Honda hopes to vroom its way up in bottom segment

Plans to consolidate its place in the motorcycle market by pitting the Dream Yuga, to be launched next month, against Hero MotoCorp’s Splendor Honda Motorcycle and Scooter India (HMSI), the Indian subsidiary of Honda Motor Company, last year grew the fastest among two-wheeler companies in the country — at double the rate logged by the industry. The company’s overall growth has come in spite of its minuscule presence in the entry-level (100cc-125cc) segment, in which market leader Hero MotoCorp (formerly Hero Honda) commands two-thirds of the market. The entry-level segment accounts for a lion’s share — 70 per cent — of the domestic motorcycle market. It had seen sales of nearly 7.1 million units last financial year (2011-12), a year in which Indians bought 10.09 million motorcycles — more than any market in the world except China. The Delhi-based Hero MotoCorp has thrived in the entry segment due to the success of its Splendor, Passion and CD Dawn/Deluxe brands — Splendor being the world’s largest selling two-wheeler brand. Hero has a total of nine models in this segment, the most by any manufacturer. Though Honda has three models on sale in the entry-level segment — Stunner, Shine and Twister (all below 125cc) — it commands only two per cent market share with sales of 142,000 units, compared with Hero’s 5.32 million units. Propelled by new products and a stronger brand recall, Hero managed to clock a growth of 16 per cent in the entry segment, even as sales of all other peers dwindled. Bajaj Auto, the second-largest in the segment posted a drop of 2.65 per cent, while TVS Motors saw a drop of 7.5 per cent. Honda’s growth in the segment dropped 14.33 per cent. One of the reasons behind HMSI’s sales drop in this segment was the absence of products from its stable in the price Rs 41,000-44,000 bracket, where Hero’s Splendor and CD Dawn/Deluxe sell. HMSI’s entry motorcycle Twister is priced at Rs 45,140 (ex-showroom, New Delhi). Yuga price for a mid-range model, according to sources Honda’s limited presence through its dealer network has also led to a fall in sales. On the other hand, Hero’s consumer touchpoint is across 5,000 outlets — comprising a mix of authorised dealerships, service and spare part outlets and dealer-appointed outlets. Its distribution strength is more than three times Honda’s 1,500 outlets at present. To become a force to reckon with in the price-sensitive bread-and-butter entry-level motorcycle segment, Honda is gearing up to launch its cheapest motorcycle, the Dream Yuga, positioned directly against the Splendor. The launch would happen sometime next month. The Dream Yuga, showcased at the biennial Auto Expo in New Delhi this year, will also be Honda’s cheapest motorbike in the world. The Dream Yuga lacks the stylish punch Honda is famous for. The company has chosen to keep the styling simple, much like the Splendor. For the Yuga, Honda is banking on its twin strategy — of offering more and charging less. According to sources, the company is keen to price position the bike below the Splendor (Rs 41,350, ex-showroom New Delhi), but a final call will be taken closer to the launch. In addition, the company aims to market its offering a better powered product than the Splendor as its selling point. The Yuga will have a 109-cc powerplant, while the Splendor is powered by a 97-cc engine. Though Honda has not provided indicative fuel efficiency figures for the Yuga, the bike will compete with the Splendor’s 65-70 km per litre. The fuel efficiency is expected to be attractive, as the new bike borrows its engine from the Twister, which, HMSI claims, gives a mileage of 70 km per litre. An HMSI spokesperson says: “The 100-110-cc motorcycle segment has continued to show a pattern of 16 per cent compound annual growth rate in the last three years, on a very high base volume. It is an attractive business proposition for any manufacturer. With the upcoming Dream Yuga, we plan to enter and expand our customer base in the entry-level motorcycle segment.” Besides, the company is also ramping up its dealer presence, with a focus on the hinterland, where Hero enjoys almost a monopoly. Honda is adding over 300 outlets this year “to reach closer to our customers in both urban and rural areas”. Also, HMSI’s upcoming third plant at Narasapuram in Karnataka, which is expected to be operational in the first half of 2013, will expand its production capacity by another 1.2 million units from the existing 2.8 million units, taking its total production capacity to 4 million units a year. But, since others such as Bajaj Auto and TVS Motors have tried and fallen short of unseating Hero from the top spot in the past, will Yuga change the dynamics of the segment? Not everybody seems to be convinced. The head of research at a leading brokerage house says: “Unlike the scooter segment, (where Honda had a first-mover advantage in the gearless segment), the motorcycle segment is a well-penetrated one. Second, there is no differentiation as far as the Dream Yuga is concerned.” The history has it that features rarely do the trick. In the past, Bajaj Auto tried to exceed Hero’s edge by projecting bikes with higher power, but failed to make an impression, he adds. Since early 2000s, Bajaj Auto, now displaced to the third spot by HMSI in domestic ranking, has tried to penetrate the entry segment with at least half a dozen launches. Its Discover has been the only model that has stood out. Anil Dua, senior vice-president (marketing & sales), Hero MotoCorp, says: “Each of Splendor and Passion clocked sales of more than a million units in 2011-12. With the planned launch of two more bikes – the 125-cc Ignitor and the 110-cc Passion XPro – later in the year, we are confident of further strengthening our presence in this segment.” In order to meet the growing demand for Hero products, the company has also been ramping up capacity at its three manufacturing plants and has taken up the current installed capacity to close to seven million units. Even as most analysts admit that Hero will lose some market share, given the competition, they are sceptical about Honda’s ability to make a dent in in the overall market dynamics of the segment. Ajay Shethiya of Centrum Broking says: “Given capacity constraints and distribution challenges, the launch of the Dream Yuga will not significantly change industry dynamics.” Across segments, Honda last year sold two million units in the country, taking its market share to 15 per cent. Moreover, single/dual-brand dominance pervades all segments of the two-wheeler sector. While Hero dominates the executive segment, with a 74 per cent share, Bajaj has a close grip on the premium segment with a 49 per cent share. In the scooter segment, Honda, which launched the gearless scooter, is sitting pretty with a share of 47 per cent. Since two-wheeler sales in the country are largely a function of the brand name, it could be difficult for Honda to immediately challenge Hero in the entry-level segment. However, once it establishes the Dream Yuga as a brand in a couple of years, and sorts out its capacity issues, it could pose a threat. To unseat Hero from its perch will be a daunting task. The Yuga can make an impact if it is positioned as a value-for-money product, says Abdul Majeed, leader (automotive practice), PricewaterhouseCoopers India. “If customers perceive it as a value-for-money product and it fits their scheme of things in terms of pricing and fuel efficiency, the product could have an impact in the short-term itself, with Honda’s share in the segment rising,” he adds.

Gearless dual in the scooter segment

A couple of years ago, if you wanted a gearless scooter, there was really only one name worth considering and that was the Honda Activa. Now though, every major motorcycle manufacturer has a seemingly great product in the market, save for Yamaha, of course, which is still in the planning stages of a scooter launch. The four contenders here today are the reigning champion Honda Activa, the once very popular Mahindra Duro (once known as Kinetic Nova), the slightly different TVS Wego and last, but not the least, the new kid on the block, the Suzuki Swish. On the face of it, they all seem similar, gearless scooters with engines displacing somewhere between 110cc and 125cc. Power figures are also more or less in the same ball park. Let’s see if they are as similar as they seem on paper or if the actual riding reveals another story altogether. We’d like to note that we are excluding a couple of scooters from this comparo, namely, the Honda Dio and the Suzuki Access, but we are including their more mass-market appealing and newer (in the case of the Access) siblings though. Looks Well, had this been a month ago, the result of this would have been very different, we’ll tell you that. The Suzuki Swish ticks all the right boxes in this segment and comes on top, with peppy, cheerful looks that really attract the eye. The Duro is, well, the same old design, really. When the Kinetic Nova debuted in 2004, it was an eye-catching design compared to the sedate Activa at the time, but now, it’s the other way around. The Activa saw a significant upgrade in its lifespan while the Duro only a minor one. The Duro still looks good, no doubt, but it doesn’t catch the eye the same way the Swish does. The Wego is a completely different animal here. It’s base itself if quite different from the others in that it resembles a motorcycle more than a traditional scooter, larger alloy wheels definitely add to the aesthetic appeal of the Wego. It’s not exactly what we call great-looking, but it does set itself apart from the rest of the scooters. Riding dynamics The larger-wheeled Wego has a definite advantage here; it seems more nimble and willing to change directions. The telescopic front suspension does help it out a lot when it comes time to hit the brakes too.Next comes the Swish with its surefooted handling and nimbleness. It’s not as solid or stable feeling as the Access, but it more than makes up for that in the way it changes direction so quickly. The Duro manages to out-handle the Activa. Notice a trend here: all the scooters with the telescoping suspension showed a great amount of confidence through the turns and even under hard braking, they held their composure well. What of the Activa, then, the once de-facto standard of the scooter world? Well, compared to this lot, it has a very stable ride, but one that doesn’t lend itself very well to quick directional changes. Under hard braking, the front anti-dive suspension doesn’t do much to up your confidence in the brakes. The braking itself is nice, but the feel you get from the front end is not something you want to experience when you’re in the middle of a panic stop. Ride comfort When it comes to comfort while riding the scooter, the Activa is the one to beat. The seat is firm enough to not be a bother on longer rides, but the suspension supple enough to take care of those pesky potholes and such. The Wego with its larger wheels and bike-like rear suspension is the next in line here; it takes on the potholes and bad roads like no other scooter, but loses out because of a seat that’s not quite as comfortable as the Activa’s. The swish and Duro are both comfortable, but they wouldn’t be our first choices if we were to embark on a long commute. The Duro doesn’t get picked because of an uncomfortable saddle height-to-floorboard height ratio. Basically, it feels like your knees are somewhere near the chest and the handlebars are down low. The Swish has a seat that’s a little too firm which doesn’t really go well with our roads here. Performance and mileage This section is a bit of a tricky one. We have two 110cc scooters and a couple of 125cc ones, so it’s no surprise really that the Swish, with its new lightweight fibre body and peppy engine, is the quickest off the line with the Duro not too far behind. The Activa, surprisingly enough, is nipping at the tail-lights of the Duro with the Wego coming in last. The larger engine scooters also have a better mid-range kick than the Activa or Wego though. The Activa and Swish have the smoothest motors of the lot, emitting nothing but a faint whisper at idle and a low growl when on the move. The Duro and Wego are a little noisier, idle is still silent, but on the move, they do emit a bit of chatter. Fuel economy is one area where they all surprisingly fared the same. The mileage varied wildly depending on the riding style for all scooters, with real-world numbers going as high as 50 kmpl for the Activa and going as low as 38 kmpl for the Duro. These are just the extremes though. Most of the time, they all returned about the same kind of mileage, which would be mid-to-high forties. Storage space Being scooters, their practicality lies in their ability to swallow a week’s worth of groceries into their in-built storage space and then some. The Wego and Swish back up that promise too, with the ability to squeeze a full-sized helmet into their under-seat compartments. The Duro barely manages it, with a half-face unit being much more comfortable there. The Activa comes with the least storage space of the lot, forgoing a front box in favour of more leg room and a smaller underseat storage. Verdict On the face of it, it seemed quite simple. But now, having ridden all of these extensively, the decision isn’t quite as easy as one would have thought. The once king of the hill, the Honda Activa still has a lot of the magic, but it’s long waiting lists aren’t worth waiting for when there are other choices out there which are just as good, if not better. The Swish, the new kid on the block, certainly has the chops to take on the King. The Access lost out because of its dull looks; but on this one, well, hopefully, it does a lot better. The Duro comes in third for us, because, it’s just a better scooter overall than the Wego. That something as good as the TVS Wego ended up being last in this shootout only shows you how good all of them are. But first and foremost, ride safely, always wear a helmet. The loved ones can wait some more to meet you.

