Motorcycle market sees negative growth in H1

The motorcycle market has witnessed negative growth of minus one per cent in the first-half of the financial year for the first time in the last five years. The first-half analysis also reveals that the market may not revive in the near future.

Talking to reporters after launching the company’s new dealership showroom in the city, K Srinivas, president of Bajaj Auto said that the sale in the industry has drastically come down, which has affected all the manufacturers.

“The sale that was close to eight lakh per month has come down to seven lakh per month. Though the market started to diminish in November last year, other companies continued manufacturing. As a result they will have to withhold production for around five months due to excess stock,” he said.

Analyzing the market fall, Srinivas said that Bajaj has increased its market share from 25 per cent to 27 per cent even in the crisis. Moreover, he also said that its brand Discover has overtaken Splendor as the largest selling motorcycle brand in the world in September.

“As per the data for the first eight days in the Navarathri season, Bajai has grown 6 per cent when the market is going down. The three new products launched in the year have brought this result to the company,” said Srinivas.

Motorcycle market sees negative growth in H1

The motorcycle market has witnessed negative growth of minus one per cent in the first-half of the financial year for the first time in the last five years. The first-half analysis also reveals that the market may not revive in the near future.

Talking to reporters after launching the company’s new dealership showroom in the city, K Srinivas, president of Bajaj Auto said that the sale in the industry has drastically come down, which has affected all the manufacturers.

“The sale that was close to eight lakh per month has come down to seven lakh per month. Though the market started to diminish in November last year, other companies continued manufacturing. As a result they will have to withhold production for around five months due to excess stock,” he said.

Analyzing the market fall, Srinivas said that Bajaj has increased its market share from 25 per cent to 27 per cent even in the crisis. Moreover, he also said that its brand Discover has overtaken Splendor as the largest selling motorcycle brand in the world in September.

“As per the data for the first eight days in the Navarathri season, Bajai has grown 6 per cent when the market is going down. The three new products launched in the year have brought this result to the company,” said Srinivas.

Motorcycle market sees negative growth in H1

The motorcycle market has witnessed negative growth of minus one per cent in the first-half of the financial year for the first time in the last five years. The first-half analysis also reveals that the market may not revive in the near future.

Talking to reporters after launching the company’s new dealership showroom in the city, K Srinivas, president of Bajaj Auto said that the sale in the industry has drastically come down, which has affected all the manufacturers.

“The sale that was close to eight lakh per month has come down to seven lakh per month. Though the market started to diminish in November last year, other companies continued manufacturing. As a result they will have to withhold production for around five months due to excess stock,” he said.

Analyzing the market fall, Srinivas said that Bajaj has increased its market share from 25 per cent to 27 per cent even in the crisis. Moreover, he also said that its brand Discover has overtaken Splendor as the largest selling motorcycle brand in the world in September.

“As per the data for the first eight days in the Navarathri season, Bajai has grown 6 per cent when the market is going down. The three new products launched in the year have brought this result to the company,” said Srinivas.

Experts optimistic on Bajaj’s outlook in a tough market

Though Bajaj Auto has indicated lower two-wheeler industry growth than earlier projected for FY13, analysts bet on company’s growth and expects it to sustain better margins due to its well-diversified portfolio and success of the new launches.

Country’s third-largest two-wheeler firm by volumes has scaled down industry sales growth guidance for the current financial year to three-four per cent from seven-eight per cent earlier estimated and the company expects to grow in that range. The festival season so far has been flat to marginally positive, the management told the conference call while discussing its September quarter performance.

The company has indicated that its recently launched Discover 125 ST and Pulsar 200NS have been doing well and are clocking monthly sales of about 34,000 units and about 8,000 units, respectively. These two bikes are seeing increasing demand during the festive season and have led to incremental volumes in the last quarter, thereby boosting market share. While the company is planning to launch a new 100cc motorcycle during December -January period, it hopes to garner a market share of about 30 per cent by FY13-end driven by success of these variants. It had a market share of 24.7 per cent in the July-September quarter.

“This portfolio of new launches along with the existing bikes will help Bajaj to take on the competition coming from Honda, which is growing leaps and bounds,” said Ashwin Patil of LKP Securities.

“Given the expectation of revival in demand through new launches in a weak domestic environment and gaining strength in Africa, SE Asia and Latin America, we expect the worst for Bajaj Auto is behind them now. With second half expected to do better along with pan India launch of Pulsar 200NS and new launch of a 100cc motorcycle during in Dec-Jan, we expect motorcycles to do well going forward and show a good recovery, especially in FY14. With RE60 getting launched in a quarter, three-wheeler exports may get a fillip. With price hikes taken, raw material prices softening a bit and three-wheeler sales in exports improving, we see better margins in the ensuing quarters,” he added.

“While the short-term volume outlook remains challenging, changing competitive structure poses a risk in the long term. However, Bajaj Auto is relatively better placed due to its diversified portfolio, with just about 30 per cent of volumes coming from sale of above 125cc motorcycles in the domestic market. Successful ramp-up of recent motorcycle launches and opening-up of three-wheeler permits would be key drivers for the stock over the next six-nine months. We estimate Ebitda margin at 18.1 per cent for FY13,” said Jinesh Gandhi of Motilal Oswal Securities.

Angel Broking’s Yaresh Kothari expects the volume growth of the company to revive in H2FY13E driven by recovery in export volumes (post price rationalisation in Sri Lanka) and also due to the success of new launches (Pulsar 200NS and Discover 125ST). The ebitda margin is expected at a little over 18 per cent for FY13.

Echoing similar view, Surjit Arora of Prabhudas Lilladher said, “With about 45 per cent of the revenues coming from relatively stable export and three-wheeler business, we believe 19 per cent plus ebitda level margins are sustainable. In our view, margins are likely to improve from here on (mainly H2FY13), led by better product mix in favour of high-end motorcycles and three-wheelers.

Bajaj, Kawasaki draft the ideal partnership script

It is the only Indo-Japanese bike alliance that continues to go strong after nearly three decades.

Perhaps, the success of the Bajaj Auto-Kawasaki partnership can be attributed to a business model, where each company gives the other enough breathing space. Hence, Kawasaki is independently working out its India manufacturing plans, and is zeroing in on a location for its bikes.

In the meantime, Bajaj Auto is helping out with the local retail plans of its Japanese partner’s powerful Ninja motorcycle from its top-end stores. Kawasaki has been a reliable ally for its Indian counterpart’s overseas operations, especially ASEAN and parts of Latin America. The two recently announced their plans for Indonesia following a successful partnership in the Philippines.

INDONESIA, PHILIPPINES

Bajaj Auto had entered Indonesia, almost immediately after the Philippines in 2004. The difference, in terms of market results, could not have been starker. “In the Philippines, where Kawasaki was partner, we have a 40 per cent share, while this was minuscule in Indonesia where we decided to go it alone,” Rajiv Bajaj, Managing Director, told Business Line.

It took the company some years to realise that things were not going to work unless the retail strategy was re-vamped. Bajaj Auto is now confident that Indonesia can replicate the success story of the Philippines, thanks largely to the presence of a strong partner in Kawasaki.

Quite unlike Honda or Yamaha, this Japanese company confines its skills to big bikes and everything that is fast and powerful. As a result, Kawasaki’s showrooms essentially house 650cc plus bikes, which effectively means that the volumes are hardly adequate to feed the network.

PULSAR, DISCOVER

This is where Bajaj Auto’s relatively smaller bikes like the Pulsar and Discover can supplement volumes and make the operations viable. “From our point of view, it makes sense to target those markets where this business model will work,” Bajaj says.

For the moment, ASEAN and Brazil are the best bets going forward with Kawasaki. On its own, Bajaj Auto is confident of handling South Asia, Africa and parts of Latin America. Its Austrian entity KTM (in which it has a 47 per cent stake) can cater to the US, Europe, Japan and Australia.

The company has decided to focus on motorcycles alone considering that it only has a 10 per cent share of the world market. “Actually, the idea is to keep things simple. There is nothing daring about this strategy as it is the most obvious thing to do,” Bajaj says.

Equally, the focus on motorcycles does not mean that there is no room for creativity.

“We have to adapt and evolve with the market while keeping the bike strategy intact. Hence, the bells and whistles are fine so long as we stay true to motorcycles,” he adds.

Bajaj, Kawasaki draft the ideal partnership script

It is the only Indo-Japanese bike alliance that continues to go strong after nearly three decades.

Perhaps, the success of the Bajaj Auto-Kawasaki partnership can be attributed to a business model, where each company gives the other enough breathing space. Hence, Kawasaki is independently working out its India manufacturing plans, and is zeroing in on a location for its bikes.

In the meantime, Bajaj Auto is helping out with the local retail plans of its Japanese partner’s powerful Ninja motorcycle from its top-end stores. Kawasaki has been a reliable ally for its Indian counterpart’s overseas operations, especially ASEAN and parts of Latin America. The two recently announced their plans for Indonesia following a successful partnership in the Philippines.

INDONESIA, PHILIPPINES

Bajaj Auto had entered Indonesia, almost immediately after the Philippines in 2004. The difference, in terms of market results, could not have been starker. “In the Philippines, where Kawasaki was partner, we have a 40 per cent share, while this was minuscule in Indonesia where we decided to go it alone,” Rajiv Bajaj, Managing Director, told Business Line.

It took the company some years to realise that things were not going to work unless the retail strategy was re-vamped. Bajaj Auto is now confident that Indonesia can replicate the success story of the Philippines, thanks largely to the presence of a strong partner in Kawasaki.

Quite unlike Honda or Yamaha, this Japanese company confines its skills to big bikes and everything that is fast and powerful. As a result, Kawasaki’s showrooms essentially house 650cc plus bikes, which effectively means that the volumes are hardly adequate to feed the network.

PULSAR, DISCOVER

This is where Bajaj Auto’s relatively smaller bikes like the Pulsar and Discover can supplement volumes and make the operations viable. “From our point of view, it makes sense to target those markets where this business model will work,” Bajaj says.

