TVS Flame gets its 'spark' back, finally

Sep 17, 2009 (The Economic Times - McClatchy-Tribune Information Services via COMTEX) -- BJAUF | Quote | Chart | News | PowerRating -- CHENNAI, India -- Downturn or not, the spark is back for TVS Motor (TVS-M) with the Supreme Court allowing it to manufacture and sell its 125-cc Flame twin-spark plug-fitted motorbike. For two years now, TVS-M and Bajaj Auto have been involved in a legal wrangle, after Bajaj locked horns with the South India-based automaker, citing patent infringement over use of twin-spark plug technology.

The apex court's decision came on Wednesday, revving up the spirit of India's third largest two-wheeler manufacturer by volumes. TVS-M CMD Venu Srinivasan told ET, "The court order is a vindication of our stand. We now have the freedom to manufacture the Flame bike with twin-spark plugs. We will decide when to start marketing the same. Though we developed the product, we lost 15 to 18 months on account of litigation."

People close to TVS told ET Now that the directive allowing it to make and sell the Flame bike will come in handy when the defamation suit it has filed against Bajaj comes up for hearing. Commercially though it means little as TVS has no plans to manufacture and sell Flame bikes with twins spark plugs. For now, it's looking to boost the sales of Flame 125-cc with single spark plug from 7,000 to 10,000-15,000 units a month. Interestingly though, there's still some confusion over the issue of the sales proceeds going to the receiver.

Meanwhile, people close to Bajaj Auto, said the fact that the Supreme Court has asked the Madras High Court to re-study the matter by November 30 indicates that it has not accepted the high court's recommendation. Also, the directive that a court receiver should keep track of any twin spark plug Flames that TVS sells will be the basis on which the court will decide compensation for Bajaj should they win the case.

When contacted by ET Now, TVS counsel AL Somayaji said the receiver has been appointed only to "keep an account of the manufacture and sales" of the twin spark plug Flame by TVS. "The appeal filed by Bajaj has been dismissed, so TVS can manufacture and sell its Flame. The only thing is they have to keep accounts. The accounts will be kept by the court receiver appointed by the Madras High Court. So, what it means is that the division bench of the Madras High Court is vacating the interim injunction granted by the single judge."

On the significance of the accounts scrutiny, Mr Somayaji said it will have a bearing at the time of final disposal of the suit, which has been directed by the Supreme Court to be done before November. The proceeds from the sale of the twin spark plug Flame, should TVS want to make them, will go to TVS "ultimately". "Only they have to maintain accounts for quantification of damages should Bajaj win the case," he said.

Meanwhile, an industry tracker, on condition of anonymity, told ET that TVS has already lost the opportunity considering that Bajaj had capitalised on the Digital Twin Spark injection or the DTSi technology. From the TVS stable, Victor was the last vehicle that had significantly contributed to sales. "Bajaj has milked the technology to the hilt. TVS would now be seen only as a follower of technology," the tracker said, noting that though both companies have been abreast of the technology, the pace of commercialisation had been faster in case of Bajaj.

It is reliably learnt that Bajaj has spent close to Rs 8 crore towards brand promotion involving DTSi technology.

Legal sources from Bajaj indicated their intent to go aggressive on the trial. They will take up the matter with the Intellectual Property Appellate Board and once the matter is resolved, it will, in fact, be counted as one of the "quickest trials in the Indian judiciary".

TVS had engaged six senior counsels to take on Bajaj, which had a single counsel representation.

A technologist whom ET spoke to sees the decision as a positive outcome. Though the Indian market has not been highly influenced by the technology, the use of technology in the common man's vehicle has succeeded in the sub-continent unlike in high-performance vehicles in other developed markets.

The use of homogenous combustion and gasoline-direct injection technology too seems to be gaining ground.

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