'VECV is best placed to take advantage when the CV industry revives.'

Vinod Aggarwal, CEO, VE Commercial Vehicles, and Philippe Divry, Senior VP, Volvo Group & VECV board member, speak to Shobha Mathur on why they believe the CV industry will soon be back in the reckoning.

How do you see growth in the Indian trucking industry panning out?
Philippe Divry (PD): From a strategic standpoint, we see two things — first of all, the Indian economy as a whole is going to bounce back and that is very promising. The second is that inside the Indian truck industry we see an increasing number of customers who understand that trucking is about productivity. They want to modernise their operations, the way they do business and they want better trucks for it.

What will be VECV’s role in this new landscape?
Vinod Aggarwal (VA): First of all, the Indian truck industry has experienced a very bad period in the last three years and the industry is cyclical and every cyclical industry has to turn positive. This is the right time for it to turn positive as all the industry segments have hit the bottom and have now started moving up.

If you look at the last quarter, the entire industry — heavy duty, medium and light duty, exports, buses — has grown in Q4 of 2014. Secondly, the industry gets a boost with government action — the government has taken various steps that have created positive sentiments though not visible on the ground level yet, for instance, infrastructure investments. If the government is able to solve the problem of land acquisition, which has resulted in a lot of projects being stuck, and if they are able to acquire land after passing the ordinances, it will facilitate infrastructure investments.

Then we will see the coal mining sector opening up. If they are able to successfully auction some coal blocks before March 31, you will see a lot of action. Also, if the government is able to meet its target of increasing production in coal mines to a billion tonnes, it will lead to a lot of action in the country.

We see a lot of positivity during 2015 because the economy is improving, the government is very strong and is taking a number of positive steps, interest rates have already fallen, inflation is low and trade balance is behaving well as oil prices have also fallen.

VECV is in an advantageous position as in the last three years when the industry was in recession we had not stopped a single initiative or our investments. We were working on new products, modernising our infrastructure, creating new industrial setups, improving quality and aftersales processes. As a result, we are in the best position to take the maximum advantage once the industry revives.

So how much growth do you foresee for VECV in CY 2015?
VA: If the industry grows in double digits in 2015, and with all our new products, our strategy will be to do better than the industry.

On which segment will the focus be?
VA: In all segments. We are already very strong in 5-15T and we have to not only maintain that position but keep steadily improving it; this year we have added 2 percent market share. In buses we keep adding share every year and now have to go beyond 14.9 percent; in exports we have added 2 percent. In heavy duty, which is the most important area as this is the largest size in the CV industry, it has the most growth potential and we are relatively small now so this offers the highest potential.

How many new models will VECV roll out in CY 2015?
VA: We have already launched three new models of the Pro 6000 series. The Pro8000 will target the emerging mid-premium market segment. We have already sold 25 trucks to customers and shortly it will have a formal launch. That will have five models in the 25-49T range.

What will be the strategy towards engine development?
VA: This has been adopted from the Volvo Group and we are supplying base engines to Volvo that are Euro VI compliant and the same engines have been adopted for Euro III and Euro IV emission norms. These engines are going to be used in our entire heavy duty range. We exported 12,000 engines to Volvo in Europe last year comprising 5-litre and 8-litre engines. This year it will be in line with Volvo’s requirements — we have a ready capacity of 50,000 engines per annum both for Volvo and VECV.

Can you detail the roadmap going forward?
VA: VECV’s Pithampura plant is the global hub for medium duty automotive engines for the Volvo Group. As far as exports are concerned, we are very strong in South Asia, Bangldesh, Sri Lanka, Nepal, Middle East and African countries and, going forward, we will be coming out with more export-oriented and country-specific products. Then we will leverage the Volvo Group’s network in other countries in South East Asia and work is already underway on this. We are working on the 

Pro 3000 series medium duty based products for South
Africa and South East Asia but it will take time, say around 2-3 years.

Are there any new markets that VECV plans to tap?
PD: Eicher has always been exporting to Africa and South East Asia. What we are doing is adding firepower to the export capacity by making synergies with the Volvo commercial organisation and making Eicher as the fifth brand of Volvo – that is the basic strategy. Eicher already knows many of those countries and the difference will be having those new modern products and being able to put the full strength of the Volvo Group behind them.

VECV has already invested Rs 2,300 crore in the last 4-5 years. How much more investments will flow in?
VA: We have already made the investments, so going forward our investments will not be very aggressive. There will some maintenance related and new product-related initiatives or export-oriented products or JNNurM products where we will continue to invest but there will not be any large investment programmes as there were in the past.

Also read: VECV rolls out Pro 6000 series trucks, Pro 8000 series coming soon