Maruti 800: It's oldbut still MUL's superstar

Cars all over the world have names. That Maruti Udyog did not deem its first launch worthy of one -- it settled for a number, 800, the cubic capacity of the car's engine -- makes us suspect that it probably did not have a great marketing strategy worked out. This was in the winter of 1983. Since then, 800, arguably, has served as the first set of wheels (actually, four wheels) to more Indians than any other car: some 19.2 lakh have been sold in India in the past 19 years. At the time of its launch, 800 was a technological marvel compared to its competitors on Indian roads, but it was its price tag that did all the talking. In 1983, at Rs 48,000 for its entry-level offering, it was the cheapest car on India roads; in 2000, at Rs 1,89,000 for the 800 Standard, it still is. Along the way, the brand has underlined the importance of price.

All that seemed just-the-stuff of which obits are made in mid-2002. In the first four months of 2002-03 sales plateaued, 7,180 in April, 8,370 in May, 8,432 in June and 8,932 in July, bad going for a car that would do between 15,000 and 16,000 units a month. Inventories, both with dealers, and at the factory zoomed up. Then, in the last week of July, Maruti Managing Director Jagdish Khattar announced a price cut: the entry-level 800 would cost Rs 1,89,000, down from Rs 2,06,000; the 800 Standard (air-conditioning, multi-point injection, Euro I compliant, four gears), targeted at non-metros, Rs 2,09,000; and the metro equivalent (Standard, air-conditioning, multi-point injection, Euro II compliant, five gears), Rs 2,33,000.

And while everyone was busy berating its antiquated technology, unshapely lines, and easily-bruised body, 800 bounced back: it sold 13,500 in August, 13,878 in September and 11,300 in October (inventories had been cleaned out and there were only so many to be had). By end-November, there was a 30-day waiting list for the car -- a back log of some 7,000 units, although the company had shipped 12,300 units to dealers and exported an additional 1`,000 to Bangladesh where it is finding takers as a taxi. In the third week of November, the company stopped bookings. "Many 800 buyers have never owned a motorised vehicle before," gushes Khattar. "Some don't even have licences." The dinky car is back.

Khattar could (and probably can again, the next time sales flag) afford to slash prices because margins on 800 are high, a function of its fully depreciated plant and machinery. And the volumes don't just make up for it, they give the company an opportunity to talk down vendor prices. Despite all these, though, MUL can't afford to keep playing the price card. The plant that rolls out the 800 needs some Rs 100 crore a year to keep it ship-shape.

So, how much life is left in the old war-horse? Almost 36 per cent cheaper than the entry-level offering of its nearest competitor, Hyundai Santro, 800 remains the best reason for two-wheeler owners to go the four wheels way. Ford's Mustang, Honda's Accord and Toyota's Corolla have all been around for more than 25 years, but have undergone facelifts every three years, maybe more frequently. In contrast, 800 has been through two cosmetic surgeries and mul can't afford more -- that could up its costs and offset the one reason people have to buy the car.

MUL's obsession with 800 is easily explained. It is still the largest selling car in India and the company's other, newer offerings, Alto and Wagon R have been unable to supplant its supremacy. For now, phasing out 800 DX (it shares its engine with Alto lx and retails in Delhi at Rs 2,61,619) may be a good idea. As will be a reduction in the price of Alto LX (Rs 3,05,335) to those levels. And as long as it is profitable for MUL to continue rolling out 800, the car will continue to define new entry-level prices for first-time car buyers. Any takers on when they'll touch Rs 1,50,000?

-SUVEEN K. SINHA

M&A
Biding Time

Three months after Titan Industries made its bid for the ailing watchmaker HMT, the government is still dilly-dallying on the sale.

If you had a company that's been in losses for more than a decade now, and there was half a chance of selling it, what would you do? Sell it, of course. But that's not how the government of India thinks. In September this year, Tata-group company Titan Industries bid to acquire 74 per cent of the government-owned, loss-making watchmaker. Time is ticking, but the government is yet to take a call on the bid. Instead, on a recent visit to Bangalore, Union Minister for Heavy Industry and Public Enterprises, Balasaheb Vikhe-Patil said that the disinvestment in HMT may be put off. Reason? The government has not made up its mind whether it wants to sell the company to a single buyer or offer shares to the public. Never mind that the PSU has accumulated losses of Rs 379 crore, including nearly Rs 120 crore of the watches division.
But why isn't Titan walking away from the offer? Because it makes tremendous sense for it to have hmt in its bag. Although Titan controls over half of the Rs 1,400 crore organised watches market, it is being slammed by a dismal 2 per cent annual growth. And the market that's growing faster is the Rs 1,000 and less segment, worth Rs 900 crore. Says Bijou Kurien, COO, Titan: "Eighty per cent of the untapped potential is in rural India, and HMT is a well-known brand there." Now, Titan must bide its time.

