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The country’s largest bicycle maker Hero Cycles is targeting a higher-than-industry growth this fiscal on the back of growth across categories, new products and retail expansion.
During the first half of this fiscal, the company’s volumes grew 21 per cent compared with the industry’s 8-9 per cent. The company expects similar growth in the second half too. In FY18, the company sold about 5 million bicycles, while its total production capacity is under 7 million.
“Our plant in Sri Lanka is feeding us in a big way to meet the demand for products priced above ₹12,000 and we are ramping up the capacity from 13,000 bicycles a month to 20,000 by April/May,” said Pankaj M Munjal, Chairman and Managing Director of Hero Cycles, during the inauguration of a Hero Sprint Store in Chennai.
With its partner Just Buy Cycles, the company has added six such stores in Chennai, taking the number to 250 nationally. It plans to open 400 stores by the end of this fiscal.
Market share
“Our market share fell to 27 per cent two years ago due to the effects of demonetisation, particularly in the rural areas, and during the GST implementation period. But we have recovered well and our market share has increased to 35 per cent and surely we should aim for 39-40 per cent in the next few quarters,” said Munjal.
The South will be the key focus region to boost market share as the company manages to maintain about 40 per cent share in North.
“In the South, particularly in Chennai and Bengaluru, people are willing to spend more for health, recreation and other activities. Our new ebike (electric pedal assisted) Lectro, priced at about ₹27,000, is getting accepted like a second car in families for short distance commuting. We expect Chennai and Bengaluru to drive the adoption of such e-bikes,” said Munjal.
Eyes acquisition in Germany
While outlining the group’s ongoing ₹1,200 crore capex plans, he said, Hero Cycles was also looking at inorganic growth and scouting for an acquisition in Germany.
“Since e-bike is growing in Europe, we want to learn from Europe, design in Europe and improve in India. We are exploring e-bike space for a possible deal. An e-bike manufacturer in Germany is our target. It’s not that we plan to acquire and have full control. We would look at any win-win deal under which both can work and grow,” he explained.
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