98188010-luca-tvs

SUMMER TRAINING REPORT SUBMITTED TOWARDS THE

PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN

INTERNATIONAL BUSINESS

MARKET POTENTIAL AND STRATEGIES TO

INCREASE MARKET SHARE OF LUCAS-TVS TWO

WHEELER STARTER MOTORS

SUBMITTED BY:

HARINARAYAN P

MBA-IB (2010-2012)

Roll No. : A1802010026

AMITY INTERNATIONAL BUSINESS SCHOOL, NOIDA

AMITY UNIVERSITY – UTTAR PRADESH

SUMMER TRAINING REPORT SUBMITTED TOWARDS THE

PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN

INTERNATIONAL BUSINESS

MARKET POTENTIAL AND STRATEGIES TO

INCREASE MARKET SHARE OF LUCAS-TVS TWO

WHEELER STARTER MOTORS

SUBMITTED BY:

HARINARAYAN P

MBA-IB (2010-2012)

Roll No. : A1802010026

INDUSTRY GUIDE FACULTY GUIDE

Mr. G. PRAVIN WINSTER Ms. POORVA RANJAN

ASST. MANAGER, BD & MARKETING

LUCAS-TVS, CHENNAI

AMITY INTERNATIONAL BUSINESS SCHOOL, NOIDA

AMITY UNIVERSITY – UTTAR PRADESH

TELEPHONE

TELECRAM

FAX

044 - 26258211LUCASUN, CHENNAI444 - 26259642044 - 262s7863

LUCAS.TVS LTD,, PADI, CHENNAI-6OO O5(}, INDIA.

TO WHOM IT MAY CONCERN

This is to certiflz that Mr. HARINARAYAN.P, a student of Amity International

Business School, Noida, undertook a project on ooMarket Potential and Strategies to

increase Market Share of Lucas-TVS Two Wheeler Starter Motors" at

LUCAS-TVS, Chennai

Mr. HARINARAYAN.P has successfully completed the project under the guidance of

Mr. G. PRAVIN WINSTER. He is a sincere and hard-working student with pleasant

manners.

We wish all success in his future endeavours

$0-uy4Manager (Training & Development)

Regd. Ofllce: ll, Potullo Rood, Chennql - 600 002, lndlo.Corp. Otllce : 'Aolim Cenlre' 82, U. Eodho Krishnon Soloi,

Chennol - 600 004. lelephone:28I10063 / 28110074. Fox:28115624.

CERTIFICATE OF ORIGIN

This is to certify that Mr. HARINARAYAN P a student of Post Graduate

Degree in MASTER OF BUSINESS ADMINISTRATION, Amity

International Business School, Noida has worked in the MARKETING

DEPARTMENT under the able guidance and supervision of Mr. G. PRAVIN

WINSTER, Asst. Manager, Business Development & Marketing, LUCAS-TVS

LTD

The period for which he was on training was for 8 weeks, starting from 13th

may

2011 to 30th

June 2011. This Summer Internship report has the requisite

standard for the partial fulfillment the Post Graduate Degree in International

Business. To the best of our knowledge no part of this report has been

reproduced from any other report and the contents are based on original

research.

SIGNATURE SIGNATURE

(Ms. POORVA RANJAN) (HARINARAYAN P)

ACKNOWLEDGEMENT

I express my sincere gratitude to my industry guide Mr. G. PRAVIN

WINSTER, Asst. Manager, Business Development & Marketing, LUCAS-TVS

LTD for his able guidance, continuous support and cooperation throughout my

project, without which the present work would not have been possible.

I would also like to thank Mr. N. KUMAR, Mr. VINOTH, Mr. V. MAHESH,

Mr. SUMIT and the entire team of MARKETING for their constant support

and help in the successful completion of my project.

Also, I am thankful to my faculty guide Ms. POORVA RANJAN of my

institute, for her continued guidance and invaluable encouragement.

SIGNATURE

(HARINARAYAN P)

TABLE OF CONTENTS

SUBJECT PG NO.

EXECUTIVE SUMMARY ......................................................................................................... 1

INTRODUCTION ...................................................................................................................... 2

INDUSTRY PROFILE ............................................................................................................... 3

LITERATURE REVIEW ................................................................................................................. 3

AUTOMOTIVE MISSION PLAN 2016......................................................................................... 5

MARKET SHARE ..................................................................................................................... 5

TWO WHEELERS INDUSTRY IN INDIA .......................................................................................... 7

KEY PLAYERS IN THE TWO-WHEELER INDUSTRY....................................................................... 7

DEMAND AND MARKET POSITION .......................................................................................... 8

AUTO COMPONENT INDUSTRY ................................................................................................ 11

AUTO-COMPONENTS MANUFACTURERS ASSOCIATION OF INDIA ........................................... 11

SEGMENT-WISE DIVISION: ................................................................................................... 12

CLASSIFICATION OF AUTO COMPONENT MARKET ................................................................. 13

MAJOR AUTO COMPONENT PLAYERS (TWO, THREE AND FOUR WHEELER PLAYERS)................ 14

MAJOR PLAYERS OPERATING IN THE PRODUCT SEGMENTS OF AUTO-COMPONENTS .............. 15

SWOT ANALYSIS: INDIA AUTO COMPONENT MARKET............................................................ 16

COMPANY PROFILE ............................................................................................................. 17

TVS GROUP............................................................................................................................. 17

TVS GROUP OF COMPANIES ................................................................................................. 18

LUCAS-TVS.............................................................................................................................. 20

PRODUCTS .......................................................................................................................... 20

CUSTOMERS........................................................................................................................ 20

AWARDS ............................................................................................................................. 23

SALES PERFORMANCE.......................................................................................................... 24

SWOT ANALYSIS .................................................................................................................. 24

ISSUES AND CHALLENGES.................................................................................................. 26

COMPETITOR ANALYSIS..................................................................................................... 27

COMPETITOR ANALYSIS IN TWO-WHEELER SEGMENT- STARTER MOTORS .............................. 27

COMPETITOR’S PROFILE .......................................................................................................... 28

DOMESTIC SUPPLY AND MARKET POSITION- MODEL WISE ........................................................ 30

DATA COLLECTION FRAMEWORK ............................................................................................. 31

RESULTS AND FINDINGS ..................................................................................................... 32

FAST MOVING TWO WHEELER MODELS IN MARKET.................................................................. 32

DATA ANALYSIS....................................................................................................................... 33

MOST FREQUENTLY SERVICED VEHICLE ................................................................................ 33

NUMBER OF STARTERS REPLACED IN A MONTH .................................................................... 33

AVAILABILITY OF THE PRODUCT ........................................................................................... 34

MOST PREFERRED PRODUCT IN MARKET .............................................................................. 34

CUSTOMER PREFERENCE IN BUYING AND SERVICING A PRODUCT .......................................... 35

SUGGESTION OF LUCAS-TVS STARTERS TO CUSTOMERS ........................................................ 36

OEM’s SATISFACTION LEVEL WITH LUCAS-TVS STARTER MOTORS .......................................... 37

HONDA: SATISFACTION SURVEY ........................................................................................... 37

HERO HONDA: SATISFACTION SURVEY .................................................................................. 38

YAMAHA: SATISFACTION SURVEY ......................................................................................... 39

RECOMMENDATIONS .......................................................................................................... 40

STRATEGIES TO BE ADOPTED ............................................................................................... 41

CONCLUSION ...................................................................................................................... 41

BIBLIOGRAPHY..................................................................................................................... 42

ANNEXURE ............................................................................................................................. 43

TABLES ............................................................................................................................... 43

QUESTIONNAIRE ................................................................................................................. 49

CASE STUDY .......................................................................................................................... 53

COMPETITIVENESS OF THE INDIAN AUTO COMPONENT INDUSTRY ........................................ 53

MOVING UP THE VALUE CHAIN ............................................................................................ 55

R&D CAPABILITY.................................................................................................................. 57

PRODUCT LIABILITY ............................................................................................................. 58

THE ROAD AHEAD ............................................................................................................... 58

SYNOPSIS................................................................................................................................ 59

1

CHAPTER 1

EXECUTIVE SUMMARY

1) This study analyses the market potential and competitiveness of Lucas-TVS two

wheeler starter motor in the Indian two wheeler industry. It is based on a field survey

and a quantitative analysis of secondary data. The field survey covers 15 two wheeler

dealers in Chennai, 11 mechanics and 5 Original Equipment Manufacturers (OEMs)

2) From 2002-2010, the Indian Automobile industry has grown at an average annual rate

of over 18 percent in terms of value of output and auto-component sector has grown

about 26 percent. During the same period in terms of domestic production in numbers,

two-wheelers have grown at a rate of 25 percent, three wheelers at more than 15

percent, commercial vehicles at about 25 percent per annum and the number of

passenger vehicles by 17 percent per annum

3) Development of Auto-Component industry depends on the development of

automobile industry. Due to the increased oil/ petrol price, there may be a downfall

expected in the sales of four wheelers and customers may prefer 150/180cc two

wheelers for their fuel efficiency.

4) Lucas-TVS, though a market leader in 4 wheeler segment, it had only 30 percent of

domestic market share with respect to the sale of products to OEMs and aftermarket.

In order to sustain in the two wheeler market and increase its net sales, it should have

the ability to meet the future demand.

5) Market potential for two wheeler segment should be analysed and the production

should be forecasted. Competitor analysis must be done in order to know their

strengths and weakness.

6) A Customer satisfaction survey must be done to know how Lucas-TVS starter motor

is rated against its rivals

7) A Field survey has been taken up in order to find out the aftermarket sales and

customer’s perception regarding the starter motor.

8) Future growth drivers for auto-component industry is also studied

2

CHAPTER 2

INTRODUCTION

The following objectives are set in order to obtain a proper flow to achieve the desired

results.

