Its about tippers

Q & A

Siddharth Kirtane,

Head – Sales & Marketing, Value Trucks, Mining Business, VE Commercial Vehicles Ltd.

Interview by: Ashish Bhatia

Q. How has the Pro 6000 tipper series evolved in line with the BSIV norms enforcement?

A. The Pithampur plant has been exporting EuroIV and EuroV engines to Volvo Trucks and other (Volvo Group) brands since four years now. In terms of technology, Eicher engines were upgraded to comply with BSIV emission norms much before the respective norms came into effect. In the case of Pro 6000 and Pro 8000 series tippers, we are using Selective Catalytic Reduction (SCR) technology to meet BSIV emission norms. At VE Commercial Vehicles (Eicher), we have already sold 100 units catering to different applications and across segments.

Q. Was it just the inclusion of SCR technology that made the trucks BSIV emission norms compliant?

A. We adopted globally proven SCR technology to meet the BSIV emission norms. SCR technology is one of the most advanced and fuel-efficient technologies that can reduce diesel engine emissions (PM and NOx to near zero levels). In the SCR system, the exhaust gases are treated outside the engine and in the exhaust system. This paves the way for the engine to run in an optimised manner, and leads to enhanced reliability and significant improvement in fuel efficiency as compared to a BSIII engine. The SCR after-treatment works such that a liquid-reducing agent is injected through a special catalyst into the exhaust stream of a diesel engine. The reducing source is usually automotive grade urea, also known as AdBlue or AUS32. AdBlue (urea) sets off a chemical reaction that converts nitrogen oxide into nitrogen, water and tiny amount of carbon dioxide (CO2), which is later expelled through the vehicle tailpipe.

Q. Have the prices risen due to the upgrade to BSIV emission norms?

A. Compliance to BSIV emission norms means the exhaust gas emitted by the vehicle should adhere to the specified limit (3.5 g/kWh) as per the Central Motor Vehicle Rules. To comply with the norms, certain design and technology changes to the engine, fuel injection system, catalyst, filters, sensors, etc., were necessary, and have been done. We are looking at a five to 10 per cent price increase across the Pro 6000 and Pro 8000 series tippers.

Q. Was there any inventory impact due to the transition to BSIV emission standards?

A. It is not unusual or abnormal to be left with an inventory at a certain point in time. There will always be some inventory in the channel. It is a regular phenomenon – to have three weeks to a month worth of inventory. We were left with around 2,000 units. It will be easy for us to export at least 50 per cent of our inventory and convert the remaining to BSIV standards.

Q. How have you leveraged the synergies with Volvo Group as you export engines?

A. Pro s eries is designed and developed with the Volvo Group processes and technology. It also seeks synergies with Eicher’s frugal engineering abilities and local expertise. The VEDX5 and VEDX8 engines have been designed and developed in collaboration with the Volvo Group, and use the latest Engine Management System (EMS) and after-treatment system.

Q. In terms of customer support, what preparations did you do as part of the move to BSIV?

A. At Eicher, we are constantly increasing and upgrading our service network. In our dealer development program, we create awareness as well as ensure necessary steps are undertaken to increase competency levels may it be the move up to BSIV emission norms or for any other service requirement.

Q. How useful are the customers finding the Eicher Live fleet management solution?

A. The ‘Eicher Live’ fleet management solution offers class leading features with uptime management as one of the core services. It plays a crucial role in providing proactive uptime support to the customer. The uptime services in turn enable the service team to proactively schedule and plan repair and maintenance activities. The truck is thus optimised for higher revenue generation. The proactive services enable us to identify faults generated by the vehicle and schedule preventive maintenance. This leads to fewer unplanned stops. The service team is also better prepared to attend to the customer needs. In an unlikely event of breakdown assistance, the service team is well prepared. Availability of specific diagnostics information (fault codes) enables it to arrange for the right parts, tools and the right technicians to minimise downtime. The dynamic service reminders in case of mining trucks ensure a change in vehicle utilisation in-line with the customer needs.

Q. How was the performance of Pro 6000 and Pro 8000 series in FY2016-17? What is your expectation for growth in the current fiscal?

A. With Pro series tippers, in the mining segment, we increased our market share to 21 per cent in FY2016-17. Growth has been phenomenal till date, and in-line with the robust performance of the tipper segment. The Eicher market share stands at five per cent across different tonnage, power range and segments (applications). Our market share varies between 10 per cent to 12 per cent. The tipper segment drove heavy commercial vehicle sale last fiscal. The Total Industry Volume (TIV) grew by 27 per cent on account of construction, quarry, infrastructure and core sector projects such as road, ports, irrigation, railways and smart cities. However, demand on mining side was little subdued due to lower off-take of coal coupled with skewed demand for cement. In mining trucks segment, we have increased our market share to 21 per cent in FY2016-17. Eicher achieved a growth of 12.5 percent in volume terms, at more than 58,000 units against 52,000 units during the last financial year. The industry, in comparison, grew four per cent. Over the short-term, we see some challenges, and mainly due to pre-buying and customer postponing the decision to purchase due to the need for clarity of taxation upon GST implementation. Over the long term, demand is expected to pick up on account of the on-going infrastructure development initiatives, stricter enforcement of regulatory norms especially related to vehicle length for certain applications and the overloading ban. We expect to witness a growth of eight to 10 per cent. With wide range of tippers (from 16- to 31-tonnes), and tailor made offerings for various segments (applications), we are well placed to tap the rising potential in the construction and mining (tippers) industry. With the massive infrastructural push announced by the government for the financial year 2017-18, and the highest ever budget allocation of four-trillion across infrastructure sectors announced in the union budget, we expect the tipper market to touch 65,000 numbers in FY2017-18. We will continue to strengthen our position in the heavy-duty truck market,

Q. What are the export volumes like for the Pro 6000 and Pro 8000 series tippers?

A. Our exports volumes have improved over time. In FY2016-17, we recorded the highest ever export volumes at over 8000 units as compared to the export of 6512 units in the last fiscal. We command a strong presence in South Asia, and in some countries in Africa and the Middle East. We plan to leverage the distribution network of Volvo Group in Africa, the Middle East, South East Asia and in Latin America to drive exports. The new products that are being revealed now will also be adapted for export markets.


The tipper segment drove heavy commercial vehicle sale last fiscal. The Total Industry Volume (TIV) grew by 27 per cent.

Defining Standards

Q & A

Rattan Kapur,

President, ACMA

Interview by: Anirudh Raheja

Q. What will be the effect of BSIV emission norms on the industry?

A. As far as BSIV emission norms are concerned, I would say that the industry is ready. The problem of fuel availability has already been addressed by the government. Most Indian companies have already adapted to BSIV technologies. BSIV, I feel, is good for India. The industry is ready for it too. The 2020 deadline for BSVI emission norms however seems too optimistic.

Q. Global players are expanding their base in India. What role will the Indian auto components players play?

A. Not only is the Indian market opening up, the world is also increasing its shopping list from India. Over a period of time, India has proved to be a market that has matured to a great extent on the quality aspect. The acceptability of Indian products has been rising even in difficult markets like Japan and Germany. It will be a matter of time that the whole world accepts us. Exports will be an important part of the business plans of most companies. As of date, out of our total exports of USD 13 to 15 billion, nearly 25 per cent is exported to the United States of America.

Q. What led to the publication of ACMA study report?

A. The study report reflects on the growth trajectory of auto aftermarket in the country. As per the study, the Indian aftermarket stands at around USD eight billion, and is expected to surpass USD 13 billion mark by 2020. As per the Indian Government’s Automotive Mission Plan 2026, the set target is to reach USD 32 billion. We are looking at the aftermarket to scale up in the next few years. I think it is becoming a part of everybody’s portfolio. It is also proving to be a de-risking portfolio, and is thus an important market. The aftermarket is here to stay.

Q. The unorganised part of the aftermarket is sizeable. How does ACMA look at it?

A. There are two aspects to it. A big chunk of unorganised market reflects upon an entrepreneurial spirit. As long as these companies produce genuine, safe and good quality products, there should not be an issue. The challenge is when unorganised players get involved in the production of substandard products. This largely happens, and in part because India is a highly price sensitive market. At every price point, you can find a market segment. Unfortunately, India has not mandated the standards of products to be sold in the aftermarket. If standards were mandated, there would be a mechanism in place to check the standards. The products would have to comply to those standards. When supplying to the vehicle industry, component manufacturers have to adhere to the auto industry standards. Nobody will take the risk of making the vehicle unsafe. We have been talking to the government for three years now, to make standards a mandate for the aftermarket. The government is serious. If one looks at the new Motor Vehicle Act, much stress is laid out on safety. We are in dialogue with the government.

Q. Counterfeiting is hurting the auto industry. How successful have you been in curbing it?

A. We did a study five years ago. The counterfeit market was as high as 36 per cent. It has now come down to five per cent. In the earlier study, counterfeiting was used in a broad sense. We have tightened the definition of counterfeiting. Counterfeiting is truly spurious as per the tightend definition, and accounts for five per cent. Consider the earlier 36 per cent, and the rest of the 31 per cent accounts for substandard products. The proportion, when one looks closely, hasn’t changed. There is thus a long way yet to curb substandard and counterfeit products.

