Rajiv Bajaj: Gunning for the Spendor

T

The sweet spot of the 39,00,000-units-a-year, Rs 15,000-crore Indian motorcycle market is executive bikes, those priced between Rs 35,000 and Rs 45,000. Hero Honda's Splendor, accounting for around 56 per cent of all exec bikes sold, dominates the segment that, in turn, accounts for 54 per cent of the motorcycle market. Now Rajiv Bajaj, President, Bajaj Auto, wants a piece of the action. The result: the Caliber 115, a new offering. ''This is another attempt to make a dent in Splendor sales,'' says Atul Sobti, the Senior Vice President in charge of Hero Honda's sales and marketing. ''But Splendor will continue to grow.'' Actually, the two companies would do well to look beyond each other. In the first nine months of 2002-03, Bajaj's motorcycle sales grew by 28 per cent, Hero Honda's by 22 per cent, and the market by 38 per cent. And both companies have already announced they are on track to miss their sales targets for the year. It is smaller companies, notably TVS Motor, that have benefited the most.

-Swati Prasad

INTERVIEW
''Real Options Will Be The Decision-Making Tool In The Future''

Thomas E. Copeland: Future options

Thomas E. Copeland, Managing Director (Corporate Finance), Monitor Company, an authority on valuation and risk management, was in India recently to conduct a seminar for CFOs. BT's Roshni Jayakar talked to him on the latest in corporate finance. Excerpts:

Tell us a little bit about your concept of real options.

A real option is the right, but not the obligation, to take action in the future when you get information. It is built around flexibility rather than fixed plans. For example, Napoleon Bonaparte reportedly said that he didn't have any strategy at all. His strategy was to enter the fray and respond quickly to information.

What will be the hot topics in finance in the coming years?

We are extending the real options concept to the information economy. Another is flexibility. Most CFOs responsible for choosing debt or equity mix will tell you that flexibility is important.

Are you in favour of more regulation of financial markets?

I am in favour of more information available to investors in companies. I am fairly negative about regulations concerning a company's decision-making. That restricts a company's ability to reallocate resources.

OBITUARY
The Muscleman
K.M. Mammen Mappillai, founder MRF, died on March 2, aged 80.

Mammen Mappillai: The passing of a legend

Unlike the brand he built, K.K. mammem mappillai enjoyed anonymity. Although he was a member of several industry associations, Mammen Mappillai rarely made public appearances and almost never spoke to the media, preferring to keep a quiet focus on building the fortunes of his tyre company from his corner office in the Charles Correa-designed headquarters on Chennai's Greams Road.

But Mammen Mappillai's low-key public life was not due to a dislike of company. (In fact, his close friends know of him as a cheerful person, who would spice-up board lunches with interesting anecdotes.) It was simply because he believed, and rightly so, that his first duty was to his work and as long as he did that properly, there was little to gain from pressing flesh with the rich and powerful. It's a philosophy that stood him well. The business empire that he leaves behind includes the market leader MRF Tyres, with Rs 2,240 crore in revenues; a toy manufacturing joint venture with Hasbro; an automotive paints business, and an industrial rubber products unit.

A Long Trek

Mammen Mappillai was born on November 28, 1922, to K.C. Mammen, as the youngest in a family of eight children. His father wanted him to become a commercial artist, but Mammen Mappillai had other ideas. He started off in 1946 making balloons from his home in T. Nagar (Chennai), quickly expanded business and six years later was manufacturing retreading compounds.

The first tyres he made were for bullock carts. In 1961, he tied up with Mansfield Tire and Rubber Co of the US and barely three years later was exporting. Around the same time, the MRF Muscleman logo was introduced. Through the 70s and 80s, Mammen Mappillai built MRF into a premier tyre company, fighting his rivals on quality and not price. In 1979, MRF crossed the Rs 100-crore turnover mark.

In the mid-90s, he came close to losing his hard-built company, when Michelin made an attempt to take over MRF. The attack was thwarted, but it made Mammen Mappillai much more possessive of his closely-held company.

The MRF that his son K.M. "Vinoo" Mammen takes charge of now is both promising and vulnerable. The entry of global car majors and tyre manufacturers means that MRF must invest more in R&D. But profit margins in the business are low, and funding growth might mean raising either debt or equity. In either case, it will test the conservative philosophy Mammen Mappillai lived by.

-Nitya Varadarajan

The Mountain Dew ad: Soft target

FIZZ
Never Say Die
Pepsi and Coke go tearing each other's hair again.

How do you know if it's business as usual in the cola world? If Coca-Cola and Pepsi are busy berating each other and spending lots of ad money in the process. So, what's surprising about Pepsi's Mountain Dew launch is not that Coke has gone ahead and done a spoof using its own clear lime brand, Sprite. This is: Pepsi has countered the spoof with, well, its own spoof. ''Gyan Deeya, Ad Bhee Chalaya, Per Kuch Hoowa Nahin,'' says Pepsi's Mountain Dew about a brand called Frite. Grow up, guys.

-Shailesh Dobhal

DASH BOARD

Heard of the new jersey Bill-the legislation that sought to proscribe the outsourcing of government contracts to foreign countries, especially those like India? India's association of software companies, Nasscom lobbied state senators, threatened to take the issue to WTO and finally scored a victory of sorts when the bill was put on hold in early March. Surely, that should suffice to ensure a A+ for Nasscom chief Kiran Karnik.

First, the confederation of Indian Industry, CII, the voice of India Inc., makes a habit of clashing with Gujarat Chief Minister Narendra Modi over the post-Godhra riots that swept through the state. Then, after the CM turns aggressive, CII Director General Tarun Das sends him a contrite all's-forgotten-let's-be-friends missive. Maybe it's a continuation of the Rollback Raj.