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CEAT to supply tyres for Nissan Magnite

Tyre maker CEAT on Wednesday said it has partnered Nissan Motor for supplying tyres for the Japanese carmaker’s newly-launched subcompact SUV Magnite.

The compact SUV market in India is set to grow exponentially in the coming years, and CEAT has best in class product offering in this segment, the company said in a release.

“CEAT will be supplying the SecuraDrive range of tyres for all models of the Nissan Magnite. The Magnite launch would happen for five models,” CEAT Tyres Ltd said.

The company said its ‘SecuraDrive’ tyres have been specially designed for the premium sedan segment and compact SUVs like the Nissan Magnite. The tyre performance has been validated by Nissan Japan, it said.

“The compact SUV market is set to exponentially grow in India in the coming years and with SecuraDrive range, CEAT has best in class product offering in this segment. We are elated to announce our association with Nissan’s new SUV Magnite as the OE fitment partner,” CEAT Tyres Chief Marketing Officer Amit Tolani said.

The tyres come with optimised tread patterns that help in lowering tyre noise, CEAT said.

Earlier on Wednesday, Nissan Motor India entered the highly competitive compact SUV segment in the country with the launch of Magnite at an introductory starting price of Rs 4.99 lakh (ex-showroom Delhi).

The model, which comes with both manual and automatic transmissions, will compete with the likes of Maruti Vitara Brezza, Hyundai Venue, Tata Nexon, Kia Sonet, Mahindra XUV300 and Honda WR-V.

Honda Motorcycle & Scooter India July sales rise 20 pc to 3,85,533 units

Honda Motorcycle & Scooter India (HMSI) on Tuesday reported a 20 per cent rise in total sales at 3,85,533 units in July. The company had sold 3,21,583 units in the same month last year.

Domestic sales last month stood at 3,40,133 units, as against 3,09,332 units in July 2020, a growth of 10 per cent.

“Gradually ramping up production while monitoring the market situation, Honda‘s sales momentum continues to accelerate with July month reaching closer to 4 lakh unit mark,” HMSI Director – Sales & Marketing Yadvinder Singh Guleria said in a statement.

He further said, “with the majority of our dealer network resuming operations across the country, a sharp surge in enquiries for scooters followed by motorcycles is being witnessed. Backed by a good monsoon, increasing preference for personal mobility and upcoming festival season, we expect faster recovery for the market.”

HMSI said its exports last month stood at 45,400 units, as against 12,251 units in July 2020, the company said.

Bajaj takes a dig at Hero’s Passion & Splendor in its latest advertisement for Discover 125

NEW DELHI: “We have not yet beaten Bajaj,” said Brijmohan Lall Munjal, “they’ve just been overtaken by us.” This was in 2001, when the reticent Munjal family patriarch and chairman of Hero Honda understated the fact that his company sold more two-wheelers than

Bajaj Auto

.

Fast forward to 2012.

The latest TV commercial for Discover 125 takes a veiled dig at Hero‘s flagship brands Passion and Splendor as the old bonhomie between two industrial giants gives way to no-holds-barred marketing strategy in a fiercely competitive market.

Bajaj Auto MD Rajiv Bajaj says the advertisement reflects a strategic repositioning and it’s not about Hero. “Our campaign is based on a consumer research interpretation and has nothing to do with taking on Hero,” he says.

That’s the official line. But most people who have watched the commercial feel it’s unmistakably targeted at

Hero MotoCorp

, the new entity formed after the Munjal-family owned Hero bought out its 27-year long partner Honda last year.

Industry watchers say the breakup with Honda has weakened the market leader in the world’s second-largest two-wheeler market and Bajaj Auto wants to make the most of it.

“Now Hero is without the safety helmet of Honda,” says Prathap Suthan, chief creative officer of iYogi, a global remote tech support company. “So it is the best time for Bajaj to inflict maximum damage on the leader that is weak and vulnerable,” adds the man who created the government’s ‘India Shining’ and ‘Incredible India’ campaigns.

KYUN, HERO?
The advertisement shows three men owning different commuter bikes (seen in the background) say they always desired Discover 125, but settled for something lesser to satisfy father or wife, or to avoid annoying boss.

