Polaris India | Diversification To Lead Growth

Polaris India, the Indian subsidiary of Polaris Industries Inc, USA has been making headlines of late on two counts. One, it recently opened a new experience zone near Delhi for people to experience its range of all-terrain vehicles. More importantly, Polaris launched the iconic Indian Motorcycle brand in the country, opening up a new and high-value business segment. Pankaj Dubey, Managing Director, Polaris India Pvt Ltd gives us a lowdown on the company's performance in the Indian market, and a view into its future.

Business

At a time when people are putting aside purchase of vehicles required for mobility, indulging in ATVs doesn't seem like a bright idea. Contrary to common belief though, Dubey told us that the company has managed to put on a good show and has only grown from its previous year's performance. Although he did not disclose any numbers, growth was in the high single digits.

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Adding numbers to the order book is the Indian Motorcycle business, which puts the company in the on-road segment, although on the expensive side. The first task for Polaris is to establish the brand and its technical capabilities in the market. The importance of the Indian market can be gauged from the fact that Polaris plans to launch new models in India almost at the same time as the global launch. In 2014, Polaris expects to sell about 20 units of Indian motorcycles and expects this number to grow significantly year-on-year as the Indian super premium motorcycle segment continues to grow.

Talking about the possibilities of looking at smaller displacement motorcycles, Dubey told us that although competitors have adopted this strategy, it's early for Polaris to take a call on this.

Indian Market

India's contribution to the global revenue of Polaris is still small. Nonetheless, the future holds a much larger promise, said Dubey. Beyond the sale of ATVs, the country plays an important role for Polaris globally as a sourcing team here helps in procurement of components for global models. Such is the potential of the market that the company is expected to grow at a CAGR of about 30 % in the next five years.

The reason for projecting such numbers is a combination of activities undertaken over the last three years, including the introduction of finance for Polaris vehicles. Another key growth driver will be institutional sales to the armed forces, which will develop into a sizeable business in the coming years. The numbers are negligible presently, but are expected to account for about 15 % of the total sales in the next three years or so. Sale to such institutions is a long and demanding process, often bringing about unique requirements. In order to take care of such demands, Polaris already has a product management team in India. This engineering team can carry out changes specific to a customer till the time it doesn't involve alterations to the basic platform. Going forward, engineering capabilities will continue to be expanded in India but vehicle development will continue to be done in the US, even in case of vehicles developed for India in the future. A new yet important business for the company is being a platform provider for varied applications, requiring high off-road capabilities. At the recently concluded Defence Expo, the company had showcased an ambulance and an unmanned vehicle developed in partnership with Hi-Tech Robotics. While the company is waiting for this business to start, Dubey expects the growth herein to be good, once it gets going.

Local manufacturing is also being considered as volumes continue to grow. The company also has an equal joint venture with Eicher Motors, aimed at developing and producing a new segment of vehicles for both companies. Although none of the companies have disclosed the vehicle details, we expect them to be small cars aimed at personal mobility. Dubey told us that the progress in this venture is right on track and production at the new facility is expected to become operational in 2015.

Text: Arpit Mahendra