Primary Objective:

To study the market potential and competitiveness of Lucas-TVS Starter Motor in domestic

two wheeler market and to device an optimal strategy to increase its market share in supply to

OEMs

Secondary Objective:

1) To analyse the competitiveness of Lucas-TVS’s products in Two-wheeler industry.

2) To study and analyse the two wheeler market.

3) To find the fast moving bike models in market and analyse Lucas presence on the

same

4) To study the service level provided by the two wheeler dealers in a month

5) To analyze the current repair practice in the market

6) To know the customer preferences on buying a product

7) To analyse the growth factors in two wheeler industry and to find out the gap between

the self (auto) start and manual start in two wheelers.

3

CHAPTER 3

INDUSTRY PROFILE

LITERATURE REVIEW

There are two distinct sets of players in the Indian auto industry: Automobile compone nt

manufacturers and the vehicle manufacturers, which are also referred to as Original

Equipment Manufacturers (OEMs). While the former set is engaged in manufacturing parts,

components, bodies and chassis involved in automobile manufacturing, the latter is engaged

in assembling of all these components into an automobile.

As noted by National Manufacturing Competitiveness Council (NMCC) 2006,

competitiveness of manufacturing sector is a very broad multi-dimensional concept that

embraces numerous aspects such as price, quality, productivity, efficiency and macro-

economic environment. The OECD (Organisation of Economic Co-operation and

Development) definition of competitiveness, which is most widely quoted, also considers

employment and sustainability, while being exposed to international competition, as features

pertaining to competitiveness.

The Indian auto components industry has experienced healthy sequential growth over the last

one-and-a-half years, following a period of de-growth in 2008-09. The recovery could be

attributed to factors such as strong buoyancy in the end-user industry; recovery of the global

economy; improved consumer sentiment and return of adequate liquidity in the financial

system. The revival of the auto industry was initially driven by the fiscal stimulus programme

of the government. Nevertheless, the fact that the growth momentum has sustained even after

withdrawal of such incentives in February 2010 highlights the strength of the underlying

domestic demand.

ICRA (Investment Information and Credit Rating Agency of India Limited) expects the trend

of automobile sales volume growth, and in turn the auto ancillary business growth to hold

over the short-to-medium term aided by strong underlying domestic demand across all

automobile segments [comprising two-wheelers (2W), three-wheelers (3W), passenger

vehicles (PVs) and commercial vehicles (CVs)], thrust on low-cost sourcing by Original

Equipment Manufacturers (OEMs) and Tier-1 players based from developed markets,

aggressive supply side push from automotive Original Equipment Manufacturers (OEMs) in

4

the form of new model launches and expected continuation of facilitators like easy access to

vehicle financing, notwithstanding possible challenges related to pressures on commodity

prices, interest rate hardening and fuel price deregulation.

While almost all segments of the automobile industry have posted a steady growth over the

last 18 months, the recovery in the Medium and Heavy Commercial Vehicle (M&HCV)

segment has been the slowest to gather momentum. The segment had also experienced the

sharpest volume decline in 2008-09, which had translated into significantly lower off- take

and losses for suppliers of M&HCV components - and had contributed to around 40% of

rating downgrades in the universe of auto and auto component manufacturers downgraded by

ICRA in 2008-09 and 2009-10. However, with domestic economic activity having gained

traction, ICRA expects the M&HCV segment volumes over the near term to surpass the

levels achieved in the pre-downturn period, which should result in improvement in the credit

profiles of auto component suppliers dependent on this segment.

On the whole, ICRA believes the Indian auto components industry is poised to sustain its

revenue growth momentum over the short-to-medium term. However, the industry

profitability may face pressures due to (a) pricing pressures from OEMs, which in turn are

entering into a phase of heightened competitive intensity constraining their pricing power; (b)

threat of rising commodity prices; (c) likely higher cost of funds consequent to hardening of

interest rates; and (d) import from other low-cost locations. In addition, companies engaged

in select product categories within the auto components industry are expected to incur large

CAPEX for enhancing production capacities to meet the growing demand, which could affect

the capital structure and return metrics of such companies over the short term.

However, in ICRA’s view, the anticipated strong business growth should result in healthy

cash accruals and enable such companies to tide over the short term pressures and emerge

with a stronger credit profile over the medium term. Other risks to growth and profitability of

the Indian auto components industry include increase in competition from other countries to

capture business opportunities both in the international as well as domestic markets;

uncertainty arising from currency volatility; and ability to acquire capabilities in tune with

technological advancements. The industry efforts to mitigate the above risks along with

policy measures of the government would determine the impact of the above risks on the auto

components industry going forward.

5

AUTOMOTIVE MISSION PLAN 2016

The Ministry of Commerce, with the help of SIAM (Society of Indian Automobile

Manufacturers) and ACMA (Automotive Component Manufacturers Association of India)

has devised automotive mission plan 2016 to emerge as the destination of choice in the world

for design and manufacture of automobiles and auto components with output reaching a level

of US$ 145 billion accounting for more than 10 percent of the GDP and providing additional

employment to 25 million people by 2016.

The Automotive Industry offers huge growth potential in terms of sales volume (including

exports) and also immense employment opportunities. The likely future volumes of different

vehicle categories were estimated on the basis of projections made by iMaCS (ICRA

Management consulting Services Limited), NCAER (National council of Applied Economic

Research) and AT Kearney. The value of projected domestic output was computed based on

historical average vehicle prices. The export potential was estimated on the basis of current

trends and possible opportunities in major export destinations.

The demand for after-market auto components and export output was also included in

computing growth potential of the industry. According to AMP, Government will encourage

collaboration of Industry with research and academic institutions like CSIR, IIT, and machine

tool industry for the development of appropriate technology and creation of IPR to meet more

stringent regulations as well as to develop relevant machine tools and equipment that improve

manufacturing processes and quality of the vehicles and components produced by the

industry. The interface with the Core Group on Automotive Research (CAR) would be

strengthened.

MARKET SHARE

Market share, in strategic management and marketing is, according to Carlton O'Neal, the

percentage or proportion of the total available market or market segment that is being

serviced by a company. It can be expressed as a company's sales revenue (from that market)

divided by the total sales revenue available in that market. It can also be expressed as a

company's unit sales volume (in a market) divided by the total volume of units sold in that

market.

Increasing market share is one of the most important objectives of business. The main

advantage of using market share as a measure of business performance is that it is less

6

dependent upon macro-environmental variables such as the state of the economy or changes

in tax policy. Market share is used by businesses to determine their competitive strength in a

sector as compared to other companies in the same sector. It also allows company to

accurately assess its performance from year to year.

There are four basic ways to improve market share.

1) Improving the quality of the Product, better than the competitors.

2) Product pricing factor is important

3) Should have Strong distribution Network

4) Product Promotion

Increased market share is not always the best solution for businesses. It might not be

profitable if it is associated with expensive advertising or a big price decrease. A company

may not be able to meet the demand of an increased market share without huge inves tments

in new equipment and employees. In some cases it can be to a company's advantage to

decrease market share, if the lower costs of lower market share can improve profitability.

Managing market share, therefore, is a very important aspect of managing a business

7

TWO WHEELERS INDUSTRY IN INDIA

The feeling of freedom and being one with the Nature comes only from riding a two wheeler.

Indians prefer the two wheelers because of their small manageable size, low maintenance,

price and easy loan repayments. Indian streets are full of people of all age groups riding a two

wheeler. Motorized two wheelers are seen as a symbol of status by the populace. Thus, in

India, we would see swanky four wheels jostling with our ever reliable and sturdy steed: The

two-wheeler.

India is the second largest producer and manufacturer of two-wheelers in the world. It stands

next only to Japan and China in terms of the number of two-wheelers produced and domestic

sales respectively. Indian two-wheeler industry has got spectacular growth in the last few

years

KEY PLAYERS IN THE TWO-WHEELER INDUSTRY

There are many two-wheeler manufacturers in India. Major players in the 2-wheeler industry

are Hero Honda Motors Ltd (HHML), Bajaj Auto Ltd (Bajaj Auto) and TVS Motor Company

Ltd (TVS).

Break up of Two wheeler Industry

8

The other key players in the two-wheeler industry are Kinetic Motor Company Ltd (KMCL),

Kinetic Engineering Ltd (KEL), LML Ltd (LML), Yamaha Motors India Ltd (Yamaha),

Majestic Auto Ltd (Majestic Auto), Royal Enfield Ltd (REL), Mahindra 2 wheelers and

Honda Motorcycle & Scooter India (P) Ltd (HMSI).

Two-wheeler Industry Production Forecast

DEMAND AND MARKET POSITION

The total size of Indian two-wheeler industry increased at a CAGR of around 9.0 percent in

the last 5 years, and was pegged at Rs 360 billion with total volume of 10.5 million units in

2009-10. CRISIL research estimates the two-wheeler industry to grow at 8-10 percent in

volume terms during 2009-10 to 2014-15, with domestic two-wheeler sales growing at 7-9

percent and exports at 10-12 percent. In value terms, the two-wheeler industry is estimated to

post a CAGR of 9-11 percent to reach a size of Rs 720 billion by 2014-15.

The industry is dominated by three players- Hero Honda, Bajaj Auto and TVS Motors- and is

divided into three segments – motorcycles, scooters and mopeds. In volume as well as value

terms, motorcycles lead the two-wheeler market. The share of motorcycles in total sales

volume in 2009-10 was 80.3 percent, followed by scooters (14.2 percent) and Mopeds (5.5

percent).

9

Motorcycles can be further divided into three segments- economy, executive and premium.

The economy segment comprises lower- end motorcycles (priced at Rs 30-000-40,000),

whereas the executive segment (priced at Rs 40,000-50,000) and premium segment (priced

higher than Rs50, 000) constitute higher-end motorcycles. Now-a-days, due to the increased

oil prices, high interest rates and to satisfy the market demand, players are shifting their focus

to 110-125cc motorcycles. This has led to increase in the executive segment contribution

from 42.6 percent in 2005-06 to 59.1 percent in 2009-10.