For the moment, ASEAN and Brazil are the best bets going forward with Kawasaki. On its own, Bajaj Auto is confident of handling South Asia, Africa and parts of Latin America. Its Austrian entity KTM (in which it has a 47 per cent stake) can cater to the US, Europe, Japan and Australia.

The company has decided to focus on motorcycles alone considering that it only has a 10 per cent share of the world market. “Actually, the idea is to keep things simple. There is nothing daring about this strategy as it is the most obvious thing to do,” Bajaj says.

Equally, the focus on motorcycles does not mean that there is no room for creativity.

“We have to adapt and evolve with the market while keeping the bike strategy intact. Hence, the bells and whistles are fine so long as we stay true to motorcycles,” he adds.

Bajaj, Kawasaki draft the ideal partnership script

It is the only Indo-Japanese bike alliance that continues to go strong after nearly three decades.

Perhaps, the success of the Bajaj Auto-Kawasaki partnership can be attributed to a business model, where each company gives the other enough breathing space. Hence, Kawasaki is independently working out its India manufacturing plans, and is zeroing in on a location for its bikes.

In the meantime, Bajaj Auto is helping out with the local retail plans of its Japanese partner’s powerful Ninja motorcycle from its top-end stores. Kawasaki has been a reliable ally for its Indian counterpart’s overseas operations, especially ASEAN and parts of Latin America. The two recently announced their plans for Indonesia following a successful partnership in the Philippines.

INDONESIA, PHILIPPINES

Bajaj Auto had entered Indonesia, almost immediately after the Philippines in 2004. The difference, in terms of market results, could not have been starker. “In the Philippines, where Kawasaki was partner, we have a 40 per cent share, while this was minuscule in Indonesia where we decided to go it alone,” Rajiv Bajaj, Managing Director, told Business Line.

It took the company some years to realise that things were not going to work unless the retail strategy was re-vamped. Bajaj Auto is now confident that Indonesia can replicate the success story of the Philippines, thanks largely to the presence of a strong partner in Kawasaki.

Quite unlike Honda or Yamaha, this Japanese company confines its skills to big bikes and everything that is fast and powerful. As a result, Kawasaki’s showrooms essentially house 650cc plus bikes, which effectively means that the volumes are hardly adequate to feed the network.

PULSAR, DISCOVER

This is where Bajaj Auto’s relatively smaller bikes like the Pulsar and Discover can supplement volumes and make the operations viable. “From our point of view, it makes sense to target those markets where this business model will work,” Bajaj says.

For the moment, ASEAN and Brazil are the best bets going forward with Kawasaki. On its own, Bajaj Auto is confident of handling South Asia, Africa and parts of Latin America. Its Austrian entity KTM (in which it has a 47 per cent stake) can cater to the US, Europe, Japan and Australia.

The company has decided to focus on motorcycles alone considering that it only has a 10 per cent share of the world market. “Actually, the idea is to keep things simple. There is nothing daring about this strategy as it is the most obvious thing to do,” Bajaj says.

Equally, the focus on motorcycles does not mean that there is no room for creativity.

“We have to adapt and evolve with the market while keeping the bike strategy intact. Hence, the bells and whistles are fine so long as we stay true to motorcycles,” he adds.

Santhosh hits paydirt in Himalayan Raid

Bangalore rider CS Santhosh is in celebratory mode.After having set the national tracks ablaze,the Bangalorean sizzled with creditable shows in Iran,Dubai,Philippines and Sri Lanka,winning several titles.But the best of Santhoshs major victories came when he clinched his maiden Raid De Himalaya,the most grueling after the Dakar Rally.

Making his maiden appearance at the Raid a week ago,Santhosh,riding a Honda CFR 450,clinched the Moto Xtreme open class title outclassing experienced international rider Helly Frauwallner.The Austrian was the winner of the 2011 Raid de Himalaya and an accomplished rider having finished second in the Paris Dakar.

This was my first Raid and I won on my very first attempt,something that has not been done, said the 28-year-old champion,who holds as many as 50 podiums including 40 victories.

It was a remarkable moment for Santhosh as he became the first biker from south India to win a Raid.He clocked the fastest time as against the eight-time Raid champion Suresh Rana (four-wheeler ).

The Xtreme motorbikes and quads category is considered the ultimate adventure in rallying,pitting competitor and machine against the most gruelling terrains.The Raid is the only Indian motorsport event listed on the off-road rallies calendar of FIM (Federation Internationale Motorcyclisme ),Geneva,Switzerland.Only 12 international motoring events world-wide are listed in this calendar.This is by far the most cherished memory of mine because not many people believed that a rider like me would be able to finish,let alone win the Raid in the first attempt.My biggest challenge was last years Raid winner Frauwallner who was riding a Yamaha, said Santhosh.

The stories of crashes and casualties at the Raid did not deter Santhosh.It only made him more determined to scale the summit.I have limited rally experience.This is the first time I have completed a rally.Prior to this,I took part in K-1000 in 2003 where I crashed out in the first stage.I decided to do the Raid this year not knowing what to expect other than the drops and ice and snow on the rally stages which I had heard about, said Santhosh,who is backed by Pro Bikes from Dubai.

The 14th edition of Raid De Himalaya took off from Shimla on October 7 and ended in Leh on October 12,covering over 1,800 km.

Santosh,who is a fourtime national champion and three-time supercross champion,is currently the lead rider of the TVS Racing team,having won several titles in the Foreign Open categories for the last nine years.
His career almost came to an end in 2011.During practice rounds,Santhosh crashed while clearing a wall jump and was almost paralysed,hampering his hopes of return to bikes.However,a tough rider that he is,Santhosh came out flying colours,winning the Sri Lankan championship,three months after his recovery from back injury.

Even though I was winning races,I wasnt getting anything out of it.I had hurt my back and come close to paralysis;my parents were very scared.I almost gave up rallying,but my team urged me to go to Sri Lanka and I won there, he said.

Having won the Raid,Santhosh has set his sights on the Maruti Suzuki Desert Storm and will be aiming to impress at the World Cross Country Rally Championship in Abu Dhabi.

If everything goes according to plan,I will take part in the World Cross Country Rally championship in March in Abu Dhabi.Before that I will be riding in the Maruti Suzuki Desert Storm in February 2013 on the Honda CRF 450, said Santhosh.

Santhosh hits paydirt in Himalayan Raid

Bangalore rider CS Santhosh is in celebratory mode.After having set the national tracks ablaze,the Bangalorean sizzled with creditable shows in Iran,Dubai,Philippines and Sri Lanka,winning several titles.But the best of Santhoshs major victories came when he clinched his maiden Raid De Himalaya,the most grueling after the Dakar Rally.

Making his maiden appearance at the Raid a week ago,Santhosh,riding a Honda CFR 450,clinched the Moto Xtreme open class title outclassing experienced international rider Helly Frauwallner.The Austrian was the winner of the 2011 Raid de Himalaya and an accomplished rider having finished second in the Paris Dakar.

This was my first Raid and I won on my very first attempt,something that has not been done, said the 28-year-old champion,who holds as many as 50 podiums including 40 victories.

It was a remarkable moment for Santhosh as he became the first biker from south India to win a Raid.He clocked the fastest time as against the eight-time Raid champion Suresh Rana (four-wheeler ).

The Xtreme motorbikes and quads category is considered the ultimate adventure in rallying,pitting competitor and machine against the most gruelling terrains.The Raid is the only Indian motorsport event listed on the off-road rallies calendar of FIM (Federation Internationale Motorcyclisme ),Geneva,Switzerland.Only 12 international motoring events world-wide are listed in this calendar.This is by far the most cherished memory of mine because not many people believed that a rider like me would be able to finish,let alone win the Raid in the first attempt.My biggest challenge was last years Raid winner Frauwallner who was riding a Yamaha, said Santhosh.

The stories of crashes and casualties at the Raid did not deter Santhosh.It only made him more determined to scale the summit.I have limited rally experience.This is the first time I have completed a rally.Prior to this,I took part in K-1000 in 2003 where I crashed out in the first stage.I decided to do the Raid this year not knowing what to expect other than the drops and ice and snow on the rally stages which I had heard about, said Santhosh,who is backed by Pro Bikes from Dubai.

The 14th edition of Raid De Himalaya took off from Shimla on October 7 and ended in Leh on October 12,covering over 1,800 km.

Santosh,who is a fourtime national champion and three-time supercross champion,is currently the lead rider of the TVS Racing team,having won several titles in the Foreign Open categories for the last nine years.
His career almost came to an end in 2011.During practice rounds,Santhosh crashed while clearing a wall jump and was almost paralysed,hampering his hopes of return to bikes.However,a tough rider that he is,Santhosh came out flying colours,winning the Sri Lankan championship,three months after his recovery from back injury.

Even though I was winning races,I wasnt getting anything out of it.I had hurt my back and come close to paralysis;my parents were very scared.I almost gave up rallying,but my team urged me to go to Sri Lanka and I won there, he said.

Having won the Raid,Santhosh has set his sights on the Maruti Suzuki Desert Storm and will be aiming to impress at the World Cross Country Rally Championship in Abu Dhabi.

If everything goes according to plan,I will take part in the World Cross Country Rally championship in March in Abu Dhabi.Before that I will be riding in the Maruti Suzuki Desert Storm in February 2013 on the Honda CRF 450, said Santhosh.

Santhosh hits paydirt in Himalayan Raid

Bangalore rider CS Santhosh is in celebratory mode.After having set the national tracks ablaze,the Bangalorean sizzled with creditable shows in Iran,Dubai,Philippines and Sri Lanka,winning several titles.But the best of Santhoshs major victories came when he clinched his maiden Raid De Himalaya,the most grueling after the Dakar Rally.

Making his maiden appearance at the Raid a week ago,Santhosh,riding a Honda CFR 450,clinched the Moto Xtreme open class title outclassing experienced international rider Helly Frauwallner.The Austrian was the winner of the 2011 Raid de Himalaya and an accomplished rider having finished second in the Paris Dakar.

