A study on The breakup and ties between kinetic and honda and its implications

1. “The breakup of ties between Kinetic and Honda and its implications”
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INDEX
EXECUTIVE SUMMARY __________________________ 3
THE OBJECTIVES OF THE STUDY __________________ 3
HONDA __________________________________________ 5
HONDA PRESENT ________________________________ 6
KINETIC PRESENT _______________________________ 7
KINETIC MOTOR COMPANY (KMCL)______________ 8
INTRODUCTION__________________________________ 9
KINETIC AND HONDA LTD ______________________ 10
PRODUCT HISTORY _____________________________ 11
YEAR AND MODELS FEATURES TABLE _________________ 11
BACKGROUND __________________________________ 13
THE BREAKUP OF TIES BETWEEN KINETIC AND HONDA ____ 13
FIRODIA_________________________________________ 13
CASE STUDY ____________________________________ 16

2. “The breakup of ties between Kinetic and Honda and its implications”
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CASE STUDY: “THE BREAKUP OF TIES BETWEEN KINETIC AND
HONDA AND ITS IMPLICATIONS” ______________________ 16
OVERVIEWS ON KINETIC MOTORS COMPANY
LIMITED________________________________________ 18
TURNING DRAWS IMPLICATIONS _______________ 19
KINETIC HONDA PRODUCT (MOPED)___________________ 20
COMPETITION SURVIVE/MARKET
FIGHTS/IMPLEMENTS___________________________ 21
KINETIC MARKET STRATEGY ________________________ 21
HONDA MARKET STRATEGY ____________________ 23
IN RETURN THE ACTION OF HONDA (HONDA MARKET
STRATEGY AND PROGRAMS UNDER TAKEN FOR THE
COMPETITION HELD IN INDUSTRY _____________________ 24
EXPERIENCE AND LEARNING ___________________ 25
CONCLUSION ___________________________________ 27
REFERENCE ____________________________________ 28
METHODS USED TO ACCOMPLISH OBJECTIVES: ___ 28

3. “The breakup of ties between Kinetic and Honda and its implications”
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Executive summary
This project studies and examines in aspect of the causes for “The breakup of ties
between Kinetic and Honda and its implications” mutual undertaking Venture.
The Study also chucks light on the stake break-up tactics of the 2 corporations. The
study is so industrialized as to give a vision into the bases that led to “Kinetic and
Honda” valedictory ways.
It stretches an idea of the intricacies involved in managing a Joint Venture and of
the tactical allegations of a good or bad relationship amid partners.
At the conclusion of the case talk, one should have seized the following topics:
The problems faced by the breakup of ties between Kinetic and Honda Joint Venture
The issues that caused in the break-up of Kinetic and Honda Motors
The tactical ingenuities taken by the Kinetic group to step a comeback
The break up strategies of the 2 companies
THE OBJECTIVES OF THE STUDY
 To know the Joint venture of Kinetic and Honda companies
 To have a overlook on both industry and there products
 To analyze the reason of breakup of Kinetic Honda
 To know about the current prevailing situation in the company
 To assess the impact of breakup of Kinetic Honda

4. “The breakup of ties between Kinetic and Honda and its implications”
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The project is focused by the Joint venture strategy and the necessities and
obtainability at several skill heights across the ventures. There were inconsistencies
across varied data springs, which were spoken by using material from trustworthy
sources.
These all information which is in the project is taken by secondary data and
interviewing several friends and discussion on the topic of Merge acquisition of
kinetic and Honda from the years and Pros and corns of the break up strategy and
so on.
The whole study on this project focus on the reasons behind the pulling of relations
between two firms here in this case kinetic and Honda and how it has posh the
overall brand image of the company
The outcomes of the case study will chuck an insight into what influences can
harm relationship among companies and also further investigation of the topic will
let to need valuation aspects of how to sustain good relations between corporations
and how to maintain it if the relation breaks what factors can lead to collaborative
hiccups is investigated.

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HONDA
Company Name: HONDA MOTORCYCLE AND SCOOTER INDIA
(PRIVATE LIMITED)
HMSI WAS FOUNDED IN YEAR 1999
Head office located Gurgaon, Haryana, India
Company chiefs are Minoru Kato, President and CEO
Industry products are Motorcycles, Scooters, Sports Bikes
Parent company is Honda Motors Company
Official Webpage https://www.honda2wheelersindia.com/

