Our vision is to be globally among the top ten in trucks by 2015
The customer has always been at the core of our business and all our efforts have been and will be aimed towards making the customer more profitable, says Rajive Saharia, Executive Director - Marketing, Ashok Leyland. In a detailed chat with Equipment India Rajive speaks about the changing trends in the trucking industry and the company?s growth strategies. Excerpts from the interview.
How do you assess the growth prospects of the commercial vehicle segment (medium, heavy duty trucks and tippers)?
The fortunes of the commercial vehicle (CV) industry are closely linked to the economic climate in the country. After a few years of continued growth, the CV industry, more particularly, the medium and heavy commercial vehicle (Mand HCV) segment has been finding the going tough in recent times owing to a decelerating economy, decreasing industrial output, increasing interest rates and lack of infrastructure spending. The LCV and the ICV segments, however, have bucked the trend by continuing to post growth.
Historically, although Ashok Leyland?s strength has been in the M and HCV segment, we have adopted a robust de-risking policy to combat the cyclicality of the CV industry by developing support businesses of power solutions, defence, exports, parts and passenger vehicles which have been performing remarkably well. Exports, for example, grew by 25 per cent in FY 2011-12 while the parts business posted an equally impressive growth of 20 per cent. The company?s entry into the LCV space in joint venture with Nissan Motor Company has been extremely successful with Dost, the company?s first offering, becoming the Number Two brand in its category of 2-3.5-tonne vehicles. We have also sought the advantages of foraying into profitable adjacencies by entering the aggressively growing construction equipment business in partnership with John Deere.
The India story is very much on track, albeit at a slower pace and growth for the CV industry, will be precipitated once the clouds of uncertainty clear on the political and economic fronts.
The competition in the trucking industry has become very intense. AL, hitherto one of the undisputable leaders, has not only to retain the existing market share but need to grow it further?what is your take on this tough challenge?
Challenges are a way of life and we welcome healthy competition. There has been an advent of competition from different parts of the world recently but neither is it surprising nor were we unprepared for it.
It is widely held that most growth in the near future will be triggered in the BRIC countries, of which India offers the most in terms of opportunities. Mindful of this reality, we articulated our vision to be globally among the top ten in trucks and top five in buses by 2015.
The customer has always been at the core of our business and all our efforts have been and will be aimed towards making the customer more profitable. Our strategy going forward will be to consolidate our entries into new businesses, introduce new product concepts in response to specific customer requirements, foray into new geographies while at the same time shore up our hold in existing markets, build new capacity, strengthen our brand and enhance levels of customer engagement and experience.
How do you look the evolution of the trucking industry in terms of shift in tonnage, kms travelled per day, advanced technology, buyer patterns, driver comforts, etc?
As in most other spheres, the trucking industry has also evolved with time. The most important development has been the change in the customer who is now more demanding, more discerning and, in recent times, spoilt for choice. Aspects like adaptability of a vehicle for a specific application, fuel efficiency, better operating economics and superior driveability have become key considerations that are being delivered by OEMs thanks to the adoption of frontier technologies, engineering of New Age vehicles and, most importantly, backing up sale with superior network and support services. One case in point is the rise of demand for fully-built vehicle solutions that is reflective of changing customer preferences for factory-built cabs with superior features and ergonomics for greater driver and ride comfort. This directly translates into better profitability. Another case is the increasing demand for more powerful, higher tonnage and more efficient rigid trucks because of greater load availability and load aggregation. Ashok Leyland?s answer has been India?s first 37-tonne haulage truck with the highest payload of up to 27 tonne on the future-ready U-Truck platform. The U-3723H is unique for its 5 axles, including a lift axle that enables it to carry more loads more efficiently.
Is there any more capex/new product on the anvil?
We have always incurred capital expenditure or made investments whenever the need has risen for them and shall continue doing so in the future.
In terms of new product concepts, apart from the U-3723H, referred to earlier, there is the Jan Bus, the world?s first single-step, front-engine, fully flat floor bus. It has been engineered to address the needs of all involved stakeholders, the passenger, the operator, the driver, the conductor and the cleaner. We have applied for 16 patents for 16 various innovations on the Jan Bus.
Tell us about your performance on the export front.
Our international operations did exceptionally well last year, with export volumes touching a new peak of 12,852 vehicles reflecting a growth of 25 per cent. Apart from consolidating our position in our strong markets of Sri Lanka, Bangladesh and the Middle East, we made significant inroads into new markets like Africa, CIS and Russia. We have carried our robust showing into this fiscal too, having recently bagged orders for 50 Vestibule buses and 88 AC buses from Bangladesh Road Transport Corporation (BRTC) and a hundred Falcon buses from Ghana cumulatively worth over $20 million.