This was my first Raid and I won on my very first attempt,something that has not been done, said the 28-year-old champion,who holds as many as 50 podiums including 40 victories.

It was a remarkable moment for Santhosh as he became the first biker from south India to win a Raid.He clocked the fastest time as against the eight-time Raid champion Suresh Rana (four-wheeler ).

The Xtreme motorbikes and quads category is considered the ultimate adventure in rallying,pitting competitor and machine against the most gruelling terrains.The Raid is the only Indian motorsport event listed on the off-road rallies calendar of FIM (Federation Internationale Motorcyclisme ),Geneva,Switzerland.Only 12 international motoring events world-wide are listed in this calendar.This is by far the most cherished memory of mine because not many people believed that a rider like me would be able to finish,let alone win the Raid in the first attempt.My biggest challenge was last years Raid winner Frauwallner who was riding a Yamaha, said Santhosh.

The stories of crashes and casualties at the Raid did not deter Santhosh.It only made him more determined to scale the summit.I have limited rally experience.This is the first time I have completed a rally.Prior to this,I took part in K-1000 in 2003 where I crashed out in the first stage.I decided to do the Raid this year not knowing what to expect other than the drops and ice and snow on the rally stages which I had heard about, said Santhosh,who is backed by Pro Bikes from Dubai.

The 14th edition of Raid De Himalaya took off from Shimla on October 7 and ended in Leh on October 12,covering over 1,800 km.

Santosh,who is a fourtime national champion and three-time supercross champion,is currently the lead rider of the TVS Racing team,having won several titles in the Foreign Open categories for the last nine years.
His career almost came to an end in 2011.During practice rounds,Santhosh crashed while clearing a wall jump and was almost paralysed,hampering his hopes of return to bikes.However,a tough rider that he is,Santhosh came out flying colours,winning the Sri Lankan championship,three months after his recovery from back injury.

Even though I was winning races,I wasnt getting anything out of it.I had hurt my back and come close to paralysis;my parents were very scared.I almost gave up rallying,but my team urged me to go to Sri Lanka and I won there, he said.

Having won the Raid,Santhosh has set his sights on the Maruti Suzuki Desert Storm and will be aiming to impress at the World Cross Country Rally Championship in Abu Dhabi.

If everything goes according to plan,I will take part in the World Cross Country Rally championship in March in Abu Dhabi.Before that I will be riding in the Maruti Suzuki Desert Storm in February 2013 on the Honda CRF 450, said Santhosh.

Santhosh hits paydirt in Himalayan Raid

Bangalore rider CS Santhosh is in celebratory mode.After having set the national tracks ablaze,the Bangalorean sizzled with creditable shows in Iran,Dubai,Philippines and Sri Lanka,winning several titles.But the best of Santhoshs major victories came when he clinched his maiden Raid De Himalaya,the most grueling after the Dakar Rally.

Making his maiden appearance at the Raid a week ago,Santhosh,riding a Honda CFR 450,clinched the Moto Xtreme open class title outclassing experienced international rider Helly Frauwallner.The Austrian was the winner of the 2011 Raid de Himalaya and an accomplished rider having finished second in the Paris Dakar.

This was my first Raid and I won on my very first attempt,something that has not been done, said the 28-year-old champion,who holds as many as 50 podiums including 40 victories.

It was a remarkable moment for Santhosh as he became the first biker from south India to win a Raid.He clocked the fastest time as against the eight-time Raid champion Suresh Rana (four-wheeler ).

The Xtreme motorbikes and quads category is considered the ultimate adventure in rallying,pitting competitor and machine against the most gruelling terrains.The Raid is the only Indian motorsport event listed on the off-road rallies calendar of FIM (Federation Internationale Motorcyclisme ),Geneva,Switzerland.Only 12 international motoring events world-wide are listed in this calendar.This is by far the most cherished memory of mine because not many people believed that a rider like me would be able to finish,let alone win the Raid in the first attempt.My biggest challenge was last years Raid winner Frauwallner who was riding a Yamaha, said Santhosh.

The stories of crashes and casualties at the Raid did not deter Santhosh.It only made him more determined to scale the summit.I have limited rally experience.This is the first time I have completed a rally.Prior to this,I took part in K-1000 in 2003 where I crashed out in the first stage.I decided to do the Raid this year not knowing what to expect other than the drops and ice and snow on the rally stages which I had heard about, said Santhosh,who is backed by Pro Bikes from Dubai.

The 14th edition of Raid De Himalaya took off from Shimla on October 7 and ended in Leh on October 12,covering over 1,800 km.

Santosh,who is a fourtime national champion and three-time supercross champion,is currently the lead rider of the TVS Racing team,having won several titles in the Foreign Open categories for the last nine years.
His career almost came to an end in 2011.During practice rounds,Santhosh crashed while clearing a wall jump and was almost paralysed,hampering his hopes of return to bikes.However,a tough rider that he is,Santhosh came out flying colours,winning the Sri Lankan championship,three months after his recovery from back injury.

Even though I was winning races,I wasnt getting anything out of it.I had hurt my back and come close to paralysis;my parents were very scared.I almost gave up rallying,but my team urged me to go to Sri Lanka and I won there, he said.

Having won the Raid,Santhosh has set his sights on the Maruti Suzuki Desert Storm and will be aiming to impress at the World Cross Country Rally Championship in Abu Dhabi.

If everything goes according to plan,I will take part in the World Cross Country Rally championship in March in Abu Dhabi.Before that I will be riding in the Maruti Suzuki Desert Storm in February 2013 on the Honda CRF 450, said Santhosh.

Santhosh hits paydirt in Himalayan Raid

Bangalore rider CS Santhosh is in celebratory mode.After having set the national tracks ablaze,the Bangalorean sizzled with creditable shows in Iran,Dubai,Philippines and Sri Lanka,winning several titles.But the best of Santhoshs major victories came when he clinched his maiden Raid De Himalaya,the most grueling after the Dakar Rally.

Making his maiden appearance at the Raid a week ago,Santhosh,riding a Honda CFR 450,clinched the Moto Xtreme open class title outclassing experienced international rider Helly Frauwallner.The Austrian was the winner of the 2011 Raid de Himalaya and an accomplished rider having finished second in the Paris Dakar.

This was my first Raid and I won on my very first attempt,something that has not been done, said the 28-year-old champion,who holds as many as 50 podiums including 40 victories.

It was a remarkable moment for Santhosh as he became the first biker from south India to win a Raid.He clocked the fastest time as against the eight-time Raid champion Suresh Rana (four-wheeler ).

The Xtreme motorbikes and quads category is considered the ultimate adventure in rallying,pitting competitor and machine against the most gruelling terrains.The Raid is the only Indian motorsport event listed on the off-road rallies calendar of FIM (Federation Internationale Motorcyclisme ),Geneva,Switzerland.Only 12 international motoring events world-wide are listed in this calendar.This is by far the most cherished memory of mine because not many people believed that a rider like me would be able to finish,let alone win the Raid in the first attempt.My biggest challenge was last years Raid winner Frauwallner who was riding a Yamaha, said Santhosh.

The stories of crashes and casualties at the Raid did not deter Santhosh.It only made him more determined to scale the summit.I have limited rally experience.This is the first time I have completed a rally.Prior to this,I took part in K-1000 in 2003 where I crashed out in the first stage.I decided to do the Raid this year not knowing what to expect other than the drops and ice and snow on the rally stages which I had heard about, said Santhosh,who is backed by Pro Bikes from Dubai.

The 14th edition of Raid De Himalaya took off from Shimla on October 7 and ended in Leh on October 12,covering over 1,800 km.

Santosh,who is a fourtime national champion and three-time supercross champion,is currently the lead rider of the TVS Racing team,having won several titles in the Foreign Open categories for the last nine years.
His career almost came to an end in 2011.During practice rounds,Santhosh crashed while clearing a wall jump and was almost paralysed,hampering his hopes of return to bikes.However,a tough rider that he is,Santhosh came out flying colours,winning the Sri Lankan championship,three months after his recovery from back injury.

Even though I was winning races,I wasnt getting anything out of it.I had hurt my back and come close to paralysis;my parents were very scared.I almost gave up rallying,but my team urged me to go to Sri Lanka and I won there, he said.

Having won the Raid,Santhosh has set his sights on the Maruti Suzuki Desert Storm and will be aiming to impress at the World Cross Country Rally Championship in Abu Dhabi.

If everything goes according to plan,I will take part in the World Cross Country Rally championship in March in Abu Dhabi.Before that I will be riding in the Maruti Suzuki Desert Storm in February 2013 on the Honda CRF 450, said Santhosh.

Hero will not pay royalty fee to its new partners

Experts see Hero’s move to opt for milestone payments as its endeavour to ramp up R&D capability

Two-wheeler maker Hero MotoCorp Ltd will not pay royalty fee to its new technology partners, unlike its arrangement with former partner Honda Motor Co. Ltd, chief financial officer Ravi Sud said.
Instead, Hero has entered into “umbrella arrangements with them. The payments will be made in tranches based on the milestones for the products to be developed”, Sud said.

An umbrella agreement covers all the aspects of a business tie-up between two parties, where an investor gives money to a specialist to work on a project and in return gets complete control over the outcomes of the project.

In 2010, the New Delhi-based Hero and the Japanese auto maker decided to part ways in order to pursue their individual ambitions in the world’s second largest two-wheeler market.

But Hero continues to pay at least 5% of its net sales as royalty fee on models such as Ignitor, Maestro and Impulse that it launched after December 2011, according to the licencing agreement signed in March 2011 between the two parties.

For older models such as Splendor and Passion, Hero will pay a lump sum of Rs.2,350 crore, or at least Rs.180 crore per quarter, as royalty to Honda till June 2014.

