Financial Daily from THE HINDU group of publications
Saturday, Aug 03, 2002
`Kinetic group focus on broad portfolio paying off'
Ms Sulajja Firodia Motwani
BANGALORE, Aug 2
EVER since Kinetic Motors parted ways with Honda in 1998, it has been aggressively developing and launching new modelsat regular intervals, in a bid to retain customer interest and beat the competition.
Its erstwhile partner Honda has also been tasting success with the Activa and is all set to launch its second model.
However, Kinetic Motors appears unshaken by the competition.
Ms Sulajja Firodia Motwani, Director, Kinetic Motors and Joint Managing Director, Kinetic Engineering, spoke to Business Line about the company's strategy and what it took to bring a new model ever so often. Excerpts from the interview:
Was the strategy to launch new models every few months aimed at top of the mind recall and to keep the competition on its toes?
We have been launching many models in a very short span of time. After we parted ways with Honda in 1998, we began intense product development activity. For the past three years, we have invested a lot of time, money and effort into making products and they are now ready to be introduced in the market.
Our strategy is to have a wide range of products across all industry segments - from motorcycles, scooters to mopeds, and within each segment, to have a portfolio. We want to have a suitable transportation solution forevery customer. With that goal in mind, we have expanded our product portfolio; the focus is on the customer and his needs.
Some of your models like Nova and Zing have been produced in a matter of 14 months or so. How was this possible? What kind of work did it involve at the factories? It has indeed been a lot of work. However, our organisation structure has helped us a lot. For example, we have three separate R&D divisions - for scooters, motorcycles and mopeds. There are separate R&D chiefs, teams and resources for each of these groups.
Then we also have separate manufacturing plants - one for scooters near Pithampur, and another two for bikes and mopeds near Pune.
For marketing, we have followed a clever distribution strategy of regional launches. For example, we started Nova launch in the West, Boss launch in the North and Zing's launch in Banglore, which minimised product launch overlap in many cities.
A tremendous amount of hard work has been involved from the company's side as well as the dealers' side.
Your (Kinetic Motors) sales turnover and net profit have actually gone down this fiscal (Rs 376.92 crore in 2001-02 as compared to Rs 423.01 crore in 2000-01 and a net profit of Rs 14.20 crore in 01-02 as against Rs 15.91 crore in 00-01) despite the launch of new models. Why?
It is true that our turnover was down a bit last year, but our scooter product launches have only happened now or towards the end of last year.
We began Nova launch in a small way in Madhya Pradesh in March and only now we are present in twelve States.
Zing launch has only just started. Hence, the benefit of these product launches was not received in the last financial year.
Also, if you look at last three year's data, our sales have grown manifold and profitability has more than tripled. I am confident that with Nova and Zing, we will regain our growth figures this year
You have been winning export awards for nine consecutive years and you have been exporting to many countries in Europe, America, Asia, Australia and West Asia.
But much of the export has been of Pride to Australia/US/Canada and Europe while to Africa and West Asia, Safari has topped. Any particular reasons for the popularity of these models in these regions?
Some of it has to do with homologation requirements, emission norms and import regulations of each country. For example, in the US, we sell Style with a 49 cc engine (which we do not sell here) and Luna TFR with a 49 cc engine again because for engines under 50 cc, the homologation process is simple and the user does not need registration or a special licence.
Mopeds are popular across the world as simple and economical vehicles, which can be easily self-maintained.
Which are the newer models you hope to export. There is already talk of export of Nova... What do you hope to achieve here?
We have started exports of all our new models - Challenger, Nova, GF and Boss.
We are tapping markets in Asia, South America, Africa, Central America and Europe for these. With four-stroke vehicles, a lot of new markets are also open to us, particularly in Europe and Australia, and we are going after them aggressively now.
Kinetic Motors is known more as a scooter company. So how has your foray into motorcycles been?
In scooters, we have sixteen years of history. Motorcycles is a new segment for us, and we have slowly been building our portfolio. Challenger has served us well as our entry vehicle in the segment... we've sold over 60,000 bikes. GF 125 has done well as our presence in the high-performance, high-styling category. It is liked for its looks and breakthrough technology of four-valve engines.
Boss will be our big volume earner; it has already done well wherever it has been launched (only selectively launched so far).
And the GF 150 will soon be available. With this, we have a strong product portfolio in motorcycles and we will establish our presence in this year.
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