M&M's Jeeto be a worthy contender in SCV segment: Goenka

Launch of 'Jeeto'  a small commercial vehicle (SCV) by Mahindra and Mahindra is about the disrupt the status quo in that segment, which so far was dominated by Tata Motors and Ashok Leyland. Speaking to CNBC-TV18’s Alexander Mathew, Pawan Goenka, executive director, M&M at the launch of the vehicle said the new SCV is sure to be a worthy contender. and added that  the vehicle also has a new m-Dura engine.The company so far has invested about Rs 300 crore in the product out of which Rs 150-200 crore has gone into the plant and rest into production, said Goenka.Jeeto has been launched in eight variants priced between Rs 2.32 to 2.7 lakh. Below is the transcript of Pawan Goenka’s interview with Alexander Mathew on CNBC-TV18.

Q: What will be the demand for this product?A: If I sub-divide the segment, there are three sub-segments where this will pull customers from; the three-wheeler segment, where we have presence with our Alpha, the 0.5 tonne segment where we have very small presence with our Gio and the mini-truck segment where we have presence with our Maxximo. If you look at these three segments together, we have a market share of 16 percent today. And therefore, there is room for us to grow from 16 percent because if we had been at 60 percent then it is very difficult to grow from 60. Since we are 16, there is very good room for us to grow to whatever number and therefore we have a good volume potential too, getting customers from three sub-segments which is a market capacitor. Volume capacity is 250,000 vehicles per year, looking at the last two or three years. Q: When was the product actually conceptualised and take us through the capital expenditure (Capex), the spending that went into this product. A: About four years ago, when we conceptualised the product and started the work. Here we also worked on a brand new engine, m-Dura that we have launched today along with the vehicle. We have invested about Rs 300 crore on this product out of which about Rs 150-200 crore has gone into the plant and the remaining into the product itself. We had a team of almost 200 engineers working on this project for the last four years at Mahindra Research Valley (MRV) that is the engine and the vehicle. Q: We are at the Zaheerabad plant where an expansion of capacity has actually taken place. Take us through the expansion, what was the cost involved in expanding that capacity?A: Let me take it in two phases. First phase is when we inherited this plant from the old Allwyn Nissan and that was 20 years ago. At that time, this plant was making about 10,000 vehicles a year. Today, the plant has capacity of making 250,000 vehicles a year. During this period of 20 years, we have invested Rs 1,100 crore. But bulk of that investment, more than half has happened in the last two years when we did the new tractor plant which has a capacity of manufacturing one lakh tractors in three shifts. This Jeeto plant has a capacity of manufacturing 92,000 vehicles in three shifts. So, in this we have invested about Rs 550-600 crore.