Strategy in place to dethrone Bajaj: TVS

FANNING THE FLAME(S)

TVS Motor Company's ambition to become the second largest two-wheeler player in the country is pegged on a twin strategy.

First, to aggressively sell the Flame, its 3-valve single spark plug 125cc motor cycle in the executive segment where the company has been hardly present and second, to reduce its dependence on rural markets which are more prone to get adversely effected from rising interest rates and tougher norms for getting consumer finance.

At the moment, Hero Honda, with over 50 per cent market share, is the largest player in the motor bike space followed by Bajaj Auto (36 per cent) and TVS (10 per cent). The 2.5 million executive segment constitutes nearly 50 per cent of the total bike market.

Venu Srinivasan, chairman and managing director, TVS Motor Company, says the company plans to sell over 300,000 Flame bikes in 2008-09.

"We cannot be a national player without a presence in the executive segment. With the Flame, we hope to get at least a 12-15 per cent share in the segment."

TVS is also planning to add another bike in the segment in the next 12 months in order to bolster its position Hero Honda and Bajaj Auto reign supreme.

TVS is also reducing its dependence on rural markets. TVS derives 70 to 80 per cent of its overall turnover from the rural market (competitors sell one-third to one-fourth of their bikes in this market).

With the Flame, says Srinivasan, they would be able to reduce their dependence on rural markets and bring it down to 50 per cent.

"Our fall in sales is steeper than others because our dependence on rural markets is higher. With credit drying up and micro credit getting expensive, we were affected more than others."

The gap in numbers between TVS and Bajaj is not massive. "The gap between Bajaj Auto and us is not that huge. We hope to become a strong No. 2 player in the industry soon," said Srinivasan.

According to Siam, while Bajaj sold 153,222 two-wheelers in February, TVS inched up with 88,865 units.

TVS, which has fought a bitter patent battle with Bajaj Auto on the ownership of twin-spark plug technology, has, as directed by the courts, decided to drop the use of the technology for the Flame and go for a single-spark plug powered engine.

While TVS made appeals against the court order, Srinivasan says that the dispute has lead to a two-month delay for the launch of the vehicle.

"We hoped to sell about 30,000 units of the Flame with twin-spark plugs in January and February. But that didn't happen, so we will lose close to Rs 100 crore in sales. "

Bajaj Auto's patent infringement suit involves the digital twin spark ignition engine technology (DTSi) which it claims to be its own and which TVS Motor alleges is a mere modification of the original technology that was developed by Honda, Japan.