“The day of graduation might mark the end of formal education, but it is the starting point for non-formal education. Continuous learning will ensure that a person achieves quality and respects team spirit,” Venu Srinivasan, Managing Director, Sundaram-Clayton Limited and Chairman, TVS Motor Co. Ltd., said here on Saturday.
Delivering the graduation day address at the D.J. Academy for Managerial Excellence, he said that there were a few renowned organisations that were respected for team spirit. “The army with no team spirit has no chance of winning”.
Entrepreneurship
Mr. Srinivasan pointed out that entrepreneurship was no longer meant only for those from the privileged background, but also for others.
“Small scale industries have turned into medium scale ones and later into large-scale industries because of the drive of society. Students should aspire to start something small, own it as their business and then make it grow,” the industrialist told the students.
Capital and education were made available to everybody in the State. There was a future for all and an opportunity to make money from anything, he added.
“There was a time when India was in a terrible position where we could not buy Indian products of quality. We only bought foreign products. But today we are proud Indians buying many quality Indian products.
“This is because we have a driven, hardworking new generation of Indians who appreciate the opportunities they get and face the enormous challenges with rapid change and a good working attitude,” Mr. Srinivasan said.
Since the present world conformed to an open economy, customers were also changing. Quality, quantity and innovation were required to meet the challenges of the changing nature of the customers, he said.
He urged the graduating students to be sensitive to society and give back something to it.
He also exhorted them to care for nature.
Vespa returns to India, again
Piaggio Vehicles Pvt Ltd unveiled the first of the new Vespa Scooters, the four-stroke LX 125, in India for the first time at an auto expo in Mumbai on Monday. Touted as the flagship model, the LX 125 will be the first Vespa scooter that the Italian automaker will begin selling in India in 2012.
Vespa, already a popular name in India, is making an entry into the two-wheeler market for the third time, however, with two new models and as a fully-owned subsidiary of its parent company Piaggio & Co. SpA, Italy. It was an evening full of nostalgia as surprised and curious visitors — many of them had rode a Vespa at least once or owned one — thronged at the Italian automakers stand at the MMRDA ground in BKC. “It’s a great looking scooter,” said an onlooker, adding, “Those who have driven a Vespa would know what it is,” said a visitor in his early 40s.
The automaker this time has stayed away from partnering with a third party, which often resulted into their early exit. They entered India for the first time in the 1960s in partnership with Bajaj Auto Ltd, (Chetak scooter was a product of this partnership) and then again in the 1983 with LML Motors, when it produced P-series scooters (LML NV and LML Select) for the Indian market.
Ravi Chopra, chairman and managing director, Piaggio Vehicles Pvt Ltd says, “Vespa is an amazing scooter, which most of the Indians already have had an experience with at some point in time. But the new scooters that we are bringing to India are far different from the ones they have seen. The LX 125 is much more than a scooter. It’s technologically advanced, stylish, and most importantly the real Italian Vespa that people in India never knew of. It will be sold without any changes.”
Chopra says that styling will play a key role in differentiating its products in the Indian market. “Indians today, don’t want to ride just a vehicle that gives good mileage, but also the one that makes a style statement. It’s true irrespective of age groups. A vehicle is about attitude and making a statement, and that’s what the LX 125 does,” he added.
But with fuel prices increased again, recently, mileage would be a key factor in deciding the scooter’s fate in India, as another visitor pointed out: “How much does it give on the road?”
Chopra expects the scooters to be available in the market by mid-2012 and plans to bring more models in near future.
Vespa, already a popular name in India, is making an entry into the two-wheeler market for the third time, however, with two new models and as a fully-owned subsidiary of its parent company Piaggio & Co. SpA, Italy. It was an evening full of nostalgia as surprised and curious visitors — many of them had rode a Vespa at least once or owned one — thronged at the Italian automakers stand at the MMRDA ground in BKC. “It’s a great looking scooter,” said an onlooker, adding, “Those who have driven a Vespa would know what it is,” said a visitor in his early 40s.
The automaker this time has stayed away from partnering with a third party, which often resulted into their early exit. They entered India for the first time in the 1960s in partnership with Bajaj Auto Ltd, (Chetak scooter was a product of this partnership) and then again in the 1983 with LML Motors, when it produced P-series scooters (LML NV and LML Select) for the Indian market.
Ravi Chopra, chairman and managing director, Piaggio Vehicles Pvt Ltd says, “Vespa is an amazing scooter, which most of the Indians already have had an experience with at some point in time. But the new scooters that we are bringing to India are far different from the ones they have seen. The LX 125 is much more than a scooter. It’s technologically advanced, stylish, and most importantly the real Italian Vespa that people in India never knew of. It will be sold without any changes.”
Chopra says that styling will play a key role in differentiating its products in the Indian market. “Indians today, don’t want to ride just a vehicle that gives good mileage, but also the one that makes a style statement. It’s true irrespective of age groups. A vehicle is about attitude and making a statement, and that’s what the LX 125 does,” he added.
But with fuel prices increased again, recently, mileage would be a key factor in deciding the scooter’s fate in India, as another visitor pointed out: “How much does it give on the road?”
Chopra expects the scooters to be available in the market by mid-2012 and plans to bring more models in near future.
Mahindra & Mahindra off course in mobike race
Despite signing up Aamir Khan as brand ambassador, the company has failed to revv up sales of its only motorcycle Stallio
Competition in the two-wheeler market is fiercer than ever before and Mahindra's only motorcycle, Stallio, is bearing the brunt of it.
Last-month sales of the 110cc entry-level motorcycle, launched by the $7.1-billion Mahindra & Mahindra (M&M) group last year, slid more than 10 times from October levels, which was also its best month.
Mahindra 2 Wheelers, the company that was formed after the group bought assets of money-losing Kinetic Motor Company, despatched 256 units of the Stallio last month to 250-275 dealers. That is an average of just one unit of Stallio delivered to each dealer.
Sales of the indigenously built motorcycle have been on a downward trend since its launch in September 2010. From 2,664 units despatched in October, M&M reported a drop of 36 per cent in November, delivering 1,706 units of the bike, according to data provided by the Society of Indian Automobile Manufacturers (SIAM).
The Stallio is being promoted by the company as a fuel-efficient and stylish bike with an affordable price tag of Rs 41,199 (base model, ex-showroom Mumbai). The bike is fighting for share against segment leaders such as Honda CB Twister, Hero Honda Splendor and Passion, and Bajaj Discover on price and power parameters.
The CB Twister launched by Honda Motorcycle and Scooter India (HMSI), the country's fourth largest two-wheeler maker, shares almost the same engine specification seen on the Stallio, but is priced a premium of over Rs 5,000 at Rs 46,417, in Mumbai.
Despite the premium tag, the 110cc Twister sells at over 15,000 units per month and carries a waiting period of two-three months, due to production constraints faced by HMSI.
Meanwhile, M&M states that the reason behind such a dramatic fall in sales to its dealers is primarily because of “go-slow” approach on its part and also due to shortage in parts supplies for the bike.
When contacted, Anoop Mathur, president, two-wheeler sector, M&M said: "In the initial phase you are producing the bike, but the billing does not happen because it is not launched yet. Then we have seen that there is a supply demand mismatch due to shortage of components due to which we have not been able to produce as much as we had liked to."
However, as per SIAM figures, the company collectively produced 6,825 units of the Stallio during the past three months, but delivered just 4,626 units to its dealers.
The ramp-up in distribution has also been on the slower side with 250-275 dealers currently utilised as against the total strength of 400. Some units of the Stallio have been used for display purposes only at over 125 dealers, with no sales taking place from there.
The group had brought on board Bollywood actor Aamir Khan for promotional activities and also for being the brand ambassador of Stallio. The company reportedly paid Rs 14 crore as endorsement fee to the actor.
M&M maintains that consumer demand for the Stallio has been very positive, however, the company refused to divulge retail figures.
"The feedback on the Stallio has been very encouraging. But we are calibrating our deliveries so that we are able to maintain a matched situation. The vendors take time to come up to your level of requirement. Nobody pre-places its capacities and capabilities. They also want to see how (the product) is going, what is the market pull," added Mathur.
Most other two-wheeler makers, including market leader Hero Honda and HMSI, showed improvement in sales in December when compared to November. This is despite an upward revision in prices this month which could impact retail sales marginally.
When asked whether production for the motorcycle would be raised in the coming months, the M&M executive said: "We are working very hard for that purpose only and during the course of this quarter you will start seeing the effect coming out very clearly." Mathur declined to give a targeted production or sales figure.
To beat competition, M&M is agreeing to provide a market-beating four-year or 80,000km warranty on the Stallio. In addition, the company is also gearing up for a better service offering in the coming months when it will add more products to its line-up.
Most of M&M's two-wheeler dealers are based in urban centres, which sell automatic scooters such as Rodeo, Duro and Flyte. The company will try to become more active in rural areas as it moves forward leveraging the Mahindra brands' strength.
"It would be very difficult for Mahindras to have volumes with the Stallio at the very start due to immense competition. Things will ease out only when they add more and better products in the market that could challenge the Bajajs and Hero Hondas of the industry," said a financial analyst.
Competition in the two-wheeler market is fiercer than ever before and Mahindra's only motorcycle, Stallio, is bearing the brunt of it.
Last-month sales of the 110cc entry-level motorcycle, launched by the $7.1-billion Mahindra & Mahindra (M&M) group last year, slid more than 10 times from October levels, which was also its best month.
Mahindra 2 Wheelers, the company that was formed after the group bought assets of money-losing Kinetic Motor Company, despatched 256 units of the Stallio last month to 250-275 dealers. That is an average of just one unit of Stallio delivered to each dealer.
Sales of the indigenously built motorcycle have been on a downward trend since its launch in September 2010. From 2,664 units despatched in October, M&M reported a drop of 36 per cent in November, delivering 1,706 units of the bike, according to data provided by the Society of Indian Automobile Manufacturers (SIAM).
The Stallio is being promoted by the company as a fuel-efficient and stylish bike with an affordable price tag of Rs 41,199 (base model, ex-showroom Mumbai). The bike is fighting for share against segment leaders such as Honda CB Twister, Hero Honda Splendor and Passion, and Bajaj Discover on price and power parameters.
The CB Twister launched by Honda Motorcycle and Scooter India (HMSI), the country's fourth largest two-wheeler maker, shares almost the same engine specification seen on the Stallio, but is priced a premium of over Rs 5,000 at Rs 46,417, in Mumbai.
Despite the premium tag, the 110cc Twister sells at over 15,000 units per month and carries a waiting period of two-three months, due to production constraints faced by HMSI.
Meanwhile, M&M states that the reason behind such a dramatic fall in sales to its dealers is primarily because of “go-slow” approach on its part and also due to shortage in parts supplies for the bike.
When contacted, Anoop Mathur, president, two-wheeler sector, M&M said: "In the initial phase you are producing the bike, but the billing does not happen because it is not launched yet. Then we have seen that there is a supply demand mismatch due to shortage of components due to which we have not been able to produce as much as we had liked to."
However, as per SIAM figures, the company collectively produced 6,825 units of the Stallio during the past three months, but delivered just 4,626 units to its dealers.
The ramp-up in distribution has also been on the slower side with 250-275 dealers currently utilised as against the total strength of 400. Some units of the Stallio have been used for display purposes only at over 125 dealers, with no sales taking place from there.
The group had brought on board Bollywood actor Aamir Khan for promotional activities and also for being the brand ambassador of Stallio. The company reportedly paid Rs 14 crore as endorsement fee to the actor.
M&M maintains that consumer demand for the Stallio has been very positive, however, the company refused to divulge retail figures.
"The feedback on the Stallio has been very encouraging. But we are calibrating our deliveries so that we are able to maintain a matched situation. The vendors take time to come up to your level of requirement. Nobody pre-places its capacities and capabilities. They also want to see how (the product) is going, what is the market pull," added Mathur.
Most other two-wheeler makers, including market leader Hero Honda and HMSI, showed improvement in sales in December when compared to November. This is despite an upward revision in prices this month which could impact retail sales marginally.
When asked whether production for the motorcycle would be raised in the coming months, the M&M executive said: "We are working very hard for that purpose only and during the course of this quarter you will start seeing the effect coming out very clearly." Mathur declined to give a targeted production or sales figure.
To beat competition, M&M is agreeing to provide a market-beating four-year or 80,000km warranty on the Stallio. In addition, the company is also gearing up for a better service offering in the coming months when it will add more products to its line-up.
Most of M&M's two-wheeler dealers are based in urban centres, which sell automatic scooters such as Rodeo, Duro and Flyte. The company will try to become more active in rural areas as it moves forward leveraging the Mahindra brands' strength.
"It would be very difficult for Mahindras to have volumes with the Stallio at the very start due to immense competition. Things will ease out only when they add more and better products in the market that could challenge the Bajajs and Hero Hondas of the industry," said a financial analyst.
Hero, Honda sign new licensing pact till 2014
The Hero Group has signed a final licensing agreement with Honda, paving the way for the Indian group to access technology from the Japanese firm for existing and future products till 2014.
In December Hero and Honda had announced the dissolution of their 26-year-old partnership. The Hero Group, owned by the Munjal family, will buy Honda’s 26% stake in Hero Honda -- which dominates the Indian two-wheeler market with a market share of 44% -- according to a memorandum of understanding signed on December 16.
“The company has executed a final binding licensing agreement with the Japanese partner. It was signed last week and pertains to the existing and new products that the company will offer in the Indian market, once the Japanese firm exits the joint venture,” Hero Honda said in a communication to the stock exchange. Analysts said the Hero Group had a challenging task as it gears up for life without Honda.
“The two companies have time to align their operations as the new agreement would be effective till 2014, but Hero would have to organise its house to get the right products for the Indian market. It can source technology from international market but that may lead to similar cracks as with Honda; so it will be prudent to develop its own R&D base, which is a real challenge for the New Delhi-based group,” said Vaishali Jajoo, an automobile analyst at Angel Broking.
The partners will sign a definitive agreement for the share transfer shortly, leading to the Hero Group launching its own brands which will compete with the ones owned by Honda Motorcycle and Scooter India, a 100% Honda subsidiary. Entry-level bikes Splendor and Passion account for roughly 70% of Hero Honda’s sales.
The separation will allow Hero to develop its own R&D activities and export of two-wheelers under its own brand. Under the deal, Hero Honda will continue to pay royalty at the current rate of 2.3-3% of its net sales to Honda for supplying automotive technology and developing new products in future.
The new license would replace the 2004 agreement between Hero Group and Honda Motor under which the Japanese partner was supposed to provide technology to the joint venture till 2014. Hero Honda shares closed 0.33% lower at Rs 1,750.15 on the Bombay Stock Exchange at the close of trading on Monday.
In December Hero and Honda had announced the dissolution of their 26-year-old partnership. The Hero Group, owned by the Munjal family, will buy Honda’s 26% stake in Hero Honda -- which dominates the Indian two-wheeler market with a market share of 44% -- according to a memorandum of understanding signed on December 16.
“The company has executed a final binding licensing agreement with the Japanese partner. It was signed last week and pertains to the existing and new products that the company will offer in the Indian market, once the Japanese firm exits the joint venture,” Hero Honda said in a communication to the stock exchange. Analysts said the Hero Group had a challenging task as it gears up for life without Honda.
“The two companies have time to align their operations as the new agreement would be effective till 2014, but Hero would have to organise its house to get the right products for the Indian market. It can source technology from international market but that may lead to similar cracks as with Honda; so it will be prudent to develop its own R&D base, which is a real challenge for the New Delhi-based group,” said Vaishali Jajoo, an automobile analyst at Angel Broking.
The partners will sign a definitive agreement for the share transfer shortly, leading to the Hero Group launching its own brands which will compete with the ones owned by Honda Motorcycle and Scooter India, a 100% Honda subsidiary. Entry-level bikes Splendor and Passion account for roughly 70% of Hero Honda’s sales.
The separation will allow Hero to develop its own R&D activities and export of two-wheelers under its own brand. Under the deal, Hero Honda will continue to pay royalty at the current rate of 2.3-3% of its net sales to Honda for supplying automotive technology and developing new products in future.
The new license would replace the 2004 agreement between Hero Group and Honda Motor under which the Japanese partner was supposed to provide technology to the joint venture till 2014. Hero Honda shares closed 0.33% lower at Rs 1,750.15 on the Bombay Stock Exchange at the close of trading on Monday.
Bajaj revs up retail strategy for two new commuter bikes
Opens 130 dealerships in small towns, taps popularity of Discover
Bajaj Auto is preparing the retail base for the two new commuter motorcycles it will launch in the next six months. One of these will be a variant of Discover, whose 100cc and 150cc siblings are already clocking monthly sales of around 1.5 lakh units.
“The Discover has brought us back strongly in the commuter segment and we are keen that the next round of bike launches takes the story forward. The retail strategy is, therefore, very important to make this a reality,” Mr S. Sridhar, President, Motorcycle Business, told Business Line.
Preference for owner dealers
The company recently selected 130 new dealers from among 2,500 applications small towns, the real growth drivers of commuter bikes. More than 95 per cent of these dealerships will be owner-driven.
“This was deliberately done because we wanted to ensure maximum customer care and satisfaction in the selling process. An owner, quite unlike a top-level employee manager, can comfortably pull out all stops for the potential buyer,” Mr Sridhar said.
Bajaj's shift towards owner dealers, who are usually fewer in metros and mini-metros, is meant to ensure its growth in the commuter segment, where Hero Honda reigns supreme.
This also explains why it is keen on positioning its two successful brands — the Pulsar and Discover — across its 600 dealerships by the end of next fiscal. The ‘Bajaj' identity will take the backseat in this branding strategy.
Brand projection
The Pulsar will continue to be projected as the premium sporty bike that is predominantly city-centric. The Discover, in contrast, is the mass product positioned to take on Hero Honda's Splendor and Passion, which jointly dominate the market with monthly sales of over 2.8 lakh bikes. The Discover duo is halfway there and it will be interesting to see the evolving market dynamics in the coming months.
Bajaj hopes to end this fiscal at four million bikes and three-wheelers, and has upped the target to five million during 2011-12. Bikes could account for over 4.2 million units annually, with the commuter models catalysing the growth.
Bajaj Auto is preparing the retail base for the two new commuter motorcycles it will launch in the next six months. One of these will be a variant of Discover, whose 100cc and 150cc siblings are already clocking monthly sales of around 1.5 lakh units.
“The Discover has brought us back strongly in the commuter segment and we are keen that the next round of bike launches takes the story forward. The retail strategy is, therefore, very important to make this a reality,” Mr S. Sridhar, President, Motorcycle Business, told Business Line.
Preference for owner dealers
The company recently selected 130 new dealers from among 2,500 applications small towns, the real growth drivers of commuter bikes. More than 95 per cent of these dealerships will be owner-driven.
“This was deliberately done because we wanted to ensure maximum customer care and satisfaction in the selling process. An owner, quite unlike a top-level employee manager, can comfortably pull out all stops for the potential buyer,” Mr Sridhar said.
Bajaj's shift towards owner dealers, who are usually fewer in metros and mini-metros, is meant to ensure its growth in the commuter segment, where Hero Honda reigns supreme.
This also explains why it is keen on positioning its two successful brands — the Pulsar and Discover — across its 600 dealerships by the end of next fiscal. The ‘Bajaj' identity will take the backseat in this branding strategy.
