 keynote speaker Mr Rohit Gauti, CEO Hero Cycles Ltd. He will share his thoughts on why purpose before profit is very important to stand strong in future. Now Rohit Gauti is leading one of the largest cycle companies in the world as its CEO. He has been at the helm of this global company since the last three years and has ensured not only hero continues to grow and stays the undisputed market leader that it is with almost 43% share in India, in Indian market itself, but also grows the premiums bicycles market in India through Firefox Bikes Limited and the European market through its UK subsidiary Ausid Sports Limited Manchester. Ladies and gentlemen, I want all of you to join me in welcoming with a virtual applause over to you Mr Gauti, a very warm welcome to you. Thank you, thank you Khati. A very good afternoon to all, to all who have been able to join and to all who will be joining very very soon. Andraag and his team over the years have created a brilliant organization and over the last 24 hours I've been witnessing some very very interesting conversations around this it's a real pleasure to be presenting to this audience and thank you for inviting me to share my thoughts. When the conversation came around what should I be sharing and there were some options which were given, I think I immediately chose purpose before profit because that's something which is absolutely relevant that stainless power in the current context that becomes extremely important. I'm going to just share a presentation slide for all of you so that becomes convenient yes. So yeah as I was sharing when I was given some choices of on what I want to speak upon I think purpose before profit really really I thought is the most relevant topic to speak upon in the context of our brand hero and I'll try and share this for the next 25 to 30 minutes my presentation and then we will be more than I will be more than happy to take any questions on any of the thoughts which I'm sharing. All of us know I mean I'm sure most of the people would have heard Sam and Sinek and if you there's no better masterclass than what purpose why of any brand and to me he beautifully defines why it is extremely important to have why for the brand and why is nothing but the purpose. Over the last few months we have seen some different ways of working I thought I'll just share some of the screens from our place of working this is a screen where these are our team members our partners distributors dealers and we're just celebrating Diwali you know and I would have never thought that typically what we do is once in a year we kind of 3000 people meet in a you know gathering across the country and celebrate Diwali this has been a tradition which we have been doing for quite a few years now and this year we're just not able to do it but we said no we have to do it so so we kind of you know obviously pivoted around virtual did some various kind of fancy dressings and Diwali gifts virtual gifts so this is the kind of change which all of us are seeing you know obviously we are also seeking balance in our lives the left hand side is is a favorite shot of mine where people are cycling so how do we live in the new normal basically we are all seeking balance in this year more than any time and then at the same time we are trying to literally re-evaluate our operating ways both at us organization and more importantly at an individual level people trying to multitask because suddenly work from home is what we are forced to do so all in all there has been a fundamental shift during the year in the last few months and that has made us very very humble you know one feeling which I always know I whenever I interface with the employees with my partners whenever I go to the factories I'm seeing there is a sense of humility which has come into us as human being which was possibly not there there was a sense of arrogance that we can overcome anything but suddenly a small microbe comes and really disturbs the entire ecosystem in a way so it is we have become very very responsible to some extent absolutely more socially responsible more sensitive to nature more aware of our surroundings I'm sure most of us remember the face of the local Kirana now even with his or her mask and more importantly I think over the last nine to ten months quite a few of us actually have started looking in words which means we are trying to find out what our real calling is what our real purpose is what is the sense of purpose what is our Ikega and their various words but overall it has also told us that how unprepared we are in spite of all the scenario building which we are doing in the corporate world in spite of various risk matrixes which we as an organization try to create it has told us that we are not prepared similarly as a consumer and all of us are consumers we are seeing a definite shift words like social responsibility inclusiveness which earlier used to have lower weightage in the so-called purchase preferences have become suddenly become extremely important we as consumers are trying to spend less but we are also seeking value for money we actually are looking at categories first categories which are socially responsible categories which are having an environmental impact and then go to the brand so the hierarchy of decision making to a large extent has changed where categories become more important than the brand earlier we used to think of what brand to buy now we think more category to buy and these are these are fundamental shifts which are happening in the consumer behavior we are also wanting our institutions to do more suddenly I should not I should not say suddenly but our expectation from our own governments across the globe have increased many fold we are looking up to to the institutions to to lead us we are looking up to the brands to lead us we want brands to be an example and guide us through this change we want brands to make us more optimistic about the world which is around us we want brands to really really demonstrate that this crisis can be fought and and innovate accordingly so that we can live in a much better world so overall the gen z which