only led to increased sales for
the cycle industry. Today the size of the cycle industry is approximately 15.5
million units per annum, out of which we contribute 5.5 million units. The
industry is led by four leading players and there are a lot of other smaller
Every industry has seen a
major evolution in terms of technology, design, styling etc. Has your industry
too witnessed such a radical change over the years?
This industry is no different from other industries. The
law of change applies here too. The conservative looking black cycles have
given way to more stylish cycles. The cycle industry is segmented according to
the different types of cycles. First is the standard segment which is also the
mass segment and here the cycles are usually the black basic cycles. A notch
above the standard is the fancy segment.
Here the products are related to lifestyles and fashion and these come
in different colours. The third segment is the mass premium. This segment is
known more for its performance. Then
there are mountain bikes and a super premium bike category where the bikes cost
upwards of Rs.20,000 and go beyond the 1 lakh price tag. But here the volumes
are very limited. We have leadership in mass and fancy. We have forayed into
the premium segment. The growth rate in
this segment is higher compared to the mass segment. After the evolution in the
automotive industry, it is the turn of the cycle industry. The standard cycles cost around Rs.3,000. The
fancy bikes cost above Rs.3000 and go up to Rs.6000. Premium cycles cost
anywhere between Rs.4000 to Rs.15000. Above this comes the super premium.
Standard and fancy segments constitute around 40pc of total sales.
Imports of premium cycles
are happening big time in India. Any plans to enter this segment?
Hero has its own established brand images. These imported
bikes are operating in a small segment but Hero has a wider reach. We are now
entering this segment.
What about exports?
10 to 15pc of our sales constitute exports. Different companies have different
requirements for cycles depending on the terrain. One cannot generalise the
exports of cycles. Our models that are exported are market specific. If your
look at our neighbouring countries, our black cycles as well as mountain bikes
are popular. In Africa they prefer only black cycles. In Europe and USA, it’s
all modern looking cycles. Incidentally our high-end bikes do not match the
low-end of products in the UK, for example. As an industry we need to upgrade.
That’s a very positive sign because it means lots of opportunities for us to
evolve. Even in the automobile industry you will see a similar phenomenon. The
regulations in Europe are far too stringent compared to the ones in India.
By 2015, you plan to double your manufacturing
capacity? You currently have a 48pc share and Rs.1,700 crore turnover. Do you
intend maintaining your share in 2015?
Yes, we hope to
increase our market share at that time. Our turnover too would increase. The
industry is going to grow at a moderate rate. If you see the penetration level
of cycles in Europe it would be 50pc, China it is 43pc. In India it is 25pc.
There is a huge potential in the country.
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