Aiming To Double Our Topline To Rs. 6 k Crore By FY 2019-20: SMIPL
Suzuki Motorcycle India Private Limited (SMIPL), the wholly-owned two-wheeler subsidiary of Suzuki Motor Corporation (SMC), Japan and the sister entity of Maruti Suzuki, commenced its operations in February’06. The company’s EVP, Sales and Marketing, Sajeev Rajasekharan, SMIPL tells BW Businessworld that it is looking to reboot is strategy and aiming to double its turnover to Rs. 6,000 crore and sell 1 million units by financial year 2019-20. Below are the edited excerpts:
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In a hyper competitive two-wheeler market like India, how excited are you and how challenging is it for you to attain sizeable volumes?
We feel, it (India) is the largest two-wheeler market globally in terms of absolute volumes. Secondly, we have the technology in terms of the categories which we have shortlisted (for growth) i.e. scooters and 150cc+ and above bikes. These segments, which account for 50% of the overall two-wheeler market, will be our focus areas. For scooters, we are present in 125cc and above categories while the entire market is playing in the sub-125cc categories. Our technology complements the categories where we are present (in India) and the growth is happening in these two segments only. We have left the past behind and the only way we look forward is by growing 40% YOY which is around four times the (two-wheeler) industry growth. We have earmarked select pockets which has a market size of more than 1,000 units for scooters and 150cc bikes.
What is your current marketshare and could you also share your sales target for this financial year and for 2020?
As I just mentioned, we operate primarily in the premium segment of motorcycles (150cc and above) and scooters and our market-share in those segments is 5.5% and 5.2% respectively. We are aiming to sell half a million units by the end of this financial year. Subsequently, we should be selling 7 lakh units and by FY 2019-20, we are confident of achieving the 1 million mark in annual sales which will also give us a market-share of 10% each in both those aforementioned segments. A major chunk of the projected volumes will be derived from tier-I and tier-II cities and scooters will play a dominant role by contributing around 80% of the total volumes.
What are your plans for heavyweight bikes which are above 1000cc?
For big bikes, comprising 1000cc and above, we are having about 15 stores across the country. Apart from the one in Delhi, we have an outlet each at Gurgaon, Chennai, Hyderabad, Calcutta, Bangalore, Bhubaneswar, Ahmedabad, etc. We need an expertise in terms of after-sales service for such high-end bikes. The market size of such bikes is just 500 units per annum and 70% of them would fall under the sub Rs. 10 lakh category. There is a huge market which exists below 800cc.
So will you be seeking partnerships for getting into that segment? And will it be locally assembled here?
As of now, we have three 1000cc products in our product portfolio called the GSX-R1000 and R100R as well as the legendry Hayabusa 1300cc Sports (in the heavyweight segment comprising bikes above 800cc). Going forward, we might see some new introductions in that segment too. There could be a sub-800cc product (middleweight bike) in the future. All products under 800 cc will be following the CKD route and anything above that will be imported as a CBU.
What is your current installed capacity at your existing facility in Gurgaon and how much is it utilised?
In India, SMIPL has one manufacturing-plant, which is at Village Kherki Dhaula, Badshahapur, Gurgaon. The total land area of the facility at Gurgaon is 37 acres out of which the present plant is constructed in an area of 10 acres of land. The remaining area is left for land development and future expansion. Presently, we have an annual capacity of 5,40,000 units and 4 assembly lines which can churn out upto to 1 million units per annum with some additional investments within the existing assembly lines. We will end up producing 6 lakh units by the end of this fiscal. We are operating in two shifts and if required we might go for a third shift if there is a necessity.
When do you intend to set up your second greenfield facility? Will you prefer to utilize your parent company’s facility in Gujarat where it is already making cars?
We have not put a finger on any location because the basic study (for this) has not yet started. We will start working on this from the beginning of next calendar year. The market size and marketshare for us is higher in the South. If we get a facility along with them (Maruti) in Gujarat, that also could be one of the best options.
How has a policy like make-in-India benefitted SMIPL?
Make-in-India gives us a further impetus to be in sync with our government’s vision. All these initiatives encourage us more to further consolidate our position in terms of Suzuki Motorcycle’s standing at a global level. Even now, we are the largest contributor in terms of motorcycles for the worldwide business. We have been exporting to 40 countries majorly in Latin America, South-east Asia and Africa. Apart from adding news geographies, we are looking forward to enhance the total number of volumes that are shipped out of India. We are exporting Gixxer 150 to Japan.
Apart from building your manufacturing facilities here, would you also be interested in establishing an in-house R&D centre that can serve your global and local markets?
Going by the kind of growth which we are doing and also realizing our future plans, it is only a logical progression for us to have our R&D centre (in India). We have a lot of support from our SMC team in Japan which does a lot of India–related product development work. We do take a lot of consumer insights from India in order to develop our product lines. We have a product planning team based here which is helmed by a Japanese expat. There is definitely a plan in the pipeline to have a self-reliant team to design and develop products for the local market. But to pinpoint on an exact timeframe for an (in-house) R&D centre is not currently possible.
What kind of synergies do you have with Maruti Suzuki?
We procure engines from Maruti. There is some expertise in terms of certain key positions where people with a Maruti background are deputed here. There are some 11 four wheeler automobile (Maruti) dealers who are also selling two-wheelers. There are some synergies in auto component sourcing.
Your company’s MD has already shared that SMIPL has logged Rs. 3,000 crore during last financial year. What will be the topline in the next three years?
The Average Selling Price (ASP) of our existing products is very high and will be present in that space only. So when we grow by 40% and the overall value of the products is going up, we expect a relative increase in our turnover too. So if we are doubling from 0.5 million (units) in 2017-18 to 1 million (units) in 2019-20, the value (of sales) will also double (proportionally). So, we should be able to earn Rs. 6,000 crore by that time.