In re-launch of Freedom, LML faces rocky road to revival.

LML Ltd, which used to make the iconic LML Vespa in collaboration with Italy's Piaggio & C Spa, is working hard to regain its lost glory with the relaunch of the Freedom motorbike, besides making new two-wheelers as well as light-weight three-wheelers.

The company, in a downward spiral after its break-up with Piaggio in 1999 and a lock-out at its Kanpur factory in 2006, will initially focus on the Gujarat and Maharashtra markets, apart from Delhi and Punjab where it already operates, a senior official said.

LML posted a net loss of Rs 45.2 crore in 2011-12. In the December 2012 quarter, the latest quarterly result available, the company's net loss widened to Rs 17.46 crore from Rs 9.25 cr in the corresponding period last year.

The company is now ready to relaunch the old 110cc Freedom motorbike, a two-stroke scooter LML NV, and an all new four-stroke gearless scooter, the Star Automatic, which is dubbed as the "man's scooter". "We are also planning to come up with 125cc and 150cc motorbikes, apart from the 125cc Unisex scooters and 150cc and above lifestyle scooters," said Partha Sen Chowdhury, head of sales and marketing, LML.

There are plans to launch light-weight three-wheelers for cargo applications.

The LML Freedom and Star Automatic will be available in 70 outlets in Delhi and Punjab by mid-May. In Gujarat and Maharashtra, the products will be launched in three months, Chowdhury said. "We have been able to develop a four-stroke engine and meet euro-emission norms, without altering the vehicle's dimensions, the prime reason why the scooter is popular in the exports market."

LML is looking to add at least 12 dealers across Gujarat and 20-25 in Maharashtra. "We are not looking at huge numbers initially, but maybe 50-60 units a dealer per month," Chowdhury said. That would mean 26,640 units a year from Gujarat and Maharashtra, and 50,400 units from Punjab, Delhi and parts of Uttar Pradesh.

Even so, the numbers would be far higher than what LML sold in 2012-13. Chowdhury said it exported 40,000 units the last financial year and sold 25,000-28,000 scooters in the domestic market. This was down from 44,435 units (exports) and 31,148 units (domestic) sold in 2011-12.

"(The) company has been passing through a difficult time and facing problems for the last few years, which has affected its operations," LML's 2011-12 annual report said. "Since the company's net worth became negative, it filed reference before the Board for Industrial and Financial Reconstruction (BIFR), where it is registered and declared as a sick industrial company."

The company has proposed a revival scheme to the BIFR in 2011, under active consideration of LML's banks and various financiers. "Stakes of a lot of banks and financiers are involved; hence everybody's views have to be considered," a finance official in the company said, requesting anonymity.

"Europe is a heritage-oriented market, and our particular bodyline has a lot of demand. We are even selling decent numbers in Piaggio's home ground, Italy. More, we also managed to get an attractive pricing in the foreign market," Chowdhury said. LML has been exporting to Italy, France, Germany, the UK, Belgium, Denmark, apart from some Latin American and African countries.

"The positive in favour of LML is that it has a good brand recall, but results would depend on what kind of a product they can come up with. The motorcycle market has remained flat during 2012-13, while the scooters segment has grown by around 14 per cent. However, the 110-125 cc segment in bikes is the fastest growing," said Yaresh Kothari, an automobile analyst with Angel Broking.

"The timing is crucial as the overall industry is not doing very well at the moment. Moreover, with stiff competition, almost every player has increased their ad-spend budget. It might be difficult to position the products without a strong marketing campaign," Kothari added.

India Inc ups its stake in Africa.

It is no coincidence that the fifth BRICS summit was held in Durban, South Africa, last month. The country is the gateway to a continent that is catching up fast.

Holding the summit in Durban, therefore, was a recognition of the changing dynamics of what was once a hopeless, strife-torn continent. Africa is now seen as the place where the next big opportunities are. A genuine middle class is emerging in the continent; its population of 1.1 billion has a median age of 18; and consumer spending, currently over $920 billion, is expected to grow to $1.4 trillion by 2020. Obviously, the growth potential is huge. For new and old Indian companies alike in the continent, the untapped demand for consumer durables, automobiles, medicines and mobiles phones offers a lucrative opportunity.

