The iconic Harley-Davidson motorcycles could become a lot more affordable for Indian buyers if the local arm of the US company of the same name goes ahead with its plan to develop an India-specific model.
At least six people associated with the project independently said Harley is working closely with the Indian suppliers on the design and development of a motorcycle that will fit the budget of Indian buyers. Of the six, four are directly involved with the project. None of the six wanted to be identified given the secrecy surrounding the initiative.
In an email response, Sanjay Tripathi, Harley-Davidson India’s director (marketing), said: “To strengthen our operations in the country, Harley-Davidson has set up a CKD (completely knocked down) unit to assemble select motorcycle models for the Indian market. We have recently launched three CKD bikes in the market and will continue to focus on our CKD operations for the moment. Having said that, we will continue to carefully evaluate any option that may benefit our customers and the business, and as a longstanding company policy, we do not comment on market speculation or rumours.”
The Indian model, parts for which will be made locally, will also be exported to Asean (Association of Southeast Asian Nations) countries.
Harley adopted a similar strategy of high level customization for emerging markets such as China, said an analyst with a global consulting firm, who declined to be identified. He is not aware of Harley’s India plans.
The new model is expected to have an engine displacement in the range of 500-750cc and will be ready for launch sometime between mid-2012 and early-2013, according to one of the four people directly involved with the project.
“The price could be as low as Rs4 lakh,” said another of the four; this person is involved in the sales and marketing of Harley-Davidson bikes.
With the company increasingly focusing on emerging markets, there will be many more such offerings from its local arm, said a third person.
Harley officials have been meetings Indian suppliers and discussing the project for months now.
The company commenced its India operations in August 2009. Encouraged by the initial response, Harley started assembling some of its select models this year at its newly established factory in Bawal, near Haryana.
It currently sells 15 models that are priced upwards of Rs5.5 lakh. Most of the models are imported.
In India, imported bikes attract a duty of at least 90%, while CKD kits attract a duty of 30%.
“Local manufacturing will help the company in paring the duty costs substantially,” said Kumar Kandaswami, senior director at audit and consulting firm Deloitte Touche Tohmatsu India Pvt. Ltd.
Even niche product companies need to offer some price points and configurations that work for a slightly larger cross-section of Indian consumers and hence it only makes sense to customize the bike, given that India is a fast growing market, he added.
Harley-Davidson currently sells motorcycles through dealers in Delhi, Mumbai, Bangalore and Hyderabad. The company sold 200-250 motorcycles in India in the six months to December.
Tripathi of Harley-Davidson said the company is assessing the possibility of expanding its dealership network to Kolkata, Ahmedabad and Chennai.
The burgeoning number of millionaires in India have prompted several premium global bike makers to tap the local market. According to Credit Suisse’s global wealth report, in 2010, India had 170,000 millionaires in dollar terms.
Lifetime Contribution Award Brijmohan Lall Munjal
In all of AIMA’s history spanning more than 5 decades, it has been promoting excellence in the discipline of management in business and education. The AIMA Managing India Awards was constituted last year to promote management in every sphere of life and be recognized as a patron of management in fields as varied as commerce, art, and cinema.
Management is the science of perfecting the process and pushing your abilities to achieve the best and it applies everywhere. From teamwork to leadership qualities to quick-fire decision making abilities, all management principles and theories find practical application in each and every single one of our categories.
India is not just about management and thriving businesses, but it is also about arts, cinema, media and social change. It is the synergy of all these varied disciplines that has made us a force to reckon with. In the year 2010, we have seen all-round contributions from all these spheres which made the world sit up and take notice of the emerging super-power, India.
The AIMA Managing India Awards 2011 proposes to bring all these vibrant disciplines, which reflect the state of advanced development in an economy under one umbrella and recognize the contributions of those who have set benchmarks of excellence in their respective spheres and have helped built Brand India.
AIMA Managing India Awards 2011 aims to recognize the achievers who have made a fundamental difference, creating an edge above peers for others to emulate. This is a platform to recognize the contributions of these stalwarts from different fields, all outstanding performers in their own right, who epitomize strength, ingenuity, knowledge, foresight, who excelled in their respective spheres with vision and inspiration and are worthy of emulation and admiration.
A neutral jury chaired by Mr Sanjiv Goenka, Immediate Past President, AIMA and Vice Chairman, RPG Enterprises has decided the eminent personalities who will be awarded under different categories.
The winners this year include :
Lifetime Contribution Award –Mr Brijmohan Lall Munjal, Founder Director & Chairman, Hero Group
Management is the science of perfecting the process and pushing your abilities to achieve the best and it applies everywhere. From teamwork to leadership qualities to quick-fire decision making abilities, all management principles and theories find practical application in each and every single one of our categories.
India is not just about management and thriving businesses, but it is also about arts, cinema, media and social change. It is the synergy of all these varied disciplines that has made us a force to reckon with. In the year 2010, we have seen all-round contributions from all these spheres which made the world sit up and take notice of the emerging super-power, India.
The AIMA Managing India Awards 2011 proposes to bring all these vibrant disciplines, which reflect the state of advanced development in an economy under one umbrella and recognize the contributions of those who have set benchmarks of excellence in their respective spheres and have helped built Brand India.