Q. You spoke about defining the standards. How does that reflect on the role of ACMA?

A. It is essential to understand that the market is rapidly evolving. Our understanding of the market is also evolving. Earlier, the term counterfeit included substandard products. Those that are available with small retailers in markets like Paharganj and Kashmere Gate. Counterfeit now refers to fake or spurious products strictly. Products that do not comply with the Copyright Act, and with the IP Act. At this juncture, it may be worth mentioning that China is also dumping products into India. Curbing this is possible by mandating standards. It should be made necessary to show proof of compliance to standards at the customs. The raids we conduct to flush out spurious spares are collective raids. There is a committee in ACMA where all the member companies come together. ACMA conducts raids on their behalf. It is paid for by the members. ACMA has been conducting raids for several years now.

Q. What was the effect of demonetisation on the auto components industry?

A. There are some industries that have survived immense pressure. The four wheeler, two wheeler and agricultural equipment sector lost a big chunk of revenue in terms of sales from rural areas. Major transactions there take place in cash. Demonetisation led to buyer shrinkage. In the long term, demonetisation will go a long way in eradicating industry malpractices. Various sellers sell products at cheap prices in cash and disappear. It is difficult to catch them. Demonetisation will make it difficult for such transactions to take place. Trace-ability will rise when they are mandated to raise invoices. It would be much easier to catch these people, and to regulate the market. In many instances, they end up killing the taxation structure. They end up killing the industry too. Demonetisation has been accepted in the market.

Q. What was the effect of demonetisation on the aftermarket?

A. From an aftermarket perspective, the effect of demonetisation was based on the nature of transactions carried out. In the North, cash transactions are over 50 per cent. In the South, they are less than 20 per cent. Depending upon the amount of cash transactions, markets reacted differently. They were affected differently. Improvement in cash flow should improve market sentiments. I don’t think there are any more issues pertaining to market vibrancy. It is back to normal. The government and bankers today know who are doing cash transactions. At ACMA, we are pushing for digital transactions. We organised seminars at (ACMA) Automechanika to promote digital transactions and epayments.

Q. How do you look at the aftermarket in the eastern region of the country?

A. It is a vibrant market, especially from a commercial vehicle point of view. The hilly terrain leads to more wear and tear of vehicles. This has an effect on maintenance. East India market is set to become big with Assam as the focal point for warehousing. All the material from across India will move there before being transported further to various surrounding regions including the export markets of Myanmar and China.

Q. What change will GST bring about?

A. Products travel across various states. Much paperwork is involved in terms of sales tax and excise duty. GST will eradicate this in a big way. We as an industry have been struggling for long to conduct raids. Almost 500 raids are carried out every year at the retail level. It is possible to reach the distribution level but not the manufacturer level. With GST, it will be possible to reach the level of the manufacturer. My only hope is that GST maintains a level of 18 per cent or less. Above 18 per cent, it will hurt the industry, and may lead to counterfeiting and price rise. Once prices go up, the tendency to under cut and under sell increases. Especially, in the absence of legal papers. We have an abatement on Maximum Retail Price (MRP). Tax is paid on MRP. This abatement will stop once GST comes in. It is tax paid on MRP that makes a product expensive. In a price sensitive market like this, where there is a gravitational pull towards products, lacking quality consciousness, the two wheeler market looks the most vulnerable. If the product becomes more expensive, it will have an adverse impact. This will be led by the two wheeler market, and followed by the agricultural equipment market, commercial vehicles, and passenger vehicles.

Q. What are the programs and drives ACMA conducts?

A. ‘Safer drives’ is a big campaign we conduct. During the safety week of the Government of India, we participated for the first time. We held seminars, walkabouts, and campaigns. Even at (ACMA) Automechanika, we had a pavilion for safer drives. We are now consciously pushing people to use safer products. We also held a classroom for mechanics. Mechanics in batches of 30 were trained to use safety products. We are also building a digital catalogue of all aftermarket products. When one needs a product, he or she can send a query on the ACMA website. It will enable us to help them find a genuine product at a genuine price.

Q. Is the Cluster program a part of it?

A. The cluster program is completely different. It is about building competency in manufacturing. It intervenes at the shop floor level to make sure that requisite training happens at all levels to minimise defects. A part of this program concentrates on zero defect. To create awareness for safer and quality products, we constantly conduct road shows, take up kiosks in vibrant automotive hubs, and get company teams to educate people about spurious products. .

Q. What role does ACMA play in connecting suppliers with OEMs, and improve the ecosystem?

A. We try to find out from the OEMs what their requirements are. We talk to them. We consult them for visiting as delegates. We introduce our member suppliers, and help to establish a communication link, including inking of technical pacts. Such activities helps boost the technical capabilities of local manufacturers while understanding the needs of OEMs. We execute such activities for tier 1 suppliers with OEMs, and with tier 1 and tier 2 suppliers. There is a need to handhold them to ensure an improvement of the whole ecosystem. We have already developed a strong base of 80 tier 2 suppliers in Gujarat who are the preferred choice of OEMs.

Q. Does ACMA also engage with potential investors?

A. An ACMA delegation visited US to meet venture capitalists recently. The delegation reached out to companies developing technologies as well. Four members of ACMA have shown interest to engage with the venture capitalists. This is towards investing in new technologies. It is for the companies to find the right path.

Q. What is your view on electromobility from an ACMA stand point?

A. Looking at the issue of pollution, the future lies in electrification of vehicles. There will be need for technologies like quick charge. There is already a talk about setting up charging points, and building the necessary infrastructure. Solutions are being found to overcome challenges.

“My only hope is that GST maintains a level of 18 per cent or less. Above 18 per cent, it will hurt the industry, and may lead to counterfeiting and price rise.”


Counterfeit now refers to fake or spurious products strictly. Products that do not comply with the Copyright Act, and with the IP Act.

Tyres for CVs

IMG_2757 copy

Q & A

Arun Kumar Bajoria,

Director & President – International Operations, JK Tyre & Industries

Interview by: Anirudh Raheja

Q. Part of Tata Motor’s Prima T1 racing initiative from the start, how would you term your association with the CV major?

A. JK Tyre has been manufacturing tyres for four decades. That is a fairly long duration. We have 12 manufacturing plants, out of which nine are in India, and three are in Mexico. We have a work force of 15,000 tyre specialists in various disciplines, starting from tyre engineering, tyre designing, prototyping, manufacturing to testing. We have built a good brand value, and Truck and Bus Radial (TBR) is a segment where we are market leaders for the last two decades. We pioneered radialisation with steel belted radials in the country. We achieved the distinction of manufacturing 10 million TBR tyres recently. Having invested significantly in terms of product development to produce the right tyres for the right application, our association with Tata Motors starts at this stage. Being involved in motorsports activities for long, and being a market leader, we have the right technology to develop high performance tyres. Tyres that were never ever built in India, we were able to build. We delivered the first set of racing tyres to Tata Motors in just 50 days. Season-after-season, we have been working with Tata Motors to enhance the tyres in terms of the changing requirements and parameters. Our tyres have already been tested for speeds of over 160 kmph. Our ambition has always been to engineer the product to perform at least 20 per cent higher than the expectation.

Q. How have the tyres evolved in the process?

A. There are three things. Firstly the size is different, which is 315/70 R22.5 designed for speeds up to 160 kmph. This is against prevailing average size of tyres, which is 295/80 R22.5, and whose average speed is 140 kmph. We have changed the compounds to suit the racing style; to suit higher speeds, cornering and braking. The pressure that the tyre shoulders undergo during racing, is where tyre design plays a vital role. The tyres are thus designed to offer better grip, cornering abilities and traction. Especially when one considers the fact that the forces acting on tyres quadruple when cornering at speed. The tyre needs to withstand much pressure to perform.

Q. How do you see the new, 1000bhp Tata racing Prima from a JK Tyre point of view?

A. For us, it signals a move to higher levels of speed. To us, it means more work. It is more for testing as of now. With nearly two and a half times the power than what the current racing Prima has, the 1000 hp racing Prima shows Tata Motors’ technical prowess. In other countries, racing trucks are powered by 750 hp to 800 hp engines.

Q. How does motorsports align with the company philosophy?

A. Simply put, motorsports is our vehicle to build the brand. We started with small vehicles like Go-karts. We have had racing champions like Karun Chandhok and Narain Karthikeyan. Motorsports has been the test bed for our tyres. We have been testing our own tyres with our home grown drivers. We have reached a level where we can develop capable and safe tyres that perform at their best, and in the toughest conditions. The hardwork of the team at JK Tyre has helped to build the brand.