They sound apologetic and wistful about their bikes. When they name them, a bleep sinks their voice, but it leaves enough for viewers to guess they are referring to Hero’s Splendor or Passion. “Discover nahin hai, par chalta hai,” each of them says. And the commercial, created by Ogilvy & Mather, ends with voice over, “Discover 125, ye chalta nahin, daudta hai.”

The only previous time a Bajaj commercial took on Hero Honda was back in the early 1990s when a campaign for its 4s Champion teased Hero Honda with a tagline, “Kyun Hero?”

Bajaj Auto President, Motorcycles, K Srinivas claims that the advertisement does not take a dig at any rival, but wouldn’t comment on the bleep sound.

DOING A

BMW


Rajiv Bajaj says his company wants to do what luxury carmaker BMW did when it entered the US 30 years ago-reposition the leader. “Mercedes was already an established player. So BMW said that Mercedes is the ultimate sitting machine while BMW is the ultimate driving machine,” he says.

Now Bajaj wants to do something similar. “As part of an internal discussion, we felt that if you are not a leader, position yourself and re-position the leader by projecting yourself as the opposite of a leader… that’s what we are doing,” says Bajaj.

With Discover 125, Bajaj seeks a large chunk in the biggest segment of the two-wheeler market. Discover competes in the executive commuter segment-or bikes in Rs 40,000-50,000 price range-that accounts for two-thirds of the two-wheeler market that sells more than a million units a year. This segment is dominated by Splendor and Passion.

But that may soon change.

BATTLE ROYALE
“Splendor and Passion have not changed at all over the last few years, except maybe a tweak in graphics,” says Zigwheels Editor Adil Jal Darukhanawala. “They are heading the way Bajaj Chetak did,” he adds.

One of the most popular scooters ever in the country, Chetak was discontinued in 2009.

Analysts say Hero is grappling on technology front after the exit of Honda and this opens up the largest segment to competitors like Bajaj Auto and Honda Motorcycle & Scooter India that plan aggressive model refurbishment and new launches.

“For the first time in a decade, Bajaj is sniffing an opportunity to challenge the numero uno,” says Saurabh Uboweja, director of brand consulting firm Brands of Desire. He says Bajaj’s take on Hero MotoCorp is deliberate and well timed. “By projecting buyers of Hero bikes as meek and compromising, Bajaj is also highlighting the weaknesses of Hero MotoCorp-withdrawal of Honda and its tech platform.”

Without Honda, Hero might struggle to launch path-breaking products like it did in the past.

Agrees Darukhanawala: “Hero has money but no technology. This is something that Bajaj is going to take advantage of with its slew of new models blitzkrieg that it has lined up this year.”

The Discover ad is in line with Bajaj Auto’s aggressive stance in the market. Last year, one of its TVCs proclaimed that ‘Pulsar sells five times more than any Japanese sports bike in India’.

With inputs from Lijee Philip

GroupM unit Motivator wins media account of Honda cars

KOLKATA: Motivator, one of GroupM‘s media agencies, has bagged the Honda Cars India‘s media account. The size of the account is estimated to be over Rs 100 crore including digital media, according to top executives familiar with the matter.

The GroupM agency has replaced ZenithOptimedia, which won the account in 2011.

“As part of our corporate governance rules, we call for a pitch every three years. And this time we had invited six agencies and had two rounds of pitch presentations. We asked agencies to present two case studies for Honda City and Amaze,” said Anita Sharma, assistant vice-president, marketing, Honda Cars India.

The carmaker had shortlisted three agencies including Zenith-Optimedia and Madison, besides Motivator, said Sharma. “Their (Motivator’s) strategic inputs and understanding of the category is better,” she said.

Sharma added that there has been a strategic shift at Honda over the past three years in terms of its media plans. “Since we are now concentrating more on the mass segment and have expanded into several regions and cities, we have moved away from Hindi and English ads to regional ads and we convert our ads in at least nine to 10 regional languages. Even in the premium segment we have noticed that consumers like to read the ads in the language of their choice, especially in South India,” she said.

