forbes bharatbenz

8/2/2019 Forbes BharatBenz

1/8

.. - . ~.NKLIN TEMPLETON'S SECRET ASSETS)

!1

ROBE


2/8

COVER


3/8


4/8

customers rich"; he'd tried to setupventure capital firmof hii own But

that fizzled out in two years. And hefinallyknocked on Daimler's doors.

The folks there could see theyoung man had fire in his belly.That said, they were sceptical aswell. So they madehim an 0 % ~start out in the boondocks as asalesman. If he did well, they'd hirehim.Until then, he'd have to workfor free. I asked, work for free?You arrogant b******s! Who do youthink you are&'Llistosella recalls.

The amused folks at the otherend of the table told him he ought tobe thankfulthey weremak'mg himan offer n the &st place. And thatall he knew was banking; for goodmeasure, they rubbed it in-theytold him he'd make a hash of the job.And that's why they weren't willingto take a chance or pay him a dime.An incensedLlistosella, ust 28 then,took the job, "-.and in two years Isold like hell. I sold everythingtoeverybody. You know what? Theyaskedme o stop beinga salesmanand come to headquarters."

By his own account, he hatedbeing at the headquarters "Thatwasn't where the party was...^^ in2006, it was not them who told meto do this thingin India I said Indiais the next market and we have to bethere! Headquarters caved in to hisrelentless demands and Llistosellamoved to Chennai. Bharat Benz, asubsidiary wholly owned by Daimlerwas created a few years later.ACHTUNG JUOAADlEarlier this year, on February23 ,Llistosella and his men showcasedfive trucks to potential dealers and2,500 potential buyers who had flowninto Hyderabad "My men weren'tGust] emotional. They were crying

for God's sake!" says Llistosella.AydoganCakmaz,head of research

and development at the team, wasexcited enough to drive one of thetrucks from Chennai to Hyderabadfor the event "Ithas takena lot ofsweat, not blood, but sweat to gethere. We have seen people breakdown under the stress. What wehave here is a team which is so damnproud of what we have done. I saywe are believers," says Llistosella.

For six years, the team travelledacross the country o understand themarket so they could build a truckthey believed the market would buyinto. "I am the real deal," he s&s. He'sgot the numbers to prove his point

makes selling cw , itmakes Rs 5.6sellingtrucks and buses. If that be theyardstick, 85 percent of the company'srevenues and a bulk of its profitscome from this segment. And don'tforget, two-thirds of all trucks soldin India are built by the Tatas. So ifLlistoseIla succeeds, it would hurtTata Motors where ithua s most

Which iswhy, a couple of yearsago, Tata made it very clear to all itscommercial vehicle dealers in Indiathat taking up a Daimler dealershipwas not kosher. And everybody n thenetwork complied. To that extent,Tata is using all of its muscle andexperience to prevent the Germansfiom gettinginto their temtory, A

"IT HA S TAKEN A LO T OF SWEAT, NOTBLOOD, BUT SWEAT TO GET HERE. W EHAVE SEEN PEOPLE BREAK DOW NUNDER THE STRESS"Until now, Daimler has invested Rs4,400 crore in Bharat Benz, its largestgreenfield investment outside Europe.

The folks at Bombay House,corporate headquarters of the $83billion Tata group, which earnsone-third of its revenues fmmTata Motors, have been watchingLlktosella intently. They have goodreason to. A little less than half ofTata Motors' revenues come fromits India operations,with JaguarLandRover making up the rest. Now,for the India operations, the truckbusiness is pure oxygen becausethat's where most of its moneycomes from. While the passengervehicle business may sound like thesexier one to most people, fact is, itdoesn'tgenerate toomuch revenue.

Analysts Forbes India spoketosay that for every one rupee Tata

senior Tata Motors official who didnot want to be quoted says, W e areabsolutely prepared for them. Be itin technology, product or reach, weare taking themvery seriously."

An email sent to Tata Motorsquestioning how the company isplanning to do thatgot this reply:' w e believe that to do justice toyour topic, we will need to sharewith you perspective, examples andinformation which are of competitiveadvantage to u s Our play willbecome apparent to competition!'

On his part, Llistosella knows theTatas aren't pushovers. Sowhen hefirst came down to India in 2006to study the marketwith his teamof five people, they rented a smallcubiclein Gurgaon, which servedas the office. That done, they renteda warehouse from the Transport

&ill 13.2012 FORBES INDIA 41


5/8

Corporation of India, a logisticscompany.They calledit the "teardown centre" because everytruckthat existed in the Indian marketwasdrivendownhere andstripped,and examinedto the last detail.What are its specs?Whataboutthe qualityof its parts?What doesthe enginelooklie? Whosuppliesit?Everythingwas looked at,to usea clichg,with the attention to detaitGermansare sofamous for. Afterthis exercise,which lasted aboutsixmonths,Llistosellawent backto headquarterswith his projectreport and a fewstartlinginsights.