usually and which what we have seen in consumer behavior is which has been doing it for the last four or five years the latest I mean that's the trend we are seeing in this in this generation as a consumer cohort that their anti-capitalism if I might say so and this set of consumers suddenly have found a new voice and this gives an opportunity to brands to corporations which are being seen by these set of consumer cohort as as a capitalist actually that we can actually redefine capitalism and we can actually seek much more acceptance from this from this generation because this generation believes that to a large extent again and I'm not generalizing I'm not talking about the entire generation but we're talking about friends here that large corporations are typically profit-making machines and in their quest of profit they create huge imbalances in the environment and the world of tomorrow and this is the time when in general as I said earlier we are being much more humble the brands are becoming much more humble there is a humility around the brands we can actually speak to these sense of to this set of consumers convey to these group of consumers our real purpose and I'm sure we can win back these set of millions very very soon it's not that the baby boomers were not wanting the brands to be change agents they were also to some extent but here we're talking about degrees especially with covid especially with this pandemic virtually every second person is expecting brands to be much more responsible towards environment and societies in fact over the last few months if you look at any data being responsible is a much demanded expectation earlier it used to be nice to have whether you are being responsible towards your society your environment your employees suddenly it is becoming it is it is a much demanded expectation in the last one year and that's a significant change event we see when we speak to the consumers when we speak to our own employees or when we speak to any of the trade partners they are saying that look you always wanted all brands to be responsible but today the threshold of being responsible has increased and therefore it's extremely important that as a brand you not only tell what your brand positioning is you don't only tell what your brand is going to play in which consumer cohort but very very important what is the purpose of the brand and why is this brand exist we have seen many many emerging dialogues of purpose today now some of them could be pure marketing communication gimmicks but at the same time the brands are doing some innovation to talk to the consumer in an innovative and interesting way and I mean like let's let's accept the fact that business was and is never about profits when I say business was is was never about profits it was never about maximizing profit making profits extremely important at the sea of this organization whenever I go to into a board meet every quarter I have to meet my profit targets but that does not mean that I have to meet only my profit targets profits cannot be the purpose think of any successful entrepreneur think of think of Mark Zuckerberg I'm not I'm not I'm pretty sure that when they started the business they never thought that we are going to make profits they started those businesses they started those enterprises because they were passionate about those things profit follows but the why to them was extremely clear that why are they getting into these businesses at hero and as I come back to our journey of hero brand I mean it's it's so beautiful we started our first bicycles rolled out in 1956 and and there is a folklore in the company and its folklore is usually you know are are based on or based on what the facts were at some point of time and obviously I was not there but when you speak to people who have been there around in this organization for long when you read books about us and there are many books which are written about hero cycles journey and the Munjal brothers who are the who were the founders of this particular corporate I mean it's interesting that they were absolutely passionate about one thing and that one thing was how do we move this country who has just got this independence think 1956 the penetration of two-wheelers and four-wheelers was very very low and and at that point of time the founding fathers of this particular brand thought that this is our passion this is our purpose and that purpose is that how can we give wheels to this post independence India obviously they never put these words which I am now trying to look back and connect the dots but if you speak to the current chairman of this organization his father actually started this company and this brand and you hear that he was very very clear that what I am doing is I am not making bicycles what I am doing is I am providing mobility to our countrymen in our factory you know when when when people like my me who try and who have come from various different backgrounds at some point of time you say why can't our margins be much higher than what they are and there's a literal pushback from everybody saying that no first and foremost are we stranding two to our values of durability reliability and affordability these were some of the values when we started and there is reason to these values because at that point of time think 1956 think 1960s you know it was not that India's growth momentum was as it is today the penetration of two-wheelers uh hero motorcycles started much later it was primarily cycles which were moving the countrymen especially in tier two tier three and rural and rural India and therefore we were very very clear that when we make the bike cycle we will never at least from our standards try and maximize profits but we will keep the profits fixed so whatever innovation on material we will do whatever innovation on freight cost whatever innovation on logistics whatever innovation on material whatever innovation on design whatever innovation any any cost savings anything do with our supply chain partners we shall pass on that particular set of margins to the end consumer so that the penetration of bicycle improves