NEW DELHI :Hero MotoCorp’s newly appointed chief executive officer (CEO) Niranjan Gupta is on mission mode to “change gears” fast, double down on customer-centricity and simplify organizational structures at India’s largest two-wheeler maker to attract future-ready talent, Gupta said in his first interview since taking over as CEO on 1 May. Gupta had been serving as the chief financial officer for over six years before he was elevated to the top job in March, a significant step in the Pawan Munjal-led legacy motorcycle maker’s succession plans.
NEW DELHI :Hero MotoCorp’s newly appointed chief executive officer (CEO) Niranjan Gupta is on mission mode to “change gears” fast, double down on customer-centricity and simplify organizational structures at India’s largest two-wheeler maker to attract future-ready talent, Gupta said in his first interview since taking over as CEO on 1 May. Gupta had been serving as the chief financial officer for over six years before he was elevated to the top job in March, a significant step in the Pawan Munjal-led legacy motorcycle maker’s succession plans.
“At an organization level, the key principles will be to simplify, because speed will be the currency. To ensure speed, we have to reduce the layers and simplify the organization down the line; so that will be the philosophy on which the next levels of changes will happen in the organization. We continue to receive Mr Munjal’s guidance, wisdom, advice, and inputs as executive chairman. He has been very vocal in expressing that you go out and now deliver and the [leadership] is free from all shackles. The board has as much as said that in your and the leadership team’s success lies our success and the company’s success. So it is a very empowered organization and therefore, we have the full mandate to go forward, so much as to even go make mistakes, but not delay decisions,” Gupta said.
“At an organization level, the key principles will be to simplify, because speed will be the currency. To ensure speed, we have to reduce the layers and simplify the organization down the line; so that will be the philosophy on which the next levels of changes will happen in the organization. We continue to receive Mr Munjal’s guidance, wisdom, advice, and inputs as executive chairman. He has been very vocal in expressing that you go out and now deliver and the [leadership] is free from all shackles. The board has as much as said that in your and the leadership team’s success lies our success and the company’s success. So it is a very empowered organization and therefore, we have the full mandate to go forward, so much as to even go make mistakes, but not delay decisions,” Gupta said.
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Gupta’s first decision as CEO-designate to launch a voluntary retirement scheme (VRS) to “reduce layers” at Hero MotoCorp has already yielded results with more than 400 management employees availing of the VRS plan.
“We want to unshackle decision-making at the lowest levels. The VRS we introduced in April has been successful. 10% of the management staff or 400 people took VRS in line with our policy or philosophy of care. The package was one of the best packages that we gave to the people who were separating, but that allows the talent to churn. Because you need people who are fit for future,” he said.
Hero MotoCorp has lost significant market share in the domestic motorcycle and scooter segments as the commuter or entry-level category of motorcycles faced several headwinds while rivals focused on premium offerings in the market. The success rate of its new model launches over the last decade has been low compared to its peers, with new launches accounting for only 1.6% market share in FY23, showed analysis by brokerage firm Elara Capital. Elara has a buy rating on the Hero MotoCorp stock.
Hero MotoCorp’s new agenda is built on three pillars: Expand the commuter segment of motorcycles (those below 125cc engine capacity, where Hero MotoCorp has a nearly 70% share; execute a three-pronged strategy to win the premium category of two-wheelers; and build leadership in electric vehicles.
Gupta pointed out that Hero MotoCorp will see more new model launches in the premium category this year than it ever before in its history. This will include models cross-badged with Harley Davidson as well as revival of its old brands like Karizma. Hero MotoCorp will also undertake a major overhaul of its distribution strategy, upgrading up to 40% of its dealers to ‘Hero 2.0’ showrooms that will house some of its premium brands, and also create exclusive, premium stores which will showcase its entire premium range, including EVs.
“In the commuter segment, we have 65-70% market share, our role there is to grow the category rather than just defend or recover volumes. Our second agenda is on the premium end. This year is going to see the maximum number of premium launches compared to any other year in Hero’s history. And that’s a big change that’s going to happen. And these are not variants; these are new models. Winning in the premium category requires articulating a strategy which addresses – one, creating a portfolio because you cannot win when you are a commuter brand and known as a commuter brand. You cannot get into premium with one product, one model and claim credibility to win in premium. So, we require a portfolio to be called a premium player, which is a portfolio strategy that we embarked on four years back,” Gupta explained.
“The second is, the consumer at the premium end is more discerning than the consumer at the commuter end, and therefore, you require a different degree or different level of retail experience. And the way we are addressing that is by creating a journey and revamping physical spaces. We will create a facelift of a part of our retail stores, including hardware and software. We will also put up exclusive premium showrooms. We also need strong brands in premium, which is where our collaboration with Hero comes in. The third plank is about our scooter EVs, which is building leadership in EVs. We are aiming to be in 100 cities before March next year,” he said.
Jay Kale, senior vice president, Elara Capital said he expects Hero MotoCorp to “benefit from the expected recovery in rural market and the volume growth expected from the industry in FY24.” “A slew of planned launches provide the required positive optionally on the stock, but it will have to break out from the past mould of low success rates for new launches,” he said.
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