AIMA Managing India Awards 2011 aims to recognize the achievers who have made a fundamental difference, creating an edge above peers for others to emulate. This is a platform to recognize the contributions of these stalwarts from different fields, all outstanding performers in their own right, who epitomize strength, ingenuity, knowledge, foresight, who excelled in their respective spheres with vision and inspiration and are worthy of emulation and admiration.
A neutral jury chaired by Mr Sanjiv Goenka, Immediate Past President, AIMA and Vice Chairman, RPG Enterprises has decided the eminent personalities who will be awarded under different categories.
The winners this year include :
Lifetime Contribution Award –Mr Brijmohan Lall Munjal, Founder Director & Chairman, Hero Group
S&T Motors launches Hyosung superbikes for Rs 4.75-5.69 lakh
South Korean two-wheeler maker S&T Motors today launched its two Hyosung branded premium bikes in India, priced between Rs 4.75 lakh and Rs 5.69 lakh (ex-showroom, Delhi).
The company has joined hands with Pune-based Garware Motors to set up an assembly line at Wai in Maharashtra and is looking to form a joint venture with the domestic firm to bring in its entire range of products in the next 3-5 years.
"India is really moving in the right direction and so we are here. It is the right time and right place for us," S&T Motors President and CEO Taekwon Kim told reporters here.
The company will assemble the two Hyosung products at the newly built assembly facility, set up by Garware Motors, and will sell these as completely knocked down units, he added.
S&T Motors today introduced its sports bike GT650R, powered by a 650cc engine, in two options for Rs 4.75 lakh and Rs 4.90 lakh. It has also rolled out a 700cc cruise bike – ST7 -- for Rs 5.69 lakh.
The company has joined hands with Pune-based Garware Motors to set up an assembly line at Wai in Maharashtra and is looking to form a joint venture with the domestic firm to bring in its entire range of products in the next 3-5 years.
"India is really moving in the right direction and so we are here. It is the right time and right place for us," S&T Motors President and CEO Taekwon Kim told reporters here.
The company will assemble the two Hyosung products at the newly built assembly facility, set up by Garware Motors, and will sell these as completely knocked down units, he added.
S&T Motors today introduced its sports bike GT650R, powered by a 650cc engine, in two options for Rs 4.75 lakh and Rs 4.90 lakh. It has also rolled out a 700cc cruise bike – ST7 -- for Rs 5.69 lakh.
HIPL pledges 2.6% stake in Hero Honda to IL&FS
NEW DELHI: The country's largest two-wheeler maker Hero Honda today said its promoter group firm Hero Investments Pvt Ltd (HIPL) has pledged 2.6 per cent of the company's stake estimated to be worth over Rs 900 crore.
According to a filing to the Bombay Stock Exchange (BSE), HIPL has pledged 52 lakh shares on two equal transactions to IL&FS Trust Company Ltd on April 13.
According to a filing to the Bombay Stock Exchange (BSE), HIPL has pledged 52 lakh shares on two equal transactions to IL&FS Trust Company Ltd on April 13.
Rain forecast raises hopes of farm boost, sales boom
The India Meteorological Department’s (IMD's) forecast on Tuesday of a normal monsoon this year has raised the prospects of higher agricultural production, lower food inflation and better rural sales for a host of consumer goods and services companies.
Although the monsoon-dependent agriculture con-tributes only about 16 per cent to its national income, farm output impacts food prices for urban consumers, rural incomes and markets for manufactured products and services.
At the agriculture ministry, excitement ran high after the forecast. The prospects of a bumper harvest in the monsoon-fed kharif season comes on top of a record crop of cereals, oilseeds, pulses and cotton that the ministry has estimated to have been achieved in 2010-11.
Agriculture secretary P K Basu said his ministry expected the forecast to induce more area to come under cotton, tobacco and pulses in addition to the main kharif crop of paddy. “Concerns of lower than normal rainfall over north-west and north-east India were there last year too, and still we achieved our second-best year of agricultural output,” he added.
“With a normal monsoon forecast, we are likely to head for bumper kharif crops of rice, maize, pulses and oilseeds,” Nityanand Roy, a senior analyst with Agriwatch, a New Delhi-based consultancy, said.
Agricultural scientists are hopeful that on-going measures to boost pulse, oilseed and cotton output will receive a further boost. “The availability of seeds is better than last year. And if the rains are as good and widespread as last year, farmers will spare no effort to adopt better seeds and inputs to raise productivity,” said Swapan Dutta, deputy director- general of crop sciences at the Indian Council of Agriculture Research.
A normal monsoon also means less migration from rural areas and more disposable income in the hands of the rural population. In turn, this means they will likely spend more on consumer goods and services, the director of Ncaer’s centre for macro- consumer research, Rajesh Shukla, said. Agriculture employs almost 60 per cent of the country’s labour. In absolute numbers, over 60 million people work on farms, according to labour ministry estimates.
Shukla said the cost of migration reduced the income levels of migrant workers and this could be up to 15 per cent of their average annual income. Financial Chronicle reported on April 15 that the implementation of the National Rural Employment Guarantee Scheme has already led to a labour shortage in the construction sector, for whom a normal monsoon is not good news. The movement of migrant farm workers to the grain bowl states of Punjab and Haryana has also dwindled following last year’s good monsoon. This year may see a repeat.