Hero-Honda, the market leader, holds a dominant market share of 69.8 percent in the

executive segment, whereas Bajaj Auto leads the other two segments with a market share of

around 45.0 percent in both segments. Global players- Yamaha and Suzuki- also have a

presence in the Indian two-wheeler industry; however, they are yet to gain a significant

market share. Honda motorcycle & Scooter India Ltd (HMSI) leads the un-geared scooter

segment, with a 50.6 percent market share. TVS Motors holds a second position in the

scooters segments with a 20.5 percent share, followed by Hero Honda (14.3 percent). Electric

scooter is manufactured by only two players, TVS Motors and Electrotherm (India) Ltd, and

its share in the scooters segment is negligible as of 2010-11.

Mopeds, which are generally preferred in rural and semi urban areas, are manufactured only

by TVS motors. Over the past few years, Kinetic Motors, majestic motors and Kinetic

10

Engineering have discounted their business operations; TVS Motors enjoy monopoly in the

mopeds segment.

In domestic sales 2009-10, Hero Honda retains its market leadership with 48 percent overall

market share whereas Bajaj Auto grew at 38.8 percent, thus holds a market share of 19.1

percent, followed by TVS Motors, which holds 14.5 percent share.

In last few years, HMSI is emerging as a strong contender to TVS motors. HMSI grew by

17.3 percent and has a market share of 12.7 percent. Yamaha Motors, Suzuki Motorcycles

India and Mahindra & Mahindra are still struggling to gain a substantial market share.

Mahindra & Mahindra entered two-wheeler industry with the acquisition of Kinetic Motors in

2008-09, however, its presence only in the scooter segment.

Domestic Market Share of Two wheeler Players

Source: Annexure Table (v)

11

AUTO COMPONENT INDUSTRY

Indian auto component industry is emerging as a global manufacturing hub for auto

component manufacture. Indian auto component industry is one of the front runners for

grabbing the global auto component outsourcing market, estimated to be worth US$700

billion by 2015. Auto components sector requires an incremental investment of Rs 2,000-

crores as per the report of working group on automobile industry Eleventh Five Year Plan

(2007-2012).

Today, India has the potential to manufacture a range of automotive components (about

20,000 in numbers) - from fasteners to engine parts apart from the foreign demand, the

domestic automobile production is also growing with sales expected to be about 17 million

by 2012. The exports are expected to touch US$17.5 billion by 2015.

The Indian auto component Industry is highly fragmented:

Around 500 organized players account for the 77% of the value added in the sector.

Unorganized players are mainly replacement market players or tier ¾ component

manufacturers

Auto-Components Manufacturers Association of India (ACMA) represents the auto

component industry in India and has around 500 registered members.

AUTO-COMPONENTS MANUFACTURERS ASSOCIATION OF INDIA

The Automotive Component Manufacturers Association of India (ACMA) is the nodal

agency for the Indian Auto Component Industry.

Its active involvement in trade promotion, technology up-gradation, quality enhancement and

collection and dissemination of information has made it a vital catalyst for this industry's

development. Its other activities include participation in international trade fairs, sending

trade delegations overseas and bringing out publications on various subjects related to the

automotive industry.

ACMA is represented on a number of panels, committees and councils of the Government of

India through which it helps in the formulation of policies pertaining to the Indian automotive

industry.

12

For exchange of information and especially for co-operation in trade matters, ACMA has

signed Memoranda of Understanding with its counterparts in Australia, Brazil, Canada,

Egypt, France, Germany, Iran, Italy, Japan, Malaysia, Pakistan, South Africa, South Korea,

Spain, Sweden, Thailand, Tunisia, Turkey, UK, USA and Uzbekistan.

ACMA represents over 600 companies, whose production forms a majority of the total auto

component output in the organized sector. In the domestic market, they supply components to

vehicle manufacturers, Tier-1 suppliers, to state transport undertakings, defence

establishments, railways and even to the replacement market. A variety of components are

being exported to OEMs and aftermarket worldwide.

SEGMENT-WISE DIVISION:

The Auto components industry is predominantly divided into the following segments:

Engine parts: 31%

Drive Transmission & Steering Parts: 19%

Suspension & Brake Parts: 12%

Electrical Parts: 9%

Body and chassis: 12%

Equipments: 10%

Others: 7%

According to estimates available from industry association ACMA, the global automotive

component industry is estimated to be more than US$1trn. It is forecasted to hit US$1.9

trillion by2015. Out of the total auto-component market in 2015, around 40%, US$700 billion

market is expected to be driven by low cost countries globally. India is one of the fastest

growing low-cost manufacturers of auto components in the world. The auto-component

market is estimated to be US$19 billion in 2008-09 in India, of which US $3.8 billion is the

export market. With the growth in automobile sector, entry of new players in India, rising

income and export, auto component manufacturers in India has potential to rise at a CAGR of

13% to touch US$40 billion by 2015. In volume terms, two/three wheelers are the largest

customer segment of auto-component market (around 34%), followed by passenger cars

13

Auto-component industry production forecast

contributed nearly 33% and commercial vehicle (CV) components account for almos t 24% of

the auto-component market

CLASSIFICATION OF AUTO COMPONENT MARKET

The auto component industry can be classified into the 3 channels; as far as auto component

market is concerned. The classification of auto component market, as per the market spread,

is shown below:

Classification of Auto Component Market

Auto Component market

OEM Demand After market Demand Export Demand

Auto Components Auto Accessories

14

The OEM (Domestic and Export Demand) contributes to 70 percent of the turnover, rest 30

percent of the auto component demand is generated through aftermarket or replacement

demand.

Auto-Component’s demand in OEM and After Market

MAJOR AUTO COMPONENT PLAYERS (TWO, THREE AND FOUR WHEELER

PLAYERS)

There is not any distinction between the two wheeler and four wheeler automobile

component players in the Indian automobile component industry. The major organized

players who are catering to two wheeler OEMs are also catering to four wheeler OEMs.

However, for some niche commercial vehicle components, due to specialized load bearing

and design requirements, some automobile component players are the vendors only to

commercial vehicles.

The Indian automotive industry is characterised by a strong competition between increasingly

quality conscious manufacturers. The large, highly skilled but low cost manufacturing base

makes partnering linkages with overseas players attractive. These strengths coupled with

India’s well established strengths in IT/ Software combined together to make India an

emerging player in this sector.

15

MAJOR PLAYERS OPERATING IN THE PRODUCT SEGMENTS OF AUTO-

COMPONENTS

Product Segment Key Sub-Segments Major Players

Transmission and Steering

Gears and Drive Rico Auto Industries.

Clutches Automotive Axles

Axles Wheels India ltd. Others Sona Koyo Steer.

GKN Driveline (India)

Electrical Parts

Starter Motors, Generator, Denso

Distributor, Spark plugs, MICO

Ignition Coil, Flywheel Motherson Sumi

Magnet, Voltage Regulator, Minda Industries Electrical Ignition Lucas TVS

India Nippon

Engine Parts

Pistons Piston Rings Engine Valves Carburettors Fuel Delivery System

Escorts

India Pistons Geotze (India)

India Pistons Rane Engine Valves

Shriram Piston & Rings Space Carburettors

Ucal Fuel Lucas TVS MICO Germany

Equipment

Headlight Lumax, Autolite, Phoenix Lamps

Dashboard Premier Instruments & Controls

Sheet Metal Jay Bharat Maruti, Omax Auto, JBM tools

Suspension and Braking

Brake System Brake Linings Shock Absorbers

Automotive Axles Brakes India

Kalyani Brakes Allied Nippon

Rane Brake Lining Sundaram Brake

Gabriel India Munjal Showa

Others Fan Belts Rico Auto

Sheet Metal Rico Auto

16

SWOT ANALYSIS: INDIA AUTO COMPONENT MARKET

The classical tool to assess the industry environment is through SWOT analysis.

Strength

Is Globally Cost Competitive

Adheres to strict quality controls

Has access to latest technology

Provides support to critical infrastructure and metal industries

Weakness

Industry has low level of R&D capability

Industry is exposed to cyclical

downturns in the automotive industry

Most component companies are

dependent on global majors for technology

Opportunities

May serve as sourcing hub for global

automobile majors

Significant export opportunities may be

realised through diversification of export basket

Implementation of Value-added tax (VAT) in FY2004 will negate the

cascading impact

Continuous pressure on global OEMs to

reduce cost and source from low cost countries

Threats

The presence of a large counterfeit components market poses a significant

threat

Pressure on prices from OEMs

continues

Imports pose price based competition

in the replacement market

Further marginalization of smaller

players likely

With the growing sales of automobiles, new global OEMs are entering in the Indian

automotive industry which in turn provides the auto component industry the opportunity to

register robust growth over next 5-8 years. The component industry has not more than 50

players with turnover of more than US$ 500 million per annum. The growing automobile

demand and the increasing awareness to purchase genuine spare parts in the aftermarket

poses attractive market opportunities for the two and four wheeler auto component

manufacturers.

17

CHAPTER 4

COMPANY PROFILE

TVS GROUP

TVS is an Indian diversified industrial conglomerate with

principal base in Chennai and Madurai. Almost all the

companies in the group are privately held. The largest and the

most visible company is TVS Motors, one of the top 3 two-wheeler manufacturers in India.

From its humble beginning at the turn of the 20th century, the group has progressed to

become the largest manufacturer and distributor of auto components in India

TVS Group was established in 1911 by T.V.Sundaram Iyengar, one of the visionaries of the

Indian industry. His ideas were years ahead of their times. Three years before World War I,

when the automobile was still seen as some kind of intimidating “horse- less carriage”, he had

the vision to set up South India’s first ever rural bus service and over the years, this transport

company became the largest of its kind in the country, legendary for its punctuality and

service. In fact, the rules and regulations laid down by him later became the blue print for the

Motor Vehicles Act.

