<b>India 2011:</b> Hero Exports on a New High
Hero Eco is on a high. The company already bought out Ultra Motors last December and group subsidiary Hero Exports has regained the markets lost earlier, recording its best-ever export performance after many years.
LUDHIANA, India – Hero Eco is on a high. The company already bought out Ultra Motors last December and group subsidiary Hero Exports has regained the markets lost earlier, recording its best-ever export performance after many years.
“The bicycle exports have reached 480,000 units for 2011 – one of our best showings in recent years. We exported 630,000 units in 2005-06,” recalls Vijay Munjal, Chairman, Heroeco Vehicles (P) Ltd. Interestingly, the greater chunk of exports (70%) were shipped to African countries at that time, Europe’s share was a mere 15-20%. “Now the European share has almost doubled to 28%,” claimed Munjal, who also unveiled the new Hero Eco logo of his group on Dec. 29, 2011 in New Delhi. Hero Exports registered an export turnover of US$ 40 million in 2011.
When asked what territories will be the company’s focus in the international market, Munjal replied, “(The) focus will be on increasing exports to Europe & Latin America territories.” The positive outlook is due to a number of measures taken by Hero, the largest exporter of bicycles in India. Hero Exports new model line-up matches the design requirements prevalent in Europe and is bolstered by the short development cycle at its export-oriented Mangli plant in Ludhiana.
The reasons for Hero’s export growth are various. But one of the biggest importances is named by Munjal as, “The extension of anti-dumping duty on China made bikes. Next to that some of the world’s major retail chains restored confidence in our products, while new ones showed interest. We are in constant touch with others and hope to revive a few more in 2012.”
Some of the European customers regularly visit Hero Exports Mangli unit, which is helping Hero to raise quality levels further and also increase the size of its portfolio. Hero Ecotech exported bikes are complying with the EN Standards.
The extension of the dumping duties on China made bikes changes the whole scenario in favour of Indian bicycle exporters as China is no longer competitive price-wise and European assemblers are looking for alternate sources of supply such as India, Vietnam, Indonesia, and Thailand. “By February this year, a very big wholesaler will start sourcing from us and that will really impact our exports to Europe. The sales to Europe are likely to increase by almost 50% and would cross 150,000 units in 2012,” confided Munjal, without naming the wholesaler.
Meanwhile the company is further gearing up to meet the growing demand in the European market – adding more capacity, and installing of robotic TIG welding by the end of January. “It would further hike the capacity from the current 3,200 units per day to 4,500 units per day,” said Vijay Munjal.
Plans in Electric Scooter market
Commenting on the prospects of the electric scooter market, in light of its acquisition of Ultra Motors, Munjal commented, “The electric scooter market in India in the current financial year ending March is likely to be around 100,000 units. The market has seen a strong growth in the last 6 to 9 months. In the organized segment there are 3 national players and 7 regional players constituting around 50% of the market.”
When asked about the potential of the electric scooter market in India, Munjal said, “The market will certainly double, there are more than 400,000 electric scooters on Indian roads, many customers have used the product for more than 2 years and are convinced of the great value equation that the electric scooters offers, especially from reputable manufacturers.”
Hero Electric has produced around 20,000 units to become the market leader in the organized segment of the Indian EV market. The Hero Electric plant in Punjab can produce up to 220 electric scooters per day. Investments in 2012 will be in the field of Technology, R&D, and Quality. The company plans to introduce some of the currently manufactured products in India to the European and the North American markets.
“One such product is ‘Heroeco AT3’ which will be launched in two power options – 2.5 Kw and 4 Kw, with a lithium ion battery pack. In times to come, we’ll be one of the few companies offering e-bikes, e-scooters and e-motorcycles across the globe,” said Naveen Munjal Managing Director Heroeco Vehicles (P) Ltd.
In the Indian market, the company will launch Photon, the high speed scooter in April. A special ability vehicle is under development to be launched in the latter half of the year. “Some of the A2B and Fast4ward e-bikes may also be launched selectively in the Indian market,” said Munjal.
Hero Cycles considering overseas foray
India’s biggest bicycle maker Hero Cycles Ltd. manufactured 5.6 million bicycles in the calendar year 2011. The company is further hiking the production in 2012 to 6 million units. Hero Cycles is also entering the exports market in 2012 and expects to ship 400,000 units in 2012. The company’s 2011 turnover stood at about US$ 280 million.
Hero Cycles is a separate and independent company. The Hero Group has been splitted up in separate companies owned by the Munjal family members. The ‘Hero’ brand name is used by the family companies collectively. Heroeco is owned by Vijay Munjal, and Hero Cycles by Pankaj Munjal. Hero Cycles is planning to enter the export market on its own.
Avon Cycles Hikes Production as Domestic Demand Grows
India’s second largest bike maker – Avon Cycles – manufactured a record-setting 1.9 million bicycles in 2011. Avon Cycles shipped 200,000 units to the overseas market. The company retains its stronghold in the African market. With the increasing size of its domestic market the company has finalised plans to expand its production capacity in 2012. The capacity expansion will mark the bicycle maker’s 60 years of existence and be part of its Diamond Jubilee celebrations in 2012.
Avon Cycles started as a bicycle saddles and brakes manufacturing unit in 1948. In 1952, the first batch of 250 bicycles rolled out of its plant. Now the bicycle maker has achieved a high degree of product manufacturing integration, having in-house facilities for making almost all the parts, including steel ball bearings.
To meet the growing domestic demand, Onkar Singh, Managing Director, Avon Cycles Ltd. says: “We have decided to raise the production capacity to 2.5 million units annually in our mother plant in Ludhiana,” said Onkar Singh, Managing Director, Avon Cycles Ltd. When asked about the investment Avon envisaged for the expansion, Singh replied, “We earmarked an outlay of INR 150 million (2.3 mn euro).”
The expansion will likely be completed in the last quarter of 2012. The company recorded turnover of INR 4.55 billion (70.2 mn euro) in 2011. Next to bicycles Avon Cycles manufactured 5,100 electric scooters in 2011.
Atlas Steps in Bike Retailing
Atlas Cycles manufactured 1.7 million bicycles in 2011. The company has exported 65,000 units during the twelve month period. Atlas recorded a turnover of US$ 85 million in 2011. The company is to open some upscale, chic bicycle retail outlets in 2012, following the path of a few other major OEMs in India.
In 2012 the Indian bicycle maker is to expand its production and upgrade its paint plants, R&D facilities, and further streamlining the manufacturing process. According to Gautam Kapur, Joint President, Atlas Cycles (Sahibabad), the facility will be further modernized in order to keep up with the current market preferences. Atlas sees growth in high-end fancy and kid’s bicycles.
“Even OEMs are increasingly focusing on the fancy ladies/girls’ segment as it too has huge user base,” Kapur said.
The domestic bicycle market received a strong boost as various state governments distributed bicycles to students as a part of their economic initiatives and during impending assembly elections in five Indian states. Atlas supplied bikes to the state governments of Tamil Nadu and Jharkhand in 2011.