Q. What is your opinion about CV radialisation?

A. Radialisation in the TBR segment has crossed 40 per cent. A decade ago, it did not even amount to single digit figures. The pace of radialisation is fast. This is because of two associated advantages – high initial tread mileage and fuel saving. As compared to bias ply tyres that can clock between 70,000 and 80,000 km, a radial tyre can do 1.2 lakh km. If cared for, and not subject to overload, radial tyres in CVs can go up to 1.4 lakh km too. TBRs offer better mileage of up to 10 per cent.

Q. How are you educating truckers about the TBR advantage?

A. We carry out measures to educate truckers about the advantage of using TBRs. The initial investment is high, that of 22 per cent almost over a bias-ply tyre. The ability to deliver higher mileage however offers significant pay back. If you take Cost Per Km (CPKm), the initial investment is recovered in a very reasonable time. As for the measures we carry out; we hold camps and activities. We train drivers, and hope to continue doing it in a structured manner.

Q. What do you think is the reason for fall in production of tyres by 20 per cent in the last one year?

A. One of the main reasons are the headwinds caused by demonetisation. Things slowed down for a few months. I am hoping things to start improving in the first quarter of FY2017-18. Tyre production at JK Tyre has not fallen. It may remain flat.

Q. Demonetisation affected Chinese tyres influx. Has that helped the Indian tyre industry?

A. As we see it, those tyres were coming in through ‘Hawala’ transactions, and were subject to a lot of malpractices and malafied intentions. Tyres were often priced below the actual raw material prices. No guarantee was offered. Taxes were evaded. From a figure of almost 50,000 tyres per month, the sale of Chinese tyres has gone down by 50 per cent almost. Though there has been a bounce back, I think that the tyre industry will soon enjoy better times.

Q. How do you look at dumping of tyres in India?

A. It took just 90 days in the United States to impose anti-dumping duties on OTR tyres from India. We have been requesting the Government for long to impose anti-dumping duties on Chinese tyres. The Chinese have been dumping tyres at un-remunerative prices. There is too much under-hand and over-hand invoicing. Apart from compromising safety, the tyres signal a revenue loss to the Government due to tax evasion. The service standards offered are not on par with organised players. Buyers are taken for a ride because they get tyres at a much lesser cost.

Q. CVs are modernising. How would that affect the tyre industry?

A. Tyre manufacturers are working on tyre monitoring devices that are fitted to wheels. We are already testing a TPMS product and technology. We feel that it is going to be an important element. The TPMS that we are working on, will give deflection figures of tyres on the dashboard. Also, when the Initial Tread Depth (ITD) changes. In high performance cars, if the tyre pressure goes down, the same gets reflected on the dashboard. In India, which is a very price sensitive market, such technologies are not cheap as of now. They will not be until they are produced in bulk. One TPMS unit in one tyre will cost Rs.280 approximately. What makes TPMS important is because of its ability to influence fuel efficiency. If the tyre is monitored well, which the TPMS helps to do, fuel efficiency increases. In the long run, tyres will have electronic components that will benefit the end user.

Q. Has JK Tyre associated with a TPMS manufacturer? There have been aftermarket offerings.

A. There is no OEM offering in this segment. We are developing it (TPMS) on our own. We have specialists from different spheres, and they visit international exhibitions to understand the latest trends. We are in discussions with two largest manufacturers involved in TPMS. As you may be aware, these are constantly developing procedures, and one needs to keep looking for devices which will be beneficial to increase tyre life.

Q. Automation and operating speeds are rising. Amid this, how do you look at CV tyres to perform?

A. Trucks will continue to change and modernise. BSIV emission norms are here. This will lead to an escalation in price by up to Rupees-two lakh. People will have to appreciate it. The government is pushing for second legislation that will say no to overloading. This is linked to the government’s push to build infrastructure and roads. Roads that are expected to last for a decade will be consumed in two years due to overloading. The regulations will need to be implemented and executed. Consider the case of air-conditioned truck cabin. He (the driver) must have a comfortable cabin. Manufacturers are already developing modern cabins, but price is a constraint. Such developments will continue to evolve. They will put an additional demand on tyres. Tyres will need to be upgraded constantly, both in terms of life and economy.

Q. Rubber prices continue to fluctuate, and pose procurement challenges. How do you look at it?

A. It is a big challenge. We used to buy rubber at an average price of Rs.110 per kg. We now buy at Rs.160 per kg. The demand of rubber in India is almost 10.5 lakh tonnes. Production of rubber in India is not more than 6.5 lakh tonnes. To meet the 10.5 lakh tonnes demand, considerable amount of rubber is imported. Imported rubber is expensive than the rubber procured in India. What makes it sensitive is the fact that we have been requesting the government to work on an inverted duty structure. To import rubber in India, one has to pay as per the tax rate of 20 per cent. The import duty, at the other end, on a finished tyre is nine per cent. This is weird. For the promotion of ‘make in India’, there is a need to protect the local industry from headwinds.

Q. What effect does this have on the production of tyres?

A. Those who are aggressive are not letting the production suffer. One can opt for different avenues like exporting and inventing better tyres. All that energy is however saved and utilised for other, better and more productive activities if a level playing field is available. The USA, which is considered to be a champion of free economy, has imposed 37 per cent duty. It is clear, that everyone tries to protect their own economy.

Q. What effect do you expect GST to have on the tyre industry?

A. I am optimistic about the implementation of GST. Many wrong practices will come to an end. There are various complications due to competition between states that have interstate malpractices today. All that will be regulated to a great extent. I think, it will boost sales.

Engineering & technology


Dr AKJ 8 cabin copy

Dr. A K Jindal,

Head – Engineering Research Centre, Commercial Vehicles, Tata Motors

Interview by: Ashish Bhatia

Q. How has technology evolved at the Engineering Research Centre (ERC) over the years?

A. We have come a long way. Both in terms of technological depth, and areas that we cover, right to the extent of product breadths that we cover. Till 2000, the number of products that ERC was working on were limited. The frequency of new product development was low. This has increased, in terms of output almost asymptotically. Especially in case of large commercial vehicles. The number of commercial vehicle products, like in the passenger vehicle space, have expanded. They have almost doubled. Within the same product space, the number of variants has increased. The days of having a one-fit solution are passe. So, from an ERC perspective, work, both in terms of depth as well as width, has expanded. In 2005, for example, we were roughly 2000 people. We now amount to 4000 people. We also have a lot of external linkages to ensure the capture and incorporation of new technology.

Q. You have laid stress on frugal engineering and local development. How has it worked?

A. Unlike before, we are today creating everything ground up at the plant. We are creating as well as co-creating. In many instances, it is in conjunction with the suppliers. The fact is, everything is being manufactured ground-up.

Q. How do you respond to changes quickly?

A. We maintain agility through different strategies that we have adopted. We are working on a platform approach. We are also working on the re-use of existing basket of components. Over the last four to five years, we have used the platform approach to the hilt. We have ensured that the same architecture helps us to come out with a large number of products. The ‘Ultra’ and ‘Prima’ platforms are examples of this approach. We now want to take it to the next level. We want to increase process agility through modularisation. Rather than to have a discrete set of components, we are now looking at creating modules. In this approach, the entire vehicle is split in 30 to 36 modules. The interfaces between these modules are standardised. As a result when one of the modules requires a change, one doesn’t end up changing the entire vehicle. This helps tremendously in reducing the development time; in reducing the re-engineering of products. This also helps in testing and validation among various other processes. We are converting our Bill of Materials (BoM) into modular forms. We are aiming at a day when the products we manufacture are defined by the customers.

Q. How would these strategies reflect through the 15 new launches and 200 variants you plan to launch?

A. Consider the Ace, SuperAce, Xenon, the entire Light Commercial Vehicle (LCV) range, Ultra, Signa and the Prima, and it will be these seven product families that will give rise to new launches and variants as part of our modular approach.

Q. Does that indicate a change in the tear-down processes at Tata Motors?

A. The format continues to be the same. We first tear-down, and then take the performance footprint. Then, we see how the aggregate engineers will join to take stock of the key learnings. What is changing is the set of requirements. For example, the weight of the vehicles. Earlier, the weight of the vehicle was not a priority, today it is. We therefore have to link everything in terms of its impact on fuel efficiency. Everything has to be measured in terms of the impact on the overall reliability of the system. The major change in the CV space, in the light- and medium-heavy vehicles especially, are the changing requirements of the customers. Customer expectations have undergone a huge transformation. The mindset from a point of view of maintaining it at regular intervals is changing. People are not really keen to maintain or carry out recurring interventions. This is having a big implication on design, and the way we design. The way we look at component design, component testing and their integration. The integration of aggregates. It may be at a micro-level, their severity does not diminish. They are of critical importance for the future.

