Hero Cycles, a 65-year-old Indian cycle manufacturing company has set an ambitious target to become a global leader in E-Cycles. The company launched its much awaited state-of-the-art export oriented manufacturing unit ‘Hero E-Cycle Valley’ via video conferencing on the auspicious day of Baisakhi (New Year). Based in Dhanansu in Ludhiana, the Hero E-Cycle Valley will make 10Mn Cycles a year, with a production of 4 million premium bicycles and E-Cycles, majorly for global consumption.
Envisaged as a manufacturing hub for the global market, the new plant of ‘Hero E-Cycles Ltd’ marks a major leap for the ‘Make in India’ initiative.
Along with the new plant, Hero E-Cycle Valley will also house a series of international component suppliers to achieve complete localisation of manufacturing in India.
Pankaj Munjal, CMD Hero Cycles said “This Eco-System of the Mother Plant, Supplier Base, Training Centers, and European Norms (EN) Certifications is amongst the first in the world. With a capacity of 10Mn a year, it’s surely the world’s largest”.
The Hero E-Cycle Valley which houses the new plant is a significant milestone in HMC’s global journey and is a critical link towards establishing the company’s global engineering and manufacturing chain. While 50 acres of the Valley houses the Hero E-Cycles Factory, another 50 acres has been marked for a dedicated Suppliers Park.
Mr. Nitin Gadkari, Union Minister of Road Transport and Highways and Minister of Micro, Small and Medium Enterprises (MSME), Government of India virtually inaugurated the Hero E-Cycle Valley.
In his opening remarks, Mr. Gadkari explained “In the recent years there has been a greater emphasis on providing accessible, inclusive, affordable and sustainable transport for the people.
Our 1st priority is the Waterways, 2nd the Railways, 3rd Roadways and the Aviation. But unfortunately, roads have 85% share of goods and passenger traffic. We need to develop mass-rapid transport system which could run on electricity, and at the same time in the city area, we need to encourage more bicycle use. It is good for the health at the same time it is very affordable and that is one of the reasons why the bicycle is very popular. We are already planning to make special cycle ways in the National Highways connecting the city area”.
Presently, the global bicycle market is dominated by China. “I am confident that with Mr. Munjal’s efforts in building a new R&D facility, their new range of e-cycles and cycles will open up the market”.
Cycling by default implies a physically more active population, thus, providing an excellent solution to nationwide health challenges like asthma, obesity and diabetes.
Across the world the demand for bicycles has doubled. Cycling is a core constituent of sustainable urban transport protocol and meets UN’s sustainable development goals.
The Indian bicycle industry is the 2nd largest in the world and Indian manufactures has the potential to scale up their exports.
“Bicycle industry is important to create employment in the country. A lot of component manufacturers and suppliers now have tremendous opportunity and I am confident that this industry is going to create new jobs for young and talented youth of our nation” Mr. Gadkari added.
India produces around 22Mn bicycles annually with a turnover of 7,000 crores approximately and 4,000 MSME’s employ nearly 1Mn people in their entire value chain.
The current global bicycle market size is estimated at $16Bn. India has 1.5% share by value and 15% by volume. Hence, there is a huge potential for production and exports for both cycles and e-cycles in the domestic and international market.
Mr. Gadkari further said “I take his opportunity to congratulate Mr. Pankaj Munjal and his team at Hero Cycles for commissioning this landmark new Hero Industrial Park (HIP) in Ludhiana that will roll-out world-class premium components and bicycles. This park will immensely boost the MSME sector, generate employment, and significantly promote an atmanirbhar (Self-Reliant) Indian Bicycle Sector.
Speaking about the business strategy Mr. Munjal explained “for design studio, we have picked the styling capital of the world ‘England’, and appointed ‘Berlin’ known for automobile engineering”.
Out of the 9000 workforce, 400 employees operate from international locations. The Hero E-Cycle Valley is strategically aligned to its designed center in Manchester, Engineering center in Berlin, and sales office at London.
Mr. Munjal said “In the brand architecture, we are the World leaders in technology and also the cost leaders. Hero Cycles is booked for 2023 with orders from global partners. The Valley precisely knows what model, what color is to be given to which country in 2023”.
Over Rs, 1,000 crore is being undertaken over two years in total outlay to operationalise the E-Cycle Valley and grow Hero International in EU and UK. While HMC is spending Rs 350 crore in operationalising the E-Cycle Valley, the vendors are bringing in an estimated Rs 400 crore.
Additionally, HMC plans to further invest Rs. 300 Crore over the next couple of years to fortify its brands, R&D and distribution across EU and UK, which becomes a pivot for its global ambitions.
Hero Cycles is eyeing 5% share of exports through the new facility. The company will be launching a smart e-bike in German market in April this year with advanced features like geo-mapping, geo-fencing, health related insights etc., subsequently the e-bike will be introduced in India after a quarter.
HMC is already in advanced talks to finalize a Joint Venture with an international player for Electric Motor localization and another JV for manufacturing international quality Alloy frames, suspension and CVT in India. Premium bicycle parts maker Spur Technologies, a subsidiary of Hero Motors Company, has already set up a manufacturing unit at the Valley.
With hi-end component localization and innovation center, the ecosystem is expected to upgrade HMC’s manufacturing capability to make bicycles priced at $150-500, and e-bikes $1000 to 5000 against $60 today. The best in class ecosystem aligned to the ‘Make in India’ policy will enable India to become a global hub of manufacturing international quality bicycles, e-bikes and auto components.
Mr. Munjal pointed out three major areas of support from the government –
To make the country a global manufacturing base, we need a Productivity Linked Incentive (PLI) scheme since India is competing against an eco-system created by China, Vietnam and Taiwan with an established foothold in the European market.
If we have safer cycling infrastructure, we will be able to decongest the roads and urban pollution will come down.
Penetration of cycles in India is 60 cycles per 1000 households, whereas in developed countries it ranges 600 to 800; our goal is to increase market penetration with your assistance.
Photo credit: Hero Cycles.
Author: Vijay Malhotra, Mumbai