Hero Explores Options after Failed MIFA Takeover
LUDHIANA, India – After the failed MIFA takeover Hero Cycles continues to explore its options in Europe through different routes, amongst which mergers, acquisitions and strategic alliances will continue to be open. India’s biggest bike maker is determined to grow its existing exports channel to Europe.
That focus on Europe however has, according to Hero Cycles, fit in an international business model. “Hero’s primary focus would be to enter into a strategic tie-up with companies that have a strong front end distribution platform as we have a strong back end to support the supply chain from India,” says Pankaj Munjal, Managing Director, Hero Cycles Ltd.
14% import tax
But to route bicycles to Europe Hero is hampered by the fact that export from its production facilities in India to the EU markets comes with the regular 14% import tax. Bike export from other Asian countries – Bangladesh, Cambodia and Pakistan – can take place completely import duty free as granted by the EU in its Generalized System of Preferences (GSP) for Least Developed Countries.
Due to that Hero Cycles is now focusing on buying-out a strong brand name and setting-up a production facility in Asia. MD Munjal, “We have a two-pronged strategy for our international business including Europe; building brands on the front-end and high-quality manufacturing with cost-leadership at the back-end. If these two align with the brand buy-out and production in low-cost least developed categorized Asian countries, we are open to explore this.”
Hero manufactured some 5.4 million bicycles in 2014. The company has sold 5.33 million bicycles in the domestic market in 2013 and exported some 100,000 units. Hero Cycles Ltd. is part of the Hero Group; one of the world’s biggest manufacturer of two-wheelers. Turnover stood at over USD 4 billion states the Group’s 2013-2014 financial report.