in the country and it really helps our citizens to move I mean and it was not only that you know it was the the purpose the brand always remained true to its purpose and with evolving country it steered alongside whether it was talking about women empowerment at some point of time in 1970s or ensuring that most of the parts and the components of the cycles and the brand was made in India and I'm talking again 60s and 70s just try to think of those time the brand remained always true to its purpose of of moving the country of moving citizens from point A to point B as the preferred mode of transport these are some of the earlier campaigns you're trying to look at the archive book and see what we were doing to being true and in every time you see something like this it was very very clear that the brand purpose was very clear it was always giving accessibility to all its users across segments I mean this is this is much later we realize that you know there are these Asha workers in in villages who need a special type of bicycle to go and really take care of the and this is this is 80s now and there's 90s now not 70s and 60s so obviously the team kept on creating with innovating with consumer needs and created products with the whole purpose that we are here to move India and these Asha workers who are also kind of you know half nurse if I might say so help them to really move from one place to another in order to help the country so very clearly the purpose of the brand through the 50s 60s 1780s and 90s was was and is mobility and what a journey and triple journey it has been for hero cycles not only we became India's number one bicycle brand but as I speak we are the world's largest selling brand in terms of volume and therefore this journey has been incredible go to the villages and again very very focused on the purpose that we are here to move you and in the process as you move from a place let's call a bau bazaar in West Bengal 10 kilometers in that place instead of going in a shared auto your earnings of this particular lady will increase and at the same time she will create her own asset by throwing through by buying through a finance company I mean we have tagged with most of the NDFCs and we really really go in deep rural to ensure that we are being true to the purpose as I keep on saying profit has never been about shares at brand hero it's about playing a meaningful role in the society and one thing about this whole cycling you know over the last few days and people who are in Delhi would would relate to it if you go to India gate you can see a lot of consumers lot of people coming and actually enjoying by cycling and in one of those consumer insight immersions which we were doing at India gate one statement and that statement I thought I must share with the group we asked them why I mean what is the great thing about cycling and she said the exhilaration I feel when the wind touches my face is no machine of any house power can ever give me that joy when I heard that and then I was reading somewhere about a statement which Farid Zakaria made and and he said that and I can relate to that when this consumer said and the statement which Farid said that in these times more than ever especially when digital and digitalization is taking over truly everything we will cherish the things in us that are most human and I said there cannot be more human thing in a wind touching your face when you're cycling so that's the brand we are trying to create which is which is having a purpose by the same time I was sold as things moved to 90s to 2000s to to the current pandemic we pivoted we pivoted because we realized the society needs a different push now we pivoted from mobility to sustainable mobility we realized the kind of pollution the kind of damage or the common emission which is happening in this in this country it's extremely important that the brand like hero cycles who has been kind of having the purpose of of moving India now has to take a larger purpose of sustainable mobility and that's what now for the last two to three years we are trying to achieve that our purpose now is from is not only sheer mobility but sustained mobility which is much more responsible way of doing mobility all of us know that you know if one person uses a hero cycle instead of a car almost one and a half times or tons of carbon dioxide can be offset by one particular cycle all of us can see the pictures here the kind of decongestion usage of hero cycles can do I mean data says very clearly that the congestion can actually reduced by 400 percent so what we said to ourselves is that can we take a larger higher order purpose from which is that can we reduce carbon emission by x percentage and we said yes why not and we did studies a lot of studies we have done with various partners and the data is very very interesting and the data says that if 40 percent of the commuting traffic which is less than 7 kilometers moves to cycle it can actually contribute to 1.1 percent of the country GDP and obviously the benefits will come in terms of health which is reducing pollution the benefit will come in terms of India being much more fitter the benefits will come in terms of India being more healthier so that is what we are seeking and that is the purpose of our brand hero now that how can we create a brand which is absolutely efficient for future commute with a very clear vision of achieving a clean India fit India and move India over the years we realized that the black cycle the hero classical hero is helping India to move we quickly said to ourselves okay we have moved a particular movement there almost five crores bicycle which translates roughly into 20 crores 25 crores of households we have been able to give bicycles to commute how can we now convert more and more two-wheelers and four-wheelers into electric journey so we launched a brand extension called hero electro this is an electric bicycle which we launched and very clearly the whole purpose is that how can we migrate most of the people into this category of e-cycles from motorcycles or from cars some of most of you who have been to Europe