In the latest September quarter, the company paid at least Rs.206 crore to its former joint venture partner.
The payment was at least Rs.14 crore less than it paid in the June quarter as the rupee had strengthened against the Japanese currency.

Hero’s net profit for the September quarter fell 27% to Rs.440 crore from a year ago owing to the market slowdown, which forced company to cut production at its plants.

After the break-up with Honda, Hero has signed at least three technology arrangements—with US-based bike maker EBR Racing, Austria-based engine maker AVL, and Italy-based designing and engines expert Engines Engineering.

Sud said EBR Racing will help the company deliver powerful products in the high-end segment, and AVL will work with Hero’s engineers on engines for its existing products. Engines Engineering will help the company design products.

Hero has given letters of intent for certain projects to its new partners and payments for these will be made in tranches, Sud said. “For each project, there will be milestones. The payment will be made in tranches based on the milestones achieved,” he said. “And we will also be having intellectual property rights on the outcomes and we will be free to use and modify them in future.”

Sud did not divulge details on the new projects or the payments.

Industry experts see the new partnerships and the decision to opt for milestone-based rather than royalty payments as Hero’s endeavour to quickly ramp up its own research and development capability as its technology agreement with Honda will end in June 2014.

A consultant, who did not want to be named as Hero is one of his clients, said the difference between royalty and one-time payment is that a royalty arrangement effectively holds a company hostage for a long time in the hands of the technology provider.

“In Hero’s case, it is not clear who dictated the terms. It is possible that its partners may have agreed to take one-time fee rather than having a long-term business association through royalty set-up as Hero’s future is unclear,” he said. “One-time payment may run you into risks. But today, Hero is willing to take risk and thus they are trying (to) show faith in their partners. By doing this, Hero is not putting its future at stake.”

After it announced its separation with Honda, experts raised doubts about Hero’s ability to develop products on its own. The firm is now setting up a research and development centre at Kukas, near Jaipur in Rajasthan, in which it has invested Rs.400 crore. Hero will hire 500 experts and engineers for its research and development team, which it expects will be fully equipped by 2014 and be able to introduce its own product by the end of the next fiscal.

Shares of Hero Motocorp fell 1.9% to Rs.1,796 on BSE on Tuesday, underperforming the benchmark Sensex’s 0.44% drop.

Hero will not pay royalty fee to its new partners

Experts see Hero’s move to opt for milestone payments as its endeavour to ramp up R&D capability

Two-wheeler maker Hero MotoCorp Ltd will not pay royalty fee to its new technology partners, unlike its arrangement with former partner Honda Motor Co. Ltd, chief financial officer Ravi Sud said.
Instead, Hero has entered into “umbrella arrangements with them. The payments will be made in tranches based on the milestones for the products to be developed”, Sud said.

An umbrella agreement covers all the aspects of a business tie-up between two parties, where an investor gives money to a specialist to work on a project and in return gets complete control over the outcomes of the project.

In 2010, the New Delhi-based Hero and the Japanese auto maker decided to part ways in order to pursue their individual ambitions in the world’s second largest two-wheeler market.

But Hero continues to pay at least 5% of its net sales as royalty fee on models such as Ignitor, Maestro and Impulse that it launched after December 2011, according to the licencing agreement signed in March 2011 between the two parties.

For older models such as Splendor and Passion, Hero will pay a lump sum of Rs.2,350 crore, or at least Rs.180 crore per quarter, as royalty to Honda till June 2014.

In the latest September quarter, the company paid at least Rs.206 crore to its former joint venture partner.
The payment was at least Rs.14 crore less than it paid in the June quarter as the rupee had strengthened against the Japanese currency.

Hero’s net profit for the September quarter fell 27% to Rs.440 crore from a year ago owing to the market slowdown, which forced company to cut production at its plants.

After the break-up with Honda, Hero has signed at least three technology arrangements—with US-based bike maker EBR Racing, Austria-based engine maker AVL, and Italy-based designing and engines expert Engines Engineering.

Sud said EBR Racing will help the company deliver powerful products in the high-end segment, and AVL will work with Hero’s engineers on engines for its existing products. Engines Engineering will help the company design products.

Hero has given letters of intent for certain projects to its new partners and payments for these will be made in tranches, Sud said. “For each project, there will be milestones. The payment will be made in tranches based on the milestones achieved,” he said. “And we will also be having intellectual property rights on the outcomes and we will be free to use and modify them in future.”

Sud did not divulge details on the new projects or the payments.

Industry experts see the new partnerships and the decision to opt for milestone-based rather than royalty payments as Hero’s endeavour to quickly ramp up its own research and development capability as its technology agreement with Honda will end in June 2014.

A consultant, who did not want to be named as Hero is one of his clients, said the difference between royalty and one-time payment is that a royalty arrangement effectively holds a company hostage for a long time in the hands of the technology provider.

“In Hero’s case, it is not clear who dictated the terms. It is possible that its partners may have agreed to take one-time fee rather than having a long-term business association through royalty set-up as Hero’s future is unclear,” he said. “One-time payment may run you into risks. But today, Hero is willing to take risk and thus they are trying (to) show faith in their partners. By doing this, Hero is not putting its future at stake.”

After it announced its separation with Honda, experts raised doubts about Hero’s ability to develop products on its own. The firm is now setting up a research and development centre at Kukas, near Jaipur in Rajasthan, in which it has invested Rs.400 crore. Hero will hire 500 experts and engineers for its research and development team, which it expects will be fully equipped by 2014 and be able to introduce its own product by the end of the next fiscal.

Shares of Hero Motocorp fell 1.9% to Rs.1,796 on BSE on Tuesday, underperforming the benchmark Sensex’s 0.44% drop.

Hero Motocorp will not pay royalty fee to its new partners

Experts see Hero’s move to opt for milestone payments as its endeavour to ramp up R&D capability

Two-wheeler maker Hero MotoCorp Ltd will not pay royalty fee to its new technology partners, unlike its arrangement with former partner Honda Motor Co. Ltd, chief financial officer Ravi Sud said.
Instead, Hero has entered into “umbrella arrangements with them. The payments will be made in tranches based on the milestones for the products to be developed”, Sud said.

An umbrella agreement covers all the aspects of a business tie-up between two parties, where an investor gives money to a specialist to work on a project and in return gets complete control over the outcomes of the project.

In 2010, the New Delhi-based Hero and the Japanese auto maker decided to part ways in order to pursue their individual ambitions in the world’s second largest two-wheeler market.

But Hero continues to pay at least 5% of its net sales as royalty fee on models such as Ignitor, Maestro and Impulse that it launched after December 2011, according to the licencing agreement signed in March 2011 between the two parties.

For older models such as Splendor and Passion, Hero will pay a lump sum of Rs.2,350 crore, or at least Rs.180 crore per quarter, as royalty to Honda till June 2014.

In the latest September quarter, the company paid at least Rs.206 crore to its former joint venture partner.
The payment was at least Rs.14 crore less than it paid in the June quarter as the rupee had strengthened against the Japanese currency.

Hero’s net profit for the September quarter fell 27% to Rs.440 crore from a year ago owing to the market slowdown, which forced company to cut production at its plants.

After the break-up with Honda, Hero has signed at least three technology arrangements—with US-based bike maker EBR Racing, Austria-based engine maker AVL, and Italy-based designing and engines expert Engines Engineering.

Sud said EBR Racing will help the company deliver powerful products in the high-end segment, and AVL will work with Hero’s engineers on engines for its existing products. Engines Engineering will help the company design products.

Hero has given letters of intent for certain projects to its new partners and payments for these will be made in tranches, Sud said. “For each project, there will be milestones. The payment will be made in tranches based on the milestones achieved,” he said. “And we will also be having intellectual property rights on the outcomes and we will be free to use and modify them in future.”

Sud did not divulge details on the new projects or the payments.

Industry experts see the new partnerships and the decision to opt for milestone-based rather than royalty payments as Hero’s endeavour to quickly ramp up its own research and development capability as its technology agreement with Honda will end in June 2014.

A consultant, who did not want to be named as Hero is one of his clients, said the difference between royalty and one-time payment is that a royalty arrangement effectively holds a company hostage for a long time in the hands of the technology provider.

“In Hero’s case, it is not clear who dictated the terms. It is possible that its partners may have agreed to take one-time fee rather than having a long-term business association through royalty set-up as Hero’s future is unclear,” he said. “One-time payment may run you into risks. But today, Hero is willing to take risk and thus they are trying (to) show faith in their partners. By doing this, Hero is not putting its future at stake.”

After it announced its separation with Honda, experts raised doubts about Hero’s ability to develop products on its own. The firm is now setting up a research and development centre at Kukas, near Jaipur in Rajasthan, in which it has invested Rs.400 crore. Hero will hire 500 experts and engineers for its research and development team, which it expects will be fully equipped by 2014 and be able to introduce its own product by the end of the next fiscal.

Shares of Hero Motocorp fell 1.9% to Rs.1,796 on BSE on Tuesday, underperforming the benchmark Sensex’s 0.44% drop.

Hero will not pay royalty fee to its new partners

Experts see Hero’s move to opt for milestone payments as its endeavour to ramp up R&D capability

Two-wheeler maker Hero MotoCorp Ltd will not pay royalty fee to its new technology partners, unlike its arrangement with former partner Honda Motor Co. Ltd, chief financial officer Ravi Sud said.
Instead, Hero has entered into “umbrella arrangements with them. The payments will be made in tranches based on the milestones for the products to be developed”, Sud said.

An umbrella agreement covers all the aspects of a business tie-up between two parties, where an investor gives money to a specialist to work on a project and in return gets complete control over the outcomes of the project.

In 2010, the New Delhi-based Hero and the Japanese auto maker decided to part ways in order to pursue their individual ambitions in the world’s second largest two-wheeler market.

But Hero continues to pay at least 5% of its net sales as royalty fee on models such as Ignitor, Maestro and Impulse that it launched after December 2011, according to the licencing agreement signed in March 2011 between the two parties.

