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When the scooterette major Kine3tic Engineering wanted to build a motorcycle, it turned to its own R&D team.
When Kinetic's team of six engineers started work on the project two-and-a-half years ago, it chose the company's popular k4-100 engine for platform. The reasons were simple. For one, the bike's engine was tried and tested, and spare parts were available throughout India. But the team had a tough brief from the top brass, which wanted the new bike to be high-performance and more exciting than other mobikes on the road. Ergo, the team-led by M. Venkataiah-acquired engine design technology from WGL of Taiwan. It also upgraded the engine and increased the compression ratio to get 7.5 bhp compared to 7 bhp of Hero Honda Splendor, and 7.6 bhp of Bajaj Caliber (which has a marginally bigger engine capacity). To achieve fuel economy, an innovative turbo induction resonator was added. What the resonator does is to store extra energy generated while going downhill and releasing it at no extra consumption of fuel while going uphill. As a result, under ideal conditions, the Challenger claims to offer 93 kilometers for every litre of petrol, and 70 to 75 km per litre in city traffic. Some other features were added to help in marketing. Apart from design novelties such as dual-cradle chassis (the only other bike which has it is the Splendor), on led indicator was built in to show gear shifts, side-stand position, and the condition of the battery. ''These are all firsts in an Indian bike,'' boasts Mahesh Shinde, Manager (R&D). The Challenger also has larger drum brakes: 130 mm diameter in the front wheel, and 110 mm in the rear wheel. WGL also helped fine tune the initial contours and flow lines developed by the Kinetic team. Says Jagdish Mali, another key member of the team: ''We wanted to ensure that the bike looks sleek and stylish.'' At Rs 38,000 apiece (ex-showroom Mumbai), the Challenger is an impressive effort. But the jury is still out. -Roop Karnani INSURANCE This is one contingency the new insurance companies were unprepared for: the dearth of actuaries. There's little foreign about the new breed of insurance companies in India. Sure, the joint ventures have foreign partners, but the controlling management-the CEO to the broker-is Indian. Except for one post, though: the actuary's. Faced with a dearth of actuarial talent-actuaries are experts who assess the financial impact of future uncertainties-insurance companies are either importing actuaries from their parent's, hiring former executives from the state-owned giant, the Life Insurance Corporation (LIC), or training young ones from scratch. Max New York, for instance, has sought its foreign partner's help in sourcing expatriates of Indian origin for its actuarial department. HDFC Standard Life and Birla Sun have also roped in expats to head their actuarial department, while ICICI Prudential has roped in a former LIC actuary, besides an independent consultant. Says Tony Singh, CEO, Max New York Life: ''Demand has gone up drastically, but the supply is limited.'' But why? Blame it on nationalisation. Soon after the industry was taken over by the government in 1956, the demand for actuaries shrunk, simply because there weren't too many companies to work for. Besides, an actuary must clear a difficult 17-paper examination conducted by the Institute of Actuaries, or the Faculty of Actuaries, both of which are in the UK. Notes Pankaj Seith, Head of Marketing, ICICI Prudential Life: ''But the problem is that very few people haven taken these examinations.'' The Actuarial Society of India (a registration with it is a must for actuaries) did not have a ready headcount of its alumni. But most of its members have left for foreign shores in search of better opportunities. The result: actuary as a profession declined. Yet, the importance of an actuary in an insurance company cannot be overemphasised. The actuary is responsible for all pricing decisions and reserve requirements (only a part of the premium is treated as income, and the rest set aside as reserves). His essential job is to optimise the asset-liability match. Therefore, he must have a good understanding of statistics (probability theory), investment management (asset-liability match), and legal and taxation issues. In fact, in India he has been given an even more important position. According to the Insurance Regulatory Development Authority (IRDA), the actuary can attend all board meetings, access all company documents, and if there are certain contentious issues, can bypass the company board and report directly to the IRDA. Quips Singh of Max New York Life: ''He's the IRDA's watchdog onsite.'' ASI, which recently upgraded its tests, doesn't think there is any shortage of actuaries. The face of monopoly in a knowledge economy? -Ranju Sarkar CORPORATE
RESULTS In an immature market, companies are learning that it can be disastrous to pre-announce bad results.
