Global scenario

Country's largest two-wheeler maker Hero MotoCorpNSE 0.45 % is expecting a double-digit

growth for its global business on the back of new launches and more focus on markets with
potential of higher volumes, according to Chairman and Managing Director Pawan Munjal.

The company, which is planning to enter Mexico next year, has also started export of
motorcycles and scooters from its manufacturing facility at Vila Rica in Colombia to other
countries in Latin America.

"We are optimistic of maintaining the growth trajectory in our global business in the current
fiscal (2018-19)," Munjal, who is also the CEO of the company, told

Riding on the robust growth in the Central American Cluster (CAC) and Bangladesh, Hero
MotoCorp had posted 12.28 per cent growth in global sales at 2,04,484 units in 2017-18 as
against 1,82,117 units in 2016-17.

Overall, Hero MotoCorp clocked its highest-ever annual sales of 75,87,130 units in 2017-18 as
against 66,64,240 units in 2016-17, a growth of 14 per cent.

Hero MotoCorp's optimism for its global business to grow in double digits comes at a time when
overseas markets had witnessed slowdown in recent years.
Over the past few years, most of the oil-dependent economies in Latin America and Africa were
struggling. This had adversely impacted international sales of most Indian two-wheeler
companies, Munjal said.

"However, we utilised this downtime to build brand equity of Hero in global markets. This
strategic brand building is now beginning to yield results," he added.

Elaborating on the company's plans, he said:"Going forward, our strategy is to focus more on
markets with potential of higher volumes, particularly on six clusters within our global
markets."

He further said:"We have also planned to launch a slew of new products, many of which have
been designed specifically for global markets."

Hero MotoCorp will soon launch Thriller 200 motorcycle and Dash 125 scooter in the global
markets. These products are respectively called Xtreme 200R and Maestro Edge 125, in Indi

In Colombia, the homegrown major has introduced the Ignitor 125 (called Glamour in India),
and the Eco100 specifically for the taxi segment.

It has also launched the Dawn 100 with specially designed longer-seats for the African market,
where two-wheelers are mostly used as taxis for commercial purposes.
On new market entry, he said: "Mexico is the next big market where we will be launching our
products. We plan to be in that market by next year."

Sharing an update on Hero MotoCorp's global manufacturing operations, he said,"we have now
commenced exports of motorcycles and scooters from our manufacturing facility at Vila Rica in
Colombia to Guatemala, El Salvador and Bolivia."

Munjal further said: "This is in keeping with our strategic plan to make the Vila Rica facility an
export hub to cater to the neighbouring Andean countries in the region."

Hero MotoCorp had commenced production at the plant in 2015.

He also said the company has recently received necessary approval from the local government to
sell Hero genuine parts 'directly' through its Colombian subsidiary.
"This will significantly improve customer satisfaction by making Hero genuine parts easily
available to our customers. This will also generate additional revenue and profit for our business
in Colombia," Munjal said.

Apart from the plant in Colombia, the company has one facility in Bangladesh, which
commenced operations in 2017-18.

The unit in Bangladesh has an installed capacity of 1.5 lakh units per annum, while the Colombia
plant has a capacity of 80,000 units per annum.

National scenario

Hero MotoCorpNSE 0.45 % has set its sights on Brazil and Mexico, two big motorcycle markets
where the Indian company’s biggest rival will be its former partner, Honda Motor. Hero is
developing flexi-fuel engines for Brazil — the country uses ethanolblended petrol — with an aim
to enter that market by March 2019. The launchin Mexico is likely to happen before that. Hero
had previously planned to enter Brazil around 2016 Olympics, but missed that target.
“We are looking at launching our products in Brazil and Mexico in the near future,” a top Hero
executive told ET on the condition of anonymity. He declined to divulge any specific time frame.
Market sources privy to Hero’s expansion plans said it is looking at entering the two markets in
the second half of fiscal 2019.

Brazil is Latin America’s largest market, and the fourth-largest globally, for two-wheelers with
annual volumes of around two-million units, while Mexico sells more than half-a-million units a
year. These are two key markets for Hero’s global ambitions since it parted ways with former
joint venture partner Honda more than six years ago. Hero, the world’s top two-wheeler maker
by volume, targets to be present in 50 countries by 2020.

By then the company expects its total revenue to climb to Rs 60,000 crore a year, with 10% of it
coming from international businesses. Hero MotoCorp posted revenue of Rs 28,599 crore in
FY16 when contribution from overseas was negligible — it is scheduled to report FY17 results
on Wednesday. Since it started the solo journey, the Pawan Munjal-led company has expanded
its footprint to 35 countries, including Argentina, Peru, Turkey and Egypt.

It has assembly units in Kenya, Tanzania and Uganda, established through distributors, and
amanufacturing facility in Colombia. Its second manufacturing plant outside home is coming up
in Bangladesh.

Honda has been present in the Brazilian market since 1976. A statement from the company last
year claimed its local unit Moto Honda da Amazonia having 80% of the motorcycle market in
Brazil. Motorcycles dominate two-wheeler sales in the Latin American country.

o take on competition on foreign turf, Hero MotoCorp has been working on products tailored to
suit the requirements in those markets. “Our engineers at the Centre of Innovation and
Technology (the in-housing R&D facility near Jaipur) are working on developing specific
products for different markets around the world. We will have very market-specific products,”
the Hero executive said.

Sources in the know of Hero’s strategy said it is looking at expanding its presence in the global
markets by designing and developing market specific two-wheelers, including scooters and
large-capacity motorcycles.

Literature view