For older models such as Splendor and Passion, Hero will pay a lump sum of Rs.2,350 crore, or at least Rs.180 crore per quarter, as royalty to Honda till June 2014.

In the latest September quarter, the company paid at least Rs.206 crore to its former joint venture partner.
The payment was at least Rs.14 crore less than it paid in the June quarter as the rupee had strengthened against the Japanese currency.

Hero’s net profit for the September quarter fell 27% to Rs.440 crore from a year ago owing to the market slowdown, which forced company to cut production at its plants.

After the break-up with Honda, Hero has signed at least three technology arrangements—with US-based bike maker EBR Racing, Austria-based engine maker AVL, and Italy-based designing and engines expert Engines Engineering.

Sud said EBR Racing will help the company deliver powerful products in the high-end segment, and AVL will work with Hero’s engineers on engines for its existing products. Engines Engineering will help the company design products.

Hero has given letters of intent for certain projects to its new partners and payments for these will be made in tranches, Sud said. “For each project, there will be milestones. The payment will be made in tranches based on the milestones achieved,” he said. “And we will also be having intellectual property rights on the outcomes and we will be free to use and modify them in future.”

Sud did not divulge details on the new projects or the payments.

Industry experts see the new partnerships and the decision to opt for milestone-based rather than royalty payments as Hero’s endeavour to quickly ramp up its own research and development capability as its technology agreement with Honda will end in June 2014.

A consultant, who did not want to be named as Hero is one of his clients, said the difference between royalty and one-time payment is that a royalty arrangement effectively holds a company hostage for a long time in the hands of the technology provider.

“In Hero’s case, it is not clear who dictated the terms. It is possible that its partners may have agreed to take one-time fee rather than having a long-term business association through royalty set-up as Hero’s future is unclear,” he said. “One-time payment may run you into risks. But today, Hero is willing to take risk and thus they are trying (to) show faith in their partners. By doing this, Hero is not putting its future at stake.”

After it announced its separation with Honda, experts raised doubts about Hero’s ability to develop products on its own. The firm is now setting up a research and development centre at Kukas, near Jaipur in Rajasthan, in which it has invested Rs.400 crore. Hero will hire 500 experts and engineers for its research and development team, which it expects will be fully equipped by 2014 and be able to introduce its own product by the end of the next fiscal.

Shares of Hero Motocorp fell 1.9% to Rs.1,796 on BSE on Tuesday, underperforming the benchmark Sensex’s 0.44% drop.

Hero will not pay royalty fee to its new partners

Experts see Hero’s move to opt for milestone payments as its endeavour to ramp up R&D capability

Two-wheeler maker Hero MotoCorp Ltd will not pay royalty fee to its new technology partners, unlike its arrangement with former partner Honda Motor Co. Ltd, chief financial officer Ravi Sud said.
Instead, Hero has entered into “umbrella arrangements with them. The payments will be made in tranches based on the milestones for the products to be developed”, Sud said.

An umbrella agreement covers all the aspects of a business tie-up between two parties, where an investor gives money to a specialist to work on a project and in return gets complete control over the outcomes of the project.

In 2010, the New Delhi-based Hero and the Japanese auto maker decided to part ways in order to pursue their individual ambitions in the world’s second largest two-wheeler market.

But Hero continues to pay at least 5% of its net sales as royalty fee on models such as Ignitor, Maestro and Impulse that it launched after December 2011, according to the licencing agreement signed in March 2011 between the two parties.

For older models such as Splendor and Passion, Hero will pay a lump sum of Rs.2,350 crore, or at least Rs.180 crore per quarter, as royalty to Honda till June 2014.

In the latest September quarter, the company paid at least Rs.206 crore to its former joint venture partner.
The payment was at least Rs.14 crore less than it paid in the June quarter as the rupee had strengthened against the Japanese currency.

Hero’s net profit for the September quarter fell 27% to Rs.440 crore from a year ago owing to the market slowdown, which forced company to cut production at its plants.

After the break-up with Honda, Hero has signed at least three technology arrangements—with US-based bike maker EBR Racing, Austria-based engine maker AVL, and Italy-based designing and engines expert Engines Engineering.

Sud said EBR Racing will help the company deliver powerful products in the high-end segment, and AVL will work with Hero’s engineers on engines for its existing products. Engines Engineering will help the company design products.

Hero has given letters of intent for certain projects to its new partners and payments for these will be made in tranches, Sud said. “For each project, there will be milestones. The payment will be made in tranches based on the milestones achieved,” he said. “And we will also be having intellectual property rights on the outcomes and we will be free to use and modify them in future.”

Sud did not divulge details on the new projects or the payments.

Industry experts see the new partnerships and the decision to opt for milestone-based rather than royalty payments as Hero’s endeavour to quickly ramp up its own research and development capability as its technology agreement with Honda will end in June 2014.

A consultant, who did not want to be named as Hero is one of his clients, said the difference between royalty and one-time payment is that a royalty arrangement effectively holds a company hostage for a long time in the hands of the technology provider.

“In Hero’s case, it is not clear who dictated the terms. It is possible that its partners may have agreed to take one-time fee rather than having a long-term business association through royalty set-up as Hero’s future is unclear,” he said. “One-time payment may run you into risks. But today, Hero is willing to take risk and thus they are trying (to) show faith in their partners. By doing this, Hero is not putting its future at stake.”

After it announced its separation with Honda, experts raised doubts about Hero’s ability to develop products on its own. The firm is now setting up a research and development centre at Kukas, near Jaipur in Rajasthan, in which it has invested Rs.400 crore. Hero will hire 500 experts and engineers for its research and development team, which it expects will be fully equipped by 2014 and be able to introduce its own product by the end of the next fiscal.

Shares of Hero Motocorp fell 1.9% to Rs.1,796 on BSE on Tuesday, underperforming the benchmark Sensex’s 0.44% drop.

Hero will not pay royalty fee to its new partners

Experts see Hero’s move to opt for milestone payments as its endeavour to ramp up R&D capability

Two-wheeler maker Hero MotoCorp Ltd will not pay royalty fee to its new technology partners, unlike its arrangement with former partner Honda Motor Co. Ltd, chief financial officer Ravi Sud said.
Instead, Hero has entered into “umbrella arrangements with them. The payments will be made in tranches based on the milestones for the products to be developed”, Sud said.

An umbrella agreement covers all the aspects of a business tie-up between two parties, where an investor gives money to a specialist to work on a project and in return gets complete control over the outcomes of the project.

In 2010, the New Delhi-based Hero and the Japanese auto maker decided to part ways in order to pursue their individual ambitions in the world’s second largest two-wheeler market.

But Hero continues to pay at least 5% of its net sales as royalty fee on models such as Ignitor, Maestro and Impulse that it launched after December 2011, according to the licencing agreement signed in March 2011 between the two parties.

For older models such as Splendor and Passion, Hero will pay a lump sum of Rs.2,350 crore, or at least Rs.180 crore per quarter, as royalty to Honda till June 2014.

In the latest September quarter, the company paid at least Rs.206 crore to its former joint venture partner.
The payment was at least Rs.14 crore less than it paid in the June quarter as the rupee had strengthened against the Japanese currency.

Hero’s net profit for the September quarter fell 27% to Rs.440 crore from a year ago owing to the market slowdown, which forced company to cut production at its plants.

After the break-up with Honda, Hero has signed at least three technology arrangements—with US-based bike maker EBR Racing, Austria-based engine maker AVL, and Italy-based designing and engines expert Engines Engineering.

Sud said EBR Racing will help the company deliver powerful products in the high-end segment, and AVL will work with Hero’s engineers on engines for its existing products. Engines Engineering will help the company design products.

Hero has given letters of intent for certain projects to its new partners and payments for these will be made in tranches, Sud said. “For each project, there will be milestones. The payment will be made in tranches based on the milestones achieved,” he said. “And we will also be having intellectual property rights on the outcomes and we will be free to use and modify them in future.”

Sud did not divulge details on the new projects or the payments.

Industry experts see the new partnerships and the decision to opt for milestone-based rather than royalty payments as Hero’s endeavour to quickly ramp up its own research and development capability as its technology agreement with Honda will end in June 2014.

A consultant, who did not want to be named as Hero is one of his clients, said the difference between royalty and one-time payment is that a royalty arrangement effectively holds a company hostage for a long time in the hands of the technology provider.

“In Hero’s case, it is not clear who dictated the terms. It is possible that its partners may have agreed to take one-time fee rather than having a long-term business association through royalty set-up as Hero’s future is unclear,” he said. “One-time payment may run you into risks. But today, Hero is willing to take risk and thus they are trying (to) show faith in their partners. By doing this, Hero is not putting its future at stake.”

After it announced its separation with Honda, experts raised doubts about Hero’s ability to develop products on its own. The firm is now setting up a research and development centre at Kukas, near Jaipur in Rajasthan, in which it has invested Rs.400 crore. Hero will hire 500 experts and engineers for its research and development team, which it expects will be fully equipped by 2014 and be able to introduce its own product by the end of the next fiscal.

Shares of Hero Motocorp fell 1.9% to Rs.1,796 on BSE on Tuesday, underperforming the benchmark Sensex’s 0.44% drop.

Hero will not pay royalty fee to its new partners

Experts see Hero’s move to opt for milestone payments as its endeavour to ramp up R&D capability

Two-wheeler maker Hero MotoCorp Ltd will not pay royalty fee to its new technology partners, unlike its arrangement with former partner Honda Motor Co. Ltd, chief financial officer Ravi Sud said.
Instead, Hero has entered into “umbrella arrangements with them. The payments will be made in tranches based on the milestones for the products to be developed”, Sud said.

An umbrella agreement covers all the aspects of a business tie-up between two parties, where an investor gives money to a specialist to work on a project and in return gets complete control over the outcomes of the project.

In 2010, the New Delhi-based Hero and the Japanese auto maker decided to part ways in order to pursue their individual ambitions in the world’s second largest two-wheeler market.

