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In the early 1970s, India was divided between people who stuck to their traditional bicycles and thrill-seekers who were fast adapting to scooters. For most of the middle-class population, cycles worked better because they were cheap, durable, and required minimal maintenance. On the other hand, motorcycles were attracting a lot of attention for the speed and comfort they offered, but with a price tag.
The Genesis of Kinetic Luna
Enter Arun Firodia, whose company Kinetic Group brought a 50cc two-stroke engine moped that had a simple design, low maintenance, and high fuel efficiency with a 100% made-in-India tag. The moped offered the middle-class Indian an upgrade from his bicycle while still considering his comfort and time—at affordable rates. That was how Luna was born. Marketed as a convenient and affordable mode of transport for the masses, especially in rural areas, Luna became an instant hit among students, office-goers, farmers, and homemakers. People also used it to carry goods and passengers.
The Luna’s tagline, “Chal Meri Luna” (Come on, my Luna), became a household phrase and a cultural icon. The Luna raced trains and rode around India to become India’s number 1 Moped brand quickly.
Supported by a strong distribution network, a catchy advertising campaign, and a loyal customer base, Luna received several awards and recognition for its quality and performance.
The Kinetic Honda Era: A Gearless Revolution
Then, in 1984, Arun Firodia launched another gem – India’s first gearless scooter – Kinetic Honda, with electric start and gearless transmission. The genesis of the Kinetic Honda was driven by the changing preferences and aspirations of Indian consumers in the 1980s.
The traditional geared scooters, such as the Bajaj Chetak, were still a mighty competitor with up to an 8-year wait time. Kinetic Honda was the only one who could take it head-on with its offering of a modern, convenient, and affordable alternative to Bajaj’s geared scooter. Another feature that many others had overlooked was that Kinetic Honda was suited for both men and women, as it did not require shifting gears or balancing. All in all, Kinetic sold more than 2 Crore vehicles in its heydays.
A New Direction: From Two-Wheelers to Auto Components
But by the early 2000s, the Kinetic faced one of its biggest challenges. Its long-time partner Honda exited the joint venture and came up with its 100% owned subsidiary company. As their old partner became a competitor, Kinetic diverted its attention to motorcycles. Now, Kinetic was faced with a double challenge of working on its own and facing its old friend in the market as its competitor.
During this time Ajinkya Firodia, the grandson of Shri H.K. Firodia, joined Kinetic. A magna-cum laude graduate from Brown University with a double degree in engineering and economics, Ajinkya had done a short stint at JPMorgan in the USA but came back to put his company back in gear. For the first six months, he went through a training process where he worked on the shop floor, with the marketing department, sales department, and the R&D department to understand what was going on at Kinetic.
In 2003, as the Senior Vice President of Sales and Marketing at Kinetic, Ajinkya was in charge of the company-wide rebranding exercise, modernizing the dealers, launching a new product portfolio, expanding the dealer network, and more. His actions bore fruit as Kinetic signed contracts with top-end brands like Hyosung, Korea, Italjet (Italy) & SYM (Taiwan) as part of their international collaborations.
By 2009, Indian consumers’ tastes had started to change as monthly motorcycle sales began to surpass scooter sales by a large margin. During this time, the Mahindra group decided to enter the two-wheeler market and formed a joint venture with Kinetic to strengthen their position in the two-wheeler segment, which was still a new business for them.
By then, Ajinkya was also looking at auto-systems and components manufacturing as another line of business where Kinetic’s existing capabilities would be well suited. As part of this restructuring business plan, Ajinkya decided to sell Kinetic’s entire stake in its JV with Mahindra.
The year was 2014 when Kinetic exited the 2-wheeler business completely and started its journey as a Auto-systems and components manufacturer. And Ajinkya was entrusted with the humongous task of taking their legacy business in a new direction. But it was easier said than done.
The journey had its own set of challenges. The first one was the cultural challenge. From a B2C company known for its 2-wheelers, shifting gears to become a B2B company meant that the existing employees needed a mindset shift too, and it would take a lot of work for a forty-year-old company. But Ajinkya knew that without the mindset shift, the rest of the journey would be even more daunting.
The second challenge was the technological one. From making two-wheelers to making complete gearboxes for heavy commercial vehicles required more than just willpower and hope. So, Ajinkya and his team had to learn new techniques and technologies that were at par with the quality systems of their clients like Mahindra, Renault-Nissan, Bombardier Recreational Products, American Axle, and Arvin Meritor, to name a few. But only technological innovations were not enough.
