Moneycontrol
Get App
Last Updated : Sep 02, 2016 04:06 PM IST | Source: CNBC-TV18

Seeing some pressure on freight rates, margins: Volvo-Eicher CEO

In an interview with CNBC-TV18, Vinod Aggarwal, CEO - VE Commercial Vehicles, Eicher Motors, talked about freight rates and the margin situation for the industry and the company, respectively.

In an interview with CNBC-TV18, Vinod Aggarwal, CEO - VE Commercial Vehicles, Eicher Motors, talked about freight rates and the margin situation for the industry and the company, respectively.

Below is the verbatim transcript of Vinod Aggarwal’s interview to Ekta Batra and Prashant Nair on CNBC-TV18.

Ekta: First what has lead to the sales slowing sequentially for the third consecutive month? When can we expect some pickup in demand?

A: Last two months we have seen some muted growth. In fact there has been decline in the month of August and there were some decline in the month of July also. This is also attributed to monsoon months. So, we are still hopeful that this month onwards and from the festive months we should see again growth coming back.

Prashant: So, we understand from channel checks that freight rates have weakened over the last three months. What is your sense on both freight and traffic movements?

A: Yes, that is quite alright because these months are off season months. So, the freight availability is less. But it will grow as we get into the festive months and then of course there will be more demand drivers coming through, more demand through better monsoon impact. Rural incomes as well as Seventh Pay Commission impact all these things will start kicking in and that will lead to more demand and that will lead to more movement of goods and services as we get into the festive months. So, we should see the freight rates going.

The other reason for transporters is that the diesel rates of course have gone up in last few months. In fact if you compare to earlier it had come down to almost Rs 43-44 per litre in Delhi. Now it has gone back to almost Rs 53-52 per litre which is a huge increase as compared to the earlier lower rates. This increase in diesel rates it has not been matched by the corresponding increase in freight rates. So, that is the other thing which has impacted the transporters but of course if there is a demand then of course the transporters will be able to pass on this increase in rates.

Ekta: Last quarter was strong with 9 percent margins. Is this sustainable, are you seeing pressures on realisations due to heightened competition as well as discounts?

A: I cannot give a forward statement on the margins. But as such it is not much matter of concern. Even though there are still discount levels continuing to be high. So, margins continue to be under pressure. But we are managing through various other methods, like cost reduction, they are getting tremendous focus in our company. So, it has to be from both sides, one is from the pricing side and other is from the waste reduction and cost reductions which of course we are continuing to adapt from both sides.

India Union Budget 2019: What does Finance Minister Nirmala Sitharaman have up her sleeve? Click here for top and latest Budget news, views and analyses.
First Published on Sep 2, 2016 03:59 pm
Loading...
Sections
Follow us on
Available On
PCI DSS Compliant