The JV fell far below what we planned with regard to the objective with which we had set up the JV and the business expectations that we had., he said.
Pankaj Dubey, managing director & country head, Polaris India and CEO & whole-time director of Eicher Polaris, the soured JV, spoke to FE’s Shweta Bhanot Mehrotra on what led to the JV falling apart and how Polaris is re-strategising in India. Excerpts:
What led to the JV failing?
The JV fell far below what we planned with regard to the objective with which we had set up the JV and the business expectations that we had. All business opportunities were explored but the JV was not helping in getting business at the level we wanted. It was found not viable at this time and therefore, it was decided that we would wind up the business.
The JV is in the process of getting dissolved. We are looking at how to settle employees, dealers and vendors of the JV. Eicher’s sister companies have come forward and absorbed many employees. Though the innovation we did under the JV did not move in the direction as planned and investments we made did not get returns as expected, India continues to be a very good market for Polaris.
Was the absence of a market for Multix, the sole JV product, a reason for the failure?
It is a combination of number of reasons. We did a lot of exploration and it is true that the Multix was a very innovative product. It was India’s first personal utility vehicle with lots of unique features like independent suspensions. The expectations with which we had began were very high, considering our research. Unfortunately, the ground reality is that it was far from the business map.
How do you plan to take care of the existing customers of Multix?
The customers would not be impacted. We are talking to a few companies to take the entire after-sales support.
With the JV a thing of past, how does Polaris look at India as a market?
As you know, we have our off-road ATVs (all-terrain vehicles) and motorcycles business. We have high expectations for both the businesses. The industry size is small right now. However, over a period of time, we believe that our motorcycles business will become bigger with more opportunities. On the other hand, our innovative and unique products in the off-road business (ATVs) are slowly getting into relevant segments. It will take a little longer for the ATV business to become what we want.
Where do you see the ATV demand coming from?
Currently, 70% of ATV sales come from adventure sports and the remaining 30% from the security forces. In the next few years, we see this ratio changing with more business coming from the security forces.
Does Polaris plan to assemble in India?
Both ATVs and motorcycles are directly imported from the US. We are looking at doing value-adds in India. So what we are getting from the US is the basic platform and product. These vehicles need modifications and equipment additions, which is what we are looking at doing in India. However, we are not planning to assemble here unless the volumes are justified, and currently they are not.
Was GST a dampener?
The entire product costing went up right from 7% to 20% as a result of GST. It was not a great thing for our products. In fact, for our snow-scooters it went up to 45% and for the rest of the vehicles it is between 28 and 31%. We have already made a representation to the Government of India on snow-scooters because we are the only player in India with most of its products going to the security agencies and tourism-related customers. I do not see it helpful in any way to have a 45% GST on products that are going to be used by the security forces and tourism industry. It is a pending demand with the finance department.