Leading commercial vehicle manufacturer Ashok Leyland managed to post strong profit in Q4 of FY21 while it incurred losses of ₹314 crore in FY21, which was a tough year for the CV industry due to the impact of the pandemic and BS-6 norms, among others. Its consolidated revenue stood at ₹19,454 crore in FY21, down 11 per cent from ₹21,951 crore in FY20. However, the company says it is well-positioned to benefit from the revival in the CV market as it used the downcycle phase to build its next-gen Avtr truck platform and establish the new pick up Bada Dost in the market. Vipin Sondhi, MD & CEO of Ashok Leyland, spoke to BusinessLine about CV market recovery, its new vehicle platforms and growth plans. Experts:

How do you see the recovery in the CV market this time around?

As a country we have learnt our lessons and we are far better prepared this time to handle the pandemic. For Ashok Leyland, we were in the process of launching new products —Avtr modular platform with BS-6 technology in June and pick up Bada Dost out of our new LCV platform Phoenix in September 2020. We had no experience how it would pan out in the market. But we are now more confident as we come out of this lockdown with product, technology and people.

Do you see the tipper segment reporting better recovery than others due to resumption of construction activity?

Actually, tippers never went down dramatically. In some ways, building roads and highways continued at a slower pace. Now it is picking up again. So, I hope the government continues to invest in infrastructure developments and tippers will continue to grow. Our GDP forecast is 9.5 per cent, though Q1 will be challenging. So we do see growth coming quarter on quarter. Each segment of CV — light, intermediate, medium and heavy — will have its own trajectory of growth and also tippers.

When will the benefits of scrappage policy start flowing and is there a plan for the used truck market?

The ecosystem has to develop — fitness centres and scrappage yards — over a period of time. It will start adding value gradually. Once the ecosystem is in place, the full benefits of scrappage will take place. On used vehicle business, we are reviewing a plan.

How will the new set of platforms such as Avtr or Pheonix help AL to grow volumes and share?

A modular vehicle platform helps a buyer to customise to their specific application by looking at the load patterns, distance etc.. Why do you need a standard or heavier fuel tank if you are going to run it for short hauls? This is like a lego system model under which you configure your own truck. But this will take time for customers to get used to. Secondly, in total cost of ownership (TCO), the largest part is fluid economy, that is, fuel economy followed by tyre wear and tear. Modularity addresses the latter and the design of engines addresses the former. Based on the data from the trials we have conducted with customers, we have the best TCO that will give significant savings to customers in addition to the quality and reliability built into the design of the new modular platform. So, there are many, many reasons for the Avtr platform to be a preferred choice among the truck buyers.

Is there a shift among the truck buyers to consider TCO over initial price?

It will take some time for this change to take place, probably in a gradual manner. Because truck customers are used to a particular kind of negotiation while buying new vehicles. Will TCO be the way in which truck buyers will look more and more in the future? The answer is absolutely yes. Are all of them looking at it? No. Are some of them considering TCO as a way? Yes. It is also our responsibility to show the benefits of TCO with the real data.

How is Ashok Leyland devising growth for the future?

Ashok Leyland has always been very, very strong in medium and heavy commercial vehicles. Going forward, technology and lowest TCO will be our key selling points. Avtr platform has given us the edge to be one step ahead in technology. We are also expanding our sales network more and more in the northern and eastern region to strengthen our presence further.

What are the plans for the Bada Dost and LCV business? Are you planning more variants, new launches and other expansion initiatives?

Before Bada Dost, which was the first product of Phoenix platform, we were addressing little over a third of the market. After the launch of Bada Dost, we are now participating in 50 per cent of the market. Customer segment remains retail and we have both new buyers and upgrades happening for Bada Dost, a pick up. We are definitely gaining in market share after the launch of this new product, which will be launched in more markets going forward.

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