In the commodity market, prices are likely to be less volatile for farm produce, elping to bring down food inflation. “We saw price volatility after the worst drought in 37 years hit farm production in 2009. The lag effect of high prices we have felt so far is tapering off, and thanks to the normal monsoon last year, we expect to see food inflation stable around 9 per cent for rest of the year,” said Naveen Mathur, vice- president and research head with Angel Investments.
“The IMD’s long range forecast for June to September this year is most likely normal rains of 96 per cent to 104 per cent of the long period average (LPA). There is very low probability for seasonal rains to be deficient (less than 90 per cent of LPA) or excess (96 per cent to 104 per cent),” the minister for earth sciences, P K Bansal, said, releasing the government’s early monsoon outlook.
Some concerns about rain in the paddy and cotton growing north-west and horticultural north-east India could occur. “We would ascertain the onset and spread of the monsoon in June. Distribution of rain could be a little less than normal over the north-west and north-east due to the impact of La Nina,” Ajit Tyagi, IMD director- general, said.
As per market expectations, stock indices are likely to rise by 5 to 10 per cent, given a higher farm output and lower inflation.
After the drought of 2009, farm output declined by 0.2 per cent in 2009-10. Food inflation zoomed to 22 per cent the following year. However, after a normal monsoon next year, the 2010-11 crop output became the second best after the record output of 2008-09, taking the farm sector’s growth to nearly 6 per cent, as per estimates of the Planning Commission deputy chairman, Montek Singh Ahluwalia.
Although the monsoon-dependent agriculture con-tributes only about 16 per cent to its national income, farm output impacts food prices for urban consumers, rural incomes and markets for manufactured products and services.
At the agriculture ministry, excitement ran high after the forecast. The prospects of a bumper harvest in the monsoon-fed kharif season comes on top of a record crop of cereals, oilseeds, pulses and cotton that the ministry has estimated to have been achieved in 2010-11.
Agriculture secretary P K Basu said his ministry expected the forecast to induce more area to come under cotton, tobacco and pulses in addition to the main kharif crop of paddy. “Concerns of lower than normal rainfall over north-west and north-east India were there last year too, and still we achieved our second-best year of agricultural output,” he added.
“With a normal monsoon forecast, we are likely to head for bumper kharif crops of rice, maize, pulses and oilseeds,” Nityanand Roy, a senior analyst with Agriwatch, a New Delhi-based consultancy, said.
Agricultural scientists are hopeful that on-going measures to boost pulse, oilseed and cotton output will receive a further boost. “The availability of seeds is better than last year. And if the rains are as good and widespread as last year, farmers will spare no effort to adopt better seeds and inputs to raise productivity,” said Swapan Dutta, deputy director- general of crop sciences at the Indian Council of Agriculture Research.
A normal monsoon also means less migration from rural areas and more disposable income in the hands of the rural population. In turn, this means they will likely spend more on consumer goods and services, the director of Ncaer’s centre for macro- consumer research, Rajesh Shukla, said. Agriculture employs almost 60 per cent of the country’s labour. In absolute numbers, over 60 million people work on farms, according to labour ministry estimates.
Shukla said the cost of migration reduced the income levels of migrant workers and this could be up to 15 per cent of their average annual income. Financial Chronicle reported on April 15 that the implementation of the National Rural Employment Guarantee Scheme has already led to a labour shortage in the construction sector, for whom a normal monsoon is not good news. The movement of migrant farm workers to the grain bowl states of Punjab and Haryana has also dwindled following last year’s good monsoon. This year may see a repeat.
In the commodity market, prices are likely to be less volatile for farm produce, elping to bring down food inflation. “We saw price volatility after the worst drought in 37 years hit farm production in 2009. The lag effect of high prices we have felt so far is tapering off, and thanks to the normal monsoon last year, we expect to see food inflation stable around 9 per cent for rest of the year,” said Naveen Mathur, vice- president and research head with Angel Investments.
“The IMD’s long range forecast for June to September this year is most likely normal rains of 96 per cent to 104 per cent of the long period average (LPA). There is very low probability for seasonal rains to be deficient (less than 90 per cent of LPA) or excess (96 per cent to 104 per cent),” the minister for earth sciences, P K Bansal, said, releasing the government’s early monsoon outlook.
Some concerns about rain in the paddy and cotton growing north-west and horticultural north-east India could occur. “We would ascertain the onset and spread of the monsoon in June. Distribution of rain could be a little less than normal over the north-west and north-east due to the impact of La Nina,” Ajit Tyagi, IMD director- general, said.
As per market expectations, stock indices are likely to rise by 5 to 10 per cent, given a higher farm output and lower inflation.
After the drought of 2009, farm output declined by 0.2 per cent in 2009-10. Food inflation zoomed to 22 per cent the following year. However, after a normal monsoon next year, the 2010-11 crop output became the second best after the record output of 2008-09, taking the farm sector’s growth to nearly 6 per cent, as per estimates of the Planning Commission deputy chairman, Montek Singh Ahluwalia.
Honda in search of distribution key
While it has the firepower to launch new-age bikes, taking on Hero and Bajaj Auto on consumer touch-points will be a key challenge.