Tell us about the value propositions offered to clients.
Strength of network has emerged as a key differentiator in the CV business and we have been working at significantly increasing our reach. We now have more than 400 full service centers dotting the country with over 20,000 touch points for Key parts ? our genuine spare parts. We have one centre every 75 km on all major highways across the country that enables us to deliver on our Tatkaal promise, first launched by us, of being able to reach a customer within four hours and put his vehicle back on road within 48 hours. We also have a rich bouquet of service offerings to enhance customer engagement and satisfaction.
In terms of training, we are the only Indian auto major to have two Driver Training Institutes that are operational at Namakkal (Tamil Nadu) and Burari (near Delhi) that are equipped with state-of-the-art training facilities and all conceivable road configurations. Till date, more than 500,000 drivers have been trained at these two institutes combined. Three more institutes are soon to go on stream at Rajasmand, Rajasthan, Khaital, Haryana and Chindwara, Madhya Pradesh with another two to go operational next year.
What kind of productivity enhancement does one gets in using the AL range of trucks?
Ashok Leyland trucks are synonymous with reliability and sturdiness and have for long been well-received for their class-leading performance and low-operational cost. The company?s flagship models like the 1212, 1616il, 2516il, 3116il, 3518il and 4019il have been performing very well helping us gain market share because of their superior fuel efficiency, thanks largely to the inline fuel pump. In fact, we are the first company to offer a BS III engine on a commercial vehicle with an inline pump.
Tell us about the plant facility and capacity. Is it fully utilised and is there any plans on capacity augmentation?
We have seven manufacturing facilities located pan-India with an installed capacity of 150,000 vehicles. e also have facilities at Prague, in the Czech Republic and Ras Al Khaimah, UAE. With our Pantnagar plant reaching peak capacity and up-gradations at all plants, we are well placed to meet market demand.
Tell us about the tracking solutions.
Ashok Leyland offers Alert, a GPS-based telematics services for vehicle tracking and data and voice communication designed for the fleet operators, public utility services, passenger bus corporations and operators. In addition, Automotive Infotronics, our joint with Continental, AG, Germany, is engaged in developing sophisticated vehicle electronic systems that are already onboard on many U-Trucks.
How do you assess the growth prospects of the commercial vehicle segment (medium, heavy duty trucks and tippers)?
The fortunes of the commercial vehicle (CV) industry are closely linked to the economic climate in the country. After a few years of continued growth, the CV industry, more particularly, the medium and heavy commercial vehicle (Mand HCV) segment has been finding the going tough in recent times owing to a decelerating economy, decreasing industrial output, increasing interest rates and lack of infrastructure spending. The LCV and the ICV segments, however, have bucked the trend by continuing to post growth.
Historically, although Ashok Leyland?s strength has been in the M and HCV segment, we have adopted a robust de-risking policy to combat the cyclicality of the CV industry by developing support businesses of power solutions, defence, exports, parts and passenger vehicles which have been performing remarkably well. Exports, for example, grew by 25 per cent in FY 2011-12 while the parts business posted an equally impressive growth of 20 per cent. The company?s entry into the LCV space in joint venture with Nissan Motor Company has been extremely successful with Dost, the company?s first offering, becoming the Number Two brand in its category of 2-3.5-tonne vehicles. We have also sought the advantages of foraying into profitable adjacencies by entering the aggressively growing construction equipment business in partnership with John Deere.
The India story is very much on track, albeit at a slower pace and growth for the CV industry, will be precipitated once the clouds of uncertainty clear on the political and economic fronts.
The competition in the trucking industry has become very intense. AL, hitherto one of the undisputable leaders, has not only to retain the existing market share but need to grow it further?what is your take on this tough challenge?
Challenges are a way of life and we welcome healthy competition. There has been an advent of competition from different parts of the world recently but neither is it surprising nor were we unprepared for it.
It is widely held that most growth in the near future will be triggered in the BRIC countries, of which India offers the most in terms of opportunities. Mindful of this reality, we articulated our vision to be globally among the top ten in trucks and top five in buses by 2015.
The customer has always been at the core of our business and all our efforts have been and will be aimed towards making the customer more profitable. Our strategy going forward will be to consolidate our entries into new businesses, introduce new product concepts in response to specific customer requirements, foray into new geographies while at the same time shore up our hold in existing markets, build new capacity, strengthen our brand and enhance levels of customer engagement and experience.
