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00:00We are now taking stock of VECV on the back of their September sales as well as their
00:04outlook for the full year as well as any kind of commentary they have on the new PM eDrive
00:08scheme as well.
00:09We are now joined by Mr. Vinod Agarwal, MD and CEO of VECV.
00:14Good afternoon sir and thank you so much for joining us today.
00:16I wanted to start off with the September sales numbers because it was a very strong show
00:20by VECV in this particular month.
00:23When you look at the competition as well, both players have reported a negative sales
00:28outlook while you have shown 5-6% growth in this particular month.
00:32Talk to us what led to this particular growth and we will get into the FY24 outlook in just
00:37a bit.
00:38But just for September, what led to this strong growth?
00:40Absolutely, as we have said, we have grown by 5.7% in September and in fact, if you look
00:48at our track record even last full five months, we are consistently doing better than the
00:56industry.
00:57So September the industry has dropped by almost 16% and we have grown by 5.7% which means
01:03that we are improving on our market shares every month and that is happening because
01:12of very, very, you can say, wide product range and then of course we are also improving on
01:19our network.
01:20We are adding more distribution points and then of course it is based on the satisfaction
01:29of the customers with us that they are preferring Aishwarya trucks, Aishwarya and Volvo trucks.
01:36So all these factors combined together, we are doing better than the industry.
01:41Now before I come to the new scheme which is coming by the government, I wanted to talk
01:46about your segmental performance as well because we have seen for this month as well
01:51as for FI25 specifically, you have shown positive growth while the other players operating in
01:58the space are still 1-2% down.
02:00Now you have shown good growth in the heavy-duty trucks specifically while the light and medium-duty
02:07trucks has been around 3-4% fall for these first six months, for the first half of FI25.
02:13How are you seeing the market now going forward for both these segments because it's a divergent
02:18trend that's happening in the industry versus what's happening at VECV, so just talk to
02:22us on that also a bit.
02:24Fundamentally, if you look at the heavy-duty trucks first, in heavy-duty trucks we are
02:30still relatively a very small player.
02:34So we have a very high room for growth.
02:38We are still both Aishwarya and Volvo brands put together.
02:43We have a market share of around 9.7%, which is still, you can say it is much, much lower
02:50as compared to the other players.
02:52So therefore, we have a very clear objective that we have to consistently improve in our
02:59market shares in heavy-duty trucks.
03:02And that's what we have been doing over the past few years.
03:05Step-by-step, steadily, we are improving the heavy-duty trucks market share based on a,
03:13you can say, very wide product range and improved distribution network and better customer satisfaction
03:22with our products.
03:23For example, we are offering better fuel efficiency, all our trucks are connected, and we are offering
03:31various services which are based on these connected trucks, very advanced telematics system.
03:42We are providing predictive maintenance.
03:44So we are providing various types of value-added services which customers are preferring and
03:51they are liking that, and more and more customers are therefore moving towards our trucks.
03:57So that is why we are improving the market share.
04:01And if you look at the light and medium-duty trucks also, even though there is a drop as
04:08compared to the previous year, but that drop is less than the drop in the industry.
04:13So therefore, in the light and medium-duty trucks also, our market share is consistently
04:18improving.
04:19On a YTD basis, our market share is now 35% plus.
04:23So there also, we are doing better than the overall industry movement.
04:29Point well taken, Mr. Agarwal.
04:31Now just wanted to shift focus a bit to the electric truck side as well, because we've
04:35seen the new scheme announced in the PM eDrive scheme.
04:38Now there is, while we are still awaiting the final prints of the day scheme, there
04:45is an understanding that roughly about 35% to 40% allocation will go towards buses as
04:51well as trucks will also getting a higher exposure now compared to FAME 2.
04:55How are you seeing the new PM eDrive scheme as a whole?
04:58And I'll come to the payment security mechanism a bit later on.
05:02Just wanted to understand on allocation and what's announced until now on the PM eDrive
05:06scheme.
05:07How do you see that playing out over the next couple of years?
05:12And where is VECV in terms of electric trucks as well as LCVs as well specifically?
05:19If you look at the eDrive scheme, PM eDrive scheme, now all the details are available.
05:24Government has already issued the notification and they have given the complete details that
05:28how much is the allocation for each category of vehicles.
05:32For example, for buses, government is proposing to give this subsidy for 14,000 plus buses
05:40and the amount allocated is around four and a half thousand crore.
05:44I don't remember exactly, but it is around four and a half thousand crore.
05:48And the subsidy will range from 20 lakhs per bus to 35 lakhs per bus depending on the capacity
05:55of the bus.
05:58And then, of course, as you mentioned, payment security mechanism is also there, which earlier
06:03was not there.
06:04So they have allocated around three and a half thousand crores in addition to PM eDrive
06:09scheme, which will go towards mechanism of security for payment by the state transport
06:20undertakings.
06:21So that is also a very good scheme.
06:24Just wanted a bit more color on this because you mentioned previously in our previous conversations
06:29as well that the absence of this payment security mechanism is keeping you out of the market
06:35because the current mechanisms or the fares that is allocated and the operationalizing
06:43of the buses for the next 10 to 12 years once you sell the buses as well is a key concern
06:49that you had.
06:50How are you seeing and what's the current strategy for VECV after this change and addition
06:55of payment security mechanism?
