Tata Mo­tors looks up to an ex­cit­ing fu­ture

Post the tran­si­tion to BSIV, Tata Mo­tors is eye­ing strong growth.

Commercial Vehicle - - WHAT'S INSIDE - Story by: Bhushan Mhapralkar

Post the tran­si­tion to BSIV, Tata Mo­tors is eye­ing strong growth.

Like many other com­mer­cial ve­hi­cle man­u­fac­tur­ers, de­mon­eti­sa­tion af­fected Tata Mo­tors too. The end of FY2016-17 marked not just the end of a tu­mul­tuous pe­riod, it also marked green shoots. For ex­am­ple, buses did ex­ceed­ingly well. For Tata Mo­tors, they posted a growth of 22 per cent against an in­dus­try growth rate of 10 per cent. This led the com­pany to grab the lead in the Indian bus mar­ket. LCVs also per­formed well for Tata Mo­tors. Look­ing at a new pe­riod that does not come of­ten, and will per­haps never come again, Tata Mo­tors is look­ing up to an ex­cit­ing fu­ture. Ac­cord­ing to Ravi Pishar­ody, Ex­ec­u­tive Di­rec­tor – Com­mer­cial Ve­hi­cles, Tata Mo­tors, the CV maker is con­fi­dent of in­fra­struc­ture revival help­ing it to grow. It is also look­ing at growth com­ing

from the push for elec­tric and al­ter­nate fuel ve­hi­cles. With teams in place, and post the sig­nif­i­cant struc­tural changes to as­sume a leaner form, the com­pany is ex­ert­ing a good deal of thrust on exports as well.

The Ul­tra, ac­cord­ing to Pishar­ody, is in the sweet spot. It is help­ing the com­pany, along with the Prima, to drive exports. Ex­port vol­ume ac­counts for

17 to 18 per cent of the to­tal vol­ume, and is ex­pected to go up to 25 per cent. Keen to of­fer the low­est cost of own­er­ship, Tata Mo­tors, in FY2016-17, saw the M&HCV seg­ment shake and rat­tle. A seg­ment where its new age prod­ucts, Signa and Prima, en­joy a con­sid­er­able clout. The months of April and May brought good growth to M&HCVs whereas the months of June, July and Au­gust proved to be weak. The rea­son, said Pishar­ody, could be at­trib­uted to GST. “GST started do­ing the rounds, and the PMO and the fi­nance min­is­ter be­gan talk­ing about its im­ple­men­ta­tion from April 2017. This seems to have led to lack­lus­tre per­for­mance of M&HCVs in June, July and Au­gust last fis­cal on the back of un­cer­tainty, as CV buy­ers, hop­ing that prices will fall, de­cided to post­pone their pur­chase. The talk of a tax struc­ture of 18 per cent would en­tail a drop in prices by 8 to 10 per cent,” he ex­pressed. The M&HCV seg­ment started gain­ing ve­loc­ity in Septem­ber, and be­cause of the good mon­soon. In Oc­to­ber 2016, and at the start of the fes­tive sea­son, the M&HCV seg­ment recorded the high­est growth in FY2016-17.

De­mon­eti­sa­tion

In Novem­ber 2016, the ef­fect of de­mon­eti­sa­tion was most felt in north and west, the mar­kets where Tata Mo­tors en­joyed the most ex­po­sure. “For a few days, the CV in­dus­try was lit­er­ally stranded on the road,” opined Pishar­ody. Point­ing at the way the trans­port in­dus­try works, Pishar­ody said, “A truck driver car­ries an amount of cash, which the driver and owner fig­ure out as nec­es­sary.” The in­dus­try de­clined over the next two months. Tata Mo­tors’ sales de­clined 30 per cent in com­par­i­son to Oc­to­ber, and 15 per cent in com­par­i­son to the cor­re­spond­ing month of the pre­vi­ous fi­nan­cial year. The same sit­u­a­tion pre­vailed in De­cem­ber 2016. In Jan­uary 2017, the ef­fect had vanned.