India and Africa resemble each other, says Chandru Chawla, head of corporate strategy (international business),Cipla, referring to the huge opportunity at the bottom of the pyramid in the two geographies. Cipla, the Mumbai-based pharmaceuticals company, went to Africa over a decade back and it is now trying to step up its presence in the continent. In February, it announced plans to acquire its South African distribution partner, Medpro, for $512 million.

Cipla could gaze into the potential of Africa's bottom-of- the-pyramid market early on. In 2000, Yusuf Hamied, the promoter of the company, decided to sell its three-drug combination for treatment of HIV/AIDS for around $800 for a year's dosage. At that time, patent-holding multinational corporations were selling the combination for $12,000 per patient.

Cipla could reap the benefits of economy of scale. Africa's huge HIV-infected population allowed it to cut costs further to $140 for a year's stock.

"We found these markets attractive despite the challenges. We find that the opportunity is increasing exponentially," says Chawla.

Cipla, which has a turnover of about $1.3 billion, is expecting its Africa business to contribute $1 billion by 2020. For the purpose, it is changing its distribution model. From getting into tie-ups with companies to market its products, it is setting up its own distribution companies.

India's Tata Group, which has a turnover of $100 billion, set up Tata Africa Holdings about two decades ago to identify development opportunities. Its Africa operations, which include automotive, chemicals, smelting, among others, had a turnover of about $2.3 billion in 2011-12. The group has so far invested $1.7 billion in various projects in the continent including a plant in Pretoria to produce commercial vehicles for the local market.

"The kind of growth that the Tatas have experienced in Africa in the last decade is a reflection of the potential and promise that this continent has to offer," says Mukund Rajan, the group's spokesperson. The group is looking at annual revenue growth of 30 per cent from its Africa business, Raman Dhawan, managing director of Tata Africa Holdings, had told Business Standard recently. The Tatas are also planning to get into business hotels in Africa, expanding from the luxury hotels that it operates in Lusaka and Cape Town.

Telecom is another sunrise sector in Africa, with Bharti Airtel leading the Indian charge. It acquired Africa's mobile telecommunication company, Zain, in 2010 for $10.7 billion (enterprise value). Since then its subscriber base has risen to 62 million from 36 million. Bharti also offers high-speed data service in 11 countries and mobile remittance service in 15 countries. Bharti has adopted a low-cost business model in Africa with the help of its global partners: IBM, Ericsson, Nokia Siemens, Tech Mahindra and Spanco. The low-cost model has helped the company expand its presence in the rural areas there.

"It may have taken us a little longer than we expected but if you look at the overall trajectory and direction, we are on the right track in a continent that is the market of the future," says a Bharti Airtel spokesperson. Africa is the fastest growing mobile market in the world. Over the past five years, it has seen a 20 per cent rise in the consumer base, according to a study by telecom industry body GSMA .

India-Africa partnership is not limited to companies setting up bases in that continent. In 2011-12, India-Africa bilateral trade was worth $63.1 billion, accounting for seven per cent of India's global trade. Bulk of this, about $43 billion, was still made up of Africa's staple: oil, gold and metals. However, in recent years, export of manufactured goods such as machinery, transportation equipment, food and pharmaceuticals to Africa has also been on the rise. In 2011-12, it was $20.1 billion.

"We see the growth trajectory in Africa is going to be higher in the years to come vis-a-vis other markets," says Mahendren Moodley, chief executive and India head of Africa's leading financial group, FirstRand Bank

Pune-based Bajaj Auto exports its two- and three-wheelers to 20 African countries. In African markets the primary usage of motorcycles is in the taxi segment. Its Boxer brand with its robust exterior and fuel-efficient engines is a hit in the continent, accounting for 28 per cent of the market. The company has assembly lines in eight African countries.

"For the last few years, Africa has been growing as governments are getting more stable. Also, demographics of the continent is such that it ignites consumption," says Rakesh Sharma, president (international business), Bajaj Auto.