Brand projection
The Pulsar will continue to be projected as the premium sporty bike that is predominantly city-centric. The Discover, in contrast, is the mass product positioned to take on Hero Honda's Splendor and Passion, which jointly dominate the market with monthly sales of over 2.8 lakh bikes. The Discover duo is halfway there and it will be interesting to see the evolving market dynamics in the coming months.
Bajaj hopes to end this fiscal at four million bikes and three-wheelers, and has upped the target to five million during 2011-12. Bikes could account for over 4.2 million units annually, with the commuter models catalysing the growth.
High-end bikes turn it on for Bajaj Auto, net up 40% in Q3
BAJAJ Auto beat analysts’ estimates to post a 40% rise in net profit during the third quarter as volume growth and higher prices boosted sales.
Rising raw material costs may put pressure on the margins, going forward. But its focus on highend products will help maintain profitability, analysts said.
Net profit for the quarter ended December jumped to 667 crore from 475 crore and sales grew 28% to 4,277 crore from a year earlier, India’s second-biggest motorcycle maker by sales said. “The quarter witnessed an all-round increase in input costs. In this challenging environment, the company’s focus on high-end motorcycles enabled it to maintain record high margins in excess of 20%,” the company said in a statement. Currently, high-end motorcycles contribute over 70% of its total motorcycle sales.
The company’s domestic sales of motorcycles, including the Pulsar and Discover, rose 23% in the quarter as a buoyant economy, rising disposable incomes and a need for personal mobility spurred consumer spending. The company’s shares gained after the results to close about 2% higher at 1,319.85 on the BSE. The stock gained 49% during the past one year owing to rising margins and volume growth.
While the rural initiative and new products in the pipeline will make an immediate impact on the company’s business and market share, concerns on rising input costs are expected to impact margins. Bajaj Auto holds a 27% share in the twowheeler market, dominated by Hero Honda, with a 54% share. The new initiative of appointing close to 135 dealers in the mini-metros and smaller towns will help Bajaj tap the huge potential in rural India much better.
Rising raw material costs may put pressure on the margins, going forward. But its focus on highend products will help maintain profitability, analysts said.
Net profit for the quarter ended December jumped to 667 crore from 475 crore and sales grew 28% to 4,277 crore from a year earlier, India’s second-biggest motorcycle maker by sales said. “The quarter witnessed an all-round increase in input costs. In this challenging environment, the company’s focus on high-end motorcycles enabled it to maintain record high margins in excess of 20%,” the company said in a statement. Currently, high-end motorcycles contribute over 70% of its total motorcycle sales.
The company’s domestic sales of motorcycles, including the Pulsar and Discover, rose 23% in the quarter as a buoyant economy, rising disposable incomes and a need for personal mobility spurred consumer spending. The company’s shares gained after the results to close about 2% higher at 1,319.85 on the BSE. The stock gained 49% during the past one year owing to rising margins and volume growth.
While the rural initiative and new products in the pipeline will make an immediate impact on the company’s business and market share, concerns on rising input costs are expected to impact margins. Bajaj Auto holds a 27% share in the twowheeler market, dominated by Hero Honda, with a 54% share. The new initiative of appointing close to 135 dealers in the mini-metros and smaller towns will help Bajaj tap the huge potential in rural India much better.
Marketing with a human touch
When Neeru, a resident of Manoharpur village on the outskirts of Agra, attended a driving camp conducted by Mahindra and Mahindra (M&M) a few days ago, nobody thought she would learn the ropes and start driving a tractor so soon.
But M&M’s technicians made sure she and many other girls do that in style. Neeru even took Agra’s Mayor for a drive in the tractor. M&M has been doing this for a few weeks now under its “Nayi Disha, Nai Soch programme”.
Mahindra Group Vice Chairman & MD Anand Mahindra says an initiative like this isn’t just another corporate social responsibility programme. “Yes, it is our way of giving back to society. But it can be profitable too. Can you imagine the impact such a programme has on a rather conservative social milieu? The emotional connect with the parents of these girls or the villagers who attend such camps will also serve another useful purpose. When they decide to buy a tractor, chances are they will opt for an M&M tractor,” he says.
Like M&M, a host of companies have woken up to the fact that apart from making a significant impact on people’s lives, their social contributions can be profitable too. So the backward backwaters are now at the forefront of big corporate thinking.
Take the eco-friendly Pattori village in Madhepura, Bihar. After the village was wrecked by the Kosi river two years ago, the Mahindra Foundation & Mahindra Consulting Engineers (MACE) stepped in to rebuild the village by setting up disaster-resistant dwellings with all social infrastructure facilities like water supply, sanitation, solar lighting, an amenity building, cattle sheds, machaans (raised resting platforms) and so on. To keep costs in check, MACE ensured the extensive use of locally available materials and skill sets and employed the local workforce.
M&M is now using this experience to build ultra low-cost housing in other parts of the country as a profitable venture.
Examples like these are the reason companies are increasingly saying that marketing with a human touch is the way to go, specially in remote villages. Ask Godrej & Boyce. For Chotukool, its nano refrigerators, the Godrej group junked the traditional model of a proprietary channel with a sales force and a distributor-dealer chain. The company has joined hands with micro-finance institutions and has gone in for an innovative scheme which can serve two purposes: give employment to local villagers to increase their participation in the success of the project and keep the venture profitable by keeping distribution costs low.
So the bullock cart stops in one of the dusty alleys in Osnamabad, a small town in the Marathwada region of Maharashtra and two village girls, dressed in traditional Marathi Kasta Saree, step out in style with the products they have helped co-create with Godrej engineers. The quality of the sales pitch of these girls, who have passed Class 10, would do an MBA proud. For, they know the products well, as the company involved them right from the conception stage to designing and marketing Chotukool.
There are other innovations galore. While Google is developing online bulletin boards that can be used by villagers who don’t know how to read or use a computer, companies like TVS are using programmes like Women on Wheels that trains women to ride two-wheelers. As a part of this campaign, TVS has set up driving learning centres called TVS Scooty Institute at its dealerships where girls over 16 years of age can take a week’s training for just Rs 350.
Since women account for more than 70 per cent of Scooty sales, the campaign, positioned as empowerment of women, was a smart move. The strategy – train and sell – is also in tune with a TVS-IMRB research study which found that any girl who learns to ride on a certain brand of bike would invariably like to buy the same brand — the training being a big influence on purchase decision.
The study also showed that while it is normal for men to lend their bikes to their male friends who want to learn how to ride, women face stiff resistance from even family members. What makes it worse is that there aren’t many formal two-wheeler training centres in the country. The findings prompted the company to set up the Scooty Institute.
Since most two-wheeler sales are in small towns, TVS launched the institute in areas with population of 100,000 to 500,000. The women undergoing training are in the age group of 18-25 and who don’t want to depend on family members or the public transport system for commuting.
TVS is now planning to scale up the programme, under which dealers approach girls’ schools and colleges to offer training in riding two-wheelers. Studies have shown that one in every five students has bought a TVS brand within three months of the training.
Showing that we care has never been so profitable.
But M&M’s technicians made sure she and many other girls do that in style. Neeru even took Agra’s Mayor for a drive in the tractor. M&M has been doing this for a few weeks now under its “Nayi Disha, Nai Soch programme”.
Mahindra Group Vice Chairman & MD Anand Mahindra says an initiative like this isn’t just another corporate social responsibility programme. “Yes, it is our way of giving back to society. But it can be profitable too. Can you imagine the impact such a programme has on a rather conservative social milieu? The emotional connect with the parents of these girls or the villagers who attend such camps will also serve another useful purpose. When they decide to buy a tractor, chances are they will opt for an M&M tractor,” he says.
Like M&M, a host of companies have woken up to the fact that apart from making a significant impact on people’s lives, their social contributions can be profitable too. So the backward backwaters are now at the forefront of big corporate thinking.
Take the eco-friendly Pattori village in Madhepura, Bihar. After the village was wrecked by the Kosi river two years ago, the Mahindra Foundation & Mahindra Consulting Engineers (MACE) stepped in to rebuild the village by setting up disaster-resistant dwellings with all social infrastructure facilities like water supply, sanitation, solar lighting, an amenity building, cattle sheds, machaans (raised resting platforms) and so on. To keep costs in check, MACE ensured the extensive use of locally available materials and skill sets and employed the local workforce.
M&M is now using this experience to build ultra low-cost housing in other parts of the country as a profitable venture.
Examples like these are the reason companies are increasingly saying that marketing with a human touch is the way to go, specially in remote villages. Ask Godrej & Boyce. For Chotukool, its nano refrigerators, the Godrej group junked the traditional model of a proprietary channel with a sales force and a distributor-dealer chain. The company has joined hands with micro-finance institutions and has gone in for an innovative scheme which can serve two purposes: give employment to local villagers to increase their participation in the success of the project and keep the venture profitable by keeping distribution costs low.
So the bullock cart stops in one of the dusty alleys in Osnamabad, a small town in the Marathwada region of Maharashtra and two village girls, dressed in traditional Marathi Kasta Saree, step out in style with the products they have helped co-create with Godrej engineers. The quality of the sales pitch of these girls, who have passed Class 10, would do an MBA proud. For, they know the products well, as the company involved them right from the conception stage to designing and marketing Chotukool.
There are other innovations galore. While Google is developing online bulletin boards that can be used by villagers who don’t know how to read or use a computer, companies like TVS are using programmes like Women on Wheels that trains women to ride two-wheelers. As a part of this campaign, TVS has set up driving learning centres called TVS Scooty Institute at its dealerships where girls over 16 years of age can take a week’s training for just Rs 350.
Since women account for more than 70 per cent of Scooty sales, the campaign, positioned as empowerment of women, was a smart move. The strategy – train and sell – is also in tune with a TVS-IMRB research study which found that any girl who learns to ride on a certain brand of bike would invariably like to buy the same brand — the training being a big influence on purchase decision.
The study also showed that while it is normal for men to lend their bikes to their male friends who want to learn how to ride, women face stiff resistance from even family members. What makes it worse is that there aren’t many formal two-wheeler training centres in the country. The findings prompted the company to set up the Scooty Institute.
Since most two-wheeler sales are in small towns, TVS launched the institute in areas with population of 100,000 to 500,000. The women undergoing training are in the age group of 18-25 and who don’t want to depend on family members or the public transport system for commuting.
TVS is now planning to scale up the programme, under which dealers approach girls’ schools and colleges to offer training in riding two-wheelers. Studies have shown that one in every five students has bought a TVS brand within three months of the training.
Showing that we care has never been so profitable.
Motown drives on hinterland hopes
Automakers are banking on the rural sector to prop up demand as industry growth is seen slowing this year after a spectacular ride in 2010.
The 30% growth last year came as a big surprise to the auto industry, which sees the urban markets getting saturated and the focus shifting to the hinterland.
Experts feel that companies with higher rural exposures will continue to enjoy better volumes this year, though growth rate per se may fall due to the higher base of 2010.
Sonal Gupta, UBS Investment Research analyst in a report on January 12, said rural demand will play a strong role in fiscal 2012 and support auto demand.
“We expect two-wheelers and tractors to be the key beneficiaries of this strong growth,” the analyst said.
The demand is expected to be driven by strong growth in rural incomes, due to high food inflation and strong agriculture growth, continued stimulus to the rural economy in the form of higher National Rural Employment Guarantee Act allocation, high credit growth and investment in rural infrastructure.
Pawan Goenka, president, automotive and farm equipment sector, Mahindra & Mahindra, said, “There isn’t significant data to say that there is sharp increase in rural demand as compared to urban. Mahindra & Mahindra, however, always had higher percentage of demand coming from rural side than the industry average. Going ahead, we see more attention being given to rural demand by most of the automakers.”
He said, “There is a lot of income and affordability available in the rural segment. Urban demand in a way is getting saturated not just from the capacity point of view but also from the infrastructure point. We see a lot of potential if we are able to create right value proposition in rural area.”
Toyota Kirloskar Motor, which is expecting to add significant volumes with the launch of Etios sedan, is banking on demand from rural and semi-urban areas.
The company has expanded its dealer network to 150 in 2010 from 82 in 2009.
Other players like Hyundai Motors and Honda Siel, too, have expanded their dealer network last year to capture demand from hinterland.
In two-wheelers, players like Hero Honda, Bajaj and TVS are well networked within the rural geographies. Despite an overall household penetration level of 45%, the two-wheeler industry continues to grow in double-digits due to demand from rural markets and shortening replacement cycle.
The UBS analyst said the epicentre of the two-wheeler demand is shifting to rural segment. “We believe industry split is now 50:50 for rural versus urban and likely to increase further in favour of rural given a large rural population (71% of total), where income growth is likely to drive growth for the two-wheeler sector,” it said.
Bajaj Auto, which already had 485 dealerships across the country, is adding 130 more to give a tough fight to Hero Honda’s strong rural network.
S Sridhar, president - motorcycle business of Bajaj Auto had earlier said, “Our competition is very well established in small villages with population of 5,000, which are connected to small towns. We have a lot of thrust in taking our dealerships to Tier-II towns.”
HS Goindi, president, marketing & sales, TVS Motor, said, “About 60% of the company’s business comes from rural and semi-urban buyers. The demand in this geography will continue to remain robust. But metros and small towns will also contribute significantly to the overall industry growth.”
The 30% growth last year came as a big surprise to the auto industry, which sees the urban markets getting saturated and the focus shifting to the hinterland.
Experts feel that companies with higher rural exposures will continue to enjoy better volumes this year, though growth rate per se may fall due to the higher base of 2010.
Sonal Gupta, UBS Investment Research analyst in a report on January 12, said rural demand will play a strong role in fiscal 2012 and support auto demand.
“We expect two-wheelers and tractors to be the key beneficiaries of this strong growth,” the analyst said.
The demand is expected to be driven by strong growth in rural incomes, due to high food inflation and strong agriculture growth, continued stimulus to the rural economy in the form of higher National Rural Employment Guarantee Act allocation, high credit growth and investment in rural infrastructure.
Pawan Goenka, president, automotive and farm equipment sector, Mahindra & Mahindra, said, “There isn’t significant data to say that there is sharp increase in rural demand as compared to urban. Mahindra & Mahindra, however, always had higher percentage of demand coming from rural side than the industry average. Going ahead, we see more attention being given to rural demand by most of the automakers.”
He said, “There is a lot of income and affordability available in the rural segment. Urban demand in a way is getting saturated not just from the capacity point of view but also from the infrastructure point. We see a lot of potential if we are able to create right value proposition in rural area.”
Toyota Kirloskar Motor, which is expecting to add significant volumes with the launch of Etios sedan, is banking on demand from rural and semi-urban areas.
The company has expanded its dealer network to 150 in 2010 from 82 in 2009.
Other players like Hyundai Motors and Honda Siel, too, have expanded their dealer network last year to capture demand from hinterland.
In two-wheelers, players like Hero Honda, Bajaj and TVS are well networked within the rural geographies. Despite an overall household penetration level of 45%, the two-wheeler industry continues to grow in double-digits due to demand from rural markets and shortening replacement cycle.
The UBS analyst said the epicentre of the two-wheeler demand is shifting to rural segment. “We believe industry split is now 50:50 for rural versus urban and likely to increase further in favour of rural given a large rural population (71% of total), where income growth is likely to drive growth for the two-wheeler sector,” it said.
Bajaj Auto, which already had 485 dealerships across the country, is adding 130 more to give a tough fight to Hero Honda’s strong rural network.
S Sridhar, president - motorcycle business of Bajaj Auto had earlier said, “Our competition is very well established in small villages with population of 5,000, which are connected to small towns. We have a lot of thrust in taking our dealerships to Tier-II towns.”
HS Goindi, president, marketing & sales, TVS Motor, said, “About 60% of the company’s business comes from rural and semi-urban buyers. The demand in this geography will continue to remain robust. But metros and small towns will also contribute significantly to the overall industry growth.”
Post Honda, Hero Group to split R&D unit into 4
The Hero Group plans to spruce up its research and development wing for bridging technology deficit following the severing of ties with Japan’s Honda Motors.
The company has decided to break up its research and development (R&D) wing into four independent verticals, which would look into product development, research, design and production.
The move comes amidst fears that although Hero Honda’s two-wheeler brands and marketing & distribution network can do well without Honda’s support, the technology gap could play the spoiler.
According to sources, the Munjals are looking at hiring expatriates for the new technology set-up. Hero Honda’s R&D associate vice-president Harjeet Singh would be heading this division and reporting directly to managing director Pawan Munjal.
Eventually, the group could also look at forging a technological alliance with another foreign partner.
“Hiring experienced expatriates would be the first step towards forging an alliance with a foreign partner. The strategy would be two pronged: sourcing technology from a third party while developing its own indigenous R&D network,” a company official told FE.
A company spokesperson, however, did not reply to an email query on the subject. Following Honda’s exit, analysts have maintained that the Hero Group would have to quickly identify a technology partner to be able to upgrade its emission norms to Bharat Stage 4, which would become mandatory for two-wheeler manufacturers by 2015. “The company still has four years to develop it. This would require heavy investments in R&D which could impact its bottom line in the short-run,” the official said.
As per the current understanding between Honda Motors and Hero, the technology pact would continue beyond 2014, however the royalty pay out would decrease gradually. In fact Hero would not be paying any royalty on the existing products after the deadline.
“The royalty going forward will be in line with what we pay now and we will not be paying any royalty on existing products after 2014,” Hero Honda chief financial officer Ravi Sud said last month during a conference call with analysts.
Angel Broking auto analyst Vaishali Jajoo said, “This is a sound step by the company. It needs to improve R&D soon to be able to maintain its dominant position in the market”.
The Hero Group is also revisiting its corporate strategy. While the company has lined up plans for exports under a new brand name, it is also looking at entering new product segments. As part of this strategy, Hero would first enter the three-wheeler segment and later launch small four-wheeled commercial vehicles. This would bring Hero in direct competition with Bajaj Auto, which is the market leader in the three-wheeler segment.
The company has decided to break up its research and development (R&D) wing into four independent verticals, which would look into product development, research, design and production.
The move comes amidst fears that although Hero Honda’s two-wheeler brands and marketing & distribution network can do well without Honda’s support, the technology gap could play the spoiler.
According to sources, the Munjals are looking at hiring expatriates for the new technology set-up. Hero Honda’s R&D associate vice-president Harjeet Singh would be heading this division and reporting directly to managing director Pawan Munjal.
Eventually, the group could also look at forging a technological alliance with another foreign partner.
“Hiring experienced expatriates would be the first step towards forging an alliance with a foreign partner. The strategy would be two pronged: sourcing technology from a third party while developing its own indigenous R&D network,” a company official told FE.
A company spokesperson, however, did not reply to an email query on the subject. Following Honda’s exit, analysts have maintained that the Hero Group would have to quickly identify a technology partner to be able to upgrade its emission norms to Bharat Stage 4, which would become mandatory for two-wheeler manufacturers by 2015. “The company still has four years to develop it. This would require heavy investments in R&D which could impact its bottom line in the short-run,” the official said.
As per the current understanding between Honda Motors and Hero, the technology pact would continue beyond 2014, however the royalty pay out would decrease gradually. In fact Hero would not be paying any royalty on the existing products after the deadline.
“The royalty going forward will be in line with what we pay now and we will not be paying any royalty on existing products after 2014,” Hero Honda chief financial officer Ravi Sud said last month during a conference call with analysts.
Angel Broking auto analyst Vaishali Jajoo said, “This is a sound step by the company. It needs to improve R&D soon to be able to maintain its dominant position in the market”.