De­spite the En­vi­ron­men­tal Pol­lu­tion (Preven­tion and Con­trol) Author­ity for Delhi & NCR (EPCA) ex­ert­ing its stance, it was ex­pected that Fe­bru­ary, March and April 2017 would wit­ness pre buy­ing. An amount of pre-buy­ing did take place. Tata Mo­tors how­ever, took a bal­anced ap­proach ac­cord­ing to Pishar­ody. This en­sured that the CV maker did not carry much in­ven­tory into March 2017. “We looked at prece­dence, when ve­hi­cle man­u­fac­tur­ers were al­lowed to sell their ex­ist­ing stock, and not man­u­fac­ture it af­ter the cut-off date. The Supreme Court judge­ment was sur­pris­ing,” ex­pressed Pishar­ody. He said fur­ther, “Our strat­egy works around deal­ers car­ry­ing a stock of 30,000, all seg­ments in­cluded, at the end of March. It amounts to one month of stock, and some­thing which the dealer is able to carry into the next month. In this case, into April.” Pro­duc­tion of BSIII CVs was im­me­di­ately cut down on March 29, 2017, by Tata Mo­tors. More im­pe­tus was laid on BSIV ve­hi­cle pro­duc­tion, which the com­pany was al­ready ramp­ing-up. At­ten­tion was also

paid to help deal­ers to liq­ui­date their stock.

What made it im­por­tant to help the deal­ers liq­ui­date their stock was the sales tax com­po­nent al­ready paid. Tak­ing back dealer stock would have meant los­ing the paid tax com­po­nent. “We were largely suc­cess­ful in liq­ui­dat­ing the dealer stock,” stated Pishar­ody. Over a off-take and re­tail of 30,000 in Fe­bru­ary 2017, the March 2017 off-take was only 36,000. Tata Mo­tors did not push in­ven­tory, and the fig­ure the com­pany set­tled for in March 2017 was lower than March 2016. In March 2017, the com­pany wit­nessed solid re­tails of be­tween 51,000 and 52,000. Dealer stock of BSIII ve­hi­cles ac­cord­ing to Pishar­ody was very low as a re­sult. It was be­tween 3000 and 4000. Big trucks amounted to less than 500. At the plant level, the com­pany in­curred a stock of 15000 CVs. To get rid of 15000 BSIII CVs, Tata Mo­tors is look­ing at ex­port mar­kets. It is also look­ing at ag­gre­gates to be sold as spares. Putting the com­pany at a dis­ad­van­tage when it comes to mar­ket share in March, Tata Mo­tors re­ported a whole­sale vol­ume of 14000 as com­pared to a re­tail vol­ume of 22,00023,000. Out of the 15000 BSIII CVs left with Tata Mo­tors, the num­ber of M&HCVs, ac­cord­ing to Pishar­ody, is 4000 units. He in­formed that dis­cus­sions are

on to seek a le­gal rem­edy, and that the gov­ern­ment is sup­port­ive. Upon analysing, Tata Mo­tors found out that 80008500 units (out of the 15000 BSIII ve­hi­cles) could be ex­ported to mar­kets like Sri Lanka, Nepal and Bangladesh as they are. Con­sid­er­ing a monthly ex­port of 5000 to 5500, it would take the com­pany four to six months to get rid of the BSIII stock opined Pishar­ody. Of the re­main­ing ve­hi­cles (that are not ex­ported), Tata Mo­tors plans to con­vert to BSIV. An ICV like the Tata 1109, ex­plained Pishar­ody, can be con­verted to BSIV with a nom­i­nal cost of five per cent. Con­ver­sion of such ve­hi­cles has al­ready be­gun. In case of ve­hi­cles that would pose a con­ver­sion challenge in terms of ef­forts and ex­pense, Tata Mo­tors is mov­ing slowly. While hop­ing that a le­gal rem­edy is avail­able to dis­pose them, the com­pany is also look­ing at can­ni­bal­is­ing high value items like gear­box, tyres, etc. This would help it to ful­fill its long-term ser­vice

obli­ga­tions.