For fast-moving consumer goods companies the story is no different. Africa presents a bright spot with its huge base of middle-income people. Godrej Consumer Products (GCPL) and Marico have been the flag-bearers of the Indian FMCG industry in the continent. "We believe that Africa can be a game changer for GCPL," says Vivek Gambhir, managing director designate, Godrej Consumer Products. But it is not just India that's looking at Africa to fuel growth. "Indian companies will have to compete with other global companies in this market and it is up to them to make the most of the opportunity," says the Bharti Airtel spokesperson.

BMW deal may not impact TVS marketshare: analysts.

TVS Motor Co. Ltd on Monday said it is investing €20 million in tying up with German auto maker BMW AG’s motorcycle division, BMW Motorrad, to source technological know-how for developing high-end motorcycles.

The move could be seen as an effort by TVS to match the technological capabilities of peers in the Indian market. Other Indian two-wheeler companies such as Hero MotoCorp Ltd and Bajaj Auto Ltd have partnered with foreign technology providers such as Erik Buell Racing of the US and KTM AG of Austria, respectively.

According to the long-term agreement, TVS will invest in making vehicles below 500 cc and the development costs will be borne by BMW.

“We have been working on this for sometime and we have signed a long-term agreement, where we will marry our ability to engineer products in mass, and use the high-quality engineering and technology strength of BMW,” said Venu Srinivasan, chairman of TVS Motor, whose market share slid to 13% in FY 12, from 18% in FY 07.

The vehicles will be manufactured in two different styles for TVS and BMW each and will be sold through their individual dealerships and will also be exported. The products developed through this tie-up are expected to be launched in 2015.

Experts say this deal will not have an immediate impact on TVS Motor’s declining market share as the market for high-end bikes in India hasn’t yet matured.

“Any technological tie-up will be a positive from a long-term perspective. In case of this deal, there is not much that would result as a big game changer for TVS Motors as the domestic two-wheeler industry itself is going through a tough time,” a Mumbai-based auto analyst said, requesting anonymity.

TVS’s performance lagged that of the Indian two-wheeler industry, which grew by 2-3% in the year ended March. While Hero MotoCorp and Bajaj saw sales drop to about 2-3%, TVS sales fell 7%. Honda Motorcycle and Scooter India’s sales bucked the trend and grew by 30%, according to Yaresh Kothari, analyst, Angel Broking.

While the deal will be a positive for TVS from a strategic point of view as it could open the doors for the company in international markets, it is unlikely to result in any significant improvement in earnings or volume for TVS in the domestic market, said the Mumbai-based analyst.

Srinivasan declined to comment on whether the technological know-how will extend to products below 250cc as well. He also said there has been no equity sale in this deal.

TVS Motor entered into a technical and equity collaboration with Japan’s Suzuki Motor Corp. in 1982 to form a joint venture, which introduced several models including Suzuki Samurai, Suzuki Shogun and Suzuki Fiero.

TVS and Suzuki parted ways in 2001, and since then the company has been a solo rider battling for a greater share in the growing two-wheeler market.

For BMW, this deal should help gain a foothold in the Indian motorcycle market, Kothari said.

Stephan Schaller, president of BMW Motorrad, said BMW was in the process of realigning its motorcycle business to improve profitability and sales. “It is a logical step to develop motorcycles below 500 cc for emerging markets in Asia and South America to improve profitability.”

BMW Motorrad, known for its 600cc to 1600cc category of bikes like Enduro, Sport and Roadster, sold 117,000 motorcycles worldwide in 2012.

'India right place for high quality mass production'.

 BMW Motorrad says its tie-up with TVS Motor Company is not only to leverage a cost competitive manufacturing base. “If you don’t have the best quality of a premium product, then you have problems later on. India is the right place for high-quality mass production,” says Stephan Schaller, President, BMW Motorrad. Venu Srinivasan, Chairman, TVS Motor, also stresses this point sufficiently. Both the alliance partners spoke to Business Line on what lies ahead, as BMW gears up for emerging markets such as South East Asia and India with lower powered bikes, and TVS powers into a new category above 250-cc, a segment where it is not present now.

How will this partnership shape BMW’s focus on emerging markets?

