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Monday, Mar 25, 2002

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Kinetic hopes to `Boss' over with Hyosung's technology

Anand Krishnamoorthy
Vipin V. Nair

"For me, it is not whether it is Korean or Japanese, as I feel the former is extremely good. The Japanese technology has been in India for nearly two decades. Hence, you need time to establish a new brand in the country."

NEW DELHI, March 24

THE turn of the new millennium saw two new aspirants enter the booming motorcycle market in the country, dominated by the Japanese.

Both these players chose to rope in relatively unknown South Korean two-wheeler makers as their technology partners.

Kinetic, which pioneered ungeared scooters in India through Japan's Honda Motor, has now South Korea's Hyosung as its ally for its motorcycle project.

Having tasted some initial success in the market with its Challenger and GF motorcycles, the Pune-based Kinetic is now looking at bolstering its presence in the domestic two-wheeler market.

Ms Sulajja Firodia Motwani, Joint Managing Director of Kinetic Engineering Ltd, spoke to Business Line about the company's "aggressive" plans.

"We are positioning our two-wheelers as the `stylish' vehicle for the `modern Indian man and woman,'' says Ms Motwani. Excerpts:

It is now more than a year since you launched your first motorcycle, Challenger. You have followed it up with the GF and also launched a new scooter. What new can we expect from Kinetic?

We are going to focus on the ungeared scooter segment, which is now overtaken the traditional, metal-bodied geared scooters. In the motorcycle segment, the launch of Boss would help us consolidate our position further. Boss is a 150 cc four-stroke lower-end motorcycle. In the higher-end, we are planning to launch a 250 cc sports model in the next 18 months.

We have a tie-up with U/E/N of Taiwan to technically assist us in the design and development of vehicles. They partnered in the development of the Nova, the latest scooter that we have launched. We are planning to launch the `Zing' scooterette in June. This will be priced below Rs 23,000. We will continue to work with leading style houses such as U/E/N in the future too.

What are your views on Korean technology in motorcycles, particularly since you and LML have not really been able to make a dent on motorcycles using Japanese technology?

For me, it is not whether it is Korean or Japanese, as I feel the former is extremely good. Mind you, we launched our motorcycle only a year or so back. The Japanese technology has been in India for nearly two decades. Hence, you need time to establish a new brand in the country.

You have worked with Hyosung of South Korea for development of the GF range of motorcycles. What is the scope of extending this alliance with Hyosung to other range of two-wheelers?

At this point of time, we don't really see the need for newer technologies in the area of scooters. But if needed, I must add that there is nothing in the agreement that we have with Hyosung which prevents us from outsourcing more technologies from them. In fact, we are now expanding our relationship with Hyosung. We recently signed an MoU with them to become their export base for the GF range of motorcycles.

Could you elaborate on this?

As per this MoU, Kinetic will be one of the global sourcing point for Hyosung's international sales for the GF range. Kinetic has a marketing presence in over 35 countries and Hyosung too has its own network.

We will be free to market the GF wherever they are not present. Also, we will do the research and development work for Hyosung as they feel it is much cheaper to do such work here.

It is often asked why the Kinetic group is having two publicly-listed two-wheeler companies when you can have a single entity producing a wide range of two-wheelers. Why do you continue to keep these two companies — Kinetic Engineering Ltd and Kinetic Motor Company Ltd — as separate entities?

Yes, we would like to have a single company, but we are not exploring that possibility at this point of time. There are certain issues that need to be resolved before we embark upon such a move. We feel it is important to establish ourselves in the motorcycle market so that Kinetic Engineering Ltd will get better valuations. We feel when the motorcycle sales pick up, the valuations of this company would definitely improve.

Also, you may note that the equity base of Kinetic Engineering is rather low at Rs 4 crore, while that of Kinetic Motor Company is Rs 15 crore. The promoter's holding in Kinetic Engineering is about 35 per cent, and this company, in turn, holds 70 per cent of the other. So, if a merger takes place, one of the key issues would be a fall in the promoter's holding in the merged company. Hence, this whole issue is on the back-burner now.

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