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Relegated to an after-ran amidst the Hero Honda’s and Bajaj’s of the Indian market, Yamaha was hell-bent on completing its India comeback before its rivals had a chance to recover from the slowdown effect. In between cat calls of a global recession in July last year, the Japanese auto major launched its YZF-R15 in the Indian market; then when the US investment banking giant Lehman was breathing its last in September, Yamaha bravely launched its FZ-16 performance bike in India. And last week when the Indian Yamaha announced that it was in talks with vendors to provide spare parts for its cult bikes like RX100 and RD350, wowing old Yamaha loyalists in the process. The bid is to “win back the confidence of Yamaha customers,” says Yukimine Tsuji, Managing Director & CEO, Yamaha India.


Now consider if Yamaha had made its comeback with 100cc bikes (remember the RX100 that was once legendary in India?). Would the bike-maker have flourished? Possibly not, considering that the segment is now dominated by the world’s largest two-wheeler maker Hero Honda, which itself had been pretty aggressive all across 2008 in its marketing endeavours. Stunning market watchers, when the auto industry was just going on its slowdown hiatus, Hero Honda even came up with a 3-minute television spot, with the who’s who of celeb endorsers. Wisely therefore, Yamaha decided to focus on the weak link in the bike market – Bajaj – and decided to upset their premium segment apple cart instead. Guess marketers at Yamaha just thought differently and needless to say smartly...

The results are already showing. Between April–December 2008, Yamaha had won some of its own back in the premium bikes segment, registering a staggering 220% growth in the category, while rival Bechara Bajaj took a heavy beating. Not one to rest on past laurels on its blazing comeback trail, Yamaha is now busy expanding its dealer network, with plans to invest a cool Rs.240 crore in 2010-11 to develop India-specific models. And the focus on Indian market is clearly visible as Tsuiji states, “India is the first priority market for Yamaha Corporation...” Even Hero Honda’s marketing overtures in 2008 are paying off. To beat sluggish demand, it even launched three refurbished variants of Glamour, Glamour FI and CD Deluxe in December last year, notching up standalone net profit of Rs.300.42 crore versus Rs.275.01 crore on y-o-y basis. Hero Honda too is winning the heated war against the painful slowdown effect in the economy.

Bajaj too is reacting now, though a little too less and a little too late… Honcho Rajiv Bajaj is now promising to launch six two-wheeler models within the next nine months. In an interview with 4Ps B&M, S. Sridhar, CEO, two-wheelers, Bajaj Auto, blamed Bajaj’s aggressive strategy for the falling sales graph (huh!) and elaborated further on their plan. “Three of the six bikes will be in the value segment, one will be the Ninja 250cc and another will be a 750cc bike. This will ensure that by the time recession ends, we will be in a very strong position,” he promises.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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“Pursue your goals even in the face of difficulties, and convert adversities into opportunities.”

Dhirubhai Hirachand Ambani

Go to the home page of Reliance ADAG Group and these words of wisdom hit you gently. There is little doubt that the younger son of the legendary Dhirubhai Ambani must be mulling over these words of wisdom. Well and truly, after he split with elder brother Mukesh Ambani in 2005 and launched his own BIG dreams, Anil Ambani is finding the going tough. Almost all his BIG dreams in telecom, energy, entertainment, infrastructure and healthcare need huge investments. And the money is needed at a time when lenders and investors are holding on to money like a virgin holds on to her chastity. Sure, the man and his group will never be in serious trouble the way many other Indian entrepreneurs are. He sure has the chutzpah to overcome such hurdles. But there is no doubt that the year 2008 – that started so spectacularly well for him – has wounded him quite deeply. Says T. Jagganathan, Equity Head at SMC Capitals, “The year 2008 was a completely forgettable year for Anil Ambani. As far as 2009 is concerned, there are no hopes whatsoever from the economy point of view as well as the capital markets point of view. The performance of Reliance group is closely benchmarked against their capital market performance.”

That has an uncomfortable ring of truth. For instance, there has been an almost 75% decline in the personal net worth of Anil Ambani to just about $30 billion (just see the use of words ‘just’ to describe $30 billion – that’s how one benchmarks the Ambanis!). In early 2008, the price of a Reliance Communications share was about Rs.800 while that of rival Bharti was about Rs.1,000. The gap was a mere Rs.200 a share and Anil Ambani was closing in. Then the script changes. By December 2008, the Reliance scrip has crashed to about Rs.200 while that of Bharti has tumbled to Rs.600. The gap has now widened to Rs.400; something that must be hurting the younger Ambani who is fiercely competitive and numbers driven. What must be hurting even more is the yawning gap between the number of subscribers corralled by Reliance and Bharti (Airtel). In January 2008, RCOM had about 37 million mobile subscribers while Bharti had about 52 million. By December 2008, the RCOM numbers had shot up to about 52 million while Bharti’s numbers had zoomed to about 85 million.