That's what Mastek-a Mumbai-based services company-discovered when it became the first Indian company to issue a profit warning last December. On the day it issued a communique to the Bombay Stock Exchange, its share price fell by a steep 12 per cent. The fact that Indian investors at large do not quite understand the concept of advance warning was driven home again when on March, 26, rumours about Infosys reporting a lower profit in third quarter made the BSE Sensex lose 10 per cent of its value in intra-day session. But the market learns quickly. Having just heard out a profit warning from VisualSoft (NIIT and Geometric Software are the other two), both market analysts and shareholders are veering round to the opinion that earnings guidance do enable investors to make more informed decisions. Says Devender Kumar of Ranka Securities: ''This is a healthy trend. Although there might be immediate dips in share prices, in the long-term it will be boost investor confidence in the company.'' Companies are hoping so, too. -Venkatesha Babu ADVERTISING A bad idea, a huge budget, and a boringly long ad. But by throwing its weight behind the ad, client Bharti shows that there can be fairy tales in advertising too. It's shallow, too overdone.'' Then, almost as an afterthought, ''it's supposed to be an emotional delivery (pun totally unintended) of the message, but is too plastic''. The speaker's name is Zap, aka Sabyaschi Sengupta, he's the creative honcho at ad agency McCann Erickson India, and he's treading on ulcer gulch's no man land, criticising a commercial made by another agency. The client is Bharti and the ad is the 90-second long pregnant-woman-in-the-stadium one, which has more than a few shades of GE's injured-football-player-in-a-stadium one. The commercial, created by Percept, and shot, at the whopping cost of Rs 1 crore at Sydney's Olympic stadium is reminiscent of big-budget Hollywood epics, like Kevin Kostner's Waterworld, that didn't quite make the cut. We'd like to describe it here for you, but it'd take too much space and you've probably seen it already, in which case we'll be opening up old scars Still, Percept seems to have done a great job of selling the concept behind the ad, and the product itself to the client. Most companies don't like to invest in larger-than-life commercials and not too many clients would have agreed to air ads they don't like, but Bharti must have loved the commercial. It has gone ahead and pumped good money behind passable execution, giving the commercial significant air-play. ''The ad has been hugely visible and the credit must go to the Percept-Carat new venture that handled media planning and buying,'' says Mona Jain, the Media Head of ad agency Mudra. As a media planner, Jain must be impressed by the Rs 20 crore Bharti has reportedly allocated for its corporate campaign, a sort of pre-IPO image building exercise. And the ad has certainly been highly visible on most channels. Well, it takes all kinds. -Shamni Pande FORENSIC ACCOUNTING Male employees continue to be the biggest source of corporate frauds, but women are fast catching up. Great. Your internet-based ERP system is finally in place. That means you can manufacture just in time, keep inventories low, and never let your customers miss your product. Your CEO is happy. But somebody else is happy, too: the e-fraudster. According to kpmg's annual Fraud Survey of 800 CEOs (15 per cent replied), nearly a fifth of the respondents had experienced a security breach, including system crashes, web site defacing, and virus attacks. In the future, the CEOs surveyed believed that the most likely areas for breaches could be copying/deletion of customer data, system shutdown, and losses from fraudulent activity. A staggering 89 per cent of FMCG companies surveyed had experienced fraud. The person who did it the most was a male employee (in nine out of 10 cases), was between 26 and 40 years of age, and typically was tweaking his expense accounts or accepting kickbacks. Worryingly for companies, the percentage of female fraudsters rose from 8 per cent to 11 per cent. Who caught them? Internal auditors. And what did the victim company do about it? Most just carried out an investigation, but several others (47 per cent) were strict enough to hand out immediate dismissal. When asked why the frauds occurred, more than half of the respondents pointed to poor internal control, and a not-so-insignificant 40 per cent blamed collusion between supplier and employees. A wisened corporate India now wants to tighten internal controls, rotate staff, and establish a corporate code of conduct. Good luck.
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There is nothing spectacular about the
50,000-sq ft R&D centre at Kinetic Engineering's Pune facility. In
fact, remove the Kinetic logos, and the development facility could well
belong to any automotive company in India. Except for one crucial
difference. The humming, but austere, facility is also the birthplace of
what, arguably, is India's first indigenously developed motorcycle: the
100-cc Kinetic Challenger. Built at a cost of Rs 10 crore and 180 months
of man hour, the Challenger marks the scooter and moped major's entry into
the fast-growing motorcycle market. Understandably, the company-which has
already sold 15,000 Challengers-is proud of its handiwork. Says Sulajja
Firodia Motwani, Joint Managing Director, Kinetic Engineering: ''We had a
lot riding on it. I am glad that we pulled it off.''
For Indian companies listed on the US
stockmarkets, and those who are not listed but believe in affirmative
investor action, it must be a quarterly trial-by-fire event: having to
''guide'' investors on their earnings estimates. They can't avoid it
because the Securities and Exchange Commission (SEC) requires them to do
so. Yet, the cost of making such an announcement is often an immediate
fall in stock prices.