The importance given by the founder of Trust, Value and Service-TVS, are the basic tenets of

the TQM framework even today. His philosophy of business reflected the kind of man he

was-simple and stern. It was based rigidly on four concepts – Quality, Service, Reliability

and a sense of Ethics. The TVS Group is the largest manufacturer and distributor of

automotive components in India, with a turnover in excess of 2.7 billion US$ and a family of

over 25000 members. Today, this renowned business conglomerate remains faithful to its

core ideals of trust, values, service and ethics.

The TVS Group is India's leading supplier of automotive components and one of the

country's most respected business groups. With a combined turnover of more than USD 5

billion, the TVS Group employs a total workforce of around 25,000. Charting a steady

growth in terms of expansion and diversification, it currently comprises around 43

companies. These companies operate in diverse fields ranging from two-wheeler and

automotive component manufacturing to automotive dealerships, finance and electronics.

18

Uniting these multiple businesses is a common ethos of quality, customer service a nd social

responsibility.

TVS GROUP OF COMPANIES

The TVS group, with a turnover of over one billion dollars, is the largest manufacturer of

automotive components in India. The group produces auto electrical, diesel fuel injection

systems, braking systems, automotive wheels and axle fasteners, powder metal components,

radiator caps, two wheelers and computer peripherals. Backed by five service and distribution

companies with an extensive network across the country, group has the largest distribution

network for automotive products in India

Company Products

Manufacturing Companies

Axles India Ltd Automotive axles

Brakes India Ltd Hydraulic brakes & clutch ignition systems

India Nippon Electricals Ltd Magnetos, two/three wheeler ignition systems

India Japan Lighting Ltd Headlamps, rear combination lamps &

various signal lamps for automotive & two

wheeler applications

Lakshmi Auto components Ltd Engine/transmission components

Lucas-TVS Ltd Auto electrical parts

TVS Srichakra Ltd Automotive tyres

Sundaram Brake Linings Ltd Brake linings & clutch facings

Delphi-TVS Ltd Diesel fuel injection equipments

Sundaram Clayton Ltd Air brakes

Sundaram Fasteners Ltd High tensile fasteners, cold extruded

products, sintered components, intelligent

systems, radiator caps

Sundaram Textiles Ltd Yarn

Turbo Energy Ltd Turbo chargers

19

TVS Interconnect Systems Ltd Electronic connectors

TVS Electronics Ltd Computer peripherals

TVS Sewing Needles Ltd Sewing needles

TVS Motor Company Ltd Two wheelers

TVS Cherry Ltd Precision miniature, sub-miniature, selector

switches, hall effect sensors, key switches

Wheels India Ltd Automotive wheels

Distributive Companies

India Motor parts & Accessories Ltd Distributors of automotive components

Lucas India Service Ltd Distributors of auto electrical, fuel injection

equipment, LISPART & batteries

TV Sundaram Iyengar & Sons Ltd Distributors of passenger cars, commercial

vehicles, automotive spare parts

Other Companies

Southern Roadways Ltd Freight services

Sunco Machines Ltd Precure tyre retreading equipment

Sundaram Industries Ltd Tyre retreading, coach building, rubber

components.

20

LUCAS-TVS

Lucas - TVS established in 1961 as a joint venture between Lucas UK

and T V Sundram Iyengar & Sons (TVS), India to manufacture

Automotive Electrical Systems. Lucas-TVS is the Leader in Auto

Electricals in India today with 48 years experience in design and manufacturing. 4 out of 5

vehicles rolled out daily are fitted with Lucas-TVS products. 100% share of LUCAS-TVS is

now owned by the TVS group.

Lucas - TVS is a TS16949 and OSHAS 18001 certified company. Lucas-TVS have bagged

the Deming application price in 2004 from the Japanese Union of Scientists and Engineers

(JUSE).

Lucas-TVS has emerged as one of India's largest independent suppliers of automotive

components and it reaches out to all segments of the automotive industry such as passenger

cars, commercial vehicles, tractors, jeeps, two-wheelers, and off-highway vehicles, and also

caters to stationary and marine applications.

PRODUCTS

Lucas-TVS manufacture electrical components for the entire automobile industry (CVs,

LCVs, Cars, 3/2 wheelers) and provides wide range of products with various technical

features as per the demand in market. Various Products are:

1) Starter Motors

2) Alternators

3) Wiper Motors

4) Blower Fan Motors

5) Small Motors

6) Ignition

CUSTOMERS

Cars/Utility vehicle:

21

LCVs/CVs:

Tractors:

22

Earth movers:

Two/ Three Wheelers

23

Exports:

After Market Customers:

Australia, Austria, Bangladesh, Bahrain, Belgium, China, Doha, Dubai, Egypt, England,

Germany, Ghana, Ireland, Italy, Korea, Kuwait, Libya, Malaysia, Mauritius, Romania,

Russia, Serbia, Seychelles, Singapore, South Africa, Spain, Srilanka, Sultanate Of Oman,

Switzerland, Turkey, U.S.A, Zambia.

AWARDS

Lucas-TVS, believes that quality begins and ends with the customer. This means identifying

customer needs and comprehensively meeting them. For the company, quality is not just

conformance to drawings or specifications but ensuring customer satisfaction.

1. II PLACE IN NATIONAL ENERGY CONSERVATION, AWARDS - 2008 Auto-

motive sector Ministry of Power, Govt. of India

2. TATA CUMMINS Lucas-TVS is Awarded "OUTSTANDING SUPPLIER &

EXCELLENCE PERFORMANCE during the year 2007 by CUMMINS INDIA

LIMITED

3. Deming Application prize JUSE, Japan

4. Best Supplier Award Maruti Udyog

24

5. 100 PPM Award Hyundai motor India

6. Q1 Award From Ford

SALES PERFORMANCE

Lucas-TVS will retain its dominant position in the automotive electricals market over the

medium to long term, supported by its long-standing and established relationships with

domestic OEMs. However, revenue growth and profitability will remain under pressure

with sluggish off- take by OEMs, increasing competition, and pricing pressures from the

OEMs.

Net sales and Growth Trend of Lucas-TVS

Source: Annexure table (ii)

SWOT ANALYSIS

Strengths

Lucas- TVS reaches out to all segments of the automotive industry from two wheelers

to Heavy Commercial Vehicles (HCVs)

It has extensive distribution network comprising over 2000 outlets spanning the entire

length and breadth of the country.

25

Its focus on quality products combines with urge to constantly learn and improve

imparts it a unique strength, which cannot be easily initiated by its competitors

It has been successful in developing contacts with a host of service dealers over last

eleven and half decades.

The management style at Lucas-TVS allows participation at the worker level. Small

Group Activity (SGA) is just an example of this management style.

Weakness

Lucas-TVS have not been able to establish a backward integration. It has to further

develop its technologies to meet higher quality demand in market

Lucas-TVS is facing high pressure from OEMs in terms of pricing of the product

The company has to motivate development of quality products so as to bring down the

rejection levels

Opportunities

Rapid inflow of investments in the auto component sector resulting in new green field

sites near the vehicle-manufacturing units to ensure JIT delivery to OEMs. This will

further open new avenues for the company

With liberalization and the slashing of import duties both on automobiles and auto

components, world class automobile manufacturers have shown interest in entering

the Indian markets. Increased production of vehicles will stimulate the auto

components industry

Threats

Inability to match the technological capabilities of big foreign auto component

manufacturers like Delphi, MICO etc.

The company has established links with many collaborators which is not the case with

other Global players, hence might prove to be a threat in future.

26

CHAPTER 5

ISSUES AND CHALLENGES

ISSUES AND CHALLENGES

The Indian Auto-Component industry as a whole is engulfed with certain challenges. These

challenges can be dissected into two categories – internal factors i.e. the challenges faced at

organizations’ level and external factors where the other entities, issues outside the

organization / industry influence the growth of the industry.

Internal Factors

Sustaining Quality Levels

Under- investment in ERP (Enterprise Resource Planning) infrastructure leading to

inefficient stock planning and high inventory levels

Rising attrition rate which slows down the growth

Need for Innovation

Enhancement of share of Auto component in global trade

External factors

Poor logistics and power Infrastructure

Increasing cost of raw materials and labor wages

Increasing competition and high lead time for international contracts (from OEMs)

Managing M&A /JV / collaborations.

Tightening environmental & safety regulations leading to high capital investments

27

CHAPTER 6

COMPETITOR ANALYSIS

COMPETITOR ANALYSIS IN TWO-WHEELER SEGMENT- STARTER MOTORS

The two wheeler industry is going through a tremendous technological change where each

firm is engaged in changing its processes and technologies to sustain the competitive

advantage and provide customers with optimized products and services. Starting from engine

parts to drive train, chassis to body dimensions, OEMs are offering various types of models

with prices ranging from Rs30, 000 to Rs1, 00,000 and more. Now-a-days firms are

launching “sport” type bike models for day-today life use.

In olden days, people have to kick start their bikes, which in other way resemble as a stress

reliever. If the engine doesn’t pick up the first time or the second, people continue to kick as

much and the kick lever gets jammed. With new technologies in hand, vehicles are

manufactured without kick levers (i.e. Kick start). Self-Start in two wheelers has made the

industry to sustain continuous growth while satisfying customers in all sub-segments. It has

provided ease in starting a bike and has made ride smooth.

What is a self / electric start?

Self start or an electric start in a two wheeler is defined as a system that uses battery power to

automatically start an internal-combustion engine. Person, who rides a two wheeler, has to

just press the “Start” button and the vehicle’s engine is triggered on.