Q. What challenges do you face to achieve sustainable mobility solutions?

A. I would like to divide it into two parts – emission and regulations. Stress on hybridisation, and fuel efficiency is high. These rank high on the priority list. We have a very clear objective of improving the fuel-efficiency year-on-year. It contributes directly to sustainability. There are other enablers like light-weighting among others. The BSIV emission compliant vehicles will feature high level of electronics. We have an opportunity to fine-tune fuel efficiency. We are looking at five-to-seven per cent higher fuel efficiency than was attained by BSII and BSIII emission compliant vehicles. The target is to outdo it with BSVI. It will all be achieved gradually, and with focus on light-weighting, driveline optimisation, duty-cycle dependent calibrations among others. Our objective is to increase fuel efficiency through all possible means. We are working on new technologies by keeping in mind vehicle aerodynamics, rolling-resistance, etc. Hybridisation can substantially boost fuel economy. Electrification also signals a move towards sustainability. Our aim is to have technology at an affordable cost. We may refer to an European bus in the case of Starbus Hybrid. In the case of electric bus (9 m and 12 m), that does not apply. If the market migrates to a sophisticated bus, we will provide it. If we simply provide a hybrid bus as an electric variant, the costs will escalate to an extent that there will be no buyers for it. Solutions therefore have to be tailored for the market. They have to meet the market’s perceived price points. Both our electric buses are testimony to our efforts to minimise the cost impact en-route to achieving sustainable mobility solutions. We will give a product that suits a particular application of the customer, and at their price point.

Q. What is the thought process behind cross-platform interchange?

A. Engines for instance, at a broad level, are agnostic in nature. How you really integrate them is where the skill lies. For example, Toyota uses its 2.4D engine in a huge number of platforms. Keeping the base the same, how you package is what the entire game plan is all about. It is not necessary that every time we work ground-up.

Q. How is a vehicle deemed fit for its appropriate haulage type?

A. Energy balance of a vehicle is a highly precise study. On an expressway, for example, a bus runs at a fixed speed almost. Braking frequency is less. The portion of braking energy as compared to the portion of overall energy consumed will be small. The driver will cruise at a constant speed, and at an optimum rpm. There is little scope for energy redistribution. When the engine is supplying power, the losses in top-gear include aerodynamic losses, rolling losses (tyres), and losses born out the extent of energy difference between the engine and the axles. Change the engine, and one gains. In the case of an intra-city bus, energy is used in acceleration and braking. Braking makes a substantial portion of the overall consumption. As per an old study, typical of an Indian driving cycle, the braking energy was 24 per cent of the overall drive-cycle, which is a waste. Also, energy is wasted when accelerating and decelerating. It is here that the potential for improvement lies; it is about how that energy could be recovered. Till a few years back there was no knowledge available on this. With a vehicle like the Starbus Hybrid, it is possible to regenerate the lost energy. Recovered energy is fed back to the battery. This energy is used for acceleration. Ultimately, the engine will run on a constant load. This philosophy is extended to all vehicle types where the vehicle drive-cycle is studied. The use of technology is highly cycle dependent. If it is Delhi where a stop is mapped at an interval of one-kilometer, a hybrid bus makes an ideal solution. A cost analysis is necessary if one were to decide if it would be a series hybrid or a parallel hybrid. A series hybrid turns out to be expensive whereas a parallel hybrid has its own set of advantages. The latter (parallel) will be effective when there are frequent starts and stops. Where a reasonable cruising speed is achieved between starts and stops. On roads with substantial straights, a parallel hybrid is most suitable. With less scope of cruising, a series hybrid would fit the bill. A series-parallel on the other does not fit the CV space. It is used in passenger vehicles. The world will eventually move towards electrification. Hybridisation is an interim solution.

Q. With Economies of Scale (EoS) lacking, what timelines could one look at for penetration of advanced technologies in CVs?

A. In the CV space, change in technology is taking place at a slow pace. The CV industry is cyclic, and the renewal rates are longer. Mindsets are conservative. The change in technology in the CV space is therefore slower than that in the passenger vehicle space. There, the renewal rates and technology upgrade rates are higher. Volumes too are far greater. One can very quickly ammortise technological development costs on a large base. In the CV space, the same is not possible.

Q. What are the challenges when it comes to ‘Fuel-cell’ technology?

A. There are challenges, and they are surmountable. In case of the ‘fuel cell’ bus, we had to use welded joints to reduce susceptibility of leakages. We had to use stainless steel – double steel joints, to avoid leakages.

Q. How much progress has been achieved in vehicle control strategy?

A. A lot has been accomplished, and a lot needs to be accomplished. If one wants to model the cell level in a battery to predict the performance for example, it is yet to be finalised. If one wants to predict the performance of a vehicle, it is do-able. It is a function of technology, its maturity, its database internal to the company, or external to the company. Maturity comes slowly, and one has to work towards improving the fidelity of these models. On how they can be made more predictive. Any simulation model today is as good as its validation.

Q. How does the Lithium Titanate Oxide (LTO) cell technology facilitate light-weighting?

A. The most prevalent and safe technology is Lithium iron phosphate (LiFePO4) followed by Lithium Nickel Manganese Cobalt Oxide (NMC), and LTO cell technology. These three have attained a high level of maturity. The shortcoming of LTO technology is the need for many more cells to be put in series to achieve the desired voltage. The good part is, the cycle life is high. In light-weighting context, because of the high lifecycle, one could do away with putting smaller battery packs and in-turn reduce weight. This leads to the concept of opportunity charging, or fast charging as we know it. A 400 kV charger can fully charge a 50 kV battery in about 10 minutes. If 5 kV has been utilised after running on one route and has to be replenished, charging will take a few seconds.

Q. Do you think LNG will cannibalise CNG as an established alternate fuel?

A. It is only the fueling method that changes. We foresee no cannibalisation therefore. Our thought process is that places where CNG was not available will be catered to by LNG. The strategy is to have multiple products for multiple places, and with multiple peculiarities. It is about what is available locally. In my opinion, both will co-exist. The only difference is in the way fuel is acquired and stored. There is no difference between a LNG or a CNG engine.

Q. What are the challenges when it comes to Intelligent Transport System (ITS) modules?

A. The current ITS is basic as far as my understanding is concerned. Bus stands are notified of the bus location, and it is about track and trace. It is good but not complete. The scope of ITS includes overall traffic management and improvement in traffic efficiency among others. Features such as these need to be integrated for the smooth functioning of traffic.

Q. Given the various fronts on which the ERC works, how do you gauge resource requirements?

A. We do not go on a resource shopping spree. What we do is prioritise. We do gap analysis to ascertain the area with a bottleneck, and how we can address it. We call for external help if the need be; from entities like Tata Technologies Limited (TTL) and others. We indulge in work-share with our suppliers too. This helps us to optimise our resource utilisation.


One can very quickly ammortise technological development costs on a large base. In the CV space, the same is not possible.

Making a strong business case

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Q & A

Joerg Mommertz,

Chairman & Managing Director,

MAN Trucks India Pvt. Ltd.

Interview by: Bhushan Mhapralkar

Q. What did you think of the economic changes that took place when you took charge of MAN Trucks India?

A. The transport business is a big contributor to the GDP. It and the commercial vehicle business are an early indicator of which direction the economy is moving in – if it is slowing down or picking up. I think that the development, which took place when I took charge would have a short-term effect. I believe that India will be on course to be the most sustainable commercial vehicle market in the coming years. For us, India is one of the most dynamic markets. Look at Europe, and the markets there are quiet stable and saturated. There are some ups and downs, but there is no course. In India, we see a trend where the whole CV market will grow in the future. Having managed worst crisis – some central eastern European markets in 2008 saw a decline of 99 per cent, the developments here are of a short-term nature. I was responsible for Baltic markets as part of Central East Europe, and there was no market anymore. There was no market for two years. Considering this, I am very optimistic about CV market growth in India. After having been in the CV industry for long, I have come to observe that the CV market is cyclic the world over. The cycle lasts for five-to-six years. One has to be flexible to adapt to the cyclic nature of the market.

Q. What synergies has the formation of Volkswagen Truck and Bus Group achieved? How is it influencing MAN’s Indian operations?

A. The formation of Volkswagen Truck and Bus Group is part of Volkswagen’s worldwide strategy. It is part of the consolidation process. MAN is strong in Europe; also Scania. Volkswagen is not a complete CV producer. In Europe, it makes light CVs only. The strategy therefore was to establish a worldwide competitive CV portfolio that spanned from an LCV to a heavy-duty vehicle. The CV Group has a significant share of bus business. The synergies achieved include purchase, R&D and production on the inside; outside we are completely independent. In India, we don’t have any link to the Volkswagen (Indian) operations; we don’t have any link to the operation of Scania in India. Scania for us, as in a lot of markets, is a competitor. The model replicates Volkswagen’s passenger car business. The synergies are resulting in cost savings. A recent example of how it is working for MAN is that Scania and MAN are sharing a production facility in Russia. This is resulting in significant cost saving without touching the products of either CV maker, the customer approach or the product blend. The Latin American trucks of Volkswagen brand belong to MAN. The company that produces the heavy-duty trucks is MAN Latin America. Volkswagen sold their CV brand to MAN. In India, we are looking at areas where synergies will make sense; where there is a business case. MAN, Scania and Volkswagen are sharing resources regarding purchase activities. We recently held a vendor conference.