Schaller: We are traditionally strong in our segments of 600-1,600 cc. We are internationally among the top three players. With smaller displacement and lower price level, we have the chance to enter so-called emerging markets which we cannot enter with our existing products. A country like India, one of the biggest populations in the world, is an interesting place for us. The new products will also be sold in our existing markets.

Does the TVS alliance also give you access to a lower cost manufacturing base?

Schaller: What impressed me most was the high quality of mass production I have seen here. This is more important than a low-cost base. India is the right place for high quality mass production — to source, produce, to ship to places in the world where we can sell them… and one of these places will also be India.

If you don’t have the best quality of a premium product, then you have problems later on. This is always more expensive than a high-cost one. This was why we finally thought TVS would be the best partner for us.

Which markets will you look at?

Srinivasan: We are not into any exclusivity. What is made as TVS with its branding, specifications, styling and features, which would be different from BMW, would be sold as TVS. Whatever is done the BMW way will be sold as BMW.

How big is this alliance really?

Srinivasan: For us, it is a privilege and honour. In terms of premium and quality, there is no company in the world higher than BMW. BMW is known for class, styling and pizzazz. We also bring to the table high-quality mass production. It is not low-cost cheap, mass production. The alliance of engineering and premium manufacturing and quality can be a big win-win for both of us. We are not willing to predict volumes. Our biggest bike today is 180-cc. So this gets us into the above 200-500cc segment. For BMW, which makes only above 650, this gets them products up to 500 cc. That is really the play we are working together. We are looking at specific outcomes. We look forward to it with a great deal of hope and aspiration. 

Hero announces 5 - year warranty on all 2 - wheelers

Country's largest two-wheeler maker Hero MotoCorpBSE -0.31 % has announced a warranty of five years on all its models.

The warranty will be of five years or 70,000 km on motorcycles, whichever is earlier and five years or 50,000 km on scooters, whichever is earlier, the company said in a statement.

"Staying true to our splendid legacy, all Hero two- wheelers will now have a 5-year warranty. Hero MotoCorp is the first manufacturer in the country to offer this benefit," Hero MotoCorp Senior VP (Marketing and Sales) Anil Dua said.

The company said initiatives like this have resulted in strong customer commitment and trust in Hero.

"This unequalled assurance of five years when purchasing Hero's two-wheelers, will further strengthen Hero's position in the market-place as the undisputed leader," it said.

Hero MotoCorp currently has over 5,000 customer touch points across the country, including authorised dealerships, state-of-the-art automated workshops, spare part outlets and authorised representatives of dealers, it added.

Honda Motorcycle overtakes Bajaj as 2nd largest two-wheeler maker

Honda Motorcycle & Scooter India (HMSI) has become the second largest two-wheeler maker in the country by volumes overtaking home grown rival Bajaj Auto in the fiscal ended March 31, 2012.

According to figures released by the Society of Indian Automobile Manufacturers (SIAM) today, HMSI sold a total of 26,06,841 two-wheelers, which included both motorcycles and scooters, in 2012-13, in the domestic market.

On the other hand, Bajaj Auto Ltd (BAL), which produces and sells only motorcycles, clocked sales of 24,63,863 units in the last fiscal in India.

In the previous fiscal of 2011-12, BAL was occupying a comfortable second place behind market leader Hero MotoCorp.

The Pune-based firm had sold 25,66,757 units in 2011-12 as against HMSI’s 19,96,320 units in the same year.

Hero MotoCorp continues to occupy the top spot with sales of 59,12,538 units in 2012-13, SIAM said.

HMSI’s growth in FY’13 has been fuelled by a quantum jump in its motorcycle sales, which stood at 11,86,726 units as against 7,71,715 units in 2011-12, up 53.78 per cent.

During the last financial year, HMSI launched two new models — CB Trigger and Dream Yuga. Besides, it also introduced its Dio, Activa and Aviator scooters with advanced engine technology.

On the exports front in 2012-13, BAL was racing ahead with sales of 12,93,231 units compared to just 1,47,931 units of HMSI, SIAM said.

