Cross badging is helping Nissan and Renault: Venkatram Mamillapalle

Venkatram Mamillapalle, who was till recently heading the purchase function for the Avtovaz-Renault Nissan Mitsubishi Alliance in Russia, took over the reins of Renault India in March from Sumit Sawhney. Mamillapalle, who is now the MD & CEO of Renault India, has earlier worked at Tata Motors (senior vice president, head of purchasing & supply chain), General Motors Korea (VP purchasing and supply chain), Lombardini India, Delphi Automotive Systems and Eicher Tractors. In an interaction with DNA Money, Mamillapalle spoke on wide-ranging issues concerning Renault's India operations and his plans to take it forward.

Excerpts below.

You have just taken over the command of Renault India recently. What are your immediate priorities considering the complexities of an alliance?

My aim is to implement One- team- one- ambition which is to get the alignment of all the entities in India as one team to lead us or walk through our portfolios. This is exactly what I am trying to do by sitting in Chennai. My objective is the quality and alignment of the teams, irrespective of the entities which I don't care. But we have to move together as one team. I requested for an office at the plant site which I will soon have and would start going every week to the shop floor to see how all products are going through the levels of quality checks, including the current ones which are on sale.

Your alliance plant is mostly dependent on Nissan and its exports? How do you maintain quality in such an arrangement?

We have the same line which makes Renault Kwid and Datsun both. If I improve quality of Kwid, then obviously Datsun quality improves. You can not say that I will make Datsun at a lower quality than Kwid. It does not work that way. It is a process-oriented quality improvement. Both Nissan and Renault have to come together to develop this quality and we are doing it today. Same is with Duster and Capture as it goes on the same line. I am from the technical background and been working on the quality, so I exactly know how things work. I am trying to push that knowledge into the shop floor to get the right quality. It does not matter if it's an alliance plant. Obviously, Nissan gets advantage and for me, the plant is a cost centre. They need volumes to become very profitable for me. So, how do I make them profitable? It's by bringing them volumes. Whether it is Renault, Nissan or Datsun, it doesn't matter. The plant has to make volumes. The unit costs get distributed and that is what we are doing right now.

Another big problem is the infighting, usually at an alliance level. How do you ensure one team approach, alignment between Renault and Nissan?

Your question is not correct. The platforms are common. Once the platform is defined, the featuring and the engineering work by is done based on the requirement of each marketing team. Yes, in the market place we compete. In the market, Renault compete with Nissan, Nissan competes with Renault, Renault competes with Datsun, Datsun competes with Nissan. That is normal and it's healthy. It's not that I go shooting down or he shoots me down. But when it comes to an engineering aspect, each marketing guy defines what he wants and what his features are. I define what my features are and how I want it to be. And engineering guys take the feedback and build the car with different features. That's normal because they are add-ons and not structural changes.

As a strategy, will you continue with cross badging because it has not only worked for you but also other manufacturers who tried doing that?

I would disagree with you. There is nothing called "not-working'. Cost of opportunity and how do you minimise your investments. Let's take Capture and Kicks. These are two cars but platforms are the same. The difference is only in features. The plant which manufactures, it needs both the volume. For it does not matter which brand it makes. It wants the line to run at a certain speed and the cost is well distributed. For me, my interest is to keep the cost low. For my friend at Nissan, it also matters to keep the cost low. So for us, both have to give volume to the manufacturing plant so that we get an optimum cost. So cross badging is helpful, it's not a conflict. Helping or not helping is a marketing strategy and not a manufacturing strategy. So don't mix the manufacturing strategy with the marketing strategy.

The issue is also on the differentiation of the cross badge products. The sameness that one saw with a Scala or a Sunny was a big factor behind the product not taking off...It is something which the management of Renault-Nissan accepted that?

Admission is one thing. But it is also how the customer perceives it. If a guy walks into a Nissan showroom, he may end up buying a Nissan model of same badging. It can be a Terrano or it can be a Kicks or it can be something else. And when he walks into Renault, he gets the same opportunity. Now, you are talking about Sunny and Scala. Both their grills are different. However, you are giving a portfolio to a customer who walks in not asking.. sorry you don't come here you go to next door. This happens. It is wrong or right, I don't know. This is a good marketing strategy, I can not tell you either. So, this is how I look it at that.

So that means you need to work more on your marketing strategy?

I need to be a good salesman. I am a good manufacturing guy but not a good salesman. I need to work more on the sales skills to get the volumes in. So that is how it is.

Where does Mitsubishi fit into all this?

Mitsubishi is not in India. Globally, yes they fit in perfectly because they are extremely strong in the Asia Pacific region which starts from Thailand, down to Indonesia. They are the leaders for the whole alliance. Actually, we are piggy bagging on these countries on Mitsubishi. So it's an opportunity for us and they are not small players either. They will become profitable as we piggy bag. They are good in the US too. But they may not be good in India or they may not be good in some other countries but they have their own strengths. How do they fit? They perfectly fit into our strategy because we, Renault-Nissan, do not exist in the range or in the area where Mitsubishi exists. They do not just exist, but they are super strong. They are number one. In some cases, they are number two because of Toyota but in many cases, they are number one. So Pajero is a brand. Who wants to lose Pajero brand? Pajero is Mitsubishi.

Do you see the revival of Mitsubishi?

In India? I cannot comment because I am not responsible for it. But in my life, the dream is to buy a Pajero.

Do you see fresh capital infusion happening in the run-up to the mid-term plan?

Yes, the two models need money.

How much is it?

That's confidential.

You talked about doubling the market share in India from the current of about 3%?

When we talk about market share, it depends upon the denominator and the numerator. It's pure mathematics. The objective is to fill my volume in the plant. If the car industry goes to six-seven million units in three years, even if I am at 2.5-3%, I will fill my plant. Remember that. If I do not have the capacity to make my cars in the plant, even if I tell you I want to capture 10% I have no capacity. I need to build a new plant. So telling you by percentage is not going to make any real sense to me. My endeavour is to fill my plant which is 4.08 lakh car capacity and my mid-term plan is 2 lakh plus Renault.

Have you met your dealers?

I have met them. They are not sad. I will not say they are happy. I need to make them profitable to make them happy and I am working on that.

Any plans for capital infusion in EV space?

We need to. Today, I am fighting for EV in India. I don't know what will happen post-election on FAME-2. I don't know what will Niti Aayog do. So, everything is in the cloud and before I put my foot down and ask my corporate and request them, it's not capital it's projected money. Nothing to do with equity. Every project needs to have budget approval. That is what I meant.