Q. How do you find the vendors in India?

A. Vendors are big contributors to the business; to product development, and to the product quality. We are working in-line with Volkswagen’s purchase strategy. We have a strong focus on quality and what we offer to the customer. The MAN team in India, through their long experience, has engaged the right vendors. Some of our vendors are already listed on the Volkswagen channel. We have been working closely with our vendors to realise our expectations from them. Some vendors, we have found, are highly professional in their approach. To handhold vendors is necessary as we want to guarantee MAN CVs for quality and performance.

Q. MAN enjoys a high brand recall in Europe. How do you look at it in India?

A. MAN wants to partner with the transport customer. It therefore wants to offer quality and reliability, uptime guarantee, and a state-of-the-art after sales experience. MAN in Europe is known for value for money. We don’t want to be cheap, neither do we want to be premium. MAN wants to offer CVs that guarantee highest productivity and fuel efficiency; low TCO and life-cycle costs.

Q. Unlike in Europe, MAN seems to be concentrating only on trucks in India. Any reason?

A. In Europe we have a strong presence in the bus business as well; in luxury coach, and in inter-city buses. In inter-city buses, we offer state-of-the-art products. The Indian market is completely different. The structure of the bus customer is different, and the product requirements are different. We do not want to compete with budget mass producers. We find profitability to be very low. Investments required are quiet high. We looked at bringing our low entry city-bus to India, but found the market to be very small. The investment to localise is high. The premium (inter-city) bus segment we find is too small. It is looking to be a 1000 units segment when stable, and is dominated by three known brands. We may look at the segment when it grows; becomes sustainable. We have decided to use our chassis structure with better specifications than the domestic budget producers are able to offer to participate in the high quality economy segment. These include a front-engine 220 hp and 280 hp bus chassis. We would soon include a 300 hp chassis as well. With features like air suspension and good body build, we are looking at offering the customer value for money.

Q. Isn’t that a competitive space with local and global players looking for participation?

A. It is a competitive space, but our chassis offers a little bit more than what the domestic mass volume players could offer. The good part is, we have the product, and do not need to do high investments. We believe that we can have a piece of the cake.

Q. With stress on value, would MAN look at a sub-brand for India for a mid-premium positioning?

A. We took a clear strategic decision to have one brand worldwide. So, the trucks that we make in India will be called as MAN. The product range we are designing and making in India are different. The Cargo Line Asia (CLA) range is made for India, other Asian markets and some export markets. Rather than making a differentiation by brand, we are making at differentiation by the product range. We are looking at mid-premium positioning. We have also tasted some success with completely imported products. If there is a particular customer who demands a fire fighting (special application) truck or a heavy-duty application, we are ready to offer completely imported high-end TGX or TGH range. In TGX, we also have TGX WW, which was created for some exports markets and could have a potential here.

Q. How far are you looking at taking the CLA range?

A. Above 16-tonnes, principally we have all the offerings. What we want to do is to activate our sales in all segments, including haulage, rigid, and tractors. I am seeing a change in the market in the direction of truck-tractors. Over the concrete product portfolio we are offering, we are intensifying our activities here in India. We do not want to be known in the market as just a mining truck manufacturer.

Q. But then, you are not into deep mining trucks?

A. We have released a project for heavy deep mining application, and will have a launch in 2018. This product will be an extension of the CLA, and will have a different power pack.

Q. You are looking at the haulage segment. GST could influence it. What is your strategy?

A. The government, I think, is doing the right things. I wouldn’t say that they are all in our favour. GST will help us, and so would the other activities like AC cabin and BSVI by 2020. This, I think, is a push in the direction of technology development, and in the direction of changing the customer’s mind a little bit. The customer changing his logistics concept will create demand. Different configurations, stronger focus on fuel economy, and at the same time, a stronger focus on ecology will mark the future. We are therefore confident of the future of the Indian market.

Q. Is GST playing out the way you and your team at Germany expected it to play out?

A. We had to explain to our board in Germany the reasons behind GST. At the beginning they were confused, and we had to explain. We believe that the way GST is (playing out), is in the right direction. I would like to compare it with the European Union. It took long for the EU to abolish the export and import duties. To have a free trade between European countries, and have one currency. I think, this is a similar process.

Q. How do you see the hub and spoke transportation system evolving in India?

A. Infrastructure, logistics optimisation and ecological aspects will play a role. GST will also play a role. I would cite the example of Moscow where 12 million people live officially, and 17 million people live unofficially. A mega city Moscow is. At short-notice, a ban on heavy-duty trucks entering the city was introduced. There was hue and cry. There was no impact on the sale of heavy-duty trucks however. Demand for light and medium CVs went up. In Scandinavia, it is very different. They have 20- to 60-tonne configurations. The 60-tonne is a 25:25 concept. For every city there are logistics hubs and distributing hubs. It is because of this that electric vehicles are coming into focus; electric LCVs are used to enter the city. I believe in this concept. How soon it would come to India, is hard to say. In India, transport volume will increase. Other transport channels will have to absorb the rise. The same may not happen. If the total transport volume in EU is growing by five per cent, it is growing share wise five per cent in truck transport, five per cent in air, and five per cent in shipping. The advantage of transporting goods by road is to have them delivered much more quickly. In India, I think, road transport will be the main stay because of speed, flexibility and logistics systems. The need is to bring goods to the point of need – to the customer. Looking at our last greenfield site at Poland with a trailer yard, truckers deliver packed trailers and pick-up empty trailers from the yard. With this, inventory time is reduced and the whole process is streamlined. It is ‘Just-In-Time’. As private consumers, we expect delivery of goods tomorrow with the press of a button.

Q. Would the shift to higher tonnage reduce the number of trucks on road and give rise to new concepts?

A. I see a link to the 25:25 concept in Scandinavia. I was comparing two Scandinavian countries, Sweden and Finland. Norway has 50-tonne trucks. I compared the number of trucks; the average truck market per year in these markets with other developed markets like Germany, France and UK that are at the same level of development. There are rough calculation guidelines. As per the guidelines, one-million people in the country translates into a total truck market above six-tonnes of 1000 units on an average. Germany has a population of 83 million, and the truck market above six-tonnes is 80000 to 85000 units. It is the same in UK and France. In Sweden, with a population of 8.7 million, the total truck market is 5000 to 5200 units. A 25:25 combination to come to India will take too long. It requires infrastructure. If the market is moving in that direction, I see a huge potential in improving the load capacity of the existing combinations based on homologation and registration conditions. I see lift axles and tractors optimising payloads. It signals towards reducing the weight of the truck, and the body.

Q. What is the scope of weight reduction in a CV?

A. In Europe, we launched a special Lion edition truck for bulk transport. All elements were optimised for bulk carriage. It was aimed at the chemical industry where payment is per kg. Strict rules mean there’s no scope for even a kilo of overload. For the customer, a truck tractor-based bulk tanker combination with 500 kg weight advantage means much. He can carry 500 kg more payload. The 500 kg weight saving was achieved by incorporating aluminium wheels, aluminium tanks, air bellows and tiptronic gearbox apart from other optimisation. The pay back period was calculated to be one year.

Q. Are you leveraging any weight saving technology for India?

A. We are working on updating the (CLA) product. We have seen the need for product improvement and development. We started a lot of projects. In the next twelve months we will not give a big bang. We have something reasonable in the pipeline. The current CLA we have converted to meet BSIV emission standards. We also established the product maintenance process recently. About leveraging weight saving technology in India, it depends on the business case. Weight saving costs money. The last 50 kg weight reduction in a sports car costs a fortune for example. Getting a truck to shed 500 kg is tough. Customers should be ready to pay for it. It is a chicken and egg story. We are not waiting however; we are starting the process.

Q. How do you look at the segment shifts in India?

A. Segment shifts are influenced by logistical changes. We see a strong trend in truck-tractor. Much depends on the fuel economy, tyre wear and other factors. We see a smooth change in the market segments rather than a quick step up.

Q. There is urgency about truck code and trailer code. Does the lack of timeline confuse you?

A. The truck and trailer combination have to match perfectly. About urgency of truck code and trailer code, I think there are a lot of advantages to offer to the economy. Reducing the number of trucks on the road by optimising load can help the environment. We made a prototype in the form of Concept S truck-tractor combination to optimise trucking, but the government is not ready. In EU, what makes it tough is that there are more than one countries from a legislation point of view. In India, I don’t believe in a quick change. Where I see a quick development – politically driven, is in alternate fuels like CNG. I don’t believe in LNG.

Q. But, the amount of trouble it will entail to get an alternate fuel CV on the road?

A. We have CNG technology but it depends on the infrastructure. Three years ago I signed a Memorandum of Understanding with the chairman of Gazprom in Russia for CNG. Gazprom was unable to develop CNG infrastructure in Russia. As a truck maker we cannot create CNG infrastructure. The technology is there, and there are a lot of advantages. For India, we currently don’t have a plan for CNG. If we see a demand, we can act quickly to deliver even a CLA in CNG technology. In the case of hybrid buses, we feel it makes sense where infrastructure is available, and it makes a business case for the customer. Hybrid buses are much more expensive than regular diesel buses. Hybrid buses amount to niche products. In the heavy truck business, I don’t see a future for hybrid technology. Even in an urban application, it is better to shift completely to electric or alternate fuels like CNG.

