Masahiko Shibuya, CEO YMIL: Turnaround samurai

It's a double head-turner on the streets these days. The first, as in 'what's that?', and the second as in 'a Yamaha?' That's the effect of the 125-cc Yamaha Enticer. It's no regular transportation vehicle. It's a cruiser, intended for sink-back highway cruising, complete with a laterally-enlarged fuel tank, bucketish seats, curling handle bar and miss-me-not silencer-in short, a gleaming self-image booster. The sort that would make the most conscious aspirant to yuppiedom want to whisk off his helmet, given half a chance, for the benefit of onlookers.

The man who should take a bow for that little performance, though, is Masahiko Shibuya, the CEO who took charge in June 2001, when Japan's Yamaha finally broke off its joint venture (JV) with Escorts, turned Yamaha Motor India Ltd (YMIL) into a full Yamaha subsidiary, and vowed to turn the company around. ''The main problem,'' says Shibuya, ''was communication between an Indian company and a Japanese company with different styles of working, and as I did not see much improvement in the JV, I met Chairman Rajan Nanda and convinced him why the tie-up wouldn't work.'' The 50:50 ownership was changed first to a 74:26 one in 2000, and then Yamaha bought its partner out completely about a year later.

The last big bow Shibuya took was for an entirely different purpose, on December 8, 2001, when he addressed a vendor conference in Delhi to exorcise ghosts of the past and rally support for his turnaround strategy. It was a customary Japanese bow, a mark of respect, done as part of a confessional. Yamaha had done badly, he admitted.

Once the pioneering tar-scorcher on Indian roads (with its rx-100), Yamaha had been sliding for years together, its market share falling from 25 per cent in the mid-1990s to a low of 8 per cent by decade-end, even as fuel-savers from Hero Honda and other rivals took over the streets. The Indian motorcycles market was roaring full-throttle, but Yamaha had missed all the action, accumulating nearly Rs 100 crore in losses over three years, even as labour unrest ruined production schedules, delaying payments to vendors. Sorry, said Shibuya, pledging a normalisation of payments by January 2002. But cost targets had to be achieved. Material costs had to be slashed by 21 per cent by 2004, and by 8 per cent in the first year. The vendors had work to do.

"A 125-cc bike is inadequate as a cruiser. However, I do not think that Enticer's price is too low for the specs it offers." Sulajja F. Motwani, Joint Managing Director, Kinetic Motors

Market Adaptation

Shibuya and his team had even more work to do, igniting customer interest in a dormant brand. The good news was that the motorcycle market was clocking consistent growth of 30 per cent-plus. But the main gainer was Hero Honda, followed by Bajaj Auto and TVS (which had grown wise to the leader's game). The bulk of the market lay in fuel-economy bikes, while Yamaha's strength lay in engine power-a reason it got relegated to the No. 4 slot to begin with, despite the initial success of the rx-100. ''Because of its success,'' says Shibuya, ''the inherent weaknesses of the company never came to the fore, and only surfaced once the market changed.''

Changed to Hero Honda's advantage, that is, with styling, bike-span, vrroom power, everything getting eclipsed by fuel-economy as a product attribute. If low-cost transport was the big need to be addressed, Yamaha needed a new product. The 100-cc Crux, launched in late 2000, was supposed to make up for lost ground in the mass 'affordability' market. It did. The Crux made rural inroads, and was later supported by a semi-urban variant, the Crux R, flagged off in August 2001. And now, as the Crux begins to enter the daily commuter's consideration set, Yamaha is finally breathing easy.

The Crux range is expected to sell 165,000 units this calendar year-the first time the company will get a sub-brand into six-digit sales since the rx-100's peak years.

Competitors have taken note, even if they don't see Crux as much of a threat. ''They have finally arrived in the 100 cc club with Crux,'' concedes Atul Sobti, Senior Vice-President (Marketing), Hero Honda, ''but the pricing has fluctuated widely.'' Nods Sanjeev Bajaj, Vice President (Finance), Bajaj Auto: ''The Crux is now being sold for Rs 39,000, but just a couple of months back, it was pegged at Rs 35,000.''