Rabe Iyer, MD of Motivator, said, “The brief that was given tested our media strategy, analysis and innovation skills apart from media implementation processes and buying.” Honda’s creative duties are handled by Soho Square and Dentsu. The digital business is with Blazer, another GroupM agency. But Honda will shortly call for a digital media pitch, said an executive, who did not wish to be named.

How Rajiv Bajaj’s mentoring relationship with Jack Trout changed the way Bajaj Auto is run

(This story originally appeared in on Dec 06, 2013)

By Vinod

Mahanta & Moinak Mitra
A book-reading session is not what you’d expect from a CEO when his company is in the doldrums. Sometime in 2008, when Bajaj Auto was on a sticky wicket, CEO Rajiv Bajaj, then 41, addressed his top generals, a copy of Jack Trout’s Differentiate or Die in his hands. The young Bajaj read out passages for a good 90 minutes, expounding the key messages gleaned, why Bajaj Auto was floundering, and how some of Trout’s theories could come in handy.

Finally, as Bajaj wrapped up the last chapter, Tom Ishikawa, a Japanese executive who had joined Bajaj Auto from Yamaha, said: “Rajiv San, all you have said is ok, but this is just a book.” Bajaj shot back: “Tom San, Yamaha is such a big name. Even then, why isn’t it making money?”

Five years later, Bajaj still recalls the incident. The point being at that time, he had also been grappling with a question: the Japanese (Sony), or Korean (LG) or Taiwanese companies, which had mastered technology, quality, efficiency and productivity, weren’t making money. Why? It was that cold splash of market reality, which ultimately led Bajaj to Jack Trout, the 76-year-old author and management guru.

Since then, a fairly intense guru-shishya relationship between Bajaj and Trout has helped the former find the answers and transformed the way Bajaj runs the Rs 20,973 crore company. Under Trout’s influence, Bajaj Auto has adopted a successful brand-led growth strategy and morphed into a marketing company; j Bajaj no longer sees it as an auto company.

 

Most products are sharply differentiated and enjoy better profitability. “Our operating profit margins stand at 22%, while that of the market leader stands at 10%, and they have nearly double our volumes,” says Bajaj. “If I had their volumes, I would be at 25-26% profit margins.”

In the five years since Bajaj met Trout, Bajaj Auto’s net profit has grown almost five-fold to Rs 3,044 crore.

Though Bajaj runs a very tight ship with variable costs on a leash and fixed and employee costs a shade under 8 per cent of sales, he credits Trout’s contribution in shaping Bajaj Auto’s brand-led strategy as the reason for its higher profitability. “We didn’t become better in the kitchen, we serve better in the restaurant,” says Bajaj. Adds Rajiv Memani, Country Managing Partner, EY India: “Under Rajiv’s leadership, Bajaj Auto has aligned well strategically. He is very clear, he is chasing profitability, not blind market share.”

Corporate Dossier met up with Bajaj and Trout in Delhi last month where Bajaj and his marketing team spent a few hours sharpening the positioning and communication strategies for the new range of Discover motorcycles that the company is in the process of launching. The guru was visibly pleased with his shishya. “After years of working all over the globe, I can safely say that Rajiv is my best student,” says Trout. “He has read my material so carefully. Sometimes, he quotes from my books, and I ask: Did I say that?”

How the penny dropped

Three years after Rajiv Bajaj took charge, it was all smooth sailing till the tide turned at Bajaj Auto. Its newest launch XCD, a 125cc bike targeted at the commuter segment, bombed, sales of the Discover dipped and overall volumes plunged. The crisis led Bajaj, a seeker and radical self improver, to Trout’s books.

After weeks of introspection, Bajaj conceded his company didn’t have a coherent strategy. And thus began Bajaj’s deep pe into understanding ‘strategy’. But Bajaj was quickly disillusioned with modern management science as the failure rate of new products still exceeded 90%. He turned to unlikely places – yoga, homeopathy and even philosophers, like Seneca and Confucius – to glean management lessons. “The penny dropped,” says Bajaj, when he was reading Trout’s and Steve Rivkin’s Differentiate or Die. “I learnt almost very late that people don’t actually buy products, they buy brands. If you take the brand out of the equation, you reduce everything to the product level,” says Bajaj. “I didn’t understand the true meaning of the word ‘brand’ till I read his books – and later, met Mr Trout.”

