Our new products will be designed for global markets - Pawan Munjal

The Pawan Munjal-led Hero MotoCorp does not seem to be in a mood to leave any stone unturned to retain its 'numero uno' position in the two-wheeler industry.

In its pursuit of becoming a "truly global player" across all geographies, the company is not only forging multiple alliances for technology development, it is also actively working on various options to go beyond its existing segments.

Talking to ET, MD and CEO Pawan Munjal shares key insights into his strategic initiatives to make Hero the world's biggest two-wheeler brand. Excerpts:

Technology is the key to retain competitive edge. With aspirations to become global how will you fill the gap after severance with your 27-year-old Japanese partner, Honda?

The idea is to enhance our own R&D capabilities by training our own engineers. We are also forging multiple "strategic partnerships" with leading global technology companies to further enhance our in-house engineering skills.

As you know, we now have a partnership with Erik Buel Racing (EBR) of US for technology. We have also started work with AVL of Austria with the objective to develop our in-house capabilities in engine designing and technologies.

So, you will not be taking any more products or technology from Honda Motor Company?

We have a partnership till 2014 with Honda. This continues unabated and will keep rolling out Honda's sourced products - bikes and scooters - for the next years. And it would coincide with our indigenously developed line-up that would debut in both local and overseas markets subsequently.

We have just rolled out our new scooter Maestro, and also showcased the Passion X Pro and Ignitor bikes at the Auto Expo that are from the Honda lineage.

Much has been said in Hero's plans to introduce low-cost bikes. Given the adverse reaction of Indian customers to such products like cars etc, is the concept still feasible?

We have a huge focus on the entry-level segment. If you look at the bottom of the pyramid, there is a large section, which does not use any two-wheeler today, and therefore, there is immense potential.
I am not talking about a smaller bike with lower capacity engines, like mopeds etc. We have plans to make a motorcycle with inherent advantages of frugal engineering. Hero products are known for high fuel efficiency without compromising power. Something similar with a lower price tag would surely attract customers.

So, your future products would be catering to markets beyond India?

Yes, whatever we make from now on, will be designed keeping in mind global markets and customers. We have very little exports right now - only to neighbouring markets and to Columbia. We intend to enter new markets in Central America by the end of June and following that would foray into the East African markets.

The future products would be across all segments and will also cater to developed markets, but it would take a longer time to develop the right blend of bikes with higher displacement.

Will you export fully built two-wheeler or would put in place assembly or manufacturing operations in overseas markets?

We are studying various options. In few countries, the taxation structure makes its prudent to assemble rather than ship directly from India.

We are looking at setting up assembly operation in some foreign markets, but starting next fiscal most of the exports would be of made-in-India bikes.

How do you plan to make inroads in Latin America and Africa where local rival Bajaj Auto has the first mover advantage?

It's already an advantage for any Indian company to foray into markets where India-made products are well accepted and are successful. We will complement the Indian companies and our past experience (when Hero Honda products were sold under the Honda global distribution channels) shows that our bikes were taken well on performance parameters and also accepted for their robust quality.

Is there any possibility of synergies among three big Indian two-wheeler companies?

We have never looked at that till now. The presence of Indian companies has largely been in isolation, unlike the Chinese companies who still carry some synergies to venture into foreign markets. But Chinese products have met with limited success with issues of quality and performance keeping their growth under check.