The largest manufacturer in the Indian automotive industry, Tata Motors Limited is a leader in commercial vehicles, and among the top in passenger vehicles. Ravi Pisharody, Executive Director, Commercial Vehicles, Tata Motors talks to Shashidhar V about the prevailing market sentiments in the M&HCV segment, and the growth drivers while revealing how the biggest concern for the CV industry is the challenging macro-economic environment.
[!mage2:l!]

After a long lull, the M&HCV, LCV and Tipper Trucks market has now begun to take off. How do you read the sentiments in the Indian market today? What are the main growth drivers for the same?
The M&HCV segment as a whole has grown, posting a robust growth over last year, on the back of strong replacement demand and capacity addition by organised fleet owners. At Tata Motors our M&HCVs continued the strong growth of 14.4 percent, in June 2016, as compared to June 2015, with a major portion of that growth coming in from trucks at 30 percent. While a major portion of this growth was largely driven by the cargo segment, we are seeing an increasing contribution from the construction segment, which is growing at around 7.0 percent. YoY.
Based on reforms being initiated by the Government, to promote safety and emissions, develop infrastructure, with its impetus on Smart Cities and taxation, demand in the M&HCV space is further expected to pick up. The macro-economic environment, specifically in manufacturing, mining and construction segments, the fluctuating value of the rupee, fuel prices and financing availability are other key elements that will affect this segment.
We continue to expect demand from certain operators asking for newer modern trucks with higher power and fuel efficiency, and are geared to cater to those demands, across CV segments. From a fleet operator’s perspective, the operating environment over the past year has stabilised, owing to a lower diesel rates and relatively firm freight rates, implying improvement in the cash flows, suggesting that fleet utilisation levels are gradually improving on the back of higher load availability. We have seen some improvements in the last couple of months in some sectors, driven by key segments such as cement, road, infrastructure, auto logistics, consumer durables and FMCG, coupled with the strong replacement demand aided growth.

Considering the immense competition that we are currently witnessing in the M&HCV, LCV and tipper trucks markets, what are the strategic decisions that you need to take to stay ahead of competition, or garner a larger market share?
Tata Motors continues to take the lead in shaping the Indian commercial vehicle landscape, with the introduction of new CV technologies with innovations in both products and services, to cater to the ever evolving need of Indian industries and transport businesses, offering best lifecycle cost. Tata Prima marked a paradigm shift in bringing the global trucking to India in terms of technology, innovation and comfort.
The Prima is available with automatic transmission, and has also been validated with AMT. For a superior in-cab experience, the SIGNA range of cabin, with its smartly designed cabin space, improved ergonomics and NVH levels, enables drivers to operate fatigue free over long hauls, which in turn offers significant improvement in productivity.
Tata Fleetman has introduced a host of Telematics solutions and services in the market which assists fleet operators monitor their fleets in real time, enhances productivity as well as safety and reduces operating costs. We have the largest touchpoints in the country, which is well appreciated by our customers and are planning to add more touchpoints. We are geared up to further strengthen our market leadership and are committed to striking the right balance between sustainable growth and profitability.

Many manufacturers in the country are making innovative strides to modify their existing lines to enable them to deliver higher production outputs, improving the productivity and, simultaneously, offering a good return. What are your plans on this front?
Our commercial vehicles are backed by world class R&D and design centres and top-of-the-line manufacturing technology. Our strong focus on excellence in manufacturing ensures that our facilities carry out every step in the manufacturing process, from design to production to assembly, with the highest standards of quality. Our manufacturing facilities have more than just state-of-the-art technology; we have the best and passionate engineering and quality talent working to produce superior vehicles. Striving for excellence is an integral part of the Tata Motors culture. Our plants are certified for world-class manufacturing and quality standards. Our focus on automation and technology has kept us at the forefront of the automobile industry, and we continue on the same path in the future as well.