Hyosung 250 ready for road

Pune-based Garware Motors Ltd, which assembles and sells the Hyosung bikes in collaboration with South Korea’s S&T Motor Company, will launch two models in the 250cc segment this year. “The company will launch the Hyosung GT 250R in May this year and the GV 250R in October,” said Shiva Padaray, general manager, marketing and sales, Garware. The company is also planning to bring the Hyosung GV 650 Aquila, a cruiser-style bike. A wholly owned subsidiary of Garware Bestretch Ltd, Garware Motors made an entry into the premium superbike category last year with a range of Hyosung’s 650cc bikes. The company assembled and sold the GT 650R, the GT 650N and the ST7 Royale. In 2012-13, Garware plans to sell 3,500 to 5,000 units, with maximum sales targeted from the 250cc segment. It sold 611 units of the 650cc bikes in 2011-12. The GT 250R and the GV 250R will be priced between Rs 2.35 lakh and Rs 2.65 lakh. Of the 611 units sold last year, “50 per cent of the sales have come from the GT 650R and 35 per cent from the ST7. The rest 15 per cent are from GT 650N,” said Padaray. “The market is growing at 100 per cent rate. In 2009-10, 500 superbikes of over 650cc and above were sold. The figure stood at 1,200 in 2010-11 and last year this segment saw sales of 2,500-3,000 units,” said Padaray. Hyosung, with a sale of 611 units, has garnered a market share of 20 per cent. Besides the GT 250R and the GV 250R, “there will be a limited edition of the GV 650N too this year”, said Padaray. Garware assembles the Hyosung bikes in its plant at Wai, 100km from Pune. The company has made an initial investment of Rs 20 crore and operates a single shift. “Another Rs 55 crore to Rs 75 crore additional investment is to be made this year,” said Padaray. He said the company planned to extend its dealership network, which stands at 18 at present. Share on email Share on print Share on facebook Share on twitter More Sharing Services

Suzuki to set up 2nd factory in Rohtak

Two-wheeler maker Suzuki Motorcycle India Private Limited (SMIPL) on Monday laid the foundation stone for its second manufacturing facility in the country at Rohtak in Haryana. The company has a capacity to produce 470,000 units at its first factory in Manesar, Haryana. SMIPL declined to specify the investment it was making for establishing the new unit. Industry sources, however, indicated investments to the tune of Rs 2,000 crore were scheduled for Rohtak. This would be inclusive of the resources being utilised by Maruti Suzuki to set up a research & development facility in Haryana. SMIPL has limited presence in the motorcycle industry in India with GS150R (150 cc) and Slingshot (125 cc). Over 80 per cent of its volumes, 288,604 units, came from scooters, Access 125 and Swish 125, in the last financial year. Motorcycle sales stood at a modest 50,130 units. Suzuki is gearing up to foray into the fast-growing mass commuter segment with Hayate next month. The 110-cc Hayate will take on best-sellers Hero Splendor, Bajaj Discover and TVS Star City. Suzuki is expecting to sell 10,000 units of Hayate every month after the launch, double the 5,000 units its best-seller Slingshot clocks in month at present. With sales of over seven million units, the commuter segment contributes as much as 70 per cent of overall motorcycle sales in the country. Hero alone accounts for three-fourths of sales in the category. Suzuki, which has products with engine capacity upwards of 125 cc, has less than one per cent share in the domestic motorcycle market. To tap growth potential in the hinterland, Suzuki, too, has commenced work to double its distribution network to 500 touch points over the next two years. To meet growing requirement the company is increasing capacity by 50 per cent to 540,000 units by 2014.

Podium finish for Sarath

Mahindra Racing's Sarath Kumar created history at the CIV-Italian championship, taking the third spot and getting his first-ever podium finish, in the 125GP here on Sunday. The Indian rider moved up the rankings after third place winner, Andrea Mantovani, was disqualified due to engine irregularities. Sarath clocked a remarkable time of 25:38:775. Sarath had become the first Indian to score points in this championship during the second round in Imola. On the other hand, the winner of the first two rounds — Ricardo Morreti — was forced into early retirement due to technical problems. After the third round, Sarath climbed up to fifth place with 22 points while Moretti was in the second spot with 50. The next two races will take place on June 23 and 24. Dream come true About his performance, Sarath said: “A podium finish at the Italian Championship is a dream come true for me. I got off to a good start and was able to recover a lot of positions up to the 14th place. “It was my first time in Monza, a circuit I am quickly getting accustomed to — it's a really fast one! “I want to thank all my technical staff, manager and Team Mahindra for their support,” said Sarath.

Bank of Maharashtra Inks pact with M&M

Bank of Maharashtra (BoM) has signed a preferred financier agreement with Mahindra & Mahindra Ltd (M&M). Under this tie-up, M&M customers will be able to avail themselves of vehicle finance services from any of the 1,589 branches of the bank. The MoU was signed by Mr Sanjay Arya, General Manager, BoM, and Mr Arun Malhotra, Senior Vice-President, M&M. Mr Arya said, “Customers of BoM will benefit from this tie-up since they will have privileged access to the specialised services of M&M. BoM is coming out with an attractive package for purchasers of M&M vehicles, he added.

Piaggio to roll out three-wheeler from Baramati plant by Sept

Piaggio Vehicles plans to roll out three-wheeler passenger vehicles from its newly inaugurated plant in Baramati by September. Speaking at the inauguration of the Vespa plant here, Mr Ravi Chopra, Chairman and Managing Director of Piaggio Vehicles, said the company is considering the launch of three light commercial vehicle (LCV) models, including the three-wheeler passenger vehicle, in the next two years. All three LCVs would be rolled out from the Baramati plant, he added. Piaggio Vehicles is the wholly owned Indian subsidiary of the Italian Piaggio Group. The company is developing two new diesel engines – 1 litre and 1.2 litres - at the new Baramati plant for both the European and the non-European markets. Vespa LX 125 Company officials had said that they hope to double sales in the next two-three years. Last year, the global sales numbers of Vespa stood at 1.50 lakh units. The Vespa LX 125 has been positioned as a premium segment scooter and is priced at Rs 66,661 (ex-showroom Maharashtra) onwards. It has been priced at a 40-50 per cent premium over its competitors such as Honda Activa, Suzuki Access and Mahindra Duro. The Baramati plant has a capacity to roll out a maximum of 12,000 Vespa units a month, but is currently running at 10,000-11,000. “Depending on the demand, there could be a ramp-up in the plant. This could enable us to realise the full potential of the plant by the fourth quarter of this (calendar) year,” said Mr Chopra. The company has invested about €30 million (approximately Rs 210 crore) in the plant. The company plans to invest an additional €20 million (approximately Rs 140 crore) to double the capacity to 300,000 units a year by mid-2013. The plant employs around 3,000 people as of now. Four-wheeler segment The Piaggio Group has plans to enter the four-wheeler segment as well. According to group Chief Financial Officer, Mr Gabriele Galli, the company has already made an initial investment of about €150 million for the development of this segment. However, the plans are in the early stages and would require two to three years to fructify, he added. Mr Roberto Colaninno, Group Chairman and Chief Executive Officer of Piaggio Group, said that the company does not plan on venturing beyond the LCV category and will look at new models to manufacture in the near future.

TVS signs MoU with Central Bank Of India

Two-wheeler manufacturer TVS Motor Company has signed a Memorandum of Understanding with public sector Central Bank of India to offer loans for it's three wheeler TVS King in all 4,000 branches of the bank. As per the agreement Central Bank of India would offer 90 per cent funding to TVS King customers, TVS Motor Company said in a statement. TVS Motor Company Vice-President (Three Wheeler sales) K Srinivasan, Central Bank of India General Manager (Retail) Ram S Sangapure exchanged documents in the presence of Central Bank CMD Mohan V Tanksale, it said. "This initiative will provide retail finance options to customers who wish to purchase a (three-wheeler) TVS King. The MoU is tailor made to provide benefits to customers with longer tenure option of upto seven years at an interest rate of 11.25 per cent with 90 per cent funding", Srinivasan said. TVS King is available in all markets across the country in LPG, CNG and petrol variants. "Customers have easy access to us as we have pan-India presence through a large network of more than 4000 branches.", Central Bank of India General Manager (Retail Banking) Dr Sangapure said.

Piaggio to sell Vespa scooter from today

Piaggio Vehicles Pvt. Ltd, the Indian arm of Italian scooter maker Piaggio and C SpA, will start selling its Vespa scooter in the Indian market from Friday. Piaggio has priced the gearless Vespa LX 125 at Rs. 66,661 (ex-showroom, Pune), hoping to create a niche, premium category in the 2.5 million-a-year scooter market in India. The scooter, to be positioned as a lifestyle product rather than a commuter’s choice, will be sold through exclusive showrooms across 35 cities. The Italian firm will form exclusive Vespa fan clubs in India. “There is no premium segment in the scooter market today, hence we see there is potential market for consumers who are looking at making a statement,” said Ravi Chopra, chairman and managing director of Piaggio Vehicles. Piaggio will produce the scooters at the company’s facility in Baramati, Maharashtra. Chopra said the facility can produce 150,000 units annually and plans are afoot to double capacity in a year’s time. Piaggio, which has already invested €35 million (around Rs. 243 crore today) in the facility, plans to pump in an additional €20 million to augment capacity. Piaggio has entered the Indian market with a new gearless scooter that effectively creates a new premium segment that didn’t exist before. Close to 17 million units of the Vespa have been sold in Europe since it made a debut in 1946. According to Chopra, the market potential in the scooter segment in India, which has been expanding at 20% yearly, is huge and Piaggio hopes to reach its full production capacity of 12,000 units per month by October. While market leader Honda Motorcycle and Scooter India Pvt. Ltd sold 1,224,599 units in the year ended March, No. 2 TVS Motor Co. Ltd sold 496,896 units in the same period. The launch of Vespa scooters is Piaggio’s maiden venture in the Indian market without a local partner. More than four decades ago, Piaggio licensed the production of Vespa scooters to Bajaj Auto Ltd. The joint venture ended in 1971. Subsequently, the company partnered with LML Ltd in 1983 to make and sell scooters in India. It exited the venture in 1999, when LML acquired Piaggio’s stake.