Post the termination of the joint venture with the Munjal-promoted Hero Group, Honda Motorcycle and Scooter India (HMSI) is set to go full throttle in the world’s second largest motorcycle market.
The company, which is the fourth largest two-wheeler manufacturer in the country at present, is already the king in the scooters market with a 43.2 per cent market share. But it has already realized that alone won’t be enough to achieve its stated target of becoming the number one two-wheeler brand in India. In the motorbike segment, it is the number four player with a share of just 7.4 per cent, according to the Society of Indian Automobile Manufacturers data for April-February.
So HMSI is already gearing up to introduce its first 100 cc bike in the Indian market next year. It wasn’t possible earlier because of the joint venture with the Hero Group.
While that is good news, industry insiders raise concern on Honda’s ability to put in place a distribution network that can take on the likes of Hero Honda and Bajaj Auto which have 4,500 and 3,600 touch points respectively.
Rakesh Batra, analyst automotive practice, Ernst &Young, says, “Hero Honda has cultivated marketing initiatives at the grassroot level over the last 30 years. To grow volumes, HMSI would have to reach out to customers in rural areas. The company also needs to put in place a cost-effective supply chain for delivering products.”
HMSI has a distribution network of 800 dealers and sub dealers. The company plans to add on 100 outlets in the current fiscal and an average of 200 new sale stations every year.
That is particularly critical as the company plans to focus on sales in rural areas to shore up volumes. “Currently, the demand is more from the urban market which is going to reverse in the next 10 years”, Shinji Aoyama, outgoing president and chief executive officer, HMSI, says. The company at present registers two-third of its sales from urban centres and the remaining one-third from rural and semi-urban areas.
Aoyama says it is crucial to introduce mass market products to drive up volumes in the Indian market. The Twister has been HMSI’s workhorse in the commuter segment and has clocked an average of 14,000 units every month since its launch in April 2010. Going ahead, HMSI is looking at launching “inexpensive models” in the 100+ cc and 150 cc segments to grab a bigger share of the market.
“We are in a hurry to fill up whatever we did not have in our product portfolio earlier. Introducing inexpensive models is a crucial area for us. While we will not disturb the existing Hero Honda customers, we will concentrate extensively in beefing up our line-up in the country”, Aoyama adds. Industry experts note that nearly 60 per cent of the nine million motorcycles sold in the last financial year came from products in the 100-110 cc segment and Hero Honda Splendor alone sold two million units in the segment.
VG Ramakrishnan, senior director, Frost & Sullivan, says, “The pressure has increased on the Indian subsidiary to increase sales in the motorcycle segment. While it would not be difficult for HMSI to get products into the Indian market, it will have to get the pricing right to scale up volumes.”
Another critical area HMSI needs to focus on, experts say, is to work on re-establishing the uniqueness of the Honda brand in the country. “Hero Honda has entrenched itself in the minds of customers and brand Honda is known for its association with Hero Honda. HMSI has to establish the uniqueness of its brand so that loyalties towards HMSI do not get transferred to Hero Honda”, says an industry observer on condition of anonymity.
At present, the company has three scooter brands — the Activa, Dio and Aviator priced between Rs 39,820 and Rs 50,020. Its motorcycle portfolio includes the CB Twister (Honda’s sole offering in the best-selling 110 cc segment), the CB Shine, the CB Stunner and the CB Stunner PGM-Fi in the 125 cc segment and the CB Unicorn and CB Dazzler in the 150 cc category.
Post the termination of the joint venture with the Munjal-promoted Hero Group, Honda Motorcycle and Scooter India (HMSI) is set to go full throttle in the world’s second largest motorcycle market.
The company, which is the fourth largest two-wheeler manufacturer in the country at present, is already the king in the scooters market with a 43.2 per cent market share. But it has already realized that alone won’t be enough to achieve its stated target of becoming the number one two-wheeler brand in India. In the motorbike segment, it is the number four player with a share of just 7.4 per cent, according to the Society of Indian Automobile Manufacturers data for April-February.
So HMSI is already gearing up to introduce its first 100 cc bike in the Indian market next year. It wasn’t possible earlier because of the joint venture with the Hero Group.
While that is good news, industry insiders raise concern on Honda’s ability to put in place a distribution network that can take on the likes of Hero Honda and Bajaj Auto which have 4,500 and 3,600 touch points respectively.
Rakesh Batra, analyst automotive practice, Ernst &Young, says, “Hero Honda has cultivated marketing initiatives at the grassroot level over the last 30 years. To grow volumes, HMSI would have to reach out to customers in rural areas. The company also needs to put in place a cost-effective supply chain for delivering products.”
HMSI has a distribution network of 800 dealers and sub dealers. The company plans to add on 100 outlets in the current fiscal and an average of 200 new sale stations every year.
That is particularly critical as the company plans to focus on sales in rural areas to shore up volumes. “Currently, the demand is more from the urban market which is going to reverse in the next 10 years”, Shinji Aoyama, outgoing president and chief executive officer, HMSI, says. The company at present registers two-third of its sales from urban centres and the remaining one-third from rural and semi-urban areas.
Aoyama says it is crucial to introduce mass market products to drive up volumes in the Indian market. The Twister has been HMSI’s workhorse in the commuter segment and has clocked an average of 14,000 units every month since its launch in April 2010. Going ahead, HMSI is looking at launching “inexpensive models” in the 100+ cc and 150 cc segments to grab a bigger share of the market.