— VENKATESHA BABU

Executive Tracking

It's been ages since Sanjay Dalmia of Dalmia Brothers made news. Expect to see the man make the comeback with a vengeance. From what we hear, Dalmia is hiring en masse for a new "consumer" project that, and he's going after the big guns. Sudershan Banerjee, CEO of Hutch, is believed to be joining as the CEO of Dalmia's venture. Banerjee wouldn't confirm except to say that he is joining a "blue-collared retail consumer and consumer durable venture". Banerjee isn't the lone swallow. Kartik Raina, CEO of Dr Morepen, is rumoured to be joining him as the COO. No news yet on who'll replace Raina (a little birdie tells us that Arvind Nagarajan, the ex-CEO of Arcus, has joined as the head of Morepen's Lifespring retail venture).
Other moves: Toyota Kirloskar is apparently losing its marketing head Sandeep Singh to British construction equipment company JCB. Singh will take over as director marketing. Britannia also loses GM HR Nishit Mohanty to Apollo Tyres, where he'll head HR. Here's an interesting tale to end with: Sanjay Tugnait, Principal Consultant (CRM) at PWC Software quit to join IBM three months ahead of the Monday deal. Two months into the job, he decided to return to PWC. Then the merger happened, putting Tugnait in a fix. But he's found an answer to that: He's believed to be joining Satyam Computers to take charge of its Canada operations. All's well that ends well.

— SEEMA SHUKLA

PULP IT
Go West, Young Man

Post 9-11, West Asia is set to become an attractive job hunting ground for some Indians.

9-11 and India's flagging finance services industry have forced mid-career professionals to explore options outside Continental US and Europe. And the only ones going at this point in time are in West Asia

Dubai: It isn't just shopping, now Indians go there for jobs as well

I can hear the howls of protest from Kerala. Starting in the mid-1990s, the state went into an economic tailspin as jobs for Indians dried up in the Persian Gulf. In 1997, by some estimates, 600,000 Indians, the majority from Kerala, went looking for a pot of gold at the Arabian end of the rainbow. By 1999, the number had shrunk to 150,000. All the while, droves of Indians were returning from the Gulf States, a few voluntarily, most, reluctantly.

Kerala suffered. Among those who came back, were those who wanted to build houses for themselves, others who wished to start up department stores, and still others who planned to do both. Evidence of these activities is littered across the geography of Kerala: a pink-and-green concrete monstrosity in the middle of an otherwise quaint village or a gleaming department store in a borough that would be hardpressed to sustain corner stores. So, when I stick my neck out and claim that West Asia is set to become a destination of choice for some Indians it is only natural that all of Kerala protests.

The refusenairs are right: the number of jobs in West Asia hasn't increased in the recent past and shows no sign of bucking that trend now. And those who came back in a hurry were right to do so -- they would have lost their jobs had they not.

None of this has changed post 9-11. If anything, the United States' hunt for Osama Bin Laden and the looming threat of another Iraq-versus-the-rest (or Iraq-versus-the-US) war has only served to remove what little allure remained of the region's once thriving job market.

What 9-11 has achieved, though, is to suddenly turn the growing market for Indian finance and investment banking professionals in the US and, to some extent, in Europe -- something that was already being threatened by the economic recession in these markets-that much colder.
The emergence of this market in the early 1990s caused Indian banking and finance pros to pitch their overseas aspirations at the US, Europe, and Singapore, a shift from their traditional focus of the Gulf States and Singapore. With jobs drying up in the continental United States and Europe, West Asia became an attractive destination by default. India's flagging financial services industry too may have given sufficient cause for mid-career pros to explore options elsewhere. The only ones going at this point in time are those in West Asia.

The renaissance won't last: if B-school smoke signals are to be believed, the coming year could see a revival, a small one, in the American job market for Indian banking and finance professionals. It may not even take that: Iraq going to war again will suffice. When either happens, West Asia will lose its allure again.

Circa November 2002, though, West Asia remains a happy hunting ground for Indian banking and finance execs. Pick a random sample of people from that universe in your Rolodex and try to establish their current co-ordinates. I did. And I am convinced.

— R. SUKUMAR