M&M performed well on strategy, not fuel prices: Nayer

In his interview to CNBC-TV18 after Mahindra & Mahindra (M&M) posted positive results, Vivek Nayer, senior vice-president-marketing, automotive division, points out that the high contribution of exports to results is due a correction from the previous month.

He confirms that the company's performance is due to right strategy and not the due to the huge difference between petrol and diesel prices. Below is an edited transcript of the interview on CNBC-TV18. Also watch the accompanying video.   Q: The results are a positive surprise to the street particularly led by exports and the 84% growth was not expected. What led to this surprise? Do you see the export markets doing better than the domestic markets in the near-term?
A: Our exports have seen a bit of a correction from the previous month. Q: Do you see the trend of positive results holding up especially with the huge difference between petrol and diesel prices? Do you see this trend aid the domestic volumes to outperform the industry average?
A: We have grown 28% in May and that is a good performance We are very pleased with the performance especially because the overall market sentiment is very poor and we have been outperforming our competitors and the industry in which we operate in.
So I do not think it's just a diesel or petrol issue because we have competitors who have diesel vehicles as well.
But our strategy has been working well and our new product launches have been doing extremely well like the XUV 500 and the Maxximo mini van. Our refreshed models have done well like the stylish new Xylo.
Other existing products like the Scorpio, Bolero and the Pick Up continue to do well. So it's the across-the- board performance which has helped drive results. Q: Can you provide a breakup of where you exactly see the maximum growth come in specifically for utility vehicles?
A: Our passenger-vehicles segment, which include our passenger UV models and the Verito , has grown 27%.  The four-wheeler commercial and small commercial vehicles including both load and passenger segments, has grown 33% and this is where the contribution of the Pick-UP and Maxximo comes in.
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So in both these segments, we have done well. There are signs of weakness is the three-wheeler segment which has posted a small fall of 4% as it is most sensitive to interest rates, costs and overall investor sentiment, which is going through a slowdown. Q: Combined with new launches expected in FY13, what is your target for the next few months if not the year?
A: We never talk about our internal targets till they are achieves and declared. But the overall industry growth expectation is between 10-12% and for the UV segment we expecting a slightly higher growth.
As I said, we have been outperforming the industry. Our launches include the compact SUV Rexton and the hard top brand Maxximo. By the year end we will come with sub 4-metre Verito. We are cautiously optimistic as we move forward because, as I said earlier,  overall consumer sentiment is quite poor. Q: You said that exports had corrected from May. In May, exports were about 1,420, which was lower than the average. So, do you think this was just a carry-forward of what was to be done last time around? Do you think the monthly average will be slightly lower than what's been reported this time?
A: You need to look at both months put together. But having said that, overall, we are doing well in exports. We launched the XUV 500 in South Africa and there are plans to launch this product in Australia and Chile too.
So, we are fairly positive on the export side. It’s just that this particular month we are not reading much into the 87% growth because of the correction from last month. Q: There is a lot is speculation about duty on diesel vehicles. But if you were to defend your case on the government’s proposal to levy a duty on diesel cars because of the wide difference in prices, what would be your plea?
A: I don't even want to comment or enter into a debate on this speculation. Q: What was the incremental growth in diesel vehicles on a year-on-year basis? Is it  just an percentage increase or is it the difference between the two?
A: I don't have the figures with me, but diesel vehicles have performed much better than petrol vehicles. As I said earlier, as far as Mahindra’s performance is concerned we have outperformed the industry and that’s not just because of the absence of a hike in diesel prices.
It has much to do with our strategy which is driven by innovative products, extending reach and making sure that even the existing products are refreshed and continue to grow well.