From being a manufacturer of mopeds and scooters, the Kinetic group has been transformed over the years into a full range manufacturer of two-wheelers, with a product portfolio comprising its Luna and King mopeds / step-throughs; Zing and Zing Rocking (aimed at collegians, this two-wheeler has a built-in hi-fi system) scooterettes; Zoom, Nova, and Marvel scooters and; Boss, Velocity, GF 170 City, Laser and Aquila motorcycles.

In 1986, if Kinetic Motors, the Firodia-group company, that makes the smaller two-wheelers within the Kinetic group, had hoped to sweep the Indian market with its innovative gearless scooter, Kinetic Honda, in collaboration with Honda of Japan, it was in for a disappointment; the product failed to take-off in the north from where it was launched. However, the progressive southern markets proved receptive and soon, Kinetic Honda began to prove a challenge to the better-known Bajaj Auto scooters. Incidentally, both companies have their headquarters in Pune, near Mumbai.

From being dominated by scooters, the domestic two-wheeler market began to give way to motorcycles during the late '90s. In 2001, the Kinetic group entered this segment with its model, Boss, manufactured by Kinetic Engineering, which focuses exclusively on making two-wheelers with bigger-wheels.

Over the years, the Kinetic group has launched several new models at different price points - ranging from economy to luxury models. Its latest launch is the sports bike, Laser.

Motwani is upbeat about the group's agreement with the Italian company, Italjet. From next year onwards, Kinetic will manufacture seven Italjet models from the 65cc to 250cc range for the Indian and export markets. The Kinetic group had earlier also signed a manufacturing agreement with Hyosung Motors, Korea. According to Motwani, the two agreements do not make the Kinetic group into a contract-manufacturer for these two companies, she says in an interview to domain-b.

What changes in manufacturing, vendor management and branding did you have to address during the group's transition from a moped and scooter maker to becoming a full range two-wheeler manufacturer?
Our earlier join venture with Honda Motor Company, Japan, had restricted our entry in to the motorcycles segment. Consequently, we were a late entrant into this segment. Making a transition from manufacturing mopeds to motorcycles required transforming our focus in product development, R&D, building a new product portfolio, purchasing, technical know-how, re-designing the manufacturing facilities, etc.

Since we have always had a very strong focus on R&D and indigenous product development, we were able to leverage our expertise to put together a product portfolio that could hold its own against anyone fairly quickly. We signed a technical collaboration for motorcycles with Hyosung Motors of Korea, which helped us in getting advanced technical know-how like four-valve engines.

We signed on Kapil Dev as our brand ambassador, where winners of contests could play cricket with him; a special cricket edition motorcycle dedicated to him and so on. We have taken him on promotional tours across the country.

We also launched the Aquila - a 250cc v-twin cruiser at Rs.1.5 lakh, which was a runaway success. We launched four motorcycles simultaneously last year - something which, no other manufacturer has done. Our executive bike, Velocity, is off to a very good start in the market and we are building on that success.

Our strategy now is to build on all the groundwork that has been done in the last three years. We will continue to focus on high quality and give strong value for money and distinctively designed motorcycles to the Indian consumer.

At a time when Indian two-wheeler manufacturers are planning overseas operations to sell their own brands, your two tie-ups with Hyosung Motors and Italjet seem to indicate a contract manufacturing strategy.
That is absolutely incorrect. With Italjet, we have acquired, for a one-time cost, complete production and marketing rights to seven of their best vehicles. We are getting their entire production lines shifted to India, all tools, moulds, dies, etc. We will fit our engines into them, and sell them in India as well as anywhere we want globally.

Plus Italjet's founder Leopoldo Tartarini, one of the world's most acclaimed two wheeler designers will design for us in the future. He has designed for many of the world's leading companies such as Ducati, Yamaha, Piaggio and Gilera. And now he will design for Kinetic. I think this deal with Italjet is a real coup for us. This is not contract manufacturing. In many countries, Italjet is a highly-respected brand. In our exports to those countries, we may sell these products under Italjet's own brand.

