Fasching to produce seat belts in India

Fasching Salzburg is working towards manufacturing seat belts in India to cater to the domestic and other South East Asian markets.

Story by: Bhargav TS

Fasching Salzburg GmbH was established in 1987 in the Austrian city of Salzburg as a small family business to manufacture safety belts. The period between 1987 and 1989 led the company to grow rapidly in-line with the retrofitting obligation for safety belts in Italy. This growth fuelled expansion, and Fasching in 1990 took a strategic decision to relocate its manufacturing activities to Sopron, Hungary. It is here that the company came to possess a high-quality and affordable manufacturing base for safety belts and components. Beginning to supply safety belts to OEMs in 2000 for passenger seats of buses and commercial vehicles as per the statutory regulations that dictated their use, Fasching embarked on yet another stage of expansion. This time, its strategy took it to the international markets the world over. It is for some time now that Fasching has been supplying safety belts in India.

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Local manufacture

To underline its commitment for the Indian market, the company is working towards setting up a manufacturing facility in India. The aim is to serve the domestic market as well as the other South East Asian markets like Malaysia, Vietnam, Indonesia and Thailand. Specialising in the design, development and manufacture of safety belts mainly for wheel chair applications apart from commercial vehicles, the company is looking at leveraging the frugal engineering qualities associated with manufacturing in India. Fasching is expected to manufacture a wide range of safety belts in India among those that it offers globally. The product range of the company includes two-point, three-point and special belts in different versions and technologies like static, ALR, ELR and buckles. The range also includes automatic locking retractors, emergency locking retractors, two-point belt systems, three-point belt system, and special solutions like H-belts, bicycle tethers, fall protection belts, YoYo belts and five-point belt systems.

Supplying seat belts in India for the last four to five years, the company, according to Harald Pessl Ing, Sales Director and Authorised Officer, Fasching Salzburg GmbH, is looking at India as a switch to broadcast the business prospects. “Keeping India as a base, we could cover the South East Asian markets. Setting up a manufacturing base in India will open new avenues for us,” Expressed Harald. Fasching, in India, has supplied 60,000-80,000 seat belts over the last four to five years. This clearly indicates that India is one of the promising international markets for the company, which currently has just one manufacturing facility in Europe. Averred Harald, “To begin with, we would target the commercial vehicle segment, and buses especially, as this zone has huge numbers. We are planning to localise 99.9 per cent as this will give us a cost advantage. We would also be tagged as one of the local suppliers.”

Aiming for sustainable growth

Fasching, it is clear, is not hurrying into its strategy to setup a manufacturing operation in India. It is working on a sustainable growth model instead. It is keen to ensure that its seat belts do not earn a bad name for reasons that may not have to do with the belts, but with other factors involved. The design and layout of the seat for example. Planning to produce seat belts with technical inputs from the parent company and supply them to buses, mini buses and mini vans, Fasching is targetting tier-one and tier-two suppliers. Close to 80 per cent of what the company supplies, goes to tier-two suppliers. Another 15 per cent goes to tier-one suppliers. The remaining five-per cent, according to Harald, is equally balanced. “We are supplying safety products to the customers,” mentioned Harald. He said, “We will work with seat manufacturers on how to structure the seat, position the retractor and make it function flawlessly.” The function of passenger seat belts in a bus amounts to a complex operation. It goes to work in sync with various seat functions and seat designs. Any shortcoming in seat design or seat function can hamper the function of the seat belt. “Unless we get the required layout, our seat belt will not function properly. As we sell a safety product, we need to doubly verify before we proceed with order book instructions,” said Harald.

The Indian market, opined Harald, is still at a nascent stage in the adaptation of safety products as a stand-alone feature. This is despite seat belts being made mandatory for passenger cars, he added. “It would have been better if the regulation was extended to buses, especially inter-city buses, with a deadline for compliance”. Harald felt that it were the manufacturers of buses like Mercedes-Benz and Volvo among others who could direct the Indian market to set high standards in safety with the use of passenger seat belts. “We can only manufacture and supply the product. As an extended move we could explain our product needs with certain videos. The difference between two-point and three-point seat belts could be explained for example. Beyond that much depends on market awareness and regulations,” said Harald. Interestingly, the ratio of two-point seat belts and three-point seat belts was 70:30 in 2004-2005. Today it is 50:50, and mandated as per the European norms. India, opined Harald, could look at a similar structure, albeit agressively, where four years down the line, a 20:80 (two-point : three-point seat belts) ratio is achieved.

Passenger seat belt culture in Indian buses

In the near-term, the company is not expecting a drastic change in demand for commercial vehicle seat belts. It is perhaps because of this that Fasching is open to looking at the passenger car segment for growth. “Passenger car segment seat belts does not involve rocket science. We have capabilities to produce such seat belts except for the pretensioners. Pretensioners are however found only on some premium cars like BMW, Audi, Mercedes-Benz and Volvo. Smaller car segments do not have them. Though car segment is not going to be our immediate priority, we are open to look at it,” informed Harald. He signed off by saying that he is hopeful of inter-city buses in India being mechanised with seat belts soon.

ZF technology centre in India

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ZF Friedrichshafen AG has commissioned a technology centre at Hyderabad to pursue progress in the digital space.

Story by:

Bhushan Mhapralkar

Present in India since 1982 through joint ventures until it set up its own subsidiary at Pune in 2007, ZF Friedrichshafen AG has commissioned a technology centre at Hyderabad. Spanning 100,000 sq. ft., the technology centre will help the tier 1 automotive supplier to pursue progress in the digital space. Adding to ZF’s manufacturing footprints at Coimbatore and Pune, the technology centre highlight’s ZF’s commitment to India where it will be investing Euro 15 million over the next five years. Apart from fostering high-end innovations which will focus on bringing advanced technology to India as well as localise strategic business activities including research, design and development for global market initiatives, the centre will also look at leveraging academic research communities from India. To be dedicated to electronics, embedded software and mechanical engineering, the centre will support ZF’s global development teams, enabling the company to accelerate local product development. Built in a short span of eight months, the centre, according to Mamatha Chamarthi, Chief Digital Officer of ZF, will become a pillar of innovation for the company.

Leveraging frugal engineering qualities

Aiming to leverage the frugal engineering abilities India is known for through the technology centre, Chamarthi said that they are looking at creating a low cost model of its nine-speed transmission that is offered to commercial vehicle OEMs in India. Announcing that the technology centre at Hyderabad will play a crucial role in carrying our safe routing as part of ZF’s three main stays – see, think and act, ZF CEO Dr. Stefan Sommer, said, “The safe routing of technologies as we expect significant change in automobiles comes under the think part.” Dedicated to electronics, embedded software and mechanical engineering, the technology centre at Hydreabad will support ZF’s global development teams, enabling the tier 1 automotive supplier to accelerate local product development and support its non-automotive operations as well as customers.