Self start mechanism works with the help of a Starter Motor. A starter motor (also starting

motor or starter) is an electric motor for rotating an internal-combustion engine so as to

initiate the engine's operation under its own power.

Lucas-TVS starters for two-wheelers have been introduced in the year 2002, and sales has not

picked up as expected by the firm. Given here are the details of other two-wheeler starter

motor supplier for the Indian two wheeler industry.

1) Varroc Engineering Private Limited

2) Mitsuba Sical India Limited

3) Flash Electronics India Private Limited

28

COMPETITOR’S PROFILE

Varroc Engineering Private Limited

Trade Mark: Varroc Excellence

Products Manufactured: Engine valves, Crank shafts, Transmission

Assemblies, Front wheel hub Assemblies, Steering Assemblies, Catalytic Converters, Starter

and Wiper Motor, Capacitor discharge Ignition, Regulator rectifier, Magnetic AC Generators,

Body Switches, Lightning systems, Direction Indicators.

Principle Customers:

Domestic (OEM): Bajaj Auto Ltd., Suzuki Motorcycles India Ltd., Honda Motorcycle &

Scooter India Pvt. Ltd., India Yamaha Motors Ltd., Royal Enfield

Sales Turnover (2009-10 in US $ Mln): 192.55

Exports Turnover (2009-10 in US $ Mln): 12.45

Mitsuba Sical India Limited

Year of Commencing Production: 1986

Trade Mark: MSIL (MITSUBA SICAL INDIA LIMITED)

Products Manufactured: Wiper Motor and Link Motion Assembly, Windshield Washer

Assembly, Fan Motor Assembly, AC Generator, Starter Motor Assembly, Power window

Motor

Principle Customers:

Domestic (OEM): Hero Honda Motors India Ltd., Suzuki Motorcycles India Ltd. and Honda

Motorcycle & Scooter India Pvt. Ltd.

Sales Turnover (2009-10 in US $ Mln): 66.67

Flash Electronics India Private Limited

Year of Commencing Production: 1989

29

Trade Mark: FLASH

Products Manufactured: Automotive Sensors, Ignition Coils, Starter Motors, Stepper Motors,

Magneto Assembly, Alternators, RR Unit, CDI, DC Flashers, Spark Plug Cap & Complete

Automotive Solution for Electrical & Electronic Components

Principle Customers:

Domestic (OEM): Bajaj Auto Ltd., Honda Motorcycle & Scooter India Pvt. Ltd. and India

Yamaha Motors Ltd.

Sales Turnover (2009-10 in US $ Mln): 32.29

Domestic Market share of two wheeler Starter Motor Suppliers

Source: Annexure Table (v)

Currently, Mitsuba holds the dominant position in the two wheeler domestic automotive

electrical market as it supplies two wheeler starter motor to most of the bike models of two

wheeler market leader-Hero Honda. Mitsuba also supplies starter motor to all bike models of

Honda and Suzuki which holds 13 percent and 6 percent of the market respectively.

After the split between Hero and Honda, the Hero group is likely to expand its business

overseas which in turn is an opportunity to LUCAS-TVS to expand its supplies thereby

capturing the market. Honda Motorcycle & Scooter India, the country's fourth- largest two-

30

wheeler maker, can now take on the market leader in every segment, while other companies

will also try to make the most out of an expected weakening of Hero Honda's brand image

DOMESTIC SUPPLY AND MARKET POSITION- MODEL WISE

Starter Motor Supplier OEMs Bike Models

Mitsuba Sical

Hero Honda

Splendor Super Splendor

Passion Pro CD (Dawn, Deluxe) Glamour

Karizma CBZ

Hunk Achiever

Honda Motorcycles and Scooters India

Twister Shine

Stunner Unicorn

Unicorn Dazzler

Suzuki

Heat GS 150R Zeus

Slingshot Access

Varroc Excellence Bajaj Auto

Discover 150cc

Pulsar Platina

Flash Bajaj Auto

Discover 125/135 cc

Pulsar Platina

Lucas-TVS

Hero Honda Pleasure

Honda motorcycles and

Scooter India

Activa

Aviator Dio

Bajaj Auto Discover 100cc

TVS Motors

Pep+ Teenz

Wego Apache

Victor Star City Flame

Jive

Yamaha

Fazer Entizer

Gladiator FZ16

31

DATA COLLECTION FRAMEWORK

Three sets of questionnaire were prepared to find out the performance of Lucas-TVS starter

motors in two wheeler market. One set of questionnaire (Customer Satisfaction Survey) is to

the OEMs, to find out the level of satisfaction with Lucas-TVS products. The second set and

the third set of questionnaire is to the Authorized two wheeler dealers and to the mechanics

respectively, to find out the top selling bike models and customer preference in buying/

repairing a faulty starter motor.

Questionnaire to OEMs:

Questionnaire were given to the OEM representatives and were asked to rate the performance

of Lucas-TVS products with respect to Quality, Delivery, Line rejections, After sales support,

Product Improvements and New product Development in comparison with other suppliers.

Questionnaire to Dealers (Sales and Service):

Q1 & Q2 explicitly asked to the respondent to specify the top 3 selling bike models for the

month of May and June and if possible the volume sold is also noted.

Q3 to Q5 of the questionnaire are used to get general details regarding the number of vehicles

serviced per month and replacement of faulty starter motor.

Q6 explicitly asked to the respondent about the price of Lucas-TVS products when compared

to others and their recommendations

Questionnaire to Mechanics

Q1 & Q2 explicitly asks the respondents regarding the number of vehicles serviced per

month and number of starter motor replaced.

Q3 & Q4 asks about the availability of product spares and the discount price given by the

nearby dealers on starter motors.

Q7 & Q8 explicitly asks the respondent regarding the customer preference regarding the

quality, price and servicing a starter motor.

Q9 to Q12 of the questionnaire are used to get the general details regarding the awareness of

Lucas-TVS products and its recommendations.

32

CHAPTER 7

RESULTS AND FINDINGS

FAST MOVING TWO WHEELER MODELS IN MARKET

COMPANY MODEL CAPACITY

AVERAGE

VOLUME SOLD/

MONTH

CURRENT

SUPPLIER

TVS

Scooty Pep + 110cc 45 LTVS/

Chengudu Streak 110cc

Apache 150/180cc 5

HERO HONDA

Splendor plus 100c

60 Mitsuba Sical Splendor pro 100cc

Passion pro 100cc

HONDA

Twister (with Disc brakes)

110cc

100 Mitsuba Sical Unicorn 150cc

Shine 125cc

BAJAJ

Pulsar 150cc 50

Flash/ Varroc Discover 125cc/150cc 15

Platina 100cc

YAMAHA

FZ16 150cc

5-15 LTVS Enticer 125cc

Fazer 125cc

SUZUKI Access 125cc 25 Mitsuba Sical

Honda’s sale is on increasing line compared to last year. Unicorn (Standard and Dazzler) is

on the top selling bike list. Due to the increase in oil/ petrol price, customers prefer 100-

150/180cc bikes which give good mileage. TVS, Honda, Suzuki have also stated the

increasing sale on scooter segment i.e. Scooty Pep+, Activa and Access as many customers

who travel through heavy traffic areas prefer gearless vehicle compared to geared ones.

33

DATA ANALYSIS

MOST FREQUENTLY SERVICED VEHICLE

It is seen that Scooty pep+ is serviced more in a month than other vehicles. Service dealers

quoted that, in a month they service over 100 Pep+, which comes for general service and with

minimal complaints.

NUMBER OF STARTERS REPLACED IN A MONTH

Most of the mechanics say that around 50-100 two wheeler starters are replaced per month.

The average life time of a two wheeler starter motor is 3 years.

34

Number of Starter Motor Replaced per month

Attributes Number of Respondents Percentage

50-100 5 45.45%

100-150 2 18.18%

150-200 3 27.27%

>200 1 9.09%

AVAILABILITY OF THE PRODUCT

Most of the respondents responded that the product spares are available in the market.

Distributors offer at a nominal discount rate (8-10 percent) and spares are available with 6

months to 1 year warranty.

MOST PREFERRED PRODUCT IN MARKET

Attributes Percentage preferred

Varroc 46%

Mitsuba Sical 19%

Lucas-TVS 27%

Chinese Products 8%

35

It is seen that Varroc starter motor is highly preferred in the market. 46% of the respondents

have voted for varroc starter motor.

CUSTOMER PREFERENCE IN BUYING AND SERVICING A PRODUCT

Attributes Number of Respondents

Price 1

Quality 10

Servicing a old Product 2

Buying a New Product 8

.

36

From the analysis it is clearly seen that customers prefer buying a new product than servicing

and importance is given to quality and not price of the product. However, some customers

prefer Chinese products because of its low prices in the aftermarket

SUGGESTION OF LUCAS-TVS STARTERS TO CUSTOMERS

64 percent of the respondents responded that they suggest Lucas-TVS two wheeler starter

motor to the customers whereas 36 percent of them said they will not suggest it to the

customers.

37

OEM’s SATISFACTION LEVEL WITH LUCAS-TVS STARTER MOTORS

A Customer satisfaction survey was done, where the questionnaire was given to

representatives of the respective OEMs through mail or through direct meeting and

information obtained is shown below:

HONDA: SATISFACTION SURVEY

It is seen that, there is a gradual increase in quality of the product and product rating given by

Honda motorcycles and Scooter India Limited on Lucas-TVS two wheeler starter Motor.

38

It is seen that the delivery performance and the Price of the product are stable from 2006.

Though Lucas-TVS face pressure from OEMs regarding the reduction of price on their

product, steps have to be taken to bring a win-win situation favoring the both.

HERO HONDA: SATISFACTION SURVEY

There is a steady rise seen product rating as well as the quality of the product. Price seems to

be steady, that is no alteration in price has been done so far.