But it is the Reliance Power fiasco that has caused the maximum damage to the group. In early 2008, the RPower IPO to raise Rs.11,500 odd crores was hailed as the most successful IPO in Indian stock markets. Investors were delighted at the prospect of such manna from heaven. But the euphoria was short lived and the Great Expectations ended up in greater disappointment. The scrip listed on the stock exchange at Rs.547 in February, 2008. On January 15, 2009, the scrip was available for about Rs.98. Sure, you can say that the markets have tanked and shares of all business houses and entrepreneurs have suffered. But the fact of the matter is that RPower shares crashed by more than 74%, while that of rival Tata Power tumbled by a much smaller 54%. This hurts! Says Jagganathan of SMC capital, “Unfortunately, many people not very familiar with the markets still associate the crash of 2008 to the Reliance Power IPO itself!”

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Exclusively designed ballrooms, well-lit bedrooms, imported chandeliers, supremely planned restaurants...

IIPM set to beat economic slowdown

Exclusively designed ballrooms, well-lit bedrooms, imported chandeliers, supremely planned restaurants... the five-star lot in India is still finding buyers. And though times are not easy, why is it that all, except the bar-tender, smile? Does he hide a secret? Neha Saraiya narrates a tale of success (and the secretive oncoming storm)...

Yes, you read the heading right – really ‘cold’ times, and that’s exactly what is ripping the comfort jackets off the global tourism and hospitality industry... Cut to India, for the common street walker, events that unfolded of late (the terrorist attacks in five-star mansions... and blah... blah...) too make him wonder whether we really are that economy that is growing much better as compared to global counterparts. Imagine – a 6-7% projected growth rate for the next year, and at a time when even George Bush (or was it Obama?) admits to incessant headaches and blurred vision (thanks to the recessionary migrane)! And of all the macroeconomic excuses that we can boast about, here is a look at how (and why) those well-dressed ladies are still smiling their way into the ballroom of the 5-star hamlet, just a few miles away from where you presently stand!

Yes, at a time when all we can talk about the global hospitality industry is ‘gloom’, India continues to ‘shine’. In a close-finish race, the Indian hospitality industry nearly outdid even the diversified GDP growth, and closed the calendar year 2008, having grown y-o-y by 6%, with 5.37 million foreign tourist arrivals (and forex earnings of Rs.50,700 crore) being recorded! But at a time when every inch of the economy can feel the heat of the slowdown, the hotel industry is also rowing on lukewarm waters, both on the consumer and supplier end. Undoubtedly the ongoing economic crisis has dampened discretionary spending on both the corporate & personal levels, thus eroding pricing power of hotels and reduce demands for rooms, restaurants and banquets halls. Secondly, the prevalent dearth of easy debt is making new development and upgradation plans difficult to materialise for hoteliers (their working capital woes to meet just operating expenses, being a long tale for another day). Keshav Baljee, VP-Corporate Affairs, Royal Orchid Hotels Ltd, sums up demand and cost worries of the industry as, “The major cost has been that of lost business during the peak season. However, there are some ‘one-time’ costs associated with purchase of additional security equipment and some recurring costs with respect to that of additional staffing and screening. And the insurance costs are likely to rise as well!”

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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We can buy pizzas too!

1500-plus IIPM students placed across the country with 44 bagging international offers

McDonald’s had become India’s darling because of its value for money pricing; Domino’s encashed on this and launched its budget pizzas at Rs.35 only. The bid was to attract economy consumers and also kids, making pizzas within reach of their pockets. For the first time, Domino’s shed its ‘Hungry kya?’ tagline and launched an ad that played on compassion rather than humour. The tagline – ‘Khushiyon ki Home Delivery’; the aim – to expand their customer base in one go. Now that’s what we call a smart marketing move.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM set to beat economic slowdown
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It’s high time to revisit retail, says 4Ps B&M’s Savreen Gadhoke…

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In fact, retailers have now realised that having too many stores was perhaps not the right strategy to increase sales, as now handling rising operating expenses is beginning to get difficult for retailers. Moreover, rising manpower costs and sky-rocketing rentals too are adding to their dilemma. So, most of the retailers are now either merging their different retail formats or are relocating and resizing. They are even shutting down stores. This is certainly a natural move on retailers part, however, what is intriguing is that how did such a situation rise, especially when the Indian retail boasts of some of the biggest names of India Inc.?

Answers Vasal, “The reason for some retailers closing down stores is the general slowdown & fault in the strategies of the retail players. Some players entered the market during boom and hence the calculations weren’t done adequately.” Recently Videocon-owned consumer electronics store Next revisited its strategies and announced the closure of 20 outlets in prime cities. However, K. S. Raman, Director, Next Retail has a different reason for the same. “We now want to consolidate our presence in the interiors of the country and North East,” he argues. Similarly, Spencer’s Retail, too has shut down 56 stores (out of a total of 400 stores) purely on account of non-performance. Exclaims Goenka of Spencer’s Retail, “It is not an alarming news but a sensible decision.” Reasons cited by Goenka for non-performance of his stores were that in certain places, rents were too high and did not commensurate with the revenues, while in certain other places revenues just didn’t pick up. “You have to see what product(s) you are selling and then choose on a location. In few cases, this was done in a reverse manner,” he adds.

Apart from closing down stores, retailers are also considering to merge different retail formats they opened during the process. Reliance Retail is expected to merge its hypermarkets, supermarkets and convenience store formats. Certainly a merged management will help Reliance save on man-power, operational and recurring expenses. Kishore Biyani-owned Pantaloon Retail has also shelved its plans to hive off Big Bazaar as a separate entity and therefore cut on the costs that were expected to rise with the formation of a new company.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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