Looking at harnessing the skill set present in India to develop world class technology solutions for ZF across the globe, in addition to accelerating local product development, the technology centre, said Chamarthi, would provide employment to 2500 individuals by 2020. “Our focus when it comes to digitisation is on our products. We are looking at many things; transmissions in CVs for example can be connected and monitored to help with remote diagnostics, and move forward to prognostics and maintenance,” she added. Stating that they are looking at different business models like not charging for the entire transmission at once, and charging only a quarter of it, Mamatha said, “We are looking not just at technology but also at how it can help us to come up with different business policies. Not just to support organic growth but to support new revenue models that contribute to growth.”

ZF Friedrichshafen am 20.09.2016 bei der IAA Hannover

Premium, and cost effective

With all five divisions of the ZF Group represented in the Indian market, and having local production companies that manufacture parts for diverse vehicle applications, it is not tough to understand and acknowledge ZF’s intention to increase its footprint in India. Said Sommer, “The motivation for the technology centre at Hyderabad came from the company’s digitisation strategy. There is a huge need in software capacity and expertise to serve the digital future of our products. With software as the main point, the centre at Hyderabad will support all our technology centres in the world. It will also help us to stay close to our customers by leveraging new software and intelligence of our think, act and see strategy.” The technology centre at Hyderabad, apart from helping ZF to set up a strong footprint in India, will help the group to support customers to achieve ambitious fuel efficiency targets the government has set. ZF has a lot of technologies to offer. These would effectively contribute to the group’s customers addressing regulatory and other market needs. The technology centre at Hyderabad, said Sommer, give us an opportunity to have the right technology from the cost and performance perspective.

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A brainchild of Mamatha who comes from the TRW side of the business, the technology centre at Hyderabad has a lot riding on it. While Mamatha is keen to replicate ‘M-city’ (University of Michigan Mobility Transformation Center) at Hyderabad in association with the Telangana Government, according to Sommer, ZF is looking at being balanced and modular. Said Sommer, “ZF has traditionally been stronger in the high cost market. The TRW acquisition gives us an opportunity to push our case for cost efficient technology. TRW has excellent cost position when it comes to their products, and have premium technology and quality. We have learned a lot from TRW, and the strategy is to have market share in performance as well as cost effective areas of the business.”

ZF and auto megatrends

ZF has identified three megatrends in automobiles. It has added safety to these three megatrends to arrive at a zero accidents level. Said Sommer, “We feel that safety is an important element. Autonomous driving, as a megatrend, is a challenge. It is life spent in different ways for the end customer, for us the need is to comply with occupant safety. If autonomous driving wil bring value, we need to rethink the safety systems to be more flexible.” Interestingly, the engineers at ZF are looking at having airbags outside the vehicle to absorb impact energy and not let it reach the vehicle, and its occupants inside. Such technologies, it is clear, would call for sensors that not only let the vehicle to drive itself in traffic, but to also avoid crashes. The ‘extra safe’ technology ZF has developed is to prevent collisions. Electric gadgets are used to drive the tech, including a smart device. Vehicle position is automatically transmitted to the cloud to make a truly connected environment. With existing automobiles expected to be on the road for quite some time, to arrive at zero-accident autonomous vehicle environment, the use of smart device may make for faster progress according to Sommer. “Safety as a third megatrend has us investing in it in the form of technologies and solutions,” said Sommer.

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ZF is putting in place a global engineering strategy. The strategy is being aligned to the talent available. “In India, the talent is about new age technology,” said Mamatha. “The commissioning of the tech centre at Hyderabad in eight months was made possible because of innovation thereby, and agile processes,” she added. According to Mamatha, ZF is keen to leverage the problem solving mindset and the analytical nature of Indian talent to gather data and process it into intelligence that can be fed to make an actuator work. ZF, for CVs, apart from supplying axles, transmissions, etc., is offering Openmatics. It is a smart telematics platform that enables remote monitoring of truck fleets. ZF initially provided the hardware, but has now begun doing the software part too. This involves visualisation of data. It is an area that ZF is tinkering with according to Mamatha. Openmatics, she said, has grown into a Euro 100 million business.

At CES 2017, ZF showcased two specific technologies – Block chain and extra safe. Extra safe is not about every individual subscribing to it. It is about incorporating intelligence in the components of CVs that ZF builds. It would be app.-based. It would be about connecting and sharing the geo position. The cloud-based algorithm receives the data and processes it such that it can be applied to different situations. For example, to let a vehicle know that a pedestrian is walking towards the vehicle from behind another vehicle or similar such object such that the driver of the vehicle, or the vehicle itself is not able to see him. The vehicle can take action; the pedestrian can take action. Multiple such applications can be done, adding a concrete dimension to digitisation. Through the tech centre at Hyderabad, ZF is expected to look at building a predictive maintenance platform credibility. It could be made available to all the components ZF offers. ZF is partnering with GE for data monetisation by sharing best business practices according to Mamatha. ZF is keen to get into that space too. It is exploring, without getting away from its position as a mechatronics intelligence company. ZF is keen to venture into the space, and understand what Google is doing as Google ventures into the auto space and tries to understand what companies like ZF are doing. ZF is setting up a centre in Silicon Valley with Plug and Play as a partner.

Bullish about cloud-bsed logistic solutions

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Quikhop Logistic Solutions s is banking on cloud-based solutions for the logistics industry.

Story by:

Anirudh Raheja

India spends close to 14 per cent of its GDP on logistics. It is almost double of the world average at eight per cent. At a time when every solution is engineered to shed unnecessary weight, both in terms of its structure and the costs involved, an expenditure of close to 14 per cent of the GDP points at a wide scope to dial efficiency and stream-line processes. Considering the figure of four per cent, it does not come as a surprise that over 90 per cent of the logistics sector continues to be fragmented. Inefficiencies include a complex taxation structure, poor roads, low technology adoption, warehousing and storage problems. What makes the situation worse is that these inefficiencies span across geographies.

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In a bid to cut down inefficiencies in the logistics sector, Quikhop Logistics Solutions is tapping into cloud-based solutions. A young company that was established in 2015, Quikhop specialises in full truck load space as of now. Employing an asset-light model, Quikhop has developed SaaS-based solutions that focus on saving costs at various levels in the B2B segment. These solutions will be made available on demand, and will be contractual as well as spot based. According to Apollo Sharma, CEO, Quikhop Logistics Solutions, such solutions do not need specialised hardware. They enable cost saving for the customer right from the inception. Accessible via website, mobile app., interactive voice response system, and through a 24×7 call centre based at the company’s headquarters in Noida the company is laying stress on developing solutions that address difficult brand requirements. Explained Sharma, “Our emphasis is to develop solutions that address different brand requirements.”