Q. Would BSVI compliant CVs in 2020 cost almost as much as their hybrid and electric variants?

A. It is challenging. The BSVI technology will increase the product cost and the cost for the customer as well. From what we saw, the main concern of the customer was if the new emission standard will increase the fuel consumption. Using advanced technology we have been capable of countering this. Fuel consumption has actually reduced. The BSVI technology will increase cost. There will be some added element on the truck. Compared to a hybrid, I assume, a BSVI CV will still have a price gap of 30 per cent. Consider a regular diesel low-floor 12 m city bus with a CNG low-floor city bus, and the price difference is 20 to 25 per cent. It makes a business case if there is an infrastructure; the gas supply. Hybrid technology is even more expensive as a business case.

Q. What role does MAN look at playing in the Indian bus market?

A. I can’t see a trend for rear-engine buses at the mid-premium level over the current premium level at which they operate. We already have a design for the rear-engine chassis to co-operate with body builders. But this is not making a business case yet. We want to place our ‘economy’ chassis in a certain niche. Our worldwide strategy regarding coach builders is to be open for co-operation with more or less all of them. The emphasis is however on quality. To co-operate with a coach builder may be viable than to build buses on our own. It will be quicker. After a study of the market scenario, we came to the conclusion that it does not make sense to build buses. If the market volumes grow, we will act. To make a business case, our estimate would be 1000 units a year. With the bus chassis model that we currently employ, we do not have to worry about viability. If one were to do a high-end premium monocoque construction bus, then considering the investments involved, the need would be for a stable volume of 1000 buses a year. For the chassis with body built by the coach builder model, we have body builder guidelines. This is to ensure that the body builder delivers on quality. We have similar guidelines for trucks too.

Q. Are you looking at a new engine in India?

A. In India we use D08 engine family. We are taking steps to align D08 with global sourcing strategies. We are already supplying some products to our engine factory in Germany from Pithampur. CLA localisation is above 82 per cent. What we supply to Germany include some core parts too. We are running projects, and if a demand for higher performance output engines comes up, we are ready to have our engine families localised.

Q. To which markets do you export your trucks?

A. Exports to neighbouring countries was part of our strategy to look at India as a hub for Asia, some African and Middle East markets. We export ‘Truck-in-the-box’ (CKD kits) to South Africa. Our biggest export customer is our joint venture in Uzbekistan. We send CKD kits there. In Uzbekistan, MAN CLA and TGS are offered. In Middle East it is not looking very good. The market in Saudi Arabia has more or less collapsed. We will be having a group of customers visit us in March 2017 at our Pithampur plant from Africa. We are also looking at South East Asian countries like Malaysia, Philippines and Indonesia for exports.

Q. Where does MAN India stand at the scheme of things at Volkswagen?

A. The expectation of the board is to be seen on the market as MAN; reflecting to the market our core values as a brand. To make it easier for our customer to do business, and to be profitable. Last year, we sold 1,600 units in the domestic market. We exported in the region of 1,200 units. We want to increase the volume. I am realistic, and we are not unhappy. We did reasonably well last year. One has to be serious in the business strategy. If you have the ambition to beat domestic budget producers, this is not the business field to be in, also from the view of profitability. The margins are low. Also, this is not MAN’s standing for the customer. We are therefore looking at what is the market that we can address. Yes, we want to get a piece of the cake. We want to grow with the growth of the segment or segments that we find we can address.

Q. You seem to be rigid in not wanting to look at any segment below M&HCV?

A. We have launched in Europe the TGE. It is the right product and the right concept for Europe. For it to compete in India, which is a low-budget mass volume market, is not what we want. We are looking at some synergies with Brazil. To localise the product here is not yet decided. We are talking inside the group, but at the moment, below 16-tonne, we have not decided anything. We also need to look at where we are strong. And, we are strong in the segments above 16-tonnes. In Europe, we are strong in segments above 7.5-tonne. We have the MAN TGL with a weight of 12-tonne. This is however not the market for it. We are looking at all opportunities since we are launching some new products in Brazil, but we do not have a plan as of now. What we want to do, is to reinforce our position above 16-tonnes. We want to sell all that we have to offer and update it.

Q. Are you carrying out a drive to upgrade existing dealers and appoint new dealers?

A. A dealer has to be motivated to do good business. We have some areas of focus where we have to get better. We have to lift the quality and density of our network. We want to make it a feasible business case for the dealer. The volume of 1600 trucks is not enough. We have to feed the dealer network. We are working towards guaranteeing the customer of maximum uptime. A dealer is playing a major role; he is at the place of the customer, and guaranteeing him good service. We have 42 dealers at 62 locations. We are looking at expanding dealers, carefully, and with a focus on quality service to the customer.

Q. What growth are you looking at?

A. I will not give you a figure, but we want to grow stronger than the market is growing.

Driving optimism

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Q & A

Vinod Aggarwal,

MD & CEO, Volvo Eicher Commercial Vehicles Ltd (VECV).

Interview by: Anirudh Raheja

“We are optimistic about things soon returning to normal.”

Q. How has been the year till now for VECV?

A. The CV industry in FY2016-17 started off really well. The first quarter saw the industry clock bag good numbers. The second quarter turned out to be a bit slow. The month of October was better. CV sales were expected to make a comeback with good numbers in the third quarter. Due to demonetisation, the impact on the industry was immediate. Since small transporters and used truck business operates largely on cash, the impact of demonetisation was significant. Over a period of time, everyone will need to get used to using less cash. The industry will have to also align too. There was a sales impact in November and December 2016. A decline was registered against expected growth.

Q. What has been the impact of demonetisation on the CV industry?

A. If one looks at the growth swing, and the drop suffered by the CV industry, it is an estimated 25-30 per cent. Despite this, we are very optimistic. We are optimistic about things soon returning to normal. The transporter business is currently coming back to normal; most of the transporters have adjusted to using less cash. Due to reduction in consumption however, the overall economic activity has come down. This has impacted the CV industry. It will hopefully pick up soon and the CV industry will make a faster comeback. I don’t think it will take six months for the CV industry to return to normal. The government will also come up with more and more reforms, which may allow expenditure boosts.

Q. What about the impact of demonetisation on construction and mining truck segments?

A. Even in November and December 2016, construction and mining truck sales posted good growth. In the first nine months, construction and mining trucks grew 31 per cent. The drop in sales has been observed in the haulage segment. One of the reasons is the movement of industry higher tonnage trucks. This would not only increase the overall capacity, it will also reduce the number of trucks required for the movement of same quantity of goods. Two years back the 37-tonne segment did not even exist. Today, it does. This segment has seen healthy numbers this year.

Q. What was instrumental for the growth of construction and mining truck segments?

A. Investment in infrastructure. I think, the focus on infrastructure investment should continue. The government can spend more so that the overall economy becomes better. The Ministry of Road Transport and Highways has been bullish on building highways. It is a good sign. The fiscal deficit of Government of India looks to be within the range. This clearly indicates that the government is having a good control over its revenues. Based on it, there is a reason to believe that public spending will increase. The other major positive factor is the southward movement of interest rates. Increase in bank deposits and control on inflation has made it possible.

Q. LCV segment did not see good growth. Did demonetisation prove to be a double whammy?

A. I would say that demonetisation impacted this segment the most. Since this segment includes a lot of small fleet operators, it was badly affected due to demonetisation. LCVs and MCVs find use in rural areas. The rural economy was badly impacted due to demonetisation. The 5 to 15-tonne truck market is far from the peak growth period of FY2011-12. It was 105,000 units. Last year, the figures hovered around 72,000 units. This year, the growth is between 10 to 12 per cent. Due to demonetisation, growth dropped significantly in November and December 2016. The LCV segment is currently growing by just two per cent. This indicates that there is much to recover.

Q. When do you think, the industry can bridge or exceed the peak FY2011-12 figures?

A. In the heavy-duty truck segment, we had expected the numbers to come back. We may see peak levels of FY2011-12 being bridged or exceeded in FY2017-18.

Q. Stricter BSIV emission standards are around the corner. What technological and pricing changes do you foresee?

A. The advent of BSIV emission norms will turn the engines electronic. Keeping such developments in focus, we are continually bringing in new platforms. Costs will increase no doubt. Pre-buying of vehicles is expected to gain steam across segments in this last quarter of FY2016-17. The extent of it will need to be seen. It can affect the sales in the following quarter. The cost is likely to go up by seven to 10 per cent depending on the model.

Q. How important is the quality of fuel for BSIV emission compliant CVs?

A. The quality of fuel is important. As one goes higher up in emission control, the engines become more and more sensitive. As the industry progresses to BSIV emission standards, both the technologies, EGR and SCR will be used in CVs. It will depend upon the manufacturer.

