In an interview to CNBC-TV18, Vinod Aggarwal, MD & CEO - VECV-Eicher Motors spoke about the latest happenings in his company and sector.
"BS-III inventory is not very high, it is around sub-2,000 or 1,700-1,800. We should be able to export quite a bit out of it maybe more than 50 percent of it and balance we should be able to convert to BS-IV", he said.
Below is the verbatim transcript of the interview.
Latha: This is a big high, you have sold 2,000 vehicles more than you sold in February, was all of it BS-III and how deep were the discounts?
A: With respect to March 2016, it was 8.5 percent higher. So March is traditionally a higher month. So from that point of view, it was quite normal.
Latha: How much had you to offer by way of discounts?
A: Because the retails had to be more, there was only a window of two days, definitely if the dealers had to clear their stocks, they would have offered some higher discounts, we are still assessing the figures. But there will be some impact but not much for Volvo-Eicher Commercial Vehicles (VECV) because as such our stocks were not very high because we always maintain a very healthy stock line and then of course we also had BS-IV – because BS-IV - already the vehicles were sold in March for example, all our buses which are going in the metro cities or for schools, they are all BS-IV. Similarly, some of the trucks also are BS-IV. So we had a mix of BS-III and BS-IV and then of course we are in a much healthy position as far as the stocks are concerned.
Sonia: What was the BS-III inventory that you liquidated in the month gone by and how much leftover BS-III inventory you have now?
A: Overall, if you look at including both the dealers, as well as with the company, we would be leftover with around 1,700-1,800 stock levels so some 2,000 units.
Sonia: Because of the discounts that you gave on the BS-III inventory that you liquidated in March, would that hamper your margin at least in Q4?
A: There may be some impact but the volume also was high. So there will be some leveraging benefit and some impact of discount. Overall, I would say let us hope, because we are still working out the figures. So results will be out within next one month and we will see at that point of time.
Anuj: How does the market share stack up now between the three largest players, you, Ashok Leyland and Tata Motors?
A: We have improved on our market share position. If you look at the heavy duty segment, we have improved the market share by more than 100 bps. We are now at close to 5 percent market share in heavy duty trucks. Last year we were at sub-4 percent and if you look at the buses, there also we have improved by 100 bps, we are at 17 percent as against 16 percent last year and in light and medium duty trucks which is 5-15 tonne, we are almost flat at around 33 percent market share. So overall we have done extremely well as far as our market shares are concerned.
Overall, we have finished the year very well with a growth of 12.5 percent in the volume terms at more than 58,000 units including Volvo and Eicher both put together as against 52,000 last year whereas the industry has grown by only 4 percent. So we have improved in all the segments particularly in exports, we have improved by 23-24 percent and all time high exports of more than 8,000 units.
Sonia: Is the government extending any help to any of the commercial vehicle makers to get rid of their unsold BS-III inventory and what would the cost involved be to convert from BS-III to BS-IV engines?
A: As far as the government help is concerned, we have not heard anything on that but as I told our inventory is not very high, it is around sub-2,000 or 1,700-1,800, the right number will be known in the next few days because we are still getting the reports from the dealers. We should be able to export quite a bit out of it maybe more than 50 percent of it and balance we should be able to convert to BS-IV. So as far as VECV is concerned, we will be able to manage. This decision has impacted the industry very badly.
Latha: Generally how is business going forward, are you seeing a little bit of a pick up? Overall the industry still seems to be a little downbeat?
A: Month of April always is less than March because March is a financial year end for most of the companies and because of that there is a lot of buying happening in March. Definitely there was some pre-buying also. So because of that we expect that April month should be subdued to that extent but at the same time since the channel stock have come down significantly so again there will be filling of the channel stock. So to that extent, I expect the wholesales should be better.
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