While some manufacturers are launching new variants to cater to lower capacities and tonnages, while others are improving upon their existing lines in the same capacities and tonnages. What are your plans on new capacities and tonnages in the Indian market? Are there plans to expand capacities at your existing plants, or fresh investments to cater to the growth in demand?
At Tata Motors we have adequate capacities across all our manufacturing facilities to cater to any kind of demand that may arise for its commercial vehicles. Being market leaders, we are constantly in the process of developing multiple new platforms in line with market requirements and are working towards improving the performance and reliability of our existing ones. We are working with a well-defined plan to equip our products with advanced technologies as per market demands. All the new Tata Motors platforms are package protected for the latest technologies from the concept phase itself, which can be validated by our Prima and Ultra range.

Internet of Things is looked at as the next big revolution. Are there any initiatives that you are taking to incorporate the same in your equipment?
Commercial vehicle customers are very interested in connectivity as it is more efficient processes and offers range of valuable data to reduced costs. Tata Fleetman has introduced a host of Telematics solutions and services in the market which can help fleet operators monitor their fleets in real time, enhance productivity as well as safety and reduce operating costs. They also assist in improving fleet utilisation through reduction in idle time, and better planning of return loads. Tata Fleetman provides a range of features for accident prevention, vehicle theft prevention emergency alerts and stolen vehicle tracking. It facilitates alerts on SMS and email for unsafe driving behaviour like harsh acceleration, braking and cornering, over-speeding, night driving, etc. They are installed in the vehicle at the manufacturing stage, which ensures better integration with other vehicle systems and, hence, makes it more reliable compared to other market solutions.

How would you look at your company’s performance vis-a-vis projections in the last one year?
During the last quarter, M&HCV continued its growth trajectory with volume growth of 26.6 percent Y-o-Y during the quarter on the back of the continued replacement demand, initial fleet expansion demand, infrastructure spending, and better profitability of the freight operators. LCV segment of the company also started showing growth trend with a growth of 11.8 percent Y-o-Y during the quarter. Exports of the commercial vehicles also grew 26.6 percent Y-o-Y during the quarter. The strong growth in the overall CV sales (including exports) of 19.5 percent Y-o-Y during the quarter, along with ongoing cost reduction and other margin improvement initiatives, led to the improvement of 530 bps Y-o-Y in the EBITDA margin of the company.

Would you throw light on the distribution reach in the country – customer touch-points, service and spare parts availability – to what extent has it grown in the past few years?
Tata Motors continues to invest in its products, its sales and service network, redesigning, developing and deploying modern dealerships, with an aggressive customer centric approach of anticipating customer requirements. With over 1800+ touchpoints across the country, we aim to achieve modern dealership models, to significantly improve customer experience and convenience across its network, while also improving penetration and driving quality, building strong, lasting relationships with its customers. When it comes to emergency service support, Tata Motors has a touch point on all highways, one for every 50kms. 

To what extent has your export market grown?
Global expansion is a key aspect of our business strategy as that will de-risk our performance from the cyclic nature of domestic business. The company’s sales from exports stood at 5,603 numbers in June 2016, a growth of 11 percent compared to 5,046 vehicles sold in June 2015. The cumulative sales from exports for the fiscal were at 13,816 numbers higher by 2.0 percent over 13,510 numbers sold last year. Additionally, we are exploring potential markets and latent demand that may exist for our products internationally.

What would you say are the primary challenges going ahead?
The biggest concern for the CV industry is the challenging macro-economic environment in the country. We hope that a stable government at the centre will drive reforms to promote investment, develop infrastructure, revive mining quicker, and undertake tax reforms that will definitely help sustain demand in the medium and long term, for a real turnaround in the CV industry.

Lastly, how does the coming year look?
The growth in M&HCV segment is expected to remain buoyant in FY 17, supported by continued replacement demand and further aided by fleet expansion demand. We expect the Buses and the LCV segment (including SCV) to witness positive growth in FY 17 as well. Also, our wide and compelling product range with new launches in FY 17 and growing network will provide a strong foundation for growth. With our highly competitive and comprehensive product portfolio, wide sales and service network, segment-leading technologies, we will continue our leadership in the commercial vehicle market.

“We hope that a stable government at the centre will drive reforms to promote investment, develop infrastructure, revive mining quicker, and undertake tax reforms that will definitely help sustain demand in the medium and long term, for a real turnaround in the CV industry.”

-----------------