“We are in a hurry to fill up whatever we did not have in our product portfolio earlier. Introducing inexpensive models is a crucial area for us. While we will not disturb the existing Hero Honda customers, we will concentrate extensively in beefing up our line-up in the country”, Aoyama adds. Industry experts note that nearly 60 per cent of the nine million motorcycles sold in the last financial year came from products in the 100-110 cc segment and Hero Honda Splendor alone sold two million units in the segment.
VG Ramakrishnan, senior director, Frost & Sullivan, says, “The pressure has increased on the Indian subsidiary to increase sales in the motorcycle segment. While it would not be difficult for HMSI to get products into the Indian market, it will have to get the pricing right to scale up volumes.”
Another critical area HMSI needs to focus on, experts say, is to work on re-establishing the uniqueness of the Honda brand in the country. “Hero Honda has entrenched itself in the minds of customers and brand Honda is known for its association with Hero Honda. HMSI has to establish the uniqueness of its brand so that loyalties towards HMSI do not get transferred to Hero Honda”, says an industry observer on condition of anonymity.
At present, the company has three scooter brands — the Activa, Dio and Aviator priced between Rs 39,820 and Rs 50,020. Its motorcycle portfolio includes the CB Twister (Honda’s sole offering in the best-selling 110 cc segment), the CB Shine, the CB Stunner and the CB Stunner PGM-Fi in the 125 cc segment and the CB Unicorn and CB Dazzler in the 150 cc category.
Bajaj to pack more punch with new Boxer
Bajaj Auto is all set to deliver a powerful punch with the reintroduction of the Boxer brand in the entry-level segment after a hiatus of six years. In its new avataar, the Boxer will be big, bold and powerful, targeting the workhorse like needs of rural customers that the redoubtable Rajdoot used to fulfil till it was phased out over a decade ago.
“We will reintroduce the Boxer brand in the market in three-four months. The bike will be very different from the Boxer that was introduced in 1997-98 and sold in the Indian market till 2004-05. The new Boxer will be differentiated and will eventually be available with different engine capacities and price points,” said Bajaj Auto president (motorcycle business) S Sridhar.
Unlike the original Boxer that was sold at rock-bottom price of Rs 31,000-32,000, the new boxer will be around the Rs 40,000-mark to ensure that the company did not bleed as it did the first time round. “The Boxer was a good bike. The name had tremendous brand recall. The only problem was it did not make money for Bajaj,” Sridhar pointed out.
That was the reason why Bajaj Auto decided to discontinue investments in the loss making entry-level bike segment comprising and focused completely on the sports and commuter segments where average price points are high and profit margin better. The new strategy panned out perfectly for Bajaj and its sportsbike Pulsar zoomed ahead of the competition, securing an unassailable 50% marketshare in the 1.35 lakh units per month industry. Incidentally, production of Boxer was never discontinued and the bike continued to be successfully sold in African markets.
Next, Bajaj launched the Discover in the commuter segment to replicate the success of the differentiated Pulsar in the sports category. In two years, Discover has become the second biggest bike brand in the segment after Splendor, grabbing 22% marketshare in the 5 lakh units per month industry. The company hopes to increase the share to 24-25% with the introduction of Discover 125. Hero Honda remains the leading player with Splendor Pro and Passion Pro making up nearly 70% of the market.
“Having tackled the two segments, we are now refocusing on the entry-level bikes where Platina has a 30% marketshare in the 1.2 lakh per month industry. Over the next two years, we will take the competition in the entry-level segment head on with different variants of the Boxer. Right now, Bajaj bikes are half the numbers that Hero Honda clocks in the domestic market. We hope to bridge a part of that gap before looking at other products,” Sridhar said, dismissing the possibility of re-launching scooters till the motorcycle mission was achieved.
Chairman emeritus Rahul Bajaj had, during his last visit to the city, hinted that it was time for Bajaj to introduce a scooter in two years as the market had grown significantly since Bajaj’s exit a couple of years ago.
“We will reintroduce the Boxer brand in the market in three-four months. The bike will be very different from the Boxer that was introduced in 1997-98 and sold in the Indian market till 2004-05. The new Boxer will be differentiated and will eventually be available with different engine capacities and price points,” said Bajaj Auto president (motorcycle business) S Sridhar.
Unlike the original Boxer that was sold at rock-bottom price of Rs 31,000-32,000, the new boxer will be around the Rs 40,000-mark to ensure that the company did not bleed as it did the first time round. “The Boxer was a good bike. The name had tremendous brand recall. The only problem was it did not make money for Bajaj,” Sridhar pointed out.
That was the reason why Bajaj Auto decided to discontinue investments in the loss making entry-level bike segment comprising and focused completely on the sports and commuter segments where average price points are high and profit margin better. The new strategy panned out perfectly for Bajaj and its sportsbike Pulsar zoomed ahead of the competition, securing an unassailable 50% marketshare in the 1.35 lakh units per month industry. Incidentally, production of Boxer was never discontinued and the bike continued to be successfully sold in African markets.