It wasaworldvery differentfromthe ones they were used to workingin.For instance, in their quest tofigureout if Indian truckers like airconditionedcabins, they came upwitha horribly sobering nsight into Indiaand how the nation works. Practicallyeverytruck's cowl cabii they travelledin had a hole. And contraryto whatyou'd imagine, it wasn't meant to coolthe cabin down or offerventilationofanykind Truckerstold them theyspent way too much time on the roadandthe holewas the easiestwaytoanswernature's callwithout takingabreak fromthe wheel. Llistosellahad begpn to understandjugaad.

Hewent back to headquartersandsaid he was readyto begin the Indiaoperation. &Theyaidyou're crazy.I said yes, that's what youpaymefor! TodayBharat Benz has1218people-next year it willhave2,500.

Foreign players have found it tough to break the Tata-Leyland duopoly in the Indian truck market. But BharatBenz is going to lengths that few have attempted before- ,

CRACKING THE INDIANMARKET"Theoreticallv!' ~ointsut Rathore- ~ ,, .of IHSAutomotive,"a marketwheretwo playershold 80percent and rely 6YEARS ' 1,18 1 RS4,400 CflOREcompletelyonbrand recognition IWPARATlON EMPLOYEES / ALREADY INVESTED.isattractivefor anyglobal truck I7MODELanufacturer." Thatexplains i FROM7TONNETO MORETHAN85%

BELAUNCHEDOVER 49 'CAI C iwhy practicallyeverymajor truck I LOCALISATION20 MONTHSSTARTING j VEHll I OFPARTS- THIS JUNE42 FORBES INDIA ( Apr~l 3,2012


6/8


7/8

builder in th e world has tried hardto crack open th e Indian m arket.But their carcasses now lie litteredall around th e Indian landscape.Their failurehas created an aura ofinvincibility around Tata and Leyland,saysVRV Sriprasad,marketing anddistribution head at Bharat Benz.His hypothesis is an interesting one.Their aura, he argues, rests on a fewpropositions truckers have come tobelieve in over th e years, and onesthat th e duopoly has perpetuated-

that iswhy you need a support stationevery100 ilometres. So wha t do youdo?Build reliable trucks that don'tbreak down. As simple as that!He found an ideal foil in th e head ofresearch and development, AydoganCakmaz, who first came to India inAugust 2008.When he landed herewith his wife an d kids, he didn'tknow ho w to speak English. Therewas no workshop where he couldbegin planning prototypes. "Itwaslike a startup. We have never done

When on th e highway and th e truck isheaded downhill, Indian truck drivershave mastered th e art of manoeuvringtheir machines in th e neutral gear.Try tellingthe driver that it's a safetyhazard, and he'll tell you his focus ison saving fuel. So Daimler designed itsengine control unit (ECU) to ensurethat when a driver is in cruise controlmode, fuel supply to th e engineis cu t off. Problem solved! Addedbonus? No compromiseon safety.

But the fear of a breakdown is

EVERY MAJORTRUCK BUILDER INTHE WORLD HASTRIED HARD TOCRACKOPENTHE

INDIAN MARKET. BUTTHEIR CARCASSESNOW LIE LITTEREDALL AROUND THEINDIAN LANDSCAPE

ON THE ROAD The nm t Tala truck that rolled out otthe Jamrhcdpur plant In 19M Thtswas a productof Tata'siointventure *nh Msrcs6ss-Bsnr

that you need a massive after salesnetwork across th e country to ge tyour truck serviced anywhere; thatspares ought to be easily available;and that any mechanic anywherein th e country ought to be able tofix th e beast if it breaks down.

Come to think of it, he says, thesearen't virtues. 'What kind of trucksdo you build that breaks down sooften that it needs to be serviced sooften and spares need to be availableat everypaan shop?" he asks. Hiscontention is a simple one. Trucksbuilt in India are not reliable. And

anything like this in any market.Not in Brazil or Turkey, nowhere.It was totally from ground up."

That he gets into details is anunderstatement. I t took him andhis team three months just tofigure ou t why a windshield in atruck breaks when hi t by a stone.A cracked windshield is a commonsight on Indian trucks. "So we wentback to th e supplier and askedhim to explain. He had met all ou rstandards in terms of design an dtoughness. But we found that th eactual cause of the ~ r o b l e m as in th emanufacturing process," says Cakmaz.For that matter, consider thisother curiously Indian phenomenon

embedded deep inside th e psycheof the Indian trucker. He willwant to know if Daimler will beamund if his truck breaks down.So what they've put in place isa system tha t can respond to abreakdown call in two hours flatalong the Golden Quadrilateral,ahighway network connectingDelhi,Mumbai, Chennaiand Kolkata

