Financial Daily from THE HINDU group of publications
Tuesday, Jan 13, 2004
Alliances & Joint Ventures
Kinetic acquires rights to make Italjet scooters
Mr Arun Firodia (left), Chairman, Kinetic group, with Mr Leopoldo Tartarini, Founder of Italjet, at a press conference held in Mumbai on Monday. - Paul Noronha
Mumbai , Jan.12
IN yet another instance of a Western auto company relocating production given the shrinking traditional markets and high manufacturing cost, the Bologna-based designer and manufacturer of two-wheelers, Italjet, has sold the complete manufacturing and distribution rights for seven of its scooter models to the Kinetic group.
The move is expected to invigorate the scooter line-up at Kinetic Motor Company (KMC) besides widening its export markets to include geographies like US, Europe and Japan. The 50-million-euro Italjet, which began by designing and making motorcycles for Ducati, is now a two-wheeler brand in its own capacity. It has been associated on the design front with leading two-wheeler names like Gilera, Piaggio and Yamaha.
Once synonymous with gearless scooters, KMC was fourth in the scooter/scooterette segment as per November 2003 domestic sales figures from the Society of Indian Automobile Manufacturers (SIAM). It sold 61,814 units over April-November, as compared to segment leader Honda Motorcycle & Scooter India's 1,88,147 units. KMC, which bought out Honda's joint venture equity stake in 1998, recently saw its technical understanding with Honda come to an end.
Kinetic's decision hots up the action in the scooter segment of the two-wheeler market, particularly the modern scooters half. In November 2003, Aprilia, Europe's second biggest two-wheeler manufacturer, had tied up with Hero Motors to both enter the domestic market and outsource scooters from here.
The rights acquired by Kinetic on a one-time basis for an undisclosed amount will see the seven Italjet scooters in question, being produced here at almost half the cost with sales in the domestic market and abroad. Across the seven models, initial export volume of 25,000-50,000 units is forecast, two models debuting in the domestic market next fiscal and contributing to Kinetic's 2004-05 scooter sales target of 200,000 units.
Talks are on with regard to royalty payment for exports. Branding in export too is yet to be firmed up, though the scooters will sport Kinetic engines. All the seven scooter models will roll out from KMC over the next 24-30 months time.
The rights acquisition does not involve any offer of equity. The seven models range in design from moto-scooters to retro-scooters, not all of them meriting introduction in the domestic market. Italjet's product portfolio includes motorcycles, but Kinetic's choice was to align on the scooters front.
According to Mr Leopoldo Tartarini, Founder, Italjet, his company desires to focus on higher displacement models of 500cc and above. It is working on an all-terrain vehicle (ATV). On the other hand, cost effective manufacture of the seven scooters Jetset, Millenium, Jupiter, Dragster, Torpedo, Formula and Velocifero in India, is hoped to enhance their global sales.
Moulds and dies of Italjet's seven scooters will shift to KMC's factory.
However fresh capital expenditure is claimed to be low, as Kinetic has an export platform and 250 cc engine under development while the frame is ready.
"The investment otherwise needed to design and manufacture seven models would have been around Rs 200 crore,'' Mr Arun Firodia, Chairman, Kinetic Group, said at a press briefing.
Ms Sulajja Firodia Motwani, Joint Managing Director, Kinetic Engineering, said Kinetic's agreement covers rights for a five-year span on new products from Italjet. Additionally, Mr Tartarini will design two-wheelers for Kinetic.
The Italian designer and former bike racer, known to the Firodias for long, was contemplating a shift of production lines to China before Kinetic entered the picture.
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2004, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line