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Last Updated : Apr 12, 2017 10:40 AM IST | Source: CNBC-TV18

Eicher Motors all set to mfg BS-IV compliant vehicles; see Q4 better than Q3

The inventory will be at normal levels of three weeks to four weeks post April and won't be impacted because of BS-IV norms, said Vinod Aggarwal of Eicher Motors.

Eicher Motors is set to start manufacturing BS-IV norm compliant vehicles post April 1, said CEO-VE Commercial Vehicles Vinod Aggarwal, adding that they are also not too perturbed about the inventory levels.

The inventory will be at normal levels of three weeks to four weeks post-April and won't be impacted because of BS-IV norms, said Aggarwal.

The company has not provided any special discounts for the sale of BS-III compliant vehicles in March, said Aggarwal, adding that fourth quarter seasonally has been a strong quarter for them. This year Q4 will see more growth due to pent-up demand of Q3 that was impacted by demonetisation, he said in an interview to CNBC-TV18.

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The Indian automobile industry is gearing up to commence production of vehicles compliant with Bharat Stage-IV Emission norms (BS-IV) from April 1 across the country.

According to him, the new tax regime that will kick in after rollout of GST on July 1, it will benefit the consumers tax wise and so may incentivize them to buy more trucks. Moreover, there is also expectations that lot of efficiencies will come about in terms of distribution, productivity etc which would be good for the industry.

The work on adapting to different tax regime is already in progress for the company, he said.

Below is the verbatim transcript of the interview.

Anuj: At Eicher Motors, are you fully compliant, fully ready?

A: Absolutely. We are ready for BS-IV from April 1. All the vehicles manufactured from April 1 will be BS-IV.

Latha: What about inventory. How much of BS-III inventory are you carrying and how much are your dealers carrying?

A: Inventory is always normal; take any cut-off whether March 31 or any other date. There always be some inventory with the channel and some with the customers. So it will be normal inventory which will be three weeks to one month.

Latha: Have you seen any accelerated pre-buying. What are the discounts that you are offering on that?

A: There are no special schemes which we have launched in March for selling more BS-III vehicles. It is in the normal course. However, if you compare this quarter with last year's January-March quarter, I would say it is almost similar. There is some growth and there was also some pent-up demand because of November and December, because of demonetisation the industry was down. So in this quarter it will catch-up with respect to the commercial vehicle sales and compared to last year's quarter it would be 2-3 percent growth because last year's January-March was a bumper quarter.

Anuj: Your monthly run rate has been strong over the last four months. Month-on-month we have seen big improvement. From 3,000 in November now all the way to 5,400 in February and February was 28 day month. What kind of run rate can we see now?

A: November was low because of demonetisation. In normal course November should have been 5,000 plus. So November and December were low months because of demonetisation.

Anuj: I guess February was a pent-up demand taking over but what kind of run rate now? Will it be sharper in March?

A: March last year we sold 6,500 because January-March is the last quarter of the financial year and there is always more activity because it's the financial year end for most of the customers; they buy a lot of trucks and they get depreciation benefit. So because of various reasons, last quarter is a bigger quarter.

Latha: What about April-June because that will be the last quarter before goods and service tax (GST) comes in. So you all may want to clear out inventory even at that time. Do you expect a strong April-June?

A: I am keeping my fingers crossed. Let us see what happens.

Latha: Your GST rate will be the same, isn't it? The same tax you are paying now will be the tax from July 1st?

A: We feel it is going to be around 28 percent which is almost similar to the tax rate which we are paying now.

Latha: Would you expect July-September to be sober because you will have to come to terms with the new taxing?

A: I think once the GST kicks in; let's see how it impacts the customers. My assessment is that the customers will get the benefit and that should incentives them to buy trucks because they will get the GST credit for the entire tax which they pay as input tax credit. So let's see how the equation works out but after GST things should be better because a lot of efficiencies will also kick in in distribution and entire productivity will improve.

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First Published on Mar 23, 2017 11:33 am
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