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storgwould be liberally sprinkled withthe F word to descriie pretty much everything Marc LligtoseUa (pronounced~ist-0-say-a] wants to d a Chances are, if you told him that, he'd turn back, stick his middle finger, and ask, -the f*** not? That'sthe only way he knows tobe. That is also why he now has a mandate from Daimler's headquarters at Stuttgaitin Germany to put up a good fight, however bloody it gets, with TataMotors and kshok Leyland. Eighty percent of a l l trucks sold Anybody in India are built by them. who's tried to take this duopoly on, has until now, lost to their might. And that includes t~~ckingmqors from across the world like Volvo, MAN, and Scania The American Navistar reckoned partnWing with a local company would get it a toehold in the marker, which is why it chose to partner with Mahindra But in the two years t ' s ips been in business, i managed to sell just about 1500vehicles. And this market is made offleet owners who have risenfrom the grassroots to create large businesses. They know how to nut theirtrucks and m&e money, but they don't care two hoots about a global or local brand. %veryMNC & in with an advanced technology perspective, but failed to deliver on the price, financing options for the buyer and point of contact, which is sales and service,"says Deepesh Ratbore, managlngdirector, IHS Automotive, a global consulting firm. The problem i compounded, he s sitys, by the fact that every failed attemptby an MNC adds to fear in the minds of fleet operators. You pay big money to buy afancy

t ' a pity editorial policy doesn't ~ allow cuss words. If it did, ti hs

truck, take the risk of switching from a Tata or Leyland and find the company has exited the market. hns To put t i g in perspective, last year, 2.70 lakh medium and heavy commercialvehicles were lapped up by Indians. This is expected to double by 2020. Irs the End of party nobody w n s to m s ,but nobody has been at is able to capitalise on. That these kind of explosivenumbers would happen in India was obvious to Llistosella way back in2005 when he was asked to be partof a team that would identify new markets for the company. By then, he'd moved up the ranks at Daimler, a $142 billion company, by saving the company $132 millionby cutting costs and improvingefkkncieg. But Llistosella likes a good fight So the first time he got beaten up as a kid, he sworeit would never happen to him again. Aged eight, he started he'd to learn judo. By U, graduated to Shotokan karate. And at 18,he took up kickbow, which he practices I to date. " was a street fighter in Barcelona," he says, where his father hails from " know how to fight... I but rears come into your eyes when you know you're doing the right thing. Not when you go to a press conference and you're asked questions about a company with big b'**, lots of market share and making alot of man+ His bosses know that as well-that when it comes to a fight,he will put up a good one. And if t h i i go accordin to his ridiculously meticulous plans, he can change the landscape of the Indian truckingbusiness. In fact, that's how he landed the job at Daimlermany years ago. Until then, his backgraund was a chequered one. He'd walked out of an investment bankingjobat CommerzBankbecause "they were only interested in selling their products, not making their

THE A TEAM
Managiwdlrector of Dafmler lndia CommercialVehicles
"

.....................................

Born in Cologne, Gsrmany, he first came to India in 2006 as project lead and ever since then has14thelndia entry strategy. He reports diiectlyto Andreas Renschler, chief of Daimler Trucks in Germany.

II

I
Vice president of
product engineering

......"............ ...............

Born inTurkey, Cakmaz came to lndia in Aueust 2008. In chargeof ROD. Cakmazand tea. played k ~ role in designingand building y the trucks. Has an Indian commsrcialvehicle driving llcenoeand loves spendingtime behind the wheel.

Vice oresident for marketing, sales and after sales

Had spent 17-and-a-half years at Eicher Motorsworkine across several functions like body building. Dperations &marketing. At Dmmler. he olaved e kevrole informulatina the productanb noIwo;kstrategy.

Vice presidenr ror procuremmt supplier management and

Plavad a kev rolein idenwingand developing . . suppliers in-lndiawhich&schcialfor Oaimler's localisation plan. Spends a lot of fhneparked a suppliars'plantsfor quality checks.

40 FORBES INDIA I &ril13,2012

customers rich"; he'd tried to set up venture capital firm o hii own But f that fizzled out in two years. And he finallyknocked on Daimler's doors. The folks there could see the young man had fire in his belly. That said, they were sceptical as i well. So they made hm an 0 % ~ start out in the boondocks as a salesman. If he did well, they'd hire him.Until then, he'd have to work for free. 'I asked, work for free? You arrogantb******s!Who do you think you are&'Llistosella recalls. The amused folks at the other end of the table told him he ought to be thankful they weremak'mg hm i an offerin the &st place. And that all he knew was banking; for good measure, they rubbed it in-they told him he'd make a hash of the job. iln And that's why they weren't w l i g to take a chance or pay him a dime. An incensedLlistosella,just 28 then, took the job, "-.and in two years I sold like hell. I sold everythingto everybody. You know what? They askedmeto stop beinga salesman and come to headquarters." By his own account, he hated being at the headquarters "That wasn't where the party was...^^ in 2006, it was not them who told me to do this thingin India I said India is the next market and we have to be there!' Headquarters caved in to his relentless demands and Llistosella moved to Chennai. Bharat Benz, a subsidiarywholly owned by Daimler was created a few years later.
ACHTUNG JUOAADl

