In an interview to CNBC-TV18, RC Bhargava, Chairman of Maruti Suzuki India spoke about the second quarter performance and the outlook going forward.
Below is the verbatim transcript of the interview:
Q: What is your view on the Maruti's growth numbers?
A: These percentage numbers have one weakness that they are on last years' numbers. So if you had a poorer last year, this year's percentage becomes higher. Last year one quarter was a strong quarter and this year, it has a base effect. So that is the reason. I think last two quarters of last year were quite strong quarters and on top of that to get this kind of 17-18 percent growth may just not be physically possible in terms of manufacturing capacity. We still have a waiting list and all that, so probably if cars could be manufactured we could keep up those numbers. I do not think looking at last year's number to the extent I remember that on those numbers we could sustain that.
Q: How are you looking to debottleneck manufacturing and make room because I think from Gujarat, Manesar, what 1.5 million that you can churn out annually?
A: We are doing about 1.5 million and the rest is coming from Gujarat. So, Gujarat, as Mr Aikawa said a second plant they have started work on in early 2019.
Q: So everything is being fast tracked?
A: The only thing everybody is going to be cautious about is to see what progress electric vehicles (EV) will make because that affects the engine making capacity. Bodies do not matter much, but if you have more EVs then you have less conventional vehicles, therefore you need less engines, so that you have to keep in mind when you are doing your planning for the future.
Q: You have already set yourself a target of 2 million by 2020 and many would say Maruti is a company that under promises and over delivers and everybody looks at the 2 million target that you have set as an example of that because you are already at 1.6-1.7 million and if you continue to grow at this range, you are going to hit 2 million.
A: No, by the time we complete this year, it will be 2018. We will be at about 1.65-1.67 something like that. 2018-2019, if you add two lakh cars, it will become 1.9, we will still be about a lakh or so cars short. So 2019-2020. It will happen in 2019-2020.
Q: Therefore, the 2 million volumes, in all likelihood it is going to be the early part of FY20 and not at the end of FY20.
A: Probably be, if things go well, definitely in the second half of 2019-2020.
Q: You were reflecting over the last 35 years at the press conference. What do you think will be some of the key challenges as Maruti strategize for the next 35 years because there is a whole lot that is happening, a whole lot of regulatory changes, EVs of course is a big thing. What do you think could be some of the challenges that Maruti needs to be wary of?
A: Some kind of challenge come at all stages of any company. It is the ability of the management to measure up to those challenges and take an appropriate decisions at the right time. So, nobody can forecast the nature of challenges which will come up in the next 35 years. The management, whichever management is going to be around, they must have this capability of dealing with challenges.
Q: So to be nimble, to be agile, to respond to these kinds and the kind of changes we have seen in the last two years alone seems quite breathtaking, what is Maruti doing to ensure that as a company, you respond to these changes faster?
A: So far we have been responding to change all these years.
Q: But you have been catching up whether it is the whole shift to diesel, it took some time for Maruti to acknowledge the power of diesel.
A: I do not think that is correct because we did not have diesel technology and if you want some technology, it does not suddenly come to you. Suzuki had to negotiate with different people, ultimately Fiat for technology. That took time. And after getting technology, you have to set up all the facility for making engines. So if you look at that whole cycle of events, it was done quite quickly.
Q: But it was Maruti's stated position at one point that you do not want to have diesel vehicles.
A: No, we did not say ever because we had once earlier tried to do diesel when we had the Peugeot engine and it did not click. So we needed better technology. That Peugeot engine was actually a dying engine. They had stopped production of that engine. So we needed better technology but that time, the diesel and petrol prices were such that it did not matter. The real pressure for diesel came when government policy suddenly made the gap very large. Who was to predict that? How could I have known that within 2-3 months this Rs 32 gap would develop.
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