Altius Auto plans diesel bike in 2012
Can a diesel-powered bike roar into the Indian market? BVR Subbu’s Altius is betting on that even as he aims to bring out series hybrids in the future.
After BVR Subbu, ex-president, Hyundai Motor India left in 2006, he was bitten by the entrepreneurship bug and started Argentum Motors which bought the defunct Daewoo facility at Surajpur in an attempt to establish a contract manufacturing business. That did not take off. Now Subbu is back, after learning a thing or two about what it takes to set up a successful business and is ready to take a shot at India’s burgeoning two-wheeler business with Altius Automotive Technologies. With business partners U Arunkumar and Arun Gupta, he has a few interesting plans lined up.
Set up five years ago, Altius Automotive Technologies is now gearing up to start production by mid-2012. The first product that it will launch is a 670cc bike, the Scimitar (a name that he thought up at an airport lounge), a high-performance offering that will run on diesel. That’s only a starting point. “We are looking at series hybrids with high performance compact powerpacks,” Subbu told Autocar Professional.
Towards that goal, Altius has acquired a 5.5-acre plot in Gummidipoondi, Tamil Nadu, to build a plant that will have an initial annual production capacity of 25,000 units and which can be ramped up to 100,000 units.
The company has invested Rs 28 crore so far and another tranche of Rs 27 crore will be made before operations begin. A core team is in place with Subbu being the only non-engineer at present. His co-promoter, U Arunkumar, is an ex-Cummins (USA) employee and Yale graduate. Subbu is learnt to be the majority shareholder in the enterprise. Subbu won't reveal his own stake in Altius but says that “all promoters have an equal say” in the day-to-day running of Altius.
All the key teams are headed by trained professionals from large OEMs. For example, an ex-Tata Motors official heads the operations team, while the vendor development programme is being headed by a former Ashok Leyland professional. Currently, there are around five in-house engineers working on the prototype of the Scimitar. “There will be at least 16 engineers at a production level of 25,000 units per annum,” predicts Subbu.
The Scimitar is currently being tested, and based on feedback from experts, is being tweaked. In fact, outside of Altius, the bike has only been tested by Rishad Cooper of Autocar India, this publication’s sister magazine.
Based on a Kawasaki frame, even as Altius develops its own frame design for future models, work continues apace on engine tweaking and localisation where a Pune-based firm has been roped in. In the first phase, components like the engine block, head, crank cover and castings will be localised. Localisation is clearly a plank of Subbu’s manufacturing strategy in order to make the product affordable.
The company has already released orders for equipment and begun talks with potential vendors. Hiring workforce for the plant is set to start from October.
A wide range
Altius will use engines to be manufactured under license from California’s Hayes Diversified Technologies (HDT). Subbu won’t reveal what the licence fee is, but it is rumored that he has bagged the manufacturing rights for close to one million dollars, which will help him price the final product competitively. The licensing arrangement allows Altius to manufacture and sell engines across Asia and Africa as well, which will enable Altius to garner more revenue.
There’s also a “capped royalty” payment to HDT on sale of products with its engine technology. The licensing arrangement covers a “fairly significant range of engines”. Variants of Altius’ engines can also have multiple applications, including light commercial vehicles and portable power-generation sets in the future.
HDT has been supplying motorcycles to the US armed forces since 1982, when NATO set about converting ground vehicles to operate using one standard fuel — Jet Propellant 8 or JP8. So, a bike with HDT’s engine can run on the same fuel that flies a jet, runs a tank or even on bio-diesel. This could be a major selling point for Altius. A CNG-run version is also on the cards.
Even as the Scimitar undergoes various tests before it meets the ultimate test in the market place, Altius is also learnt to have started work on its second bike, which will have a little smaller displacement engine.
So, will Altius also be a supplier of engine solutions to other OEMs? That is a possibility if all goes as per Subbu’s plans. In fact, a South India-based two-wheeler maker is in advanced talks with Altius to source engines for its bikes, while “couple of other manufacturers” have also showed interest. Altius is arguably India’s most ambitious start-up in the auto sector.
Distribution challenge
For any newcomer to the automotive business, marketing and distribution remains a major challenge. But Subbu says “it is the least” of his problems. Given his track record of building an new brand like Hyundai in India, he may indeed have other challenges in his to-do list before entering the market. U Arunkumar, one of his business partners, also brings with him experience in automotive retailing albeit from a family-run establishment that has exclusive dealership for a host of automotive brands.
Though Altius will start its innings with bikes, there’s also the possibility of it benefitting from the ‘offset clause’ that requires aviation OEMs to purchase a certain amount of their business in India from Indian entities. Since most aviation OEMs also supply to defence forces globally, Altius may benefit as it has got access to manufacture engines with multi-fuel technology. It is learnt that “two large OEMs” are in talks with Altius to buy vehicles for export markets.
While there are a lot of opportunities, the issue that is top of Subbu’s mind is quality and reliability. As he says, “once they are in place, numbers will follow”.