India Yamaha Motor to hive off sales and marketing function into new unit to reduce costs and break into profits

India Yamaha Motor, the Indian arm of Japanese bike maker Yamaha, has decided to hive off its sales and marketing functions into a separate entity in a bid to reduce costs and break into profits. 

With the expanding manufacturing footprint, product portfolio and the sales outlets, the top management felt, it makes sense to have separate entities managing functions of manufacturing, sales and R&D. 

ET learns, the sales entity, to be called Yamaha Motor India Sales, will be headed by Masaki Asano as its managing director. India Yamaha Motor will manage the manufacturing function and the new R&D centre, will be managed by a separate entity, details of which are not known as yet. 

Roy Kurian, national business head sales at Yamaha Motor India Sales confirmed the development. "This will help us in having clear focus. We just have to sell and the manufacturing operation will be managed by the existing entity," he told ET. 

He said that apart from creating a clear focus on various functions, the company is looking at reducing cost and boosting its margins through this move. "At the existing price points, we are not getting the margin that we think we should get, but this is all going to change. There are whole host of cost-cutting initiatives being undertaken to boost margins," Kurian said. 

"This move will definitely improve the profitability. We are hopeful of improving our margins by 50-60 % in the coming years," he added. 

Yamaha's sales have been rising, but it has been incurring losses year after year. The accumulated losses for the company stood at Rs.1,358 crore at the end of 2011. 

In 2011, it reported losses of Rs. 241.66 crore, down from Rs.632.31 crore loss in 2010. Through its organisational restructuring the company is aiming to break into profits in 2013. 

The manufacturing company will focus on improving operational efficiency and reducing input costs while sales company will focus on building brand and selling bikes. 

People close to the development say India Yamaha Motor is aiming to reduce cost by at least 5-10 % by negotiating with vendors for lower price and using common parts across products among other measures.