would have seen the kind of penetration e-cycles have done there it is actually the largest selling category now in terms of EV so if in Europe if you see the number of EVs four-wheelers two-wheelers and e-cycles you realize e-cycle is the largest selling category there obviously there are reasons there and I'll cover that but we said as a brand is our purpose should be now to create a cleaner India a fitter India so we have so what we said let's segment our brands so there is a brand called hero cycles which will take the journey of move India we have brands like hero sprint and firefox which will take the journey of fit India and then then we have hero electro who will have a very very clear focus purpose of converting this country into an e-country for a clean India let me just show you a quick video of what this electric bike is all about and what I've been doing with that this is the bike which we launched around two years back so this is the our initiative to keep our brand purpose absolutely relevant to all set of consumers this is an e-bike we realize that we need to kind of refresh our brand hero and then we launch hero electro not only we quickly innovated to launch an EV which is you know one of the issues with any of the electric vehicles and an eruption of electric vehicles in India has been the charging that you need to create a charging infrastructure before actually you can bring in two-wheelers and four-wheelers so we said okay there are so many mobiles in this company in this country which can be charged immediately so quickly take the technology put lithium ion batteries into these e-cycles and now they can be charged at any household you know so they don't need charging we believe this along with various government initiatives and if you're able to facilitate the ecosystem for safe cycling I think this can really really create a huge difference to the country especially in these times when we're realizing that what kind of imbalances if there are any imbalances which happen in the in the ecosystem what what kind of pandemic actually it can cause so that's what we are trying to pivot ourselves the purpose we are saying why we exist today is for sustainable mobility we need to invest in futuristic manufacturing facilities we have invested quite heavily in fact in the last seven months when the entire world was contracting its capex we were possibly one of the few companies and brands who are investing in in in in setting up a new factory we want to be the thought leader very very clearly we have almost I mean the e-cycles we have 80% share on bicycles hero has almost a 42 43% market share but more importantly we want to be continue to be a thought leader ease of adoption wider distribution service network this is a product at the end of the day now people are using it as solution so from product to solution that journey of ease of adoption with respect to service network with respect to financing options more importantly how do we facilitate the ecosystem as a brand you might have a purpose but then some purposes might not be achieved on your own and therefore we said we need to facilitate the ecosystem over the last many months between us me my chairman we have been engaging with the government be it need the IO be it various ministries to actually tell them the benefits you know what happened over the last nine months I mean the roads were empty all of you would have seen that right and and naturally that roads were filled by bicycles so so very clearly if you make the roads empty and obviously you can't do that but if you create dedicated lanes for cycles then you can actually inspire of a cycling moment a cycling brand into this company so that's what we are saying we can actually inspire a huge moment to a brand hero cycles we can create cycling tracks we are impact in in two cities we are investing along with the local bodies to create those cycling tracks and how do we then facilitate the ecosystem by advocating and championing the policy level changes so that's the overall frame I'm not talking about brand sharply here because I wanted to share the overall ecosystem of what hero cycles is doing and actually more than ever our brand commitment to sustainable sustainable mobility has increased many folds we are we are engaging with many stakeholders we are trying to create change across the bodies whether it is partnering with TV channels whether it is partnering with newspapers and the whole idea is that how can we bring sustainable mobility through hero into this country just wanted to share the last video before I sign off and this is what actually we want to achieve this whole cycle of change you know if you if you can do that nothing like it given a rest it's never looked more beautiful when plants animals are going away like this then we're talking about city area is clean because I didn't start my car today is not ecological change it's a civic change expect people to think about these wonderful clean days that we've spent over the last few weeks and both that won't get back to our own habits one thing I say is make way for bicycles make way for more shape giving make way for a much more comfortable way of riding last but not the least we sincerely believe hero cycles is a brand can create a mass movement about changing community habits and we have the responsibility of creating a far greener pollution free world not only for this generation but for our future generations living I think Lenin said this I remember his and these famous words keep keeps on echoing on my mind over the last few months that their decades when nothing happens and then their weeks when decades happen this is so true for our category and for our brand and therefore our challenge is a brand for tomorrow is not only to sustain this consumer behavior towards cycling in general but also multiplied many food thank you thank you very much for listening to me if there any questions I am more than happy to answer thank you once again thank you thank you so much it was awe inspiring the entire presentation and the thoughts that hero has put behind hero cycles and you know we've