For the ongoing 2013-14 fiscal, HMSI has set a target of increasing its sales by 42.7 per cent to 39.3 lakh units, including exports, on the back of new product launches and fresh production capacities coming in.

HMSI’s Japanese parent Honda Motor Co has been undertaking an aggressive strategy to increase its market share in the two-wheeler segment in India and challenge the number one position of erstwhile partner Hero with plans to produce 10 million units by 2019-20 that may entail the company having up to eight plants in India.

Honda’s wholly-owned subsidiary HMSI is investing Rs 1,500 crore in setting up of its third plant in Karnataka, which is expected to be operational by the end of first quarter of this fiscal, taking the company’s total production capacity to 40 lakh units annually.

The company currently has two facilities at Manesar and Tapukara in Rajasthan with annual output of 16 lakh units and 12 lakh units respectively.

HMSI has charted out strategy to accelerate the rate of new model launches, while lowering prices of the products by increasing localisation levels.

Bajaj launches Ninja 300 at Rs.3.5 lakh

Bajaj Auto today said it hopes to sell around 2,000 units of the premium sports bike from the Kawasaki Ninja platform launched today, which is priced at Rs 3.5 lakh.

The new 'Ninja 300' is the fourth of the Kawasaki Ninja range of products launched in the country and the company said it will phase out the Ninja 250R model soon.

"We have sold 3,500 Ninja family bikes (250R and 650R models) since the first launch in 2009. We are planning to sell 1500-2,000 units of the Ninja 300 by the end of the fiscal," Bajaj Auto managing director Rajiv Bajaj told reporters at the much-awaited launch here.

He also said with this the company will phase out Ninja 250R model launched last August and the new model, Ninja 300 will be sold and serviced through its Probiking stores,the retail chain for premium bikes.

Priced at Rs 3.5 lakh (ex-showroom Delhi), the Ninja 300 replaces the Ninja 250R.

Yamaha opens fifth global R & D centre in India

Japanese two-wheeler major Yamaha Motor Company (YMC), which on Tuesday announced the establishment of Yamaha Motor Research & Development India (YMRI) at its Greater Noida facility, is looking at leveraging India as a procurement hub to source components for its two-wheeler operations globally. India would be the fourth regional procurement hub for Yamaha worldwide after China, Japan and the Asean.

Yuh Motoyama, senior general manager, engineering section (motorcycle business operations), said, “The research and development (R&D) unit is an integrated development centre, the second such for Yamaha globally. The vendor base in India is strong and cost-competitive and the potential to source parts from here for our operations globally is very promising.” YMC had inaugurated its first integrated development centre in Asean in Thailand last year.

Besides purchasing, YMRI would work closely with engineers at the Yamaha headquarters in Japan to develop low-cost models.

“YMRI is the fifth foreign R&D facility for Yamaha. Every centre has a mandate. While the unit in Taiwan concentrates on developing products in the 150-cc category, the centre in Italy focuses on developing two-wheelers for the European market. While platforms would continue to be made in Japan, YMRI will modify them to create low-cost products for the domestic market”, added Motoyama. The ‘root model’ can then be altered for exports to markets in Africa and Latin America.

Toshikazu Kobayashi, managing director, YMRI, said, “Our aim is to develop the lowest-cost model and parts in the world. Our aim is to develop a low-cost bike at around $ 500 for both the domestic as well as exports markets.”

He, however, declined to specify a timeline for launching the product in the Indian market. Yamaha’s move is a part of its strategy to expand its footprint in the mass commuter segment in the country.

Yamaha, at present, has marginal share in the low-cost commuter segment with the YBR110 and Crux which together sells around 4300 odd units every month. The segment accounts for over 65 per cent of motorcycle sales in India.

Additionally, to enhance its presence in the domestic two-wheeler industry India Yamaha Motor (IYM) will launch a new scooter every year till 2016. Hiroyuki Suzuki, chief executive officer and managing director, IYM said, “We intend to sell one million units by 2016 and grab 10 per cent of the domestic two-wheeler industry. In the scooter segment, we will launch one new product every year to attain market share of 20 per cent in the same period.”