The Hero Group is also revisiting its corporate strategy. While the company has lined up plans for exports under a new brand name, it is also looking at entering new product segments. As part of this strategy, Hero would first enter the three-wheeler segment and later launch small four-wheeled commercial vehicles. This would bring Hero in direct competition with Bajaj Auto, which is the market leader in the three-wheeler segment.
Mahindra to race against global players at MotoGP Championship
Mahindra & Mahindra is set to participate in this year’s FIM Road Racing World Championship, popularly known as MotoGP, with the first of the 18 races scheduled to begin in Qatar in March.
The $7.1-billion Mahindra Group is the second entrant in the motorcycle racing championship from India after Bangalore-based Ten10 Racing declared their entry through a tie-up with the San Marino-based WTR Team.
M&M participation in the race is aimed at making the brand name globally recognised. A group company, Mahindra Two Wheelers, recently marked its entry into the motorcycle category with the launch of a 110cc bike.
“The entry into the MotoGP gives us a great opportunity for brand building,” said Anoop Mathur, president, two wheeler sector.
The group’s entry into the race follows its acquisition of Engines Engineering of Italy, a company that has been constructing race bikes and providing specialised components and technical support for teams in MotoGP since 2003. The motorcycle has been designed and developed by the Italian two-wheeler specialist.
M&M has decided to go ahead with non-Indian riders for the race. Great Britain’s Danny Webb (20) and Germany’s Marcel Schrotter (18) will be the riders for Mahindra Racing, the team set up by the Mumbai-based group. This will be Webb’s fourth season with the 125cc category while it will be second for Schrotter.
The group, however, said it was scouting for Indian talents to ride for it in the following seasons after the upcoming one. Ten10 Racing, meanwhile, has gone ahead with the inclusion of one Indian rider in its line-up along with an Italian national.
Chennai’s Sarath Kumar (18) will make his debut in the 125cc class in the WTR-Ten10 Racing with his teammate Francesco Mauriello, the 125cc winner of Italian National 125cc Champion last year.
Mahindra is not be the only company to mark an entry into an international racing event like MotoGP. Liquor baron Vijay Mallya has been a part of the Formula One World Championship for the past few years through his racing team Force India. Tata Motors-owned luxury British brand Jaguar entered the 24 hours Le Mans race after a hiatus of 15 years with JaguarRSR team.
While India will hold its maiden Formula 1 race in October this year in New Delhi, the MotoGP races are to be held at 18 different venues globally.
The $7.1-billion Mahindra Group is the second entrant in the motorcycle racing championship from India after Bangalore-based Ten10 Racing declared their entry through a tie-up with the San Marino-based WTR Team.
M&M participation in the race is aimed at making the brand name globally recognised. A group company, Mahindra Two Wheelers, recently marked its entry into the motorcycle category with the launch of a 110cc bike.
“The entry into the MotoGP gives us a great opportunity for brand building,” said Anoop Mathur, president, two wheeler sector.
The group’s entry into the race follows its acquisition of Engines Engineering of Italy, a company that has been constructing race bikes and providing specialised components and technical support for teams in MotoGP since 2003. The motorcycle has been designed and developed by the Italian two-wheeler specialist.
M&M has decided to go ahead with non-Indian riders for the race. Great Britain’s Danny Webb (20) and Germany’s Marcel Schrotter (18) will be the riders for Mahindra Racing, the team set up by the Mumbai-based group. This will be Webb’s fourth season with the 125cc category while it will be second for Schrotter.
The group, however, said it was scouting for Indian talents to ride for it in the following seasons after the upcoming one. Ten10 Racing, meanwhile, has gone ahead with the inclusion of one Indian rider in its line-up along with an Italian national.
Chennai’s Sarath Kumar (18) will make his debut in the 125cc class in the WTR-Ten10 Racing with his teammate Francesco Mauriello, the 125cc winner of Italian National 125cc Champion last year.
Mahindra is not be the only company to mark an entry into an international racing event like MotoGP. Liquor baron Vijay Mallya has been a part of the Formula One World Championship for the past few years through his racing team Force India. Tata Motors-owned luxury British brand Jaguar entered the 24 hours Le Mans race after a hiatus of 15 years with JaguarRSR team.
While India will hold its maiden Formula 1 race in October this year in New Delhi, the MotoGP races are to be held at 18 different venues globally.
Royal Enfield to set up greenfield facility, ramp up existing capacity
Royal Enfield, the maker of Bullet motorcycles in the country and a unit of Eicher Motors Ltd, is planning to set up a new facility. The company has said the proposed facility would take care of the company’s requirements for the next 10 years.
Speaking at the sidelines of the ‘Sustaining Manufacturing Leadership of Tamil Nadu’ summit, organised by the Confederation of Indian Industry, Royal Enfield CEO, R L Ravichandran, said the company had decided on the new facility to meet growing demand and to bring down the waiting period, currently six months. While refusing to comment on the details of investment and capacity, he said the new facility will come in Tamil Nadu or Andhra Pradesh and the investment and location details will be decided in three months.
Besides this, greenfield facility, the company is also planning to ramp up its capacity at the Chennai plant by 20 per cent. "The investment on ramping up the capacity will be around Rs 25 crore," Ravichandran said. He added that in 2010, the company had sold 50,000 units and was likely to sell 65,000-70,000 units this year. The company’s turnover was Rs 500 crore and the growth has been 15 per cent, Ravichandran said.
Royal Enfield is also looking at increasing its exports to countries in Latin America, Africa and the West Asia, besides strengthening its presence in Europe and the US. Currently, exports contribute 6-7 per cent, Ravichandran said. Royal Enfield has, for long, dominated the 250 cc-and-above segment. According to the Society of Indian Automobile Manufacturers, an apex organisation representing vehicle and vehicle-engine manufacturers in the country, the total number of two wheelers sold between April and December 2010 was around 8.7 million units, of which Royal Enfield sold 38,458 units.
Speaking at the sidelines of the ‘Sustaining Manufacturing Leadership of Tamil Nadu’ summit, organised by the Confederation of Indian Industry, Royal Enfield CEO, R L Ravichandran, said the company had decided on the new facility to meet growing demand and to bring down the waiting period, currently six months. While refusing to comment on the details of investment and capacity, he said the new facility will come in Tamil Nadu or Andhra Pradesh and the investment and location details will be decided in three months.
Besides this, greenfield facility, the company is also planning to ramp up its capacity at the Chennai plant by 20 per cent. "The investment on ramping up the capacity will be around Rs 25 crore," Ravichandran said. He added that in 2010, the company had sold 50,000 units and was likely to sell 65,000-70,000 units this year. The company’s turnover was Rs 500 crore and the growth has been 15 per cent, Ravichandran said.
Royal Enfield is also looking at increasing its exports to countries in Latin America, Africa and the West Asia, besides strengthening its presence in Europe and the US. Currently, exports contribute 6-7 per cent, Ravichandran said. Royal Enfield has, for long, dominated the 250 cc-and-above segment. According to the Society of Indian Automobile Manufacturers, an apex organisation representing vehicle and vehicle-engine manufacturers in the country, the total number of two wheelers sold between April and December 2010 was around 8.7 million units, of which Royal Enfield sold 38,458 units.
India, Indonesia to begin talks on trade pact next week
India and Indonesia will formally begin negotiations towards entering into a Comprehensive Economic Cooperation Agreement (CECA) next week, when Indonesian President Susilo Bambang Yudhoyono visits New Delhi.
The pact could potentially open up one of the fastest growing Southeast Asian markets, and one of the only three G-20 nations with positive growth during the recession, along with India and China, for domestic firms.
Yudhoyono, who will be the chief guest at the Republic Day parade in the capital, along with Prime Minister Manmohan Singh is slated to jointly announce the commencement of talks for the CECA, Deputy Minister in Indonesia’s Coordinating Ministry for Economic Affairs Rizal Effendi Lukman told Business Standard .Senior officials in the Union Ministry of Commerce confirmed that the joint announcement would be made next week.
In November 2005, Singh and Yudhoyono had signed an MoU for establishing a joint study group (JSG) to examine the feasibility of a CECA. In a report in September 2009, the JSG backed the pact and mooted the formation of a bilateral trade negotiating committee on goods, services, investment and other areas of cooperation.
The India–Indonesia CECA will build on the Free Trade Agreement (FTA) that India already has with the ASEAN (Association of South East Asian Nations), the 10-member trade bloc that includes Indonesia, Malaysia, Philippines, Singapore and Thailand, Brunei, Myanmar, Cambodia, Laos, and Vietnam.
While Indonesia is already India’s third largest trading partner in the ASEAN, with bilateral trade of about $10 billion in 2008, the JSG in its report had suggested that trade could increase substantially with the reduction of trade barriers. By 2020, according to JSG estimates, India’s exports to Indonesia could reach up to $ 7.8 billion, while exports from Indonesia to India were likely touch $ 9.7 billion.
“For Indonesia, India is a strategic country, with a large population. We have a 50-yearold relationship that goes back to the Non-Aligned Movement. Now, we will look at beginning anew chapter, which is timely because Indonesia currently holds the chairmanship of ASEAN and is also a member of the G20,” Lukman said.
$15-bn agreements
Indonesia anticipated signing $14-15-billion deals with companies and local government, the deputy minister said. “About 70-80 Indonesian businessmen are going to New Delhi along with 10-15 members of local governments. We think about $1415 billion of cooperative pacts will be signed in total,” he said.
Yudhoyono is also scheduled to meet the brass of the Tata Group, Reliance and GVK.
Indian firms already have a substantial presence in the Southeast Asian nation. These include the Aditya Birla Group, Essar, Jindal Stainless, as well as twowheeler majors Bajaj and TVS. Additionally, in the resources sector, especially coal, there is an increased interest from domestic firms, as to look to bridge the demand-supply gap by acquiring resources in Indonesia, which is the world’s largest coal exporter.
Tata Power owns 30 per cent stake in the two largest coal mines in Indonesia, which it acquired in 2007 for about $1.1 billion, while last year, the Adani Group, India’s largest coal importer had decided to make a $1.65 billion investment to build a port and rail project in the country.
The pact could potentially open up one of the fastest growing Southeast Asian markets, and one of the only three G-20 nations with positive growth during the recession, along with India and China, for domestic firms.
Yudhoyono, who will be the chief guest at the Republic Day parade in the capital, along with Prime Minister Manmohan Singh is slated to jointly announce the commencement of talks for the CECA, Deputy Minister in Indonesia’s Coordinating Ministry for Economic Affairs Rizal Effendi Lukman told Business Standard .Senior officials in the Union Ministry of Commerce confirmed that the joint announcement would be made next week.
In November 2005, Singh and Yudhoyono had signed an MoU for establishing a joint study group (JSG) to examine the feasibility of a CECA. In a report in September 2009, the JSG backed the pact and mooted the formation of a bilateral trade negotiating committee on goods, services, investment and other areas of cooperation.
The India–Indonesia CECA will build on the Free Trade Agreement (FTA) that India already has with the ASEAN (Association of South East Asian Nations), the 10-member trade bloc that includes Indonesia, Malaysia, Philippines, Singapore and Thailand, Brunei, Myanmar, Cambodia, Laos, and Vietnam.
While Indonesia is already India’s third largest trading partner in the ASEAN, with bilateral trade of about $10 billion in 2008, the JSG in its report had suggested that trade could increase substantially with the reduction of trade barriers. By 2020, according to JSG estimates, India’s exports to Indonesia could reach up to $ 7.8 billion, while exports from Indonesia to India were likely touch $ 9.7 billion.
“For Indonesia, India is a strategic country, with a large population. We have a 50-yearold relationship that goes back to the Non-Aligned Movement. Now, we will look at beginning anew chapter, which is timely because Indonesia currently holds the chairmanship of ASEAN and is also a member of the G20,” Lukman said.
$15-bn agreements
Indonesia anticipated signing $14-15-billion deals with companies and local government, the deputy minister said. “About 70-80 Indonesian businessmen are going to New Delhi along with 10-15 members of local governments. We think about $1415 billion of cooperative pacts will be signed in total,” he said.
Yudhoyono is also scheduled to meet the brass of the Tata Group, Reliance and GVK.
Indian firms already have a substantial presence in the Southeast Asian nation. These include the Aditya Birla Group, Essar, Jindal Stainless, as well as twowheeler majors Bajaj and TVS. Additionally, in the resources sector, especially coal, there is an increased interest from domestic firms, as to look to bridge the demand-supply gap by acquiring resources in Indonesia, which is the world’s largest coal exporter.
Tata Power owns 30 per cent stake in the two largest coal mines in Indonesia, which it acquired in 2007 for about $1.1 billion, while last year, the Adani Group, India’s largest coal importer had decided to make a $1.65 billion investment to build a port and rail project in the country.
Bajaj Auto rejigs rural markting plan
Indias Second-Largest Two-Wheeler Maker Appoints 135 Dealers & Offers Finance To Customers Without Bank Accounts To Take On Hero Honda
BAJAJ Auto is going at full throttle to challenge market leader Hero Honda in rural and semi-urban markets that account for more than half of two-wheelers sold in the country.
The countrys second largest two-wheeler maker has appointed 135 dealers in small towns and mini metros,where it had only 25 dealers,and will offer special finance scheme for rural customers even if they have no bank account.We are reinventing our marketing and distribution strategy to keep up our growth momentum, said Bajaj Auto motorcycle business president S Sridhar.The key lies in addressing a bigger market, he added.
New dealerships will be operational by March end.Six out of every 10 new dealers are in small towns such as Hingoli in Maharashtras Nanded district,with the rest in mini metros such as Pune and Nagpur.
They will offer a special financing scheme backed by Bajaj Auto Finance with a direct cash collection facility.That is,customers need not provide post-dated cheques to avail of finance;they can pay the instalments in cash.
The loans will be given on the basis of trust and initial verification and there will be no collateral, Sridhar said.The company has already tried this out in select areas and,according to him,default rate is much less than in the post-dated cheque system.
Bajaj Auto is also considering a seasonal collection strategy for rural areas,Sridhar said.This would mean that instead of monthly instalments,rural customers can time their loan repayment to crop cycle,which is 2-3 months for rice and wheat.
Experts feel that the rural initiative will make an immediate impact on the companys business.Bajaj Auto will be able to improve its market share to more than 30% with the rural push, said Fortune Financials analyst Mahantesh Sabarad.But the rising input cost will put pressure on margins, he added.
At present,Bajaj Auto holds a 27% share in the two-wheeler market,dominated by Hero Honda with 54%share.Hero Honda does almost two-thirds of its sales in rural areas,while Bajajs most popular bike in rural areas,Discover,gets 45% of its sales from interior areas.
This number will increase soon.The new initiative will help Bajaj tap the huge potential in rural India much better.
Good rains,increasing crop productivity,high farm product prices have pushed disposable incomes up in rural India.So did the rural job guarantee scheme and development projects that also ensured improved accessibility.
Bajajs Sridhar expects rural markets to grow at a healthy pace for at least 10 years,as at present there are only 18 motorcycles in every 1,000 households in rural India.Motorcycle penetration in evolved markets in 50 vehicles per 1,000 households.
Bajaj Auto has appointed 135 new dealers in record time since making an announcement on November 24.A typical Bajaj dealership requires at least 1800 sq ft of showroom space and 2200 sq ft of workshop space,and will have about 50 employees.The investment on each dealership will be around.1.5 crore.
The new showrooms will have dedicated zones for the Pulsar and Discover,Sridhar said.Around 20% of the dealership space will be used to showcase technology.
Dealer owners and CEOs will undergo a familiarization and dealership management programme in the first week of March and there will be intense programme for sales and service training, he said.
Most new dealers will be in Maharashtra (around 19),Andhra Pradesh (18) and Tamil Nadu (12).The addition to existing 485 dealers will take Bajajs dealer network beyond 600.
Bajaj Auto reported a 46% growth during April-December by selling 17.97 lakh motorcycles,mostly Pulsar and Discover.The Pune based firm,which exited the 100cc segment two years ago,has set a growth target of 40% to clock four million units this year.
Some experts say that Bajajs margins may come under pressure due to increasing input costs.Margins are expected to be under pressure although the company has increased prices of its products to partially mitigate cost pressures, said India Infoline automobile analyst Jatin Chawla.
BAJAJ Auto is going at full throttle to challenge market leader Hero Honda in rural and semi-urban markets that account for more than half of two-wheelers sold in the country.
The countrys second largest two-wheeler maker has appointed 135 dealers in small towns and mini metros,where it had only 25 dealers,and will offer special finance scheme for rural customers even if they have no bank account.We are reinventing our marketing and distribution strategy to keep up our growth momentum, said Bajaj Auto motorcycle business president S Sridhar.The key lies in addressing a bigger market, he added.
New dealerships will be operational by March end.Six out of every 10 new dealers are in small towns such as Hingoli in Maharashtras Nanded district,with the rest in mini metros such as Pune and Nagpur.
They will offer a special financing scheme backed by Bajaj Auto Finance with a direct cash collection facility.That is,customers need not provide post-dated cheques to avail of finance;they can pay the instalments in cash.
The loans will be given on the basis of trust and initial verification and there will be no collateral, Sridhar said.The company has already tried this out in select areas and,according to him,default rate is much less than in the post-dated cheque system.
Bajaj Auto is also considering a seasonal collection strategy for rural areas,Sridhar said.This would mean that instead of monthly instalments,rural customers can time their loan repayment to crop cycle,which is 2-3 months for rice and wheat.
Experts feel that the rural initiative will make an immediate impact on the companys business.Bajaj Auto will be able to improve its market share to more than 30% with the rural push, said Fortune Financials analyst Mahantesh Sabarad.But the rising input cost will put pressure on margins, he added.
At present,Bajaj Auto holds a 27% share in the two-wheeler market,dominated by Hero Honda with 54%share.Hero Honda does almost two-thirds of its sales in rural areas,while Bajajs most popular bike in rural areas,Discover,gets 45% of its sales from interior areas.
This number will increase soon.The new initiative will help Bajaj tap the huge potential in rural India much better.
Good rains,increasing crop productivity,high farm product prices have pushed disposable incomes up in rural India.So did the rural job guarantee scheme and development projects that also ensured improved accessibility.
Bajajs Sridhar expects rural markets to grow at a healthy pace for at least 10 years,as at present there are only 18 motorcycles in every 1,000 households in rural India.Motorcycle penetration in evolved markets in 50 vehicles per 1,000 households.
Bajaj Auto has appointed 135 new dealers in record time since making an announcement on November 24.A typical Bajaj dealership requires at least 1800 sq ft of showroom space and 2200 sq ft of workshop space,and will have about 50 employees.The investment on each dealership will be around.1.5 crore.
The new showrooms will have dedicated zones for the Pulsar and Discover,Sridhar said.Around 20% of the dealership space will be used to showcase technology.
Dealer owners and CEOs will undergo a familiarization and dealership management programme in the first week of March and there will be intense programme for sales and service training, he said.
Most new dealers will be in Maharashtra (around 19),Andhra Pradesh (18) and Tamil Nadu (12).The addition to existing 485 dealers will take Bajajs dealer network beyond 600.
Bajaj Auto reported a 46% growth during April-December by selling 17.97 lakh motorcycles,mostly Pulsar and Discover.The Pune based firm,which exited the 100cc segment two years ago,has set a growth target of 40% to clock four million units this year.