Ajinkya knew that he had to make Kinetic leaner from a financial perspective too. The financial restructuring exercise thus focused on reducing debt and interest costs with a laser-like focus on bringing down the debt-to-equity ratio. Kinetic also stepped away from non-core businesses by selling its non-core assets. All this showed results, as its debt-to-equity ratio dropped to 0.4 from a high of 6. At the same time, Ajinkya made fresh investments in Capex and hired new blood who understood Kinetic’s new business philosophy.
Fast-Tracking Growth: Three Key Focus Areas
To fast-track growth Kinetic’s growth as an auto component manufacturer, Ajinkya focused on three key areas:
A Resurgence and a Look to the Future
Ajinkya was also fortunate that his team stayed with him. Many Kinetic employees have been with the company for over thirty-five years.
They took the change with a pinch of salt and, along with Ajinkya, spent hours and days in the factory. Ajinkya and his team did various experiments, traveled worldwide to meet prospects, and showed them Kinetic’s capabilities. Today, Kinetic is supplying parts to the US, Slovenia, Europe, and Mexico, to name a few.
Today, Kinetic is a leading auto component manufacturer.
Ajinkya’s focus is still on the exports, and 50% of their sales come from there.
But why exports?
There are multiple reasons for that.
First – It’s a very high-volume game, as export customers tend to customize their programs across global volumes.
Second – Long-term contracts solidify revenue generation over a longer term.
Third – Cracking the export formula meant Kinetic had to bring their A-game to meet the quality standards required by their customers. As most companies competing in this space fail to adhere to such stringent quality standards over the long term hence Kinetic’s moat widens by a large margin. Also, once Kinetic specialized in understanding and delivering the global requirements of their customers, they faced less resistance from their competition in holding that position.
A testament to the success of this strategy is that their biggest customer has recently extended their contract for another seven years (3rd time in a row), thus securing about 300 crores of business for Kinetic.
Kinetic’s second biggest vertical is transmissions, where they make gears and gearboxes for customers such as Mahindra, Ashok Leyland, and Renault Nissan. Here also, very few companies globally have the capability to build completely assembled transmissions in-house at competitive price points. This has further improved Kinetic’s profit margins.
Kinetic’s newest and emerging vertical is the electric, where they are doing a lot of exciting work like developing gearboxes, axles, chassis and body parts for electric two & three-wheelers. Ajinkya views this as the next growth engine for Kinetic.
Most recently, Kinetic has also set up a line to make chassis and side stands for a very dear product called the Luna, being launched in an electric version by their sister company, Kinetic Green.
All this has resulted in Kinetic having eight consecutive quarters of net profit with three years of cash profit.
This was a hell of a journey, but did Ajinkya ever think of quitting?
In his words, “When Facebook was launched, they used to have a game where you had to nominate a friend who would be apt for this one-liner – ‘Get Rich or Die Trying,’ and everyone put my name. That’s who I am. So, I’m never quitting, and I’m never leaving, and I’m never stopping. That’s just not what I do. But in my Kinetic journey, there were certain challenges that were too big and massive. And at that point in time, you think, maybe this is it. This is the end. But then you fight, and you persist, and you have your team behind you. And you get out of it, wiser and battle-hardened. The good thing is that the worst is behind us, and we are looking at some glorious days ahead. For me, life has also come full circle with the advent of electric two-wheelers, and we now have the opportunity to recreate the legacy of Kinetic. So, I’m focused on that. The journey is only going to get more interesting from here.” He signed off with a smile.
The journey of Kinetic, under the visionary leadership of Ajinkya Firodia, is a testament to the resilience and adaptability of a company facing the winds of change. From dominating the Indian two-wheeler market with innovative products like Luna and Kinetic Honda to navigating through challenging times in the 90s, Kinetic’s story is one of transformation and reinvention.
Ajinkya’s return to India and his strategic overhaul of the company highlight the importance of leadership that is willing to learn, adapt, and innovate. His efforts in rebranding, expanding into new markets, and focusing on exports and complete assemblies demonstrate a deep understanding of global business dynamics and a commitment to maintaining the legacy of Kinetic while evolving with the times.
Today, Kinetic stands as a company reborn, with a strong presence in the auto components sector and an eye toward the future in electric vehicle technology. The resilience shown by Ajinkya and his team, especially in overcoming technological and cultural challenges, is a powerful reminder of the enduring spirit of enterprise. Kinetic’s journey, marked by both trials and triumphs, is not just a corporate story but an inspirational saga of a business adapting to survive and thrive in a rapidly changing world. The future, as Ajinkya rightly points out, looks promising, with the company poised to make significant strides in the evolving landscape of the automotive industry. Kinetic’s story is a beacon for businesses worldwide, illustrating that with the right leadership, vision, and team, even the most daunting challenges can be transformed into opportunities for growth and success.
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