In the current financial year the company is eyeing sales of 710,000 units, which is an increase of around 45 per cent over the 490,000 units sold last fiscal. While 500,000 units will be sold in the domestic market, the remaining numbers would come in from exports.

TVS in bike tech deal with BMW

TVS Motors has teamed up with German automobile firm BMW’s two-wheeler division — BMW Motorrad — to share technology and develop products below 500cc capacity, which will be marketed across the globe.

The new range of motorcycles will be manufactured at TVS’s Mysore or Hosur plants though the two partners will sell their products separately.

The move is expected to give a much-needed traction to TVS, which has been losing ground to Japanese firms.

TVS chief Venu Srinivasan said the company would benefit by revamping its product line-up and developing models above 250cc.

Stephan Schaller, president of BMW Motorrad, said the tie-up would give the Berlin-based firm an opportunity to tap the demand in developing markets of Asia and South America.

“We will be able to offer vehicles in smaller capacities in addition to the BMW Motorrad core segment,” said Schaller.

The core two-wheeler products of BMW are in the 650-1600cc range. The firm sold over 117,000 motorcycles worldwide in 2012. The company will continue to produce its core products in Berlin.

Srinivasan added that the bikes manufactured by the two firms would be under two different specifications — one under the BMW brand and the other under the TVS brand.

“We have entered into a joint technical cooperation and manufacturing agreement. There will not be an equity participation,” Srinivasan said.

TVS is planning to invest about 20 million euros in the project; BMW has declined to provide the details of its investment. The firms could even have competing products at various price points in India.

The sub 500cc market comprising 100, 125, 150, 200, 250cc models makes up the majority of the local two-wheeler market. The overall market size is around 13 million units at the end of February. The market is dominated by Hero, followed by Bajaj. Honda and TVS are competing for the third spot.

Shares of TVS rose to Rs 42.35 apiece on the BSE following the deal. They closed up 9.93 per cent at Rs 39.85.

Bajaj - Kawasaki gears upto enter Indonesia

Bajaj Auto and Kawasaki Heavy Industries, which have marketing collaborations in India and the Philippines, are now taking their partnership to Indonesia, under which select Bajaj products will be assembled at Kawasaki’s facility and distributed through its network.

The first product that will be taken to that market is the Pulsar 200 NS, and this is scheduled to happen during this financial year. “Kawasaki has made some minor improvements in the motorcycle,” said Rajiv Bajaj, MD, Bajaj Auto. He added that after Indonesia, Brazil and Asean markets were also on the partnership’s radar.

He was speaking after the launch of the Kawasaki Ninja 300 in the Indian market. This is the fourth product in this range to be marketed in India by Bajaj, and since its debut here around four years ago, 3,000 units of the Ninja have so far been sold.

INDIAN CONTENT

The newest Ninja, that will come from Thailand as a CKD unit and be assembled at Bajaj’s Chakan plant, has some content such as headlights and speedometer sourced from India. Kawasaki is preparing to source suspensions also for their products.

Yuji Horiuchi, head of India Kawasaki Motors, said that the current level of Indian content stood at 10 per cent, and the company was looking to expand it further.

Bajaj Auto already has a small assembly plant in Indonesia where semi-knocked down operations can be undertaken, and around two years ago there were reports that Bajaj planned to invest further to enable CKD operations.

However, a senior official said the company had not made much headway in penetrating the Indonesian market, and hence, a marketing collaboration with an existing partner, who was successful in the country, was the best option. Products will be sold with only the sub-brand name (eg Pulsar) prominently displayed and the Kawasaki name less obviously located.

NINJA 300 LAUNCHED

Bajaj Auto, a distributor of Kawasaki Bikes in India, has launched the Kawasaki Ninja 300 in the Indian market.

The new motorcycle will be sold through Probiking showrooms. It is the fourth of the Kawasaki Ninja range of products launched in India.

Priced at Rs 3.5 lakh (ex-showroom Delhi), it replaces the Kawasaki Ninja 250 R launched last August.

With a maximum power of 39PS and a maximum torque of 27 NM, the Ninja 300 has a host of features from Kawasaki’s superbikes like the ZX-10R and ZX-14R.