Cutting down idle time

In its first year of operation, Quikhop Logistics Solutions worked towards expanding its horizons. The company entered into an association with 200 shippers, 1500 carriers and 8000 truck owners. This gave it an opportunity to specialise in return truck load. Upon careful study of the procurement rates for load transport, which account for a complex procedure and often result in over 35-40 per cent rise in costs, Quikhop Logistics Solutions decided to automate shippers even before the truck reached its destination to cut down on idle time. Upon learning that end to end project execution can result in cost excalation due to inefficiencies that can be dealt with, the company invested in the development of solutions for return truck load. “Our algorithms have integrated solutions for return trucks that are available at a cost that is cheaper than the origin city trucks for resource optimisation,” expressed Sharma.

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The operational model

A team of 15 experts at Quikhop Logistics Solutions has developed various solutions under Quikhop Transport Management System (QTM) for shippers and carriers. These comprise of real time repository of consignments available for transportation. The system matches the freight with the most suitable carrier based on the route and load capacity of trucks available with the carriers. “We maintain proof of deliveries and of any other process necessary. Carriers get recommendation for freight by utilising price clearing system for increased efficiency and transparency,” said Sharma. According to him, the company has developed a centralised order booking system, which is controlled out of its Noida office. The centralised order booking, averred Sharma, minimises delays and reduced leakage arising out of system complexities.

In order to boast efficiency, the company has invested in ten offices across India. Plans are also being drawn to double the number of offices over the next one year. This would enable the company to increase its reach in the market. Sharma, pointing at the broker-intensive nature of the logistics and transportation industry, said that it is simply impossible to remove the middle men. It is impossible to eliminate their role despite them siphoning off a major part of the trade revenues. “Brokers will always exist in the industry. With a sharp eye on reducing involvement of multiple level brokers, what is more important is to harness their capacities and arrange transport quickly,” he added. Working with 150 SMEs, Quikhop Logistics Solutions also has clients across auto and FMCG industries.

For truck drivers

Truck drivers, said Sharma, play a crucial role in the logistics industry. “They are however a link that is often looked upon with a huge trust deficit. It is wrong to mistrust them. It is they who ferry goods worth crores of rupees,” he added. Quikhop Logistics Solutions has taken upon itself to train truck drivers once every two months. The training is conducted to enable the driver to focus better on his job. Quikhop Logistics Solutions also offers scholarships to their sons and daughters. To ensure that the drivers are able to increase their productivity, the company is chalking out plans to inculcate the culture of entrepreneurship. This, according to Sharma, will encourage the drivers to perform better. Quikhop Logistics Solutions is already working with 25 drivers. It has also helped to self finance vehicles to encourage people to perform better; to reduce the stop overs. With GST due to be implemented later this year, Sharma is of the opinion that goods movement across states and geographies will be simplified. “Delays caused towards payment of interstate taxes will be avoided,” he added.

Charging ahead

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Daimler India Commercial Vehicles charges ahead with a mix of rising domestic sales and a strong exports drive.

Story by:

Anusha B

It was in March 2012 that Daimler India Commercial Vehicles (DICV), a wholly-owned subsidiary of Daimler AG, unveiled its new range of trucks under the BharatBenz brand. The company held a special event spanning six-days at the Hyderabad International Convention Center, where the media, potential customers and brand partners including dealers and suppliers were able to see the trucks up and close. The event followed the announcement from the company that it will seek a presence in the CV segments in India ranging from 9 to 49-tonnes. Truck models to that effect – light-duty and heavy-duty, were showcased. A sale of 1000 trucks was achieved in 2012. In May 2013, the company announced its Indian strategy under its forward-looking programme, Daimler Trucks No. 1. The first outcome of the programme resulted in the launch of a new robust ‘Made in India’ truck portfolio under the Fuso brand for exports. Supported by rising domestic sales and a strong export drive, DICV, it is no secret, is pursuing growth. Expecting to break-even this year, the company, according to Marc Llistosella, President and CEO, Mitsubishi Fuso Truck and Bus Corporation (MFTBC), and Head of Daimler Trucks Asia, has been able to offset its growth in the domestic market last year with exports. “Our path is promising, and we expect to break-even this year,” he said.

Expecting to be profitable from 2018, DICV, it is certain will continue to follow the strategy of driving exports while it increases its reach in the domestic market. Exports of DICV trucks made at the Oragadam plant ammounted to 4500 units in 2016. In 2015, 2100 units were exported. So far, 7500 trucks have been exported to over 30 markets. Exports of parts from DICV’s extensive Indian supplier base to other Daimler entities in Japan, Europe, North America and Brazil, have crossed 35 million. The domestic performance of the company may reflect from the degrowth of seven per cent, it were the exports that made a difference. A total of 13,081 trucks were sold in the domestic market by the company in 2016. In 2015, 13,997 units were sold. Until now, sources close to the company claim, 40,000 BharatBenz trucks have been put on the road. Said Llistosella, “The Indian operation is a cornerstone of our success at Daimler Trucks Asia. With the launch of a third product line for exports, we will enter the next stage in the strategic collaboration of DICV and MFTBC. DICV will start production of this new series of trucks – sub-9 tonne vehicles, shortly. These would initially be exported as Fuso brand variants.” “The first customer vehicles will roll out in the first half of the year,” he added.

According to Erich Nesselhauf, MD & CEO, DICV, the focus on profitable growth continued in 2016. “A mixed year for the Indian CV industry 2016 was. We were able to compensate the current challenges in the domestic market with our successful export story. With new products in the pipeline, we are geared up for further growth.” Clear about offering fully-built trucks and buses, the implementation of BSIV emission norms in April this year are likely to work to the advantage of the company, which announced last year that product transition to BSIV emission norms has been accomplished. “With BharatBenz, we have the best technology in the market. The CVs are based on proven solutions, and enable use to be fully ready to sell BSIV vehicles in India. Feedback from our customers for our BSIV vehicles clearly indicates that we are perfectly positioned for the transition,” expressed Nesselhauf. He mentioned, “Continuing discussions on BSIV are reflecting upon the attempt of some players in the Indian commercial vehicle industry to dilute this upcoming transition of emissions standards. It should not be diluted by commercial interests. There is no acceptable reason for any delay, as everyone in the industry has had enough time to get ready for the transition. We also believe that our BSIV vehicles are economically beneficial to our customers since they deliver more mileage (kilometer per litre) compared to BSIII versions. Superior efficiency of BSIV trucks can help to reduce the import bill of the Government of India,” explained Nesselhauf. He further stated, “We have been selling BSIV emission compliant CVs since August 2015. The feedback we received was positive.” The company has trained its dealers to cater to its new-tech trucks.