6. “The breakup of ties between Kinetic and Honda and its implications”
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Honda Present
The joint venture between India's Hero Group and Honda Motor Company, Japan‟s
not only created the world's single Huge two wheeler company but also one-off the
most successful joint ventures worldwide. During the 80s, Hero Honda became the
first company in India to prove that it was possible to drive a vehicle without
polluting the roads. The company introduced new generation motorcycles that set
industry benchmarks for fuel thrift and low emission. A legendary
'Fill it - Shut it - Forget it'//campaign captured the imagination of commuters
across India, and Hero Honda sold millions of bikes purely on the commitment of
increased mileage. Over 20 million Hero Honda two wheelers tread Indian roads
today. These are almost as many as the number of people in Finland, Ireland and
Sweden put together! Hero Honda has consistently grown at double digits since
inception; and today, every second motorcycle sold in the country is a Hero Honda.
Every 30 seconds, someone in India buys Hero Honda's top -selling motorcycle –
Splendor.
This festive season, the company sold half a million two wheelers in a single
month feat unparalleled in global automotive
history.Hero Honda bikes currently roll out from its three globally benchmarkedma
nufacturing facilities. Two of these are based at Dharuhera and Gurgaon in
Haryana and the third state of the art manufacturing facility was inaugurated at
Haridwar, Uttrakhand in April this year. These plants together are capable
of producing out 4.4 million units per year.

7. “The breakup of ties between Kinetic and Honda and its implications”
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Kinetic present
Company name: Kinetic Engineering Limited
Established in the Year 1972
Established by H.K Firodia
Head office located in Pune, India
Parent company is Firodia Group
Official web site http://kineticindia.com/

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Kinetic Motor Company (KMCL)
KMCL has transformed revolution concept of personalized transport in India with
the launch of Kinetic 'Luna' moped in 1972.
Kinetic motor began in 1984 with collaboration with Honda motor of Japan
formerly known as Kinetic Honda Motor to sell advanced scooters in India which
brought in the 1st gearless scooters on the Indian roads.
Kinetic has three manufacturing facilities located at Goregaon Bhima,
Ahmednagar and Pithampur to produce more than 4 lakh vehicles per year.
And on Aug 1, 2008 Mahindra & Mahindra's proposed acquisition of the assets of
Kinetic Motor Company (KMCL).Aug 1, 2008 Mahindra & Mahindra's proposed
acquisition of the assets of Kinetic Motor Company (KMCL).

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Introduction
The breakup of ties between Kinetic and Honda and
its implications
Organization
Kinetic Motor Limited,
Honda Motors Ltd.
Industry Automobile & Automotive
Countries India

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Kinetic and Honda Ltd
Kinetic Honda stood as a joint venture flanked by Kinetic Engineering Limited
and Honda Motor Company, (Kinetic-India, Honda-Japan).
Kinetic situated the 1st establishment to have a joint venture with Honda
Motorcycle ad scooter India. The Joint venture ran during 1984-1998,
industrialized to build two-stroke, two wheeler vehicles (scooters) in India. In
1998, the JV was ended after which Kinetic Engineering sustained to sell the
modeled products beneath the brand name Kinetic until 2008 when the then were
sold to Mahindra.
The JV Kinetic Honda brand is evoked for its bequest two-stroke scooters which
remained in fact built on the Honda NH series, with constant variable
transmission and electric jerk, this was first in India when it was thrown in 1984,
and lone in INDIA till the 1990s.
Honda NH series scoters

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Product History
The Kinetic Honda Limited has produced many models and modernized scooters
The below are the detail report of the products model scooters launched by KHL.
Year and Models Features table
Year Model name Specifications
1984 Kinetic DX
98cc, two-stroke, single
mirror, black plastic finish
1984 Kinetic EX
98cc, two-stroke, single
mirror, black plastic finish,
no indicators (replaced by
black blocks), limited color
versions
1994 Kinetic ZX
98cc, two-stroke, double
mirror, wind shield, more
graphical stickers, grey
plastic finish

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1995 Kinetic Marvel
99cc, two-stroke, double
mirror, wide shield, more
graphical stickers, red,
white and blackish blue
plastic finish and with pure
Honda 2 stroke Engine
2001 Kinetic ZX Zoom
110cc, two-stroke;
otherwise as the ZX
2002
Kinetic Nova
2005 Kinetic 4s
113.5cc, four-stroke
2006 Kinetic Kine
2007 Kinetic Y2K
2008
Kinetic Jupiter and Kinetic
Blaze
The Joint venture has of by Kinetic Engineering Limited and Honda Motor
Company, (Kinetic-India, Honda-Japan) has played a remarkable role in Indian
Two wheeler market and the above way the Company has established the greater
scope in INDIA (Kinetic Engineering Limited and Honda Motor Company,
(Kinetic-India, Honda-Japan))

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Background
The breakup of ties between Kinetic and Honda
On year 1998 of August month the main gaps in the “Kinetic Honda Motors Ltd”
(Kinetic Engineering Limited and Honda Motor Company, (Kinetic-India, Honda-
Japan)) main statements were reported by Automobile & Automotive Industries in
India.
Firodia
Founder of Kinetic Honda ltd