Ever since then, Bajaj has been relentlessly drilling Trout’s insights into the DNA of the company. Take sports bike Pulsar, for instance. Its attributes are clear: it’s big, fast, expensive, powerful, and its strong point is definitely not mileage. So these attributes are made explicitly clear not only to the consumer but also to internal functions, like R&D, marketing, sales etc.

In internal meetings at a large meeting room adjacent to his office, Bajaj asks his top team to imagine that a Pulsar is placed in the centre of the large oval table. All discussion always flows within the boundaries of Pulsar attributes and brand image. Bajaj often rejects perfectly good designs and variant proposals because they aren’t true to the Pulsar attributes. “Great brands have to be true to their brand promise,” says Bajaj.

 

“Bajaj’s competitive edge has been its consistent focusing on ‘brands’, ‘positioning’ and creating ‘exciting segments’ for two-wheeler enthusiasts,” agrees Sameer Lumba, Managing Director, JM Financial Institutional Securities. Like a true student, Bajaj tests Trout’s teachings in different situations. When flagship brand Pulsar – it has 47% market share in the sports bike category ¬– started drawing competition, Bajaj implemented another idea from Trout and Al Reis’ book, Marketing Warfare. In the marketing tome, the authors advise creating a real and perceptual benefit into the product while defending leadership. They cite the example of Gillette defending market share by adding an extra blade to the razor, and then, another. Bajaj adapted the insight, launching Pulsar 200 NS with three spark plugs for better performance. Competitors have only one or two spark plugs.

It’s a similar story in global markets, which now account for 40% of Bajaj Auto’s sales. In Indonesia, the company was struggling with a market share of only 2% even six years after entering the country. Japanese heavyweights, Honda and Yamaha, and cheap Chinese brands dominate the market.

Bajaj tied-up with Kawasaki, the Japanese manufacturer that focused on the 400cc plus category. It also targeted the value segment by selling the Pulsar as a Kawasaki Bajaj. “In Indonesia, we had to find out, as Mr Trout says, a way to supply the customer with a reason to buy. We positioned ourselves as a motorcycle specialist with a specific technology (triple spark) vis-à-vis the Japanese, who offered a buffet of twowheelers,” says Bajaj. “From our end, we solved the differentiation problem and from their side (Kawasaki), we solved the consumer access problem. So that becomes the strategy, otherwise, it is impossible to crack the market where we are 50 years late.”

But is running a business as simple as merely copying lessons from management books? Sure, Trout and his books did have an influence on Bajaj, but four things set him apart – his ability to synthesize and figure out what works for Bajaj Auto; absolute conviction in driving ideas and actions once he has tested them; a laser-sharp focus on motorcycles. Lastly, credit must go to his father Rahul Bajaj for rotating him through functions. In his nearly 23 years at the company, Bajaj had spent five years each at manufacturing, engineering and marketing before taking the top job in April 2005.

It’s interesting that Bajaj chose to work with Trout because he takes everything with a pinch of salt and even McKinsey reports gather dust in his drawers. So what was it about Trout that appealed to Bajaj? “Mr Trout’s books give principles upon which to reflect. Unfortunately, there is no first law of management, like the first law of thermodynamics….sometimes, there are seven new hats or seven habits or blue ocean or bottom of the pyramid. But you can reflect on the principles he propounds for weeks, months,” says Bajaj.

One of Bajaj’s most controversial decisions has been to exit and stay out of scooters, a category that’s now growing at 20 per cent, and more importantly, was his father Rahul Bajaj’s heritage. “Great brands are built on the foundation of sacrifices,” says Rajiv Bajaj. “Making more scooters doesn’t mean making more money. We are a specialist motorcycle company; we won’t venture out of that easily.” Trout backs Bajaj’s bold call to stay out of scooters. “The scooter business is a bit of a jungle with amazingly tough brands and pricing pressure. I think Rajiv made the right call there,” he says.

And where does Trout fit in Bajaj’s fourwheeler strategy? According to the CEO, it’s another ploy to defend leadership in the three-wheeler category where they are global leaders. His logic: If we can add a second or third spark plug to Pulsar, why can’t we add another wheel to the three-wheeler, thereby increasing comfort, safety and also giving consumers a certain feeling of prestige. “The best three-wheeler is a four-wheeler,” he says. “We want to create a new category with Bajaj RE. Those who create categories, create long-term businesses,” says Bajaj.