But Hero continues to pay at least 5% of its net sales as royalty fee on models such as Ignitor, Maestro and Impulse that it launched after December 2011, according to the licencing agreement signed in March 2011 between the two parties.

For older models such as Splendor and Passion, Hero will pay a lump sum of Rs.2,350 crore, or at least Rs.180 crore per quarter, as royalty to Honda till June 2014.

In the latest September quarter, the company paid at least Rs.206 crore to its former joint venture partner.
The payment was at least Rs.14 crore less than it paid in the June quarter as the rupee had strengthened against the Japanese currency.

Hero’s net profit for the September quarter fell 27% to Rs.440 crore from a year ago owing to the market slowdown, which forced company to cut production at its plants.

After the break-up with Honda, Hero has signed at least three technology arrangements—with US-based bike maker EBR Racing, Austria-based engine maker AVL, and Italy-based designing and engines expert Engines Engineering.

Sud said EBR Racing will help the company deliver powerful products in the high-end segment, and AVL will work with Hero’s engineers on engines for its existing products. Engines Engineering will help the company design products.

Hero has given letters of intent for certain projects to its new partners and payments for these will be made in tranches, Sud said. “For each project, there will be milestones. The payment will be made in tranches based on the milestones achieved,” he said. “And we will also be having intellectual property rights on the outcomes and we will be free to use and modify them in future.”

Sud did not divulge details on the new projects or the payments.

Industry experts see the new partnerships and the decision to opt for milestone-based rather than royalty payments as Hero’s endeavour to quickly ramp up its own research and development capability as its technology agreement with Honda will end in June 2014.

A consultant, who did not want to be named as Hero is one of his clients, said the difference between royalty and one-time payment is that a royalty arrangement effectively holds a company hostage for a long time in the hands of the technology provider.

“In Hero’s case, it is not clear who dictated the terms. It is possible that its partners may have agreed to take one-time fee rather than having a long-term business association through royalty set-up as Hero’s future is unclear,” he said. “One-time payment may run you into risks. But today, Hero is willing to take risk and thus they are trying (to) show faith in their partners. By doing this, Hero is not putting its future at stake.”

After it announced its separation with Honda, experts raised doubts about Hero’s ability to develop products on its own. The firm is now setting up a research and development centre at Kukas, near Jaipur in Rajasthan, in which it has invested Rs.400 crore. Hero will hire 500 experts and engineers for its research and development team, which it expects will be fully equipped by 2014 and be able to introduce its own product by the end of the next fiscal.

Shares of Hero Motocorp fell 1.9% to Rs.1,796 on BSE on Tuesday, underperforming the benchmark Sensex’s 0.44% drop.

Hero will not pay royalty fee to its new partners

Experts see Hero’s move to opt for milestone payments as its endeavour to ramp up R&D capability

Two-wheeler maker Hero MotoCorp Ltd will not pay royalty fee to its new technology partners, unlike its arrangement with former partner Honda Motor Co. Ltd, chief financial officer Ravi Sud said.
Instead, Hero has entered into “umbrella arrangements with them. The payments will be made in tranches based on the milestones for the products to be developed”, Sud said.

An umbrella agreement covers all the aspects of a business tie-up between two parties, where an investor gives money to a specialist to work on a project and in return gets complete control over the outcomes of the project.

In 2010, the New Delhi-based Hero and the Japanese auto maker decided to part ways in order to pursue their individual ambitions in the world’s second largest two-wheeler market.

But Hero continues to pay at least 5% of its net sales as royalty fee on models such as Ignitor, Maestro and Impulse that it launched after December 2011, according to the licencing agreement signed in March 2011 between the two parties.

For older models such as Splendor and Passion, Hero will pay a lump sum of Rs.2,350 crore, or at least Rs.180 crore per quarter, as royalty to Honda till June 2014.

In the latest September quarter, the company paid at least Rs.206 crore to its former joint venture partner.
The payment was at least Rs.14 crore less than it paid in the June quarter as the rupee had strengthened against the Japanese currency.

Hero’s net profit for the September quarter fell 27% to Rs.440 crore from a year ago owing to the market slowdown, which forced company to cut production at its plants.

After the break-up with Honda, Hero has signed at least three technology arrangements—with US-based bike maker EBR Racing, Austria-based engine maker AVL, and Italy-based designing and engines expert Engines Engineering.

Sud said EBR Racing will help the company deliver powerful products in the high-end segment, and AVL will work with Hero’s engineers on engines for its existing products. Engines Engineering will help the company design products.

Hero has given letters of intent for certain projects to its new partners and payments for these will be made in tranches, Sud said. “For each project, there will be milestones. The payment will be made in tranches based on the milestones achieved,” he said. “And we will also be having intellectual property rights on the outcomes and we will be free to use and modify them in future.”

Sud did not divulge details on the new projects or the payments.

Industry experts see the new partnerships and the decision to opt for milestone-based rather than royalty payments as Hero’s endeavour to quickly ramp up its own research and development capability as its technology agreement with Honda will end in June 2014.

A consultant, who did not want to be named as Hero is one of his clients, said the difference between royalty and one-time payment is that a royalty arrangement effectively holds a company hostage for a long time in the hands of the technology provider.

“In Hero’s case, it is not clear who dictated the terms. It is possible that its partners may have agreed to take one-time fee rather than having a long-term business association through royalty set-up as Hero’s future is unclear,” he said. “One-time payment may run you into risks. But today, Hero is willing to take risk and thus they are trying (to) show faith in their partners. By doing this, Hero is not putting its future at stake.”

After it announced its separation with Honda, experts raised doubts about Hero’s ability to develop products on its own. The firm is now setting up a research and development centre at Kukas, near Jaipur in Rajasthan, in which it has invested Rs.400 crore. Hero will hire 500 experts and engineers for its research and development team, which it expects will be fully equipped by 2014 and be able to introduce its own product by the end of the next fiscal.

Shares of Hero Motocorp fell 1.9% to Rs.1,796 on BSE on Tuesday, underperforming the benchmark Sensex’s 0.44% drop.

Hero offers bike finance at 6.99%

THE country’s largest two wheeler maker Hero MotoCorp is going all out to cash in on the festive season and has tied up with HDFC Bank to offer financing at 6.99 per cent across its entire range of products. The company claimed it has retailed over 1.5 lakh twowheelers during the Navratras till Sunday evening.

“For the benefit of our customers during the festive season, we have just launched a programme with HDFC Bank to offer very attractive easy financing at just 6.99 per cent on our entire range of models,” Hero MotoCorp, senior vice -president (marketing & sales) Anil Dua said.

As per industry estimates, the existing interest rate on two-wheeler finance is around 10 per cent. Commenting on the festive season sales, he said the first week of the festive season has been encouraging and the company has retailed over 1.5 lakh two-wheelers during the Navratras till Sunday.

Royal Enfield hopes to reduce waiting time by Q1 of 2013

Royal Enfield, the Chennai-based maker of the iconic ‘Bullet’, on Thursday said the waiting period for its bikes would come down from present 6-8 months once its second plant at Oragadam near Chennai was commissioned by first quarter of 2013.

The Oragadam plant would have a production capacity of 1.5 lakh units per annum by March 2013, Royal Enfield Chief Executive Officer Venki Padmanabhan said here.

He was speaking to reporters at the launch of Royal Enfield’s Thunderbird model in two variants — 500 cc and 350 cc — in the Bangalore market.

Royal Enfield Senior Vice-President (Sales and Marketing) Shaji Koshy said the demand for the company products is very high in Karnataka.

In 2011, the company’s sales in the state grew by almost 80 per cent over 2010, Koshy said.

“This year we have already registered a growth of 70 per cent over the average monthly sales volume of 2011. To keep up with the growing demand we have expanded our footprints aggressively and we have 16 dealers across Karnataka,” he added.

“So far we have sold 75,000 bikes and this fiscal we hope to cross one lakh sales figures,” Padmanabhan said.

Padmanabhan also announced the company’s entry into the biking accessories market with a slew of apparel and biking gadgets, including leather and nylon jackets, helmets and gloves.

The new Thunderbird, targeted at the highway cruising buffs, is priced at Rs 1,86,622 (on road Bangalore for the 500 cc) and Rs 1,46,466 (350 cc), he said.

On exports, he said US is the biggest market for Royal Enfield, adding the brand is also sold in Australia, European and Latin American countries.

The first Thunderbird was launched in 2002 and around 1,000 units of the 350-cc model are sold a month, Padmanabhan said.

Keywords: Royal Enfield, ‘Bullet’ bike, waiting period for Enfield bikes, come down from present 6-8 months, Enfield second plant at Oragadam, two variants of Thunderbird model

Hero MotoCorp posts 27% profit drop amid Honda's market push

Hero MotoCorp, the largest two-wheeler manufacturer in India, has reported a 27 per cent decline in net profit to Rs 440.58 crore in the July-September quarter, as sales dropped on slowing demand and tough competition.

The two-wheeler market in India has witnessed the adverse impact of the economic slowdown, rising fuel costs and relatively high interest rates. Hero’s sales, on the other hand, have been impacted due to a strong push by its previous partner Honda Motor Co, which has been trying to get a strong foothold in the Indian market after it broke up with Hero last year.

“Sensing the slowdown in the market, we led the way in adjusting our production plans in August and September, and this has been reflected in our quarterly sales figures,” Pawan Munjal, managing director and chief executive office, Hero MotoCorp, said in a statement.
Hero sold 13,32,805 units during the quarter under review, down 13.67 per cent compared to 15,44,315 units during the corresponding period of the last financial year.

The company’s stock dropped 1.9 per cent on the Bombay Stock Exchange before the results were announced, and was last traded at Rs 1,795.95. The company had reported its net profit at Rs 603.62 crore in the July-September quarter of the last financial year. Hero’s net income during the July-September quarter stood at Rs 5,187.46 crore, down 10.96 per cent as against Rs 5,826.15 crore in the corresponding period last year.