already seen during pandemic rise in cyclers you know even purchases or rather a layman like me went on to buy a bicycle and couldn't get it because there was so much demand and less supply at that time so of course we are seeing a rise change that we want to see but do you think it's a sustained change so here I would like to bring in an audience question which comes in for you which says the that globally studies have shown that consumers do not mind paying more for a brand whose purpose is defined and resonates with consumer values India is a price sensitive market so do you think that Indian consumers will pay more for a product if the company has a clearly defined purpose now this is true for hero cycles so we would love to know from you I mean my mind the answer is absolutely simple as far as you're able to deliver value to the consumer it's not about price and value comes in various facets purpose is one of the many values you are delivering to your consumer right purpose is not the only value you're delivering to your consumer but the purpose has a higher weightage than any other benefits you're offering but if you are able to clarify to the consumer or the consumer can resonate with your purpose will he pay two times maybe not but as far as you are able to give him value and purposes in my mind the overall arching value of that particular brand there's no reason why consumer will not pay for that right absolutely another quick question the audience has put in which says that many brands have in the past spoken about social issues in their larger context of brand purpose however in the recent past we've seen that brands being targeted online so with trolls with questions on whether they are sticking to their guidelines the brand values and the brand purpose so which is the way forward in such cases I think we need to differentiate purpose and communication the trolls the reactions of consumers are primarily to a tactical things which brands are trying to do to do a short term responsible behavior if as a brand you are being true to your purpose and that is nothing to with covid covid is only multiplying that weightage to your purpose at least in our case then there is no reason why consumers are going to troll you but if you're going to be super smart and trying to use some opportunity then be ready for that so all right now another question here which I think brands will have a little insight to take from you here in the production of cycles that hero cycles make is hero being sustainable if so then how interesting question and let me answer straight away we are trying to be sustainable we are not 100 sustainable have we stopped use of plastic the answer is no have we minimized use of plastic the answer is yes are we taking care of all ethical issues of being social responsible the answer is yes because we are supplying to Europe we are supplying to Indian markets we are very very from an ethical standard perspective we are very very conscious but are we 100 sustainable dance for example we are using we are using trucks to transport cycle from point A to point B and therefore in the process are we giving it back the camera emission our our today our carbon score is not is not zero so yes we are trying the new factory for example which we have just set up and it's about to start production that's again a completely different ball game it's an absolutely green factory I mean I say absolutely green not 100% 99% I mean far higher green standards than what today my other factories are so the intent is absolutely that if you want to be a brand which wants to do sustainable mobility you as a product maker has to become absolutely sustainable first so yes to so therefore a short answer are we 100% the answer is no but are we improving the answer is yes that's lovely to hear so another quick question now this may be personal to a lot of this generation as you called us you know who are trying to make that change in their lifestyle I have started seeing that once the lockdown was opened up the traffic has come back the cyclers have started moving away from the roads so as hero cycles as a brand as an organization are making amends with government to create policies to have more cycling lanes to have any policies like that in the future yeah we are doing some very very specific interventions and as I shared in my presentation whether in terms of investment to co-create along with the government roads for cyclists separately the government of India has in the last six months actually have created a larger body called Bicycle Development Council it is headed by a secretary level bureaucrat and in that Bicycle Development Council there are many bureaucrats who are let's say people who are heading smart cities commissioners who are setting smart cities NGOs many more bicycle ambassadors from each city and that whole ambition they're actually you know if you ask me one line agenda which I'm and we are trying as an organization from the government is that the so-called smart city has to have a dedicated lane for the cycle there has to be some budgetary allocation for creating the cycling infrastructure so yes the intent is there from the government side the intent is there from the bureaucrat side the intent is there from the social bodies and obviously as a brand we are trying to anchor and create an ecosystem because absolutely right I mean when the roads were empty we were all enjoying cycling as the roads become much more the traffic density increases the cycling does not get the way of right in this country but I'm pretty confident that we will get our way of right provided all of us including your generation as you say become party to this movement absolutely and we are looking forward to it sir and we are hoping that more brands like yours come forward and join this movement of change so thank you so much for sharing your insights and story with us if a rem appreciates your time and effort and all our viewers have taken I'm sure a lot of takeaways from your presentation so thank you so much sir thank you thank you Kathy and thank you everyone for listening to me really appreciate