for God's sake!" says Llistosella. Aydogan Cakmaz, head of research and development at the team, was excited enough to drive one of the trucks from Chennai to Hyderabad for the event "It has takena lot of sweat, not blood, but sweat to get here. We have seen people break down under the stress. What we have here is a team which is so damn proud of what we have done. I say we are believers," says Llistosella. For six years, the team travelled across the countryto understand the market so they could build a truck they believed the market would buy into. "I am the real deal," he s&s. He's got the numbers to prove his point

makes selling c w , it makes Rs 5.6 sellingtrucks and buses. If that be the yardstick, 85 percent of the company's revenues and a bulk of its profits come from this segment.And don't forget, two-thirds of all trucks sold in India are built by the Tatas. So if LlistoseIla succeeds, it would hurt Tata Motors where it huas most Which is why, a couple of years ago, Tata made it very clear to all its commercial vehicle dealers in India that taking up a Daimler dealership was not kosher. And everybodyin the network complied. To that extent, Tata is using all of its muscle and experience to prevent the Germans fiom gettinginto their temtory, A

"IT HAS TAKEN A LOT OF SWEAT, NOT BLOOD, BUT SWEAT TO GET HERE. WE HAVE SEEN PEOPLE BREAK DOWN UNDER THE STRESS"
Until now, Daimler has invested Rs 4,400 crore in Bharat Benz, its largest greenfield investment outside Europe. The folks at Bombay House, corporate headquarters of the $83 billion Tata group, which earns one-third of its revenues fmm Tata Motors, have been watching Llktosella intently. They have good reason to. A little less than half of Tata Motors' revenues come from its India operations, with Jaguar LandRover making up the rest. Now, for the India operations, the truck business is pure oxygen because that's where most of its money comes from. While the passenger vehicle business may sound like the sexier one to most people, fact is, it doesn'tgenerate toomuch revenue. Analysts Forbes India spoke to say that for every one rupee Tata senior Tata Motors official who did not want to be quoted says, W e are absolutely prepared for them. Be it in technology, product or reach, we are taking themvery seriously." An email sent to Tata Motors questioning how the company is planning to do that got this reply: ' w e believe that to do justice to your topic, we will need to share with you perspective, examples and information which are of competitive advantage to u s Our play will become apparent to competition!' On his part, Llistosella knows the Tatas aren't pushovers. So when he first came down to India in 2006 to study the market with his team of five people, they rented a small cubicle in Gurgaon, which served as the office. That done, they rented a warehouse from the Transport

Earlier this year, on February 23, Llistosella and his men showcased five trucks to potential dealers and 2,500 potential buyers who had flown into Hyderabad "My men weren't Gust] emotional. They were crying

&ill 13.2012 I FORBES INDIA 41

Corporation of India, a logistics company. They called it the "tear down centre" because every truck that existed in the Indian market was driven down here and stripped, and examined to the last detail. What are its specs?What about the quality of its parts? What does the engine looklie? Who supplies it? Everything was looked at, to use a clichg, with the attention to detait Germans are so famous for. After this exercise, which lasted about six months, Llistosellawent back to headquarters with his project report and a few startling insights. It was a world very different from the ones they were used to working in. For instance, in their quest to figure out if Indian truckers like air conditioned cabins, they came up with a horribly soberinginsight into India and how the nation works. Practically every truck's cowl cabii they travelled in had a hole. And contrary to what you'd imagine, it wasn't meant to cool the cabin down or offerventilation of any kind Truckers told them they spent way too much time on the road and the hole was the easiest way to answer nature's call without taking a break from the wheel. Llistosella had begpn to understand jugaad. He went back to headquarters and said he was ready to begin the India said operation. &They you're crazy. I said yes, that's what you pay me for!' Today Bharat Benz has 1218 people-next year it will have 2,500.
CRACKING THE INDIAN MARKET

<

Foreign players have found it tough to break the TataLeyland duopoly in the Indian truck market. But Bharat Benz is going to lengths that few have attempted before
,

"Theoreticallv!', ~ o i n tout Rathore s - - ~ , of IHS Automotive, "a market where two players hold 80 percent and rely completely on brand recognition . is attractive for any global truck manufacturer." That explains why practically every major truck