The new generation BharatBenz heavy-duty trucks launched in the coming months, will be key growth drivers, claim Daimler India sources. In Its been three years after the launch of BharatBenz CVs that the company is presenting a new range of medium-duty trucks. Upgrading the entire truck portfolio with the launch of its new generation heavy-duty trucks in the segment between 16 and 49 tonne GWV, the company rolled out the 50,000th CV recently. The roll out marked a production milestone in August 2016. Localisation levels of trucks are claimed to be as high as 92 per cent. With air conditioned cabins on offer, the new BharatBenz trucks are expected to reduce driver fatigue, a major cause for accidents in India.

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With the ecanter, the third generation of the world’s first fully-electric light truck under the Fuso brand marking a leap forward, DICV, as part of Daimler’s Asia strategy, continues to look forward to a brighter future. The ecanter, based on the modular battery concept, can cover up to 100 km on a single charge.

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It takes less than an hour to charge 80 per cent of the battery. Payback time is expected to be three years. With a payload capacity of two to three-tonne, the trial run of the ecanter is said to have highlighted a saving of around Euro 1000 per 10,000 km. This vehicle will be delivered to the customers in Europe, the US and Japan.

Digitisation in Cvs

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The second panel discussion, as part of the Apollo-CV Awards 2017, focused on the growing use of electronics in CVs.

Panelists (L to R)

Kaaushik Madhavan, Director, Automotive & Transportation, Frost & Sullivan.

Dattatreya Saste, Advisor & Technical Consultant, Ministry of Road Transport and Highways

A Sriniwas, Senior Vice President – Product Development & Technology, Automotive Division, Mahindra & Mahindra.

Ramashankar Pandey, Managing Director, Hella India Lighting. .

Bhushan Mhapralkar, Editor, Commercial Vehicle magazine.


V G Ramakrishnan, Managing Director, Avanteum Advisors

Highlighting the OE perspective, Kaushik Madhavan, in response to V G Ramakrishnan’s question on industry movement towards digitisation, mentioned that much depends on the jump the OE industry is ready for when it comes to digitisation. “We will have initial regulations, hybridisation, etc., to play a key role in the digital sphere. Suppliers will also play a key role,” he averred. Drawing attention to the use of signboards by STUs in buses, and the setting up of a control room to monitor buses on the road, Kaushik expressed, “Fleet management services like DigiSense from Mahindra are reflective of the successful development of (digital) platforms.” “These,” he added,”can be used across vehicle segments.” Stressing upon the rising use of fleet management services to track movement and driver behaviour, Kaushik stated, “Driver has become an integral part of the entire CV ecosystem, and dgitisaion is helping him to realise better efficiency.” Kaushik also drew attention to how digitisation is aiding service compliance. “In 2014, in Europe, we were trying to understand what is going to happen with EuroVI. We asked the drivers about the truck getting complicated with SCR. We are now travelling on the same route, and the tone will be set for digitisation in CVs,” explained Kaushik. He did not forget to mention that the aggregator business model is picking up; leading to many looking at optimising loads.

A Sriniwas, from the product stand point, said that a lot of work will happen in India and the world over in the case of driver awareness. “Initiatives like driver training and monitoring will gain importance among other things,” he added. Sriniwas linked driver behaviour with digitisation in CVs by the means of sensors. He mentioined that trucks are today equipped with sensors, and the need is to use them to get data to be able to work out an intervention.

Rising electronics in CVs

Dattatreya Saste expressed that 25 years ago, as a convenor for deciding auto policies, he had estimated the electronic content to be about 30 per cent. “In cars, it has come to that level. In CVs it is expected to rise quickly,” he said. Stating that safety of women and night drivers ranks high on the agenda of the ministry, Saste opined, “When it comes to roads we are at a primitive stage.” “We are trying to create national registry for drivers. In the case of public transport, we are talking about multi-modal transport. While there is a need to upgrade enforcement, the ministry is co-ordinating; and is keen to dispel the confusion between the tasks carried out by the traffic police and other policing agencies,” he added. Stressing upon his ministry offering full support to digitisation, Saste averred that a big impetus will be laid on ‘Intelligent Transport System’ and vehicle electronics.

Ramashanker Pandey subtly changed the course of the discussion by expressing digitisation as not just about technology, but also about electrification, and the huge computing power the world has. “Commercial vehicles will be early adapters of it,” he added. Stating that companies are tackling challenges by working in isolation, and forming an impression that they have a good understanding of the customer, Pandey called for a need to collaborate. “It is not about product sale, but about the whole business model. Today, an OEM calls for a product, the payment for which will be done if he values it. The rules of the game will change, much like they have in the IT world and the mobile phone sector. Supplier collaboration will start from the product development stage and extend all the way to the release stage. Within five years, collaborative approach will assume importance. If one company wants to do everything on its own, digitisation will be a very costly affair,” he explained. Pandey touched upon a survey undertaken by his company lasting five years on safety. It turned into a revolution almost, and the takeaway was that safety will need to be driven not just by regulation, but by the industry collaborating. “It is a new game for us,” said Pandey.

The ecosystem

Speaking on the issue of industry buzz, and regulation driven digitisation, Bhushan drew attention to having driven three-to-four ‘digital’ CVs in 2016. “This was not the case earlier,” he said, pointing at the change taking place in the Indian CV industry. “We see a reflection of change in these vehicles,” he added. Stating that the comparison (in the case of digitisation) is drawn between a passenger vehicle and a CV, he averred, “the use of electronics in passenger vehicles and CVs is completely different. If passengers are looking at different outcomes from use of electronics, in CVs it is looked upon differently.” “In CVs,” he added, “electronics is enhancing comfort, safety and better operability.” Mentioned Pandey, “The glamour of electrics in a passenger vehicle is completely different. The rear view camera system, for example, that is needed in a mining truck is completely different from what a car driver will need on the road. The nature of digitisation is completely different, and the value and cost are also completely different.”

Responding to Ramakrishnan’s query on the issue of understanding the customer, Bhushan stated that dealers are going to play an important role. “The customer will need to come close to the OEM at the aftersales level as far as the lifecycle of the vehicle is concerned. The other part is fuel efficiency and comfort. Both these will add to safety. We are still at a regulatory level. The comfort part, which is so prominent in European trucks, is yet to set in. It is coming,” he added. Drawing attention to Intelligent Transport System (ITS) as a means to vehicle-to-vehicle communication , Kaushik Madhavan opined that vehicle to infrastructure communication is also important. “It is already happening in Europe. Volvo is already talking about platooning, which will play an important role in improving efficiency and productivity,” he added.