39

YAMAHA: SATISFACTION SURVEY

It is seen that, there is a gradual increase in quality of the product and product rating given by

Yamaha on Lucas-TVS two wheeler starter Motor. Price seems to be steady, that is no

alteration in price has been done so far. It is also seen that the delivery performance, sales and

service provided by Lucas-TVS are rated high. Currently Lucas-TVS has 100 percent share

on supply of starter motor to Yamaha.

40

CHAPTER 8

RECOMMENDATIONS

From the above analysis it is visible that Lucas-TVS is on path to success. But still

competitors like Mitsuba and Varroc are playing a tough game by holding major shares in

two wheeler market. After the analysis on fast selling bike models, it can be inferred that

Lucas-TVS is having an opportunity to supply starter motors to these models in order to

increase its sales. Further, the split of Hero Group and Honda Motorcycle has widened the

path of growth for auto-components companies to take steps for the supply.

New technological Improvements have to be done to enter new markets. New product

development has to be tuned so as to introduce many products in a short span of time to

attract OEMs. Pricing has to be made optimal so that Chinese products don’t eat away the

share in aftermarket. The firm must create Uniqueness in their marketing strategy and their

product ranges so that the people in the distribution channel get attracted and the sales of the

product can be increased. Extensive marketing of the product has to be done; Niche

marketing will be highly suitable. Also company has to employ exclusive distributors for

distributing the product and can provide training programs for dealers involved in the process

of distribution.

Further the company can negotiate with the OEMs for the future supply of starter motor to

41

the bike models which will be launched in future. This will increase the domestic market

share as well as the net sales of the company.

STRATEGIES TO BE ADOPTED

Focus on niche segments and niche export markets is an innovative marketing

strategy followed by some component firms. For example, Manual Rack and Pinion

(R&P) Steering Gears is in high demand in the Middle East and Africa, while they are

not preferred in most other parts of the world. Hence, a Chennai based steering

manufacturer, whose core strength lies in manual R&P steering gears, has decided to

focus on this niche export market.

Low-cost manufacturing and targeting East Asian countries for exports

Lucas-TVS can target the blooming segment in two wheelers, that is electric two

wheelers (battery operated)

Acquisition of leading foreign brands and plants is believed to be a strategy that gives

access to new markets and technologies. When this value addition is blended with

existing cost advantage in plants located in India, overall competitive advantage is

enhanced. Further, this also serves as a brand-promotion strategy.

Technical collaborations with international technology leaders will help Lucas-TVS

to rise up to global standards.

CONCLUSION

According to a study conducted by IMRB (Indian Market Research Bureau) the domestic

automotive component market holds promising potential for the domestic industries and for

the players from china and ASEAN countries.

Domestic two wheeler players will soon start their ventures outside India. Lucas-TVS, with a

varied opportunity, can collaborate with technological leaders and produce starters which

adhere to the global quality thereby increasing its exports, Market share and soon becoming a

Market Leader in two wheelers’ segment. Lucas-TVS can supply their products to non-auto

industries such as industrial machinery manufacturers, so as to ensure that their market risk is

minimized.

42

BIBLIOGRAPHY

REFERENCES

1) “Global Competitiveness of Indian Auto Component Industry & Its Sustainability”

Auto Component Manufacturer’s Association (ACMA) Member book 2011

2) “INDIAN AUTO COMPONENTS INDUSTRY: RIDING THE TIDE”- Investment

Information and Credit Rating Agency of India-“December 2010

3) “Defining the Role of the Government in the Transnationalisation Efforts of the

Indian SMEs in the Auto Components Sector”- Department of Scientific & Industrial

Research (DSIR), August 2008

4) Automotive Mission Plan 2006-2016

5) Badri Narayanan G. “Determinants of Competitiveness of Indian Auto Industry”-

Indian Council of Research on International Economic Relations (ICRIER)-2008

6) Hari K. Nagarajan “The Evolution and Structure of Two wheeler Industry in India”-

IIM Bangalore

7) “Demand Forecast for Indian Automobile Industry”-Society of Indian Automobile

Manufacturers (SIAM)

8) Vision 2015’ for the Indian supplier industry: how achievable is it?’ A Report of

ACMA-McKinsey.

WEB LINKS

1) SIAM: http://www.siamindia.com/scripts/gross-turnover.aspx

http://www.siamindia.com/scripts/production-trend.aspx

2) FADA: http://www.fadaweb.com/vision_2015.htm

3) IBEF: http://www.ibef.org/industry/autocomponents.aspx

4) India Infoline: http://content.indiainfoline.com/wc/archives/sect/attw/ch07.html

5) Know India: http://www.knowindia.net/auto.html

43

ANNEXURE

TABLES

(i) Table showing the two wheeler production forecast

Year 2008-09

2009-10

2010-11

2011-12*

2012-13*

2013-14*

2014-15*

2015-16*

Sales 7.43 9.37 11.995 14.994 16.328 17.773 19.151 20.683

Exports 1.004 1.14 1.653 1.845 2.07 2.333 2.608 2.908

Production 8.434 10.51 13.648 16.839 18.398 20.106 21.759 23.591

Growth 24.61% 29.86% 23.38% 9.26% 9.28% 8.22% 8.42% Source: SIAM

(ii) Table Showing Lucas-TVS Net sales growth Analysis

Year 2005-06

2006-07

2007-08

2008-09

2009-10

2010-11*

Net

sales 543 715 886 1020 1310 1400 Growth 31.68% 23.92% 15.12% 28.43% 6.87%

Source: Lucas-TVS Annual Report 2002-2009

(iii) Table showing current and estimated Domestic market Share

Year 2010-11 2011-12 2012-13* LTVS 29.30% 31.64% 38.07%

Mitsuba 39.63% 38.22% 35.09%

Varroc/Flash 17.87% 18.06% 15.40%

Chengudu 11.02% 8.69% 8.38%

Others 2.18% 3.39% 3.06% Source: Refer table

(iv) Table Showing Preferred Starter Motor in aftermarket

Preferred product

Product No. of Respondents Percentage

Varroc 5 45.45%

Mitsuba 2 18.18%

Lucas-TVS 3 27.27%

Chinese products 1 9.09%

Total 11

44

(v) Table showing the current supplier of two wheeler starter Motor to various bike models of two wheeler market players

2 Wheeler projections and Volume

OEMs

Bike / Scooter Model

Engine Capacity 2010-11

LTVS Supply 2011-12

LTVS Supply 2012-13*

LTVS Supply

Current Supplier of Starter Motor

ES ES ES

Hero Honda

Bike Splendor 100cc 450000 0 550000 0 600000 0 Mitsuba

Bike Passion Pro 100cc 950000 0 1000000 0 1050000 105000 Mitsuba/ Taigene

Bike CD 100cc 380000 0 400000 0 430000 0 Mitsuba

Bike Super Splendor 125cc 150000 0 200000 0 220000 0 Mitsuba

Bike Glamour 125cc 240000 0 280000 0 290000 0 Mitsuba

Bike Karizma 225cc 50000 0 60000 0 70000 0 Mitsuba

Bike CBZ 150cc 200000 0 260000 0 280000 0 Mitsuba

Bike Hunk 150cc 100000 0 110000 0 100000 0 Mitsuba

Bike Achiever 150cc 30000 0 40000 0 40000 0 Mitsuba

Bike New model 0 0 0 0 100000 0

Scooter Pleasure 102cc 350000 350000 500000 500000 600000 600000 LTVS

Scooter New model 108cc 0 0 60000 60000 150000 100000 LTVS

Total 2900000 350000 3460000 560000 3930000 805000

HMSI

Bike Twister 110cc 210000 0 270000 0 290000 0 Mitsuba

Bike Shine 125cc 240000 0 360000 20000 400000 100000 Mitsuba

Bike Stunner 125cc 70000 0 100000 0 110000 0 Mitsuba

Bike Unicorn-Std 150cc 60000 0 70000 0 60000 0 Mitsuba

Bike Unicorn Dazzler 150cc 50000 0 60000 0 70000 0 Mitsuba

Bike New Model 0 0 35000 0 60000 60000 Mitsuba

Scooter Activa 109cc 710000 710000 880000 880000 1030000 1030000 LTVS

Scooter Aviator 109cc 140000 140000 140000 140000 150000 150000 LTVS

45

Scooter Dio 109cc 90000 90000 80000 80000 80000 80000 LTVS

Total 1570000 940000 1995000 1120000 2250000 1420000

Bajaj Auto

Bike Discover 100cc 900000 500000 1100000 700000 1100000 800000 LTVS

Bike Discover 125/135cc 120000 0 170000 0 210000 100000 Flash

Bike Discover 150cc 90000 0 110000 0 140000 0 Varroc

Bike Pulsar 135/150cc 600000 0 700000 0 800000 150000 Varroc/Flash

Bike Pulsar 200cc 100000 0 140000 0 150000 0 Varroc/Flash

Bike Pulsar 220cc 50000 0 70000 0 80000 0 Varroc/Flash

Bike Platina 100/125cc 200000 0 280000 0 332000 0 Varroc/Flash

Bike New Model 0 0 100000 0 150000 0 Varroc/Flash

Total 2060000 500000 2670000 700000 2962000 1050000

TVS Motors

Bike Apache 150/180cc 180000 72000 190000 80000 200000 90000 LTVS/Chengudu

Bike Victor 110/125cc 30000 30000 40000 40000 50000 50000 LTVS

Bike Star City 110cc 120000 36000 160000 60000 180000 LTVS/Chengudu

Bike Flame 125cc 330000 40000 360000 130000 400000 180000 LTVS/Chengudu

Bike Jive 110cc 140000 20000 180000 72000 200000 100000 LTVS/Chengudu

Scooter Pep+ 110cc 300000 100000 330000 130000 360000 150000 LTVS/Chengudu

Scooter Teenz 60cc 180000 80000 220000 100000 240000 120000 LTVS/Chengudu

Scooter Wego 110cc 100000 40000 140000 60000 180000 80000 LTVS/Chengudu

Total 1380000 418000 1620000 672000 1810000 770000

Yamaha

Bike Fazer 125cc 80000 80000 90000 90000 110000 110000 LTVS

Bike Enticer 125cc 40000 40000 50000 50000 60000 60000 LTVS

Bike Gladiator 125cc 30000 30000 40000 40000 50000 50000 LTVS

Bike Fz16 150cc 200000 200000 220000 220000 240000 240000 LTVS

Total 350000 350000 400000 400000 460000 460000

46

Suzuki

Bike GS150R 150cc

50000

0

120000

0

160000 30000

Mitsuba

Bike Heat 125cc 0 0 Mitsuba

Bike Zeus 125cc 0 0 Mitsuba

Bike Slingshot 125cc 0 0 Mitsuba

Bike New model 110cc 0 0 15000 0 70000 0 Mitsuba

Scooter Access 125cc 230000 0 260000 0 300000 100000 Mitsuba

Total 280000 0 395000 0 530000 130000

Mahindra

Bike Stallio 110cc 20000 0 120000 0 150000 30000 Imported (Chinese)