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Finally, Firodia conveyed a deal with Honda, to get its share at IND Rupee 45 per
stake, When the stock price was nearly double at a whole cost of IND Rupee
35CRs.
Mutually Honda and the Firodias of Kinetic stood quick to repudiate tales of a
split, however intelligences of the Firodias gently raised funds to buy out Honda
shares reserved surfacing.
The Firodias were even described to have securitized the resources of their 2
wheeler banking company the twentieth Century Kinetic Finance -TCKF started to
increase this dosh.
The problem had been infusing from the corporation stated a huge Loos of IND RS
6 CRs in the 1st quarter of 1998.
Ultimately “Honda” definite to declaim the matter to break and contacted “Arun
Firodia” to japan in Dec 1998 at end of 1998. Honda made Firodia that „proposal
of either Firodia to buy their fifty one percent shares or Honda will buy back his
nineteen percent share‟.
Experts stated that it was problematic for Firodia to get break from the company
that he had developed for the finest of his life
He also contracted a settlement agreement with them for ongoing to production
and vend the standing Kinetic Honda models.

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Honda also decided to continue giving practical distinguish how provision in
arrival for royalty and tech fees from Kinetic.
Since Honda was the internationally chief and greatest successful scooter producer,
the retreat came as a shock to industry spectators, as it was fairly uncharacteristic
of Honda Motor to stretch up a segment.
Honda company founder
As just a few months prior, Honda had been stated to be development to make
more investments in Kinetic Honda.
This was realized as a major impediment for the JV business. It was also perchance
the only case of a Honda letdown anywhere in the Universe.

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Case Study
Case study: “The breakup of ties between Kinetic and Honda
and its implications”
At preliminary the company Kinetic Honda limited at 2001 Kinetic Team had 2
automobile corporations
“Kinetic Engineering Ltd and Kinetic Motor Company Ltd”
Later at 1998 Dec a deal with Kinetic Honda Motor Ltd was changed to Kinetic
Motor Company Ltd.
Kinetics‟ tier originated in 1972 with the originator/ establisher Firodia purchasing
LUNA moped scooter strategy and Product design from an oversea company.
That which intended at takeoff stand in bicycle market, pass on to achieve an
outstanding success, then LUNA turn out to be a standard brand name for mopeds.
After in 1985, under the leadership of Arun Firodia's H.K.Firodia's son
Kinetic signed an agreement up with Japanese auto chief „Honda Motor‟ to form
“Kinetic Honda Motors Ltd”-KHML with in cooperation the joint venture holding
an equivalent share of twenty eight percent.

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The corporation's key business was built-up scooters. Manufacturing and vending
of spare parts formed a minor part of the turnover.
The Kinetic Honda 100 was the first ungeared scooter in India, evidenced to be a
giant success in the starting phases.
By 1980, Kinetic stood as India's biggest moped producer with a forty four percent
market stake and a fifteen percent stake of the total of two wheeler market.
A few years later, the corporation's moped market stake split to Twenty two
percent and the total market stake figure touched an awful five percent and also in
1991 the Kinetic took turnover of IND RS 121 CRs.
It was challenging on an equivalent turf with the IND RS 140 CRs “TVS Suzuki”
and the IND RS 150 CRs “Hero Honda” by 1999, “TVS” and “Hero Honda” raised
7 times over to IND RS 1018 CRs and IND RS 1146 CRs correspondingly, Kinetic
just achieved to twice its turnover.
A key reason for this was the circumstance that Kinetic looked to obligate missed
to add to market, which was reckless moving to motorcycles.

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Overviews on Kinetic Motors Company Limited
KMCL is a company with a rich heritage spanning more than three decades.
Over the years, we have introduced several new concepts such as the Luna and
India's first gearless scooter which have revolutionized the two-wheeler
industry. Hence, we are delighted to associate with Mahindra, another
pioneering automobile company with a rich legacy which will add long term
value to the business and take it to greater heights,”

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Turning Draws Implications
Intelligences statement and report appealed that accurate result from the
commencement business there had been changes between “Honda” and the
“Firodias” over the matter of management subjected to Kinetic Honda.
Firodia acknowledged that there were major variances problems like introduction
of new products, marketing expenditure, advertising strategies, etc.
As a consequence, the corporation agonized in standings of growth, productivity
and success.
Under the both JV bond, “Kinetic Honda” produced scooters and “Kinetic
Engineering” manufactured mopeds.
Both could not produce each other motorcycles. As „Honda‟ was contemporary in
the motorcycle sector with „Hero Honda‟.
The Kinetic group continued in mopeds and scooters. This was not in good sign of
Kinetic as the moped market had decayed considerably the decline during the
1990.