Next, Bajaj launched the Discover in the commuter segment to replicate the success of the differentiated Pulsar in the sports category. In two years, Discover has become the second biggest bike brand in the segment after Splendor, grabbing 22% marketshare in the 5 lakh units per month industry. The company hopes to increase the share to 24-25% with the introduction of Discover 125. Hero Honda remains the leading player with Splendor Pro and Passion Pro making up nearly 70% of the market.
“Having tackled the two segments, we are now refocusing on the entry-level bikes where Platina has a 30% marketshare in the 1.2 lakh per month industry. Over the next two years, we will take the competition in the entry-level segment head on with different variants of the Boxer. Right now, Bajaj bikes are half the numbers that Hero Honda clocks in the domestic market. We hope to bridge a part of that gap before looking at other products,” Sridhar said, dismissing the possibility of re-launching scooters till the motorcycle mission was achieved.
Chairman emeritus Rahul Bajaj had, during his last visit to the city, hinted that it was time for Bajaj to introduce a scooter in two years as the market had grown significantly since Bajaj’s exit a couple of years ago.
Hero Honda Declares 3,500% Interim Dividend
NEW DELHI Hero Honda declared a 3,500% interim dividend of . 70 per equity share of . 2 each. In its board meeting held on Wednesday, the company considered an interim dividend at the rate of 3500%, Hero Honda said in a communication to BSE. The company, which has huge cash reserves in excess of . 4,000 crore, did not mention the capital outgo due to the dividend payments. An email query to the company went unanswered.
Yamaha may take partnership route for mass mobikes
Yamaha is exploring strategic options among domestic two-wheeler companies to offer products in the 100-125-cc engine capacity segment. This category represents over 70 per cent of the bikes sold in the country.
The Japanese bike maker has called a pitch from around five merchant bankers in search of the right model, multiple sources close to the development told Business Line.
OPTIONS
“They are looking for a strategic partnership with a domestic player who can help them with technology and low-cost production in the mass motorbike segment. We have given them 2-3 options and they are expected to take a call in 10-15 days coinciding with their board meeting for annual results,” said a top merchant banker involved in the negotiations, while another banker added that top industry names have been suggested for the deal.
Among the options suggested to the company are a technological or a production tie-up for low cost manufacturing. The third option is a strategic stake sale by Yamaha to the interested partner as part of an agreement on technology and production.
Responding to queries on the development, Mr Hiroyuki Suzuki, CEO and Managing Director, India Yamaha Motor (IYM) said, “We do not comment on any market speculation.”
Yamaha has a portfolio of six models in the 125-250 cc segment. Collectively this segment accounts for just 8 per cent of the market for motorcycles in India (2.10 lakh units sold in 2010-11).
MARKET SHARE
The entry-level segment will be key for IYM which is looking to turn its operations profitable and help it counter growing competition. At present, it has four products in the segment, but only about one per cent market share (sold 67,420 units in 2010-11).
Present in India since 1985, Yamaha operates two plants – Surajpur, Greater Noida (UP) and Faridabad, Haryana. However, only the former manufactures complete motorcycles with a six lakh per annum installed capacity. Both these plants were a part of Yamaha's buyout of its joint venture partner, Escorts' 50 per cent stake, in 2001. At present, Mitsui and Co has a minority stake in IYM. The company has invested around Rs 800 crore over the last three years for new product development, dealer network expansion and capacity expansion.
The company is trying to ramp up its output, which is around 3.5 lakh units annually. With demand exceeding production, average waiting periods on popular models like the R15, FZ & SZ series hover at about four to five weeks.
“Around January, the parent company had invested about Rs 400 crore. A majority of this is expected to go into the plans for a third plant (with an export focus), besides the launch of new products like a scooter range by 2012,” said the industry source.
The appointment of Mr Suzuki as the Managing Director and CEO in November last year is also an indication of Yamaha's plan to step up its game in India. Mr Suzuki, who is also a Director in the parent company, is expected to act as a trouble-shooter for Indian operations, industry sources said.
The Japanese bike maker has called a pitch from around five merchant bankers in search of the right model, multiple sources close to the development told Business Line.
OPTIONS
“They are looking for a strategic partnership with a domestic player who can help them with technology and low-cost production in the mass motorbike segment. We have given them 2-3 options and they are expected to take a call in 10-15 days coinciding with their board meeting for annual results,” said a top merchant banker involved in the negotiations, while another banker added that top industry names have been suggested for the deal.
Among the options suggested to the company are a technological or a production tie-up for low cost manufacturing. The third option is a strategic stake sale by Yamaha to the interested partner as part of an agreement on technology and production.
Responding to queries on the development, Mr Hiroyuki Suzuki, CEO and Managing Director, India Yamaha Motor (IYM) said, “We do not comment on any market speculation.”
Yamaha has a portfolio of six models in the 125-250 cc segment. Collectively this segment accounts for just 8 per cent of the market for motorcycles in India (2.10 lakh units sold in 2010-11).
MARKET SHARE
The entry-level segment will be key for IYM which is looking to turn its operations profitable and help it counter growing competition. At present, it has four products in the segment, but only about one per cent market share (sold 67,420 units in 2010-11).
