PANKAJ MUNJAL HAS A PREDICTABLE ROUTE TO WORK EACH MORNING. IT IS A SEVEN-MINUTE WALK AND GETS A LITTLE LONGER IF HE DECIDES TO STOP BY TO PICK UP SOME COFFEE AT AN OUTLET EN ROUTE. HE RARELY CALLS FOR A CAR UNLESS IT IS ABSOLUTELY NECESSARY.
Just before you start wondering if all this is true, let’s get to the point. The man spends most of his time—at least nine months a year—in London. It is for a strategic reason since it is the prefect locale given his desire to get a large chunk of the European e-bike market. While he walks to work, evenings and weekends are reserved for e-bike rides. That’s how much he loves his own business and what he makes. As Chairman and Managing Director of Hero Cycles, Munjal sees a huge opportunity in the continent since the market is fragmented and most governments are pushing the cause of this more environment-friendly mobility option. “We are already among the top five brands in Europe and there is tremendous room for growth,” he says, over a Zoom call from his Ludhiana factory where he is parked for a couple of days.
For FY21, he reveals (the unlisted Hero Cycles has not filed its numbers yet), exports alone brought in ₹700 crore. Most of that comes from Europe and is up 2X from the previous financial year. “There is no reason why we will not hit €200 million [over ₹1,700 crore] from exports over the next couple of years,” he says, with absolute calmness. If those numbers sound ambitious, it must be borne in mind that Munjal has quietly gone about cracking the European market over at least six years. That perseverance is paying off.
BEING AT IT
Hero Cycles as a brand has been in India since 1956. It started off making components before going on to become one of the largest bicycle manufacturers globally. On the face of it, Munjal has little to complain about. “We are sitting on a 45 per cent market share [in India] but that also means a need to look at other growth avenues,” he says bluntly.
The baby steps in Europe were taken in mid-2015 when his company acquired Avocet Sports, a UK-based distributor. Avocet was among the top three players in the business and offered a range cutting across categories such as mountain, roadster and road. Much as Hero already did export cycles to parts of Asia, Africa and Europe, this was a much bigger play in what would turn out to be its largest market. Two more buyouts followed, the first being BSH Ventures, a Sri Lanka-based company (in 2016) that came with a plant making premium products. With a distribution presence in Europe, the manufacturing leg was complementary. Of course, there were also exports going out of the Ludhiana factory.
Last year, Hero Cycles picked up a stake in HNF Nicolai, a German premium e-bike manufacturer. The plan is to invest in HNF by way of design and supply chain, among other areas. Importantly, HNF has an R&D centre in Berlin. “There is obviously a clear strategic rationale in our buyouts. Today, we can capitalise on low manufacturing costs out of our Sri Lanka operations and top up with our ability to innovate in Germany [the biggest e-bike market in Europe],” explains Munjal. Again, the story in Europe is one that has moved in a phased manner—first understand retail and then look at manufacturing with the ability to get the best out of facilities housed in other locations.
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