Foreign brands gain in Indian two-wheeler market

Demand for foreign branded bikes and scooters surged to an all-time high in 2011-12, thanks to people like Raghavendra Verma. One in every five bike buyers bought a motorcycle made for a foreign brand. Verma, a 26-year-old computer sales executive, was one of them. He could have gone for more powerful products of Indian brands, which cost more than 20 per cent less. But he picked a Japanese brand, 150cc Yamaha R15. “I paid Rs 1.22 lakh for it, but cost was never the criterion. I loved its styling and performance and decided to go for it. It is very fast too,” Verma said rather gleefully. Bowled over by aerodynamic shape, power muscled macho image, speed and durability, buyers like Verma are driving demand for foreign branded bikes and scooters, whose share in the mass market segment has almost increased by two-thirds in five years. Honda, Yamaha and Suzuki accounted for 20 per cent of the market in 2011-12, against 12 per cent in 2006-07. According to data provided by the Society of Indian Automobile Manufacturers (Siam), the combined share of Indian heavyweights like Hero MotoCorp, Bajaj Auto and TVS Motors hit a new low of 78 per cent, compared to 86 per cent in 2006-07. Honda Motorcycle and Scooter India (HMSI), an arm of Japan’s Honda Motor Company, led the growth chart with a market share of 15 per cent, compared to nine per cent five years ago. While the share of Yamaha remained flat at 2.6 per cent, Suzuki saw a three-fold rise in its share to 2.5 per cent, from 0.8 per cent. Kumar Kandaswami, senior director and India manufacturing leader - consulting, Deloitte, said, “It’s hard to believe these foreign brands will stop at this level. Their market share could reach 50 per cent in 10 years. There is enough room for that. These brands have very strong brand pull. They are known to introduce new technology at better value. After all, buying a two-wheeler involves a lot of emotion too.” Two-wheeler sales rose seventy one per cent to 13.43 million units in 2011-12, from 7.85 million units in 2006-07. Growing consumer aspirations, improved disposable income levels and a flurry of new product introductions have led to such marked growth in demand, experts say. “Honda is committed to achieving a leadership position in India. The upcoming third plant at Karnataka will further help us in meeting the high demand in a consistent double-digit growth Indian two-wheelers market. The plant is expected to be operational in the first half of 2013 and will expand our production capacity by another 1.2 million units, from the existing 2.8 million units, taking the total production capacity to 4 million units,” said a spokesperson at Honda. While HMSI has consolidated its position as India’s top scooter manufacturer, Yamaha and Suzuki are in pursuit of similar growth. To tackle the onslaught of these foreign brands, Hero and Bajaj have stepped up research and development (R&D) efforts through collaborations with international companies. After its break-up with Honda, Hero has tied up with US-based EBR and Austria-based AVL. It has also strengthened its R&D team and infrastructure. Similarly, Pune-based Bajaj Auto has also drawn technical expertise from Austria-based KTM to power its future generation Pulsar bikes.

TVS files complaint against ex-employee for cyber crime

TVS Motor Company has filed a complaint against a former employee for allegedly transferring company secrets and business techniques. According to the company, the employee, who hails from Chhattisgarh, sent 10 e-mails, with attachments, containing secrets, business techniques and operation files from his official e-mail to his personal e-mail id. In the First Information Report, TVS said that “transferring of 10 files to an e-mail id which has no relevance to our company has caused losses to business and affected the technological development of the company”. The employee was working as territory manager in the three-wheeler sales department in Kolkata. The FIR, said, as part of his job responsibility, he had access to important information, business secrets of the company and information which were exchanged via e-mail. Mr Cecil K. Dewars, Senior Vice-President, TVS Motor Company, said the company considered this as a “serious breach of trust and a case of cheating…” He said this also fell under cyber crime. The FIR was filed on April 21 at the Mathigiri police station, Krishnagiri, Tamil Nadu.

Mahindra Racing eyes on race tracks for 2-wheeler tips

Mahindra says it is watching the racing track keenly to pick up pointers for its relatively nascent two-wheeler business. The company's tryst with racing began last year. The Mahindra GP 125 (2-stroke) and the Mahindra MGP 30 (250 cc; 4-stroke) motorbikes have participated in the Moto Grand Prix and Italian Championships. Mahindra is also grooming aspiring rider, Sarath Kumar, for the big league. But this is not an association to merely pursue racing interests, says Mr Mufaddal Choonia, COO, Mahindra Racing. The company, he says, is “not in this for fun and glamour”. The races, which are the “ultimate stress tests for reliability and strength,” generate data that goes into product development. Some of the racing technologies that could be looked at are fuel injection and traction control. Traction control helps steer the bike easily while taking turns. It also ensures the wheels do not spin out of control on wet surface. These technologies are currently only available in very high-end bikes such as Honda CBR 250 cc and Ducati. But Mahindra hopes it can break the “elitist” image over time as it expands its motorcycle portfolio. Scooters could also be looked into. “Some of the high-end Piaggio scooters have traction control and fuel injection systems,” says Mr Choonia. Mahindra has a little over 5 per cent share in the domestic scooter market. The company entered the two-wheeler business about four years ago with the acquisition of Kinetic, today called Kine. Its other products include the Duro DZ, Rodeo and Flyte scooters. It is also set to re-launch the Stallio motorcycle soon. The company sold over one lakh units in 2011-2012.

Honda to move R&D Base for 2 wheeler to Manesar

The last part in the amicable separation between the Hero Group and the Honda Motor Company is being initiated, making the separation of the leading players in the Indian two-wheeler market complete. Honda Motor's Indian subsidiary will be moving its research & development base for two-wheelers in India from Gurgaon to Manesar plant, even as Hero MotoCorp is forging new alliances and ties to set up its own full-fledged R&D centre. The move will help Honda Motorcycle & Limited, the second largest domestic two-wheeler maker today, to churn out new models faster, especially in the mass market category, and take on its erstwhile partner Hero Group head on to achieve its long term goal of becoming the number one two-wheeler maker in the country. ET learns that the R&D centre, which runs under the company called Honda R&D India Private Limited (HRID), will move from a rented set up at IFFCO chowk in Gurgaon to an integrated R&D set-up in the HMSI Manesar plant, where a new building is being currently built. The centre is likely to be operational in the next three to six months. Honda Motor Company is expected to invest "several hundred crore" in this expanded set-up and aims to more than double the number of engineers to 200-300, said people close to development. The new set-up will move beyond developing minor model changes to styling and design, prototype development, testing & validation and component development with vendor to offer products faster at lower cost. An email query to Honda Motorcycle & Scooters India and Honda R&D India Private Limited did not elicit any response. The Hero MotoCorp spokesperson told ETthat it is an "internal matter and such a development, if any, will have no effect whatsoever on our product launch plans". "We are strengthening our own capabilities both organically as well as through strategic tieups, such as with EBR and AV," the spokesperson added. Before the break up, HRID used to work for erstwhile Hero Honda and Honda Motorcycle's future products, now it will solely focus on the needs of HMSI. When Honda was Hero Group's partner, HMSI was barred from entering mass market, but now with both the companies on their own, the HRID will be working aggressively on developing new mass market motorcycles and will be in a position to react to market needs more quickly with new models "If you want to compete with Hero, then you need to have inhouse capabilities. With this move, HMSI will be able to bring newer models at quick pace. Apart from model improvement, the introduction time will improve dramatically," said an official familiar with the matter. The Honda Motor Company's technology agreement with the Hero Group expires in June 2014. The Pawan Munjal-promoted company will, however, continue to source products and technology from Honda's R&D bases in Thailand and Japan. In fact there are two or three new products lined up by the Hero Group with the support of Honda technology which will be launched in the next 12-24 months and these includes 100 CC bike Passion XPro and a 125 CC Bike Ignitor, which the company showcased at the Auto Expo.

MotoGP, Other Premier Races Head to NCR Now

Delhiites, gear up for more speed thrills. After Formula One, the national capital region will soon host MotoGP and Superbike World Championship - the two premier international motorcycle-racing events - and the FIA GT1 sports car racing. While India will be the last stop for GT1's 2012 season with a race in December, it is likely to host the first race of the Superbike World Championship, or SBK, next year, in the first week of March, an official of Jaypee Group, promoters of India's first F1 track, said. MotoGP is expected to be held in March 2013. "We want to accommodate all of these races, but India has only five months of good whether when they can be held," Sameer Gaur, managing director and chief executive officer of Jaypee Sports International, said. All the races will be held on the 5.14 km-long Buddh International Race Circuit in Greater Noida that the company built last year for India's first Formula One race held in October. Unlike the F1 race, where all rights except for tickets rested with F1 promoter Bernie Ecclestone, Jaypee Sports will hold TV, online and radio rights as well as on-track sponsorship rights for GT1 Championship. In the case of Superbike World Championship, or SBK, Jaypee will have 70% share of the revenues, outside of tickets, with the rest going to race authorities FGSport. For MotoGP, though, Jaypee may get only 30% with the lion's share going to race promoters Dorna Sports. "We are currently negotiating with MotoGP on the terms and revenue share," Gaur said. Jaypee had spent more than $400 million to build the racing track, infrastructure around it and for the F1 licence fee. "It will still take 3-4 years to break even, but if we manage to bring in more events quickly, we might be able to do it faster," Gaur said. Buddh International Race Circuit has been generating revenues after the F1 race five months ago through various track events being organised by corporates and auto companies such as Ferrari, Yamaha, Hyundai, Toyota and others, including Cannonball Club, a group of owners of super cars such as the Bentley GTC, Lamborghini Gallardo 560-4, Maserati GT and Aston Martin Vantage S. Jaypee Sports charges between Rs 8-10 lakh a day for the entire track. The track will have ten days of F1 in a year and the rest of the year will be used for other races, corporate events, concerts, and also large international and national exhibitions. While the races will be held between October and March every year, exhibitions will be held during the monsoon months as well. "We are negotiating with a large mining equipment exhibition and also an equipment manufacturing exhibition to bring them here," Gaur said. It is also in talks with CII to shift the Delhi Auto Expo to the track.