Some experts say that Bajajs margins may come under pressure due to increasing input costs.Margins are expected to be under pressure although the company has increased prices of its products to partially mitigate cost pressures, said India Infoline automobile analyst Jatin Chawla.
CII portal to ease recruitment, training
Aimed at providing a common platform for industry and academia, industry body CII today entered into an agreement with city-based SurgeForth Technologies to launch a portal for the purpose.
The www.emplyabilitybridge.com will enable students to identify the type and number of vacancies available in companies which are members of the chamber.
"About 1,400 member companies of CII will be able to inform the academia about employee requirement and the kind of students they expect, depending on which we can provide access for students from Tier-II and III cities," Surgeforth Technologies Director Emmanuel Justus said.
CII Educational Panel Convenor, Vice-Chairman of TAKE Solutions H R Srinivasan and SurgeForth Technologies Director Ambalavanan Ramachandran exchanged documents on the occasion.
Read more: CII ties up for setting up job website - The Times of India http://timesofindia.indiatimes.com/tech/careers/job-trends/CII-ties-up-for-setting-up-job-website/articleshow/7312484.cms#ixzz1BSWabLlh
The www.emplyabilitybridge.com will enable students to identify the type and number of vacancies available in companies which are members of the chamber.
"About 1,400 member companies of CII will be able to inform the academia about employee requirement and the kind of students they expect, depending on which we can provide access for students from Tier-II and III cities," Surgeforth Technologies Director Emmanuel Justus said.
CII Educational Panel Convenor, Vice-Chairman of TAKE Solutions H R Srinivasan and SurgeForth Technologies Director Ambalavanan Ramachandran exchanged documents on the occasion.
Read more: CII ties up for setting up job website - The Times of India http://timesofindia.indiatimes.com/tech/careers/job-trends/CII-ties-up-for-setting-up-job-website/articleshow/7312484.cms#ixzz1BSWabLlh
Why Rajiv Bajaj believes 'less is actually more'
“Less is actually more,” says Mr Rajiv Bajaj, on his company's successful twin-brand strategy, which is expected to see it wrap up this fiscal with its highest ever profits, revenue and volume sales.
Bajaj Auto's vehicle numbers (including the ‘RE' branded three-wheelers) in the first three quarters are tipped to exceed the entire output of around 2.85 million units in 2009-10. The first quarter of this fiscal reported 9.2 lakh motorcycles and three-wheelers, going up to over a million units in Q2 and tipped to settle at around 9.5 lakh vehicles in Q3.
The company has targeted four million units for this fiscal, and its Managing Director is confident that the momentum is in place to achieve this objective.
Quite unlike earlier years when it had a slew of motorcycles in its kitty, Bajaj Auto has now settled for just two brands to act as the growth drivers.
Mr Bajaj makes a pointed reference to niche bike maker, Harley Davidson, whose market capitalisation is still higher than a Ford or General Motors which churn out a lot more vehicles. Harley, incidentally, continued to do well even as the US was falling apart, post-Lehman, in 2008.
‘No inflated figures'
Likewise, Bajaj Auto has made it clear that profitability is its most important objective where the brand focus has played a key role in generating revenue, planning a better product mix and assuring more pricing power. “When we fixed the target of four million vehicles for this fiscal, this number was conveyed to everyone concerned right from the management to suppliers and dealers. There were no inflated figures given to one lot and, by the end of the day, everyone was speaking the same voice,” Mr Bajaj said.
As in the case of homeopathy where “at one time, there is only a single remedy,” the company, likewise, focused on a single number. “We may end up exceeding or falling marginally short but the underlying message is that all of us jointly are giving our best shot to make this four million mark a reality,” he added.
Going forward, the company plans to hone this brand strategy even further at its dealerships, where the Pulsar and Discover will be the centre of gravity quite unlike the corporate brand. “Customers know what these bikes represent and we want to ensure that the brand message gets through strongly,” Mr Bajaj said.
Exports
The fact that exports account for over 25 per cent of its numbers only implies that Bajaj Auto's brand strategy is paying off in other geographies too.
While the sporty Pulsar holds pride of place in its product portfolio as the premium brand, the Discover has quickly emerged as a strong option in the commuter segment. Its positioning is critical because it is perceived as the ‘affordable' or ‘aspirational' Pulsar and this has helped spawn a new sporty-commuter product category.
Bajaj Auto's vehicle numbers (including the ‘RE' branded three-wheelers) in the first three quarters are tipped to exceed the entire output of around 2.85 million units in 2009-10. The first quarter of this fiscal reported 9.2 lakh motorcycles and three-wheelers, going up to over a million units in Q2 and tipped to settle at around 9.5 lakh vehicles in Q3.
The company has targeted four million units for this fiscal, and its Managing Director is confident that the momentum is in place to achieve this objective.
Quite unlike earlier years when it had a slew of motorcycles in its kitty, Bajaj Auto has now settled for just two brands to act as the growth drivers.
Mr Bajaj makes a pointed reference to niche bike maker, Harley Davidson, whose market capitalisation is still higher than a Ford or General Motors which churn out a lot more vehicles. Harley, incidentally, continued to do well even as the US was falling apart, post-Lehman, in 2008.
‘No inflated figures'
Likewise, Bajaj Auto has made it clear that profitability is its most important objective where the brand focus has played a key role in generating revenue, planning a better product mix and assuring more pricing power. “When we fixed the target of four million vehicles for this fiscal, this number was conveyed to everyone concerned right from the management to suppliers and dealers. There were no inflated figures given to one lot and, by the end of the day, everyone was speaking the same voice,” Mr Bajaj said.
As in the case of homeopathy where “at one time, there is only a single remedy,” the company, likewise, focused on a single number. “We may end up exceeding or falling marginally short but the underlying message is that all of us jointly are giving our best shot to make this four million mark a reality,” he added.
Going forward, the company plans to hone this brand strategy even further at its dealerships, where the Pulsar and Discover will be the centre of gravity quite unlike the corporate brand. “Customers know what these bikes represent and we want to ensure that the brand message gets through strongly,” Mr Bajaj said.
Exports
The fact that exports account for over 25 per cent of its numbers only implies that Bajaj Auto's brand strategy is paying off in other geographies too.
While the sporty Pulsar holds pride of place in its product portfolio as the premium brand, the Discover has quickly emerged as a strong option in the commuter segment. Its positioning is critical because it is perceived as the ‘affordable' or ‘aspirational' Pulsar and this has helped spawn a new sporty-commuter product category.
Life without 'Bajaj'
Rebranding is a difficult thing to do correctly, especially if you happen to be Bajaj Auto. Why, then, is the company taking such a drastic step? Bajaj Auto wants to force a change in direction to once again steal a lead on the competition. How? To start with, by dropping the family name from its communication. One can only imagine the behind-the-scenes deliberations at Bajaj Auto headquarters preceding the decision, but it is one that has provoked more than a few raised eyebrows.
Why? Because it is Bajaj Auto. A brand built on the Bajaj family name.
ndeed, the name ‘Bajaj’ has been an inextricable part of all Bajaj Auto communication over the decades. In 2001 Bajaj Auto introduced a refreshed version of the famed ‘Hamara Bajaj’ advertising whose earlier version had forged an emotional connect with the ‘average’ Indian and had firmly established its agency Lowe Lintas as a ‘creative’ powerhouse. The ad campaign, where one could see the entire range of new generation Bajaj models against the backdrop of new age consumers blending perfectly with Indian tradition and values, was again hailed as one of the agency’s finest.
With the tag line, ‘Badal rahein hain hum yahan’, it not only showcased the changes Bajaj Auto was making within the company but also showed the transformation that the two-wheeler industry was set to go through. This was also the time when consumers were beginning to favour motorcycles of rival Hero Honda known for their versatility and fuel-efficiency, ignoring the Bajaj Chetak, an iconic geared scooter, a champion in the 1980s.
Riding piggyback on the Bajaj brand, the Pune-based company, which is India’s second largest bike making firm, launched a slew of two-wheelers including motorcycles and gearless scooters over the next few years.
A decade on, Rajiv Bajaj, the enthusiastic mechanical engineer and managing director of Bajaj Auto, has envisaged a brighter future for the company, which he believes can be achieved only if the family name is dropped from all forms of communication.
Going forward the company will do away with the ‘Bajaj’ brand completely, paving way for branding by models in its stable. At present, two models dominate its portfolio — Pulsar, launched in 2001, and Discover, launched in 2004 — that have several variants at different price points. According to Bajaj, it is essential for a company like Bajaj Auto to separate its name from its models to ensure greater acceptability not just locally but in overseas markets such as Europe and the US.
Rajiv Bajaj says, “Today if you talk to people or go on Google they say that they wish to buy a ‘Hero Honda’ but when it comes to Bajaj the buyer will say that he wishes to buy a ‘Pulsar’ or ‘Discover’; he won’t say I want to buy a ‘Bajaj’. This tells me we have succeeded in separating and specialising (in branding)”.
Tried and tested
By putting the product brand before the company brand, Bajaj is treading the path chosen by consumer goods giants like Apple Inc, Hindustan Unilever, Kraft Foods Inc, among several others.
The marketing success of international automotive companies like Germany’s Volkswagen or Japan’s Toyota Motor Corporation that have several brands operating as independent entities, has also attracted Bajaj. He feels that both Pulsar and Discover are well established in the domestic market with a loyal customer base and no longer need the support of an umbrella brand like Bajaj Auto.
Analysts say this strategy may prove favourable for a company that has greater recall for its products built on their brand value rather than the equity of the company which manufactures them. Hero Honda, for instance, thrived on the success of the Splendor brand created more than a decade ago. More products were launched by the Delhi-based company and the current market leader riding on the success of Splendor and its derivatives over time.
“The success of Splendor and later Passion proved the tipping point for Hero Honda. Both the models were promoted as fuel-efficient bikes which, in turn, strengthened the Hero Honda brand. The company was thus able to venture into newer segments later ,” says an analyst from a Mumbai-based brokerage firm.
As far as Bajaj Auto is concerned, the two models, Pulsar and Discover, constitute 70 per cent of its total two-wheeler sales. Pulsar is positioned as a performance-oriented motorcycle serving mostly the younger buyers (referred internally as Krishna at Bajaj), who preferred a bit of style and zing in their vehicle of choice.
Discover, meanwhile, is promoted as a fuel-efficient bike and is targeted at the Splendor segment. This category of buyers (known internally as Rama) are often those who look for high mileage, lower maintenance costs and other add-on utilities in a bike, which is often their first.
Significant others
Bajaj Auto has two other brands in its portfolio — Platina and Avenger — but the intention is to focus more on the two volume generating models, according to Bajaj Auto officials.
“We produce the Platina and Avenger since there is a sustainable demand for them. Our focus, however, will remain on the Pulsar and Discover. We do not intend to add any more brands to the portfolio,” adds Bajaj.
While India remains the largest two-wheeler market in the world, manufacturers here don’t go for premium pricing with most motorcycles and scooters are in the affordable range with small engines.
The international markets will be the mainstay of the Bajaj strategy with the managing director going on record to state that he wants his company to become the largest two-wheeler manufacturer in the world with a significant share of the global market.
“The reason why Bajaj decided to focus on motorcycles is that we want to be a global player. We have no choice but to compete with global competition not only in our market but overseas market as well — from Chinese at the bottom to the Japanese in the middle to the European at the top,” adds Bajaj.
Bajaj intends to break into the league of European and Japanese companies like BMW, Piaggio (Aprilia), Ducati, Triumph, Honda, Yamaha and Suzuki with KTM Power Sports, Kawasaki and Bajaj itself.
For this too, the company believes, it will have to separate its brand from its products. KTM, the Austria-based auto company, where Bajaj Auto holds 38 per cent (through a subsidiary) and intends to have management control later, will play a crucial part in Bajaj’s global expansion strategy.
KTM will continue to have independent branding. Bajaj does not plan to lend its own brand to the Austrian bike maker, which in Europe enjoys a very distinct positioning.
Small beginning
Bajaj Auto has taken a few steps in the direction of doing away with the company’s branding on its product as the volume models no longer carry the Bajaj name. It will soon undertake a similar rebranding exercise throughout its massive sales and service outlets. The company will put its distribution set up through a complete overhaul and rebrand all consumer touch points, such as showrooms and service centres, on the lines of brands Pulsar and Discover.
Fitch, an international retail design agency which has also worked with entities such as the Nokia, HSBC, Coca-Cola, Tata Docomo to name a few, will help in upgrading the quality of Bajaj showrooms across the country.
The final blueprint of the new marketing plan for its 600-odd showrooms and 1,100 service outlets is in the works and should be ready by March or April this year. Dealers will be required to spend around Rs 1.75 lakh to upgrade their showrooms and service centres. A model dealership based on the new plan will be opened in some markets where existing dealers can experience the changes before they invest to employ a similar transformation.
This will collectively cost around Rs 21 crore for its dealers the strength of which will be 600 this year in addition to 1,100 service centres. The upgradation programme will also encompass the next generation of motorcycles comprising KTM, Kawasaki and Bajaj models that would be launched later this year.
Why? Because it is Bajaj Auto. A brand built on the Bajaj family name.
ndeed, the name ‘Bajaj’ has been an inextricable part of all Bajaj Auto communication over the decades. In 2001 Bajaj Auto introduced a refreshed version of the famed ‘Hamara Bajaj’ advertising whose earlier version had forged an emotional connect with the ‘average’ Indian and had firmly established its agency Lowe Lintas as a ‘creative’ powerhouse. The ad campaign, where one could see the entire range of new generation Bajaj models against the backdrop of new age consumers blending perfectly with Indian tradition and values, was again hailed as one of the agency’s finest.
With the tag line, ‘Badal rahein hain hum yahan’, it not only showcased the changes Bajaj Auto was making within the company but also showed the transformation that the two-wheeler industry was set to go through. This was also the time when consumers were beginning to favour motorcycles of rival Hero Honda known for their versatility and fuel-efficiency, ignoring the Bajaj Chetak, an iconic geared scooter, a champion in the 1980s.
Riding piggyback on the Bajaj brand, the Pune-based company, which is India’s second largest bike making firm, launched a slew of two-wheelers including motorcycles and gearless scooters over the next few years.
A decade on, Rajiv Bajaj, the enthusiastic mechanical engineer and managing director of Bajaj Auto, has envisaged a brighter future for the company, which he believes can be achieved only if the family name is dropped from all forms of communication.
Going forward the company will do away with the ‘Bajaj’ brand completely, paving way for branding by models in its stable. At present, two models dominate its portfolio — Pulsar, launched in 2001, and Discover, launched in 2004 — that have several variants at different price points. According to Bajaj, it is essential for a company like Bajaj Auto to separate its name from its models to ensure greater acceptability not just locally but in overseas markets such as Europe and the US.
Rajiv Bajaj says, “Today if you talk to people or go on Google they say that they wish to buy a ‘Hero Honda’ but when it comes to Bajaj the buyer will say that he wishes to buy a ‘Pulsar’ or ‘Discover’; he won’t say I want to buy a ‘Bajaj’. This tells me we have succeeded in separating and specialising (in branding)”.
Tried and tested
By putting the product brand before the company brand, Bajaj is treading the path chosen by consumer goods giants like Apple Inc, Hindustan Unilever, Kraft Foods Inc, among several others.
The marketing success of international automotive companies like Germany’s Volkswagen or Japan’s Toyota Motor Corporation that have several brands operating as independent entities, has also attracted Bajaj. He feels that both Pulsar and Discover are well established in the domestic market with a loyal customer base and no longer need the support of an umbrella brand like Bajaj Auto.
Analysts say this strategy may prove favourable for a company that has greater recall for its products built on their brand value rather than the equity of the company which manufactures them. Hero Honda, for instance, thrived on the success of the Splendor brand created more than a decade ago. More products were launched by the Delhi-based company and the current market leader riding on the success of Splendor and its derivatives over time.
“The success of Splendor and later Passion proved the tipping point for Hero Honda. Both the models were promoted as fuel-efficient bikes which, in turn, strengthened the Hero Honda brand. The company was thus able to venture into newer segments later ,” says an analyst from a Mumbai-based brokerage firm.
As far as Bajaj Auto is concerned, the two models, Pulsar and Discover, constitute 70 per cent of its total two-wheeler sales. Pulsar is positioned as a performance-oriented motorcycle serving mostly the younger buyers (referred internally as Krishna at Bajaj), who preferred a bit of style and zing in their vehicle of choice.
Discover, meanwhile, is promoted as a fuel-efficient bike and is targeted at the Splendor segment. This category of buyers (known internally as Rama) are often those who look for high mileage, lower maintenance costs and other add-on utilities in a bike, which is often their first.
Significant others
Bajaj Auto has two other brands in its portfolio — Platina and Avenger — but the intention is to focus more on the two volume generating models, according to Bajaj Auto officials.
“We produce the Platina and Avenger since there is a sustainable demand for them. Our focus, however, will remain on the Pulsar and Discover. We do not intend to add any more brands to the portfolio,” adds Bajaj.
While India remains the largest two-wheeler market in the world, manufacturers here don’t go for premium pricing with most motorcycles and scooters are in the affordable range with small engines.
The international markets will be the mainstay of the Bajaj strategy with the managing director going on record to state that he wants his company to become the largest two-wheeler manufacturer in the world with a significant share of the global market.
“The reason why Bajaj decided to focus on motorcycles is that we want to be a global player. We have no choice but to compete with global competition not only in our market but overseas market as well — from Chinese at the bottom to the Japanese in the middle to the European at the top,” adds Bajaj.
Bajaj intends to break into the league of European and Japanese companies like BMW, Piaggio (Aprilia), Ducati, Triumph, Honda, Yamaha and Suzuki with KTM Power Sports, Kawasaki and Bajaj itself.
For this too, the company believes, it will have to separate its brand from its products. KTM, the Austria-based auto company, where Bajaj Auto holds 38 per cent (through a subsidiary) and intends to have management control later, will play a crucial part in Bajaj’s global expansion strategy.
KTM will continue to have independent branding. Bajaj does not plan to lend its own brand to the Austrian bike maker, which in Europe enjoys a very distinct positioning.
Small beginning
Bajaj Auto has taken a few steps in the direction of doing away with the company’s branding on its product as the volume models no longer carry the Bajaj name. It will soon undertake a similar rebranding exercise throughout its massive sales and service outlets. The company will put its distribution set up through a complete overhaul and rebrand all consumer touch points, such as showrooms and service centres, on the lines of brands Pulsar and Discover.
Fitch, an international retail design agency which has also worked with entities such as the Nokia, HSBC, Coca-Cola, Tata Docomo to name a few, will help in upgrading the quality of Bajaj showrooms across the country.
The final blueprint of the new marketing plan for its 600-odd showrooms and 1,100 service outlets is in the works and should be ready by March or April this year. Dealers will be required to spend around Rs 1.75 lakh to upgrade their showrooms and service centres. A model dealership based on the new plan will be opened in some markets where existing dealers can experience the changes before they invest to employ a similar transformation.
This will collectively cost around Rs 21 crore for its dealers the strength of which will be 600 this year in addition to 1,100 service centres. The upgradation programme will also encompass the next generation of motorcycles comprising KTM, Kawasaki and Bajaj models that would be launched later this year.