Q. Which according to you will be the growth areas in FY2016-17?

A. If you look at VECV, the company has grown in all the segments. In the 5 to 15-tonne truck market, VECV continues to be one of the strong players with a 33 per cent market share. In the heavy duty truck segment of 16-tonnes and above, VECV has grown its market share to five per cent from the sub four per cent market share last year. VECV was not present in the 4.9-tonne segment earlier. In a short span of time, a presence in the segment was achieved. VECV now sells over 200 units per month. In the domestic market, Eicher grew at 12 per cent in the first nine months. This was against the industry declining by one per cent. In the bus segment, VECV grew at a rate of 16 per cent. Its market share in buses shot up to 16.5 per cent from 16 per cent last year. In the first nine months, the company sold 8,500 buses when compared to 7,300 units sold last year. VECV continues to be strong in the school and road permit (staff) buses. The company is currently executing good amount of bus orders from State Transport Undertakings (STUs).

Q. How is the VEPT engine plant supporting growth at VECV?

A. We are already exporting EuroVI base engines towards addressing Volvo Group’s European needs in the medium duty truck range, which is equivalent to India’s heavy duty truck range. We are also meeting the EuroIII and EuroIV needs of other Asian countries. The technology has also been adopted in our EuroIII and EuroIV compliant Pro 6000 and Pro 8000 series trucks, which are also make our heavy-duty range. As India progresses towards BSVI emission norms with a set deadline for 2020, the industry has to follow too. Copy paste of technology designed for Europe will not happen as India has different duty cycles. Us, having hands on EuroVI engines will definitely help. It will give us an edge. As far as the capacity is concerned, the VEPT plant at Pithampur in a single shift, is currently manufacturing 50,000 engines. The capacity can be scalabled up to 1,00,000 units annually as and when required.

Q. Hybrid and electric vehicles are gaining prominence in India. What are your thoughts?

A. In-line with the initiative of the Government of India, we are working on new technologies. We will be ready with a fully-electric bus this year.

Q. What benefits will GST offer to the CV industry?

A. It (GST) is a very forward looking reform. We are looking forward to its implementation. It will bring in a lot of efficiency in our distribution model. It will also cut down a lot of waste. Instead of operating from depots in every state in the country, we could simply operate from hubs built across four to five regions. GST can also reduce the cascading impact of taxes and there may be some benefit for the transporters. I think, they will be able to take credit for the GST which is paid on vehicle purchase. We will also be able to bring in more efficiencies in our buying process as the entire supply chain will become more efficient, and will be devoid of the cascading impact of taxes. I don’t think there will be impact on sales in Q4 of 2016-17 on account of GST as BSIV emission norms will come in April 2017. There is still some time before GST is implemented.

Q. Return on investment plays an important role. How will the move up to BSIV affect this?

A. Costs are definitely becoming a challenge in connection with rising regulatory implementations. Manufacturers have no choice but to pass on the costs to the consumers. Efficiency and productivity improvements have to continue. It is they that will continue to drive the costs down. In the case of ownership cost, the initial acquisition cost of the vehicle has an impact of only around 20 per cent. The impact of fuel cost is in the region of 45 per cent to 50 per cent. If the acquisition cost goes up by 10 per cent, the customer may be still able to gain on a net basis if productivity and fuel efficiency cost goes down by around the same per centage. We thus have to focus on driving modernisation and improve productivity. Even though the acquisition cost increases, it should not pinch the customer.


If you look at VECV, the company has grown in all the segments.

Inventing growth


01 Mr. Ravi Pisharody pic 3 copy

Q & A

Ravi Pisharody,

Executive Director – Commercial Vehicles, Tata Motors

Interview by: Ashish Bhatia

“LCVs command close to 50 per cent market share, and LCVs and ICVs command 50 per cent market share (including buses). This ratio is not sustainable.”

Q. How would you gauge the performance of Tata Motors across CV segments?

A. Tata Motors continues to perform well in the four-tonne Light Commercial Vehicle (LCV) segment. Upon realising that there was a yawning gap between a three-wheeler cargo vehicle and a pick-up truck, we introduced the Ace. It did well for a long time. Our competition was slow to react. When they did, their vehicles failed to succeed. Everytime a competitor introduced a product, our market share dropped from 90 per cent to 70-75 per cent. The superiority of Ace compared to the competition enabled us to get back to 80 per cent market share. Our competitors have changed the nature of battle. A conventional pick-up was re-priced at almost the level of Tata Ace. If one could buy a Ace at four-lakh rupees, a pick-up truck with few features taken out could be had at four and a half lakh rupees. It was an unfair battle. We did not want to discount the Ace, or offer a lower price. We therefore had to make do with the situation. LCV market share was lost as the Ace buyer found an equivalent in a vehicle at a rather comparable price point.

Q. Have you been able to identify the need gaps in segments?

A. The space between Small Commercial Vehicles (SCVs) and pick-ups has blurred. When we introduced the Super AceMint, a competitor introduced a similar vehicle, blurring any chance of differentiation. The Ace Mega we introduced 12 months ago, from a Gross Vehicle Weight (GVW) point of view, classifies as a pick-up. It does so with tonnage-wise application. We have been able to increase our market share with the Ace Mega significantly. The pick-up and the LCV segments are the largest segments worldwide. In India, it is however yet to attain that stature. Light and Intermediate Commercial Vehicles (ICVs) command 21 per cent market share, and pick-ups and SCVs command 70 per cent market share globally. In India, this is not the case. LCVs command close to 50 per cent market share, and LCVs and ICVs command 50 per cent market share (including buses). This ratio is not sustainable. We anticipate LCVs to grow at a faster rate because of the impetus on infrastructural growth. This space is still evolving. What has been happening for the last two years is not the final outcome. Among the Ace Mega and Tata xenon, the Xenon is being offered at a rather aggressive price point. The Xenon price point is closer to the range of Rs.6.5 lakh and seven lakh rupees. With the advent of BSIV emission norms, prices will go up by a mere Rs.15,000. The Ace Mega, Super Ace and the Xenon Yodha we have just introduced will help us to encompass the entire pick-up segment. With the Ace Mega and Super Ace qualifying for the title of a pick-up truck, we have the distinction of being the only player to have three different type of vehicles in the same segment, and at similar price points.

Q. Has demonetisation affected CV growth. If it has, then how long will it take to attain the desired levels once again?

A. When you look at CVs, M&HCV market is cyclical. When the market goes down, it is really about postponement. There is a certain fleet replacement cycle which gets pushed back and then the market comes back fiercely. There is no other segment barring two-wheelers which did not have a rough time due to demonetisation. There is no other segment which goes down by 25-30 per cent the way M&HCVs do. But it also bounces back by 20-25 per cent. So we have had two periods; June to August and September to December with slow growth. We believe that the base is relatively low, and that is paving the way for a comeback. November took everyone by shock; very few people were prepared for it. Even till the middle of December the prospects were looking weak. But the last few days have given us confidence. If you look at the reported numbers it’s only six to eight per cent lower than the previous year. Over November, the situation is better. Gradually, with the cash-limits easing, the system is falling in place. What is giving us comfort is that customers were seen taking decision in the later half of Decemeber 2016 which they had postponed earlier. While the product pipeline was strong, the actual purchase was taking way too long.

Q. With BSIV emission norms and GST expected to roll-out in April 2017, how do you see the fourth quarter of FY2016-17 (Q4)?

A. With buying postponement, we are looking at a fairly strong January to March quarter (Q4 FY2016-17). The infrastructure segment is doing very well. Construction tippers continue to demonstrate a 20-25 per cent growth. Growth in this segment is expected to continue at the same rate. The government’s stated intent is being practiced, and infrastructure is improving. Road projects are picking up and other projects like ports and power are also taking off. Construction companies are conducting inquiries for tippers. Doubts were being aired about GST rates last year. It was hard to find a reason for the June to August (Q2 FY2016-17) slowdown barring the speculation that GST rate would be at 18 per cent for the auto industry. This essentially meant that it would better to buy post GST. It is now almost clear that GST pricing will be very close to the current pricing. If small cars are announced at 28 per cent it could be considered as the default rate for the rest of the auto industry. It is becoming quite clear now that in terms of pure taxation, GST will not be of much benefit to the industry. There is bound to be that small blip due to the transition from BSIII to BSIV, which is expected to result in lower demand in the first quarter (Q1 FY2017-18) as a result of higher pre-buying in Q4 FY2016-17. Post that, both from an economic stand point and a reform point of view, the effects of demonetisation would have settled down by then. Logistics is heavily weighed down by issues in terms of trouble at various border cross points, at ‘Octroi’ posts, and at the time of loading and unloading among others. The entire logistics value chain stands to gain. This is what buyers would also look for. Both in the case of HCVs and LCVs, it is a case of witnessing a lower base. These two segments have been under pressure to perform for a long time. They are turning around. M&HCVs, in FY2015-16 almost pulled us to the last peak. In FY2016-17 it has a lower base. It is expected to grow. While demand post GST settles down, second half of next year (FY2017-18) and the period beyond will be good irrespective of the base we build upon.