Scooter, Bikes Cos offer Freebies to Drive Sales

Prospective two-wheeler customers have never had it so good. A test ride of scooter leaves them with handsome Rs 500 cash without any compulsion to buy the two-wheeler, hoping that the customer will stick with the first impression and not look around for other models. This bold offer comes from Mahindra & Mahindra that leads the utility vehicle zone, which is trying to make inroads into a market dominated by Hero MotoCorp, Honda Motorcycles & Scooters and Bajaj Auto. Slowing demand due to high interest rates coupled with rising fuel prices have brought discounts and freebies back for those vying for scooters or its faster siblings, bikes. Two-wheeler makers in their bid to reduce inventories have also lined up various options to attract customers after almost a gap of more than four years, doling out cash benefits and lower rate of interest. "This is for the first time that scooters, basically an urban-centric product, attract discounts. The market conditions are increasingly getting tougher amid adverse economic sentiments simmering in the past few months. The low consumer sentiment is tapering off demand for bikes and scooters unlike 2011, when we saw highest ever sales growth in a single year," said Atul Gupta, vice-president (marketing) of Suzuki Motor India. According to industry players, demand has been slowing particularly in smaller towns and rural areas. This follows a splendid 11.39% growth to 13.43 million units sold in April to March 2012. A stagnating passenger car segment forced companies to dole out huge discounts for most part of 2011, and they had raised it even further this year to bring customers back to their dealerships. Two-wheeler industry is now mirroring the same strategy. For the first time companies are doling out rebates, such as free insurance on scooters, despite a record growth of this segment in the two-wheeler market. Scooter sales had jumped by a quarter to record 25.62 lakh in the last fiscal. The segment leader, Honda Motorcycle and Scooter India (HMSI) flagship model Activa comes with free insurance and easier down payment of Rs 7,999 for instant delivery any many markets. Dealers said that they were offering these benefits to reduce stocks as the demand has been slowing with retail sales getting being low and the cautious customers are postponing their purchase decisions. However, the company refused to acknowledge any offer. "There are no schemes or discounts offered by HMSI in the market," the company spokesperson said. However, analysts tracking the sector say that cash discounts and gifts options are being offered in selective markets. "We have noticed many companies coming up with cash options as well as finance options coming in many markets as interest subvention offered by different companies," said Mahantesh Sabarad, senior vice-president, research, Fortune Securities. Bikes and scooters are small-ticket purchases and banks and financial institutions take high interest rates on their loan schemes. Currently the interest rates are hovering in the range of 23-26% for financing two-wheelers. Companies like TVS Motors and Bajaj Auto are offering interest discounting in the range of 6-9% to attract customers. "It attractive packaging being done in some market but we are not offering any direct discounts," Bajaj Auto's two-wheeler unit president K Srinivas said. These benefits to customers are mainly coming from dealers as attractive marketing initiatives to improve retail sales. Analysts tracking the market said that discounts from dealers are precursor to what the company may offer in next few months. "As the ticket size of two-wheeler purchases is less they are not immediately impacted by the macro economic sentiment. But if dealers are giving benefits to consumer, companies may not be far behind," said analyst with a Mumbai-based brokerage firm.

Pockets of outperformance in automobile sales

After two successive years of 26 per cent year-on-year volume growth in each, growth in the domestic auto industry has moderated in 2011-12. Thanks to high interest rates and the general economic slowdown, the industry (passenger vehicles, commercial vehicles, three- and two-wheelers put together) has grown only by 12 per cent. But few sub-segments such as utility vehicles (UVs), light commercial vehicles (LCV goods carriers) and scooters have put up a better-than-industry performance. While utility vehicle sales in the domestic market have grown by 16.5 per cent, LCV goods carriers and scooters have shown a Y-o-Y volume growth of 30 per cent and 24 per cent respectively in the April 2011-March 2012 period. What has triggered the out-performance in these segments? Diesel models drive UV growth With the gap between petrol and diesel prices widening during the year, customer preference clearly shifted to diesel vehicles. This is evident from the fact that even as demand for cars slowed considerably, diesel models, among cars, continued to do well. Hence, the availability of many diesel models among UVs could have been a contributing factor. Mahindra and Mahindra (Bolero, Scorpio, Xylo, XUV 500), the market leader in the UV segment, saw a healthy 19.5 per cent in volume growth last year. The company ‘s market share improved from 53.5 per cent in 2010-11 to 55 per cent. Another reason for healthy growth in this segment has been launches/new arrivals. Force One from Force Motors, Aria from Tata Motors, Santa Fe from Hyundai as well as the XUV 500 were launched during this period. Other models that saw good off takes include the Tavera from General Motors, Toyota Innova, Tata Sumo and the Skoda Yeti. LCVs non-cyclical Among CVs, LCV goods carriers have yet again proved to defy the cyclicality witnessed in the sales of heavier trucks (30 per cent vis-à-vis the 8.8 per cent growth ). One reason for the good show could be that, given their lower cost, these vehicles may not be as sensitive to interest rate hikes as larger trucks and the proportion of financed purchases too may be less. Also, the demand for small CVs such as the Ace, Ape, Gio, Genio , Maxximo and Dost have been strong. This stands testimony to the catching on of the ‘hub and spoke model' of transportation in India, where such small vehicles are used for last mile connectivity within the cities and towns. Scooters GET popular Although motor cycles still remain the largest sub-segment in terms of volumes among two-wheelers (consisting scooters, motorcycles, mopeds), scooters have clearly been gaining popularity in the last few years. The 2011-12 performance is a continuation of this trend. From about 79.5 per cent in 2007-08, the share of motorcycles in total two-wheeler volumes has steadily declined to 75 per cent now. On the other hand, the share of scooters has increased from 14.5 per cent to 19 per cent during this period. Expansion of product portfolio with the entry of the Mahindras ( Duro, Rodeo, Flyte, Kine) in the last few years, coupled with a deepening of footprint by Honda, has been the reason for the same.

Royal Enfield roars back on quiter, sleeker bikes

The "thump" is gone, but sales are booming. Royal Enfield, a 119-year-old Anglo-Indian motorcycle maker with a cult following, has brought its distinctive bikes into the modern era with new and quieter engines and can't make them fast enough to meet demand. The once-sleepy company sold 74,600 motorcycles in 2011, a 40 percent increase, all made at its 57-year-old factory on India's southeastern coast, and is spending $30 million this fiscal year in a push to double capacity and upgrade manufacturing technology. For now, customers must wait six to nine months to get their bikes. "Paradoxically, the more we make the more we appear to be falling behind. Only when the new plant kicks in fully next year will we be able to fully address the waiting periods," Venki Padmanabhan, chief executive officer of Royal Enfield Motors, told Reuters. A new engine has replaced Royal Enfield's antiquated cast iron engine, boosting acceleration, performance, mileage and reliability, and reducing emissions. The company is best known for the powerful Bullet model, but it is the newer Classic series that is driving growth in a crowded and fast-expanding Indian market where 10 million motorbikes were sold last year. "They've finally got the markings, the logo and the colour schemes perfect," said 35-year-old George Koshy, who works in an advertising firm and owns four Royal Enfield bikes, including a Classic 500. Royal Enfield's motorcycles start at 108,000 rupees in Mumbai and rise to 175,000 rupees, against 72,000 rupees for a 220 cc Bajaj Avenger, a similarly powerful bike also marketed towards enthusiasts. Harley Davidson (HOG.N), whose bikes start at 560,000 rupees, is part of a slew of overseas manufacturers such as Britain's Triumph and Japan's Kawasaki that is ramping up activity in India to capture a growing premium motorbike market. "If you want to ride for the heart, you ride the Bullet; if you want to ride for performance you ride the Harley," said Koshy, who plans to add a Harley Davidson to his collection. TRANSFORMATION Purists still come to the company looking to buy a bike with the old engine, but they have to go to the second-hand market as production ceased in 2010. Royal Enfield originally built motorcycles to be parachuted into enemy territory by British forces during the Second World War, and the classic styling and trademark thumping of its engine at full throttle drew a legion of gearheads to the brand, including television host and motor enthusiast Jay Leno. It rolled out its first motorised bike in 1901 and entered the Indian market in 1949, where the Bullet, now in its 80th year of manufacture, became a staple on the country's roads. Royal Enfield, which stopped building bikes in Britain in 1970 and was bought by India's Eicher Motors (EICH.NS) in 1994, expects to open a new 50-acre plant in the southern Indian state of Tamil Nadu next year, taking capacity to 150,000 vehicles. It is a niche manufacturer in a country where mass-market players led by Hero MotoCorp (HROM.NS) and Bajaj Auto (BAJA.NS) sell cheap bikes as basic transportation and family vehicles. The company sold just 3,200 bikes overseas last year and is looking to expand its export markets on the strength of its upgraded engines. It recently signed up dealerships in Malaysia and the Philippines, and is working to resurrect its distribution network in Germany and France. An auto-industry veteran, the 49-year-old Padmanabhan started his career with General Motors (GM.N) in Michigan and took the top job at Royal Enfield in January 2011 after two years as chief operating officer. "For many motorcycle companies, when they change engines it's like life and death - if you don't do it right you're finished," he said. "For us we think we've been successful with the UCE engine, which just happened a little over a year ago, and there's still a lot more to be done with this engine," he said.

