Fiscal 2017-18 had been a largely satisfactory year in a challenging business environment for the Chennai-based Ashok Leyland. India’s second largest medium and heavy commercial vehicle maker had witnessed record sales. And, the Hinduja flagship company managed to retain market share in the face of stiff competition. Ahead of its global summit last week, managing directorVinod K. Dasari shared his thoughts about the firm and the auto industry.
Is the economy doing well?
Nobody will buy so many tippers to park them somewhere. Ask two-wheeler makers, car companies or white goods’ makers. All of them produce at record levels. So, who is consuming all of these? For several months, we faced challenges in producing a higher number of the large trucks. JCB is producing construction equipment like never before. Where are these vehicles and equipment going? And, it is not mining. Coal mining or iron ore mining is banned. All these vehicles and equipment are going to infrastructure development. This is a reality.
Why is then there is so much negativism around?
I am quite satisfied with the economic growth. I think all of us should focus on discussing larger issues that affect our economy instead of fighting over petty issues. I don’t know why there is so much negative picture about the economy. I can only say that the demand is at its peak. Bank accounts can be opened in a few minutes by showing your Aadhaar card even in rural areas.
What about the cash crunch?
Cash not available might be a temporary thing because of logistics issues. I look at macro things. Are they building roads? Are people buying lots of white goods and homes? Are farmers getting their money in time? Have the rains been positive? Yes. I am very bullish about the economy.
Do you think that you need to set up one more plant?
We are possibly the only commercial vehicle manufacturer in the world that operates on a negative working capital. This is because we have a very tight operational component. We have more plants than all our competitors combined together. That doesn’t mean that I get more capacities than all of them. We would possibly invest in de-bottlenecking our existing plants and go for outsourcing wherever it is necessary. And, we will be investing in suppliers to improve their capabilities. I don’t think we require a new plant now. Maybe we might put up a new unit for LCV (light commercial vehicles) in Pillaipakkam where we already have some land.
How is Ashok Leyland getting ready for the upcoming growth trajectory?
There are two important areas which we have not talked about in detail so far. We are sowing the seeds now and that will show very good results in [the] future. First is our digital strategy. We have created a telematics unit that collects all kinds of data on the truck and sends it back to us as we have created machine learning algorithms etc. to improve the performance of the vehicle, [the] driver and so on. ServiceMandi (a digital mobile app-based platform for commercial vehicles which helps trucks and buses locate the nearest local mechanic in India to avail services such as breakdown, repair or maintenance) is another successful example. This business is now worth ₹100 crore. We expect this to grow to about ₹500 crore by next year.
Another important area is on an emerging trend. Maybe in five years, trucks will become a commodity. There will hardly be any difference between trucks of different brands. One of the things that we learnt is 90% of what our customer spends in a lifetime of a vehicle comes after the vehicle is sold. So, we have created a whole new vertical — customer solutions business. This is launched about six months ago. Technology is our core — whether it is trucks, buses or electric vehicles. We will continue to focus on Indian innovation, and we will not do cut and paste job for a new technology. So, how do I partner with my customer for his lifetime? This is the new Ashok Leyland we are trying to build.