Trout in choppy waters

Given the amount of ground the guru-shishya duo has covered together, surprisingly, there are two sides to the story of how they met. Trout remembers meeting Bajaj after a talk in Mumbai sometime in 2008. Bajaj told him that he wanted him to work with his team. Bajaj, on the other hand, says he had written several emails to Trout before the meeting, without any response. Trout doesn’t remember the emails and says he hadn’t even heard about the company until then.

Five years later, the two enjoy a relationship that’s long crossed the confines of a consultant-CEO commercial engagement. They share a strong personal bond. Bajaj also ensures his team members regularly get to spend enough time with Trout. Earlier, Trout would spend 8-10 days a year with Bajaj and his managers; now it’s down to once every quarter.

Despite the fruitful partnership, the two are yet to crack a vexing problem – managing Bajaj, the family brand. It has been extended into too many products, says Trout. He even met with the Bajaj board and family members advising them to rebrand all other Bajaj businesses. “Gentlemen, this is a mistake, I told them. But they wouldn’t let go,” recalls Trout. “The more successful the motorcycle brand gets, the more Bajaj will become a motorcycle brand. Why do you want a motorcycle brand on your electrical appliances or insurance products or sugar?”

Bajaj too is vocal about his views on this. “If I tell you I want to show you a Bajaj product outside, you wouldn’t know what I would show you — a hair oil, a mixer grinder or a financial product.” But Bajaj enjoys a good challenge. “Einstein said that he derived less satisfaction from E=MC2 than from thinking about the problem,” he says. “Mr Trout’s biggest contribution would be that he has taught us how to think through problems.”

Trout knows Bajaj and his brash ways all too well. He recently presented Bajaj with a signed copy of his book Big Brand, Big Trouble. This is what he wrote as he signed: “Rajiv, make sure to stay out of trouble.”

‘Synthetic leather industry may touch Rs 9,000 crore mark in next 5 years’

NEW DELHI: The market size of India’s synthetic leather industry is expected to double in the next five years to touch Rs 9,000 crore mark on account of increasing consumption and purchasing power.

Currently, the market size of the sector stood at about Rs 4,500 crore,

Mayur Uniquoters

, the country’s leading synthetic leather manufacturer, Chairman & Managing Director Suresh Kumar Poddar told PTI.

Poddar said the artificial leather is substitute for natural leather and its fine designing and texture is attracting people’s attention.

“The industry is growing very fast in the country. I think, the market size of the synthetic leather industry must double in the next five years. The sector’s growth is being driven by the increasing buying power of people and growing consumption,” Poddar said.

He said artificial leather is used in every sector that includes automobile, footwear, home furnishing and lifestyle accessories.

Talking about the problems being faced by the sector in India, he said China is dumping its cheap products in the country and urged the government to look into the issue to protect the interest of domestic players.

Further, commenting about Mayur Uniquoters’ performance Poddar said his Bombay Stock Exchange listed company is expected to register a flat growth in the second half of this fiscal.

“During April-September period, the company has registered a net profit of Rs 20.4 crore. Given the current global conditions, we are expecting that we should be able to do the same in the next half of the fiscal. Offtake in the market is down,” he said.

On the firm’s export performance, he said given the global demand slowdown, the company is expecting a moderate growth.

“Our major export destinations are the US, Russia, Germany and Middle east countries. 20 per cent of our total revenue comes from America. Sector wise, the company gets maximum revenue from footwear followed by automobile and lifestyle accessories,” he added.

The company, which was recently listed in the Forbes 200 top Asian firms, has customers including

Maruti

, Honda,

Mahindra and Mahindra

,

Tata Motors

, Ford US,

Bata

and Liberty.

Mayur Uniquoters’ share closed flat at Rs 470 on the BSE on Friday.

Firms pledge to cut back on guzzling

NEW DELHI: In another 10 years, India will be very , very thirsty . By 2030, water supply will be just enough to meet only half the country’s demand. Agriculture consumes 88 per cent of India’s overall water currently , but industry and households will be the big guzzlers, accounting for 54 per cent and 85 per cent of incremental demand by 2025 and 2050.