How do you look the evolution of the trucking industry in terms of shift in tonnage, kms travelled per day, advanced technology, buyer patterns, driver comforts, etc?
As in most other spheres, the trucking industry has also evolved with time. The most important development has been the change in the customer who is now more demanding, more discerning and, in recent times, spoilt for choice. Aspects like adaptability of a vehicle for a specific application, fuel efficiency, better operating economics and superior driveability have become key considerations that are being delivered by OEMs thanks to the adoption of frontier technologies, engineering of New Age vehicles and, most importantly, backing up sale with superior network and support services. One case in point is the rise of demand for fully-built vehicle solutions that is reflective of changing customer preferences for factory-built cabs with superior features and ergonomics for greater driver and ride comfort. This directly translates into better profitability. Another case is the increasing demand for more powerful, higher tonnage and more efficient rigid trucks because of greater load availability and load aggregation. Ashok Leyland?s answer has been India?s first 37-tonne haulage truck with the highest payload of up to 27 tonne on the future-ready U-Truck platform. The U-3723H is unique for its 5 axles, including a lift axle that enables it to carry more loads more efficiently.
Is there any more capex/new product on the anvil?
We have always incurred capital expenditure or made investments whenever the need has risen for them and shall continue doing so in the future.
In terms of new product concepts, apart from the U-3723H, referred to earlier, there is the Jan Bus, the world?s first single-step, front-engine, fully flat floor bus. It has been engineered to address the needs of all involved stakeholders, the passenger, the operator, the driver, the conductor and the cleaner. We have applied for 16 patents for 16 various innovations on the Jan Bus.
Tell us about your performance on the export front.
Our international operations did exceptionally well last year, with export volumes touching a new peak of 12,852 vehicles reflecting a growth of 25 per cent. Apart from consolidating our position in our strong markets of Sri Lanka, Bangladesh and the Middle East, we made significant inroads into new markets like Africa, CIS and Russia. We have carried our robust showing into this fiscal too, having recently bagged orders for 50 Vestibule buses and 88 AC buses from Bangladesh Road Transport Corporation (BRTC) and a hundred Falcon buses from Ghana cumulatively worth over $20 million.
Tell us about the value propositions offered to clients.
Strength of network has emerged as a key differentiator in the CV business and we have been working at significantly increasing our reach. We now have more than 400 full service centers dotting the country with over 20,000 touch points for Key parts ? our genuine spare parts. We have one centre every 75 km on all major highways across the country that enables us to deliver on our Tatkaal promise, first launched by us, of being able to reach a customer within four hours and put his vehicle back on road within 48 hours. We also have a rich bouquet of service offerings to enhance customer engagement and satisfaction.
In terms of training, we are the only Indian auto major to have two Driver Training Institutes that are operational at Namakkal (Tamil Nadu) and Burari (near Delhi) that are equipped with state-of-the-art training facilities and all conceivable road configurations. Till date, more than 500,000 drivers have been trained at these two institutes combined. Three more institutes are soon to go on stream at Rajasmand, Rajasthan, Khaital, Haryana and Chindwara, Madhya Pradesh with another two to go operational next year.
What kind of productivity enhancement does one gets in using the AL range of trucks?
Ashok Leyland trucks are synonymous with reliability and sturdiness and have for long been well-received for their class-leading performance and low-operational cost. The company?s flagship models like the 1212, 1616il, 2516il, 3116il, 3518il and 4019il have been performing very well helping us gain market share because of their superior fuel efficiency, thanks largely to the inline fuel pump. In fact, we are the first company to offer a BS III engine on a commercial vehicle with an inline pump.
Tell us about the plant facility and capacity. Is it fully utilised and is there any plans on capacity augmentation?
We have seven manufacturing facilities located pan-India with an installed capacity of 150,000 vehicles. e also have facilities at Prague, in the Czech Republic and Ras Al Khaimah, UAE. With our Pantnagar plant reaching peak capacity and up-gradations at all plants, we are well placed to meet market demand.
Tell us about the tracking solutions.
Ashok Leyland offers Alert, a GPS-based telematics services for vehicle tracking and data and voice communication designed for the fleet operators, public utility services, passenger bus corporations and operators. In addition, Automotive Infotronics, our joint with Continental, AG, Germany, is engaged in developing sophisticated vehicle electronic systems that are already onboard on many U-Trucks.
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