Piaggio eyes Indian two-wheeler market
Italian two-wheeler company Piaggio & C spa, through its subsidiary in India - Piaggio Vehicles Private - will re-enter the country with its iconic brand of scooters, Vespa, in 2012 at the Auto Expo in New Delhi. Piaggio had launched the Vespa brand in India in the 1950s and then relaunched it in the 1960s, 1980s and 1990s in association with the Firodias first, and later with LML. This time, the company is coming on its own with a range of Vespa gearless scooters.
The company will be manufacturing the gearless scooters from its plant at Baramati in Maharashtra, which will have a capacity of 1.5 lakh units for scooters. The company said it is looking at 100% localisation on the scooters.
Ravi Chopra, chairman and managing director, Piaggio India, said, "We want to place Vespa as an iconic brand in India. We will start manufacturing of Vespa scooters in 2012." He added that the company is in the process of shortlisting the models it plans to bring to India. The largest market for the Vespa range is the European Union, followed by the US. There are around 17 million Vespas in the world. It is sold in around 100 countries across the globe.
Piaggio has spent euro 30 million on setting up the two-wheeler plant in Baramati, while around euro 60 million has been spent on setting up the engine plant in the same vicinity. The company has already started producing petrol engines for Vespa scooters at the plant, which it is currently exporting to Italy. "We are producing 125 cc and 50 cc Vespa engines at the moment and will later start producing for Indian market in 2012. The engine plant will also produce diesel engines including 1 litre and 1.2 litre. We have started exports of 1.2 litre diesel engine to Italy and will soon start production of 1 litre diesel engines for Indian requirement, for the four-wheeler planned for India."
Piaggio on Thursday showcased the Vespa LX 125 cc, expected to be the first from the Vespa range in India, its superbike Aprilia RSV4 in Mumbai. The Aprilia models are expected to be priced between Rs 13-18 lakh. The company plans to set up select company owned outlets to sell the Aprilia range in the country. The cities it is looking at include Mumbai, New Delhi, Hyderabad and Coimbatore, to mention a few. It would be available for bookings soon and it will take four to five months for the company to import the motorcycle as per orders, a senior official of the company said. The pricing of the Vespa is not yet decided by the company but said will be competitive in the market.
The company will be manufacturing the gearless scooters from its plant at Baramati in Maharashtra, which will have a capacity of 1.5 lakh units for scooters. The company said it is looking at 100% localisation on the scooters.
Ravi Chopra, chairman and managing director, Piaggio India, said, "We want to place Vespa as an iconic brand in India. We will start manufacturing of Vespa scooters in 2012." He added that the company is in the process of shortlisting the models it plans to bring to India. The largest market for the Vespa range is the European Union, followed by the US. There are around 17 million Vespas in the world. It is sold in around 100 countries across the globe.
Piaggio has spent euro 30 million on setting up the two-wheeler plant in Baramati, while around euro 60 million has been spent on setting up the engine plant in the same vicinity. The company has already started producing petrol engines for Vespa scooters at the plant, which it is currently exporting to Italy. "We are producing 125 cc and 50 cc Vespa engines at the moment and will later start producing for Indian market in 2012. The engine plant will also produce diesel engines including 1 litre and 1.2 litre. We have started exports of 1.2 litre diesel engine to Italy and will soon start production of 1 litre diesel engines for Indian requirement, for the four-wheeler planned for India."
Piaggio on Thursday showcased the Vespa LX 125 cc, expected to be the first from the Vespa range in India, its superbike Aprilia RSV4 in Mumbai. The Aprilia models are expected to be priced between Rs 13-18 lakh. The company plans to set up select company owned outlets to sell the Aprilia range in the country. The cities it is looking at include Mumbai, New Delhi, Hyderabad and Coimbatore, to mention a few. It would be available for bookings soon and it will take four to five months for the company to import the motorcycle as per orders, a senior official of the company said. The pricing of the Vespa is not yet decided by the company but said will be competitive in the market.
New Bikes coming soon!
Our wish-list for last year's Christmas was a bit longer than this,but never mind.For now we can work with this as we usher into the New Year and prepare for new motorcycle launches.If our horoscope is to be believed,it's going to rain motorcycles in 2011.In the coming months,the second largest two-wheeler market in the world will be graced with new bikes from various global firms including the Japanese pocketrockets,German giants,the American chrome-laden cruisers,exotic Italian beauties,some Korean wheels and also the return on the iconic Vespa scooters.Here is a list of hot new metal that we will be getting excited over for the next twelve months
BAJAJ AUTO
We all have got a first taste of the new breed of Pulsars to come our way with the baby Pulsar 135LS.Indigenously developed 4-valve head,engine employed as the stress-member and lightweight frame will be the highlights of the new Pulsar,which will also see a significant capacity increment than the current on-going Pulsar 220 DTSi.Expect the new biggest Pulsar of them all to be a globally competent quarter-litre performer at a handsome price benefit.
2011 PULSAR
EXPECTED: End 2011
PRICE: 1 - 1.5 lakh (ex-showroom )
HIGHLIGHT: The biggest Pulsar will be lighter, quicker and faster
HONDA MOTORCYCLE & SCOOTER INDIA
The all-new quarter-litre fun bike from the big H is undoubtedly one of the most eagerly awaited launches on 2011.Showcased in Thailand, the Honda CBR250R is a 249cc liquid-cooled 4-valve single cylinder motorcycle with absolutely gorgeous looks inspired by the large VFR1200F and has extremely road-friendly character. Easy to ride and weighing about 161kg this next-generation baby CBR packs in enough punch to give its rivals a good run for their money. Available in three colour schemes and an optional ABS variant, nationwide bookings for the Honda CBR250R have already commenced since December 2010 and Honda has stepped on the gas to offer the best possible value to the enthusiast bikers in India.
CBR250R
EXPECTED : April 2011
PRICE : 1.5 lakh (ex-showroom )
HIGHLIGHT : First CBR to be made out of Japan
YAMAHA
Yamaha has a few interesting launches planned for 2011.The Japanese major has been launching new products and upgrades consistently for past three years since it regained ground following the launch of the YZF-R 15 and the FZ-series and the recently launched SZ-series.For 2011,Yamaha will be launching the new upgraded YZF-R 15 in the month of January and the new bike is expected to have significant exterior changes as well as minor tweaks to the engine and a fatter rear tyre along with a split-seat setup.Also on cards are the Yamaha scooter models,the Fino,the BW125 and maybe the big burly Majesty powerscooter.
BW125
EXPECTED: Mid 2011
PRICE: 1 - 1.50 lakh (ex-showroom )
HIGHLIGHT: The R-One-Five gets split seat,fatter tyres and hopefully more power as well!
BAJAJ AUTO
We all have got a first taste of the new breed of Pulsars to come our way with the baby Pulsar 135LS.Indigenously developed 4-valve head,engine employed as the stress-member and lightweight frame will be the highlights of the new Pulsar,which will also see a significant capacity increment than the current on-going Pulsar 220 DTSi.Expect the new biggest Pulsar of them all to be a globally competent quarter-litre performer at a handsome price benefit.
2011 PULSAR
EXPECTED: End 2011
PRICE: 1 - 1.5 lakh (ex-showroom )
HIGHLIGHT: The biggest Pulsar will be lighter, quicker and faster
HONDA MOTORCYCLE & SCOOTER INDIA
The all-new quarter-litre fun bike from the big H is undoubtedly one of the most eagerly awaited launches on 2011.Showcased in Thailand, the Honda CBR250R is a 249cc liquid-cooled 4-valve single cylinder motorcycle with absolutely gorgeous looks inspired by the large VFR1200F and has extremely road-friendly character. Easy to ride and weighing about 161kg this next-generation baby CBR packs in enough punch to give its rivals a good run for their money. Available in three colour schemes and an optional ABS variant, nationwide bookings for the Honda CBR250R have already commenced since December 2010 and Honda has stepped on the gas to offer the best possible value to the enthusiast bikers in India.
CBR250R
EXPECTED : April 2011
PRICE : 1.5 lakh (ex-showroom )
HIGHLIGHT : First CBR to be made out of Japan
YAMAHA
Yamaha has a few interesting launches planned for 2011.The Japanese major has been launching new products and upgrades consistently for past three years since it regained ground following the launch of the YZF-R 15 and the FZ-series and the recently launched SZ-series.For 2011,Yamaha will be launching the new upgraded YZF-R 15 in the month of January and the new bike is expected to have significant exterior changes as well as minor tweaks to the engine and a fatter rear tyre along with a split-seat setup.Also on cards are the Yamaha scooter models,the Fino,the BW125 and maybe the big burly Majesty powerscooter.
BW125
EXPECTED: Mid 2011
PRICE: 1 - 1.50 lakh (ex-showroom )
HIGHLIGHT: The R-One-Five gets split seat,fatter tyres and hopefully more power as well!
TVS net profit surges 137%
Buoyed by an impressive performance across all segments coupled with sustained growth, two-wheeler major TVS Motor Company has reported a healthy 137% growth in net profit for the third quarter ended December 31, 2010 to Rs 55.75 crore as against Rs 23.54 crore during the same quarter of last financial year.
The revenue during the quarter under review shot up 51% to Rs 1,647 crore as compared to Rs 1,089 crore during the same quarter of last financial year. The profit before tax, during the quarter under review, grew by 177% from Rs 25.41 crore to Rs 70.29 crore in the current quarter. Cumulative profit after tax for nine months ended December 2010 grew at 128% from Rs 66.20 crore to Rs 150.90 crore.
Total two-wheeler sales of the company grew at 39% in the third quarter, increasing from 3.72 lakh units in the third quarter of the previous year.
The revenue during the quarter under review shot up 51% to Rs 1,647 crore as compared to Rs 1,089 crore during the same quarter of last financial year. The profit before tax, during the quarter under review, grew by 177% from Rs 25.41 crore to Rs 70.29 crore in the current quarter. Cumulative profit after tax for nine months ended December 2010 grew at 128% from Rs 66.20 crore to Rs 150.90 crore.
Total two-wheeler sales of the company grew at 39% in the third quarter, increasing from 3.72 lakh units in the third quarter of the previous year.
New era of competition beckons
It would be difficult at this stage to decide on which company could set a new trend in 2011: the BM Munjal controlled Hero group has bought off Honda Motors' 26 per cent stake in Hero Honda with a market value of nearly $2 billion, or i-GATE's purchase of Patni Computers.
Analysts would like to believe that the Hero-Honda divorce deal helps Honda strike out alone in the Indian market but by the same token it leaves the Hero group room to find its own identity in newer products such as three-wheelers.
What it has done is a trend-breaking acquisition after a year in which many Indian blue chip companies especially in the pharma sector walked up to the negotiating table and then ran to the bank.
AGAINST THE GRAIN
The Munjal-led Hero group split from Honda Motor after a marriage of 26 years in which it rode piggy-back on the Honda name; now it has put its money on the line for an independent existence as a competitive brand; in the bargain it pitches itself against the Japanese giant not just in India but globally.
Cut to the IT sector and what we have is another instance of assertion, not one Indian company against a global name but an outsider of sorts nibbling at the heels of the top five Indian IT companies, now increasingly exposed to headwinds from newcomers like Philippines.
When i-GATE's Phaneesh Murthy acquired Patni Computers he did more than turn his outfit into a billion dollar company knocking on heaven's door. He sounded the first tocsin for the guiding lights of India's IT ‘revolution'. i-GATE asserts a hope that India's IT sector will not become the ossified monolith that its manufacturing counterpart still is after all the liberalisation.
What has changed since the Monopoly Restrictive Trade Practices Commission's lethargic policing of an industrial landscape dominated by geriatric industry houses, other than the fact that it is now peopled by a smaller number of middle-aged industrial firms aging from a lack of competition in the domestic markets from below?
Consumers are what brands make them and Honda reigns supreme mainly because of its phonetic allure; with increasing standardisation what else distinguishes Toshiba from Phillips but the relative enchantments of their TV commercials? So when Hero decides to part ways it does something for that competitive spirit among producers that seems to have petered out in an age that glorifies it. Both Hero and i-GATE break the textual and rhetorical maze in which budding enterpreneurial possibilities invariably meet their anonymous fate in a placement in the top five. Not all the professors from American academe or the rash of Indian management schools can offer even the faintest clue as to what it takes for an entrepreneur to match the net worth of the Sensex 500. But capitalism's potential for individual enterprise has always lain in that possibility and someone like Facebook's inventor confirms that possibility.
But corporate India has always presented a dreary landscape of sameness; open the pages of some financial print media and the same faces stare out in bored arrogance or souped-up excitement shaking hands with a new minister of the environment.
What we witness in the Munjal-Hero buyout of Honda and the i-GATE purchase of Patni is more than just an assertion of Indian-ness, as if that mattered at all. What both reflect are the first gingerly steps towards a more dynamic corporate India, hopefully fluid in its constituency and with revolving doors.
RISK AVERSION
Why is it necessary, one might ask. For a nation of one billion and with a growing number of billionaires among industry, with Indian companies reaching out as global players, the record of inventiveness is pretty dismal; in large part, this is because of the same reason that allowed monopolies to flourish in the license raj: the aversion for risk, the comfort of success.
So long as the worship of the accomplished fact remains the abiding credo in mainline industry and in management schools among students, not all the Phaneesh Murthys and Munjals will change India's ossified climate for individual enterprise.
Analysts would like to believe that the Hero-Honda divorce deal helps Honda strike out alone in the Indian market but by the same token it leaves the Hero group room to find its own identity in newer products such as three-wheelers.
What it has done is a trend-breaking acquisition after a year in which many Indian blue chip companies especially in the pharma sector walked up to the negotiating table and then ran to the bank.
AGAINST THE GRAIN
The Munjal-led Hero group split from Honda Motor after a marriage of 26 years in which it rode piggy-back on the Honda name; now it has put its money on the line for an independent existence as a competitive brand; in the bargain it pitches itself against the Japanese giant not just in India but globally.
Cut to the IT sector and what we have is another instance of assertion, not one Indian company against a global name but an outsider of sorts nibbling at the heels of the top five Indian IT companies, now increasingly exposed to headwinds from newcomers like Philippines.
When i-GATE's Phaneesh Murthy acquired Patni Computers he did more than turn his outfit into a billion dollar company knocking on heaven's door. He sounded the first tocsin for the guiding lights of India's IT ‘revolution'. i-GATE asserts a hope that India's IT sector will not become the ossified monolith that its manufacturing counterpart still is after all the liberalisation.
What has changed since the Monopoly Restrictive Trade Practices Commission's lethargic policing of an industrial landscape dominated by geriatric industry houses, other than the fact that it is now peopled by a smaller number of middle-aged industrial firms aging from a lack of competition in the domestic markets from below?
Consumers are what brands make them and Honda reigns supreme mainly because of its phonetic allure; with increasing standardisation what else distinguishes Toshiba from Phillips but the relative enchantments of their TV commercials? So when Hero decides to part ways it does something for that competitive spirit among producers that seems to have petered out in an age that glorifies it. Both Hero and i-GATE break the textual and rhetorical maze in which budding enterpreneurial possibilities invariably meet their anonymous fate in a placement in the top five. Not all the professors from American academe or the rash of Indian management schools can offer even the faintest clue as to what it takes for an entrepreneur to match the net worth of the Sensex 500. But capitalism's potential for individual enterprise has always lain in that possibility and someone like Facebook's inventor confirms that possibility.
But corporate India has always presented a dreary landscape of sameness; open the pages of some financial print media and the same faces stare out in bored arrogance or souped-up excitement shaking hands with a new minister of the environment.
What we witness in the Munjal-Hero buyout of Honda and the i-GATE purchase of Patni is more than just an assertion of Indian-ness, as if that mattered at all. What both reflect are the first gingerly steps towards a more dynamic corporate India, hopefully fluid in its constituency and with revolving doors.
RISK AVERSION
Why is it necessary, one might ask. For a nation of one billion and with a growing number of billionaires among industry, with Indian companies reaching out as global players, the record of inventiveness is pretty dismal; in large part, this is because of the same reason that allowed monopolies to flourish in the license raj: the aversion for risk, the comfort of success.
So long as the worship of the accomplished fact remains the abiding credo in mainline industry and in management schools among students, not all the Phaneesh Murthys and Munjals will change India's ossified climate for individual enterprise.
LML, Act II
The attempts to revive the company show the pugnacious side of Deepak Kumar Singhania
Bhupesh Bhandari / New Delhi January 14, 2011, 0:42 IST
There is a current affairs magazine that comes to me every week. I haven’t subscribed to it; I guess the publisher has forgotten to remove me from the initial mailing list. What caught my attention in a recent issue was a full-page advertisement for LML NV four- and two-stroke scooters. The backdrop was yellow, the scooter was painted a vibrant red and the girl on the pillion seat was in a short black dress. There were three bits of information on the page: LML was India’s largest exporter of scooters, the four-stroke variant can run up to 86 km on a litre of petrol and the company offers warranty for three years or 30,000 km.
LML had fallen off the radar screen some years ago. There was simply no news from the company. The Society of Indian Automobile Manufacturers for long didn’t publish LML’s production numbers. Its promoter, Deepak Kumar Singhania, has kept a low profile for several years now. Rivals haven’t bothered to track it. Some months ago, in June and July 2010, the LML share price had climbed over 40 per cent from less than Rs 9 to close to Rs 13 on the buzz that TVS was in talks to acquire its assets — a factory in Kanpur. Trading volumes too had risen sharply. TVS as well as LML had denied the buzz. The share price has since then fallen to Rs 11 now, and the trading volumes too have thinned. The advertisement, done by Brand Curry, clearly shows that the company is trying to claw its way back into reckoning.
Here’s what’s happened. LML, till the late 1990s, was the Indian partner of Piaggio. It was the first serious threat to the hegemony of Bajaj Auto at a time when scooters sold more than motorcycles. Tata Motors Director Ravi Kant was the spearhead of its marketing team in Delhi. Piaggio exited in 1999 after an ugly spat with Mr Singhania. LML was now on its own. It diversified into motorcycles with technology bought from Daelim of South Korea. It even developed some models on its own. But the going was rough and the company got mired in losses. It was sent to the operating table of the Board for Industrial and Financial Reconstruction (BIFR).
Following some labour unrest, LML declared a lockout in March 2006, which was lifted only in January 2007. That is when the company began to take stock of the situation. While its forte was geared scooters, the market had moved en masse to gearless scooters. LML realised that geared scooters were a niche it could fill. As selling in the domestic market entails large marketing budgets, LML decided to restart operations with exports. It appointed distributors who would take care of the marketing. Company executives say 4,000 scooters sell every month under the LML badge in Europe as well as the US.
Two years later, LML decided to re-enter the domestic market. By then it had developed the four-stroke LML NV which gives fuel efficiency not very different from motorcycles. This is not easy. Unlike a motorcycle, the engine in a scooter is covered by a steel plate, which can cause heating. To control the temperature, a fan needs to be added; but this eats up a lot of energy and consequently reduces the fuel efficiency.
The higher fuel efficiency removed one roadblock from the mind of the consumers. The next step was to identify people who would buy a geared scooter. Market research showed that in spite of the trend towards gearless scooters, there were hardcore loyalists who still yearned for a rugged geared scooter which could help them in their work. These were identified as men above 35 who lived in large cities but were not metrosexual. Traders and shopkeepers fitted the bill.
In April 2009, LML launched its scooters in Delhi. The company claims that against the 4,500 gearless scooters sold every month in the city, it sells almost 1,500 geared scooters. Though the two products are strictly not comparable, this would mean it sells more than several leading scooter brands. It has eight dealers in the city, who have together created 14 touch points for the brand. Appointing dealers remains a problem though, because LML has no future glory to sell, thanks to its recent inglorious past.