With Hyosung Motors we have a technical collaboration for the GF series - 125 and 170cc City and Laser. We are manufacturing these for sale in India. In fact, Hyosung Motors was so impressed with our quality and pricing, that they signed an agreement with us to fulfill some of their obligations for these models, worldwide.

Neither of these arrangements make us a contract manufacturer. On the contrary we are gaining a global presence, exports and significant technical strengths.

Are you required to pay Italjet any royalties? Will Italjet source components from you for after sales service?
With Italjet, we have acquired outright the seven scooters. There is no royalty for any domestic production. And for further design work that Tartarini will do for us, it will be on a fee basis. Italjet will also import components from us.

What fresh investments do you have to make to rollout Italjet models?
Most of the investment required for Italjet models are through. We will be fitting our own engines into them. We are working on a 250cc engine and that will need some investment. Over the next 2-3 years, we will have the entire range from 65cc to 250c

Commonality of parts and platform help derive economies of scale. How will the Kinetic group implement this concept in the Italjet models?
We, too, will use the common platform concepts, to maximise efficiencies in production, spares and service. For example, we use our 115 cc 4-stroke engine for both Boss 115 and Velocity - but then other technical features like carburetors, tyres, suspension, etc differentiate both. We have used the 4-valve engine platform for the GF 125 and the Laser - from 125cc to 170cc and we are looking at a 190cc engine on the same platform. Italjet scooters will use the Nova engine and platform for most models.

The Kinetic group has been launching different models regularly, but has not been able to identify any single model as being synonymous with itself. How do you plan to correct this issue?
Our strategy is very consumer-focused. We aim to have a product that suits the transport requirements for everyone - be it a student or an executive, someone looking for fuel efficiency, or mileage, or performance or comfort. With this in mind, we have built a diverse product portfolio. It's okay that I have several products that contribute to my volumes rather than one single product.

In the long run it is also better not to be dependent on a single product because the market can prove fickle, a customer could change his mind anytime. Having a multi range product portfolio also means better flexibility to changing market trends

We expect volumes from new models like Velocity, Laser and Boss and hope to close this year selling 85,000 bikes, up from 55,000 last year.

What about the competition from the Chinese manufacturers? Lifan, for instance, has decided to set up production base here?
There has been a lot of noise about Chinese players for three years and not much has come out of it yet. The Indian two-wheeler market is not an easy one to crack - our customers are highly conscious of quality, reliability, after sales service, spares availability, brand name, image. So we'll see what really comes out of it.

Your scooters are known for technology and rider-comfort but not for their cost of ownership - whether maintenance or fuel economy. Did that image affect your bikes?
After we split with Honda, we did a lot of work to increase the fuel efficiency and reduce the maintenance of the Kinetic scooters. That work began in 1998 and results will show over a period of time. Either way, we have made 4-stroke motorcycles and they have all delivered on mileage, as well as spares, which reflects on the cost of ownership. So we did not really have to struggle to overcome that.

As motorcycles and scooters are manufactured by two different companies would it have been better to have created a different brand image for the bikes rather than Kinetic, which is known for scooters,?
Our research has shown that Kinetic has a very positive brand image - we have always been seen as a modern, aspirational brand, high on technology and ownership pride. We were the first to pioneer personalised transport in the country. We have been in the-two wheelers business since 1974; we have sold over 50 lakh vehicles in India.

I think you would be hard pressed to find anyone in India who has not heard of Kinetic. It is a brand that's been built over 30 years of fulfilling customer expectations and promises. It would not make sense to let go of this strength and advantage and start building a new brand in a competitive segment like motorcycles, where competitive brands are already well established.

With no joint venture partners in either company, would it not provide better shareholder-value to merge both the companies?
Well, we have already tapped the synergies of both companies in terms of marketing, distribution network and general management. We have separate plants but that's about the only difference. Kinetic Motors focuses on scooters and scooterettes, while Kinetic Engineering focuses on motorcycles and mopeds. Anyhow, right now we are in the midst of establishing a new product range in the market. Any restructuring will be dealt with later.