Digitisation driven multi-modal transport

Touching upon multi-modal transport, Kaushik Madhavan expressed that it will assume much relevance in India. “As Ramashankar said, the ownership patterns are changing .Why should a fleet operator with 10 tippers for example, stay stuck with 10 tippers for the rest of his life. Subscription based ownership patterns are changing. With multi-modal transport, somebody who has, a fleet manager, and a very good relationship with the end customer, should be able to choose the right transport at the right point and time,” added Madhavan. Stressing upon the change in ownership pattern, Madhavan said, “It will happen in India too. Not just at the vehicle level but also at the ownership level. There will be an ability to have different vehicles at different times, based on the requirement.” Opining that load optimisation, efficiency and production are already going up, Kaushik, in response to Ramakrishnan’s question on app.-based aggregators pushing utilisation up, said that aggregators will clearly say that investments are practically nil. “They have practically no assets to start with. Mind you, not just logistic operators who have 2000 to 2500 trucks but owners and drivers with just a single truck are benefitting. There is a wide opportunity for the entire spectrum,” he mentioned.

Regulations in the digital space

Stating that increase in utilisation and optimsation will lead to new challenges, Kaushik hinted at a move towards the airline industry-like regulatory practices. Said Sriniwas,”Such regulatory practices may not appear in the near future, but some business models would.” He drew attention to the use of sensors to collect data that can be analysed to understand the overall performance of the truck. “It will be able to have a long term relationship in terms of the overall maintenance of trucks. We could use it to deal with the operational efficiency, and pave the way for monetisation,” said Srinivas. “Some monetisation can happen with all the data analytics, and by giving some predictive information to the stakeholders. There is scope for improving the overall effeciency,” he added.

On MoRTH’ digitisation outlook, Dattatreya Saste expresed that the ministry will do whatever it takes as far as the fitness of vehicles is concerned. As far as the CV industry goes, Saste informed that they have developed a software for driver tests. “It is camera based, and transmitter-receiver based,” he added. Keen to replicate the software through a PPP model preferably, Saste averred, “Fitness of the driver is very important, and we are very keen as a government. We have to address safety of the people and the surroundings. We therefore have a mandate to come out with whatever electronic or digital support that is necessary. The registry should be able to ascertain if it is a vehicle problem, ownership problem or anything else.” Claiming that fuel efficiency in CVs will go up with digitisation, Bhushan averred that speeds are going up, and the rise in electronics will help to offer better comfort to the driver. “He will be attentive thus. Not just that, the industry clearly is moving to connected vehicles and offering driver assistance aids” he added. Said Kaushik, “For me the most important thing is to make the fleet operators aware of the advantages digitisation will offer.”

Ramashankar Pandey expressed that the LEDs in signalling lights will find a way into the head lights too. “Electronics is becoming cheaper,” he mentioned. Stating that electronics is finding a way into India with ‘Make in India’, Pandey opined, “If front LED lighting will be mid-term, in the long-term, the moment a truck is going outside there will be a digital clone ready. There will be predictive analysis, uptime will go up, driver cost will go up, and investment cost will go down.” “The ‘connected’ part of digitisation is fast cathing up. Load diagnostics can be captured; predictive maintenance is posible, and also an overall improvement in maintenance is possible. All this will have a definitive implication from the safety stand point, Srinivas mentioned.

CV industry growth in 2017

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The first of the two panel discussions, as part of the Apollo-CV Awards 2017, focused on the growth of CV industry in 2017.

Panelists (L to R)

Ravi Chawla, Managing Director, Gulf Oil Lubricants India.

A Sreerama Rao, Executive Vice President – Sales, Marketing & Aftermarket, Volvo Trucks.

Nalin Mehta, Managing Director and Chief Executive Officer, Mahindra Trucks and Buses.

Rajinder Singh Sachdeva, Executive VP and Head Technology, Volvo Eicher Commercial Vehicles.

T Venkatraman, Senior Vice President – Global Bus, Ashok Leyland.


V G Ramakrishnan, Managing Director, Avanteum Advisors

Responding to V G Ramakrishnan’s question on CV market having reached the 2011 level with 592,000 unit sales and good support from bus segments, Nalin Mehta expressed that commercial vehicle sales will grow as the (Indian) economy grows. “The big ticket growth in bus business,” he said, “came from STUs and translated into a growth of 153 per cent this year, statistically speaking.” Mehta emphasised on three factors – capitalising on JNNURM scheme, working on agendas using PPP approach, and getting independent operators to ply, that led to growth fuelled by STUs. Pointing at a shift taking place from LCVs to ICVs, he stated, “The delay or extension of bus body code implementation created an element of uncertainty. Manufacturers were not certain of how quickly it would be implemented, and if they will be ready. Bus body builder, a formidable part of the business today, were behind it. The Ministry of Road Transport & Highways (MoRTH) has been working towards a common mandate. If there is no clear legislation about sleeper bus code or about long haul buses, the growth volume is going to be more or less flat.”

Market shift

Diverting attention to trucks, A Sreerama Rao stated that the number of trucks required by customers has gone down on the basis of the on-road information his company has gathered over the last seven years. Expressing that a new model was always found to be more productive, Rao averred, “Transformation is also taking place in haulage trucks. A movement is taking place from double-axle trucks to multi-axle trucks. The (sales) numbers may not reveal the actual picture, the fact is, the industry is becoming more productive. It is moving towards higher productivity, and the horse power (on trucks offered) is going up across manufacturers.” Terming this as a positive trend, Rao mentioned that there was no need to worry if the absolute numbers were not growing.

Adding a new perspective, Rajinder Singh Sachdeva said that the CV industry is ready with BSIV emission compliant CVs. “Manufacturers are looking at common-rail technology, and the cost difference is hardly 10 per cent,” he said. Underlining the fact that there’s no choice there, Sachdeva said that 50 per cent of the Indian cities are already BSIV emission compliant. Some customers, he averred, were buying (BSIV compliant) vehicles whereas others were buying vehicles in cities that were still at the BSIII emission compliance stage. “In this quarter we are seeing pre-buying as CV buyers look at avoiding the cost difference they will have to account for from April 01, 2017. Post April 01, 2017, they will have no option. How GST will influence demand will depend on how the macro parameters pan out. The first quarter of FY2017-18 will be post pre-buying. It will bring into account, the fact that the CV industry never works on the right capacity,” he added. One remark of Sachdeva that caught the attention of the audience was the CV industry being either under capacity or over capacity. “Until March 31, 2017, we will be working under capacity. Demand is more than supply. From April 01, 2017, the manufacturing capacity will go up,” he said.

Factors that influence the CV industry

About factors influencing CV industry growth, Rajinder Singh Sachdeva mentioned that the first quarter of FY2017-18 will be confusing. The second quarter, he said, will have the GST cause confusion. “It is difficult to predict if anything like demonetisation or similar such initiative will arise in the third and fourth quarter,” he added. It is parameters like these, and not BSIV implementation, that will most impact, he stated. From the perspective of a oil manufacturer, Ravi Chawla remarked that they are working closely with OEMs, and that half the oils sold in India currently account for diesel engine oils. Mentioning that the industry here follows the European standards, Chawla said, “The arrival of larger trucks is driving a change in terms of the service intervals, and the way oil change happens. With GST, LCVs will play a larger role; they have different service requirements unlike the larger trucks that call for longer drain intervals. We will have to modify our approach,” he added.