Hero Plans to cut unput cost by 5% every year till 2015

In a move that could help save it a targeted Rs. 700 crore in the current fiscal year and more thereafter, India’s largest two-wheeler maker, Hero MotoCorp Ltd, has asked vendors to submit a report suggesting ways to reduce input costs. The move to pare these costs by up to 5% every year for the next three years is expected to increase the Ebitda (earnings before interest, taxes, depreciation and amortization) margins by four percentage points in the next three years. The circular on reducing the cost structure has been issued to Hero’s vendors by Neeraj Mathur, vice-president (strategic sourcing and supply chain management), and B.S. Jolly, general manager (vendor development), on 27 February, with the subject line “Sourcing strategy”. Mint has reviewed the circular. A January Motilal Oswal Securities Ltd report had cited the management as saying it wanted to pare as much as Rs. 1,000 per motorcycle, translating into a saving of about Rs. 700 crore in the current fiscal, which is slightly above the net profit posted in the third quarter of the last fiscal year. Hero will announce earnings for the fourth quarter and full fiscal in May. The company sold 6.2 million units last year, 15% more than the previous year. It is increasing capacity at existing factories to seven million units this fiscal year from 6.4 million, apart from which it’s expected to set up one more plant this year. The savings are expected to rise subsequently as Hero’s volumes are seen expanding in line with the 14% compounded annual growth rate projected till 2015 for the two-wheeler industry by Society of Indian Automobile Manufacturers lobby group. As part of seeking to prune costs in the wake of its break with long-standing partner Honda Motor Co., Hero is also looking to nurture a fresh set of vendors, while also seeking to reduce the number of component suppliers so that parts costs can be brought down. Mint’s Amrit Raj says Hero Motocorp has asked its vendors to submit a report suggesting ways to cut input costs, in a move that analysts say can save almost Rs. 700 cr for the company in the current fiscal “The company has initiated a vendor-rationalization programme. It is in the process of shifting away from Honda-approved vendors,” Jinesh Gandhi and Manasi Verma wrote in the Motilal Oswal report cited above. “However, its first priority would be the quality of the vendors. It will not change the vendors on the cost of quality. The rationalization process will help the company save at least Rs. 1,000 per unit over the next two-three years,” the report said. Under the arrangement with Honda in its erstwhile joint venture, Hero Honda Motors Ltd, Hero had to get the approval of the Japanese firm before appointing a new vendor. In December 2010, the Hero Group and Honda agreed to end their 26-year-old relationship, with the Indian promoters buying the Japanese firm’s 26% stake for Rs. 3,841.83 crore. The vendor strategy is expected to bring Hero’s profitability closer to rival Bajaj Auto Ltd’s, which boasts the maximum Ebitda margins of 20% in the Indian two-wheeler business. “This process will increase its Ebitda margins to above 15% over the next three years,” added the Motilal Oswal analysts. According to analysts’ estimates, Bajaj’s Ebitda margin is estimated at 20.5% for 2011-12, while that of Hero is seen at 15.6%. After adjusting for the quarterly royalty payment of Rs. 220 crore to Honda, Hero’s Ebitda will be 12.3%. The company asked vendors in the February circular to increase capacity. Hero aims to sell in excess of 10 million units a year and achieve $10 billion in annual sales in the five-six years, managing director and CEO Pawan Munjal had said in August. A component manufacturer confirmed the company’s move to increase capacity and rationalize its costs. “We received a circular from the company in March, which asks us to do value analysis or value engineering of our cost structure,” said a Hero vendor who supplies oil pumps to the firm. “In the circular, the company talks about its expansion plans by setting up new plants and promises full support in terms of setting up a vendor base around the plants.” Value analysis is a process that identifies and selects the best-value alternatives for designs, materials, processes and systems. The process seeks to determine whether the cost of any item can be reduced or eliminated without having any impact on quality, effectiveness and customer satisfaction. Hero’s expenditure on raw materials grew 16% to Rs. 4,453 crore in the third quarter of the last fiscal year from a year ago. A 5% reduction in input costs would result in savings of Rs. 223 crore every quarter. To be sure, vendors are not very optimistic that the move will lead to the kind of savings the company has envisaged. “The way raw material prices are going up, it seems a daunting task for us,” said the component supplier cited above, who declined to be identified. “Besides, there has been a demand for wage revision in almost all the companies. That has made the situation even worse.” Hero’s move may not yield the kind of return that it’s looking for, given the current business environment, said Mahantesh Sabarad, senior vice-president (equity and research) at Fortune Equity Brokers (India) Ltd. “Their intent is right, but the target looks ambitious,” he said. “The company needs to understand that the amount of money that may be accrued via value engineering could get offset by increasing raw material prices.” Two detailed questionnaires emailed to Hero on 27 March and 18 April did not elicit any response.

Vespa to Set Up Plant at Baramati

Iconic Italian scooter brand Vespa is coming to town all guns blazing by setting up a manufacturing facility at Baramati in Pune district Varad More Iconic Italian scooter company Vespa announced its return to the Indian market after a 13-year hiatus,at the 2012 Auto Expo.Now the company has taken the next step,and set up a plant in India.The new facility located at Baramati near Pune boasts production capacity of 1,50,000 units with a total investment of over Rs 200 crore in its first phase.Piaggio Group,the parent company of Vespa is bullish about the re-entry of the cult scooters in the Indian market that offers immense potential for non-geared two-wheelers.The company plans to expand capacity to 3,00,000 within the first six months depending on demand. The first Vespa model to hit the Indian roads will be the LX125 scooter,which was unveiled for the first time at the Times Mumbai International Motor Show in 2011.The Vespa LX125 is a premium range scooter powered by a 125cc 4-stroke single-cylinder engine pumping out 10PS at 7,500rpm and 9.6Nm of torque peaking at 7,250rpm.Paying tribute to the classic 1946 Vespa design,the LX125 might get a new name for India,but it certainly will feature trademark Vespa retro design.

Honda could have seven two-wheeler plants by 2020

Honda is working very seriously to get its waiting period for few of its products down drastically in the coming years. The company has managed to become a massive player in the Indian sub – continent by its mass appealing bikes and of course, its scooters. The amount of efforts that the company has put in to attain this status is mind – boggling. The company presently has plans to increase its manufacturing bases in India that would help reduce the difficulties that the company currently faces owing to excessive demand of the products including spares for the same. The reason for this success is the fact that Indians have started considering Honda products to be Value For Money in nature, thereby making them invest on it without much swings. The company is working on a target of attaining 10 Mn two – wheelers mark in India over years and in order to make this figure come alive, Honda is planning to own seven manufacturing facilities before the year 2020. There’re presently two plants – one in the state of Haryana and the other in Rajasthan. There’ll be two more coming up very shortly in Karnataka. The company is eyeing the states of Gujarat and Maharashtra for its forthcoming plants, though there is no official confirmation about the same. The other state that is being considered as of now is Uttarakhand. Eastern zone is also taken into consideration for its future plans. “We will not be entirely surprised if HMSI then chooses to set up its seventh plant in the eastern region. After all, this part of the country has tremendous growth potential and other markets in the northeast can be easily accessed from here,” an auto ancillary supplier told Business Line in a recent interview. Once the company manages to sell 10 Mn units in India which would include both bikes and scooters, then the company would be enjoying a flat 30 per cent market share in the nation which is a great deal for Honda. The company is also working on the same with mouth shut and fingers crossed. The company presently holds a market share of 14 per cent with 2.1 Mn units sold till now. Business Line had reported recently that ‘Sources say parent company, Honda, is keen that India plays a larger role in its two-wheeler business, ahead of Indonesia and Vietnam. The quest for leadership is also top priority following the Japanese company’s recent parting of ways with the Hero group which produces over six million two-wheelers annually. The commissioning of its Rajasthan plant saw HMSI report 27 per cent higher production last fiscal. This will be up to 50 per cent in 2012-13 at three million units and, according to sources, will be closer to five million units by FY ’15 when the Karnataka facilities are firing on all cylinders.’ “It is only after this period that the real tug-of-war will begin in the two-wheeler space. Both Hero and Bajaj will be as keen to increase numbers and stay ahead,” an industry veteran said. By 2020, all three companies could then be evenly poised at 10 million units annually. That would make India a great arena for these contenders to battle and the winner will take away the majority of the share while small players will be forced to act as silent spectators. It’s high time for all the players in the Indian market to gear up before they get lost in the years to come. The company is closely following Bajaj Auto in terms of export volumes which have got a great scope in terms of volume and the revenue. The export revenues account for almost 40 per cent of Bajaj Auto’s total revenues. That’s the value the export mark lets of these two wheeler giants can fetch to the company par se. Honda’s concentration on this segment will not recede at any point of time besides concentrating on the domestic front. The Finance news daily also quoted that ‘It would also be imperative for HMSI to get cracking in the executive segment in motorcycles where Hero MotorCorp reigns supreme. At present, scooters account for nearly two – thirds of its numbers whereas bikes have potentially much more to offer in the Indian context.’ With the setting up of new plants in the years to come, will Honda reign the Indian two wheeler market ahead of all the Indian companies. Let’s wait to watch the heroes in action very soon.

Suzuki Motorcycle to ride Salman Khan

Suzuki Motorcycle India has announced Bollywood actor Salman Khan as its first brand ambassador for India. For the Dabangg star, this is quite a turnaround. There was a time when brands refused to touch the black buck scandal tainted actor, fearing the association would sully their image. But with hits like Dabangg and Bodyguard under his belt, brand Salman has seen a revamp of sorts. His philanthropic work with Being Human has also made his fans se the softer side of his personality. From a soft drink beverage to a detergent brand, Salman seems to be on an endorsement spree. Besides a record deal with travel company Yatra, Salman has recently also been the brand ambassador for the channel History. Recent endorsement deals have now put him in league with counterparts Shah Rukh Khan and Aamir Khan in the brands deal sweepstakes. Salman Khan will spearhead Suzuki's above-the-line and below-the-line initiatives. Ms. Anu Anamika, National Marketing Head, Suzuki Motorcycle India said, “It was important to find a human face who can best portray and project our brand and product promise. Salman Khan is a passionate biker and a discerning brand endorser. We also find broad synergy in his social initiatives such as ‘Being Human'.” The first campaign featuring Salman will be based on the recently launched mass market motorcycle, Hayate and will be breaking shortly. Suzuki Motorcyle will be increasing its annual capacity from the current 3.6 lakh units to 5.4 lakh units by 2013, while doubling the sales and service network in the next two years. It is also expected to set up a second plant in Haryana at a cost of Rs 2,000 crore, with a capacity for 20 lakh units. This will start operations in 2014.

Cheaper auto loans to push sales

The auto industry has received a welcome shot in the arm with a drop in interest rates on vehicle loans expected over the next few days. This is expected to help offset the rise in model prices after the Budget last month increased excise duties by a minimum of 2 per cent. This follows the reduction of the interest rate (for lending to banks) by the Reserve Bank of India by 50 bps to 8 per cent on Tuesday, a move which has come after almost three years of successive hikes. After a tough previous fiscal, such a move is expected to boost sales, of which 70-80 per cent comes from financing alone. Mr V. Lakshmi Narasimhan, CFO, Magma Fincorp, told Business Line that this was a “dramatic intervention”, as the industry had expected a lower rate cut at about 25 bps. A non-banking financer, Magma lends for commercial vehicle, construction equipment, tractor and car purchases. “We expect banks to drop lending rates in the next 2-3 days, after which we will follow. Our average lending rate is 14.6 per cent, which may go down by a similar 50 bps,” he said. To check inflation, interest rates have gone up 13 times in the last year. The RBI had then indicated in September, 2011 that it might be reduced going forward, in order to spur GDP growth. Industry sources also feel that lower interest rates may be part of a larger package and be followed in tandem by a reduction in the fuel subsidy on diesel by the Government. Such a reduction, leading to higher diesel pricing, is expected to impact commercial vehicle sales. Mr Ajay Seth, Maruti Suzuki's CFO, said the RBI's move will help bring “lost confidence back” in the car market, but more rate cuts are needed to maintain the growth trajectory. “Only one cut won't suffice. One would have to look at a six month or a year long period, I'd expect up to a 250 bps cut this fiscal,” he said. Added Mr Vishnu Mathur, Director-General of Society of Indian Automobile Manufacturers, “It seems the Government is prioritising on industrial growth. We expect a normalising of interest rates over the year, which is better for market sentiments.”