06:58I think that was one of the very big concerns for the entire industry that the buses were
07:04given on gross cost contract basis, under which you are not only giving the bus on a
07:12lease basis, you are also running and maintaining the buses.
07:18And of course, you get the payment in the form of per kilometer basis every month.
07:24Now, this payment has to come for 12 years, since this 12 year is a very long period and
07:31the exposure is on the state transport undertakings.
07:35So there was the risk of payment coming on time during this 12 year period.
07:41Therefore, the industry had been discussing with the government that unless there is a
07:45security mechanism by which the payment is guaranteed, suppose there is some default
07:50in any payment, then of course there should be some mechanism under which that default
07:55can be corrected immediately.
07:58So that government has now addressed that concern.
08:00So therefore, we are expecting now the new tenders will be floated by CESL and then under
08:09those tenders, we will participate.
08:11And of course, we have all the products and we are very keen to participate in these tenders.
08:17Well, that's great to hear Mr. Agarwal.
08:19So just confirming, so you already have an EV bus product that's already ready and ready
08:25to go in the market.
08:27And do you also have an EV truck also that is already ready to go in the market or what's
08:32the timeline on both these aspects?
08:33No, we have both the products.
08:35We have the trucks also and we have the buses also.
08:39Just one final question, Mr. Agarwal.
08:41Now, how are you seeing the fiscal year for VECV as well as for the industry?
08:46Because while quarter 1 was very strong, which was a key surprise for many, quarter 2 has
08:52been a key laggard, which generally is slower for the industry, for commercial vehicle segments
08:56specifically.
08:57Now, the impetus has shifted to growth in H2 itself.
09:02So how are you seeing the industry growth for Q2 for trucks as well as buses specifically?
09:08And if anything, you can quantify for VECV as a whole for FY25.
09:12I know you are in silent period for Q2, but for FY25, how are you seeing the volume growth
09:17for VECV as well?
09:20As you have rightly said, the Q2 has been down as far as the entire industry is concerned.
09:27Like for example, the month of September, the industry has been down by around 16% for
09:333.5 tonne and above vehicles.
09:36The months of July and August also were down by 8% and 9% respectively.
09:41So the entire quarter 2 has been down.
09:44Quarter 1, of course, there was growth.
09:47So both the quarters put together, the industry is down around by 2% first six months.
09:53And as against this drop of 2.2%, I think, we have a growth of 3.5%.
10:01So we have consistently done better than the industry.
10:04Now, if you look at second half, I think there are a lot of positive factors in the second
10:09half, which should give better situation for the industry.
10:14For example, infrastructure investments will start in a big way because the government
10:20has now allocated a lot of allocated money for the infrastructure projects in the last
10:28two cabinet meetings.
10:29Various decisions have been cleared, allocating the money for rural areas as well as for the
10:36infrastructure projects.
10:38And the overall allocation, of course, for the full year has been very handsome, 11.1
10:43crores.
10:44And most of that will happen in the second half only.
10:48So therefore, infrastructure will lead the growth story in the second half.
10:53Apart from that, the other fundamental factors are also better, like monsoon has been better
10:59this year.
11:00Rural economy is relatively better as compared to the earlier years.
11:04We have seen the two wheelers also are now doing well, scooters are doing better, which
11:10are largely in the rural economy.
11:14So therefore, rural economy is better.
11:16There is a good economic case for doing more replacements.
11:19Then, of course, we are also expecting that there will be some respite in the interest
11:24rates.
11:25Reserve Bank of India might reduce the interest rates in the coming months because inflation
11:31is better controlled.
11:34Inflation is now, retail is just around three and a half, four percent.
11:40And of course, the other factors are also positive.
11:44Like if you look at the overall economy, we are expecting good growth in the economy.
11:48The challenges are only geopolitical factors, because this war which is now going on and
11:53there are chances of escalation.
11:56I think these are the factors which create the negative sentiments and which, of course,
12:01lead to some people waiting and watching.
12:04I think that is the biggest risk which currently we are having.
12:09Other than that, I think we have all the positive factors and we are very optimistic
12:13that second half will be much, much better than first half.
12:16Well, that's great to hear.
12:17So just one final question on your domestic bus market share.
12:21Now, you spoke about the electric bus market that you will be able to enter now with this
12:24new scheme.
12:25I just wanted to ask you for your strategy on ICE as well, because we've seen that the
12:31market is divided between a couple of players having one third market share while the others
12:35are cramping for the third part.
12:37How are you seeing the strategy for VECE specifically on the ICE bus market over the
12:42next 12 to 24 months, if longer term as well?
12:46Do you have any kind of target market share that you want to achieve?
12:50If you look at the bus market, in fact, that is the segment which is doing very well.
12:54Even though the trucks are down in the first half, the buses have grown by 21% in six months
13:00and buses are all-time high.
13:01Even last year also, bus market was all-time high.
13:06And this year, for six months, there is further growth of 21% on the higher base.
13:11So therefore, I think the bus market is doing very well.
13:14And within the bus market, we are also doing much better.
13:17Our market share in the light and medium duty buses, it is around 24-25%.
13:23And in heavy duty buses, we are around 10%.
13:26So overall, we are growing in the bus market also.
13:31We have good plans even for the second half and we are expecting to have good growth in
13:36the bus market in the second half as well.