In 2010, LML expanded to Punjab and some cities of western Uttar Pradesh. All told, the company claims that sales have hit 3,500 per month. Combined with exports, this gives volumes of 7,500 a month which translates to an annual run rate of 90,000. This doesn’t mean the company is out of the woods. It is yet to come out of the clutches of BIFR. But the volumes have given LML the confidence to draw up plans for gearless scooters and motorcycles (once again) sometime this year. A national rollout could take a while, though.
The attempts to revive the company show the pugnacious side of Mr Singhania. He had started Lohia Machines Ltd in 1975 with his cousin R K Lohia. When Mr Lohia left in 1984, Mr Singhania’s two brothers, Sitaram and Lalit, joined the company. Sitaram walked out in 1990. By then the company had become LML, and its fortunes were on the upswing. Then the fight with with Piaggio erupted. Mr Singhania, in the days after the fight, would often say that one good thing that came out of the spat was that he learned English. The lessons of his second fight, this time for survival, will be no less important.
Bhupesh Bhandari / New Delhi January 14, 2011, 0:42 IST
There is a current affairs magazine that comes to me every week. I haven’t subscribed to it; I guess the publisher has forgotten to remove me from the initial mailing list. What caught my attention in a recent issue was a full-page advertisement for LML NV four- and two-stroke scooters. The backdrop was yellow, the scooter was painted a vibrant red and the girl on the pillion seat was in a short black dress. There were three bits of information on the page: LML was India’s largest exporter of scooters, the four-stroke variant can run up to 86 km on a litre of petrol and the company offers warranty for three years or 30,000 km.
LML had fallen off the radar screen some years ago. There was simply no news from the company. The Society of Indian Automobile Manufacturers for long didn’t publish LML’s production numbers. Its promoter, Deepak Kumar Singhania, has kept a low profile for several years now. Rivals haven’t bothered to track it. Some months ago, in June and July 2010, the LML share price had climbed over 40 per cent from less than Rs 9 to close to Rs 13 on the buzz that TVS was in talks to acquire its assets — a factory in Kanpur. Trading volumes too had risen sharply. TVS as well as LML had denied the buzz. The share price has since then fallen to Rs 11 now, and the trading volumes too have thinned. The advertisement, done by Brand Curry, clearly shows that the company is trying to claw its way back into reckoning.
Here’s what’s happened. LML, till the late 1990s, was the Indian partner of Piaggio. It was the first serious threat to the hegemony of Bajaj Auto at a time when scooters sold more than motorcycles. Tata Motors Director Ravi Kant was the spearhead of its marketing team in Delhi. Piaggio exited in 1999 after an ugly spat with Mr Singhania. LML was now on its own. It diversified into motorcycles with technology bought from Daelim of South Korea. It even developed some models on its own. But the going was rough and the company got mired in losses. It was sent to the operating table of the Board for Industrial and Financial Reconstruction (BIFR).
Following some labour unrest, LML declared a lockout in March 2006, which was lifted only in January 2007. That is when the company began to take stock of the situation. While its forte was geared scooters, the market had moved en masse to gearless scooters. LML realised that geared scooters were a niche it could fill. As selling in the domestic market entails large marketing budgets, LML decided to restart operations with exports. It appointed distributors who would take care of the marketing. Company executives say 4,000 scooters sell every month under the LML badge in Europe as well as the US.
Two years later, LML decided to re-enter the domestic market. By then it had developed the four-stroke LML NV which gives fuel efficiency not very different from motorcycles. This is not easy. Unlike a motorcycle, the engine in a scooter is covered by a steel plate, which can cause heating. To control the temperature, a fan needs to be added; but this eats up a lot of energy and consequently reduces the fuel efficiency.
The higher fuel efficiency removed one roadblock from the mind of the consumers. The next step was to identify people who would buy a geared scooter. Market research showed that in spite of the trend towards gearless scooters, there were hardcore loyalists who still yearned for a rugged geared scooter which could help them in their work. These were identified as men above 35 who lived in large cities but were not metrosexual. Traders and shopkeepers fitted the bill.
In April 2009, LML launched its scooters in Delhi. The company claims that against the 4,500 gearless scooters sold every month in the city, it sells almost 1,500 geared scooters. Though the two products are strictly not comparable, this would mean it sells more than several leading scooter brands. It has eight dealers in the city, who have together created 14 touch points for the brand. Appointing dealers remains a problem though, because LML has no future glory to sell, thanks to its recent inglorious past.
In 2010, LML expanded to Punjab and some cities of western Uttar Pradesh. All told, the company claims that sales have hit 3,500 per month. Combined with exports, this gives volumes of 7,500 a month which translates to an annual run rate of 90,000. This doesn’t mean the company is out of the woods. It is yet to come out of the clutches of BIFR. But the volumes have given LML the confidence to draw up plans for gearless scooters and motorcycles (once again) sometime this year. A national rollout could take a while, though.
The attempts to revive the company show the pugnacious side of Mr Singhania. He had started Lohia Machines Ltd in 1975 with his cousin R K Lohia. When Mr Lohia left in 1984, Mr Singhania’s two brothers, Sitaram and Lalit, joined the company. Sitaram walked out in 1990. By then the company had become LML, and its fortunes were on the upswing. Then the fight with with Piaggio erupted. Mr Singhania, in the days after the fight, would often say that one good thing that came out of the spat was that he learned English. The lessons of his second fight, this time for survival, will be no less important.
TVS dominate Gulf Cup
Roaring sounds of bike engines, wet sludge flying around and smudging all in sight, is a delight for motorcycle connoisseurs and racing aficionados.
The 14 races of the Gulf Cup Dirt Track racing thrilled the Nashik crowds at the specially laid-out course by organisers Sportscraft at the Idgah Ground, Golf club, Trimbak Road.
The event began with Indian expert class foreign motorcycles upto 250cc group A race 1, which was won by KP Arvind. The racers showed why they are the category’s expert class by creating ‘frets’ from wet ground at the curves from the opening lap of the 13, which were utilised by all the competitors.
The novice class races had up to 15 competitors and produced great action for the gallery as the amateurs tried a number of manoeuvres to overtake their opponents at the turns. One of the unique races in event was the scooters up to 110cc race, which was won by Pinkesh Thakkar of Pune. Although the racers moved slower than the ones on the bikes, the very fact that they were racing on scooters made it an interesting watch.
R Prakash produced a stunning finale to the event by recovering from a tumble in the last couple of laps to finish first in the private expert class, foreign motorcycles up to 250cc.
Pradeep HK from TVS Racing Team was best in the Indian Expert class, winning both the Races in Indian Expert Group ‘B’ Motorcycle up to 260 cc 2 & 4 Stroke.
The team dominated the four Indian expert class categories, winning all three podium finishes in each.
The 14 races of the Gulf Cup Dirt Track racing thrilled the Nashik crowds at the specially laid-out course by organisers Sportscraft at the Idgah Ground, Golf club, Trimbak Road.
The event began with Indian expert class foreign motorcycles upto 250cc group A race 1, which was won by KP Arvind. The racers showed why they are the category’s expert class by creating ‘frets’ from wet ground at the curves from the opening lap of the 13, which were utilised by all the competitors.
The novice class races had up to 15 competitors and produced great action for the gallery as the amateurs tried a number of manoeuvres to overtake their opponents at the turns. One of the unique races in event was the scooters up to 110cc race, which was won by Pinkesh Thakkar of Pune. Although the racers moved slower than the ones on the bikes, the very fact that they were racing on scooters made it an interesting watch.
R Prakash produced a stunning finale to the event by recovering from a tumble in the last couple of laps to finish first in the private expert class, foreign motorcycles up to 250cc.
Pradeep HK from TVS Racing Team was best in the Indian Expert class, winning both the Races in Indian Expert Group ‘B’ Motorcycle up to 260 cc 2 & 4 Stroke.
The team dominated the four Indian expert class categories, winning all three podium finishes in each.
Hero Group set to finalise a new brand by March
Barely a month into its divorce from Honda Motor Co, Hero Group is already working on an independent brand strategy for itself.
The country's largest motorcycle maker is busy finalising an independent brand that it plans to initially test in the overseas markets.
The new brand is likely to be finalised in the current quarter ending March with the group launching its first product in the overseas markets by as early as the April-June quarter.
"They (Hero Group) are already working on it and it is most likely to be finalised by March," an industry source said on Wednesday.
He said the company initially wants to test the new brand in the overseas markets to gauge consumer response.
"Gradually, the brand would be introduced into the domestic market," he said.
Japan's Honda Motor Co and India's Hero Group ended their joint venture pact last month choosing to go separate ways after being together for 26 years. Although Hero Group has been allowed to use the Honda name till 2014, it will begin testing waters with the new brand as soon as possible so that the new brand is well in place by the 2014 deadline, the source said.
The company, in a recent communique to its component vendors, has asked them to be ready for a significant jack-up in the company's volumes as it forays into overseas markets.
It has informed its vendors that it may begin exporting vehicles by as early as first quarter of the next financial year.
"Their team is in place and so is their product strategy," the person familiar with the development said.
Despite being a leader in the domestic market by a fair margin, Hero Honda was never allowed to foray beyond Indian shores due to the joint venture pact with Honda Motor.
But while announcing the separation last month, managing director Pawan Munjal was very categorical in stating that the company was now free to try its luck in the overseas markets.
"There is a huge opportunity in the overseas markets and nothing stops Hero Honda to do well there. Even Bajaj Auto exports significant volumes," the person said.
During April-December, Bajaj Auto has sold almost a million vehicles in the overseas markets.
The source said Hero Honda is most likely to begin with the export of its popular Splendor and Passion models.
While Hero Honda sells the Splendor in three variants (125cc and 100cc), the Passion is sold in two variants with both 100cc engines.
"Bajaj's biggest export model is the Boxer and Hero Honda plans to pit the Splendor against it," the person said.
The source also said the company has revived its low-cost motorcycle plans post separation from the Japanese partner.
He said the company is developing a motorcycle model that would be priced at around `30,000 and would be mainly sold in the overseas markets.
"There is a huge opportunity for such a model in the Latin American markets," he said.
It has long been reported that a low-cost motorcycle was on Hero Honda's drawing books. However, the project had till now been put on the back burner.
These low-cost bikes would be equipped with smaller displacement engines—either a 75cc or a 100cc engine.
"The company is considering several options to compete with China made cheaper bikes," the person said adding that the motorcycle could share a number of components with the highly depreciated Splendor.
"The bike could very well be an off-shoot of the existing Splendor model," he said.
The country's largest motorcycle maker is busy finalising an independent brand that it plans to initially test in the overseas markets.
The new brand is likely to be finalised in the current quarter ending March with the group launching its first product in the overseas markets by as early as the April-June quarter.
"They (Hero Group) are already working on it and it is most likely to be finalised by March," an industry source said on Wednesday.
He said the company initially wants to test the new brand in the overseas markets to gauge consumer response.
"Gradually, the brand would be introduced into the domestic market," he said.
Japan's Honda Motor Co and India's Hero Group ended their joint venture pact last month choosing to go separate ways after being together for 26 years. Although Hero Group has been allowed to use the Honda name till 2014, it will begin testing waters with the new brand as soon as possible so that the new brand is well in place by the 2014 deadline, the source said.
The company, in a recent communique to its component vendors, has asked them to be ready for a significant jack-up in the company's volumes as it forays into overseas markets.
It has informed its vendors that it may begin exporting vehicles by as early as first quarter of the next financial year.
"Their team is in place and so is their product strategy," the person familiar with the development said.
Despite being a leader in the domestic market by a fair margin, Hero Honda was never allowed to foray beyond Indian shores due to the joint venture pact with Honda Motor.
But while announcing the separation last month, managing director Pawan Munjal was very categorical in stating that the company was now free to try its luck in the overseas markets.
"There is a huge opportunity in the overseas markets and nothing stops Hero Honda to do well there. Even Bajaj Auto exports significant volumes," the person said.
During April-December, Bajaj Auto has sold almost a million vehicles in the overseas markets.
The source said Hero Honda is most likely to begin with the export of its popular Splendor and Passion models.
While Hero Honda sells the Splendor in three variants (125cc and 100cc), the Passion is sold in two variants with both 100cc engines.
"Bajaj's biggest export model is the Boxer and Hero Honda plans to pit the Splendor against it," the person said.
The source also said the company has revived its low-cost motorcycle plans post separation from the Japanese partner.
He said the company is developing a motorcycle model that would be priced at around `30,000 and would be mainly sold in the overseas markets.
"There is a huge opportunity for such a model in the Latin American markets," he said.
It has long been reported that a low-cost motorcycle was on Hero Honda's drawing books. However, the project had till now been put on the back burner.
These low-cost bikes would be equipped with smaller displacement engines—either a 75cc or a 100cc engine.
"The company is considering several options to compete with China made cheaper bikes," the person said adding that the motorcycle could share a number of components with the highly depreciated Splendor.
"The bike could very well be an off-shoot of the existing Splendor model," he said.
Bajaj to restart Boxer sales to challenge CD Dawn
Bajaj Auto plans to restart sales of its Boxer motorcycle by April as itseeks to boost volumes for a second bid to challenge Hero Honda’s CD Dawn entry-level model.
“Boxer will be launched in the commuter space, where there is a strong boom,” chief executive (two-wheelers) of Bajaj Auto, S Shridhar, told Financial Chronicle, without giving the pricing and technical specifics of the model. “Pulsar and Discover will remain the focus brands for the time being. Boxer will initially start in a small way, while KTM (launch) will also happen soon,” Shridhar added.
The commuter segment is the bread and butter segment for two-wheelers and constitutes more than 60 per cent of the country’s total motorcycle sales that have expanded 24 per cent to 6.6 million units from April to December, according to Siam (Society of Indian Automobile Manufacturers). A company needs to have a strong product in the segment to have good market share, according to Abdul Majeed, auto practice leader at PwC. “Multinationals are also now gearing up to hit this segment, where Hero Honda and TVS are already strong,” he said.
Bajaj Auto had phased out the Boxer in 2007 and replaced it with the Platina, indicating that it wanted to offer more at a similar price. However, the Platina (Rs 35,300) failed to make much of an impact in the commuter segment against Hero Honda’s CD Dawn (Rs 33,500) and TVS’s Star City (Rs 39,200). It remains unclear whether Bajaj will continue to sell the Platina alongside the Boxer after its relaunch.
Industry officials in the know say that the Boxer would be priced below Hero Honda’s Splendour (Rs 42,000) with an engine capacity of around 125 cc. The company still exports a Boxer motorcycle variant to China, the world’s biggest motorcycle market.
Bajaj Auto’s main brands Pulsar (85,000 units per month) and Discover (130,000 units per month), available in many different engine options, jointly record sales of around 215,000 units a month on an average in the domestic market. However, in the third quarter, Bajaj lost market share marginally to Hero Honda as new launches fuelled the latter’s sales. Hero Honda holds more than 52 per cent of the two-wheeler market against Bajaj Auto’s 27 per cent.
“Going forward, Honda Motorcycle & Scooter India (HMSI) getting aggressive in the market is going to affect Bajaj Auto more towards the premium side, as Bajaj is getting higher sales from the premium segment. Hero Honda continues to be strongest in the entry-level segment,” senior research analyst Angel Broking Vaishali Jajoo said. HMSI plans launch to six models in 2011, starting with the CBR 250R sports bike in April at a starting price of Rs 1,50,000.
Bajaj is pinning hopes on Discover to topple Splendour, the largest selling motorcycle in the country, by March this year. It is going aggressive with ad campaigns to boost sales of Discover and aims at total monthly motorcycle sales (including exports) of over 300,000 units till March this year. It has forecast 2010-11 annual sales of four million units (including exports and three-wheelers). On the other hand, Hero Honda has been averaging over 400,000 monthly unit sales with the year’s forecast set at more than five million units.
Bajaj Auto, which holds 38 per cent stake in Austria’s off-road sports bike maker KTM Powersports, is also expected to launch the KTM Duke 125 cc motorcycle soon.
“Boxer will be launched in the commuter space, where there is a strong boom,” chief executive (two-wheelers) of Bajaj Auto, S Shridhar, told Financial Chronicle, without giving the pricing and technical specifics of the model. “Pulsar and Discover will remain the focus brands for the time being. Boxer will initially start in a small way, while KTM (launch) will also happen soon,” Shridhar added.
The commuter segment is the bread and butter segment for two-wheelers and constitutes more than 60 per cent of the country’s total motorcycle sales that have expanded 24 per cent to 6.6 million units from April to December, according to Siam (Society of Indian Automobile Manufacturers). A company needs to have a strong product in the segment to have good market share, according to Abdul Majeed, auto practice leader at PwC. “Multinationals are also now gearing up to hit this segment, where Hero Honda and TVS are already strong,” he said.
Bajaj Auto had phased out the Boxer in 2007 and replaced it with the Platina, indicating that it wanted to offer more at a similar price. However, the Platina (Rs 35,300) failed to make much of an impact in the commuter segment against Hero Honda’s CD Dawn (Rs 33,500) and TVS’s Star City (Rs 39,200). It remains unclear whether Bajaj will continue to sell the Platina alongside the Boxer after its relaunch.
Industry officials in the know say that the Boxer would be priced below Hero Honda’s Splendour (Rs 42,000) with an engine capacity of around 125 cc. The company still exports a Boxer motorcycle variant to China, the world’s biggest motorcycle market.
Bajaj Auto’s main brands Pulsar (85,000 units per month) and Discover (130,000 units per month), available in many different engine options, jointly record sales of around 215,000 units a month on an average in the domestic market. However, in the third quarter, Bajaj lost market share marginally to Hero Honda as new launches fuelled the latter’s sales. Hero Honda holds more than 52 per cent of the two-wheeler market against Bajaj Auto’s 27 per cent.
“Going forward, Honda Motorcycle & Scooter India (HMSI) getting aggressive in the market is going to affect Bajaj Auto more towards the premium side, as Bajaj is getting higher sales from the premium segment. Hero Honda continues to be strongest in the entry-level segment,” senior research analyst Angel Broking Vaishali Jajoo said. HMSI plans launch to six models in 2011, starting with the CBR 250R sports bike in April at a starting price of Rs 1,50,000.
Bajaj is pinning hopes on Discover to topple Splendour, the largest selling motorcycle in the country, by March this year. It is going aggressive with ad campaigns to boost sales of Discover and aims at total monthly motorcycle sales (including exports) of over 300,000 units till March this year. It has forecast 2010-11 annual sales of four million units (including exports and three-wheelers). On the other hand, Hero Honda has been averaging over 400,000 monthly unit sales with the year’s forecast set at more than five million units.
Bajaj Auto, which holds 38 per cent stake in Austria’s off-road sports bike maker KTM Powersports, is also expected to launch the KTM Duke 125 cc motorcycle soon.
Govt legalises modification of scooters for the disabled
The new year brings a small parcel of relief for the physically disabled who face problems in getting their modified twowheeler vehicles registered with the Regional Transport Office (RTO).On Tuesday,the state government gave its approval for TVS Motors Pvt Ltd to set up workshops or retrofitment centres across the state where physically disabled persons may modify their gearless scooters by adding two extra wheels in the rear.The RTOs will register those scooters that have been retrofitted in these workshops as they have been certified by Automobile Research Association of India (ARAI),Pune,for safety standards,a press release issued by the government said.
