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00:00Vinod Agarwal, MD and CEO of VECB of Aishar Motors joins us.
00:06Vinod, hi, thanks for joining in.
00:08The industry has not had it very sweet in terms of monthly sale numbers of commercial
00:12vehicles, but you have had a pretty good month, you have outpaced the industry by quite a
00:17wide margin.
00:18Is this growth sustainable given that monsoons are expected to be stable and a trust on rural
00:25dole outs can also be seen?
00:27Can we expect numbers to get better from these levels and of course double digit growth expected?
00:34First of all, I think if you look at the industry, commercial vehicle industry, we are expecting
00:41that the industry will do better in the balance part of the year.
00:45First quarter was not as good as we expected, even though first quarter also had a growth
00:50for the industry, but it was not good in some of the core segments like for example in heavy
00:55duty trucks or in light and medium duty trucks, the industry has not done so well as was expected.
01:01The industry numbers are good because of the very high growth in bus segment, buses have
01:06grown by 35% and exports also have bottomed out.
01:10Exports have done much better in the first quarter, but going forward, we are expecting
01:15that especially from September onwards, after monsoon and the festive season also will kick
01:22in, we should have much better potential for commercial vehicle industry and that fundamental
01:29reason is the economy is doing well, first of all.
01:32The second is infrastructure investments and third is the replacement demand.
01:37All these three things put together, I think we will have a very good CV industry for the
01:42balance part of the year.
01:43As far as we are concerned, as you have rightly mentioned, we have outpaced the industry last
01:48month and that is how we have been doing for the last so many years.
01:53If you look at our overall numbers, every year we are doing better than the industry
01:58growth and that's what our strategy is to continue to do that based on our very wide
02:06product range as well as more and more network in the areas where we are not present.
02:15So we are increasing our network, we are increasing our product range, we are improving
02:19our customer services.
02:21So based on that, we are doing better than the market.
02:24Sir, we will talk about how much buses and domestic business has done for you, but exports
02:31has jumped up significantly and that is also largely because it is coming off from very
02:36low base.
02:37Looking ahead, if you feel like the global market has bottomed out, what is the sort
02:42of internal objectives you have in terms of growth in the exports market?
02:49What are the units you are targeting going ahead in the next couple of months?
02:54Exports has been going through a lot of stress in the last few years and last year was absolutely
03:02very very low as compared to the earlier peak, the industry was down by almost 55-60%.
03:09Now of course, last quarter the industry has grown by 30%, but that is again on a very
03:17low base because if it was already down 60% and on that base of 40% as compared to the
03:24earlier peak, if the industry has grown by 30% now, it is not a big deal.
03:31So therefore, we have to see much much more growth in exports.
03:36As far as we are concerned, at the peak level in 2018-19, we had exported 10,000 vehicles,
03:45whereas last year it was just around 4,000 I think.
03:49And now on that 4,000, we have to continue to grow more and our first milestone will
03:56be to reach our earlier numbers of 10,000 and which should happen in next maybe two
04:01years or so.
04:04And hopefully the industry should grow now because especially if you look at Bangladesh,
04:10it started doing better, Nepal is also doing better, Middle East is doing better, African
04:16countries are also better than the earlier periods.
04:20So therefore, all across the recovery has started and we are very hopeful that there
04:24will be good recovery in the exports markets.
04:27Mr. Agarwal, just one question from my end really because I just borrow from where Samina
04:34asked you and I know you answered that you're hoping for a good second half but could it
04:38be a strong one by virtue of a post-monsoon and a festive season demand or is it difficult
04:46to predict because except for you, we haven't seen very convincing numbers per se from the
04:55CV space becoming a trend.
04:57So, hence the question really that could it be a second half only good for you or do you
05:04reckon it will be good for the industry at large?
05:05No, it has to be good for the industry if it has to be good for us, then of course…
05:09No, you will be relatively better but the industry is not that great or do you believe
05:13that even the industry will be good?
05:15Industry has to do better if we have to do better.
05:17So, industry will also be good and you will also do better?
05:20Yes.
05:21And by good, you don't mean a 2-3% good, you mean a decent strong number there?
05:26Yeah, at least double digit, that's what we are expecting because if you look at our
05:31economy is very, very, very good.
05:33In fact, it's last year it has grown by 8% and this year also the expectation is 7-8%
05:40and on top of it, there are huge infrastructure investments which are already planned and
05:44there are very, very large replacements which are still to happen.
05:50So, therefore, I think there are all good reasons why the industry has to grow more.
05:55There may be some advents because of maybe financing issues or if there are some delinquencies
06:03are increasing, there may be some issues, there are always some stress factors but definitely
06:09I think there are a lot more positive factors than the negative factors because monsoon
06:13is also expected to be good, rural economy should do better and we are also expecting
06:18that in the new fiscal budget, government also should come out with few steps to boost
06:23the rural economy.
06:24So, therefore, I think we are looking forward to a very, very positive situation and we
06:31are very optimistic.
06:32Right.
06:33You know, Mr. Agarwal, quick one, so while we were talking about the various verticals,
06:40substantial growth has been seen in the bus segment like you indicated as well but the
06:47other verticals which is heavy duty and light and medium duty truck segments, there has
06:51been no growth at all.
06:52In fact, it is almost flat.
06:54Do you feel like there could be an uptick there in terms of sales?
07:01Fundamentally, there is no reason like heavy duty trucks if you look at, first two months
07:07were the election months and there were lot of you can say the mind was diverted on various
07:13other things and the projects also were less.
07:18So, therefore, after the new government is in place, hopefully everything will start
07:23reviving.
07:24We will have lot more infrastructure projects or other capital expenditure projects.
07:31So, therefore, I think that uncertainty of the new government that is behind us.
07:38So, therefore, we are expecting that we should have better commercial vehicle industry.
07:43Because economy should continue to do better.
07:47Right.
07:47Sir, very lastly, couple of weeks and we will have the budget upon us.
07:51In terms of expectations, what are you expecting from the budget?
07:55What do you think needs to be done to boost rural economy and hence boost sectors like
07:59yourself?
08:02I think the first expectation will be that the investments on infrastructure and capital
08:08expenditure allocation that should continue to remain very strong because our economy
08:13gets a major boost based on the large allocations of capital expenditure.
08:18And in the interim budget also 11.1 lakh crores which was allocated in the interim budget
08:25for the current year.
08:26That also is very respectable number.
08:29But we expect that even if that can be increased further based on the better government finances.
08:35If you look at the GST collections are very good.
08:37Fiscal deficit is better.
08:39So, therefore, I think the capacity of government to spend more money is better.
08:45So, we are expecting that the allocations for capital expenditures will be even better
08:50than whatever was allocated in the interim budget.
08:54Other than that, if the rural economy has to do better, then, of course, there has to
09:01be some incentives or some sort of boost given to the rural consumers that how do
09:08they get better traction.
09:11So, I think that's what we are expecting from this budget that there should be some
09:18steps taken for improvement or boosting the rural economy.
09:22And then, of course, we are also expecting that there will be some incentives for electric
09:28vehicles like continuation of FAME schemes or there will be some incentive for scrappage
09:36of vehicles apart from whatever OEMs are giving in the market for the scrapping of vehicles
09:44on discount or some incentives in the form of some concessions in road tax or some other
09:52small registration fees, etc.
09:55We are expecting that there should be some incentive from the government that will boost
10:00the scrappage of old vehicles.
10:03So, I think these are the few initiatives which we expect from the fiscal budget.