Industry is well aware of the crisis and, by all accounts, many companies are at various stages of using water responsibly. In wealthy countries, industry use (51 per cent) and domestic consumption (14 per cent) contribute to 65 per cent of total demand for water.

As India’s demand for electricity, consumer goods and food increases, it will mirror a similar situation forcing businesses to rethink water-efficiency strategies.

For starters, shower heads and faucets could soon be designed to save water. Many companies TOI spoke to seemed keen to achieve a positive water balance. But green think tanks say industrial water use and efficiency efforts are still low priority in India because there are no regulations.

“Water audits are not compulsory in India. What’s also alarming is that there’s no reliable data here about water supply and usage,“ said officials at Centre for Science & Environment. “Most companies have relegated water efficiency as CSR activities.Politicians invite companies to their states and offer free water as incentive."

Given that industries are the biggest polluters of India’s water system with over 70 per cent of all industrial waste dumped untreated into water bodies, this is a frightening scenario.But businesses claim confi dence that their water-saving efforts will bear fruit.

Some are focused on making products that need less water to `consume’ -FMCG major Hindustan Unilever says it is developing water-saving products for its laundry , home cleaning and haircare range -38 per cent of its water footprint comes from the laundry process.

“The goal is to halve the environmental footprint of the making and use of products by 2030. This includes halving the water associated with the use of our products by 2020,“ said a

HUL

spokes person.

It is also tackling the issue at the manufacturing end: “We’ve reduced water usage by 48 per cent across manufacturing, compared to 2008.“

Japanese auto giant Honda Motorcycle & Scooters has invested in rainwater harvesting, says its spokesperson, claiming that upto 95 per cent of water required at its Narsapura plant is met through this process.

“Our factories in Narsapura (Bengaluru) and Tapukara (Rajasthan) have achieved positive water balance through water charging into the ground.“ Beverage giants Coke and PepsiCo, in the crosshairs of activists for siphoning off groundwater, also brag about being water positive.

PepsiCo India’s spokesperson said: “We reduced our water debit (water used for operations), then we increased our water credit -what we `gave back’ by recharging and replenishing water through sustainable agriculture and in our plants.“

But both companies still use around two litres of water to make one litre of beverage, which they say is an improvement from the previous years. Apart from power, cement, steel and paper, the textile sector is a water-intensive industry .

Over 2,000 litres go to `grow’ and produce a cotton T-shirt. “We aim for positive water balance by 2020. We’re scaling internal recycling to 75 per cent,“ says an Arvind spokesperson, the company yet to be water-positive.

“We’ve cut back by 50 per cent our freshwater use. About 10 per cent of freshwater consumption is offset with measures on cotton farms.“

Swedish furniture company Ikea, yet to open its store in India, has a water working group. It is also working on shower heads and faucets, using aerators.

“Using a faucet with an aerator reduces water consumption in the kitchen by 30 per cent without altering water pressure,“ said an Ikea India spokesperson. “We’re developing showers and taps with water-saving features.“

While there seem to be plans aplenty company to company to go water-positive, it will likely need some regulatory framework to make going water-positive an all-industry mandate.

Free fall of Rupee to make consumer goods costlier

NEW DELHI: The weakening of rupee is set to pinch the consumer. Prices of PCs, laptops, tablets, cars, TVs, premium food, luxury items and a slew of other consumer products are likely to go up, despite subdued demand, as a rapidly depreciating rupee takes its toll on high import-content industries. In certain high margin categories like smartphones, companies might absorb the impact of depreciation as they strive to increase market share, but this luxury is not available to all.

Car sales have dropped for seven consecutive months in the country but manufacturers say they have no option but to hike prices if the rupee continues to slide. The rupee has weakened by 7.5% against the US dollar since last month.

“A sustained depreciation of 10% in the rupee will lead to a 60 basis points increase in headline inflation. But it will be a lagged impact over 2-3 months,” said Shubhada Rao, chief economist, YES Bank. While Rao said weak demand would force companies to absorb higher costs and take a hit on their bottom lines, most firms that ET spoke to said they were considering price hikes. Desktops, laptops and tablets could get dearer by 5-12% by the month end. The industry works on an inventory period of just twothree weeks and new stocks will be brought at higher prices.

