For us, every customer is premium: R S Kalsi

Written by Vikram Chaudhary | Updated: Oct 18 2014, 06:41am hrs
RS Kalsi is clearly enjoying his second major engagement with the media since he took over Marutis domestic operations (the first was the launch of midsize sedan Ciaz on October 6). This week, Maruti organised the national press drives of its soon-to-be-launched car and the new executive director seems as excited as all journalists are.

A veteran at the company, Kalsi joined Maruti in 1984 as assistant manager (L11the lowest officer level). That time I had a three-year experience in the auto industry, he says as we take our seats at the Lalit, Chandigarh. Subsequently, I worked in quality assurance, vehicle inspection, engineering, special projects, etc. Maruti has a policy of job rotation. The philosophy behind that is to make the profile of an officer well-rounded, readying him for a future, higher-level job.

That future, higher-level job is here. But did the news come as a surprise I was on a holiday when I received a call from our MD & CEO, Kenichi Ayukawa, and we met. The next morning, there was a meeting of the senior management where he announced it formally, Kalsi says.

The first 15-odd years Kalsi spent on the plant side. Then marketing and sales happened. In 2000, I was selected by the then MD to spearhead new initiatives at the time. Car sales were under pressure. Competition was getting stronger. There were plans to enhance dealer revenues. We also wanted to create a unique atmosphere for the customer. When a customer approaches a dealership to buy a car, he has various requirements such as finance, insurance, accessories and so on. We thought why not create dealerships that essentially are one-stop shops for all the mobility-related needs of the customer, he says.

Soon Kalsi started working on this project with a team of four people. One of the major breakthroughs at the time was Maruti signing an agreement with the State Bank of India. This proved to be a perfect matchwe made vehicles for the masses, SBI was a bank for the masses, Kalsi says.

Unlike today, finance during those days wasnt easily available beyond 20-30 major cities. And finance is a tool that made the Indian car industry grow at a rapid pace. SBIs branch network ensured finance for buying a Maruti vehicle was readily available, Kalsi adds. It emerged as a win-win proposition. SBI was able to sell its product, which is finance, and we were able to sell our cars to even more customers.

As far as insurance is concerned, Kalsi and his team started from scratch. The concept of a cashless transaction was unheard of in those days. In association with our partners, we set up insurance one-stop shops at our dealerships. Today our insurance business is close to about R4,000 crore in terms of premium income for insurance companies. While it was also a win-win scenario, it was the customer who gained the maximum. If a customers car breaks down and he had a Maruti insurance, he could get it fixed at any Maruti dealership. He just had to pay depreciation, nothing else, Kalsi says.

He further tells us that Maruti initiated cashless insurance in the Indian market. Even till today nobody has been able to replicate what we did over a decade ago. Those days, consulting firm AT Kearney said that insurance penetration would go to 35-40% in India in about six years. But within three years we had insurance penetration of 80%. Today, for us, it stands at 95%. Kalsi adds.

In 2005, Kalsi took charge of Maruti Driving School. India, like most developing countries, was seeing an increasing number of road accidents. These could be brought down if the government, industry and the voluntary sector work together in an integrated manner. Kalsi visited France and the UK to understand motor driving training. Studying the model of the British School of Motoring, I set up the first three Maruti Driving Schools in India. Today we have 326 such schools, Kalsi says. These schools are modelled on global standards where learners go through classroom and practical sessions, and practices such as road behaviour and attitudes are also taught.

His next role, in 2006-07, was changing Marutis sales structure from a centralised one to decentralised. India is a huge country. There is Shradh (when people dont buy new cars) in north India and Onam (when people buy new cars) in the south. How can you have a nationwide sales scheme This led to us to decentralise the entire sales activity. Four commercial business heads were announced and I was given charge of northern zone, Kalsi says.

His next assignment was national sales head, where he worked for about two years. And over the last three-and-a-half years he was associated with the spare part and accessory business, and outbound vehicle logistics. The last three years have been almost flat for the industry. This impacted our spare part and accessory business. Yet this business achieved a growth of 20% over the last three years. We have a huge warehousing network where we store over 55,000 parts. Our aim has been that our customers have easy access to genuine spare parts, Kalsi says.

As he says this, I am reminded of the R2,545-crore penalty for the alleged violation of trade norms in the spare parts and after-services market the Competition Commission of India slapped on 14 car makers, including Maruti. The CCI order is sub judice. so it wont be appropriate for me to comment on this. But I must add that we have a huge network of spare part shops where any customer can walk in and buy the spares. To say that any OEM is chocking the supply of parts by not making them available is perhaps not the correct statement.

Coming to logistics, Kalsi says Maruti did a unique thing. When we dispatched cars from the Gurgaon and Manesar plants to, say, Kochi in Kerala, we had no idea where the trailer was. Neither did the dealer, who had customers waiting. We installed GPS on our entire 10,000-unit trailer fleet. We now knew where the trailer was and customers could be given the exact time they could collect their cars, Kalsi adds.

Kalsi says Maruti True Value has also been instrumental in the overall growth of the company. A large number of loyal customers wanted to upgrade to a bigger Maruti. But they had to spend much time and effort selling their old cars. We came up with Maruti True Value. The seller sold the car smoothly, the buyer was ensured that the second-hand car he is buying has gone through all the quality checks. We also found that Maruti True Value is helping us sell new cars through the exchange process. Today more than 30% of our new cars are sold through exchange, he says.

On September 30, a few days after Kalsi took over, Maruti recalled about 70,000 units of the Dzire, Swift and Ritz cars. Kalsi says that India does not have a recall regulation yet. Recall is voluntary. Our experience is that customers take a positive view of such proactive initiatives by the company. I see other global auto companies also following this practice in India, which is good for the customer.

On October 6, Maruti launched the Ciaz, its premium car. Yes, the Ciaz is an important car for us, but, for us, every customer is a premium customer. A person buying an Alto values his money more than a person buying, say, a BMW. An Alto buyer distributes sweets in his neighbourhood, unlike a luxury car buyer. For a two-wheeler user, an Alto is an aspirational car and, for us, he is a very important customer.

Kalsi says he feels a deep sense of responsibility with the new position. Maruti Suzuki is one of Indias most loved brands. There are 14 million Maruti cars on the road. We have a huge network of partners. We are performing well; better than the industry. The future is exciting, with our medium-term goal of 2 million annual sales, new products, new segments. To take this forward, I draw strength from my strong team and an extensive customer-centric experience spanning three decades at Maruti Suzuki.