Forbes India 15th Anniversary Special

'There's a clear case to bring down GST': Pawan Munjal

From discussing how to safely live with the virus and the future of electric mobility to the science behind namaskar, the 64-year-old entrepreneur talks about a wide range of issues in an exclusive interview with Forbes India

Rajiv Singh
Published: Aug 17, 2020 12:18:55 PM IST
Updated: Aug 17, 2020 12:26:36 PM IST

'There's a clear case to bring down GST': Pawan MunjalPawan Munjal, Chairman and MD and CEO of Hero MotoCorp
Image: Amit Verma

The only way to fight the Covid crisis, reckons Pawan Munjal, is to fight it together. “There is no playbook for this pandemic,” contends the chairman & managing director and CEO of Hero MotoCorp. Everyone, he lets on, is learning from the experience. From discussing how to safely live with the virus and the future of electric mobility to the science behind namaskar, the 64-year-old entrepreneur talks about a wide range of issues in an exclusive interview with Forbes India

Q. On learnings from the pandemic
There have been many. First and foremost would be communication, communication and communication. This is something that has helped all of us in the Hero family stay together, positive and motivated.  We communicated the good news, bad news and sad news with all of our key stakeholders frequently.

Another learning has been understanding and appreciating how we at Hero MotoCorp are resourceful on many fronts—be it cooking meals in our plant canteens to serve the undernourished or designing and manufacturing unique ‘First Response Vehicles’ by our engineers. By keeping us all connected, we accomplished a lot more than just good business performance. We distributed 14 lakh meals, 37,000 litres of sanitisers, 30 lakhs face masks, 15,000 PPE kits. We have to learn to live with the virus. You can’t sit at home and wait for it to go away. It is here to stay. We need to be safe and careful, and not be stupid and careless.

Q. On changes in customer behaviour
As the situation evolves, a shift in customer behaviour is expected and this is where our homework and the state of preparedness will come in handy. These trends will reshape business operations for customer-centric businesses. In the short term, there will be certain sectors such as two-wheelers, affordable cars, FMCG, health care and digital infrastructure that will see an uptick in business. In the long term, sustainable mobility, travel and operations will become even more critical.

There are clear indications of an increasing shift in customer preference towards digital and online platforms for their purchases. The automotive space remains a highly personalised and high-involvement purchase. So brick-and-mortar stores will continue to coexist with digital sales in the foreseeable future.

Q. On the Make in India opportunity
There is an opportunity now. Let me give Hero's example. We had a little lead and we built on it, gained momentum and have been getting market share. Similarly, the nation has an opportunity now because some other countries are in trouble. The prime minister is not asking us to become like an island. He is not asking us not to import and export. The message is that we should be prepared for any type of eventuality. As a company, we would not like to sell only in India. We have to sell outside. Similarly, when I have to buy, we need to be self-reliant, and back our resources here. But we also have to be pragmatic in terms of quality, cost and delivery. If somebody across the globe is giving us a better product at a better price and higher quality, we have to be pragmatic about choosing what we buy and from where.

Q. On electric mobility
India is not yet prepared, but it has to be prepared. India does not have a choice. The globe does not have a choice. This is the way forward. Our new vision is to be the future of mobility... today, it is electric that is the way forward. Setting up infrastructure is the key to electric mobility. If the entire sales and production have to shift to electric, then infrastructure has to be there across the country.

The critical thing about the shift to electric mobility is reaching a critical mass and making it affordable for mass mobility. Our plans are two-fold. The first is internal development, which is ongoing at our R&D facility—the Centre of Innovation and Technology in Jaipur. The second part is engaging with the external ecosystem. Our teams are working on both, and we will launch our products at an appropriate time.

Q. On acquisitions and collaborations
We are open to strategic partnerships and M&A, if there is a good fit. There is a huge potential for businesses to grow as multinational entities, take advantage of these times through greater and more significant collaboration across geographies. In the current scenario, and going forward, instead of M&A, we may start to see what I call ‘C&C’ activity. This means ‘collaborate and cooperate’ in order to survive, thrive and stay relevant. We are already seeing collaboration and consolidation in the automotive industry and this trend will continue.

We have started taking small steps in this direction. We are doing this with our supply chain partners so that they do not get swallowed in this disruption. We bring a lot of capabilities for anyone who wants to partner with us and in turn we would love to expand our product mix and geographical presence.

Q. On the role of the government
The auto industry has shown a lot of resilience working its way towards a rebound, while ensuring there are no job losses and salary cuts. The manufacturers, especially all the big players, are going out of their way to support the entire ecosystem. Now, the government also needs to do its part by driving the demand side.

Q. On cutting GST for two-wheelers
There is a clear case for bringing it down from 28 percent to 18 percent. The 28 percent bracket is for luxury and sin goods, while two-wheelers are for the masses. You cannot put a truck, bus and SUV maker in the same category as a small car maker. Similarly you can’t put a motorcycle costing ₹50,000 in the same GST category as a car costing ₹5 crore or a motorcycle of ₹5 lakh.

Q. On the 100 million sales mark
This is a tremendous milestone for Hero. When we get there (cumulative figure since 1985; sales were 64 lakh in FY20), it will be the fastest 100 million by anyone. Yesterday, I was in a celebration for 150 million bicycles of Hero Cycles. Had it not been for the slowdown over the last two years, and the pandemic, we would have reached the milestone last year.

Q. On importance of resilience
Let me go back to Ludhiana to Hero Cycles. A majority of the workers on the factory’s shop floor were coming from Eastern Uttar Pradesh and Bihar. And they were not supposed to be highly productive and efficient. But when they come to Ludhiana, their productivity is the highest. So, it is the mitti (soil) of Ludhiana.

Q. On preference for namaste
I started this tradition when I opened the Haridwar factory in 2007. Nobody shakes hands there. This is like going back to our roots, and sanskar (tradition). Namaskar has a science behind it.

(This story appears in the 28 August, 2020 issue of Forbes India. To visit our Archives, click here.)

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