Present in India since 1985, Yamaha operates two plants – Surajpur, Greater Noida (UP) and Faridabad, Haryana. However, only the former manufactures complete motorcycles with a six lakh per annum installed capacity. Both these plants were a part of Yamaha's buyout of its joint venture partner, Escorts' 50 per cent stake, in 2001. At present, Mitsui and Co has a minority stake in IYM. The company has invested around Rs 800 crore over the last three years for new product development, dealer network expansion and capacity expansion.
The company is trying to ramp up its output, which is around 3.5 lakh units annually. With demand exceeding production, average waiting periods on popular models like the R15, FZ & SZ series hover at about four to five weeks.
“Around January, the parent company had invested about Rs 400 crore. A majority of this is expected to go into the plans for a third plant (with an export focus), besides the launch of new products like a scooter range by 2012,” said the industry source.
The appointment of Mr Suzuki as the Managing Director and CEO in November last year is also an indication of Yamaha's plan to step up its game in India. Mr Suzuki, who is also a Director in the parent company, is expected to act as a trouble-shooter for Indian operations, industry sources said.
Bajaj Auto ties-up with SBI for inventory finance to dealers
MUMBAI: The country's second largest two-wheeler-maker, Bajaj Auto, today said it has tied-up with State Bank of India to offer inventory finance to its dealers.
Through this tie-up, a cash credit facility ranging between Rs 25-lakh-Rs 5-crore will be made available to Bajaj Auto's dealers who predominantly fall in the small and medium enterprise ( SME) category for State Bank of India.
Through this tie-up, a cash credit facility ranging between Rs 25-lakh-Rs 5-crore will be made available to Bajaj Auto's dealers who predominantly fall in the small and medium enterprise ( SME) category for State Bank of India.
Hero Honda declares interim dividend of Rs 70 per share
MUMBAI: Hero Honda Motors Ltd, India's largest motorcycle maker, on Wednesday said its board has declared an interim dividend of 70 rupees ($1.6) per share.
Last month, Hero Investments agreed to buy Honda Motors' 26 percent stake in Hero Honda Motors for around $851 million, with the Japanese automaker exiting its joint venture in India after more than 26 years.
Last month, Hero Investments agreed to buy Honda Motors' 26 percent stake in Hero Honda Motors for around $851 million, with the Japanese automaker exiting its joint venture in India after more than 26 years.
Yamaha ties up with Deccan Chargers as official team partner
NEW DELHI: Two-wheeler maker Yamaha today said it has tied up with IPL franchise Deccan Chargers (DC) as an official team partner for the ongoing session.
"The deal entitles Yamaha the right to be referred as the 'Official Team Partner' status in all its advertising and promotions, including web promotions, right to be mentioned in all official media release by DC, right to unlimited usage of DC name and logo," India Yamaha Motor said in a statement.
"The deal entitles Yamaha the right to be referred as the 'Official Team Partner' status in all its advertising and promotions, including web promotions, right to be mentioned in all official media release by DC, right to unlimited usage of DC name and logo," India Yamaha Motor said in a statement.
TVS sell over 3 million star motorcycles
Sales of TVS StaR motorcycles have crossed 3 million units since its launch in 2004, according to a press release from TVS Motor Company.
The strategy of offering an economy segment motorcycle with executive features has paid off, says the company.
TVS StaR was among the earliest to come with a five-year warranty, which was followed with an offering of electric start, as a standard fitment, another first in this segment.
TVS StaR was introduced as part of the company's customer-centric approach.
“The brand philosophy of being a complete value for money product, constant upgrades, styling and refreshing graphics has helped us achieve this milestone,” said the release quoting Mr H.S. Goindi, President Marketing, TVS Motor Company.
The strategy of offering an economy segment motorcycle with executive features has paid off, says the company.
TVS StaR was among the earliest to come with a five-year warranty, which was followed with an offering of electric start, as a standard fitment, another first in this segment.
TVS StaR was introduced as part of the company's customer-centric approach.
“The brand philosophy of being a complete value for money product, constant upgrades, styling and refreshing graphics has helped us achieve this milestone,” said the release quoting Mr H.S. Goindi, President Marketing, TVS Motor Company.
Hero to unveil new brand identity in July
After announcing separation from former joint venture partner Honda Motor Co. Ltd, Hero Honda Motors Ltd (HHML) will unveil its new brand identity in the second week of July, the company decided at a meeting on Wednesday.
Around the same time, it will also close the monetary transaction with the Japanese firm.
“Capacity expansion and branding strategy were the two things discussed in the meeting,” a board member present in the meeting said on condition of anonymity. “We have hired a branding expert who is working closely with our team of experts. The new brand identity will be unveiled on 14 July.”
Calls made to the company spokesperson and chief financial officer remained unanswered. An email sent to the company did not elicit any response either.
The new brand identity will not only help the company in venturing into the overseas market but it will also allow the company to source components from alternative vendors.
“As long as the name of Honda exists on the product, component sourcing can be done from the approved vendor list. Once the re-branding under Hero name happens, HHML will be free to scout for alternative vendors, if there is need,” Chirag Shah, a sector analyst with Mumbai-based brokerage firm Emkay Research, wrote in an 8 April report on Hero Honda.
The company has hired London-based branding expert Wolff Olins, as previously reported by Mint, to revamp the brand.
The new strategy is aimed at focusing on the group’s motorcycling pedigree and promoting individual brands such as Passion and Splendour.