Be­gin­ning of a new pe­riod

Tata Mo­tors is look­ing at FY2017-18 as a com­pletely new pe­riod. The prod­uct per­for­mance equa­tion in com­par­i­son to the com­pe­ti­tion will change ac­cord­ing to Pishar­ody. The price po­si­tion­ing as well as cus­tomer el­i­gi­bil­ity will also change, said Pishar­ody. Terming the com­pany as a CV mar­ket leader, and fu­tur­is­tic in its ap­proach, Pishar­ody averred, “We will cater to price con­scious as well as per­for­mance con­scious cus­tomers.” The com­pany will bank on a dual strat­egy as the new pe­riod re­veals it­self. For lower pow­ered en­gine of up to 160 and 180 hp, the com­pany is look­ing at EGR. With an over­lap be­tween 160 hp and 180 hp, Tata Mo­tors is look­ing at de­ploy­ing SCR tech­nol­ogy on higher pow­ered CVs. “All Tata en­gines have EGR,” in­formed Pishar­ody. He said, “Look at the 497 en­gine for ex­am­ple, and it is equipped with an EGR. The new three and five-litre en­gines that power the Ul­tra will de­ploy EGR. Two-axle trucks and lower pow­ered buses will be equipped with EGR tech­nol­ogy. For muti-axle heav­ier trucks, SCR tech­nol­ogy will be de­ployed.”

If the stress on SCR tech­nol­ogy hints at an at­ten­tion to BSVI emis­sion norms, Tata Mo­tors is mak­ing a big jump in tech­nol­ogy. It is do­ing so with an in­ten­tion to achieve ben­e­fits like fuel econ­omy, re­li­a­bil­ity and lower main­te­nance costs. Pishar­ody may ex­pect higher re­sale value to come in once the mi­gra­tion to new (BSIV)

tech­nol­ogy takes place, and on the back of fuel, which will be dif­fer­ent from what was avail­able un­til now, the fact is, the next quar­ter looks lack­lus­tre. It is some­thing that Pishar­ody is well aware of. Es­pe­cially on the back of some pre-buy­ing in Fe­bru­ary and March. With GST sched­uled for July 01, 2017, an amount of un­cer­tainty is ex­pected. Un­cer­tainty is ex­pected go down in the sec­ond quar­ter of FY2017-18 ac­cord­ing to Pishar­ody. He opined that bus and SCV sales in July and Au­gust are ex­pected to be much bet­ter than they were dur­ing the cor­re­spond­ing pe­riod last fis­cal. Buses, he quipped, are al­ready on SCR. As 13 Indian cities moved up to BSIV emis­sion norms in 2010, Tata Mo­tors equipped buses and ur­ban ap­pli­ca­tion CVs like garbage com­pactors (on 1621

plat­form) with SCR tech­nol­ogy. SCR tech­nol­ogy for Tata Mo­tors is there­fore not new­found.

EGR vs SCR

Ramp­ing up pro­duc­tion of BSIV CVs, the com­pany has lim­ited the de­ploy­ment of SCR tech to Tata Cum­mins en­gines. The four-cylin­der en­gines that Tata makes, will con­tinue to be equipped with EGR. With Cum­mins, said Pishar­ody, Tata Mo­tors is en­joy­ing ac­cess to the lat­est and the most modern tech­nol­ogy. Apart from SCR equipped en­gines, Tata Mo­tors will also source EGR equipped en­gines from Tata Cum­mins in the 150 to 200 hp power range. Con­fi­dent of the GST el­e­vat­ing the ef­fi­ciency of the lo­gis­tics in­dus­try (by do­ing away with bor­der checks), Pishar­ody opined, “The strat­egy is to equip a cer­tain range of en­gines with EGR, and a cer­tain range of en­gines with SCR.” Girish Wagh, Head – Project Plan­ning & Pro­gramme Man­age­ment, M&HCV, Tata Mo­tors, ex­plained that they have ac­quired good global and local ex­pe­ri­ence from the use of EGR and SCR tech­nol­ogy. “For light-duty ap­pli­ca­tions of up to 150 and 160 hp, EGR can do the job, and would en­tail lower costs,” he men­tioned. SCR tech­nol­ogy, ac­cord­ing to Girish, makes sense for en­gines that are pow­er­ful as it will pro­vide bet­ter fuel econ­omy. “Beyond 180 hp, liq­uid econ­omy of SCR is bet­ter than EGR”. With the use of SCR en­gines, Tata Mo­tors is eye­ing the twin ad­van­tage of low­est cost of op­er­a­tion and longer en­gine life. Well aware that the move to BSVI emis­sion norms will make SCR es­sen­tial, BSIV trucks with SCR techlogy ac­cord­ing to Pishar­ody will com­mand good re­sale value.