6 YEARS

'

IWPARATlON

1/ ALREADY INVESTED RS 4,400 CflORE EMPLOYEES

1' 8 , 1 49

: 42
FORBES INDIA ( Apr~l 13,2012

i FROM 7 TONNE TO MORETHAN 'CAI C i I LOCALISATION BE LAUNCHED OVER I OF PARTS 20 MONTHS STARTING j VEHll THIS JUNE

I7 MODEL

85 %

HOW THE INDIAN COMMERCIAL VEHICLES SPACE LOOKS LIKE TODAY

Market share data in the Medium and Heavy Co Vehicles (7.5 tonne to 49 tonne) space

ASHOK LEYLAND

Allms number's are in percentage

A PASSAGE TO INDIA: Previous attemllts by MNCs to crack the Indian commercial vehicles space have mostly ended in failure

The JV: Premier Automobiles of Mumbai and Chrysler Corporation The Product: Dodge, OeSoto and Fargo JV Ended In: Production stopped in the 1960s

V The J :Tata Mercedes-Benz, a JV between Tata Motors (then Telco) and Mercedes-Benz

The JV: Hindustan Motors and General Motors

The Product: Bedford trucks JV Ended In: 1990. While it lasted, it didn't do well

The JV: Hindustan Motors and lsuzu Corporation The Pmdust: lsuzu FseriesJCS trucks JV EnclodIn: Production stopped in late 1990s

The JV: OCM

The Product: The first Tata trucks, which had a Mercedes engine. JV Ended In: 1969

400 ACRES

PLANT AT ORAGADAM NEAR CHENNAl

I 1 ^"3 I Im u : mwm I CAPACITY ! MANUFACTUMNG

(SINGLE SHIFT)

70

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i ONE STOP SHOP 4 FINANCE OPTIONS-DAIMLER i FINANCIAL SEWICES, HDFC BANK, ICICI
BANK AND SUNDARAM FINANCE PLUS j BHARAT BENZ INSURANCE
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The JV: MAN entered a 30:70 JV with Force Motors. Both worked to The Product: The localise products The Product: tipper range and price them The production competitively, but model was called Oyna, an 8 tonne JV Ended In: weak sales vehicle L&T backed out in 2008. With no JV Ended In: manufacturing 2011. Force JVEnded In: facility in India, exited JV. MAN Early 1990s Scania has continues to struggled operate in India Toyota (between Shri Ram group and Toyota) The JV: Scania's distribution agreement with Larsen &Toubro

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builder in the world has tried hard to crack open the Indian market. But their carcasses now lie littered all around the Indian landscape. Their failure has created an aura of invincibility around Tata and Leyland, saysVRV Sriprasad,marketing and distribution head at Bharat Benz. His hypothesis is an interesting one. Their aura, he argues, rests on a few propositions truckers have come to believe in over the years, and ones that the duopoly has perpetuated-

that is why you need a support station every 100kilometres. So what do you do? Build reliable trucks that don't break down. As simple as that! He found an ideal foil in the head of research and development, Aydogan Cakmaz, who first came to India in August 2008. When he landed here with his wife and kids, he didn't know how to speak English. There was no workshop where he could begin planning prototypes. "It was like a startup. We have never done

When on the highway and the truck is headed downhill, Indian truck drivers have mastered the art of manoeuvring their machines in the neutral gear. Try tellingthe driver that it's a safety hazard, and he'll tell you his focus is on saving fuel. So Daimler designed its engine control unit (ECU) to ensure that when a driver is in cruise control mode, fuel supply to the engine is cut off. Problem solved! Added bonus? No compromiseon safety. But the fear of a breakdown is

EVERY MAJOR TRUCK BUILDER IN THE WORLD HAS TRIED HARD TO CRACKOPENTHE INDIAN MARKET. BUT THEIR CARCASSES NOW LIE LITTERED ALL AROUND THE INDIAN LANDSCAPE
ON THE ROAD The nmt Tala truck that rolled out ot the Jamrhcdpur plant In 19M Thts was a product of Tata'sioint venture *nh Msrcs6ss-Bsnr

that you need a massive after sales network across the country to get your truck serviced anywhere; that spares ought to be easily available; and that any mechanic anywhere in the country ought to be able to fix the beast if it breaks down. Come to think of it, he says, these aren't virtues. 'What kind of trucks do you build that breaks down so often that it needs to be serviced so often and spares need to be available at everypaan shop?" he asks. His contention is a simple one. Trucks built in India are not reliable. And

