2013 South India Special - Anders Grundströmer, MD, ScaniaCommercial Vehicles India &Senior Vice-President, ScaniaGroup

Why you have chosen Karnataka to set up your plant? Any concessions offered by the government?
We looked at places like Pune and Chennai and then finalised on Narasapura in Kolar district in Karnataka. We felt this place to be a good location as it will be connected by the proposed industrial corridor. It will be easy to transport goods to and from our manufacturing facility. Further, Karnataka is showing interest in attracting investments from global players. Yes, the state has given some concessions but we are not in the position to discuss it in depth as we have an agreement with them. We have around 40 acres of land in Narasapura. Roughly, 60 percent will be used for the factory.

Of the Rs 250 crore earmarked for the new plant, how much has been spent?
We have spent around 60 percent in the first phase for the truck factory and to create other related infrastructure; the remaining will be utilised for the bus plant. The Rs 250 croreinvestment is only to make and sell 2,500 trucks and 1,000 buses per annum in the next five years. But we believe Scania can sell more than this figures. Going forward we may need to invest more in the future.

How are you tackling the issue of power supply?
Yes, power is a big challenge. We will source from the government grid but also we will have our own captive power generation units as standby to meet any power deficit in the plant. The government has realised that power shortage that has been halting industrial growth. Hence it has been encouraging investments in the energy sector.

What do you think is needed to improve the auto industry in India?
For any industrial setup, the tax structure should be an easier one. The entry tax in every state is halting the growth of the economy that in turn affects the auto industry. Tax reform is never easy. I hope this government or the next government formed after the 2014 polls will address this issue.

Can you mention any of the recent government policies that would support growth of the CV industry in India?
Allowing Foreign Direct Investment (FDI) in the retail sector will propel the growth of the commercial vehicle segment. Around 30 percent of agricultural items produced in India get spoilt due to inadequate transport support backed with cooling facility. Agricultural produce should reach the retail market from the farmers safely and at a much faster pace. Global retail players have their own logistical concepts with global standards. This will also expand the market for high- quality commercial vehicles in the country.

What is your opinion on the Indian government’s drive to reduce pollution levels by bringing in eco-friendly vehicles?
When it comes to diesel engines, we already have engines with the standard of Euro 4, 5 and 6 norms. We are already selling the Euro 6 engine in Europe. But India is still in the Euro 3 category and needs to go further with Euro legislations to reduce emissions. We are talking with the government and customers to use biogas in vehicles. Biogas can be produced locally with the available waste in the cities like Bangalore. We have the technology for biogas-run vehicles.

What kind of market share you are looking in India?
We will compete in the premium bus and truck segment. The market is expected to grow to 5,000 units each for buses and trucks in the next five years. We are aiming for a 25 percent share in the premium truck segment and 30 percent in the premium bus segment.

You have been selling trucks through L&T in the mining sector. How do you see sales in this sector?
The mining sector, particularly coal mining, in India should grow. Why should India import coal when it has the third largest coal reserves in the world? Currently the coal sector is under control due to various reasons. But it will come back to the earlier growth momentum that we saw up to 2009. This will help sell more mining trucks.