The move is long overdue as two-wheeler vehicles owned and modified for the use of disabled persons are not being registered for the last two years ever since the Central government passed a resolution in 2008.According to the resolution,modified gearless scooters may no longer be classified as invalid carriages and had to get their modification done from workshops certified by ARAI.
But when I had to get my vehicle retrofitted,I found out that there was not a single certified workshop in all of Tamil Nadu, said N Kamaraj,a resident of Pollachi whose modified vehicle remains unregistered even six months after the date of purchase.Neither were any of the manufacturers providing retrofitment services themselves.
But this order only brings partial relief for the disabled.The order only concerns buyers of TVS vehicles and will bring no relief to owners of vehicles of other brands.Of what use is this order to me asked Kamaraj,who owns a Honda Activa.Sources in the transport department say that they are hoping that this move will prompt other vehicle manufacturers to also come forward and apply for certification.
The order also does not make any provision for existing unregistered vehicles that have already been modified at local uncertified workshops.Existing modified TVS vehicles may have to get their modification done again at these TVS workshops as this is a question of safety standards, stated a transport official.
The provision,however,is not welcome to owners of modified vehicles.I paid Rs 42,000 for my TVS Scooty Pep+ and Rs 10,000 later to get it retrofitted at a workshop, said Naresh Kumar from Tiruchi district.I certainly cannot afford to cough up so much money again to get it remodified by a TVS centre.Why cant the RTO officials themselves inspect the already modified vehicles for safety parameters and give their own certification
The move is long overdue as two-wheeler vehicles owned and modified for the use of disabled persons are not being registered for the last two years ever since the Central government passed a resolution in 2008.According to the resolution,modified gearless scooters may no longer be classified as invalid carriages and had to get their modification done from workshops certified by ARAI.
But when I had to get my vehicle retrofitted,I found out that there was not a single certified workshop in all of Tamil Nadu, said N Kamaraj,a resident of Pollachi whose modified vehicle remains unregistered even six months after the date of purchase.Neither were any of the manufacturers providing retrofitment services themselves.
But this order only brings partial relief for the disabled.The order only concerns buyers of TVS vehicles and will bring no relief to owners of vehicles of other brands.Of what use is this order to me asked Kamaraj,who owns a Honda Activa.Sources in the transport department say that they are hoping that this move will prompt other vehicle manufacturers to also come forward and apply for certification.
The order also does not make any provision for existing unregistered vehicles that have already been modified at local uncertified workshops.Existing modified TVS vehicles may have to get their modification done again at these TVS workshops as this is a question of safety standards, stated a transport official.
The provision,however,is not welcome to owners of modified vehicles.I paid Rs 42,000 for my TVS Scooty Pep+ and Rs 10,000 later to get it retrofitted at a workshop, said Naresh Kumar from Tiruchi district.I certainly cannot afford to cough up so much money again to get it remodified by a TVS centre.Why cant the RTO officials themselves inspect the already modified vehicles for safety parameters and give their own certification
Royal Enfield may set up a manufacturing plant in Brazil
Royal Enfield, which makes the popular Bullet motorcycles, is mulling a manufac- turing presence in Brazil. The motorcycle making unit of Eicher Motors Ltd is evaluating a contract manufacturing route to having a presence in that country, said R.L. Ravi- chandran, board member and executive director at Eicher Motors.
Ravichandran spoke to Mint on the sidelines of a Society of Indian Automobile Manufac- turers (Siam) meeting and said a presence in Brazil would help the unit make inroads into the lucrative motorcycle market of Latin America.
Royal Enfield is in talks with some contract manufacturing firms in Brazil and expects to start the assembling unit in the next two years, he said, adding that it didn't make sense for a niche player in the motorcycle market such as Royal Enfield to invest in an independent unit in Brazil.
According to Abdul Majeed, automotive practice leader at audit and consulting firm PricewaterhouseCoopers In- dia, Latin America sees sales of 6-7 million motorcycles and scooters a year and is very sim- ilar to India.
Latin America is also an im- portant market for Bajaj Auto Ltd, the country's second largest motorcycle maker, which exports its vehicles to more than 30 countries.
Royal Enfield's Brazilian venture will also help the unit reduce the risks inherent in exporting to just the US and Europe like it currently does.
Lower demand in Europe has seen the unit's exports fall 60% in Decem- ber, albeit on a low base, according to data from industry body Siam.
The manufacturer of motor- cycles with a cult following in India and some parts of the world sold 5,326 bikes in the domestic market in the same month, a growth of 25% over a year ago.
Waiting periods for some models of Enfield are as long as six months and with no capacity at its Chennai fac- tory, this could contin- ue. Ravichan- dran said that even as Eicher looks at op- tions for a new factory either in Tamil Nadu or Andhra Pradesh, it is look- ing to implement efficiency measures that will help in- crease capacity from the cur- rent 50,000 bikes a year to 75,000.
Ravichandran spoke to Mint on the sidelines of a Society of Indian Automobile Manufac- turers (Siam) meeting and said a presence in Brazil would help the unit make inroads into the lucrative motorcycle market of Latin America.
Royal Enfield is in talks with some contract manufacturing firms in Brazil and expects to start the assembling unit in the next two years, he said, adding that it didn't make sense for a niche player in the motorcycle market such as Royal Enfield to invest in an independent unit in Brazil.
According to Abdul Majeed, automotive practice leader at audit and consulting firm PricewaterhouseCoopers In- dia, Latin America sees sales of 6-7 million motorcycles and scooters a year and is very sim- ilar to India.
Latin America is also an im- portant market for Bajaj Auto Ltd, the country's second largest motorcycle maker, which exports its vehicles to more than 30 countries.
Royal Enfield's Brazilian venture will also help the unit reduce the risks inherent in exporting to just the US and Europe like it currently does.
Lower demand in Europe has seen the unit's exports fall 60% in Decem- ber, albeit on a low base, according to data from industry body Siam.
The manufacturer of motor- cycles with a cult following in India and some parts of the world sold 5,326 bikes in the domestic market in the same month, a growth of 25% over a year ago.
Waiting periods for some models of Enfield are as long as six months and with no capacity at its Chennai fac- tory, this could contin- ue. Ravichan- dran said that even as Eicher looks at op- tions for a new factory either in Tamil Nadu or Andhra Pradesh, it is look- ing to implement efficiency measures that will help in- crease capacity from the cur- rent 50,000 bikes a year to 75,000.
Royal enfield to boost sales by 27% as waitlist grows
Enfield may set up second plant as demand outstrips supplyEnfield in the process of identifying a new location for a factory near the plant it has at Thiruvottiyur in Chennai
New Delhi: Royal Enfield, the Eicher Motors Ltd unit that makes the iconic Bullet motorcycle, may set up a second factory near Chennai to overcome capacity constraints that make it difficult for the company to meet demand.
It’s in the process of identifying a new location for a factory near the plant it has at Thiruvottiyur in Chennai, Royal Enfield’s chief operating officer Venki Padmanabhan said on the sidelines of the 50th annual convention of industry lobby group Society of Indian Automobile Manufacturers.
Royal Enfield has been unable to meet demand for its Classic 350 and 500 models, which were launched in November, with the waiting period extending to as much as nine months for some variants.
“We had earlier talked about expanding the current capacity but we realized recently, there’s no scope of further expansion,” Padmanabhan said.
The existing plant, which has been producing 55,000 bikes a year, can at the most be stretched to 70,000, he said.
“While the company is trying its best to deliver the bikes as fast as possible, it’s not bad to have a little demand-supply gap for a leisure, high-energy brand,” said Siddhartha Lal, managing director and chief executive at Eicher.
Enfield’s July domestic sales rose 10% to 4,775 units. The niche manufacturer plans to sell 100,000 units by 2012.
“It makes no sense to be expanding in a 50-year-old factory,” Padmanabhan said.
The Enfield paintshop, which has, at times, been unable to cope with the rush in demand, may be upgraded, he said. The company has been using the paint facilities of Kinetic Motor Co. Ltd and TiCycles, he said.
To squeeze out some more capacity, Enfield is adding another assembly line at the existing unit. This will start by November and could reduce the waiting period by at least one-third as capacity rises from 1,200 units to 1,500-1,800 a month, closing the gap with demand, which is currently at 2,000 bikes a month.
The new plant it’s considering, will have an investment of Rs200 crore, with an installed capacity of 250,000. Royal Enfield is looking to grow at 15% annually, and expects the factory to be utilized fully by 2020.
“Exports should be 10% of our volumes,” Padmanabhan said. “Today we are at 4%.”
To make its bikes Bharat Stage 3 emission compliant, Enfield is changing engines. It’s also preparing to roll out a new model every two years with more features and higher displacement. The company will launch the Cafe Racer model in 2012.
“Our customer profile now also includes those who have experienced the Hero HondaKarizma and BajajPulsar, besides cult bike lovers,” he said.
Even as it’s aiming to step up production more to meet the demand, Enfield is not interested in over-investing in capacity and does not believe in market share metrics, Lal said.
“We will always retain the essence of the brand,” he said.
New Delhi: Royal Enfield, the Eicher Motors Ltd unit that makes the iconic Bullet motorcycle, may set up a second factory near Chennai to overcome capacity constraints that make it difficult for the company to meet demand.
It’s in the process of identifying a new location for a factory near the plant it has at Thiruvottiyur in Chennai, Royal Enfield’s chief operating officer Venki Padmanabhan said on the sidelines of the 50th annual convention of industry lobby group Society of Indian Automobile Manufacturers.
Royal Enfield has been unable to meet demand for its Classic 350 and 500 models, which were launched in November, with the waiting period extending to as much as nine months for some variants.
“We had earlier talked about expanding the current capacity but we realized recently, there’s no scope of further expansion,” Padmanabhan said.
The existing plant, which has been producing 55,000 bikes a year, can at the most be stretched to 70,000, he said.
“While the company is trying its best to deliver the bikes as fast as possible, it’s not bad to have a little demand-supply gap for a leisure, high-energy brand,” said Siddhartha Lal, managing director and chief executive at Eicher.
Enfield’s July domestic sales rose 10% to 4,775 units. The niche manufacturer plans to sell 100,000 units by 2012.
“It makes no sense to be expanding in a 50-year-old factory,” Padmanabhan said.
The Enfield paintshop, which has, at times, been unable to cope with the rush in demand, may be upgraded, he said. The company has been using the paint facilities of Kinetic Motor Co. Ltd and TiCycles, he said.
To squeeze out some more capacity, Enfield is adding another assembly line at the existing unit. This will start by November and could reduce the waiting period by at least one-third as capacity rises from 1,200 units to 1,500-1,800 a month, closing the gap with demand, which is currently at 2,000 bikes a month.
The new plant it’s considering, will have an investment of Rs200 crore, with an installed capacity of 250,000. Royal Enfield is looking to grow at 15% annually, and expects the factory to be utilized fully by 2020.
“Exports should be 10% of our volumes,” Padmanabhan said. “Today we are at 4%.”
To make its bikes Bharat Stage 3 emission compliant, Enfield is changing engines. It’s also preparing to roll out a new model every two years with more features and higher displacement. The company will launch the Cafe Racer model in 2012.
“Our customer profile now also includes those who have experienced the Hero HondaKarizma and BajajPulsar, besides cult bike lovers,” he said.
Even as it’s aiming to step up production more to meet the demand, Enfield is not interested in over-investing in capacity and does not believe in market share metrics, Lal said.
“We will always retain the essence of the brand,” he said.
After subdued Nov, auto sales pick up in Dec
After a subdued November, domestic auto sales were back on track in December. Auto sales rose 30.5 per cent as cash discounts and other offers reignited consumer demand.
Total sales climbed to 1,305,872 units in December from 1,000,500 units a year earlier. In November, the industry had posted a 17.8 per cent rise.
The passenger vehicles category, comprising cars, sport utility vehicles (SUVs) and multi-purpose vehicles, reported the second-highest growth in the industry. Passenger vehicle sales rose 29.85 per cent to 193,685 units from 149,097 units a year ago.
Maruti Suzuki, the country’s largest car maker, logged the highest growth in terms of volume. It dispatched 26 per cent more at 89,469 units during December.
Similarly, Hyundai Motor India, the country’s second-biggest car maker, posted a 17.6 per cent rise in dispatches at 26,168 units, while Tata Motors, India’s third-largest car maker, dispatched 24,592 units, an increase of 30.3 per cent.
Two-wheeler sales rose the most in December at 1,006,545 units, a jump of 31.1 per cent over 767,796 units sold a year earlier. The growth was largely aided by Hero Honda and TVS Motors, which logged 32.8 and 45.7 per cent growth, respectively, in sales.
The Society of Indian Automobile Manufacturers (SIAM), the apex body of automobile manufacturers, emphasised the need for continuation of the excise duty benefit for a sustained development.
SIAM President Pawan Goenka said, “The automobile industry contributed 86 per cent more excise (to the government) than last year, accounting 26 per cent of the overall excise kitty. There is no need to roll back to the levels of the pre-stimulus package days.”
In an attempt to spruce demand, the government had reduced excise duty on compact cars to eight per cent from 12 per cent in 2008. This was later raised to 10 per cent during last years’ Budget when demand was on an upswing. Bigger cars and SUVs attract 22 per cent excise duty.
SIAM officials have already met finance ministry officials, according to Goenka. “We have had discussions with the government and are quite encouraged by the response and we have been promised that there would be a fair look at the points that we have raised,” said Goenka.
Commercial vehicle makers, too, posted a healthy growth of 27.3 per cent in December. They sold 61,880 units compared to 48,614 units a year earlier. Sales of passenger and commercial three-wheelers grew by 25.05 per cent to 43,762 units, against 34,993 units in the year-ago period.
Total sales climbed to 1,305,872 units in December from 1,000,500 units a year earlier. In November, the industry had posted a 17.8 per cent rise.
The passenger vehicles category, comprising cars, sport utility vehicles (SUVs) and multi-purpose vehicles, reported the second-highest growth in the industry. Passenger vehicle sales rose 29.85 per cent to 193,685 units from 149,097 units a year ago.
Maruti Suzuki, the country’s largest car maker, logged the highest growth in terms of volume. It dispatched 26 per cent more at 89,469 units during December.
Similarly, Hyundai Motor India, the country’s second-biggest car maker, posted a 17.6 per cent rise in dispatches at 26,168 units, while Tata Motors, India’s third-largest car maker, dispatched 24,592 units, an increase of 30.3 per cent.
Two-wheeler sales rose the most in December at 1,006,545 units, a jump of 31.1 per cent over 767,796 units sold a year earlier. The growth was largely aided by Hero Honda and TVS Motors, which logged 32.8 and 45.7 per cent growth, respectively, in sales.
The Society of Indian Automobile Manufacturers (SIAM), the apex body of automobile manufacturers, emphasised the need for continuation of the excise duty benefit for a sustained development.
SIAM President Pawan Goenka said, “The automobile industry contributed 86 per cent more excise (to the government) than last year, accounting 26 per cent of the overall excise kitty. There is no need to roll back to the levels of the pre-stimulus package days.”
In an attempt to spruce demand, the government had reduced excise duty on compact cars to eight per cent from 12 per cent in 2008. This was later raised to 10 per cent during last years’ Budget when demand was on an upswing. Bigger cars and SUVs attract 22 per cent excise duty.
SIAM officials have already met finance ministry officials, according to Goenka. “We have had discussions with the government and are quite encouraged by the response and we have been promised that there would be a fair look at the points that we have raised,” said Goenka.
Commercial vehicle makers, too, posted a healthy growth of 27.3 per cent in December. They sold 61,880 units compared to 48,614 units a year earlier. Sales of passenger and commercial three-wheelers grew by 25.05 per cent to 43,762 units, against 34,993 units in the year-ago period.
Post-split, Hero group to bring in 3-wheelers
The Hero group, which has agreed to buy out its Japanese partner Honda’s 26% stake in the two-wheeler joint venture Hero Honda, plans to enter the three-wheeler business, pitting itself against market leader Bajaj Auto.
The BM Munjal-controlled group may launch a passenger carrier followed by a commercial goods mover, according to people familiar with its strategy. These plans were discussed at a meeting with vendors in Delhi, the people said.
“The group is examining the option of re-engineering its bigger two-wheeler engines to make three-wheelers. We have been asked to prepare for the entry into three-wheelers and other segments,” said a Delhi-based vendor who attended the meeting. Executives from over 50 companies, which supply critical parts to Hero Honda, took part.
Hero Honda uses 150cc engines for premium bikes such as Hunk while its top-end model Karizma is fired by a 225cc engine. TVS Motors rode piggyback on its two-wheeler technology to venture into three-wheelers in 2007, helping it to spread costs.
The Hero group will start implementing these plans once it signs a definitive agreement with Honda Motor Company. The Hero Honda spokesperson said there were no immediate plans to enter the three-wheeler segment. Three-wheelers are referred to as autorickshaws in India.
“Under the proposed new arrangement, several opportunities may exist in terms of new segments and product categories, but currently there is no such plan on the anvil,” the Hero Honda spokesperson said.
Diversified businesses help rivals Bajaj Auto and TVS improve profitability and the Hero group will have to drive down the same road, analysts said. Bajaj Auto’s net profit margins are around 20% in the three-wheeler business, higher than 15-17% in the two-wheeler segment.
“Exports (of three-wheelers) fetch higher prices than in the domestic market, leading to better margins. Export volumes are steadily growing, helping players such as Bajaj and TVS to post better profitability,” said Vaishali Jajoo, Analyst with Mumbai-based Angel Broking.
Three-wheelers are mainly shipped to neighbouring countries such as Sri Lanka, Bangladesh, Nepal and South East Asia. Markets such as Africa are also showing buoyant growth, signalling rising prospects for exports.
Pune-based Bajaj Auto, which is Hero group’s biggest rival in the two-wheeler business, is the largest manufacturer and exporter of three-wheelers. It dominates the domestic market with 40% share followed by Italian major DiMaggio Vehicles, with 38%. The domestic market grew 18.4% to 3.39 lakh three-wheelers in this fiscal till November.
The existing pact with Honda Motor — which will soon be scrapped — did not allow the Hero group to manufacture three-wheelers and export products except to neighbouring countries
The BM Munjal-controlled group may launch a passenger carrier followed by a commercial goods mover, according to people familiar with its strategy. These plans were discussed at a meeting with vendors in Delhi, the people said.
“The group is examining the option of re-engineering its bigger two-wheeler engines to make three-wheelers. We have been asked to prepare for the entry into three-wheelers and other segments,” said a Delhi-based vendor who attended the meeting. Executives from over 50 companies, which supply critical parts to Hero Honda, took part.
Hero Honda uses 150cc engines for premium bikes such as Hunk while its top-end model Karizma is fired by a 225cc engine. TVS Motors rode piggyback on its two-wheeler technology to venture into three-wheelers in 2007, helping it to spread costs.
The Hero group will start implementing these plans once it signs a definitive agreement with Honda Motor Company. The Hero Honda spokesperson said there were no immediate plans to enter the three-wheeler segment. Three-wheelers are referred to as autorickshaws in India.
“Under the proposed new arrangement, several opportunities may exist in terms of new segments and product categories, but currently there is no such plan on the anvil,” the Hero Honda spokesperson said.
Diversified businesses help rivals Bajaj Auto and TVS improve profitability and the Hero group will have to drive down the same road, analysts said. Bajaj Auto’s net profit margins are around 20% in the three-wheeler business, higher than 15-17% in the two-wheeler segment.