Bike Mojo 300cc 10000 0 30000 0 40000 0 Imported (Chinese)

Scooter Rodeo/Duro/Flyte 125cc 160000 0 220000 0 280000 60000 Imported (Chinese)

Total 190000 0 370000 0 470000 90000

Total vehicles 8730000 2558000 10910000 3452000 12412000 4725000

47

(vi) Table Showing Most frequently serviced vehicle in a month

Most frequently serviced vehicle

TVS Pep+ 40% Honda Activa 35%

Bajaj Pulsar 10%

Hero Honda Pleasure 10%

Others 5%

(vii) Table showing Number of starters replaced in a Month

Number of Starters replaced Starters Replaced

No. of Respondents Percentage

50-100 5 45.45%

100-150 2 18.18% 150-200 3 27.27%

>200 1 9.09%

Total 11

(viii) Table Showing Honda’s Customer Satisfaction survey

Year

Product

Rating Quality

Sales &

Service

Delivery

Performance Price

2007 77 77 80 100 80

2008 84 80 86 100 80

2009 90 86 86 100 80

2010 91 93 93 93 80 2011 97 97 95 100 80

(All in Percentages-%)

(ix) Table showing Hero Honda’s Customer satisfaction survey

Year

Product

Rating Quality Price

Sales &

Service

Delivery

Performance 2007 80 85 80 80 100

2008 84 87 80 86 100

2009 90 87 80 94 100

2010 90 87 80 94 93

2011 90 90 80 98 100 (in %)

48

(x) Table showing Yamaha’s Customer Satisfaction Survey

Year Product Rating Quality Price

Sales & Service

Delivery Performance

2007 77 77 80 80 100

2008 83 90 80 83 100

2009 90 96 80 90 100

2010 90 93 80 94 100 2011 100 95 80 98 100

(in %)

(xi) Customer’s Preferences

Attributes

No of

respondents Percentage Price 2 18%

Quality 9 82% Servicing a old

product 3 27% Buying a new

product 8 73%

(xii) Product Availability and Recommendation

Availability of the product

Attributes No. of Respondents Percentage

Yes 9 81.82%

No 2 18.18%

Recommendation

Attributes No. of Respondents Percentage

Yes 7 63.64%

No 4 36.36%

49

QUESTIONNAIRE

Questionnaire-OEMs

1) How do you rate our quality in when compared to others?

Starters from Performance Features

Life time of a starter

Rejection rate

Lucas Tvs

Others

( Rate 1-5, where 1 is very poor and 5- Excellent)

2) How do you rate our delivery Performance compared to others?

Products from Adhering to

schedule

On time delivery Ability to Meet

Fluctuation

Lucas Tvs

Others

( Rate 1-5, where 1 is very poor and 5- Excellent)

3) What do you say about the pricing of Lucas TVS Starters when compared to others?

4) If you have any suggestion for the above, please explain

5) How do you rate Lucas-TVS product reliability in terms of warranty failures?

6) How do you rate the after sales services?

Products from Technical Support Customer

Support/After sales service

Warranty

services

Lucas Tvs

Others

( Rate 1-5, where 1 is very poor and 5- Excellent)

7) Would you want Lucas-TVS to improvise in the current product?

a) Yes b)No

8) If yes, in what aspect?

50

9) Would you want Lucas-TVS to Increase the New product Introductions?

a) Yes b)No

10) How would you rate the quality of the New products, that are introduced by Lucas-

TVS when compared to others?

New Products

from

Quality Product

Modifications

Procedures Responsiveness

Lucas Tvs

Others

( Rate 1-5, where 1 is very poor and 5- Excellent)

11) Would you recommend Lucas-TVS starters to all of your two wheelers?

a) Yes b)No

12) If no, what you expect from Lucas-TVS

Questionnaire- Dealers

Name:

Place:

1. Please specify the top 3 selling bike models for the entire year?

a)

b)

c)

2. How much vehicles are sold per month?

Model Volume

51

3. How many vehicles are serviced per month?

a) 50-100 b) 100-150 c) 150-200 d) More than 200

4. How many Starters are replaced in a month?

a) 0-2 b) 2-4 c) 4-6 d) More than 6

5. Which Company’s Product is preferred more in the market?

a) Varroc b) Flash c) Mitsuba d) Lucas-T.V.S

6. Is the price of Lucas-T.V.S parts high when compared to its competitors?

a) Yes b) No

7. The parts of which company’s product are replaced more? ____________

a) Varroc b) Lucas-T.V.S c) Chinese Products d) Mitsuba

8. Would you recommend Luvas-tvs starter to any other two wheeler model

a) Yes b)No

Questionnaire-Mechanics

1. How much vehicles are serviced per month?

a) 50-100 b) 100-150 c) 150-200 d) More than 200

2. How many number of two wheeler Starters are replaced in a month?

a) 50-100 b) 100-150 c) 150-200 d) More than 200

3. Are the Products/Spares available with the nearby dealers, if not time required to

deliver the same?

a) Yes b) No

52

4. Discount Percentage getting on spare parts or full units on MRP?

a) 7% b) 8% c) 9% d) 10%

5. From where are you buying the spare parts?

a) Distributors b) Outside Dealers

6. How frequently the starters in vehicles are repaired?

a) 3 months b) 6 months c) Yearly d) Once in 2 years

7. How do customers rate the product? (Based on)

a) Price b) Quality

8. What do customers prefer?

a) Servicing an Old Product b) Buying a new Product

9. Which products customers prefer more?

a) Original Products b) Local Products

10. How many days of warranty the competitors and local players provide for their product?

a) 6months b) 1 year c) 2 years d) More than 2 years

11. Are you aware of Lucas-T.V.S 2 wheeler Starters?

a) Yes b) No

12. Do you recommend Lucas-T.V.S 2 wheeler starters to your customers?

a) Yes b) No, because __________

53

CASE STUDY

COMPETITIVENESS OF THE INDIAN AUTO COMPONENT INDUSTRY

“The Indian auto component industry could be the next big success story after software,

pharmaceuticals, BPO and textiles.”

The size of the global auto component industry is approximately $1trillion. The leading auto

component manufacturers (OEMs) in the world are Ford Motors, General Motors (GM),

Delphi Corporation, Caterpillar, International Truck and Engine Corporation and Cummins.

The US is the world's biggest auto component market. In 2002 it imported auto component

worth $69 bn. In India, Chennai, Pune and Gurgaon are the three big clusters for the auto

component manufacturers. The approximate size of the Indian auto component industry is

25,000 crore (approx. $5 bn). The size of the Indian auto component industry is still very

small; it is just one-sixth the size of the world's largest auto component maker, the $28 bn

Delphi Corporation.

Major US Auto Component Imports (In $mn) Year 1998 1999 2000 2001 2002

Mexico 14,574 16,814 18,791 18,402 20,397 Brazil 1,082 1,147 1,086 824 1,137

China 863 1,041 1,368 1,483 1,884 Thailand 309 374 362 380 516

India 99 117 150 141 177 Source: US Census Bureau's Foreign Trade Statistics 2003

For the year ended March 2004, the domestic auto component sector had registered revenues

of $1.1 bn (Rs 4,800 crore) from exports. This was 38.8% higher compared to export

revenues during the FY 2002-03. According to Automotive Component Manufacturers'

Association of India (ACMA), the projected compounded annual growth rate (CAGR) for the

domestic industry is 18% and the export projections for 2010 is $2.7 bn. India falls way

behind other developing countries when it comes to auto component exports. Indian auto

component manufacturers don't have the scale of production required to beat the global

majors. For example, Kayaba, world's biggest shock absorber maker, produces 240 mn

units/year whereas, Gabriel India, India's largest shock absorber maker, manufac turers only 9

mn units/year. Low scale of production acts as a hindrance for Indian auto component

manufacturers from getting large export orders. Most of the export orders Indian

54

manufactures receive are worth less than $100 mn. In global standard any export which is

less than $100 mn is considered insignificant.

Major Auto Component Exporting Nations in 2004 (In $bn)

Country India Mexico China Thailand Brazil

Export 1.1 16 3 2 4 Source: Compiled from Businessworld 23rd February 2004

The auto component industry in India has seen high growth in recent years. There are three

major reasons behind the recent robust growth of auto component industry. First, the

domestic automobile industry (two-wheelers, commercial vehicles and passenger cars) has

registered good growth. High demand for automobiles has subsequently fuelled the demand

for auto component from automakers. Second, the replacement market is growing rapidly as

more and more new vehicles hit the road.

