December 1, 2012: Henrik Fagrenius, managing director, Scania Commercial Vehicles India
Swedish CV major Scania recently launched four new heavy duty trucks for trial runs. Scania Commercial Vehicles India's managing director speaks to Jaishankar Jayaramiah about the status of the upcoming plant in Bangalore, future plans and the sector's growth.
Your new plant will go on stream in April 2013 but you have already launched four trucks. What is your business strategy for on-road vehicles in India?
The new vehicles are designed with high technology in a bid to reduce cost of the operator and increase reliability. We have launched four vehicles – two each for Over Dimensional Cargo (ODC) and General Cargo segments. The pullers – R 500 6x4 and G 460 6x4 – are for the premium ODC segment. The technology incorporated in the prime mover P 410 6x2 is not available with any other product in India as it comes with a liftable axle, which nobody offers in India. All these vehicles will be imported as Completely Built Units (CBUs) till we commence production in the upcoming plant near Bangalore. Once the manufacturing facility goes on stream from April 2013, all these trucks along with 8x4, which is being supplied to the mining and construction industry players through Larsen & Toubro, will be assembled in the new plant. With these new trucks on road, we will study the demands for our other trucks and will consider assembling them here in the future.
Compared to the road infrastructure in developed countries, how does India stand when it comes to operating heavy duty Scania trucks?
The problem in India is that the average speed on road is quite low. However, I am personally convinced that it will change with enormous amount of money pumped into infrastructure and proposed GST and Foreign Direct Investment in retail. Once they are in place, it will completely change the logistical setup in India and a professional supply chain management system will create demand for heavy duty trucks like Scania’s. Twenty years ago, we could see only Ambassador cars on Indian roads but today, we can see the latest models of cars plying in India as in Singapore or Sweden. A total shift is happening in the commercial vehicle segment, trucks in particular. In the next five to 10 years, we will be able to see high-technology-backed trucks on Indian roads.
How optimistic are you about India bringing in green technologies for HCVs to tackle pricing and other challenges posed by diesel vehicles?
Since India imports most of the diesel and it is heavily subsidised, the country would really needs an alternative to diesel. We have a number of different solutions ready to be provided. Since India is one of the largest producers of sugarcane, it can look at the ethanol option. The country also has jatropha plantations and some trials are being undertaken in India to produce biodiesel. I see both ethanol and biodiesel as most viable and economical. Also, a lot of wastes available in the cities like Bangalore is a good thing to produce biogas and use for city transportation. We have solutions for ethanol, biogas and biodiesel. Actually, we are starting discussions with the government to find out how we can support them in this regard.
Scania sells trucks for the mining sector through Larsen & Toubro. Can you give us an update?
I think mining will be the largest sector for our business in the coming years since we have been present in it since 2007. We foresee that the Indian coal industry will follow the trends in China. Today, India is mining only one-sixth of its available reserves but it has coal deposits almost as much as in China. The sector will grow as we need electricity. Our 8x4 trucks are used for overburden transportation. Our truck with 32 cubic metre capacity is usable both in the mining as well as in the on-road segment. It can be used where coal need to be moved, like from ports to nearby power plants.
What is the status of your upcoming manufacturing facility at Narasapura, near Bangalore?
We are building it in two phases. In the first phase, the work on the truck assembly facility will be completed to kick-off operations from April 2013. Around 40 percent work in phase 1 has been achieved. The bus assembly plant is expected to commence operations from the end of 2013 or early 2014. We have earmarked an investment of Rs 250 crore, which will be spent till the end of next year.
What is Scania Commercial Vehicles India's sales target for the next five years?
We are planning to achieve production of 2,000 trucks and 1,000 buses per annum in the next five years. This includes the trucks that we are supplying through L&T and the newly launched on-road vehicles, which will be sold through the company’s dealership network. The association with L&T will continue in the mining and construction segment.
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