New Delhi: Hero Cycles Ltd, a unit of Hero Motors Co., will develop an entire ecosystem to manufacture bicycles in Punjab with an investment of ₹ 250 crore.
In an interview, Pankaj M. Munjal, chairman and managing director of Hero Cycles, said the company’s ‘cycle valley’ project will shift focus of the bicycles industry from China to India.
“There will be around 10 joint ventures from Japan, Germany, Taiwan and China. This will help us get into the market, which is valued at ₹ 3 trillion. From our Sri Lankan base we can export to the European Union (EU) nations and, to the rest, we can export from India."
The revenue of the cycles business increased by 30% year-on-year in the April-June quarter. The funds required for the development of the manufacturing base in Punjab will be generated internally and the company would not look for any external fund raising. The company will also focus on developing e-bicycles and premium bicycles in India.
“The premium segment is on 25% growth in India though the base is very low, but it has been consistently growing for the last three to four years. We were not present there, so we bought Firefox and, now, we are going to launch our English brands, including InSync. For e-bicycles the market will take some time to develop in India, but we will export to Europe. I think we will do 8,000 units a month from September," said Munjal.
In the current fiscal year, parent Hero Motors has an order book of ₹ 2,000 crore for its automotive component manufacturing business, besides recently unveiling a new manufacturing facility in Gujarat. Hero Motors is also looking to sell its stake in some of the joint ventures to gain technological know-how about the new technologies in the automotive space. It is also betting big on its transmission business and are supplying to premium manufacturers, including BMW, Ducati and Harley-Davidson, outside India.
Two of the company’s joint ventures, including Munjal Kiriu Ltd and ZF Hero Chassis Systems Pvt. Ltd, are focused on the India market.
“For the automotive business, we had a top-line growth of 35% last (fiscal) year. Now, we have the Automotive Manual Transmission (AMT) technology and, I think, that will be the next big leap for the Indian automotive segment," Munjal said.