Moreover, the product life cycle of automobiles is becoming shorter. As more new models hit

the road the demand for auto component keeps rising. The increasing number of vehicles

means an expanding market for replacement components. Third, the global automobile

industry is going through its worst phase ever. To cut production cost, the world's leading

automobile companies are sourcing cheaper auto components from countries like India and

China. To become globally competitive, Indian auto component industry has to learn the best

manufacturing practices, be quality consciousness and adhere to strict delivery schedules.

The Indian auto component industry is also highly fragmented. Of the 400 odd players

present in the market, only 30 record revenues higher than Rs 150 crore. Two third of the

industry players have annual revenues less than 50 crore. And out of 400 companies, only 15

generate export revenues over $10 mn.

The Indian auto component manufacturers serve major OEMs as Tier II or Tier III suppliers.

China is the hottest destination for auto component sourcing as it has many Tier I suppliers.

China has over 500 Tier I auto component manufacturer. Tier I manufacturers have enormous

advantage over Tier II or Tier III suppliers. The major advantage is that Tier I suppliers are

the first to get orders for components from vehicle makers. Getting early orders help the Tier

I supplier to recover the investments very quickly. Moreover, when there is vehicle sales

raise, they earn profits. Unlike Chinese manufacturers, the Indian auto component

manufacturers lack the high-end designing, manufacturing and development skills. According

to Deep Kapuria, CMD, Hi-Tech Gears: "To succeed, you need greater integration with the

55

original equipment manufacturer and the tech partner (design integration and R&D);

innovation and indigenous technology; and a global mindset (product liability/logistics). We

are learning the ropes in the latter two, but are yet to get to the first”.

Comparison of labor Costs

Indian Companies

Developed

Country Global Companies

Skilled labor

cost/hour $8 $20

Labor cost forging industry 9.4% of Sales

Dana-38.8% of

sales and UEF-37.9% of sales

Total Labor Cost 3-15% of sales 20-40 % of sales Source: Compiled from different sources

Indian Auto Component Industry in 2002 (ACMA)

337 Companies with ISO 9000 Certification

Companies with ISO 14001 Certification

193 Companies with QS-9000 Certification

25 Companies with TS 16949

2 Deming Prize winning companies

1 Japan Quality Medal winning company

Export of auto components from India as % of Production (in Rs Crore)

FY Year Production Exports %

2000-01 17,246 2,706 15.7

2001-02 21,602 2,802 13

2002-03 25,535 3,496 13.7

2003-04 30,640 4,500 14.7 Source: Business Line, May 1st 2004

MOVING UP THE VALUE CHAIN

The Indian auto component manufactures are moving up the value chain to integrate them

with the global auto component industry. In recent times, the industry has adopted three-

pronged strategy to go global. First, giving thrust to exports. Exports are growing at a

compounded annual rate of 20-25%. Second, Indian companies have started acquiring plants

56

abroad. Third, many Indian manufacturers have started collaborating with foreign players. By

collaborating with foreign companies, the Indian companies are learning the high-end

designing and development skills of the major auto component manufacturers in the world.

Reverse engineering is one area where the Indian auto component manufacturers have proved

successful. Recently, the Pune-based Commercial Vehicles Systems Research Centre of

Anand Group added two new products - a self-steer axle and an air suspension for its partner

Dana Corporation of US. These products were developed within seven and nine months

respectively, against the 22 months it takes to manufacture these products in the US. Ten

more products are under development in the research labs of Anand Group for its partner

Dana Corporation.

Many Indian companies are trying to become Tier I suppliers to the global automakers.

Bharat Forge, India's largest auto component exporter is trying to exploit its available

resources and expertise to become a Tier I supplier. The company has indigenous design and

development capability; it has the world's largest single location plant. Bharat Forge has

some inherent strength like it takes 3-4 weeks to market a product against the global standard

of 6-12 months and it has the experience of working with the world's leading clients like

Toyota, Ford, Honda and Volvo. Bharat Forge has 50% of the US market for front axle

beams for trucks. Recently the company has made some overseas acquisitions to expand its

customer base in original equipment market. In the auto component industry original R&D is

a highly capital intensive. The global tier I players invest 5-7% of their turnover in R&D

whereas; Indian companies spend less than 1% of their turnover on R&D.

According to Suresh Krishna, Chairman and Managing Director, Sundram Fasteners, there

are three basic reasons that prompted Indian component companies to venture abroad. First,

having established a reasonable domestic presence, big Indian component makers are now

looking for an international presence. Second, having improved their productivity, quality

and reliability, Indian companies feel more confident venturing abroad. Third, the Indian

government's investment friendly policies and hassle- free environment for overseas

acquisitions have encouraged Indian companies to take the acquisition route. With these

overseas acquisitions, the Indian companies can tap the original equipment (OE) market

abroad. The Indian companies can supply their own products to these customers.

57

Acquisitions by Major Indian Players

Indian Company Company/Plant acquired/Set-up abroad Located in

Size of the deal ($ mn)

Amtek Auto Smith Jones Inc. US 20

Amtek Auto GWK Group UK 37

Bharat Forge Carl Dan Peddinghaus GmBH* Germany 116# (euro)

Sundaram Fasteners

Dana Spicer Europe* (Forging unit) UK 2.6

Sundram Fasteners

Sundram Fasteners (Zhejiang)** China 5

G. G. Automotive Gears

Name not disclosed. US company that manufactures high precision custom gears and planetary gears. US 110

Source: Businessworld, 23rd February 2004 * Plant **Plant set-up #Approximate

R&D CAPABILITY

In recent years the world's leading automakers and Tier I suppliers have opened their R&D

centers in different parts of the country. The cost of R&D in India is low compared to any

developed country and skilled manpower is available. In the long run the entry of foreign

companies would benefit the Indian industry as people working in foreign firms would

acquire insights and skills which otherwise would be impossible to acquire.

In India there is not a single auto component manufacturer which does original R&D. Only a

few companies have recently started design and development (D&D). D&D is the initial

stage of R&D and it works as a support function for R&D in auto component industry. Every

major auto component manufacture starts with D&D before venturing into full scale R&D.

R&D in auto component industry involves developing a component as per the requirement of

vehicle maker/OEMs/Tier I supplier. It involves developing the original design of the

component, making prototypes and testing and then mass production of the component. R&D

in auto component industry requires high technological capabilities and Indian companies are

on a learning curve.

The Indian companies have also proved their competence in making minor modifications to

existing products that either result in new uses for the product or significant cost cutting. For

example, Bangalore-based Motor Industries Company (Mico) has indigenously developed a

58

high-pressure single cylinder pump for its parent company, Bosch. The newly developed

pump was highly advanced compared to the existing pump. Though Bosch did not handhold

Mico by providing drawings, the product was derived from an existing product. Today, Mico

has been designated Bosch's global development centre for single-cylinder, multi-cylinder

and mechanical rotary pumps.

PRODUCT LIABILITY

The Indian auto component companies need to adhere to strict quality control to prevent any

defects in the designing and manufacturing of their products. The World's leading OEMs

follow strict product liability rules while going for any contract with their suppliers. Under

product liability rules any supplier could be penalized by its client if the product fails to meet

the set quality standards and results in line stoppages, recalls and claims. In India the

domestic insurance companies such as Tata AIG started providing product liability insurance

to the Indian auto component makers. This will give the Indian auto component

manufacturers the confidence to do more business with foreign automakers. With product

liability insurance in place the acquisition and execution of export contracts will be easier for

the Indian companies.

THE ROAD AHEAD

World's major automakers have announced their intention to develop India as a major

sourcing hub for auto components. Indian enjoys enormous cost advantage in manufacturing,

R&D, skilled labor and software. However, it can't rely on its low cost advantage for a long

time. Countries like China, Thailand and Mexico are also becoming very competitive so far

as cost is concerned. Moreover, over the years these countries have built large scale of

production and technological competence. The recent success of Indian auto component

industry is partly due to the fact that major automakers in the world were compelled to

outsource from countries like India and China to cut costs. Sooner or later the global auto

industry will come out of recession. Then cost won't be the only deciding factor for the

automakers while sourcing components. The majority of the Indian auto component

companies operate in the lower end of the value chain (like casting and forging) of the

industry. Globally, the product life cycle and the product lead time is shrinking fast. To

succeed, Indian auto component companies should develop capabilities to keep pace with

major automakers

59

SYNOPSIS

MARKET POTENTIAL AND STRATEGIES TO INCREASE MARKET SHARE OF LUCAS-

TVS TWO WHEELER STARTER MOTOR

STUDENTS’S NAME: HARINARAYAN P

INDUSTRY GUIDE: Mr. G. PRAVIN WINSTER

FACULTY GUIDE: Ms. POORVA RANJAN

BRIEF SUMMARY OF THE PROJECT:

OBJECTIVE:

To study the market potential and competitiveness of Lucas-TVS Starter Motor in domestic

two wheeler market and to device an optimal strategy to increase its market share in supply to

OEMs

FINDINGS AND CONCLUSION

Market potential for two wheeler segment was analysed and its production was forecasted.

Competitor analysis was done in order to know their strengths and weakness. A Customer

satisfaction survey with OEMs was also done to know how Lucas-TVS starter motor is rated

against its rivals. Field survey has been taken up in order to find out the aftermarket sales

and customer’s perception regarding the starter motor. After the analyses, it is clear that,

Lucas-TVS should optimize their pricing factor and need to cope up with the technological

advancement so as to meet global quality.

STUDENTS’ PERCEPTION ABOUT INDUSTRY GUIDE

Mr. G. Pravin Winster, Asst. Manager (Business Development & Marketing) holds a post

graduate degree- MBA, in the field of International Business and Marketing. He is open-

minded, positive and has excellent knowledge about Indian Automobile industry. He is very

much available for interaction and highly assistive.

I would like to thank Mr. N. Kumar, Mr. Vinoth, Mr. V. Mahesh, Mr. Sumit and the entire

marketing for their hearty support for the completion of this project.