The plant already has a capacity of 5,500 trucks per month and by year end, the company plans to increase the target to 7,000, and eventually to 8,000 a month in next 2-3 years, says Vinod Aggarwal, CEO, VE Commercial Vehicles.
The company sees maximum potential and revenue coming in from the heavy duty segments, said Vinod Aggarwal, CEO, VE Commercial Vehicles.
VE Commercial Vehicles is a 50:50 joint venture between the Volvo Group (Volvo) and Eicher Motors.
It currently enjoys a market share of 4.2 percent in the heavy duty truck segment, but Aggarwal targets 15 percent market share going forward.
The company has already invested Rs 2,700 crore in the last four years and has earmarked Rs 4,000 crore for capital investment, he added.
The allocation of Rs 4,000 crore will also cater to the new emission norms, Aggarwal said.
The plant already has a capacity of 5,500 (number of trucks) per month and by the year end, the company plans to increase the target to 7,000 per month, and eventually to 8,000 per month in the next 2-3 years.
Below is the verbatim transcript of Vinod Aggarwal's interview with Farah Bookwala on CNBC-TV18.
Q: Tell us more about the heavy-duty segments?
A: Heavy-duty segments is an area where the potential for growth for us is maximum, so our strategy going forward is to continue to focus more and more on the heavy duty segment and we will get the maximum growth from that segment.
Q: Currently you have about 4.2 percent market share in the heavy duty truck segment specifically speaking. What is the realistic target at VECV? Where do you see this figure going?
A: In the medium-term our aspirational target is to reach up to 15 percent market share in the heavy-duty trucks. However, in FY17 the heavy-duty segment might touch its new peak. The earlier peak was in 2011 when the market size was around 240,000. In the year 2015-16 the market size was 228,000, which is very close to the earlier peak.
Q: Give us a sense on the investments that you are planning?
A: This year we have earmarked around Rs 400 crore for additional capital investments in addition to around Rs 2,700 crore that we have already invested in the last four years, so we are continuing to invest. This new allocation is not only going to happen in the new products but that will also happen for the new emission norms which are going to come up, from 2020 we will have Euro VI norms and also the capacity expansion because as the market goes up we will increase the capacity.
However, in the current year we have a capacity of 550,000 per month. We are already working at more than 100 percent capacity and by the year end we are planning to take up the capacity to 7,000 per month. Hence, from this plant we will be producing 8,000 trucks per month in the next two-three years.
Q: What are the biggest triggers for growth in the heavy duty bus segment? What is going to propel that growth?
A: The biggest trigger comes from state transport undertaking because they are the largest users of big buses for intercity transport. However, in the last three-four years they have not replaced the fleet because they were short of funds, so they were not replacing actively, but from this year onwards they have started replacing. Therefore, we already have orders for heavy duty buses from the state transport undertaking, which we will be supplying over the course of this year.The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .