Growth to come in from international, defence biz: Tata Motors

Tata Motors, whose domestic sales have been muted for the past few years, expects a pick-up in overall sales on back of international and defence business, says Ravi Pisharody, Executive Director - Commercial Vehicles of the company adding that the plan is to de-risk the domestic business. Currently, domestic sales contribute 85 percent to the total standalone revenue.Speaking to CNBC-TV18, Pisharoday says that 20-25 percent growth is expected in international business in the current fiscal. Two to three large defence orders will double the turnover for the company. Tata Motors is aiming to increase exports to 25 percent of overall business in next two years and grow this number to 45-50 percent in future, he says. Export volumes are expected to touch 1,00,000 units in 3 years.Below is the verbatim transcript of Ravi Pisharody's interview to Farah Bookwala Vhora on CNBC-TV18.Q: Tell us about the defence order and products in the pipeline.A: We also need to de-risk our domestic business, so the domestic business is contributing to almost 85 percent. It is large and international business -- while it is growing, it is not sizeable enough to offset a downtrend in domestic. So that is one of the strategies we are focusing on. For instance, this year, we will see a strong growth in international business 20-25 percent, which will be the second year in succession. Defence is a third leg. So if you look at what are the counter-cyclical businesses we might have -- international business is one, defence business on the basis of one-two orders, our turnover in defence is just doubling this year. We have a lot of products and orders in the pipeline.Q: You ended last year with exports of about 54,000 units, so at what volume level do you think you would be comfortable enough to offset the downturn in the domestic market and how long would it take Tata Motors to get there?A: Till about three-four years ago, exports was not as profitable as domestic business.We have corrected that and fortunately the exchange rate scenario in India has also gone in a direction that our export contributions are equal to the domestic contribution. So it is a profitable business. Today it is at 15-16 percent of the total company business. We are expecting it to be 25 percent in two years time and overtime we do expect it to grow to 40-50 percent. In a three-year timeframe we expect the volume to be about 100,000 then going on to 150,000 somewhere down the line.Q: Coming to the diesel ban issue, the broad definition of 2000 cc diesel ban in Delhi-National Capital Region (NCR) means over a period of time even commercial vehicles (CVs) were drawn under the ambit of the ban. Now that the Supreme Court (SC) has taken cognizance of Mercedes' plea and has struck down the diesel ban in Delhi NCR in view of one percent green cess, what is the locus standi of the plea that you had made in the National Green Tribunal (NGT) and are you still pursuing that or are you going by the SC's verdict? Would that mean that commercial vehicles are also liable to pay the one percent green cess?A: Firstly, it is my perception that the initial position that diesel vehicle, above 2000cc, should not be registered in the Delhi or NCR area, was not intended for CV however, some interpretations made CVs also come under the ambit. We have tried to seek clarification but it was not forthcoming and now the issue has been settled as far as the car business is concerned that there is no restriction now but there is one percent cess.Our early understanding of the execution was that the commercial vehicle will also be attracting one percent cess, which we believe was never the intent. So we are taking it up with the authorities to have clarifications. Right now, I don’t know what is the position whether the one percent cess is being charged or not but if it is being charged, we definitely intend to take it up that it is not something which is what was intended in the legislation in the first place.