“In less than a month, the rupee has depreciated more than 8%. If it’s a gradual depreciation we can plan out better. This has been sudden and we will increase prices by June end by 5-8%,” said Amar Babu, managing director, Lenovo India. S Rajendran, chief marketing officer, Acer India said the combination of depreciation and higher costs would result in prices increasing by around 10% by the month-end. Adds Rothin Bhattacharya, head of strategy, HCL Infosystems, “For the hardware industry, its been a tough two years during which the rupee has depreciated almost 30% (from Rs 43 to Rs 58 now). This time around prices will increase by at least 8%.”

Television and white goods makers such as LG, Samsung and Panasonic said the price hike could be in the range of 2-5% but said they would monitor the situation for next 10-14 days before deciding on the quantum. “There is a rolling inventory of around 30 days in the market and hence we have sometime to decide on the price hike.

If the rupee does not gain, prices would definitely go up from next month,” said Panasonic India managing director Manish Sharma. LG India managing director Soon Kwon said if the rupee situation remains the same or worsen further, it will definitely have an impact on pricing. The consumer electronics companies are monitoring currency movements and prices for categories such as LED and Plasma television as well as premium home appliances such as side-by-side refrigerators, front-loading washing machines and inverter AC. These products are either fully imported or are assembled in India with imported components. The slump in sales over the last several months has resulted in car makers resorting to discounts and price cuts but the weakening rupee is likely to reverse this trend, even as companies admit that margins will be under pressure.

 

“We will be left with no other option, but to increase prices if this slide continues. We are going to review our car prices at the end of this month. In normal market conditions, you can take decision on price rise much faster. But when the market is not doing well, it is not only about how the rupee is moving.. we also have to see how the competition is reacting,” said Sandeep Singh, DMD and COO, Toyota Kirloskar. Similar sentiments were echoed by other car makers. “Car companies are left with no choice but to increase prices as they are not able to absorb the impact. The affect on demand depends on the quantum of price increase on the product .

We do not expect any immediate impact on demand by the small price hike on Amaze and CR-V which came into effect from June 1,” said Jnaneswar Sen of Honda Siel Cars India Ltd. A Hyundai Motor India executive said margins of car companies will be under pressure in the medium term. “Any increase of input costs may lead to a further drop in already stagnating demand. Compounded with the depressed market conditions, margins also will be under squeeze in the medium term,” said R Sethuraman, director (finanace & corporate affairs) at Hyundai.

But its not just big ticket items like cars, TVs and laptops that could get expensive. Retail chains Future Group and Spencer’s said imported chocolates and spreads such as Ferrero Rocher, Nuttela, Orion Choco Pie, Snickers, Skippy peanut butter and American Garden will also see a jump in prices, once the current stock finishes in a few weeks time. Spencer’s Retail chief executive Mohit Kampani said for every 1% the rupee devalues, the end-price on imported food goes up by 3-4%. For imported liquor, the impact is 6% and 2-3% for imported homeware such as crockery, plastic products and home convenience products. “The net impact on consumer prices could be as high as 20-25% for imported products,” Kampani said. Sales of imported products, which were growing upwards of 20%, may sober down, he said. Foreign travel, too, has become more expensive.

“The rupee’s free fall has pushed up the cost of tour packages by 5% to 8% over the last month’s rates. Travel to regions like the UK, the US or Europe would cost around 8% more, affecting the overall budget of a traveller,” says Sunil Hasija, executive director, TUI India. Given the increase in cost of tour packages, travellers are shortening their holidays by a day or two or are rethinking their hotel options. Many tourists are opting for short haul destinations such as Thailand, Malaysia, Singapore, Hong Kong over long haul ones to offset the increase in cost.

Some travel companies insulate their customers from fluctuations in package costs due to currency pressures as they book at forward market rates to offset any actual fluctuation at the time of holiday.

