Chennai’s popular and happening

Cluster

• To study the Characteristics and features of Bike Modification Cluster.

• To shed light on this cluster which is a silent yet powerful & growing.

• What made the Mechanics to start Bike Modification business

• How does Bike modification bring value to an entrepreneur’s Business?

• What is the effect of high cc bikes on modifying Bikes cluster?

• What are the problems faced from government policies?

• What is the demand of Bike Modification Business?

• What is the cash involved in each deal?

• We thought it would be difficult to approach these people

• They have good working skills, but very little outside exposure and education

• We had to approach in different way

• Creating a more like a friend than a outsider

• By doing this, we thought we could get the information.

• First we approached Monty of Hardeep auto parts who has two wheeler spares shop at GP Road.

• With his valuable support, We got few more contacts.

• Just by getting a link like this, we were able to meet people in this cluster.

• By doing this, We were successful in getting the information.

• we confirmed that there are only 10 bike choppers are there in this cluster from Mr.shajakan, who is the two wheeler association secretary

• Just to do something different !

• Creative ideas that would fetch results !

• Analyzed that buying race bikes are expensive and people cannot afford it.

• By venturing into these kind of creative areas they would also earn profits

• Could sell the Imported spare parts

• Teenagers are the ones who are passionate about modified Bikes.

• College Students- Main customers.

• Preferred by 18 – 22 years old people mostly.

• The second category is 22-25 years old (rank 2)

• Modification of bullets are mostly 25 – 40 years old.

Kind of age category

15-18 years

18-22 years

22-25 years

More than 25 years

• Partial Modification – Between 30 days to 45 days.

• Complete Modification – More than 2 months.

• Average period of modification between three to five months.

• Period of most of the bikes modification - More than 3 months.

• Completion of modification less than 1 years rarely.

KIND OF BIKESKIND OF BIKES

KIND OF BIKESKIND OF BIKES• Nowadays People can add extra gears through modification.

• Do not prefer to modify 150 cc bikes.

• Come for modification frequently – 350 cc bikes.

• People do modification of more than 350 cc rarely.

Rs. 80, 000 /- (Cost of spare parts)Rs. 80, 000 /- (Cost of spare parts)

Rs. 13,000 /- (All mandatory payments)Rs. 13,000 /- (All mandatory payments)

Rs. 7,000 /- (Cash that goes to the owner)Rs. 7,000 /- (Cash that goes to the owner)

Rs. 1,00, 000 per bike is spent during a monthRs. 1,00, 000 per bike is spent during a month

Average profit made per Bike by these entrepreneurs were between 20% and 30%.

Apart from this they also make business by undertaking repairs and maintenance of various other kinds of bikes.

Getting the whole cash in advance

Getting the cash as the work progresses

Completing the work and then collecting the cash

• 60 % of the Mechanics get the cash from the owner of the bike as the work progresses • 30% get the whole cash in advance and use for the work and• 20 % finish all their modifying work

Mr. Syed’s, CBX Racing Comments• Niche market is only for valued customers • Detailed knowledge regarding the profile of the customer

EMPLOYEE POLICY

EMPLOYEE POLICYEMPLOYEE POLICY

• Started with 5 to a maximum of 10 people.

• After the business grew, employees were reduced to around 3 or 5.– Started their own establishments due to gain

experience.

• Increased employees who had lesser than 5 employees

SEASONAL DEMANDSEASONAL DEMAND

• No seasonal demands.

• But beginning of the month has more demand than end of the month.

• Have regular customers who come for modification.

• During rainy seasons, customers coming up with problems but not for modification.

EFFECTIVE• Important aspect of completing the said Project.

• Delegates the work to others in the same field such as Cleaner, Tinkerer, Painter and sticker.

• Can handle 3-4 bikes at the same time.

DRAWBACK • Entrepreneur visualizes and understands the customer’s needs

• When delegated to others the visualization of the same gets diluted.

• Minor setbacks with the timely delivery of bikes

Outsourcing can be made effective when, • Entrepreneur - keeps a check on the work done by the outsourcer!

• Correct as and when the deviations take place from the customer’s idea of the remodeled bike.

• Connecting Time with Cash !

• Mutual understanding exists the members of the cluster.

• Mr. Monty of Hardeep Auto Agency caught fire due to short circuit.

• Choppers decided to close their shop for the day.

• Each one has their own competition.

• Parts which are used for modification are the imported fiber materials from countries such as china, Singapore and Thailand.

• But most commonly used are the ones which are imported from Bangkok which constitutes 75%.

• From GP road which is the hub for two wheeler and four wheeler parts as per customer requirements.

• If the customers feel that they need costlier ones then the mechanics go in for imported parts.

• Sometimes it also depends upon the style and design the customer prefers.

• Bullets are the only two wheeler which has a metal body the rest of the bikes are all made fiber except for the petrol tank which is a metal.

• It easy for the mechanics to go about fixing these equipment.

• Only consideration here is the availability when the whole body is customized.

• Major part of business in chindaripet, GP road and pudupet

• B’coz two wheeler spare parts hub is located in GP road.

• Central part of chennai.