Bajaj pulsar 200ns readies for production

Bajaj Auto readies for the next generation Pulsar launch, tweaks up the motorcycle with better equipment

After having shown their thrilling new offering – the next generation Pulsar 200NS and giving a solid blow to its rivals with its expected pricetag of under a lakh of rupees, Bajaj Auto is working hard to better a product which already has all the right elements to continue the legacy of the Pulsar brigade and maintain its segment leading stature. And by working hard we mean, the R&D team at Bajaj Auto is ironing out whatever small creases that they can notice as well as better the quality and equipment level furthermore. While the test mules handed to the media previously were prototypes, the final production ready Pulsar 200NS will feature a host of improved components and equipment.

To begin with, the headlight will get a bump in wattage from the 45 watt bulb on the prototype to a 55 watt bulb on the final model of the Pulsar 200NS. Also, the tell-tale lights will get some tweaks for better daylight visibility. The rear mudguard could undergo some changes with regards to the texture changing from its glossy finish to a matte black treatment. Also, there is a possibility that the company may offer optional tyre choice to the consumers who want quality rubber to truly exploit the Pulsar 200NS’s potential. From the company, the bike will come shod with tyres from MRF as well as TVS Eurogrip in varying lots. There are a host of other improvements too that will be visible on the production ready model and it only goes to say that this is going to be one cracker at an enormous price advantage. The vehicle is expected to commence production by the end of this month and until then there is more news expected about the exact launch date and the pricing of the new Pulsar 200NS. Watch this space for updates.

Honda Motorcycle to Shift R&D Base to Manesar

Move will be the last part in the amicable separation of Honda Motor Co and HeroCorp

The last part in the amicable separation between the Hero Group and the Honda Motor Company is being initiated,making the separation of the leading players in the Indian two-wheeler market complete.Honda Motors Indian subsidiary,Honda Motorcycle & Scooter India (HMSI),will be moving its research and development base for two wheelers in India from Gurgaon to Manesar plant,even as Hero MotoCorp is forging new alliances and ties to set up its own full-fledged R&D centre.The move will help HMSI,the second largest domestic two wheeler maker today,to churn out new models faster especially in the mass market category and take on its erstwhile partner Hero Group head-on to achieve its long term goal of becoming the Number 1 two wheeler maker in the country.

ET learns that the R&D centre,which runs under the company called Honda R&D India (HRID),will move from a rented set up of IFFCO chowk in Gurgaon to an integrated R&D set up in the HMSI Manesar plant,where a new building is being currently set up.The centre is likely to be operational in the next three to six months time.Honda Motor is expected to invest several hundred crore in this expanded set up and aims to more than double the number of engineers to 200-300,said people close to development.

The new set-up will move beyond developing minor model changes to styling and design,prototype development,testing and validation,component development with vendor to offer products faster at lower cost.An e-mail query to HMSI and Honda R&D India did not elicit any response.The Hero MotoCorp spokesperson told ET that it is their internal matter and such a development,if any,will have no effect whatsoever on our product launch plans.

We are strengthening our own capabilities both organically as well as through strategic tie-ups,such as with EBR and AV, the spokesperson added.Before the break-up,HRID used to work for the erstwhile Hero Honda and Honda Motorcycles future product.Now,it will solely focus on the needs of HMSI.When Honda was Hero Groups partner,HMSI was barred from entering mass market,but now with both the companies on their own,the HRID will be working aggressively on developing new mass market motorcycles and will be in a position to react to market needs more quickly with new models.If you want to compete with Hero,then you need to have capabilities in house.With this move,HMSI will be able to bring newer models at quick pace.

Apart from model improvement,the introduction time will improve dramatically, said an official familiar with the matter.The Honda Motors technology agreement with the Hero Group expires in June 2014,and the Pawan Munjal-promoted company will however continue to source products and technology from Hondas R&D bases in Thailand and Japan.In fact there are two or three new products lined up by the Hero Group with the support of Honda technology which will be launched in the next 12-24 months and these includes 100 cc bike Passion XPro and a 125 cc Bike Ignitor,which the company showcased at the Auto Expo.Hero Group and Honda had signed a new licensing agreement in March,under which the Indian firm will pay its Japanese counterpart 45 billion yen (about.2,450 crore) till 2014.

Hero MotoCorp sweats on growth, competition

While a slowing in sales volumes has taken the shine off Hero MotoCorp’s (Hero) stock, down four per cent in April against a one per cent fall in the Sensex, the expected rise in competitive pressures over the coming months and slowing industry volumes have raised concerns over its medium- to long-term outlook.

A drop in crop realisations and lower two-wheeler sales has translated to a mere 2.4 per cent year-on-year growth for Hero in the month of March. Given the high base, it is likely to achieve eight to 12 per cent growth in volumes in 2012-13, estimate analysts, compared to 15.4 per cent in 2011-12.

The key threat for Hero is the launch of Honda Motorcycle and Scooter India’s (Honda) Dream Yuga, which Citigroup Global Markets analysts Jamshed Dadabhoy and Arvind Sharma believe has the potential to destabilise market share in the executive segment.

Further, a slowing in the domestic segment will hurt Hero more than Bajaj Auto, as the latter gets about 36 per cent of its volumes from exports. The areas of opportunity for Hero will be exports, the fast growing scooter market and the premium motorcycle segment.

At Rs 1,973, the stock is trading at 15 times its FY13 estimates. Given competitive pressures at home and untried export markets, most analysts have a sell/hold rating, with price targets at Rs 1,650-1,950.

Competitive pressures

While the company has lined new products such as the 110cc Passion X Pro bike and 125cc motorcycle Ignitor for launch in FY13, it is likely to face increasing competition in the executive segment from Honda and TVS. While Honda will pull out all the stops to market its 110cc Dream Yuga, TVS is also expected to re-launch its popular bike, Victor, in a new avatar. Bajaj, too, is expected to launch a bike in this segment.

The Street will be keenly monitoring the battle between Honda and Hero, given that the executive segment accounts for about two-thirds of overall motorcycle sales, and that Honda was until recently Hero’s partner (for 26 years), with equally good understanding of the Indian market.

Hero currently dominates the executive segment, with 74 per cent market share. Due to an estimated slowing in the sector, Citi has cut volume forecasts for Hero and anticipates slight erosion in its market share, particularly in the executive segment. The battle in the segment, however, will be played out over a long term, with Hero unlikely to yield much in the short term, believe experts.

Says the head of research at a leading brokerage firm, “Though Hero MotoCorp will shed some market share, the gains for competition in the short term will be marginal, as Hero still has enough brand pull and distribution reach.” As a comparison, while Hero has a 4,000-dealer network, Honda’s is just a fourth of this. This will be difficult to replicate any time soon.

If the Honda bike is successful, it could generate sales volumes of 500,000-750,000 units annually. The incremental market share Honda would capture within the commuter bike segment in FY14 would be six to nine per cent, feel Citi analysts.

Scooters, export focus
Hero is also looking to improve its share of the scooter market, currently 16 per cent. Unlike motorcycles, this segment is expected to clock another year of higher volumes, with growth estimates pegged at a little over 15 per cent. The company has recently launched a gearless scooter, the Maestro. While analysts say it is too early to predict its impact on the segment (dominated by Honda’s Activa), Vijay Sarthy T S and N Ravindranathan of Spark Capital say the launch is likely to impact sales of TVS’ Wego. Hero is also likely to test-market its hybrid scooter, the Leap, later this year.

The other area which could open substantial opportunities for Hero is export, currently at two per cent of its volumes. The company has an export target of a million units by 2016-17, from just over 100,000 currently. Hero’s managing director and CEO, Pawan Munjal, has already indicated exports would be a focus area and the company was targeting opportunities in markets such as Africa and Latin/Central America. To compete effectively, both in the premium end of the domestic market as well as exports, the company recently entered into a strategic tie-up with US-based Erik Buell Racing. Analysts say the move will help the company turn the heat on Bajaj Auto in the premium segment and offset some of the pressure in the executive segment.

Outlook
Two-wheeler growth is likely to be on the slow lane due to a rise in product prices after the Budget and a likely rise in fuel prices in the first half of FY13, believes Hitesh Goel of Kotak Securities. While the Society of Indian Automobile Manufacturers has put out the FY13 estimates at 11-13 per cent, analysts feel it is likely to be eight to 10 per cent.

Though the impact of the slowing and competitive intensity in the executive segment will be negative, Hero’s strategy of venturing into other new markets, targeting the premium end of the domestic market and making inroads into the scooter segment should soften part of the blow, feel analysts.

TVS Motor ties up with IBM to cut logistics costs

TVS Motors on Monday announced it has selected global software giant IBM's software solutions to optimise its transport planning and assets utilisation. It will be using IBM's ILOG Transportation Analyst solution to map the most cost-effective trucking routes for timely delivery to its various dealerships. TVS has a widespread dealer network across the country, where it dispatches products from its manufacturing plants on a regular basis.

Hero MotoCorp begins work on high-end bike model

Roll-out of the 250cc bike likely in ’14; model one of the first few to be developed after separation from Honda

Hero MotoCorp Ltd, India’s largest two-wheeler maker, is set to introduce its first indigenously developed high-end motorcycle in 2014 to compete with rivals, including its erstwhile partner Honda Motor Co. Ltd, in the domestic market and enter overseas markets.

The Munjal family-controlled firm has started working on the 250cc sports bike, which is expected to start selling in 2014, according to four people familiar with the development. They declined to be named.

“The product will be well-researched and futuristic in nature,” said one, a person directly involved with the project. “Even as market research is underway, a prototype of the bike is ready. However, it’s subject to alterations as the taste of Indian two-wheeler consumers is expected to change dramatically with the country’s per capita income growing at a rapid pace.”

Hero MotoCorp’s spokesman declined comment.

