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Will Pankaj Munjal Build His Own Legacy At Hero Motors?

Pankaj Munjal, the new chairman of the Hero Motors Group has inherited a lion in the world of cycles. The company  entered the Guinness book of world records by becoming world's largest cycle manufacturer in 1986s and remains the largest in India till date with 35 per cent market share. Even the profits have been growing for the company due to increased focus on premium cycles that cost more than a lakh per unit. The company already has in place a strategy for growth in mature markets of Europe and the Hero Motors group plans his expanding in Europe through fresh investment as well as acquisition. The company has an ambitious target of increasing its turnover from Rs 3,000 crore to Rs 8,000 crore by 2018.
 
Hero Motors group had recently announced Hero Cycles' entry in European market with special focus on UK and Germany and setting up of an assembly plant for high-end cycles in Poland.
 
However, all is not rosy for the group which has only one successful business under its kitty. Pankaj Munjal’s biggest challenge comes in the form of lack of cycling culture within the country. With increased transportation in the rural India and better per capita income of the Indian population, people are discarding cycling as a poor man’s vehicle. Moreover, Chinese companies are presenting a range of cycles in the premium as well as standard low price category which is eating into the market share of Hero Cycles.
 
Pankaj Munjal along with his father Om Munjal have tried to capture the power of the e-commerce sector by tying up with sports365.in. The company which sells above 50 lakh cycles per year targets to sell 1 lakh units on this platform within one year.
 
But other than the cycle business, the group has failed to make much progress in other ventures that OM Munjal laid his hands on. The Hero Motors Group also include auto parts manufacturing companies-Hero Motors Ltd, ZF Hero Chassis Systems Pvt. Ltd, and Munjal Kiriu Industries Pvt. Ltd, hospitality arm Munjal Hospitality and luxury home decor products company OM Livings.
 
With the new Munjal at the helm of affairs, it is expected that he will come up with a strategy to diversify the company. The Hero Motors group was a part of the Hero group that was split between the Munjal Brothers in 2010. While the OM Munjal and his sons took Hero Cycles business, the Brij Mohan Munjal and sons took the hero motorcycles business as a part of the settlement.
 
The two groups do not have a non-compete agreement in their businesses and this open the window of opportunity for Pankaj Munjal.  In 1996, Hero Motors partnered with BMW to manufacture motorcycles in India, but the deal fell through as the Hero Group had a non-compete agreement with Honda. Not bound by any obligation today, Pankaj Munjal has a challenge to venture out to newer areas and look for adding strength and value to the lion of a cycling company that he has inherited from his father.


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