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Pankaj Munjal wants to take Hero from Azamgarh to America
He is the Hero of the bicycles business churning 19,000 bikes a day and over 5.6 million every year. Pankaj Munjal is now pressing the reset button and thinking global.
After the recent Munjal family business split, individual companies are free from the constraints of joint ventures and this has forced Hero to look at taking the bicycles biz from Azamgarh all the way to America.
On Tee Time With Shaili Chopra, Pankaj Munjal talks about keep the business on the fairways and golf experiences with Tiger Woods.
Your latest effort is to transform the brand into a younger one, more widely desired, how are you going about it?
Yes, that's our priority. It is like a new beginning for us. We started out in 1956 and we have now 50 per cent share in the market. I travel to villages from Aligarh to Azamgarh to gauge the cycle market. But now I have to make the Hero Cycle brand, younger and yuppier.
I have the technology, I even have the cost leadership and now so now I need to step up our business globally in a big way.
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Pankaj Munjal wants to take Hero from Azamgarh to America
You have a set up going in Denver and plan to manufacture in America to reach out to chains like WalMart
In 1982 when we signed with Honda, it was a business under one whole Munjal family. But now we have reset again. Away from the partner constraints, we have the option of going global in a big way as individual firms.
We are planning to relaunch later this year and we will now not export to WalMart but provide them smart, cost-effective bikes made locally in America. We have done a set up in Denver for the same. You know companies don't like doing business with manufacturers one half way across the globe.
They want the best stuff at the lowest cost. So we are going to be local in America under an American brand name.
So your aim is to head on-site?
We aim to build on a local distribution network and now we are working on that aspect for the expansion in international markets. We have benchmarked lots of brands and we will approach it with the 3Ps - product, price and promotion.
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Pankaj Munjal wants to take Hero from Azamgarh to America
How are you going from value to value-added?
We keep the volume apple-cart intact. But at the same time we will now look at upgrading the value chain. Three different brands, three different segments and an attempt to change the distribution by infusing younger blood is our clear focus.
We will possibly look at a detailed plan to connect with customers thorugh the Internet. We will build upon on existing distribution and invigorate the firm's business.
How did you find time for golf?
I love this game. After the weekdays of slogging and struggling at work, I come to the course on the weekend. I have grown up on the DGC, I have burned my soles to grow up here. I play every single weekend. We are a fixed foursome and I have been coming since 1991.
In fact I have even had the good fortune of meeting Greg Norman, who fixed my golf swing and practicing with Tiger Woods some years ago.
Talking of fairways and bunkers, how important is the crisis in Europe to your business? Is it hurting?
We are watching Europe very closely but the local companies there itself are all sensing the slowdown.
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Pankaj Munjal wants to take Hero from Azamgarh to America
We have long-term orders and contracts fixed up but we are monitoring the situation because 40 per cent of our export going to Germany and Austria.
You are increasing the capacity and production, and you will also push your global market to new heights?
We make 5.6 million cycles a year and now want to take it to 10 million which should be our next big mark. We are also speeding up our approach in global markets and Denver is going to be our American hub which will also support in reaching our goals.
How worrying are cost structures of the West given India has always got the value edge?
We are cost leaders, if you take India, this is the best efficiency level we are at this. Hero is known to keep costs tight so clearly that's a big objective. In global markets, if I can convert cost into productivity, then I should be strong in international markets.
Think lean, and I think we should be able to realize good productivity. Just like in Germany, you may spend a lot per hour but the productivity you get is off the best car makers in the world.
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Pankaj Munjal wants to take Hero from Azamgarh to America
You joined the business really early didn't you?
I joined the business at 24 and I loved the factory. I saw it growing and saw it creating wealth for everyone. If you get my nerves and you will find oil in it!
How have things changed for you all at the Hero family post the partition in the business?
Our suppliers are our partners for life. We are now more open to technology. For the contractural obligations we could not get ahead with other global players. Now we have a complete new story to write and engage with new technology, new partners and big markets.
You have diversified into auto transmissions as well?
We were never looking for transmissions but Bombardier came to India and asked us to work on transmissions and it was all going ahead suddenly. We have a business of Rs 2,300 crore (Rs 23 billion) right now but it's a business growing steadily.
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Pankaj Munjal wants to take Hero from Azamgarh to America
The gears and transmission business has a factory located in Ghaziabad, around 40 kilometre from Delhi, and over 90 per cent of production primarily to Bombardier Rotax and BMW.
You have had the good fortune of meeting Greg Norman and Tiger Woods together at Florida?
I practiced with Tiger Woods. We were invited by the Citigroup CEO to Florida some years ago. We hadn't a clue that Tiger and Greg Norman would be there. We were expecting good speeches and some business perspective but what we got was a big golfing surprise. Greg Norman helped me with my swing.
In the evening, I saw someone in the bar who looked like Tiger and it really turned out to be him.
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