“BSVI is a big challenge, and will call for lubricants to change,” said Chawla. He drew attention to BSIV oils already available in the market while stating that they are working closely with OEMs by keeping in mind the Indian requirements. “The need,” he mentioned, “will be to maintain the service standards such that the OEMs and truckers are able to fulfill their promises.” Touching upon SCR and AdBlue, Chawla expressed that the challenge was in the availability of AdBlue. It was necessary for the trucks to use it, he said. Stressing upon the use of AdBlue rather than water, Chawla explained that distribution, service and quality will matter the most. “That is something that we are working on as one of the two companies manufacturing AdBlue locally,” he added.

Segment shifts

Describing segment shifts as the writing on the wall for many years, Nalin Mehta expressed that there will be a need for transport were the country to produce goods. “A shift is taking place towards higher tonnage trucks; trucks that are bigger and more efficient,” he said. Stressing upon the need to calculate the number of trucks against billion-tonne kilometers, which is growing, Mehta averred, “Blips like pre-buying are occurring this year. With the impact of BSIV likely to be high, and compelling customers to pre-buy, the first quarter of FY2017-18 could well be expected to be dry.” “This would not stop the CV industry from growing however,” he added. Pointing towards better highways, rising consumption, growing economy, rising rural consumption and growing income levels, Mehta said, “With GST, the hub and spoke transportation model will assume a better form. As movement towards higher tonnage takes place, secondary transportation will shift to lower tonnage.” “With growth in the last few years not very encouraging, the co-relation between GDP and billion tonne kilometers, plotted over a long period of time, will be close to one,” he added. Stating that waterways and railways would compete with road transportation, Mehta mentioned that road transportation would continue to grow, and despite the blips and segment shifts.

Pointing at a clear shift to ICVs from medium-duty vehicles, T Venkatraman, on the subject of buses said that it was influenced by a rise in last mile connectivity and feeder operations. “People need to move. As cities grow, private operators and STUs, it is evident, are going for smaller buses. The ICV business for STUs has gone beyond 10 per cent in the last one year over the sub-five per cent earlier,” he added. Confident of the trend continuing, Venkatraman mentioned, “The need of the hour is to ensure interconnected roads and networks that would support last mile connectivity. There is a challenge of routing, and that of understanding the layouts.” Stressing on the need to work together, for the industry and the government, Venkatraman said that there is a need to build roads and networks with a common agenda; to invest in plans that are sustainable and fulfill the objectives. On the question of types of buses the industry should build, Venkatraman said, “The need is to work in the direction of building buses that address the issues of safety, passenger comfort, emissions, and an ability to get people to leave their cars behind.” Drawing attention to people travelling on bus rooftops, he mentioned that the bus body building industry and manufacturers have to set up a product that is relevant.

Digitisation and its influence on growth

Speaking about digitisation, and how it will influence CV industry growth, Rajinder Singh Sachdeva drew attention to the cost implications. “Safety aspects and digitisation will drive costs,” he said. Stating that the cost increase in the case of a six-cylinder BSVI engine will be to the tune of Rs.300,000, Sachdeva added, “It would involve setting up of a chemical factory on the vehicle.” Pointing at the challenge of putting up a chemical factory on smaller, intra-city CVs, Sachdeva explained that the cost increase will be close to the level of a hybrid solution. “A 34-seater electric bus costs Rs.1.5 crore, and a hybrid bus costs Rs.40 to Rs.50 lakh. The inclusion of BSVI technology will push costs closer to hybrid and electric levels,” he added. Explaining that the cost increase for a 8-litre engine will be Rs.400,000, Sachdeva emphasised that a significant shift was in progress. And, especially with regulatory factors like AC, truck code and trailer code accounted for. Sreerama Rao expressed that customers are ready to accept the significant shift in technology. “Volvo CV drivers have come to love the AMT technology introduced two years ago,” he added. Rao cited an example where customers are waiting to sit with them; to understand how the data can be taken off the truck using telematics, and how it will help them to get more out of their trucks. “The increase in features,” averred Rao, “is helping customers conduct their business efficiently.”

Manufacturing shift

Ruling out the challenge of manufacturing shift, Sreerama Rao said that there is a long way to go when it comes to understanding the business of the customer, and what will make value for him. “The interface between the industrial system and customers is where there is a scope for improvement,” he added. In respone to Ramakrishnan’s query on hybrids, Mehta averred that costs are going up, and the gap between conventionally powered CVs and hybrids is reducing. “To arrive at a time frame would be dangerous. The situation today is such that it will happen faster than anticipated. The progression is geometric. Little things are adding up to make a big chunk,” he mentioned. In view of the proliferation of hybrids and electrics, Chawla stated that the oil industry will have to adapt; that such vehicles also need lubrication. He added, “The trend (for hybrid and electric vehicles) is not going to be very high in the next 15-20 years it looks like. The space to charge, the cost of battery packs, battery space on the vehicle are some of the challenges that will need to be dealt with. Tests are on, and such vehicles will proliferate to an extent. It is a challenge, and we have to be ready.”

The future

In response to a question by Ramakrishnan on CV industry growth over the next four quarters, and the next two-to-three years, Ravi Chawla expressed that demonetisation may have led to a slight drop, consumption is up once again. “CV oil demand fell by 25 per cent and picked up momentum once again in January 2017,” he added. Defining the trajectory as positive, Chawla stated that segment shifts in CVs will take place, and the hub and spoke model will redefine itself. Expressed Sachdeva, that the industry overall will be one-to-two per cent plus this year as compared to the year before. “The first quarter of FY2017-18 will witness under buying as people wait for GST to play out. Second quarter will be lost in confusion. Even if the industry achieves a single digit growth will be good,” he added. Echoing Sachdeva’s sentiments, Venkatraman mentioned, “The momentum to make hybrid and electric CVs viable is necessary, and despite the presence of FAME scheme and getting potential players to set up protos.” According to Venkatraman, next year will see a rise in momentum of hybrid and electric CVs.” STUs, he said, are looking to retrofit. In his concluding remarks, Mehta stressed upon the continuation of movement to higher tonnage CVs, and towards lower tonne per kilometer in terms of cost. “If GST would lead to a postponement in purchase,” he said, “the good part is the scrappage policy, which will kick off a different ball game in terms of replacement demand.” “Growth in ICVs and tractor-trailers will follow a clear distinction between highway movement and secondary transportation. Consolidation in freight will happen. SCVs will play a tertiary role as rural demand goes up. There will be a movement toward higher tonnage in every CV segment,” signed off Mehta.

Trading Cvs

Specialising in vehicle transactions, Shriram Automall India Limited is expanding its operations on the back of good growth.