The company’s operating margin during the quarter was at 13.86 per cent, down from 15.76 per cent in the corresponding quarter last fiscal. During the previous quarter (April-June), it reported the operating margin at 15 per cent. However, Munjal is hopeful the festive season would boost the company’s sales. “The onset of the festive season has been encouraging, with retail sales of over 200,000 units during the Navratras,” he added.

The company hopes its global business plans will take shape this fiscal. It planned to launch Hero products in new international markets, including Nigeria, Kenya and Guatemala, Munjal said in the statement. It already exports to Sri Lanka and Nepal.

Pressure from competition was one of the major reasons, apart from the slowdown, for the decline in sales, said Arun Agarwal, auto analyst, Kotak Securities. Kotak Securities has put a “cautious” mark on the stock over the medium term. “The management expects the industry to grow four-five per cent in FY13. However, we remain cautious on the two-wheeler industry given the slowdown in the economy,” he added.

Bajaj Auto: Riding strong in tough conditions

Volume push from product launches and exports are likely to be the mainstay and provide some cushion to Bajaj Auto in FY13, as growth in the domestic market continues to be tepid. This is also visible in the September quarter. Despite new product launches in the quarter — the Discover ST and the Pulsar 200 NS — motorcycle sales fell seven per cent, in the domestic market.

However, it bucked the trend in the three-wheeler segment, due to introduction of three-wheeler diesel variants which helped domestic volumes grow three per cent against near-flat industry growth. While demand has been weak, the company has done well to curb the impact on its financials. Thus, despite a 10 per cent fall in September quarter volumes (two- and three-wheelers), revenues fell only four per cent, on higher realisations. Rising sales of its three-wheelers, Pulsar and higher range of the Discover motorbikes helped realisation improve six per cent year-on-year (YoY).

These also reflected in the Ebitda margins, at 18.4 per cent, down 40 basis points over the year-ago quarter but up 50 basis points sequentially. The company expects to maintain margins on price hikes for three-wheelers as well as Discover brands in July and October. The Street has given a thumbs up to the results, with the stock up nearly one per cent. At Rs 1,781, it trades at 13.7 times FY14 estimates, with price targets of Rs 1,850-2,000.

Domestic mkt: Muted growth

Domestic motorcycles volume fell 12 per cent YoY in the September quarter due to the slowdown. The muted picture continues with the first few days of the festival season showing flat to marginally positive growth, says the company’s president, finance, Kevin D’Sa. But it has improved market share both in the commuter segment (Discover) by 600 basis points to 25 per cent and the premium segment (Pulsar) by 500 basis points to 50 per cent in April-September.

While the management has maintained a five million (domestic/exports) target for FY13, analysts say it could achieve 4.4-4.5 million. Analysts say it is likely to bank on new launches (bike in January) to boost volumes. Things could look up in the three-wheeler segment, given the launch of diesel variants. If the introduction of new three-wheeler permits in Delhi and Hyderabad comes through, average monthly volumes could improve from 18-19,000 now to 20-22,000 a month.

Export focus

While exports (35 per cent of volumes) grew 31 per cent YoY in FY12 to 1.5 million units, these are down five per cent in the first half of the year at 800,000 units. For the September quarter, while motorcycle volume growth for exports fell less than that domestically, the fall was higher in three-wheeler exports, which saw a 22 per cent fall due to issues with the Sri Lankan market. Sales have recovered though on price cuts but are still 20-25 per cent lower than average market volumes.

The company continues to focus on the export markets and expects to ride on its tie-up with Kawasaki and existing distribution networks. The fastest growth is likely to come from Africa, growing at 10-15 per cent, accounting for 45 per cent of export volumes.

While the global slowdown continues to impact sales in non-African markets, entry into new markets and alliances should help. The company continues to stick to its target of doubling export volumes by 2016.

Siam slashes FY13 car sales outlook.

CAR sales in 2012-13 are set to record their worst performance in the last four years as consumer demand continues to be low on high interest rates, poor macro-economic conditions and high fuel prices.
The Society of Indian Automobile Manufacturers (Siam) on Wednesday slashed the sales growth outlook to 1-3% after the industry — for the second consecutive month — posted one of its worst monthly sales in September. Earlier in July, Siam had projected a more optimistic 9-11%. Similar abysmal growth levels were last seen in 2008-09 when sales grew 1.39%. Sales weren't robust last fiscal either, with growth at 2.35%.
The industry is now pinning hopes on festival season sales. Siam director general Vishnu Mathur said: “Diwali (in November) will help push up car sales, but it will still be subdued compared with other years”. New launches in the next few weeks, such as the Maruti Alto 800 and Chevrolet Sail, may also boost sales.
Though car sales continue to be low with grim prospects, utility vehicles may see a rise of 50-52% owing to strong demand for diesel vehicles. As a result, firms like Mahindra and Toyota Kirloskar will be major beneficiaries while Maruti Suzuki may see good sales of its multi-purpose vehicle, which comes in diesel variants also. Utility vehicle sales have already grown 56% to 2.55 lakh in the first half of the current fiscal.
Siam has reduced by half the growth projection for the overall auto industry during the current fiscal to 5-7%, from the previous target of 11-13% announced in July.

Mathur said that the recent hike in diesel prices has led to a 15-20% increase in freight costs, forcing automakers to increase vehicle prices. Higher prices is deterring customers to make purchases.
“The reforms announced recently will not help directly, but market sentiments are certainly expected to improve. If more jobs and money flow into the economy, people will consume more goods,” he said.
Two-wheeler sales growth projection has also been lowered to 5-7% from the previously-announced 11-13%. Buyers in rural areas are believed to have delayed purchases because of the uncertainty in agricultural output after irregular monsoons. Urban buyers are finding auto loans too expensive.

According to Siam, the worst hit could be the commercial vehicle sector, which may post just a 3-5% growth in FY13.

“General industrial production and mining is down, while we are not yet clear how the farm output will be this year. This is why truckers are not expanding their fleet,” Mathur said.

The industry has sent a list of suggestions to the government to help the ailing sector, which includes incentives for fleet modernisation, re-introducing the JNNURM scheme and re-starting government purchases. Meanwhile, car sales in September dipped 5% over the corresponding month last year, though strong utility vehicle demand helped the over-arching passenger vehicles segment to post a 5% growth during the month. Market leader Maruti Suzuki bounced back after its labour problems with a 13% growth in the month, though rivals Hyundai and Tata Motors posted a 14% and 5% drop, respectively.

Two-wheelers were the worst performing segment with a 13% drop in sales in the month. This has been attributed to a cut back in production on low demand and a piling up of inventories at dealers.

Commercial vehicles sales numbers in September were flat, with the medium and heavy CV sub-segment posting a 15% drop in sales.

"My naivete helped me turn around Royal Enfield".

When Siddhartha Lal got married , he opted for something with more horsepower than the traditional mare - a Bullet. Lal's passion for biking in general and his motorcycle brand Royal Enfield in particular is well-known . Understandable, given that 38-year-old Lal cut his teeth in boardroom brain-storming with his gameplan for Royal Enfield.

Known as Motown's Mr Nice Guy, Lal has grown as a strategist since he asked his father for two years of 'grace period' to turn Royal Enfield around. The year was 2000. The company was making losses and the conventional wisdom was that Royal Enfield should be sold. It's a good thing Lal got his way. In the next 12 years, he has not only managed to turn Royal Enfield around but also helped restructure the group flagship Eicher Motors, often going against the grain of analyst and consultant wisdom.

Looking back, Lal credits his 'naivete' for what happened with Royal Enfield. "I was just 26 years old at that time," he says, "and the way I looked at it was simply that the brand had enormous potential . I could see that from a distance with my young and relatively naive eyes that the way we were running it at that time was not doing justice to the brand. I had absolutely no idea what the job entailed because I had no idea about the motorcycle business or any business as such. That naivete helped me take the plunge. Today , if you offer me a struggling business to recoup, I will think a little more before I take it up," he admits.

Lal's litmus test was when he decided to sell Eicher's tractors and engines business to Tafe. That was 2005 and the deal was valued at Rs 310 crore. Lal had by then decided that he wanted Eicher Motor to focus exclusively on commercial vehicles. While analysts lauded the move, auto industry insiders wondered whether the 'young man' was selling off his family silver. Lal's logic was simple — he wanted to have fewer businesses performing strongly. "The Eicher tractors sale was the visible part of the changes that we did at that time and they were many," he says. "We had scores of companies, including a garment business, a hand tool business, a pulp and merchant exports outfit, a consultancy firm and so on. None of them were doing fabulously well and any problem in any of them needed a lot of management attention. So as part of the strategy, every single one of them was either sold or shuttered. I'd rather we had one or two businesses performing extremely well than have a string of companies which were mediocre."

The change wasn't restricted to the strategy side alone. On the management side too, it coincided with the old guard moving out and the entire organization changing inside out. "We were an extremely top-heavy organization so we chopped it down and cleaned it up," says Lal. "When I moved from Royal Enfield to the corporate office I saw it as an opportunity to make big changes . We spent a year analyzing the scenario... it was a wellthought-out move."

Lal knew that there were skeptics even within the company but he was confident that the CV-focus would bear out. It took him another two years to put a rock solid partnership in place. "After the restructuring , we were left with two businesses — the major one was commercial vehicles and the niche one was motorcycles," he remembers. "I used to spend 80% of my time on the CV business - getting it off the ground, negotiating for a partner , getting everything in place." The search for a partner too took its time. After serious negotiations with Daimler - the team even flew down to India for a final pow-wow before signing on the dotted line but the discussions fizzled out — Eicher found the partner it was looking for. In December 2007, Swedish truck maker Volvo signed up with Eicher Motors, investing Rs 1,082 crore for a 50% stake in the joint venture company Volvo Eicher Commercial Vehicles (VECV). The JV stumbled on to the 2008 slowdown almost immediately and two years on, the cycle has turned once more. But with enough investments in place — Rs 1,000 crore in a new engine making plant to make India a global sourcing hub for Volvo, new product platforms, paint shops and lines and a new bus body plant — Lal is confident of riding out the slump. The good news is that both businesses are generating enough "positive cash flow" to keep the investors happy. VECV is using its internal accruals to fund its expansion programme. And as of September 2012, Royal Enfield has been enjoying "40-50 % growth for more than two years and that too constrained by production" , says Lal. RE's new Rs 150-crore plant in Chennai should be up and running by the first quarter of 2013 and the product pipeline is happily busy.

