Hero MotoCorp’s joint managing director Sunil Kant Munjal has decided to step down from the company’s board as Hero Group, run by the Munjal family, seeks to enter high growth businesses, including defence and power.
Sunil Munjal’s tenure as joint MD ends on August 16.
A statement from the BML Munjal family said the step down is to diversify the $5-billion Hero Group into high-growth businesses, which will be headed by Sunil Munjal.
A company source confirmed that the group will expand into the areas of defence and power.
Sunil Munjal is the younger brother of Pawan Munjal, chairman, MD and chief executive officer of Hero MotoCorp, the world’s single-largest two-wheeler manufacturer.
“This is also an exciting time for me to consolidate… and to explore new opportunities that are close to my heart,” said the younger Munjal.
The Hero group had tried to enter the defence business last year through an acquisition of Pipavav Defence & Offshore Engineering Co, but the deal was snapped up by Anil Ambani-led Reliance Infrastructure.
Hero had also raised around ₹2,000 crore to go ahead with the deal. The money, sources said, will be put into the new ventures.
The move is timely, as Prime Minister Narendra Modi wants to transform India from an importer of military equipment to a manufacturer, with the country’s defence spending expected to cross $620 billion by 2022. Add that to the government opening up the sector to 49% foreign direct investment (FDI), many more joint ventures to be formed. Around $130 billion of defence contracts are expected to come up in the next few years.
For example, Anil Ambani’s Pipavav Defence & Offshore Engineering Co has been in talks with Germany’s Atlas Elektronik GmbH to make advanced torpedos in India.
The Hero group is already present in the renewable energy space through Hero Future Energies, run by Rahul Munjal.
The new power business that Sunil Munjal plans, will complement the existing portfolio.
Sunil Munjal already runs some non-automotive businesses, such as Hero Corporate Service (consulting and insurance), BPO, reality, Mindmine (traning), Hero Steel (cold steel pressing), which has little contribution to Hero Group’s overall revenue.
Both power and defence are businesses of scale, which Munjal is not used to running all by himself. He has not been involved in Hero MotoCorp’s day-to-day operations, run by Pawan and a team of professionals. Throw in the growing competition from large corporate houses — Reliance Industries, Reliance Group, Mahindra Group, Bharat Forge, Tata Group and Hinduja — the transition may not be an easy one.