Story & Photos by: Ashish Bhatia

Shriram Automall India Limited (SAMIL), a 100 per cent subsidiary of Shriram Transport Finance Company (STFC), has turned six. Providing a platform to purchase and sale pre-owned vehicles, CVs and equipment, especially through organised and transparent bidding platforms, the company is looking at expanding its operations. Conducting ‘physical’, ‘online’, ‘one-stop classified’ and ‘private treaty’ transactions towards the purchase and sell of pre-owned vehicles, the company, to mark six years of its fruitful journey held 60 bidding events simultaneously recently. The bidding events were held on one single day, and across all the centres the company has in the country. In what could be termed as a display of high level of synchronisation, bidding events were simultaneously held at Shriram Automall’s centres in Andhra Pradesh, Tamil Nadu, Karnataka, Maharashtra, Madhya Pradesh, Kerala, Odisha, Haryana, Bihar and Uttar Pradesh. Claimed SAMIL sources that over 5000 vehicles and equipment were auctioned on that day. These were valued at over Rs.100 crore. Auctions at SAMIL are a part of a systematic process that calls for interested people to register with them. Only those who have registered are allowed to participate. Commissioning the 66th mall at Agra to commemorate six years of the successful journey, SAMIL is working towards expanding its reach by introducing a mobile app, ‘MySAMIL’. Making it to the ‘Limca Book of Records’ as the ‘largest platform for acquisition and disposal of pre-owned vehicles and equipment’, and for ‘conducting highest number of physical bidding events in a single day’, SAMIL, according to Sameer Malhotra, Chief Executive Officer, Shriram Automall, has in a short span of time become the most trusted brand for all leading OEMs, banks, NBFCS, transporters, leasing and rental companies, vehicle aggregators, dealers, contractors and individuals. It is a brand that they look up to, to dispose their pre-owned commercial vehicles, construction equipment, farm equipment, passenger vehicles, three-wheelers and even two-wheelers.

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A visit to SAMIL’s centre at Panvel revealed that there were 155 vehicles listed for auction. Over 152 bidders registered for the event. Over 80 vehicles went on the block, and were successfully traded. The total transaction value according to SAMIL sources was in excess of Rupees-two crore. For all the centres combined, SAMIL transacted vehicles and equipment worth Rs.50 crore in that day. A new high for a single day business transaction according to Malhotra. Braving the harsh weather, and rising temperatures, indicating the onset of summer, Goldy of Ulhasnagar-based Shiv Shakti Transport, came to the event to buy a good used truck to add to his fleet of 12 trucks. Claiming to be a regular visitor, Goldy said that the number of CVs auctioned at the event, whenever it was held, were good. While SAMIL sources claimed that the auction is held twice every month, Goldy expressed, “ The maths behind an eight year old Tata truck would be an opportunity to save to the tune of Rs.18 lakh on a truck.” This truck, at the previous event, did not sale, he mentioned. If Goldy could have the truck for Rupees-six lakhs, financed 100 per cent by STFC, against a price of Rs.24 lakh for a new truck, it would amount to a good deal of saving. There would be little liability in the short term. Drawing attention to the lucrative nature of pre-owned vehicles, Goldy averred, “A price depreciation of Rupees-two lakh kicks in every year. A brand new truck thus amounts to a loss of Rupees-one lakh on its valuation the moment it is bought.” “In the case of this truck, I can invest in repairs to get to a good running condition if the need be,” he added.

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Milind Chauhan operates a tourist car company called Amit Travels, and is based at Dahisar in Mumbai. He came to the auction to buy a tourist passenger car with the intention to earn a good profit by reselling it to a rural buyer in the short term. Chauhan kept a close eye on the condition of cars being auctioned, aware of the fact that a worn out battery or a need for major repair would lead to a big cut in his intention of earning a profit from a resale. Mentioned Chauhan, that it is often that the seller hasn’t done the mandatory ‘fitness passing’ of the vehicle, and would result in an amount of expenses for the buyer. “If you are careful, and aware of what to look for, you could end up with a good deal.”

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Bidding process

Of the four distinct channels used to bid at SAMIL – physical bidding, online bidding, private treaty and through a one-stop classified kiosk, it is the physical bidding channel that garners 90 per cent of the business according to Umesh Govind Revankar, Managing Director & Chief Executive Officer, STFC. “Over 90 per cent of the business comes through the ‘physical channel’. The ‘kiosks’ haven’t added much to the volumes, and we are slowly looking towards tapping the mobile segment, he averred. The mobile application is said to facilitate participation in live bidding events, submission of proxy bid for vehicles, digital payment options, customer registration and uploading of KYC documents apart from notifying the customers of the latest developments in the company. “In Classifieds, we haven’t really invested too much. It is a medium that needs substantial investment, both in terms of technology, upgradation and up-keep,” he mentioned. Revankar averred that his company is looking at diverting its profits towards technology addition going forward. In ‘private treaty’, SAMIL negotiates deals as a mediator, between the buyer and the seller. This channel is exclusive to big ticket clients, and accounts for few select transactions for the company. The ‘physical’ bidding process highlighted a medium that facilitates seamless transactions. Especially when one considers the value additions like easy finance, refurbishment, valuation, documentation, and insurance.

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Stating that there is an urgency to replace an existing vehicle with a more efficient one as fuel prices are rising, Revankar opined, “The need for efficient vehicles is creating a demand for used vehicle transactions.” SAMIL, in the next financial year (FY2017-18) is looking at 30 per cent top-line growth. In the long-term, the company is looking at doubling the number of centres from the current 64 to over 150. To do so in a sustainable manner, and with good revenue to support healthy growth, the company is looking at a franchise model.

Umesh Govind Revankar, Managing Director & Chief Executive Officer, STFC

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Q. The year 2017 marks Shriram Automall’s sixth anniversary. How has the journey been?

A. The plan initially was to give our customers a reasonable choice to buy a vehicle at a fair price. We are a used vehicle finance company in the form of Shriram Transport Finance (STF) afterall. This would improve our valuation expertise. And, this is how we discovered the actual used market price even though we had the valuation expertise for used vehicles. For the customer it was a matter of choice; for us, it amounted to a learning opportunity. Truck buyers physically inspect the vehicle before buying it. This led to the formation of this business actually. We started with trucks and then diversified into passenger vehicles. We have to our credit the auction of two-wheelers too. We have also done some gold auctions apart from being present in properties (real estate) as well. Credit of this achievement should go to the relationships we have fostered over the years. We began working closely with corporate clients to sell their repossessed vehicles. Corporate banks wanted other services. This led us to enter into other areas of business. As far as the customer is concerned, we still have around 50 per cent of the business turnover coming from vehicles. Customers walk in a day or two prior to the auction, and park their vehicle in a bid to get a fair price. They are unable to get a fair price when they deal with a broker or a dealer. It is often that they are not aware of the fair price. Our platform helps them, to get a good price. The customer can change his vehicle, increase or decrease the price by gauging the pulse of the customers at the auction. We have around five lakh bidders. Many of these could be one time buyers. They come to the auction, buy and sell. We thus have sellers as well as buyers coming to us.

