G.D. Kapoor, ED (S&M), Hero Cycles

To get a real sense of India’s bicycle market and how our exports are doing, The Dollar Business caught up G. D. Kapoor, Executive Director – Sales & Marketing, Hero Cycles. He not only spoke at length about issues pertaining to the industry, but also explained the need for a higher duty drawback

G. D. Kapoor Executive Director, Sales & Marketing, Hero Cycles

TDB: Hero Cycles is the country’s leading manufacturer of cycles. What exactly is your market share?

GDK: The overall size of the bicycle industry in India is approximately 15.5 million units per annum. Hero Cycles commands a 35% market share.

GDK: The differences are wide ranging in the two markets. As is known, markets in the West are far more engaging and mature. For example, people do not mind cycling to work – a trend nowhere to be seen in India. Even in terms of organising sporting events, the West is definitely far ahead of us.

TDB: As a leading exporter of bicycles, what are your expectations from the new government?

GDK: There is a definite need for setting up world-class design & testing centers. At present, our exports are seriously hampered due to non-availability of these facilities. An Indian cycle manufacturer depends heavily on China and Taiwan for design and testing facilities, which I think is really hampering our business. The price difference in raw materials is also enormous. Steel, which accounts for roughly 65% of the cost of a bicycle, has become dearer in India by approximately Rs.7,000-8,000/MT. This, along with other cost differences and incentives, makes a Chinese exporter significantly competitive. As far as duties are concerned, there needs to be a higher duty drawback and transport subsidies should also be made available for factories upcountry.

GDK: Mozambique, Nigeria, Bangladesh, United Kingdom, Poland and Fiji are the major markets for our cycles. We exported about 1,00,000 units in FY2014 and have set an ambitious target of 5,00,000 units for this fiscal.

GDK: Europe and USA. With a 45 million unit per annum market, these two are the largest, both in terms of value and volume. However, they also pose the ultimate challenge to a bicycle manufacturer, in terms of the use of high technology and quality.

GDK: Profit margins can range anywhere between 10-12%. While exporting to developed countries the tangible benefits may appear to be less, but other factors such as exposure to latest technology, designs and systems act as a great value adds.

GDK: The premium market is growing at almost 40% within India. Urban Trail has been accepted very well in the market. Urban Trail currently offers products for kids in Rs.4,000-8,000 range and for adults in Rs.10,000-35,000 range. We will soon also be launching cycles priced at Rs.1 lakh and even higher, giving stiff competition to all international brands.

GDK: Presently, most African economies are where India was 25-30 years ago. They are going through the building processes which we have already experienced. They are convinced that Indian products and technology are best suited for their development. Africa is a continent of opportunities where Indians have been doing business for over 150 years now. This has certainly helped in building an atmosphere of mutual trust and reliability.