• Close to railway station both central and Egmore

• Convenient in building up a customer relationship

Few members are split of over other parts of chennai

• Mr.Sashi of varadhan bike works specialized in bullets – location in Alwarpet

• Residential locality

• He feels that rich people stay in this area who are fond of bullets

• Government restriction is to work only till 10pm

• Mechanics needs to work even till 12am to complete a project on time

• This is due to some seasonal demands

• Also timely delivery of modified bikes to customers

• No need for any advertisements

• Only few well known bike choppers that people trust in this cluster

• Popularity - mainly due to the word of mouth.

• Satisfied customers, indirectly advertise to his friends about the mechanic

• The modified bikes, parked outside the workshop attracts people

• Mostly Muslims and Punjabi community are involved in this cluster !

• Very few Hindus are emerging who have worked under them

• 90 % - Only Entrepreneur's Decision

• Family business only the head of the family takes the decision.

• At times the consultation from their wards are considered.

• Exception Mr. Sujath of CBX Racing consults with all his employees for any decision taken

According to him, It is better to consult all the employees before having a business deal.

• Another important means of earning !

• Renting out the bikes for various ad campaigns and movies

• For instance, a mechanic rented one such modified bike for fair & lovely ad campaign, inside Satyam Theatres in Chennai.

• They take the permission from the owners.

• They earn about Rs. 2000 per day

The common reply from the survey was,

•Depends on the trend and demand for modified bikes.

•Diversification of this cluster is needed.

•Entrepreneur’s ward -the passion towards bikes

• According to their forecast, the demand will continue, their wards would be interested in taking up this field.

• If Yes! He can succeed in this business !!

EXAMPLE – Mr. SYED AWEAS and Mr. MONTY

• Stolen Bikes were creating problem 3 to 4 years back

• Now they try to check the background of the customer

• Police do random checks and verify the documents

• For this purpose a photocopy of RC Book and insurance is taken.

• This cluster is an oligopolistic market, few sellers and few buyers

• 2000, CBX racing was the market leader

• The price was based largely on competitor’s prices!

• Entrepreneurs co-operate with each other in taking joint actions

• Pricing - discussed and decided during the two wheeler association meeting.

• Secret price cut which doesn’t fetch any demand for them, only the customer satisfaction matters.

• Keep their bargaining position stronger against the consumer.

• Everyone has an equal market share in this cluster

• Government has a number of rules on two wheelers

• Traffic policemen catches - Insurance, Registration Copy, and Pollution Check

• Modified bikes – chances are considerably high.

• Noisy Silencers and the fancy looks attracts the Traffic policemen

• Mechanics make sure that they explain their customers regarding the government rules. • Customer is not bothered regarding the problems until they get caught with cops!

• Customers yell and say they are exploited.

• We asked them whether they get any signed agreement regarding this issue; REPLY - it is all about having trust in their words.

According to our survey,

• 60% of the Entrepreneurs say that government policies have an impact on their business.

Problem with government policies

Government Policies does't affect their Business

• Bike’s owner needs to go to RTO to get the bike endorsed from the Chief Inspector.

• They will check the bikes Chassis number and engine number for verification.

• The Endorsement charges is Rupees 1500 per bike.

• Fact - None of the Police inspector accepts - modified bike is safe to ride and often they reject them.

• No proper rules set by - government for modified bikes.

• Hence the owner of the bikes, ride the bikes without getting the endorsement.

MODIFICATIONS DOESN'T MEAN BIG MODIFICATIONS DOESN'T MEAN BIG INSURANCE PRICE HIKESINSURANCE PRICE HIKES

• Choppers are failing to tell their insurer about modification to their bikes either

– fear the changes would increase their insurance premiums.

– they do not realize that they need to.

• A recent review:– many of the most common modifications

actually have little or no effect on premiums.

MODIFICATIONS DOESN'T MEAN BIG MODIFICATIONS DOESN'T MEAN BIG INSURANCE PRICE HIKESINSURANCE PRICE HIKES

• Modifications that are likely to be expensive to insure are:– Some of the bikes like bullets, during the

modification system would increase the premium.

• Insurance Companies comment :

“one of the most important principles underlying any kind of insurance is that all relevant information must be passed on to the

insurance company. That is the only way an insurer can understand precisely what risks they are covering and calculate a

fair price. “

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1971-1980

1981-1990

1991-2000

2001-2008

Futureyears

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OLD ENTREPRENUERSNEW ENTREPRENUERS

• These mechanics have the talent of venturing into modifying bikes into different shapes.

• Nowadays companies itself manufacture sporty and trendy looking bikes

• B’coz of this the market is going on a recession

• But in western world bike choppers are getting famous.

• But customization is becoming a new trend in every places.

• People want something different from others

• This will set as a new trend and again there will be a boom in this cluster.

• Entrepreneurs of this business just don’t call themselves a mechanic.

• Just being a mechanic in this field won’t fetch a good market for them

• Designing a bike is more important to succeed.

• This field calls for a lot of imagination and hard work from the part of the entrepreneur

• Therefore at all times it is required to stretch their limits of imagination and physical boundaries to the ever-changing demands of the market

• We feel that sooner or later that this would be a flourishing industry in the near future.

“ “ Bike modification is the art of shaping the bikes Bike modification is the art of shaping the bikes to the customer’s desired imagination and enabling to the customer’s desired imagination and enabling

them to run in Indian roads. ”them to run in Indian roads. ”

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