FEBRUARY, 2020, JAIPUR
Thick fog, and an air of anticipation, gripped the Pink City. Hero MotoCorp, the world’s No 1 two-wheeler maker, was about to unveil its ‘rejuvenated vision’, and mission to ‘be the future of mobility’. Global distributors, investors and stakeholders, who had swarmed into Hero MotoCorp’s research and development centre in Jaipur on February 18, expected something spectacular. And it turned out to be true: Pawan Munjal, chairman & managing director and CEO of Hero MotoCorp, announced an investment of ₹10,000 crore into research & development (R&D) for alternative mobility, new product development, facility expansion and brand building across the globe. The message was clear: The maker of Splendor and HF Deluxe bikes and Activa scooters, which was grappling with a slowdown and muted consumer sentiment over the last two years, was shifting gears.
The sense of anticipation didn’t end there—at least not for the 64-year-old Munjal. But he didn’t foresee good tidings. Covid-19 was rapidly beginning to spread out of China, reaching the US, Western Europe, Australia, Canada and closer home, Singapore, Thailand and South Korea. India had reported its first case on January 30, but few saw the pandemic that was coming.
Munjal began preparing for the worst. For starters, he shunned the handshake, preferring to greet guests with the traditional namaskar. By the end of February—almost a month before India went into a nationwide lockdown—he set up a Business Continuity Taskforce with his leadership team. A sense of urgency gripped the top brass at the corporate headquarters in Delhi.
“We had started preparing even before the lockdown was announced,” Munjal tells Forbes India. Over the next couple of months, two-hour video meetings with the taskforce became a daily ritual, with the chairman also holding digital town halls with employees, suppliers and investors, among other stakeholders. In one of those town halls, he played the galvanising chartbuster of Billy Ocean: ‘When the going gets tough, the tough gets going’. “I have been playing all sorts of numbers, and rallying people around themes and slogans,” he says. “And it worked.”
Munjal’s ability to sense what’s coming perhaps first came to the fore a decade ago when Japanese joint venture partner Honda and he parted ways. The chairman knew a solo ride would be possible only if he invested in technology. And Hero MotoCorp is today a leader by far—the $600 million Munjal pumped into R&D between 2011 and 2019 has a lot to do with that.
In two days of March, the company shut down all its factories and offices much before the national lockdown. April was a washout, and the months ahead were looking no different.
Then came June. With dispatches of over 4.5 lakh units to dealers, Hero MotoCorp had grown four times over May. And, if that looked like a one-off courtesy of pent-up demand, July saw a 14 percent growth over June. More significantly, Hero MotoCorp had achieved 95 percent of its July 2019 sales.
Two months, of course, do not make a summer, but Munjal will take pride in the fact that his company gained share in a contracting market. In the April-June quarter, its bike share in the domestic market crossed 55 percent, its highest over the last 31 quarters; in scooters, it gained 4 percentage points, taking its share to 11 percent, again a first over the last many years. Overall, the two-wheeler major has upped market share to 41 percent, a jump of 5 percent over a year ago.
“There is a clear uptick in customer sentiment,” says Munjal. Retail sales have been improving week-on-week, although he declines to share any forward guidance on volumes. “The reason for our current performance is that we anticipated the crisis ahead of the curve.”
Munjal anticipated another trend that’s proved to be invaluable in the turnaround: A rural recovery before an urban one. The government’s spend and packages for rural India over the last few quarters were a big signal. “That was a clear indication that rural would bounce back faster than urban,” he says. Second, the initial stringent lockdowns were largely an urban phenomenon. And a bumper rabi harvest, and a strong start to the kharif sowing season aided by a good monsoon provided all the makings of a rural recovery.
The company has been pulling out all stops to build on this robust base by persisting with a massive rural outreach in the second half of 2019, when over 650 rural sales executives (RSEs) covered 55,000 villages. The sales army met over 1.75 lakh opinion leaders, consumers, farmers and buyers deep in the hinterland. What started last year continues in a different avatar. “RSEs maintain touch with the rural community through video and phone calls,” says Naveen Chauhan, head of sales and after-sales at Hero MotoCorp. The topic of discussion, he adds, ranges from safety measures to avoid contracting the virus, product information, retail finance, service help and exchange support. “The rural growth story is here to stay,” he adds.
Continue reading your story on the app
Continue reading your story in the magazine
Mapping The Growth Route
Reviving the economy through capital spending should be top priority; fiscal consolidation will have to wait
SaaS Startups: India-born, US-focussed
Strong cloud-based enterprise software product companies are emerging in India, but are quickly moving to the US, drawn by customers, the ecosystem and the IPO dream
Tory Burch's Survival Sketchbook
Amid a luxury fashion apocalypse, one of the century’s greatest entrepreneurial retailers (and one of America’s richest self-made women) brought us deep inside the battle to save her brand
The Rise of Venture Debt
Startups increasingly turned to venture debt funds to raise capital, making 2020 one of the best years for the VC debt industry
Playing it Smart
India has emerged as the biggest smartphone market for Samsung, 25 years after it entered the country. it now needs to keep the Chinese rivals at bay
Meet the intrepid people who have traded traditional living spaces for a life on water
Accel seeded the passion of entrepreneurs into its investing DNA to spot early winners in the consumer business. Its next big bet: SaaS unicorns
Apollo's PE Creed
With the AION Capital Partners joint venture, Apollo Global struck deals focussing on distressed assets. Now, setting out on its own in India, it has eyes on larger transactions
2020: A Big Deal Year
PE and VCs deployed $47.5 billion in Indian companies while exits hit a five-year low at $6 billion
Covid's Real Stress: Unemployment
It’s not that the government does not believe there is no problem, but it does not have a quantified number on how big the issue is
YOGA & PEACE
DEEPAK CHOPRA speaks with DAAJI about the role Yoga has to play in bringing about world peace. This is an excerpt from their conversation broadcast on International Day of Peace, September 21, 2020. That documentary is available at https://heartfulness.org/en/international-day-of-peace/.
Create the habit of meditation
CHIRAG KULKARNI, Co-Founder and CMO of Medly Pharmacies in the USA, speaks with RISHIKA SHARMA about creating a regular meditation practice, so as to make it a habit. He also shares how meditation has benefited both his personal and professional life.
SHIA'S PRIVATE TEMPLE OF DOOM!
Indiana Jones gig derailed by abuse scandal
"Food Raconteur” Ashok Nageshwaran wants to tell you a story.
THE MAKING OF A MODEL MINORITY
Indian Americans rarely stop to ask why our entrance into American society has been so rapid—or to consider what we have in common with other nonwhite Americans.
In 2017, DR. VANDANA SHIVA spoke with KIM HUGHES about the sacredness of the Earth, the work she has been doing to bring awareness and change in the field of sustainable agriculture, and the importance of understanding our interconnectedness with Nature, and how we can change the way we eat.
DIAMONDS - A Luxury Gem Steeped in Fact & Fable
The diamond is one fabled gemstone! For example, google “Hope Diamond” to see all the legends associated with just this one stone said to bring misfortune to its owners.
Brown Sugaa and Medusa
Brown Sugaa and Medusa
CHINA DEMANDS INDIA RESCIND APP BAN AMID BORDER TENSION
China on Wednesday demanded India rescind a ban on more Chinese mobile phone apps amid tension between Beijing and other governments over technology and security.