Q. How has the used vehicle and industrial equipment segment evolved in your opinion?

A. We are increasingly seeing participation from manufacturers. Imagine a transition from BSIII to BSIV, and there are some vehicles which they will not be able to sell. They have to find a way to sell these vehicles. It also happens that some manufacturers resort to placing their existing inventory for sale. There are those that encourage their dealers for buying and selling. Dealers accumulate old vehicles, and take part in our auction. We thus have customers that include manufacturers, banks, other companies, dealers and individual truck operators. Our preference is to sell to the customer directly. We prefer a B2C business model over a B2B business model. The intention behind this is to be able to finance the customer and build a relation with him. The challenge is in documentation. Whatever vehicles we try to gather from individuals or corporates, we organise their documents for a smooth title transfer. Not everyone does this. Some corporates and banks pose a big challenge for us due to the lack of proper documents. We always prefer a vehicle with documents, and are thus able to fund the buyer as per his requirement.

Q. What are the key milestones the company has achieved?

A. A key milestone for us was when we partnered with banks in the second year of our operation. We signed up with one or two banks. Now, almost all banks have a relationship with us. The participation of almost all the banks makes us an ideal platform. We are able to cater to the needs of banks, individuals or institutions. We are, in terms of numbers, having a quarterly revenue of Rs.150 crore from the Automall. That is the top-line. We are making a profit. This year, the profit margin will be around Rupees-eight to Rs.10 crore. Net profit was not something that we consciously targeted. Our aim was to increase the revenue of the company. The figure of Rs.150 crore would be a good milestone therefore. We should soon be able to double it. The growth that we expect from Automall is 40 per cent on the top line. The bottom line can vary depending on the challenges, including the varying operational expenses. We would like to incur more expenses now on the business. Our investment here after will be into technology. The aim is to make people participate through their mobile phones. They would not be required to be physically present at the auction. The customer will be able to see the live stream of the auction, and participate. He could alternatively visit any of our branches to view the live-stream and participate. In six months, we should be able to make this possible.

Q. What are the key focus areas in terms of finance that you are looking at?

A. We never looked at this business as financial in nature. The basic idea was, and is to support customers; to help them buy the right vehicle at the right price. We have achieved that. As I said, we expect the top-line to grow at a rate of 30 to 40 per cent annually. We will additionally look at increasing the number of centres. We have 64 centres as of now. We would like to take them to 150. We have been operating on properties that we have leased. We would now want to convert to a franchise model.

Q. How has the strategy to diversify from just selling used commercial vehicles panned out?

A. We are happy with the progress we have done. We have established a significant rural presence. This has helped us to finance tractors and vehicles aimed at rural markets. We added passenger vehicles due to the coming of cab aggregator business models like Ola and Uber. The presence in different segments of used vehicles has helped us to cater to the differing needs of our customers.

Q. What is the contribution from each segment that you operate in; from Shriram Transport Finance Company, and from Shriram Automall?

A. Commercial vehicles still dominate. The share from transportation (small and big trucks combined) is about 70 per cent. From passenger vehicles, it is about 25 per cent. From farm equipment, it is around five per cent. As far as the Automall business goes, passenger vehicles contribute 35-40 per cent. We expect passenger vehicles to contribute more than 50 per cent going forward.

Q. What was the effect of demonetisation on your business?

A. We are recovering from the effect of demonetisation. Transactions saw a 30 per cent decline in the third quarter of the current financial year. We are expecting the business to bounce back this quarter. The business of used vehicle has always been cash intensive. People found it difficult to participate. We are yet to understand the impact of Rs.3,00,000 cash transaction limit put by the government. We have to really understand that particular aspect. Once we understand it, we will be able to tell you how things will pan out. As far as the fourth quarter of the current financial year is concerned, it is looking good. We are hoping to end this financial year with good earnings.

Q. What is the short to medium-term and medium to long-term plan for growth?

A. In the medium-term, we should be able to grow 30 per cent on our top-line. That is in the next financial year (FY2017-18). In the long run, we expect technology to play a major role. We will add classified and mobile applications. It will be directly proportional to the money we invest in technology and its implementation. We are bullish on that front. We expect to grow very fast in the next three to four years. The last quarter of this financial year is expected to display demand on the back of pre-buying. From April 2017, BSIV emission regulations will come into force. The implementation of regulations will negatively impact the demand in the first quarter of FY2017-18. The second quarter of the next financial year will be uncertain due to the implementation of Goods and Services Tax (GST). The next six months may not be good for new vehicles. Demand for used vehicles is likely to be high. Demand for Rabbi crop in April-May will be high. This is likely to induce demand from the rural sector. Depending on the monsoon, post the October 2017 quarter, demand from all segments including CVs and tractors is expected to be strong.

Q. How are different channels contributing to increase Shriram Automall’s revenue?

A. The physical channel contributes 90 per cent of the business. The ‘kiosks’ haven’t added much to the volumes. We are slowly looking to tap the mobile segment. In Classifieds, we haven’t really invested much. It is a medium that needs substantial investments, both in terms of technology upgradation and up-keep. We would like to divert our profits towards adding technology.

Q. What regions are you looking at to expand Shriram Automall network?

A. We have been strong in the western region. It is the northern and eastern region where we want to strengthen our presence.

Q. How do you look at the participation of banks and NBFCs?

A. Banks have been supportive of used vehicle equipment business segment. NBFCs are not, barring a few. This could be because they feel that that we are competing with them in terms of financing. Over a period of time, they, I am certain, will see the advantages.

Q. With regulations like fuel emission norms, CAFE, Bharat NCAP and the scrappage policy, do you see a disruption in CV sales?

A. These factors will only enhance the demand for used vehicles. There is an urgency to change the vehicle and move up to an efficient one. Fuel prices are going up. Regulatory factors will create demand to sell old CVs and buy new ones. In either case, finance needs will go up. This will help us. We would like to give a helping hand to the customer. In terms of scrappage, as of now no legislation exists. Except Delhi there is no other state that has banned 10 year old CVs. The cap is at 15 years. The government will have to compensate the people owning the asset in case of the scrappage scheme. Till such time re-registration of vehicles will hold us in good stead.

Q. What are the key trends from the global used vehicle markets that will find their way to India?

A. India being a very unique country, one cannot replicate trends from other markets blindly. I have tried to understand the Chinese used vehicle market. Even that market is not moving in a structured manner when it comes to commercial vehicles. However it still remains the only country in my opinion that we can learn from. Markets like USA and Europe are way different. Their entire ecosystem is different. India has more individual owners and small fleet operators. Entrepreneurship spirit is high here. People wanting to own a business is high here.