Hero acquires 60% stake in Lankan company

TH18_BU_HERO_CYCLE_1460281fHero Cycles India’s largest bicycle manufacturer has picked up 60 per cent stake in Sri Lanka’s BSH Ventures Pvt Ltd. which has a license to manufacture popular British brand Raleigh Cycles. The move will open up opportunities in the European market.

BSH Ventures’ Chairman Jeyam Perumal told Express on Wednesday that Pankaj Munjal, Chairman of Hero Cycles, will be in Colombo on April 1 to sign the deal.

“It’s win-win deal as we are entering into a partnership with a big company like Hero; BSH keeps 40 percent; and I continue as chairman under the new set up,” Perumal said.

“This is a major strategic acquisition for us as we work to expand our presence globally – both in terms of sales as well as presence,” Hero Cycles Chairman & Managing Director Pankaj Munjal said.

BSH is already Sri Lanka’s largest bicycle manufacturer. Hero, with a production of 5.5 million units per year and a 40 per cent share of the Indian market will invest $15 million to expand the Lankan plant. This will help BSH Ventures’ to double its production capacity from 2.5 lakh units to 5 lakh units per annum.

Sri Lanka is set to be a particularly advantageous base for Hero to cater to the European market. Europe is expected to be open to more Lankan products with the General System of Preference Plus set of concessions likely to be re-extended to Lanka following the establishment of democracy and human rights with the Presidential election of January 2015. Lanka is lobbying hard for this restoration and the EU is willing to consider its plea.

Hero is one of India’s home grown industrial giants. The four Munjal brothers began in 1944 by establishing a business of bicycle spare parts in Amritsar. In 1947, their operational base was shifted to Ludhiana and by 1956, the brothers had begun to manufacture key components of bicycles and assembling the entire product at their manufacturing plant in Ludhiana.

The World Bank has acclaimed Hero Cycles as a role model in vendor development based on a world-wide study. (Courtesy New Indian Express)

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