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Kinetic had determinations to becoming a complete range of two-wheeler
manufacturing company as it was solid move and also had large spreading
networks.
Kinetic Honda product (moped)

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Competition survive/Market Fights/Implements
Kinetic Market strategy to survive in market and how
it over came from Honda by stand and spare Honda
Kinetic Market strategy
The Decent moves of Kinetic Honda to get a break with regards to Customer
relationship management and expansion of business to sustain in market.
Firodia shorn of falling of the „Honda‟ tag since its product Honda scooters would
affect the Income.
The corporation brought tough events to facilitate perfections on several fronts plus
to its production costs, Product management and Research and Development
Customer relationship management.
Kinetic comprehended that fast growing customer and dealer assurance will be a
significant task to survive in Market without Honda.

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Kinetic told its traders about its manufactured goods and new product plans for
1999-2001 and had an effort to convey to them that now on they would be produce
and sell not only Kinetic Honda scooters, but stimulating the umbrella 'Kinetic'
brand.
This destined they would also be peddling mopeds and motorcycles.
They meant higher Production and high revenue in the coming years.
Kinetic directed training programs for its traders and suppliers to help them
maintain with customers in a healthier manner to improve all customer relationship
management.

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Honda market strategy
In Return the action of Honda (Honda market strategy and
programs under taken for the competition held in Industry
In year 1999 August month, “Honda” publicized that it will set up a solely owned
subordinate plant to manufacture vehicles and scooters in India with a primary
investment of 1 lakh units yearly.
The business set up an independent supply network for the new plants. By this
USD 43 million market investment; “Honda” scheduled and started to focus on
scooters for a span of 5 years.
After years, “Hero Honda” and “Honda” continuously were allowed to develop the
range to contain all 2 or 3 wheelers. “Honda” 1st scooter design and product model
was launched in middle of 2001. About one/third of the total planned expenditure
of IND RS 150 CRs.

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By then it had been capitalized by time. However the agreement with the Firodias
barred Honda from industrial manufacturing‟s the similar scooter over a subsidiary
or a JV; “Honda” grew around the passage by producing scooters in a different
range.
A Honda endorsed said, “This is an extremely significant market for us and there is
no question of giving up the scooter business we never give up”
Honda bike

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Experience and Learning
“The breakup of ties between Kinetic and Honda and
its implications”
This topic has encouraged us to know the market strategy and this has a huge scope
of implementation and example of for other corporations and has proved that a
individual/Sloe business is better than a joint venture.
Here in the topic “The breakup of ties between Kinetic and Honda and its
implications” has a diverse learning and has wider scope of merges and acquisition
of ventures.
The Honda japan based company was tied up with Indian Kinetic Company just for
the outsourcing and establishing their brand in India though it was a good effort
and right now it has made a tremendous growth in INDIA

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We have learnt many things in this study such as below:
How to expand overseas (case of Japan Company in India)
Decision making strategy
Business Independency
Expansion and growth
Merge and Acquisition
Time consistency management and maintaining the constant Industry growth
Customer relationship management
Maintaining in Customer is only key success

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CONCLUSION
The businesses which once signaled incomplete without each other are now
opponents.
This is the influence of Split of JV. Subsequently the corporations gained
individual uniqueness as
1. “Hero Moto Corporation”
2. “Honda motorcycles and scooters limited”
They appealed many things after formation of “Hero Moto Corporation” and now
are capable to export but the queries arise?
A.) That will the corporation, individually, able to establish an international image
without “Honda” technology.
B.) Regardless of the circumstance that “Hero Moto Corporation” could now effort
the world‟s major privately possessed engine designer, AVL Engineering, to cut its
technology for engineering Hero vehicles.
C.) Honda visions of acquiring major stake in India„s 2 wheeler market.
But it will be able to pursue without the prevailing brand name of “Hero”.
When the fact says that sales figures of Hero Moto Corp alone count more than the
sales figures of second, third and fourth companies in the line

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Reference
METHODS USED TO ACCOMPLISH OBJECTIVES:
The information for the study will be extracted through Internet from secondary
source of data. The resources include articles, magazines, newspapers (Economic
times, Times of India, American Express) and websites.
 https://en.wikipedia.org/wiki/Honda_Motorcycle_and_Scooter_India
 https://en.wikipedia.org/wiki/Kinetic_Honda
 http://www.icmrindia.org/free%20resources/casestudies/Business%20Strate
gy%20freecasep1.htm
 https://www.scribd.com/mobile/doc/40549295/Kinetic-Honda-Case-Study
 https://en.m.wikipedia.org/wiki/Kinetic_Honda
 www.autoindia.com
 www.bikeadvice.in
 www.motorbeam.com
 http://economictimes.indiatimes.com