With the en­gine gov­erned elec­tron­i­cally, Tata Mo­tors has had an op­por­tu­nity to add value. It thus de­vel­oped ve­hi­cle ac­cel­er­a­tion man­age­ment sys­tem that fil­ters driver in­put to en­sure op­ti­mum ef­fi­ciency and longer ag­gre­gate life. Tata Mo­tors has also de­vel­oped fuel econ­omy switch, the mode of which the driver can se­lect depend­ing upon the duty cy­cle and usage con­di­tion. A host of tech­nolo­gies have been de­vel­oped by Tata Mo­tors to in­crease ag­gre­gate life. Ef­forts to im­prove ride and com­fort were un­der­taken on the ba­sis of the feed­back re­ceived. The com­pany has de­vel­oped a modular chas­sis frame, which aligns with mul­ti­ple ap­pli­ca­tions. A new 6.5-tonne front axle has been de­vel­oped to fa­cil­i­tate higher load car­ry­ing ca­pa­bil­ity. Revealed Girish that 14000 com­mon-rail trucks are al­ready ply­ing in In­dia for the last seven years, and have pro­vided a good learn­ing op­por­tu­nity. The com­pany, averred Girish, is de­ploy­ing 1800-2000 bar pres­sure com­mon-rail sys­tems and DOC for EGR ap­pli­ca­tion. The price dif­fer­en­tial be­tween BSIII and BSIV Tata CVs is in the re­gion of 10 per cent. For the higher amount paid, the op­er­a­tor is get­ting much bet­ter value men­tioned Pishar­ody. He said, “We are of­fer­ing bet­ter AMC for SCR equipped ve­hi­cles.” Keen to en­sure that Tata CV op­er­a­tors en­joy lower to­tal cost of own­er­ship, the com­pany will mar­ket AdBlue so­lu­tion as a Tata brand through 3000 out­lets and fuel sta­tions.

Con­fi­dent of in­fra revival, and the ris­ing de­mand for elec­tric ve­hi­cles (a ten­der for 100 elec­tric-buses has been floated at Pune, and for at least six buses in Hi­machal Pradesh), Tata Mo­tors, ex­pressed Pishar­ody, is ex­pect­ing new reg­u­la­tions like AC, ad­vanced crash norms and CAFE to call for at­ten­tion in the next two years. “Pow­er­train and ve­hi­cle teams at Tata Mo­tors are in place for BSVI reg­u­la­tions that are due to come in force by 2020,” Pishar­ody

signed off.

⇩ M&HCV seg­ment, which in­cludes new prod­ucts like the Signa, wit­nessed much shake and rat­tle in FY2016-17.

⇧ Buses did ex­ceed­ingly well in FY2016-17 for Tata Mo­tors to grow faster than the in­dus­try grew.

⇩ For heavy-duty trucks above 180 hp, Tata Mo­tors is de­ploy­ing SCR tech­nol­ogy.

⇦ Ravi Pishar­ody, Ex­ec­u­tive Di­rec­tor, Com­mer­cial Ve­hi­cles, Tata Mo­tors, is con­fi­dent of growth in the do­mes­tic and exports mar­kets.

⇧ Prod­ucts like the Ul­tra (shown here) and Prima are driv­ing exports for Tata Mo­tors.

⇨ Tip­pers saw good growth on the back of in­fra­struc­ture project revival and launch. Their growth is ex­pected to con­tinue un­in­ter­rupted.

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