Eicher strength: coping with change

The story of the Eicher group, promoted by the Delhi-based Lal family, may some day make a case study, not least for its agility in coping with the changing reality of doing business in India.

In the 1990s, it succumbed to the temptation of diversification. As fellow north Indian families such as the Modis were getting into a range of businesses mainly through joint ventures with overseas companies, Eicher tried to keep in step.

It tied up with Volkswagen for making passenger cars in India, but that did not materialise because the German mass car maker grew cold feet.

The businesses it did get into were consultancy, leather and garments, and maps.

This century, though, it has tried to grow within focused segments. Under a plan devised three years ago, it sold its tractor business to South India-based Tafe for Rs 310 crore in 2005. It has also pulled out of leather and garments and consultancy. 
 

JOURNEY STARTS
Global giant	Indian partner	Nature of alliance
Volvo	Eicher Motors	JV for commercial vehicles
Nissan	Ashok Leyland	JV for LCV's
KTM	Bajaj Auto	Stake buy and JV for bikes
Renault	Bajaj Auto	Joint study for - wheelers
Siemens	Ashok Leyland	JV for infotronics
Alteams	Ashok Leyland	JV for components

Today, Eicher Motors signed a letter of intent with Sweden's Volvo AB, under which the two will have equal control over a joint venture that will house all of Eicher Motors' commercial vehicles, components and engineering businesses.

Put simply, Eicher is ceding half the control over these businesses.

According to Siddhartha Lal, chief executive of Eicher Motors and promoter Vikram Lal's son, Eicher is not shrinking, it is merely growing bigger in its focus area of commercial vehicles. To grow bigger in this business, it needed a partner like Volvo for technology and distribution.

According to a senior executive of the group, who did not want to be identified, one has to take decisions as one moves forward.

For instance, Eicher a while ago wanted to acquire Punjab Tractors, a market leader. However, it failed to get majority equity in the company and decided to drop out.