Maxxis bets big on India as it eyes to enter top 5 global tyre maker list

NEW DELHI: Taiwanese tyre major Maxxis Group is betting big on India, where it plans to build up to five factories, as it expects the country to play a crucial role in its chase to become a top five global player by 2025, according to a senior company official.

The company, which clocked revenue of around USD 4 billion in 2019, is currently the world’s 9th largest tyre brand and sees India along with Indonesia to play significant part in meeting its 2025 target.

The company is investing USD 400 million on its first manufacturing plant at Sanand in Gujarat, where it is working to hike output to 60,000 units of two-wheeler tyres per day from the current 20,000 units a day, as part of the project’s phase I expansion.

“Maxxis has a group goal of growing into the top five globally in next five years. We have accomplished much in East Asia, Southeast Asia and have significant presence in Europe and in American market.”

“The next major international markets for us will be two places — one is India and the another Indonesia, the major two-wheeler markets in the world,” Maxxis India Marketing Head Bing-Lin Wu said.

He further said, “in achieving the group goal of 2025, India will play a pivotal role. We have estimated a certain output from the Indian market alone that will help us to achieve that target. On backward calculations four or five production units will be the minimum requirement to achieve that.”

When asked about investments and timeline for setting up these plants, he said, “we will start a discussion very soon.”

Also, he said the investments on the new plants would be comparably lesser than on its first plant at Sanand where the company has already made “some heavy advanced investments” on machinery for processes such as mixing, vulcanising and calendering and the “capacity of one machine is so huge that it can supply six to seven production lines”.

“In the subsequent plants, we will try to make an optimisation between our investments and utilising the current capacity of our Sanand plant,” Wu said.

At present, Maxxis India supplies two-wheeler tyres to Honda,

Hero MotoCorp

, Yamaha and Suzuki from its Sanand plant, while it supplies four-wheeler tyres to Mahindra & Mahindra, Tata Motors, Maruti Suzuki and Jeep.

Commenting on Sanand plant expansion, Lu said, “we have used half of the land (106 acres) we got from the Gujarat government for the planned 60,000 units capacity. The other half of the land, we are still deciding whether to put another 60,000 units capacity of two-wheeler or we are going to put four-wheeler tyre production.”

Maxxis has set a target of garnering 15 per cent of two-wheeler tyre market in India by 2023.

Lu said the company expects the Indian market to grow to around 10 crore units of two-wheeler tyres per year and if the company achieves its target of 15 per cent market share “we will more or less utilise the entire capacity of our Gujarat plant and anything beyond will require expansion of production in India”.

On four-wheeler tyre segment, he said the group’s 2025 target and expectations from India are pinned on both two and four-wheeler tyres segment “but volume-wise, definitely two-wheeler tyres in India has more advantage than four-wheeler tyre business”.

When asked about growth prospects for 2020, Lu said Maxxis expects to continue with its growth momentum from last year, despite the automobile industry suffering a downturn as it was able to enhance its original equipment manufacturer (OEM) business share.

“I will say we are still in a position to aim at high growth given that we’re going to have even higher share in the existing partnership and we are looking at multiple projects simultaneously with OE (original equipment) partners,” he said.

Apollo Tyres launches Manchester Utd co-branded tyre in India

NEW DELHI:

Apollo Tyres

today unveiled a special edition of high performance dual branded — Apollo and Manchester United — tyres for the Indian market.

India is only the third country after the UK and Thailand where these co-branded tyres have been launched.

“It is a high performance product. It generally fits Toyota Corolla and Honda Civic kind of vehicles. It is a very popular size globally,” Apollo Tyres President (Asia Pacific, Middle East & Africa) Satish Sharma told reporters here.

Commenting on association with Manchester United, Sharma said the partnership has helped the tyre maker greatly in terms of brand building.

The Indian tyre maker had inked a three-year partnership with Manchester United in 2013.

Apollo Tyres in association with Manchester United Football Club and Youth Football International (YFI) also launched a scholarship programme to nurture young soccer talent in the country.

As part of ‘The Apollo Go The Distance Scholarship Programme’, six children would be selected out of the 192 participants. The selected children would be offered a one- year scholarship by Apollo Tyres for their training with YFI.

One of the selected participants would also get an opportunity to join one-week residential training camp with Manchester United Soccer Schools in the UK.