Hero Motocorp will invest Rs10,000 crore in next 5-7 year: Pawan Munjal, Chairman, Hero MotoCorp

Pawan Munjal, Chairman, Hero MotoCorp, speaks about his plans for 2020, investment plans, the impact of coronavirus on supplies, M&A opportunities and slowdown in the auto sector among others during a candid chat with Swati Khandelwal, Zee Business. 

Edited Excerpts:

Q: How is Hero MotoCorp is gearing up to take on the challenge 2020?

A: We have showcased almost everything in our event, Hero World 2020, at Centre for Innovation and Technology (CIT), Jaipur like new launches, new technologies, the direction where we are heading and concepts among others. So, whosoever attended the event is clear about the direction we are heading towards.  

Q: Can you throw some light on investment plans of the company and also name the technology on which it will be invested?

A: The company will be investing around Rs10,000 crore in the next 5-7 years. The investments will be made on technology, EVs and state-of-the-art manufacturing, new products and renewing the old manufacturing facilities and turn them into green factories.

Q: Update us on the product line up and electric product plans?

A: We have presented the entire BSVI range in the event and also launched three new products namely, Glamour 125, Passion Pro, and Xtreme 160R at Hero World 2020. Hero Xtreme 160R, a completely new product, which was liked by people. Apart from this, directional products were also showcased at the event.  

Q: BS6 transition is in place and April 1, 2020, is nearing. How ready you are for the transition and update us on price hikes?

A: Our entire product range has shifted to BSVI and the remaining BSIV inventory is being sold out at a fast pace. There is a huge price difference between the BSIV and BSVI products and that's why customers are opting for the BSIV products at the earliest. Interestingly, BSVI products will be sold from April 1, 2020, as we will not be able to sell BSIV products from that day, hence we have to finish our entire BSIV inventory by March 31, 2020.

Q: What are your big plans for premium/big bikes and the segment that you want to entre?

A: Currently, our market share is low in the premium segment. But in the last few years, we have launched some motorcycles of the premium segment under which three motorcycles of 200 CC has been launched, which are doing good in the market. Apart from these, we just haven't launched Passion Pro and Glamour but have also launched Xtreme 160R in the premium segment. Besides, we are also working on motorcycles with higher-engine capacity.

Q: How the coronavirus will impact the supply chain of Hero MotoCorp?

A: Just a few days ago, we announced that February production may fall by around 10%. But there will be no damage in dispatch and wholesale. Going forward, if the situation does not improve, then more impact can be seen in the month of March.

Q: What are your plans for the global markets and what is your business plans for the international market including new geographies?

A: We are very focused on the global market. As of today, we have our sales in almost 40 countries and have our manufacturing facilities in two of these countries. Now, we are focusing on a few big markets with the aim of improving our market share in those countries and reach the position that Hero should have in the global business.

Q: Are you looking towards some M&A opportunities, if yes, then let us know about it?

A: I always had a belief that whenever there is an availability of a good technology or partnership that makes a good match then there can be a partnership or merger & acquisition (M&A).

Q: Provide your outlook on margins and profitability? Can we see a substantial uptick in volume, which stands around 6 lakh units/month, if yes, then what are your plans there?

A: Cost has been increasing for the last one and a half months but we cannot pass on the entire cost to the customer and that's why margins have been under pressure. However, we always pay maximum attention to the cost and try to reduce the cost and likewise improve our margin.

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Q: How challenging is the Indian auto market at present with a slowdown we saw last year. Do you think the worst is over now? 

A: The market and the economy is still going through a slowdown and that's why the sales numbers have gone down. In fact, it is hard to say that there will an improvement in the market at least for the next two quarters. However, the demand is likely to go up during the festive season and then the market will start moving in a positive direction.