I'm more optimistic now on 2-wheeler biz: Pawan Munjal

Interview with chairman & managing director, Hero MotoCorp

Subdued rural demand, because of deficit rains, has been weighing on India's two-wheeler market over the past two years. Pawan Munjal, chairman & managing director of Hero MotoCorp, the country's largest two-wheeler maker, tells Ajay Modi that things would improve this year on the back of revival of sentiments in rural markets and a strong urban growth, thanks to the 7th Pay Commission. His optimism is also reflected in the company's share price, which hit a record high early this month. Munjal, who is also the chairman of the $5-billion Hero Group, talks about his interest in the used two-wheeler business and the expanding role of next generation within the group. Excerpts:

Last September, Hero launched two inhouse-developed scooters. The market has expanded. How do you see the performance?

Hero's scooter share in the domestic market has gone up after the launch of Maestro Edge and Duet. Both are doing well. We continue to focus on scooters. We're working on new scooters that will be launched this year along with new motorcycles.

A month ago, you said you were "cautiously optimistic" on the two-wheeler business. Has that changed?

You can say I am more optimistic now.

Is Hero looking to venture into the used two-wheeler business?

Many years ago, we had started a separate channel called Sure for used two-wheelers. We did not pursue it for taxation issues. Now, things have become much simpler and the GST (goods and services tax) will make things absolutely clear. We already have a pilot going on and we have plans to grow that business.

Hero FinCorp, a group company, has raised Rs 1,000 crore to expand footprint in retail consumer loans. How is Hero MotoCorp's vast network of 6,000 touch points being used?

Yes, FinCorp is using these touch points to become a complete financial services firm. The group has made investments to set up these channels for two-wheelers. We would want more and more of the group companies to use these assets and investments, so that both the company and the dealer can benefit.

What other businesses can use this network?

We are using this network for the insurance business that caters to two-wheeler insurance. Hero Fincorp will have more possibilities for the two-wheeler customer to benefit from.

Tell us about other significant businesses within the group with a potential to grow like Hero FinCorp.

Hero Future Energies (focused on renewable power) has immense scope. We recently started a new venture of Hero Electronix (engaged in electronic design and manufacturing); we see a huge opportunity there. Rockman Industries (an auto component maker), already a fairly large-size company, has made a couple of recent acquisitions and its revenues have increased significantly.

Will we see a greater role of the next generation in the group's businesses?

You're already seeing GenNext managing some businesses independently. They are all entrepreneurs in their own right. Whether it is Hero Future Energies (managed by Rahul Munjal, son of late Raman Kant Munjal, the eldest brother of Pawan Munjal), Hero FinCorp (run by Abhimanyu Munjal, also Raman Kant's son), Hero Electronix (founded by Ujjwal Munjal, son of Suman Kant Munjal) or BML Munjal University (Akshay Munjal, also Suman Kant's son)... all these are new businesses started by the next generation.