Anuj Kathuria, president, Global Trucks, Ashok Leyland Ltd, spoke with Shahkar Abidi on the sidelines of the launch of the latest variants of its intermediate commercial vehicle (ICV) ‘Guru 1010’ and medium duty vehicle (MDV) variant of Boss — the Boss 1616 and Boss 1916 in Mumbai. While the company witnessed pent-up demand for vehicles in the previous fiscal, going ahead increased infrastructure spending is expected to spur demand for intermediate commercial vehicles and tippers.
Below are the excerpts.
You have to see (demand) in the right perspective. For that, you have to go back to April 2017. During Q1 of 2017 when BS IV was introduced, there was a Supreme Court order that said no more BS-3 vehicles can be sold and registered. Also, there was some uncertainty about the availability as well as the demand. The Q1 of last fiscal year (FY18) was very bad, but things started getting better in Q2. In Q3 and Q4 of last fiscal, demand went through the roof because there was pent-up demand and, especially, there was a lot of demand for multi-axle vehicles as well as tippers due to spur in infrastructure project announcement.
So, if you see the year as a whole, the industry is going to see a growth of 15% over the previous year. It will the highest ever and this is going to be a new high. But again, if you have to closely analyse this, I have been telling this repeatedly we should look at trucks into sub-segments rather than seeing it as one medium, light and heavy commercial vehicles segment. Because the factors that drive demand in the intermediate commercial vehicles (ICV) segment are different from the one for tippers and different for MHCV. So for ICVs, we have seen that demand has been growing this year by 30%. Tipper segment has grown by almost 40% because there are many infra projects which are long-term projects and will continue for three-four years or even beyond. This shows that the demand will continue to be driven by these two segments. Also, for multi-axle vehicles, we have to understand the basics. Last year, the demand for the multi-axle vehicle was huge. This year we have again seen a 10% growth. New Axle norms did have an impact, though not on volume but on which vehicle the customer is buying today.
I believe it will be spaced out this year as compared to last time (BS-IV). A lot of people could not get the vehicles. It is also very difficult for the industry if it happens like that again. But it depends upon which segment we are talking about. We have to wait and watch as there are certain other factors, but definitely, pre-buying will be there and it will be quite strong.
The profit was down because revenues were weak, and we are comparing again with a very good quarter of last fiscal. Let’s have the right reference. We have been reporting double-digit EBITDA margins for 15 out of 16 quarter. So, I don’t see any appreciable difference in one of the quarter on its own. In isolation, I would not be reading the market that way.