As we celebrate our 25th anniversary, weve sold 25 mn two-wheelers

Headquartered out of New Delhi, Hero Honda currently has three
state-of-the-art manufacturing plants, one each at Dharuhera, Gurgaon and
Haridwar. The company is also currently celebrating its 25th anniversary.

Pawan Munjal, the current MD & CEO, has made the company touch new heights
after taking over the reins of the company from his father, Brijmohan Lall
Munjal, Under his able leadership Hero Honda crossed the landmark 25 mn
two-wheelers in cumulative sales milestone. Long before it became fashionable
for businesses to promote sports persons, Munjal, an avid golfer himself,
launched the Hero Indian Sports Academy (HISA) in collaboration with Laureus
Foundation to provide equal opportunities in sports to various communities and
to reward talent in the country. He also serves on the board of the Indian
Institute of Management, Lucknow. In an exclusive meeting with Dataquest, he
reveals how important IT has been to the growth of Hero Honda and the role it
will play in the future. Excerpts

For a manufacturing giant like Hero Honda, how important a role does
technology play?

Hero Honda has always been a technology pioneer and I have always believed
that it has been one of the key factors for the success of the company. We at
Hero Honda pioneered the introduction of fuel-efficient, environment friendly
four-stroke motorcycles in the country and were the first company to introduce
the four-stroke technology in India. Hero Honda was also the first Indian
two-wheeler company to launch Fuel Injection (FI) technology in motorcycles,
with the launch of Glamour FI in June 2006.

Our success and commitment can also be attributed to our endeavor to have the
best practices in the Indian auto industry. This commitment has earned us the
status of being the largest joint venture for two-wheelers in the world for
Honda Motors. As we celebrate our 25th anniversary this year, we have crossed
the landmark 25 mn two-wheelers milestone in cumulative sales.

From an IT perspective, I believe that it too has a very important role to
play in the growth of the company. I think the various initiatives of IT today
are fully aligned with business goals and needs of the company.

We at Hero Honda were one of the early adopters of technology in
manufacturing companies in India and I was the project sponsor when we
implemented SAP R/3 almost eight years back. SAP R/3 has helped us in
streamlining our internal business processes to make them more efficient and
integrated. There are a host of other systems including reporting and dashboards
that have also been put up.

In a competitive market like India, we need to respond to the dynamically
changing demand patterns and supply products to the markets on time. To achieve
the purpose we have technology-enabled a number of processes with our dealers
and suppliers as I feel that improving technology within the organization alone
cannot be a panacea for all issues in a supply or demand chainthe dealers and
suppliers need to be brought into the ambit of technology chain of the
organization as well. The objective is to have faster and more accurate
information exchange and eliminate manual and time consuming processes.

How are you using IT for increasing productivity in Hero Honda?

We have managed a stupendous turnaround in the last two years, and as we
celebrate the 25th year of Hero Honda, our numbers tell the entire story. We
have built this company on the foundation of values and principles, and the
continuing success of this company today proves the enduring significance of
these values. This is coupled with our strategy and efficient systems and
processes.

IT plays a key role in our organization in enhancing our productivity. All
our processes and operations are today fully integrated with IT. For example, we
have bar-coding systems fully integrated with our SAP, SMS based alerts to our
employees and dealers, workflows to improve internal productivity, dashboards
and other reporting tools to enhance our decision making abilitiesIT
contributes very significantly to our business today and plays a key role in
where we stand and aspires to go further.

Can IT be used for growing your topline as well?

Absolutely. Topline is all about getting our products to more and more
customers, and in the process keep expanding our customer base. One has to
ensure that the right product reaches the customer on time and at the right
price. We use the Internet to procure data on consumer buying patterns and
analyze that to decide our strategyand all this is IT enabledbe it our
customer relationship program, our integration with dealers for information
sharing or our internal data warehouse programs. On the supply side, we have DOL
(Direct Online) supplies with a number of suppliers, and IT again plays a key
role in this. This enables us to fulfill dynamically changing demands at a short
notice.

We continue to invest significantly in IT. For example, we have recently
embarked on a major dealer management system initiative to link all our dealers
and have real time customer information. Similarly, we are enhancing our CRM
systemthe Hero Honda passport system to make it more technology enabled. There
are a number of other initiatives underway.

You have been talking about liquidity crisis, how consumers do not have
enough cash in hand to make purchases. Do you think technology can address this
issuemaybe by use of mechanisms like online payment or instant clearance of
loan applications?

I think in todays time, it is not technology that is impeding the
availability of cash in the hands of the consumerit is the overall credit
squeeze and the very high rates of interest on two-wheelers which has been a
roadblock for the growth of two-wheeler industry in the country. I think one
needs to work on that and technology can always supplement to make processes
more efficient. Once money is available in the market, IT can certainly play a
roleafter all one can utilize technology to reach out to potential customers
in far-flung areasin fact, the opportunities are phenomenal.

What measures are you leveraging to tackle the recession, particularly in
Hero Honda?

The automotive industry at large is going through a lean patch since
2007-08. As I said earlier, the factors pulling down the growth in the auto
sector have been the very high interest rates and the overall credit squeeze.
Even in the midst of this massive slowdown in the last financial year (2007-08)
when the domestic motorcycle industry declined significantly, we at Hero Honda
reported positive numbers and surpassed the previous years sales tally. We have
kept up the momentum this year too, consistently outpacing the industry. While
the domestic industry grew at 2%, Hero Honda grew at 11% in the nine month
period between April-Dec08. Our share in the domestic two-wheeler industry is
at an all-time high of more than 56% now.

As I see ahead, we are cautiously optimistic considering some of the measures
being taken by the government including the recent fuel price cuts that has led
to much lower inflation rates with inflation below 5% at present, likely further
cuts in interest rates, etc.

At the World Economic Forum in Davos you spoke about targeting the rural
market. How do you plan to do so?

Rural penetration of two-wheelers is still very low, as less than 10% of
rural households own a two-wheeler. So there is a large market to be tapped in
rural India. The primary objective is to reach out to as many potential
customers in the rural areas as possible.

While strengthening our presence in the urban markets, we also have had
several rural initiatives. We have created a dedicated rural vertical to give
focus and consolidate all our initiatives. As part of this strategy, we are
mapping the demographic and psychographic landscape of rural India. It is
helping us in formulating region-specific modules to reach out to potential
customers at a very local level.

You are right when you say technology would play a major role for targeting
this market and we have taken a number of technology-led initiatives to support
our strategy for rural markets.

From a CEO perspective, how tech savvy are you. In fact, how much tech
savvy should a CEO be?

I guess I am fairly technology savvy. I have been using my own PC/laptop for
a number of years. I carry an Apple McAir and Google phone and am always
on-line with my Blackberry. I feel a CEO in todays time has to be tech savvy
to understand how technology can help improve topline and bottomline in the
organization, and also to be in touch with his/her team.

Stuti Das

stutid@cybermedia.co.in