Business Inc Interview — Arun Firodia

Though its Rs 1.25-lakh small car which the company had unveiled in the last Auto Expo failed to receive fiscal concessions from the government, the company is going ahead and approaching the government for tax reliefs for its electric scooter, the prototype of which will be exhibited at the Auto Expo (to be held at Pragati Maidan in theCapital from January 12 to 18). SWATI PRASAD talks to Arun Firodia, Chairman of the Kinetic group, about Kinetic Motors’ future plans. Excerpts:

What will be the approximate price of the electric scooter.
We want to price the scooter at around Rs 30,000 to Rs 35,000. But that kind of pricing depends on tax concessions. We’ve sought excise, sales tax and octroi concessions from the government.

The battery would cost another Rs 15,000. The scooter is fitted with a special noiseless battery imported from the US. The battery can be recharged 700 times. The vehicle can run 60 km without recharge. It consumes less electricity, making the running cost cheaper than other two-wheelers. The savings in running cost could easily finance the battery cost. We expect to product 10,000 scooters in the first year of production.

Doesn’t an electric vehicle mean a drop in acceleration?
Not necessarily. We want to popularise the use of this electric scooter in crowded areas likeConnaught Place in New Delhi, and in areas that need special attention due to heritage such as Agra, Khajuraho, Ajanta Ellora etc. I feel only zero-emission vehicles should ply in these places.

We want to study the consumer response to this concept vehicle at the auto show.

Is this the first electric scooter to be developed in the country?
A Bangalore-based company had developed a similar product six to seven years back. But I think now is the time when there is a need and a market for such eco-friendly and customer-friendly products.

Over the last year or so, scooters have been performing badly while motorcycles are doing well. Why is this happening?
Bad roads and a growth in farm incomes are primarily responsible for increased demand for motorcycles. However, modern scooters are not doing badly. People are switching over to conventional and trendy scooters. I don’t know if style is the determiner, but convenience certainly is. In a city, changing gears can be a real problem instop-go traffic conditions. The scooter market is changing from geared scooters to gear-less ones. Since we are pioneers in this segment, we are recording smart growth rates.

Any other eco-friendly vehicles you are working on?
There is a possibility of introducing an LPG scooter. We have already developed a prototype, though we are not displaying it at the Auto Expo. With LPG comes the problem of refuelling.

The government did not grant any concessions to Kinetic’s small car. Why do you want to approach the government again? And will Kinetic introduce the car at a later stage?
Unlike the small car, where we had made an investment (of around Rs 2 to 3 crore), in the case of the electric scooter we have not made any investment. There is still a market for our small car. The project has been put on the backburner. Both in the case of the electric two-wheeler and the small car, a clear government policy is needed. The government policy on tax benefits to such products must be known beforewe can think of introducing them.

What percentage of sales comes from finance schemes?
At present, 20 per cent of all Kinetic two-wheelers are bought through finance schemes. We want this proportion to go up to at least 40 per cent in the next two years.

Kinetic has three finance companies Kinetic Fin Cap, Kinetic Capital Finance and Kinetic Lease and Finance and we plan to merge the three. Our finance companies are already present is around 400 towns. We are entering into a sourcing arrangement with ICICI and Trans America. Under the arrangement, Kinetic will source two-wheeler financing business for ICICI and Trans America.

What are your other future plans?
We are already number one in the modern scooter market and want to also be number one in the scooterrette market in the next one or two years. We hope to do much better in the motorcycle segment. Within the next two to three years, our company’s motorcycle sales will cross two lakh per annum.

Also, we hope to achieve aturnover of Rs 2,000 crore within the next two to three years. We will achieve that by investing around Rs 50 crore every year in order to introduce new models and variants in every segment of the two-wheeler market.