Q. Any particular tipper category tonnage-wise that you see is performing better?

A. When it comes to tippers, the customers are all corporate companies like JP infrastructure, Ramky infrastructure, and others They buy tippers as per their business need and sell them as per their business needs. The main segment is 180 hp, 25-tonne tippers. This is a multipurpose tipper that can be used for mining and light construction. The deep and heavy mining tipper sub-segment amounts to niche business and is small. That’s the Prima tipper type. The main segment is 25-tonne and 16-tonne. In some places like North-East and Jammu and Kashmir, because of its manoeuvrability, a two-axle tipper should do well.

Q. How do you see GST impacting growth in the second half of FY2017-18?

A. There was uncertainty about GST rate. It was thought to be 18 per cent. CV taxation as of current is 31 to 32 per cent with excise duty and Value Added Tax (VAT) put together. Tax rate of 18 per cent would translate into a big dip. We were worried and so were our customers. If it would so happen, our second half of this year would have got wiped off. Nobody would buy our products. Such a rate would not be feasible. It would mean a lot of losses for everyone. The government is sticking to 28-30 per cent. In terms of pricing, it would not cause any ripple. From a system administration standpoint, vehicles which move on national highways will benefit. The operators have to show their papers at every border crossing. They have to pay multiple ‘Octroi’ charges. While tolls will still continue, those are all predictable amounts. We expect the efficiency of the system to be far more superior going forward. If a trip took seven days to complete earlier, it would now take one or two days less if things go well.

Q. Do you look at pre-buying because of BSIV and GST? Its effect on the performance next fiscal?

A. We had a very strong October. I would have been equivocal and said that we are going to see a bumper January to March period. The fact is, demonetisation has happened. We are talking at a time when we have had two difficult months. I have said previously that with old vehicles, customers were coming back. The extent of pre-buying will determine the performance in the period between April and June. If pre-buying turns out to be strong, then the period between April and June will be weaker. This is however a M&HCV phenomenon. In buses, SCVs and LCVs, price increase is hardly in the range of Rs.15,000 and Rs.20,000. Most metros are already buying BSIV emission compliant buses from us. So this pre-buying and post-buying is not a phenomenon except for M&HCVs. Looking at December sales figures, we are doing very well in buses. STU buying is coming back and a lot of tenders are being floated as we speak. About three to four big tenders are in the offing. Our growth in December is 59 per cent as far as buses go. It has been the case for the last three months. It is after a long time that we have buses coming into a space it deserves but not supported by the Indian economy. If you look at countries like China, the bus to M&HCV ratio is very respectable. In India, the ratio is 1:5.

Q. Would GST increase the efficiency of vendors, amounting in significant price benefit that can be passed to the CV buyer?

A. It will depend upon other pressure points like commodity, which in the last one or two months has been showing an upward trend. This is after a very benign period of two to three years. But definitely a lower vertical capital, if our clients were transporting goods. If their working capital comes down they will save on interest costs. Transporters will be able to move around faster. Overall the interest cost will reduce. End customers stand to benefit in that case.

Q. Elaborate upon the product pipeline that has been built for 2017?

A. From our side you will see a number of critical CV launches. What you call a new product, it is difficult to predict. I would say in terms of completely new powertrain or cab there will be at least 15 launches. But if you take variants, all added together with export markets the number crosses 200 easily. ‘Xenon Yodha’ is the first launch for 2017. In SCVs, we will launch products in Ace Zip and Ace Mega space. One big innovation will be the extra deck length across the Ace, Mega and the Zip making it a very versatile portfolio. If I look at ‘Signa’ for instance, it has just moved into 49-tonnes. The Signa’s cabin is going to pervade the entire range. The cabin comes at an Rs.25,000 premium on an Rs.20 lakh product. Along with advanced features like on-board telematics, the customer gets suspended seats, a new dashboard and an all new cabin at mainstream price points. If there was a view that the ‘Prima’ was highly priced, it may well be the case, we don’t want to compromise on that. The ‘Signa’ comes into mainstream with features almost deluxe in nature. The ‘Ultra’ platform while it has been in buses for the last eighteen months, is not visible because the bus gets covered by the bus body. Almost 50 per cent of the buses are on the ‘Ultra’ platform today. ‘Ultra’ HCVs is where you will get to see the cabin. I think that is going to really take-off next year. If one or two products have come in ‘Ultra’ HCVs, the next year will see a lot more including ICVs being launched. In the 14 to 15 tonne segment where there is a market gap, we will come up with a product in the next three-to-four months. So from a market standpoint, we are bullish.

Q. How would you differentiate between the Xenon Yodha and the earlier model?

A. In Xenon Yodha, we have significantly better features than what the competition has to offer. We carried out extensive research to understand customer requirements. This led to differentiators like performance, reliability and operating economics. From performance point of view, the new range features a comparatively powerful engine, and facilitates better acceleration and grade-ability. The pick-up truck can carry heavier loads. It can carry them faster and quicker to the destination. In terms of reliability, we have incorporated a reliable and improved frame. The axles are more rugged and particularly suited to Indian roads. The heavy-duty clutch adds to the life of the vehicle aggregates. In terms of operating economics, the powerful engine and higher torque lead to a better driveline, and ensure superior fuel efficiency. This reworks the cost economics entirely. We have retained the modern styling of the earlier Xenon. The Xenon Yodha offers both, a higher ground clearance and an improved fuel economy. The loading capacity is much higher in terms of both, the deck length and the width of the load body. Compared to a contemporary vehicle, it gives you an additional 20-25 per cent load carrying capacity. Whether its milk cans, poultry, or vegetables, higher number of trays can be stacked in the Yodha. The Xenon Yodha pick-up truck thus offers a pay load carrying capacity of 1.25-tonne as against the one-tonne capacity the Xenon offered earlier model offered.

Q. How many units of Xenon Yodha do yo hope to sell and produce?

A. Capacity is not an issue. All our factory lines have become very versatile. The line for Prima at Jamshedpur was a dedicated line when production began. Today, the same line can make 25-tonne and 31-tonne CVs. At Pune, we have a lot of versatility between LCV and pick-up lines. Capacity therefore is not an issue. We will start with about 1000 units of Xenon Yodha per month.

Q. How are exports helping Tata Motors to offset domestic volatility?

A. Pick-ups continue to be the largest segment globally. In India, it is the M&HCVs segment that is the largest. Exports are doing very well; over the last two years especially. We are targeting exports growth in the region of 20-25 per cent in FY2016-17. Over a two year period the growth has been 45 per cent. There is a need to remember that even the global markets are seeing ups and downs. If we have been able to grow by that per centage, it is because we have a basket of countries. If we were depending say only on Africa or the Middle-East, it would have been challenging. The Middle-East has been affected by the downturn of crude-oil. The currency situation in Africa has changed. In some markets the local currency in comparison to the US Dollar has depreciated by almost 50 per cent in two years. But then we have markets like South Asia and ASEAN countries, which are giving us good benefit. In another two years it could be that these markets could be in trouble and West Asia and Africa are doing better. So we are on a good track as far as exports go. The Xenon is already an export vehicle. With the Yodha too, we will be looking at exports. Given that it is a right-hand drive model, it looks suited for the SAARC nations.

Q.How do you look at tightening emission levels and their effect on CVs?

A. Manufacturers have already started to move towards BSVI emission norms. We have a Euro6 product in Australia. It is the only market where we have a Euro6 product. It is a Xenon pick-up. It is a completely different product, and gives us an early practice to be prepared for the upcoming deadline of BSVI by 2020.

Q. Are LCVS and SCVs likely to benefit from lower interest rates on offer from the banks?

A. From a CV perspective, the lower interest rate is important to bring in fresh investment into the economy. CV forms the backbone of a good economy. For some time, investment in capital goods has dried down, so it will definitely trigger investment. Lower lending rates are definitely a positive sign. The only thing we would like to see, and particularly in the case of SCVs and pick-ups is customer appraisal. Customer appraisal has become very tough. People who were getting loans based on their profile four-five years ago were finding it difficult to down pay. Down-payment was as low as five to ten per cent when the Tata Ace was introduced. In recent times, down payment has risen to 20-25 per cent. Lower interest rates will help because monthly installments will go down. We would like to see a further reduction in down payment because that will give a flip to SCVs and pick-ups. For M&HCV it is not a factor, it is the interest rate that will make the difference. It is bound to have a far reaching effect given our network of NBFCs, public sector and ‘Gramin’ banks in rural areas.

Q. What is the likely investment for FY2016-17?

A. We are investing in the range of Rs.1500 crore to Rs.2000 crore. The emphasis albeit changes. Sometimes we look at completely new products and on other occasions, it is the investment on emission. These days BSIV is taking a lot of investment. In the next three years, you will see BSVI starting to take a lot of investment. But we have always been in that region.


The space between Small Commercial Vehicles (SCVs) and pick-ups has blurred. When we introduced the Super AceMint, a competitor introduced a similar vehicle, blurring any chance of differentiation.