Not surprisingly, Lal isn't spooked by the slowdown. "CV is a cyclical industry and it faces a basic correction in cycle every 3-5 years," he says. "Sometimes it coincides with correction in the economy as well. It's a short-term issue dealt with short-term solutions , including improvements in production, cash flow and inventory . But we do not, for a second , ease off on our long-term investments and plans." By his own admission, Lal has had a frenetic decade ever since he offered to help turn around Royal Enfield. But the deal-making zeal hasn't come in the way of his passion for the brand that started his journey. That perhaps is one of the reasons why, despite some very lucrative offers, Lal has refused to part with his motorcycle company. Now with CEO Vinod Aggarwal running VECV, Lal has more time to focus on building up Royal Enfield as a classic brand. "I can now devote 50% of my time to RE," he says. "We are creating a market for that brand which is the practical leisure motorcycle market . It's a modern classic, a heritage brand that can be driven to work and also taken to mountain dirt tracks. Through all the tough times, we have stuck to our guns. It's only now that our focus is paying off," he says.

India Inc Talks Reforms with Geithner; Bernanke

Visiting US Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke today met corporate India leaders and discussed the recent American policy measures, including quantitative easing and the economic climate in the country.

“We got briefed by both on the US economic situation. We briefed them on India and said we were very confident now that the reform process is taking place,” Godrej group Chairman Adi Godrej told presspersons after the breakfast meet arranged by industry lobby CII, which he heads.

A majority of the business leaders said the recent decision of the Federal Reserve to inject a third round of liquidity injection and its implications were discussed.

“He (Bernanke) explained what the strategy for QE3 (quantitative easing 3) is and assured us that the implications are not going to be as large as people fear,” Vice-Chairman and Managing Director of infra financier IDFC, Rajiv Lall, said.

Finance Minister P. Chidambaram, during interactions with Geithner yesterday, had expressed his concerns over the impact of the QE3 on commodity prices, as that will have a direct bearing on the Government’s and the RBI’s efforts at controlling inflation and boosting growth here.

To a question, Lall said contentious issues such as those surrounding visas to Indian IT professionals by the US and outsourcing were not raised by the Indian industry.

Mortgage major HDFC Chairman Deepak Parekh said the recent spate of reforms in the country, the need for the Government to reduce subsidies and boost growth were also discussed. “They (the US) are very positive (on the recent reforms),” he said.

Chanda Kochchar, Managing Director and CEO of the country’s largest private sector lender ICICI Bank said, “I think their outlook is positive. Of course, everybody recognises that much more needs to be done as well. But I think their initial reaction is very positive.”

Royal Enfield launches Thunderbird models

Royal Enfield, a part of the Eicher Group, launched its Royal Enfield Thunderbird 500 and the all-new Royal Enfield Thunderbird 350 on Thursday.

The Thunderbird 500 is priced at Rs. 1,82,571 and the Thunderbird 350 is priced at Rs. 1,43,346 (ex-showroom Mumbai).

“With the launch of the Thunderbird 500 with its unique 360-degree design language and its higher powered engine, we have again upped the ante in leisure motorcycling. We have been selling around 1,000 units per month of the Thunderbird 350 and we expect this number to rise significantly with these two products,” said Siddhartha Lal, MD & CEO, Eicher Motors, while speaking to The Hindu.

“It is no doubt a niche segment. When we launched Thunderbird 350 in 2002, we recognized a definite potential in the Indian market for cruisers and people are willing to upgrade. Not only is it good for long distance travel, but also daily commutes,” said Mr. Lal.

The Chennai plant would make engines for products assembled at the new plant coming up at Oragadam, near Chennai, said Mr. Lal. It would come up by March 2013.

“The new plant would initially only make Thunderbird bikes and we would have a combined capacity of 150,000 units per annum. However, by 2014-15, this capacity will increase significantly,” he said. The company is investing Rs. 150 crore in the new plant.

Royal Enfield makes Bullet 350, Bullet Electra, Classic 350, Classic 500, Classic Chrome, Thunderbird 350 and Desert Storm bikes and exports to 40 countries. “Exports account for less than 10 per cent of sales. We would export the new Thunderbirds only after meeting domestic demand.”

Mr. Lal said there was no industry slowdown impact. “We have a strong order book and some products like `Classic’ have a 6-8 month waiting period.’’

Yamaha cut share capital to write off Rs 1,050 cr losses

Two-wheeler maker India Yamaha Motor, a subsidiary of Yamaha Motor Corp of Japan, has written off losses to the extent of Rs 1,050 crore by reducing its capital, according to its submission to the Delhi High Court.

India Yamaha, which started operations in 2008 as a joint venture (JV) between Yamaha Motor and Mitsui & Co, is cancelling 105 crore equity shares of `10 each. The proposal has been approved by the privately held company’s board already.

“The paid-up equity share capital of the company is hereby reduced from `171 crore divided into 17.1 crore equity shares of `10 each to `66 crore divided into 6.6 crore equity shares of `10 each,” the filing said.

The court approved the scheme on October 4. India Yamaha is writing off the losses as they are quite substantial and any future profits would not shrink them much, the company said in its submission.

With smooth operations key to good performance in a “highly competitive market”, the company needs to revamp its image and restructure its financial situation, the court has observed. “It would be difficult to reduce the (substantial accumulated) losses within a short span of time through operating alone. It is their considered opinion that the effective method of reducing losses in a short period of time is by reducing the share capital of the company and writing off losses against the same.”

India Yamaha’s shareholders who will take a hit in the write-off are Yamaha Motor, Yamaha Motor Asia of Singapore and Bussan Automotive Singapore.

Hiroyuki Suzuki, India Yamaha’s CEO and MD, had earlier told the media that for the Indian operations to break even, the company would have to sell 5-6 lakh units a year.

In a bid to turn its fortunes around, India Yamaha is rolling out gearless scooters, to be followed up by launch of 100cc vehicles later, which may replace existing models like YBR 110 and Crux, which have failed to make much impact in India.

Additionally, it is raising capacities at Surajpur and Faridabad, taking aggregate output to 10 lakh units a year, which will be scaled up to 18 lakh units when a greenfield project in Tamil Nadu becomes operational.

Yellow I love you - Vespa

Rational benefit-led communication eulogising about prolific mileage and muscular engine power is what the automobile advertising is mostly known for.The iconic Italian brand Vespa chooses to break the clutter with its maiden television campaign

MV Krishna who heads marketing for Vespa two wheelers admits his job is both tough and fun.To sell an automobile brand as a lifestyle statement instead of taking the rational-benefit route is a big risk in India.The reason he opted to take up the role of assistant vice president marketing at Piaggio Vehicles,after having worked in the automobile space for over 16 years on brands like TVS and Castrol is because he believes it is not just another two-wheeler.He has joined Vespa - a brand known for its associations with fashion and lifestyle,and that iconic imagery is what the new TV commercial created by Meridian Communication striving to establish.

The campaign is a simple story of a young fellow,getting ready one morning and zipping past on his canary yellow Vespa while being on the look-out for the correct accessory in this case the girl who matches his style,and of course,his Vespa.Colour,costumes,props,and music have all been used to full effect to grab attention.Agrees Krishna,There is a surreal tone to the ad flamboyant and exaggerated to accentuate the effect. The focus is clearly on the brands retro classic,yet modern chic imagery but with a sharp difference.Explains Satish deSa,executive creative director,Meridian Mumbai,We were clear that we wanted the European idiom of retro for the campaign and not the Om Shanti Om polka-dotted Indian retro look.
The challenge in auto-advertising has always been about the consumers need for the features and rock solid reasons to fork out cash.This campaign opts to stay away from the run-of-the-mill pegs - neither mileage nor pickup figures anywhere.Says Krishna,For a premium lifestyle brand like ours to navigate this tough path has been a challenge,where we have desisted in talking about the features in spite of the fact that the brand with its 125 cc powered 3-valve engine is at par with any other in the market.

Vespas communication for instance in Europe has never needed television advertising owing to its iconic status as well as familiarity.In India too,television was not the first medium of choice when the brand launched nearly four months ago.It chose a digital campaign,which was followed up with print and out-ofhome along with activation and below-the-line initiatives.Shares Samrat Bedi,head - Meridian Mumbai,It is probably the first ever strategically developed TV campaign for the Vespa brand. Launching on digital and not on a mass medium like television is a brave choice,many would feel,but there is logic in the sequence.Says Anuraag Khandelwal,executive creative director,Meridian Mumbai,Going mass early on with TV would have been a problem for many reasons.There was the brands heritage story to be told and there was a connect to be formed with the target audience and in our view these jobs were better done by other mediums like digital,print and BTL.

Sourabh Mishra,chief strategy officer,Saatchi & Saatchi India feels that while the new film is in the right strategic direction,the Vespa fan in him wishes the storytelling were a little richer.In his view it makes a lesser impact than one would expect from an icon like Vespa.

The film has been shot by the UK-based Harvey B-Brown whom Krishna recalls as being as fashionable as the brand itself.In Bedis view,Brown brought in lot of special elements in terms of the detailing in the frames as well as the overall look and feel.Satbir Singh,managing partner & chief creative officer,Havas Worldwide (formerly Euro RSCG) feels that the classic Vespa image has always been Gregory Peck and Audrey Hepburn in the 50s Hollywood classic Roman Holiday and would have preferred if the guy in the ad was more masculine like in the movies of 50s and 60s.A slightly more mature looking guy could have added a bit more.