Hero MotoCorp has reported a 14 per cent decline in monthly wholesale dispatches for August. Pawan Munjal, chairman and managing director and chief executive officer, in a media interaction, however, says he is confident dispatches will pick up from this month as the high inventory has dropped at the dealer level and the demand for festive season will drive stocking. Excerpts:
What is your overview of the economy now that a large stretch of monsoon is over?
We started off well so far as rainfall is concerned. Unfortunately, the month of August has not been too great. Overall, the monsoon is lower than our expectations. Parts of the country have had very good rainfall but states in the south and west faced deficit. It will be a concern. Since we are spread across the country, we hope to balance out sales.
Why is there a continuous decline in your sales?
We have been trying to balance out the inventories in the market place. Wholesales are not growing but we have been doing better in retail sales. The inventory situation has improved compared to a couple of months ago. Starting this month, once again, we will stock for the festive season. In spite of the environment, we are bullish about the festive demand. Like every year, we expect to do well. We have recently put out some variants of current models. We are about to launch two new scooter models in a couple of weeks, hitting the market well in time.
What is the full-year outlook for sales? How is the export market?
We are not expecting double-digit growth. Exports are picking up. Over the next few months, we hope to enter new markets. We are close to setting up a distribution network in Nigeria, Mexico and Argentina.
Hero reported a 33 per cent jump in profit in the first quarter. Can this be sustained in the rest of the quarters?
We have been working internally on our costs and are doing pretty well. Thanks to the commodity prices, it is helping everyone.
Hero has not been able to expand presence in scooters, a growing segment. What is the challenge?
We would have liked to have done better in scooters. Some others have done better. It's about the portfolio. We only have two scooters in our portfolio. The addition of two new models will improve sales.
Erik Buell Racing (EBR) has filed for bankruptcy. How does it impact Hero Motocorp's plan?
With the firm going into receivership, there is a slight pushback on timelines of less than a year. But, we are continuing to work on products. We are doing all the work now in India. We had displayed two products - 250cc motorcycle and the Lead scooter being developed with EBR.
Will you look at new technology partners?
I am open to looking at newer technologies coming from various sources. It could be in form of M&As (mergers and acquisitions) or technical support. The amount of effort we are putting in the current research facility is huge but we want to build an ecosystem.