'W e didn't want a c r o w d So wetook a call that we l l have a maximumof 35dealerswith large territoriesand multiple dealerships. Right fromday one, each service station is wellequipped to deal with a breakdown.Solet's say if there is an engine problem.No problern..Every effortwill bemade

U FORBES INDIA I Aprll13,2012


8/8

CUVtHSTORYto redu ce downtime," says Sriprasad.And just t o be doubly sure, the truckshave been tested for an astonishing45 lakh kilometres across variousconditions at its test track in C hennai.I'M NOT A NICE GUYTo be fair, Tata Motors has d one a lotof spring cleaning, both in term s ofthe cu stomer experience as well asthe produ ct itself. Things like a keyaccount policy whic h existed onlyon paper is now taken seriously andengages with customers directly. A keyaccount is defined as any fleet opera torwho owns 100 trucks or m ore.

Tata has created a dedicatedwebsite for such customerswhe re an operator can accessall information on his fleet,maintenance sch edules, spares, anddiscounts among othe r things.

"The way it works is that there a redifferent discounts for key accountsand they a re the first priority ofthe m anagement. Tata deals withthe m directly. So let's say if a keyaccount customer o rders 25 trucks.And these trucks a re not in stock,but th e dealer has orders from 25retail customers for the sam e truck,priority is accorded to th e key accountcustomer," says a Tata M otors dealer.

At the de aler level, dynamicdiscount policies are being p ut intoplace. Every first week of the month,the area sales manager together w iththe d ealer decides on the discountfor the m onth. So, for instance, if in agiven month it is Rs 50,000-it couldbe Rs one lakh the other month.

The Tatas have been workinghard to bring down the dow ntimeof its trucks to less than 24 hours."There are 24x7 helpline assistancenumbers, schemes for truckers whocarry perishable cargo where if abreakdown occurs, Tata M otors offers

to move th e load to anoth er vehicle,loyalty schemes and discounts oninsurance premiums among oth erthings. Tata knows if they don't do thisnow, a part of the market could shiftto th e competition," adds the dealer.

It is also experimentingwith wh atis internally called the 'Primazation'of Tata's e xisting product po rtfolio.Th at means m odernising its existingproducts using Tata's learnings fromthe Prim a World Series Trucks,including a variant of this seriestha t is cheaper by Rs 4 lakh. Th einitiative is being led by its R&Dhead T im Leverton. Th e idea isto plug any gap that exists in themarket today. The dealer says Tatawan ts to send its customers a simplemessage: Don't look at com petition.

fuel efficiency will be 10percenthigher; and th e service network isin place. As for resale value, tha t is avariable only the mark et can dictate.Sriprasad adds for good measurediscounts and 30 days credit offeredby competition are peripheral ideas."Insuran ce w ill be a big differentiator,no question asked... don't want evena single pie going ou t of my custom ers'hands in the unlikely event of anaccident. Leave the maintenance tous ....You focus on your business!'

On April 18,Dieter Zetsche,chairman of the Daimler managem entboard, w ill be in Ind ia to flag offproduction a t the Chennai facility.The frontal assault is expected tobegin in July 2012 wh en sales open.From the n on, over the next 20

TO BE FAIR, TATA MOTORS HAS DONE ALOT OF SPRING CLEANING, BOTH INTERMS OF THE CUSTOMER EXPERIENCEAS WELL AS THE PRODUCT ITSELF

Llistosella rema ins unfazed. He'sbetting on his team to deliver becausehe's take n a person al pu nt on aU ofthem. "Everybody has to confess andget down to his knees and say tha t Iknow nothing. Nothing at all and that Iam an idiot. I am w illingto learn. Yes.If someo ne is blabbering, som eone ispretentious that I know everythingabou t commercial vehicles...hankyou very m uch, you c an go."

The team at Bharat Benz isconvinced there are only four thingstha t ma tter to a trucker: Price, fuelefficiency, netw ork and resa le value.Of this, thre e a re in thei r controland th e prop osition is fairly straightforward. W hat they pu t ou t will beonly 9 percent m ore expensive thancompetition; to make up though,

months, the company inten ds tolaunch its e ntire portfolio of 17kindsof trucks th at will cater to varioussegments of the m arket. These includecarrier trucks, v ehicles used by coldchains, and m ining and constructioncompan ies, until its entire portfoliois available in the c ompany.It's the kind of task that so undshorribly d aunting. "They will fightbut I am not afraid of competition.Tha t's life because then th ey makeme better. So com petition is good.As long as thelcompetition is fair.If they play unfair, we can also playdirty. W e a re street fighters....Thebig learning in India is modesty. Iam no t the A merican Mr N ice Guy.I amP**' ard working and I reallyknow w ha t I do," says Llistosella.

46 FORBES INDIA I Aprll 13 . 2012

forbes bharatbenz

Documents