Kinetic Honda - The Break-Up

After the December 1998 deal, Kinetic Honda Motor Ltd was renamed Kinetic Motor Company Ltd. Kinetic's story began in 1972 with the founder H.K.Firodia buying the 'Luna' moped's design from a foreign company. The moped, which aimed at capturing the bicycle market, went on to become such a huge success, that Luna became a generic name for mopeds. In 1985, under Arun Firodia's (H.K.Firodia's son) leadership, Kinetic tied up with Japanese auto major Honda Motor² to form Kinetic Honda Motors Ltd. (KHML) with both the partners holding an equal stake of 28.56%. The company's primary business was manufacturing scooters. Sales of spare parts formed a minor part of the turnover.

Throughout the 1980s, Kinetic remained India's largest moped manufacturer with a 44% market share and a 15% share³ of the overall two-wheeler market. A decade later, the company's moped market share halved to 22% and the overall market share figure reached an abysmal 5%. Also, in 1991, Kinetic, with a turnover of Rs 121 crore, was competing on an equal turf with the Rs 140 crore TVS Suzuki and the Rs 150 core Hero Honda.⁴ But by 1999, while TVS and Hero Honda grew seven times over to Rs 1,018 crore and Rs 1,146 crore respectively, Kinetic just managed to double its turnover. A major reason for this was the fact that Kinetic seemed to have missed the pulse of the market, which was fast moving towards motorcycles...