The genesis of the thought, says Munjal, was 'the fear of failure'. The market for manually pedalled bicycles, their core business, was shrinking. “You can’t change the macro trends; you have to align with it,” he told Business Standard on the sidelines of the AutoExpo, where his company showcased a range of models that will shape its future.
These include a Straphanger, Essentia Connect and Easy Step range of electric bicycles. The Easy Step, with a foldable body and seven-speed gear, is looking to tap into the need of an urban consumer globally.
Sale of bicycles in India are to drop 10 per cent in 2019-20. Hero’s share is 40 per cent, from 36 per cent a year before, but the volumes have been muted.
Sensing an opportunity in Europe, the world’s largest market for e-bikes (bicycles), Hero diversified into e-cycles in 2018 through the launch of a Lectro brand. Last month, it acquired a stake in German e-bike manufacturer HNF Group.
The aim is to be a full range supplier of e-bicycles in Europe, a market that has seen 20 per cent annual growth over recent years. And, where the culture of cycling to work is gaining traction and the market is evolving at a fast pace.
To strengthen its foothold in Europe, Hero is in talks with a Dutch company for an alliance. It will announce a deal later this month.
The company says it aims at 10 per cent of the global e-bicycle market in 2021-22, doubling the turnover to Rs 7,000 crore and drawing half the revenue from markets outside India.
The 70-year old firm had earlier done a pivot through acquisition of brands in India and outside, in a bid to premiumize. It bought Firefox Bikes in 2015. If then rode into Europe through the acquisition of Avocet, its first buyout abroad. Followed by the buyout of Sri Lanka-based BSH Ventures.
By the end of the ongoing financial year (March 31), Hero envisages selling 25,000 units of the Lectro brand of e-bicycles and 5-5.2 million of manually pedalled bicycles. It has allocated Rs 250 crore to set up an 'e-Cycle valley' in Punjab, an entire ecosystem for manufacturing electric bicycles. An additional Rs 350 crore into the project will be invested through joint venture partners and ancillary units. The idea is that 70-80 per cent of the production would be exported, mostly to Europe. The project will go on stream in a year and will augment the overall capacity from the current 6 million units per annum to 10 million.