anything like this in any market. Not in Brazil or Turkey, nowhere. It was totally from ground up." That he gets into details is an understatement. It took him and his team three months just to figure out why a windshield in a truck breaks when hit by a stone. A cracked windshield is a common sight on Indian trucks. "So we went back to the supplier and asked him to explain. He had met all our standards in terms of design and toughness. But we found that the was actual cause of the ~roblem in the manufacturing process," says Cakmaz. For that matter, consider this other curiously Indian phenomenon

embedded deep inside the psyche of the Indian trucker. He will want to know if Daimler will be amund if his truck breaks down. So what they've put in place is a system that can respond to a breakdown call in two hours flat along the Golden Quadrilateral,a highway network connecting Delhi, Mumbai, Chennai and Kolkata 'We didn't want acrowd So we took a call that well have a maximum of 35 dealers with large territories and multiple dealerships. Right from day one, each service station is well equipped to deal with a breakdown. So let's say if there is an engine problem. No problern..Every effort will be made

FORBES INDIA I Aprll13,2012

CUVtH STORY
to reduce downtime," says Sriprasad. And just to be doubly sure, the trucks have been tested for an astonishing 45 lakh kilometres across various conditions at its test track in Chennai.
I'M NOT A NICE GUY

To be fair, Tata Motors has done a lot of spring cleaning, both in terms of the customer experience as well as the product itself. Things like a key account policy which existed only on paper is now taken seriously and engages with customers directly. A key account is defined as any fleet operator who owns 100 trucks or more. Tata has created a dedicated website for such customers where an operator can access all information on his fleet, maintenance schedules, spares, and discounts among other things. "The way it works is that there are different discounts for key accounts and they are the first priority of the management. Tata deals with them directly. So let's say if a key account customer orders 25 trucks. And these trucks are not in stock, but the dealer has orders from 25 retail customers for the same truck, priority is accorded to the key account customer," says a Tata Motors dealer. At the dealer level, dynamic discount policies are being put into place. Every first week of the month, the area sales manager together with the dealer decides on the discount for the month. So, for instance, if in a given month it is Rs 50,000-it could be Rs one lakh the other month. The Tatas have been working hard to bring down the downtime of its trucks to less than 24 hours. "There are 24x7 helpline assistance numbers, schemes for truckers who carry perishable cargo where if a breakdown occurs, Tata Motors offers

to move the load to another vehicle, loyalty schemes and discounts on insurance premiums among other things. Tata knows if they don't do this now, a part of the market could shift to the competition," adds the dealer. It is also experimentingwith what is internally called the 'Primazation' of Tata's existing product portfolio. That means modernising its existing products using Tata's learnings from the Prima World Series Trucks, including a variant of this series that is cheaper by Rs 4 lakh. The initiative is being led by its R&D head Tim Leverton. The idea is to plug any gap that exists in the market today. The dealer says Tata wants to send its customers a simple message: Don't look at competition.

fuel efficiency will be 10 percent higher; and the service network is in place. As for resale value, that is a variable only the market can dictate. Sriprasad adds for good measure discounts and 30 days credit offered by competition are peripheral ideas. "Insurance will be a big differentiator, I no question asked... don't want even a single pie going out of my customers' hands in the unlikely event of an accident. Leave the maintenance to us....You focus on your business!' On April 18, Dieter Zetsche, chairman of the Daimler management board, will be in India to flag off production at the Chennai facility. The frontal assault is expected to begin in July 2012 when sales open. From then on, over the next 20

TO BE FAIR, TATA MOTORS HAS DONE A LOT OF SPRING CLEANING, BOTH IN TERMS OF THE CUSTOMER EXPERIENCE AS WELL AS THE PRODUCT ITSELF
Llistosella remains unfazed. He's betting on his team to deliver because he's taken a personal punt on a of U them. "Everybody has to confess and get down to his knees and say that I know nothing. Nothing at all and that I am an idiot. I am willingto learn. Yes. If someone is blabbering, someone is pretentious that I know everything thank about commercial vehicles ... you very much, you can go." The team at Bharat Benz is convinced there are only four things that matter to a trucker: Price, fuel efficiency, network and resale value. Of this, three are in their control and the proposition is fairly straight forward. What they put out will be only 9 percent more expensive than competition; to make up though, months, the company intends to launch its entire portfolio of 17 kinds of trucks that will cater to various segments of the market. These include carrier trucks, vehicles used by cold chains, and mining and construction companies, until its entire portfolio is available in the company. It's the kind of task that sounds horribly daunting. "They will fight but I am not afraid of competition. That's life because then they make me better. So competition is good. As long as thelcompetition is fair. If they play unfair, we can also play The dirty. We are street fighters .... big learning in India is modesty. I am not the American Mr Nice Guy. I am P * hard working and I really *' know what I do," says Llistosella.

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FORBES INDIA I Aprll 13. 2012