The plan to introduce the premium motorcycle comes amid Hero MotoCorp’s declining market share in the segment, where the company’s Karizma ZMR competes with Honda’s CBR and Bajaj Auto Ltd’s Pulsar. In the last fiscal, the New Delhi-based Hero’s sales in the 125cc and above segment dropped 2 percentage points to 330,726 units, according to data from the Society of Indian Automobile Manufacturers, or Siam.

The 250cc segment expanded 75% in fiscal ending 2012. The segment is expected to grow 25% to 300,000 units a year over the next five years, as per IIFL Ltd’s estimates.

Honda Motor and the Munjal-owned Hero group separated in December 2010, ending a 26-year-old alliance. Even though a new agreement allows Hero to use Honda’s technology and brand till June 2014, Hero is pursuing an independent strategy in terms of technology and branding.

In February, Hero inked a technology sourcing pact with the US-based motorcycle company Erik Buell Racing.

Hero’s newly created 300-member strong research and development team will be working closely with the engineers from Erik Buell to develop motorcycles.

Erik Buell is expected to provide design inputs while Hero will develop its own engine with the help of Austria-based AVL (Anstalt für Verbrennungskraftmaschinen List).

Members of Hero’s research and development department are in Austria to work with AVL on a number of projects. AVL operates a technical centre in Gurgaon on the outskirts of Delhi as well.

Hero has also brought in designers and engineers from Erik Buell to work at its research centre in Gurgaon.

Hero chief executive Pawan Munjal had said in an interview on 22 February that the company would have multiple partnerships to develop new motorcycles and is looking at specific and niche experts in various areas.

According to a second of the four people familiar with the development, the 250cc bike with the Hero branding will be one of the first few models to be developed by the company after its separation from Honda. A third person said Hero had the prototype of the bike parked on the company’s shop floor in Gurgaon.

The 250cc segment has so far been the stronghold of foreign two-wheeler makers including Yamaha Motor Co., Suzuki Motorcycles, Honda Motorcycles and Kawasaki.

Joseph George, an analyst at domestic brokerage IIFL Ltd, said it will be tough for Hero to create a space for itself in the 95,000 units a year premium bike market (250cc and above) which is dominated by the multinationals.

“A typical premium bike buyer may not opt for a Hero brand,” he said. Even if the move may not be significant for the company in terms of profitability, it will be critical from the point of view of technology and positioning of the brand, according to George.

Car sales to grow 10-12%in FY13; CVs may take a hit

New Delhi, April 10: The auto industry is conservative with its growth projections for the current fiscal. It expects total sales to increase by 10-12 per cent which, though at the same levels as FY12, is lower than the 26 per cent growth seen in the post-slowdown years of FY11 and FY10.

The Society of Indian Automobile Manufacturers (SIAM) said that while car sales will rise 10-12 per cent in FY13, the growth of commercial vehicle (CV) sales is likely to come down to 9-11 per cent. In FY12, CV sales grew 18 per cent because of a surprise traction in the fourth quarter.

“CV sales growth is cyclic and uncertainties in infrastructure projects remain. However, they may rise further than our projections if the extended JNNURM scheme is announced for bus purchases by States,” Mr Vishnu Mathur, Director-General of SIAM, told Business Line.

He added that new models, especially diesel variants, and macro-economic growth, should help push car sales.

Other vehicles

The larger passenger vehicle segment, which also includes utility vehicles and vans, apart from cars, may also see a 10-12 per cent growth. Meanwhile, buoyed by rural demand, two-wheeler sales are expected to see a 11-13 per cent increase.

“Small car growth is still down because of the high cost of finance and low availability of diesel models in the segment. There may be a correction in the diesel-petrol prices this year,” he said.

Three-wheelers, the only segment that declined last fiscal, could see a 5-7 per cent rise this year, as States start issuing permits again for such vehicles.

However, the segment may be in trouble as a significant section of the demand is believed to have shifted to four-wheeled light CVs, such as the Tata Ace.

March Sales

A revival in car sales since January and a strong 20 per cent rise in March have helped the segment cruise back into the black for FY12, after being in the red for most of the year. Total vehicles sales were up 10 per cent in the month.

This is while passenger vehicle sales went up 21 per cent, as market leader Maruti Suzuki and rival Hyundai posted 2 per cent and 23 per cent increases. Tata Motors gained 33 per cent.

Commercial vehicle sales rose 15 per cent, with Tata Motors' sales growth at the same pace. Ashok Leyland and Mahindra & Mahindra saw a 12 per cent and 13 per cent increase respectively.

Meanwhile, two-wheeler sales rose 8 per cent, with Hero MotoCorp gaining 2 per cent and Bajaj Auto recording a 4 per cent decline. Honda Motorcycles, which overtook TVS as the third-largest two-wheeler maker in FY12, saw sales go up 55 per cent in March.

HMSI appoints Yadvinder S Guleria as VP for sales, marketing

Honda Motorcycle & Scooter India (HMSI) today appointed Yadvinder S Guleria as the Vice President for Sales and Marketing with immediate effect.

The announcement follows N K Rattan's leaving HMSI last month after serving about 12 years in the company.

"HMSI announced the appointment of Yadvinder S Guleria as the Vice President -- Sales and Marketing," the company said in a statement.

Prior to joining this new role, Guleria was working as Director for Sales and Dealer Development in the off-road vehicle maker Polaris India.

Guleria, however, is not a stranger to HMSI as he was one of the founding employees of the company and had worked for about 11 years since 2000.

He had headed Dealer Development, Domestic Sales and Exports and Logistics operations in HMSI his earlier stint, the statement said.

HMSI President and CEO Keita Muramatsu said: "I am pleased that the board has appointed Guleria as Vice President, Sales and Marketing. We are excited to have him back in our winning team."

Guleria said: "I'm truly honoured and excited to be back in Honda and lead the team at this important stage in its growth and expansion."

Higher volumes, price rises to aid growth in sector revenues

Passenger and commercial vehicles (CVs) saw strong uptick in demand in March, with diesel vehicle sales surging after the Union budget imposed no extra tax on these, according to BRICS Research. Maruti Suzuki, Ashok Leyland, Tata Motors (standalone) and Mahindra & Mahindra’s utility vehicles segment have seen a strong sequential improvement in volumes.

This and full-quarter benefits of price increases should boost sequential revenue growth this quarter, with Emkay Research expecting sales growth of 15 per cent year-on-year and 17 per cent quarter-on-quarter.

Two-wheelers have made rough weather of it, with Bajaj Auto’s 10 per cent sales growth being largely export-driven, and both TVS and Hero MotoCorp seeing flattish sequential volume growth.

Volumes, lower costs aid margin

Four-wheeler revenue growth is expected to translate to better operating leverage, with sequential expansion of operating profit margins. This should play out most dramatically for Ashok Leyland, which also sees higher production from its Pantnagar factory, and Maruti Suzuki (at 330 and 260 basis points sequential improvement, respectively), according to Emkay Research estimates for the fourth quarter of 2011-12. The margins would also benefit from stable metal prices.

The forex movement this quarter would marginally boost operating profit margins for Bajaj Auto and Hero MotoCorp. The full impact of adverse forex rates in the second quarter and higher royalty payment will compress operating margins by 210 bps y-o-y for Maruti. Religare Research sees a relatively benign environment on the commodity and currency front.

Higher PAT growth

Consequently, Emkay Research sees adjusted profit after tax increasing 31 per cent y-o-y and 23 per cent q-o-q to Rs 7,000 crore, though this would be more modest without Tata Motors’ subsidiaries, to about five per cent y-o-y and 33 per cent q-o-q to Rs 3,600 crore. The strongest sequential performers expected include Ashok Leyland (190 per cent), Maruti (173 per cent), mainly because of operating leverage benefits and favourable forex or metal contracts.

Outlook

The 2012-13 outlook is hinged on how demand plays out after the price increases and the monsoons, a key determinant of rural appetite for two-wheelers and farm equipment such as tractors. Other monitorables, according to Emkay, include performance of launches across companies, discount levels driven by competitive intensity, raw material contracts (input costs) and currency swings which would influence forex outlook and impact. Capacity ramp-up for Hero MotoCorp, Ashok Leyland (LCV and Pantnagar production) and Maruti (diesel car production) are other focus areas. Jaguar Land Rover performance in China and new launches will be key for Tata Motors.

Emkay sees a delay in cyclical demand recovery for four-wheelers after the budget due to expectations of fuel price rises and prefers two-wheeler makers. However, Religare focuses on a softer interest rate scenario as the basis of sustained CV demand (Leyland and Eicher being key picks). Maruti makes the cut as a consumption play.

Vendors' strike hits Hero MotoCorp's Haridwar unit

Permanent workers of two critical component makers that feed two-wheeler manufacturer Hero MotoCorp's biggest plant at Haridwar have been on strike for the past two weeks, but the company claims this has not impacted production.

Persons familiar with the matter told ET that 1,200 permanent workers of Satyam Auto, which makes plastic parts and two-wheeler chassis, and Rockman Industries, which supplies metal casting for engine and gears among other components, have been on strike to press for higher wages and the right to form workers' unions.

According to rules in the state, at least half of the workforce must be composed of permanent employees. Such employees at the two companies are demanding parity with workers in similar facilities in other states. The temporary workers have not joined the stir.

The component makers, owned by close relatives of Hero MotoCorp's promoter, are located in a 275-acre plot where more than 100 ancillaries churn out different components for the Haridwar plant. This plant churns out more than two million units a year, including the bestselling Splendor and Passion bikes.

"There has been no impact on our production due to the labour issue at one of our ancillaries' factories," said a senior executive of Hero Motocorp, the world's leading two-wheeler maker which reported record sales of 6.2 million two-wheelers in 2011-12.

While executives at the component makers refused to comment, major trade unions such as the All India Trade Union Congress and Hind Mazdoor Sabha said the agitating workers had their full support.

"Most of the employees in this largest industrial cluster of the state are not getting reasonable remunerations," All India Trade Union Congress national secretary DL Sachdev said, adding that the union was planning to meet Uttarakhand chief minister in this regard. "The protest may spread to other units and we expect the state labour department to come up with new wages to find a long-term solution," he said.

The industrial cluster at Haridwar, promoted by the State Infrastructure and Industrial Development Corporation of Uttarakhand, is a tax-free zone that allows excise and income tax benefits for local manufacturing.
According to the state industrial department, this has attracted about 850 companies to the cluster providing employment to more than 70,000 people. Fast-moving consumer goods firms Hindustan Unilever and ITC, capital equipment maker Bharat Heavy Electricals, battery manufacturer Eveready and luggage manufacturer VIP have set up large manufacturing facilities here over the past decade.

