'UK expansion to help Hero Cycles grow 60% by 2022'
Manchester: As India's iconic Hero Cycles makes inroads into the UK and European markets with the launch of 75 bikes under its new "Insync" brand, the world's biggest bicycle manufacturer aims to grow by over 60 per cent over the next four years, says Sreeram Venkateswaran, head of the company's UK operations.
He said that from a $800-850 million company (across all its businesses, including automotive), it is poised to become $1.3 billion to $1.4 billion company by 2022, with Europe and bicycles being an "extremely important component" of that growth story.
Sreeram told IANS in an interview that with the launch of the Insync brand, the company not only aims to penetrate the mid-premium segment of the European market but also transform the way it caters to the Indian market.
In 2015, Hero Cycles had acquired the UK's Avocet Sports to expand its footprint into Europe and Sreeram was appointed Avocet CEO. Last year, the company opened a global design centre in Manchester to design bicycles of global standards. The 75 new cycles are the first of the lot designed at the $2.7 million Hero Cycles Global Design Centre.
Sreeram said it was natural for Hero Cycles to "get out of the well called India" if it had to transform itself into a strong global player from "value perspective" from being one of the largest manufacturers from a "volume perspective".
"Just from the figures perspective, India does about 17 million bicycles a year and the total value is $1 billion. UK does about 2.75 million bicycles a year and the business is worth about $2 billion to $2.1 billion. Europe does about 21 million bicycles and the business is about $12 billion," he said.
At the same time, the company's Europe and UK plans are in sync with its growth plans in India, Sreeram said.
With India's medium- to high-end cycling segment growing at about 25-27 per cent over the last one-and-a-half years, Hero Cycles plans to optimise the Insync brand models for the Indian market and then take them back home.
"Also, having the ownership of Firefox in India, which is clearly the market leader in the mid to high-end bikes, we are well poised to garner a disproportionate share of the growth as the market starts to grow," he said.
Sreeram said the UK operations would not only go a long way to help the company grow at a robust pace but would also transform the way it caters to the Indian market.
"UK happens to be in a very nice cusp of market development. It's about three to four years behind mainland Europe and it's about three to four or five ahead of the Indian development cycle.
"What it does from a business perspective is that while usually a bike range has shelf life of one year, a facility in Manchester gives me an opportunity to extend that shelf life to three to four years," Sreeram said.
"So any investment I make into design and development of bicycles here in this facility has actually four times the value that can be extracted compared to any other company which is solely based out of Europe or the UK and selling only in this market. That's a huge advantage," Sreeram said.
The facility in the UK and designing bikes for the European market make it necessary for the company to also keep updating the design and manufacturing team back home in India to bring it at par with what is required by a European customer, he added.
"So they start looking at quality from not what a guy in Latur would want but as what a guy in Luxemburg will want. That's the difference we have to create even from a quality perspective.
"These are the kinds of things that are slowly getting imbibed in the entire manufacturing chain which makes us a much more robust and stronger company," he added.
(Vishav was in Manchester on invitation of MIDAS, Manchester government's inward investment agency. He can be contacted email@example.com)