The bike that needs to be watched, though, is the Enticer. Unveiled in July and aimed at the 18-28-year-old individualist, it's being portrayed more as an 'air flight' than a two-wheeled ride. But the real enticement, at least the part that is making rivals sit up, is the price tag. At Rs 49,000, the bike has made a debut at an eye-popping price-point for a cruiser (Royal Enfield sells for a good Rs 10,000 more, while the ill-fated Bajaj Eliminator was higher still).

It is, as you'd have gathered by now, a bet on the Indian market's readiness to ascend the value curve, as defined by engine-power and self-image. So far, the cruiser idea seems to be working. According to S.K. Taneja, Executive Director, YMIL, ''people are in the queue for one-to-two months" for the bike. Production, he claims, will be ramped up from the current 6,500 to 10,000 units per month by January, 2003. The Enticer is projected to sell 32,000 units in 2002. The target for 2003: a round 100,000 units.

Achievable? Sulajja F. Motwani, Joint Managing Director, Kinetic Motors, is doubtful. A 125-cc bike is inadequate as a cruiser, she says, adding, ''I do not think that the price is too low for the specs it offers.''

Would Yamaha dare a stronger power gambit? Not now. Not, that is, before steadying the company's mass-market base. ''Unless we reach 4.5-5 lakh in volumes,'' explains Taneja, ''it is tough introducing niche power bikes to the Indian market, and since that is Yamaha's USP, we have to maintain a healthy growth rate to reach that mark soon.''

That explains why Yamaha's recent launch, the 106-cc Libero, is also a mass-market play. Libero, launched in September, is a reworked Crux aimed at the tie-wearing executive commuter. Says Taneja: ''The Libero is priced at an affordable Rs 42,500, ex-showroom Delhi, and has the longest wheel base, good ground clearance and better height than the existing models in its category.''

Fixing The Works

Meanwhile, Yamaha's Faridabad and Surajpur operations, near Delhi, are rushing to shape up. The vendor network has been rationalised, their number cut from 285 last year to 235 now (soon to be 200)-slotted into three tiers, with higher tier expected to use the lower one for its own sourcing, ''so that we are left with fewer people to deal with and can easily help them upgrade,'' in Taneja's words.

The company is also keen to trumpet its other victories on the efficiency front. The prickly relations with the workforce, for example, are now history, claims YMIL, which has started involving workers with corporate issues in classic Japanese style. It's a collaborative agenda: revamp R&D, compress concept-to-launch time, step up localisation, and track market dynamics.

Some effect of this new way of working is in evidence already. ''We reinforced our R&D capability for more localisation of technology and component parts, and simultaneously had very close communication with our head office in Japan...all these helped in compressing the cycle of introducing our bikes in the market,'' says Shibuya. ''Crux took two years from conceptualisation to entry,'' continues Taneja, ''and this has come down to 18 months for the Enticer, but we are trying to bring it down further to one year.'' The intention: two models a year. Next up is a fully-loaded Enticer, equipped with disc brakes and a self-start.

And then? The CEO takes a long drag from his Japanese filter cigarette, and crystallises his thoughts: ''By next year, India will be the single largest overseas motorcycle producer outside Japan, pipping Indonesia.'' YMIL expects export earnings of Rs 120 crore this year, almost 10 per cent of its projected turnover.

But what about the Indian market-isn't this where all the action is?

Sure thing. Overall trends, it's glad to note, are favourable. Bikes now make up 69 per cent of India's two-wheeler sales, and with a single-digit marketshare, Yamaha sees the only way forward as up. ''While we are growing by almost 50 per cent, the industry has grown by 43 per cent during April-September 2002, and this explains why our market share has not grown substantially,'' says Shibuya.

The company expects to log sales of 350,000 units for this calendar year, which would give the brand a tenth of a market placed at around 3.5 million units. A few more successes, and Yamaha will be in cruise control. The market, luckily, is showing no signs of slowing down. Shibuya sees no saturation before 2010, by when the market could touch 10 million units. Competition will intensify, for sure. But rivals, you can be sure, won't want Yamaha getting more than a million of that.

Yamaha's strategy ''will be to redefine categories and penetrate untapped markets,'' as the CEO says. Work starts straightaway. ''It's now, or never.''