“Exports (of three-wheelers) fetch higher prices than in the domestic market, leading to better margins. Export volumes are steadily growing, helping players such as Bajaj and TVS to post better profitability,” said Vaishali Jajoo, Analyst with Mumbai-based Angel Broking.
Three-wheelers are mainly shipped to neighbouring countries such as Sri Lanka, Bangladesh, Nepal and South East Asia. Markets such as Africa are also showing buoyant growth, signalling rising prospects for exports.
Pune-based Bajaj Auto, which is Hero group’s biggest rival in the two-wheeler business, is the largest manufacturer and exporter of three-wheelers. It dominates the domestic market with 40% share followed by Italian major DiMaggio Vehicles, with 38%. The domestic market grew 18.4% to 3.39 lakh three-wheelers in this fiscal till November.
The existing pact with Honda Motor — which will soon be scrapped — did not allow the Hero group to manufacture three-wheelers and export products except to neighbouring countries
Polo, Twister bag top honours at annual auto showcase
German-engineered compact car Volkswagen Polo today bagged the Business Standard Car of the Year award, while Honda’s economy motorcycle Twister was chosen Bike of the Year.
The Business Standard Motoring awards were given away at a glittering function attended by industry leaders in Mumbai. Adding a shot of glamour was actor Chitrangada Singh.
The awards, decided by a Jury comprising the Business Standard Motoring team and an external jury of motoring experts and motorsport drivers, past and present.
Competition within the new car segment, among all models launched in 2010, was the most intense with as many as 10 contenders for the top spot.
Launched in February last year, the Polo five-seat premium hatchback beat the Ford Figo, Toyota Etios, Nissan Micra, Tata Aria, Volkswagen Vento, Maruti Suzuki Wagon R, Chevrolet Beat, Skoda Yeti and BMW 5.
The Polo, with a sticker price of Rs 4.54 lakh, is Volkswagen's maiden attempt to break into the compact car segment, dominated by market leader Maruti Suzuki.
Honda’s 110cc entry-level CB Twister pipped to the post the TVS Motor Jive, a motorcycle with an auto clutch mechanism, and the Yamaha SZ-X. Formula-1 driver and motorsport personality Karun Chandhok handed over the award to Naresh K Rattan, general manager — sales & marketing, HMSI.
TVS Motor did not return empty handed. Its new launch, the 110cc automatic geared Wego bagged the Scooter of the Year award. Vinay Harne, president, new product initiatives, TVS Motor, received the trophy from one of the world’s most influential motorcycle journalists, Alan Cathcart, from the magazine Motorcyclist.
Chennai-based Ford Motor India received a Jury Special award for its volume-generating Figo compact car. The Jury Special award is given to the most significant car launch. Nigel Wark, executive director - marketing, sales & service, Ford India, collected the trophy from Chandhok.
The sports utility vehicle segment, which has seen a jump in domestic demand over the past two years, saw more additions last year. Hyundai’s most expensive model in India, the Santa Fe, walked away with the SUV of the Year award. Arvind Saxena, director - marketing & sales, Hyundai Motor India, received the award from Diwakar Gupta, executive director, State Bank of India.
The award for the Import Bike of the Year went to Harley-Davidson’s XL 1200N Nightster. The heavy-duty cruiser from the iconic American company had to battle it out against tough contenders like the Honda VFR 1200F, Suzuki GSX R-1000 and Bandit 1250S and the Yamaha FZ1.
After being on top of the sales charts for most of the year, German luxury carmaker BMW collected the Premium Car of the Year award for the 5 Series executive sedan. Rodney Woods, director-finance, BMW India, collected the trophy from A N Jha, general manager, Indian Oil Corporation.
While the title of Premium Sports Utility Vehicle of the Year was awarded to Porsche’s Cayenne, another German automaker, Mercedes Benz, bagged the Performance Car of the Year for the SLS AMG.
Volkswagen Motorsport won the Motorsport Excellence award for bringing about a degree of professionalism and popularising motorsport in India. Chacko of VW Group India and Prithviraj Siddappa, head of VW Motorsport, received the trophy from Cathcart, who is also a renowned motorcycle racer.
Paul de Voijs, managing director, Volvo Auto India, collected the Automotive Pioneer of the Year award for the XC60 SUV from SBI’s Diwakar Gupta. The SUV features an array of safety features rarely seen in cars sold in India.
The Business Standard Motoring awards were given away at a glittering function attended by industry leaders in Mumbai. Adding a shot of glamour was actor Chitrangada Singh.
The awards, decided by a Jury comprising the Business Standard Motoring team and an external jury of motoring experts and motorsport drivers, past and present.
Competition within the new car segment, among all models launched in 2010, was the most intense with as many as 10 contenders for the top spot.
Launched in February last year, the Polo five-seat premium hatchback beat the Ford Figo, Toyota Etios, Nissan Micra, Tata Aria, Volkswagen Vento, Maruti Suzuki Wagon R, Chevrolet Beat, Skoda Yeti and BMW 5.
The Polo, with a sticker price of Rs 4.54 lakh, is Volkswagen's maiden attempt to break into the compact car segment, dominated by market leader Maruti Suzuki.
Honda’s 110cc entry-level CB Twister pipped to the post the TVS Motor Jive, a motorcycle with an auto clutch mechanism, and the Yamaha SZ-X. Formula-1 driver and motorsport personality Karun Chandhok handed over the award to Naresh K Rattan, general manager — sales & marketing, HMSI.
TVS Motor did not return empty handed. Its new launch, the 110cc automatic geared Wego bagged the Scooter of the Year award. Vinay Harne, president, new product initiatives, TVS Motor, received the trophy from one of the world’s most influential motorcycle journalists, Alan Cathcart, from the magazine Motorcyclist.
Chennai-based Ford Motor India received a Jury Special award for its volume-generating Figo compact car. The Jury Special award is given to the most significant car launch. Nigel Wark, executive director - marketing, sales & service, Ford India, collected the trophy from Chandhok.
The sports utility vehicle segment, which has seen a jump in domestic demand over the past two years, saw more additions last year. Hyundai’s most expensive model in India, the Santa Fe, walked away with the SUV of the Year award. Arvind Saxena, director - marketing & sales, Hyundai Motor India, received the award from Diwakar Gupta, executive director, State Bank of India.
The award for the Import Bike of the Year went to Harley-Davidson’s XL 1200N Nightster. The heavy-duty cruiser from the iconic American company had to battle it out against tough contenders like the Honda VFR 1200F, Suzuki GSX R-1000 and Bandit 1250S and the Yamaha FZ1.
After being on top of the sales charts for most of the year, German luxury carmaker BMW collected the Premium Car of the Year award for the 5 Series executive sedan. Rodney Woods, director-finance, BMW India, collected the trophy from A N Jha, general manager, Indian Oil Corporation.
While the title of Premium Sports Utility Vehicle of the Year was awarded to Porsche’s Cayenne, another German automaker, Mercedes Benz, bagged the Performance Car of the Year for the SLS AMG.
Volkswagen Motorsport won the Motorsport Excellence award for bringing about a degree of professionalism and popularising motorsport in India. Chacko of VW Group India and Prithviraj Siddappa, head of VW Motorsport, received the trophy from Cathcart, who is also a renowned motorcycle racer.
Paul de Voijs, managing director, Volvo Auto India, collected the Automotive Pioneer of the Year award for the XC60 SUV from SBI’s Diwakar Gupta. The SUV features an array of safety features rarely seen in cars sold in India.
Bajaj to drop its Name
Come April, Rajiv Bajaj will remove the family name from the group flagship company’s products, showrooms and service centers
In just three months from now, ‘Hamara Bajaj’ could become ‘Hamara Pulsar’ or ‘Hamara Discover’. And the man presiding over this mega transition will be none other than a Bajaj himself – Bajaj Auto Managing Director Rajiv Bajaj.
The country’s second biggest two-wheeler maker with a market cap of Rs37,800 crore is undergoing the most radical change after the three-way split of the company nearly four years ago.
The rebranding exercise will see the removal of the Bajaj name which has so far had a pride of place in all its products, showrooms and service centers for over five decades.
The company has decided to overhaul its distribution set-up and rename all its consumer touch points to just Pulsar or Discover, its two most successful bikes. Dealers are already on board on the idea.
Fitch, an international retail design agency, will be in charge of the project. In India, Fitch has worked with entities such as the Aditya Birla Group, Boeing, Reliance ADAG, Tata Group, Microsoft and Vodafone, to name a few.
The idea, pursued aggressively by Chairman Rahul Bajaj’s elder son, is not too different from the strategies used by fast moving consumer goods giants like Hindustan Unilever, ITC or Procter & Gamble.
But it would certainly be a first by an Indian automotive company, which otherwise relies heavily on family names to promote its vehicles (Tata, Mahindra and TVS).
“Actually I don’t want that (Bajaj) name. We have already started the process so today on a Pulsar, the Bajaj name is seen only on the engine. The same is the case with Discover. Our three-wheeler has Bajaj in small font while the initial ‘RE’ is in much bigger font. One day, We will drop the Bajaj name from there also completely”, adds Bajaj.
Bajaj is trying to replicate the marketing success of international automotive companies such as Germany’s Volkswagen or Japan’s Toyota Motor Corporation which has multiple brands that are promoted heavily without the company’s name.
Likewise, Bajaj’s premier motorcycle brand Pulsar (launched in 2001) will continue to strengthen its image as a sporty and performance-oriented affordable motorcycle without banking on the Bajaj name.
The Pulsar's younger sibling Discover (launched in 2004) has been promoted as a high mileage, family bike.
Bajaj feels that both these brands are well established in the domestic market with loyal customers and no longer need the support of an umbrella brand like Bajaj Auto.
“Consumers know that the product is coming from Bajaj, just like I know my Audi is coming from Volkswagen. But there is no Volkswagen on the Audi product. This creates a perception that there is something more in the product” Bajaj adds.
Although the communication exercise through sales outlets to its prospective buyers will begin in three months, the company has already phased out the Bajaj branding from most of its products.
“I will make all efforts to make the bike a Pulsar and not a Bajaj. I will have Boxer, Discover and Pulsar and tomorrow KTM. There is no Bajaj name on any of them.
People will still remember this comes from Bajaj, but this too will go away with time. After five to 10 years, customers will remember Pulsar and Discover and not Bajaj”, he further adds.
A model dealership-based new plan will be launched in some regions where existing dealers can experience the changes before they invest to employ a similar transformation.
The entire exercise will cost the 600-odd dealers and 1,100 service centres around Rs21 crore collectively. The upgradation programme will also be extended to the next generation of motorcycles comprising KTM, Kawasaki and Bajaj models that would be launched this year.
Most of the new sales outlet addition is happening in small towns where demand for fuel efficient bikes is picking up sharply. About half the 175,000 Hero Honda Splendors sold every month come from the rural markets. The Splendor is one of the most fuel efficient bikes in India.
Meanwhile, Bajaj Auto may not be the only company which will take such a step. The promoter group of arch rival Hero Honda, which is the current market leader, is also looking to seek external assistance to promote its own brand, now that Honda has sought an exit.
The Munjal promoted group is looking to promote its own brand as ‘Hero’ after the separation. It has strong models like Splendor and Passion under its belt which have developed a strong following.
In addition, due to the relative unfamiliarity of the Hero brand name in the automotive world, it may be forced to promote existing brands. The group is talking to outside experts and consultants to chart a way forward.
In just three months from now, ‘Hamara Bajaj’ could become ‘Hamara Pulsar’ or ‘Hamara Discover’. And the man presiding over this mega transition will be none other than a Bajaj himself – Bajaj Auto Managing Director Rajiv Bajaj.
The country’s second biggest two-wheeler maker with a market cap of Rs37,800 crore is undergoing the most radical change after the three-way split of the company nearly four years ago.
The rebranding exercise will see the removal of the Bajaj name which has so far had a pride of place in all its products, showrooms and service centers for over five decades.
The company has decided to overhaul its distribution set-up and rename all its consumer touch points to just Pulsar or Discover, its two most successful bikes. Dealers are already on board on the idea.
Fitch, an international retail design agency, will be in charge of the project. In India, Fitch has worked with entities such as the Aditya Birla Group, Boeing, Reliance ADAG, Tata Group, Microsoft and Vodafone, to name a few.
The idea, pursued aggressively by Chairman Rahul Bajaj’s elder son, is not too different from the strategies used by fast moving consumer goods giants like Hindustan Unilever, ITC or Procter & Gamble.
But it would certainly be a first by an Indian automotive company, which otherwise relies heavily on family names to promote its vehicles (Tata, Mahindra and TVS).
“Actually I don’t want that (Bajaj) name. We have already started the process so today on a Pulsar, the Bajaj name is seen only on the engine. The same is the case with Discover. Our three-wheeler has Bajaj in small font while the initial ‘RE’ is in much bigger font. One day, We will drop the Bajaj name from there also completely”, adds Bajaj.
Bajaj is trying to replicate the marketing success of international automotive companies such as Germany’s Volkswagen or Japan’s Toyota Motor Corporation which has multiple brands that are promoted heavily without the company’s name.
Likewise, Bajaj’s premier motorcycle brand Pulsar (launched in 2001) will continue to strengthen its image as a sporty and performance-oriented affordable motorcycle without banking on the Bajaj name.
The Pulsar's younger sibling Discover (launched in 2004) has been promoted as a high mileage, family bike.
Bajaj feels that both these brands are well established in the domestic market with loyal customers and no longer need the support of an umbrella brand like Bajaj Auto.
“Consumers know that the product is coming from Bajaj, just like I know my Audi is coming from Volkswagen. But there is no Volkswagen on the Audi product. This creates a perception that there is something more in the product” Bajaj adds.
Although the communication exercise through sales outlets to its prospective buyers will begin in three months, the company has already phased out the Bajaj branding from most of its products.
“I will make all efforts to make the bike a Pulsar and not a Bajaj. I will have Boxer, Discover and Pulsar and tomorrow KTM. There is no Bajaj name on any of them.
People will still remember this comes from Bajaj, but this too will go away with time. After five to 10 years, customers will remember Pulsar and Discover and not Bajaj”, he further adds.
A model dealership-based new plan will be launched in some regions where existing dealers can experience the changes before they invest to employ a similar transformation.
The entire exercise will cost the 600-odd dealers and 1,100 service centres around Rs21 crore collectively. The upgradation programme will also be extended to the next generation of motorcycles comprising KTM, Kawasaki and Bajaj models that would be launched this year.
Most of the new sales outlet addition is happening in small towns where demand for fuel efficient bikes is picking up sharply. About half the 175,000 Hero Honda Splendors sold every month come from the rural markets. The Splendor is one of the most fuel efficient bikes in India.
Meanwhile, Bajaj Auto may not be the only company which will take such a step. The promoter group of arch rival Hero Honda, which is the current market leader, is also looking to seek external assistance to promote its own brand, now that Honda has sought an exit.
The Munjal promoted group is looking to promote its own brand as ‘Hero’ after the separation. It has strong models like Splendor and Passion under its belt which have developed a strong following.
In addition, due to the relative unfamiliarity of the Hero brand name in the automotive world, it may be forced to promote existing brands. The group is talking to outside experts and consultants to chart a way forward.
Honda puts bike market on notice with stiff targets
Honda plans to double motorcycle sales in India in the next 2-3 years through its wholly-owned arm, Honda Motorcycle & Scooter India (HMSI).
And if Japan’s Nikkei daily is to be believed, it will treble sales to 50 lakh units over five years.
Already, the company is targeting a 25% annual growth in sales this year to around 20 lakh units.
Clearly, the end of its decades-old joint venture with the Hero Group isn’t going to stop the world’s largest two-wheeler company (Honda) from going all out in the world’s largest two-wheeler market (India).
Not only is Honda rapidly adding capacity in India, but is also believed to be readying more bikes at the entry level, lower price band, which has till now been the forte of Hero Honda Motors.
It is also believed to be readying a game plan to penetrate the hinterland and smaller towns —something it could not do till now because of the joint venture.
HMSI officials had confirmed earlier that from sales of 12.7 lakh units (bikes and scooters) last fiscal, the company was gearing up to sell about 22 lakh units in the “next two-three years. The way demand is growing, we have been adding three lakh units every year anyway.”
A second manufacturing plant with six lakh unit annual capacity will come on stream in the second half of 2011, giving a further boost to HMSI’s presence in the two-wheeler market. It has already launched CB Twister, a 110 cc bike, which directly competes with Hero Honda’s products in the same segment.
When contacted, NK Rattan, HMSI’s operating head (sales & marketing), said, “Currently, we are operating at full capacity of 16 lakh units in Manesar… Our second factory (at Tapukara, Rajasthan) will be operational in second half of 2011 with initial capacity of six lakh units. This will take our total capacity to 22 lakh units… We expect to sell 20 lakh units this year. Then, with demand growth, we can expand the second factory to 12 lakh units in coming few years. So far, there is no concrete plan for further expansion.”
In a presentation on Honda’s global strategy recently for the next 10 years, Honda Motor Co’s CEO Takanobu Ito had pointed out that his company was targeting increased annual bike production capacity in Asia (excluding Japan) at 18 million units (from 16 million now) by 2011 end.
“Today, key competitors in those (emerging) markets are Chinese and Indian makers. In order for Honda to remain a market leader, it must not only maintain the high attractiveness and quality of products but also further improve cost-competitiveness to match the low prices of these competitors,” he had said.
And if Japan’s Nikkei daily is to be believed, it will treble sales to 50 lakh units over five years.
Already, the company is targeting a 25% annual growth in sales this year to around 20 lakh units.
Clearly, the end of its decades-old joint venture with the Hero Group isn’t going to stop the world’s largest two-wheeler company (Honda) from going all out in the world’s largest two-wheeler market (India).
Not only is Honda rapidly adding capacity in India, but is also believed to be readying more bikes at the entry level, lower price band, which has till now been the forte of Hero Honda Motors.
It is also believed to be readying a game plan to penetrate the hinterland and smaller towns —something it could not do till now because of the joint venture.
HMSI officials had confirmed earlier that from sales of 12.7 lakh units (bikes and scooters) last fiscal, the company was gearing up to sell about 22 lakh units in the “next two-three years. The way demand is growing, we have been adding three lakh units every year anyway.”
A second manufacturing plant with six lakh unit annual capacity will come on stream in the second half of 2011, giving a further boost to HMSI’s presence in the two-wheeler market. It has already launched CB Twister, a 110 cc bike, which directly competes with Hero Honda’s products in the same segment.
When contacted, NK Rattan, HMSI’s operating head (sales & marketing), said, “Currently, we are operating at full capacity of 16 lakh units in Manesar… Our second factory (at Tapukara, Rajasthan) will be operational in second half of 2011 with initial capacity of six lakh units. This will take our total capacity to 22 lakh units… We expect to sell 20 lakh units this year. Then, with demand growth, we can expand the second factory to 12 lakh units in coming few years. So far, there is no concrete plan for further expansion.”
In a presentation on Honda’s global strategy recently for the next 10 years, Honda Motor Co’s CEO Takanobu Ito had pointed out that his company was targeting increased annual bike production capacity in Asia (excluding Japan) at 18 million units (from 16 million now) by 2011 end.
“Today, key competitors in those (emerging) markets are Chinese and Indian makers. In order for Honda to remain a market leader, it must not only maintain the high attractiveness and quality of products but also further improve cost-competitiveness to match the low prices of these competitors,” he had said.