Our new products will be designed for global markets - Pawan Munjal

The Pawan Munjal-led Hero MotoCorp does not seem to be in a mood to leave any stone unturned to retain its 'numero uno' position in the two-wheeler industry.

In its pursuit of becoming a "truly global player" across all geographies, the company is not only forging multiple alliances for technology development, it is also actively working on various options to go beyond its existing segments.

Talking to ET, MD and CEO Pawan Munjal shares key insights into his strategic initiatives to make Hero the world's biggest two-wheeler brand. Excerpts:

Technology is the key to retain competitive edge. With aspirations to become global how will you fill the gap after severance with your 27-year-old Japanese partner, Honda?

The idea is to enhance our own R&D capabilities by training our own engineers. We are also forging multiple "strategic partnerships" with leading global technology companies to further enhance our in-house engineering skills.

As you know, we now have a partnership with Erik Buel Racing (EBR) of US for technology. We have also started work with AVL of Austria with the objective to develop our in-house capabilities in engine designing and technologies.

So, you will not be taking any more products or technology from Honda Motor Company?

We have a partnership till 2014 with Honda. This continues unabated and will keep rolling out Honda's sourced products - bikes and scooters - for the next years. And it would coincide with our indigenously developed line-up that would debut in both local and overseas markets subsequently.

We have just rolled out our new scooter Maestro, and also showcased the Passion X Pro and Ignitor bikes at the Auto Expo that are from the Honda lineage.

Much has been said in Hero's plans to introduce low-cost bikes. Given the adverse reaction of Indian customers to such products like cars etc, is the concept still feasible?

We have a huge focus on the entry-level segment. If you look at the bottom of the pyramid, there is a large section, which does not use any two-wheeler today, and therefore, there is immense potential.
I am not talking about a smaller bike with lower capacity engines, like mopeds etc. We have plans to make a motorcycle with inherent advantages of frugal engineering. Hero products are known for high fuel efficiency without compromising power. Something similar with a lower price tag would surely attract customers.

So, your future products would be catering to markets beyond India?

Yes, whatever we make from now on, will be designed keeping in mind global markets and customers. We have very little exports right now - only to neighbouring markets and to Columbia. We intend to enter new markets in Central America by the end of June and following that would foray into the East African markets.

The future products would be across all segments and will also cater to developed markets, but it would take a longer time to develop the right blend of bikes with higher displacement.

Will you export fully built two-wheeler or would put in place assembly or manufacturing operations in overseas markets?

We are studying various options. In few countries, the taxation structure makes its prudent to assemble rather than ship directly from India.

We are looking at setting up assembly operation in some foreign markets, but starting next fiscal most of the exports would be of made-in-India bikes.

How do you plan to make inroads in Latin America and Africa where local rival Bajaj Auto has the first mover advantage?

It's already an advantage for any Indian company to foray into markets where India-made products are well accepted and are successful. We will complement the Indian companies and our past experience (when Hero Honda products were sold under the Honda global distribution channels) shows that our bikes were taken well on performance parameters and also accepted for their robust quality.

Is there any possibility of synergies among three big Indian two-wheeler companies?

We have never looked at that till now. The presence of Indian companies has largely been in isolation, unlike the Chinese companies who still carry some synergies to venture into foreign markets. But Chinese products have met with limited success with issues of quality and performance keeping their growth under check.

Galaxy of achiever's receive 'Tamilan' Awards

Oscar-winning music director A.R. Rahman and Jnanpith award winner Jayakanthan were among six winners who received the ‘Tamilan' awards instituted by ‘Puthiya Thalaimurai' news channel at a grand function here on Friday night.

The ‘Tamilan of the year' awards were received by a galaxy of achievers who hoped that the honour would inspire the younger generation to contribute their mite for the weal of society as a whole.

Chairperson of the Cancer Institute, Adyar, V. Shanta, who received the award in the social service category said her institution stood for “service above self”.

Industrialist Venu Srinivasan (awardee in the industry category) said: “Service and industry are no different as both are for the welfare of society as a whole.”

Veteran director K. Balachander lauded A.R. Rahman (who won the award in the art category) as one whose “breath and prayer” was music.

M.S. Swaminathan, eminent agricultural scientist, who was chosen under the science and technology category, reminded the gathering that but for the farmer that there would be no such gathering at all.

Writer D. Jayakanthan, who took the honours in the literature category, in his own inimitable style, chose to attribute the huge number of persons choosing to take up poetry writing these days to the comparative comfort in using the genre or the respect attached to it.

“They probably take up poetry because they find it easier or because they are better respected compared to novelists.”

Chess wizard Viswanathan Anand, awardee in the sports category, was represented by his parents and wife.

“Promising stars”

The most impressive feature of the evening was the honouring of ‘promising stars' in each category: Chandra of Sakthi Arts Troupe (art), Gayathri Govindaraj, athlete, (sports), writer Su. Venkatesan (literature), Revathi (science and technology), Muruganandam (industry) and V. Muraleedharan of Sevalaya (social service).

Companies upbeat on hiring, hikes this year: Survey

Most companies have hinted at hiring more people this year, according to a Mercer industry survey.

Of the 682 companies asked across sectors, 84 per cent indicated they would hire more in 2012, the All Industries Total Remuneration Survey released on Wednesday, said.

The insurance, chemical and manufacturing sectors are expected to hire the maximum number of people. All the respondents asked forecast headcount addition in the next 12 months.

“Hiring continues unabated in Asia, with India and China leading the pack,” Mr Muninder Anand, Director, Information Product Solutions, Mercer, said.

The hi-tech industry too was gung-ho about hiring; 86 per cent of the respondents saying there would be increased headcount. Nearly 75 per cent of those surveyed said the same about the retail, electronic manufacturing and banking and finance sectors.
INCREMENT FORECAST

The highest increments — at 14.3 per cent — are expected in the automobile sector, the survey revealed. It expects an average 12 per cent salary hike across industries, the same as last year's .

Increments in the pharmaceutical and medical equipment sectors are projected at 12.8 per cent; chemicals at 12.2 per cent, consumer durables at 12 per cent, IT and telecom at 12 per cent and ITeS at 11.3 per cent.

Employees in the insurance sector, however, may get a relatively lower salary increase, at 11 per cent.

The remuneration for executives in the asset management industry will be higher in 2012 than for those in the consumer, pharmaceutical, chemical and automobile sectors.
ATTRITION RATES

The survey said attrition rates rose across sectors to 16.7 per cent in 2010. The highest turnover was seen in the ITeS segment, at 32 per cent, followed by 16.3 per cent in IT and 15.9 per cent in pharmaceuticals. The lowest attrition was reported in the chemicals sector, at 9.9 per cent.

The survey is conducted twice a year, in March and October, and covers all facets of rewards and benefits in 12 different major and small industries, Mercer said. Hero Mindmine Institute announced the sixth annual conference, Mindmine, by Hero Mindmine Institute Ltd, a subsidiary of Hero Corporate Service Ltd.

'Thriving in Uncertainty: Is this the Real India? , the objective of 2011 Mindmine Summit is to gauge whether India can continue its dream run against an uncertain global backdrop. The Summit also examines as to how the growing confidence and clout of India can provide Indian society, business and individuals, new leverage in a multi – polar and, increasingly, multi – dimensional world.

The highlights of this year's summit also includes an 'Icon session with Pawan Munjal' that will feature light hearted, multi-flavored interaction with film personalities, Ranbir Kapoor and Sonakshi Sinha, the two youth icons who represent not just the new India but also tomorrow's India.

The Summit spans for two days 21st and 22nd April 2011 will have eleven focused sessions, where the participants will take a critical look at where India stands in this year of recovery, and the direction in which it is headed.

Mr. Kamal Nath, Minister of Urban Development, Govt. of India and Mr. Arun Jaitley, Leader of the Opposition (Rajya Sabha) were the Guests of honor for the Inaugural Session. Dr. Brijmohan Lall Munjal, Chairman, Hero Group, Mr. Pawan Munjal, Managing Director and CEO Hero Honda Motors Ltd and Mr. Sunil Kant Munjal, Chairman, Hero Corporate Service Limited, delivered the opening and closing remarks at the Inaugural session for the Summit.

We cannot replicate Honda, but can still be the best: Rajiv Bajaj

Mr Rajiv Bajaj cites the stool as an analogy for his company's growth strategy.

“Any stool needs three legs to be stable. Likewise, in our case, these legs are sales, profitability and brand image,” the Managing Director of Bajaj Auto told Business Line.

The company wrapped up 2011-12 with sales of 4.35 million motorcycles and commercial vehicles of which exports accounted for 1.58 million units. While it plans to maintain the 15 per cent growth rate this fiscal, the eventual goal is to be the ‘best motorcycle manufacturer in the world'.

Honda is, of course, the world leader in motorcycles and is rapidly gaining market share in India too after its recent split with the Munjals of the Hero Group. The Japanese automaker is a brand that is synonymous with quality and Bajaj Auto, likewise, believes that it find its own identity.

“Obviously, we cannot replicate Honda but can still be the best by being different. We cannot ape them but are trying to have our individual brands established strongly,” Mr Bajaj said.
Global market

It is here that the three-legged stool business model is critical to making this dream a reality. From the viewpoint of sales, Bajaj Auto has a ten per cent share of the global motorcycle market. “I believe we can double this to 20 per cent,” he said.

Profits, on the other hand, have ‘pretty much peaked' given that it is not going to be simple surpassing a consistent 20 per cent EBITDA posted over many quarters now.

As for brand, which represents the third leg of the strategy, Mr Bajaj is of the view that the company is halfway there.

“With the new Pulsar 200 NS, we can go even further while the new Discover to be launched this fiscal will take the story to the next level,” he said.

In addition, the Boxer has established itself in Africa over the last 6-7 years.

The more recently launched KTM brand (Duke 200) is fairly new but the market response has been encouraging with monthly sales averaging 1,500 units.

Ideally, the company like to have the Pulsar embedded in the customer's mind as a great sports bike, the Discover as a (great) commuter bike and the Boxer as the ultimate workhorse.

Over the last three years, Bajaj Auto's comeback story was built around this brand strategy. “We worked with the same products but the focus was sharper in terms of effective positioning. The next step is to enhance their positions from this fiscal,” Mr Bajaj said.

Simply put, the first three years involved more learning while the future will be more experience-based.

“There was a lot of headwind in the first phase while the tailwind is stronger now in terms of sales, profitability and brand position,” he added.

Mr Bajaj recalls the quote of the Roman philosopher, Lucius Annaeus Seneca — ‘As is a tale, so is life: not how long it is, but how good it is' — to drive home his company's vision, “It is not how many you sell but how good you are.”