In the recent cricket World Cup and in the ongoing Indian Premier League, the company hasn’t mentioned its name in advertisements for the Karizma and the Hunk on billboards or at cricket grounds.
“Honda has a lot of cachet in the Indian market. Hero will, hence, have to do a fair bit of work,” said Arvind Sharma, chairman and chief executive, Leo Burnett India Pvt. Ltd. “From a mass perspective, it’s critical that the new brand communicates that the firm has technology to make a motorcycle that meets international standards.”
He said this will be governed by a series of elements, which includes a new brand identity, new philosophy and models rolled out by Hero.
The Hero Honda board also decided to spend Rs.250 crore on capacity expansion, said the first person cited above. However, a part of the amount will also be utilized for the fourth plant, a decision on which is yet to be taken.
“Production capacity increased through debottlenecking. Current capacity stands at 6.2 million. There is further scope of debottlenecking. The company is aiming for 10% volume growth in FY12,” Shah wrote in his report.
The company has ample scope for expanding capacity at its plants. “We have been gradually ramping up capacity,” said another person familiar with company affairs on condition of anonymity. “A lot of debottlenecking is being done, especially at the Haridwar plant.”
Ajay Shethiya, analyst at brokerage Centrum Broking Pvt. Ltd, expects growth in the two-wheeler industry to taper off and reach the historical levels of 12-13%.
According to him, Hero Honda’s expansion plan is in line with demand and should see it through till the new plant comes up. The company ended the fiscal by selling 5.4 million vehicles as against 4.6 million a year ago.
In a circular issued to the Bombay Stock Exchange on Wednesday, the company declared an interim dividend of Rs.70 per share, causing the stock to surge 5.86% to Rs.1,735.10. The benchmark Sensex rose 2.25% to 19,696.86 points.
While Hero Group has already announced the transaction details of the deal, a formal closure will happen in the third week of July.
On Wednesday, Hero Honda appointed Toshiyuki Inuma non-executive additional director with effect from 13 April. Inuma is also a general manager of Honda’s motorcycle operations in India.
“He is just there to oversee the monetary transaction. He will step down on 19 July,” said the first person cited in the story.
Around the same time, it will also close the monetary transaction with the Japanese firm.
“Capacity expansion and branding strategy were the two things discussed in the meeting,” a board member present in the meeting said on condition of anonymity. “We have hired a branding expert who is working closely with our team of experts. The new brand identity will be unveiled on 14 July.”
Calls made to the company spokesperson and chief financial officer remained unanswered. An email sent to the company did not elicit any response either.
The new brand identity will not only help the company in venturing into the overseas market but it will also allow the company to source components from alternative vendors.
“As long as the name of Honda exists on the product, component sourcing can be done from the approved vendor list. Once the re-branding under Hero name happens, HHML will be free to scout for alternative vendors, if there is need,” Chirag Shah, a sector analyst with Mumbai-based brokerage firm Emkay Research, wrote in an 8 April report on Hero Honda.
The company has hired London-based branding expert Wolff Olins, as previously reported by Mint, to revamp the brand.
The new strategy is aimed at focusing on the group’s motorcycling pedigree and promoting individual brands such as Passion and Splendour.
In the recent cricket World Cup and in the ongoing Indian Premier League, the company hasn’t mentioned its name in advertisements for the Karizma and the Hunk on billboards or at cricket grounds.
“Honda has a lot of cachet in the Indian market. Hero will, hence, have to do a fair bit of work,” said Arvind Sharma, chairman and chief executive, Leo Burnett India Pvt. Ltd. “From a mass perspective, it’s critical that the new brand communicates that the firm has technology to make a motorcycle that meets international standards.”
He said this will be governed by a series of elements, which includes a new brand identity, new philosophy and models rolled out by Hero.
The Hero Honda board also decided to spend Rs.250 crore on capacity expansion, said the first person cited above. However, a part of the amount will also be utilized for the fourth plant, a decision on which is yet to be taken.
“Production capacity increased through debottlenecking. Current capacity stands at 6.2 million. There is further scope of debottlenecking. The company is aiming for 10% volume growth in FY12,” Shah wrote in his report.
The company has ample scope for expanding capacity at its plants. “We have been gradually ramping up capacity,” said another person familiar with company affairs on condition of anonymity. “A lot of debottlenecking is being done, especially at the Haridwar plant.”
Ajay Shethiya, analyst at brokerage Centrum Broking Pvt. Ltd, expects growth in the two-wheeler industry to taper off and reach the historical levels of 12-13%.
According to him, Hero Honda’s expansion plan is in line with demand and should see it through till the new plant comes up. The company ended the fiscal by selling 5.4 million vehicles as against 4.6 million a year ago.
In a circular issued to the Bombay Stock Exchange on Wednesday, the company declared an interim dividend of Rs.70 per share, causing the stock to surge 5.86% to Rs.1,735.10. The benchmark Sensex rose 2.25% to 19,696.86 points.
While Hero Group has already announced the transaction details of the deal, a formal closure will happen in the third week of July.
On Wednesday, Hero Honda appointed Toshiyuki Inuma non-executive additional director with effect from 13 April. Inuma is also a general manager of Honda’s motorcycle operations in India.
“He is just there to oversee the monetary transaction. He will step down on 19 July,” said the first person cited in the story.