You have been in charge of the current role since November 1, 2018. How would you describe the journey so far?
The journey so far has been exciting, challenging and filled with new learnings. In 2018, our focus on profitable growth paid off as we witnessed one of the best performance years in the history of DICV. We also observed excellent results in bus sales and exports as well. Despite the weak market scenario in 2019, we managed to continue our growth trajectory and break even. We also successfully increased our touch points in 2019 by 30 percent over 2018.
This year we have celebrated several milestones; our BSVI premiere, over one lakh BharatBenz trucks on Indian roads, more than 30,000 accumulated truck exports, our second MoU with the government of Tamil Nadu, and so much more.
With the lockdowns easing, and markets making a small, yet spirited comeback, we are seeing a slow recovery of the market and a strong demand for BharatBenz BSVI products. This once again proves the confidence the customers have in our products and BSVI technology. In fact, we have recently started a second shift at our plant and we continue to ramp up our operations and supply chain while maintaining high level of precautions. In a nut shell, personally it has been a very exciting journey filled with lot of learning.
How has the Covid-19 pandemic affected DICV and how are you dealing with the same?
Even before the lockdown, we initiated a Crisis Management Team (CMT) consisting of representatives from across the organisation that holds virtual meetings with DICV's top executives on a daily basis. The CMT has initiated hundreds of health, safety and sanitisation measures over the last few months, ranging from mass cleaning of DICV's 400 acre Oragadam plant to adjustment of facilities to ensure that social distancing norms are followed while we re-boot our operations. The CMT has also taken charge of tracking the health and safety of the company's 4000+ employees, plus overseeing the company's extensive CSR contributions. Aside from this, we conducted an intensive education and communication campaign. All major stakeholder groups have been provided with tailored health and safety manuals, instructional videos and web-based trainings.
DICV has now rolled out an internally-developed app that allows employees to track their health, get online medical consultations and maintain the correct social distance from colleagues while at the plant via a proximity buzzer. We continue to look for the best way to sustain production while doing our best to protect our employees.
What have been the learnings from this pandemic in terms of business?
The lockdown gave us the chance to take a step back from our daily operations and take a fresh look at our core functions. We have taken the opportunity to improve efficiencies in our business processes and have started our operations in a safe, sustainable manner. At DICV, localisation has been a high priority since the introduction of our vehicles in 2012. We currently source around 80-90 percent of our parts locally and hence were resilient in the current situation.
One of the most important lessons was that we need to build more self-reliant supply chains as we continue to work towards achieving higher localisation levels. Going forward, supply chains will need to turn digital with more usage of Robotics, Internet of Things, Artificial Intelligence and other technologies that will help make them more resilient. Moving on, we will continue to focus on providing safer and more modernised trucks ensuring industry-leading fuel efficiency, safety, comfort and reliability. We will also further increase our focus on digitalization for our customers.
How would you analyse the current status of the commercial vehicles industry in India?
At the start of 2020, people thought the market will be 10 percent lower than 2019 as India switched to BSVI norms from the 1st of April. But now there is a new situation of COVID and that number is gone. There are three storms the industry is facing altogether 1) cyclic storm 2) structural storm 3) transformational storm. COVID comes on top of all that.
Cyclical storms last for around 8-9 quarters. Structural storms are related to how customers are changing their buying decisions due to regulatory norms like axle loads, BSVI, etc., so this changes the way demand happens. Transformational storms are related to how the entire automotive industry needs to move towards a more sustainable way. With COVID, the effect of these storms will be deeper and faster.
The economic reforms by the Government offer some hope. If infrastructure and mining sectors continue to see momentum, we will see an uptick for BharatBenz products in these segments. With consumers making most of their purchases online, we see a demand for e-commerce trucks as well. Overall, there should be a definite and sharp rebound in 2021.
Where do you think does DICV stands vis-à-vis the different challenges facing the industry?
As I said, the industry is facing three storms: 1) cyclic storm 2) structural storm 3) transformational storm, with COVID on top. To overcome these challenges, we are making DICV even more resilient and using this crisis as an opportunity to emerge even stronger. One area we are focusing on is to further increase our localisation levels from the 80-90 percent which we had achieved in the past.
Secondly, the pandemic has provided DICV with an unprecedented chance to focus on new ways of connecting with stakeholders. Until now, manufacturing was thought to be a 100 percent hands-on business. Now, we see that it is possible for us to digitalize more processes and tasks than we ever thought possible. We connect with our employees, suppliers, dealers and customers virtually, regularly and comprehensively to manage our value chain.
The opportunity to explore new technologies and ways of thinking (such as work from home, virtual sales meetings and events that involve participants from all across India) has shown us new ways to increase productivity and efficiency with impressive cost savings.
We are working to digitally transform our business in the coming years. We made a great start in two major interfaces with our customers. The first is our complete customer service business which can be managed with a single app. We call this "Proserv" and the customers can do more than 60 transactions on their smart phones. The second is that with BSVI, we have launched Truckconnect and BusConnect which is a state-of-the-art connectivity platform. This will help our customers to improve the efficiency of their fleets on many fronts. India lags behind many western economies when it comes to logistics costs and Covid would accelerate customer expectations on improving efficiency of their fleets. We will continue to work in future to provide an even better value equation to our customers, which has been our endeavour since we started operations in India: BharatBenz offers the best value for money products.
Which are the key factors that you see driving the growth the CV industry in the times to come?
Currently, owing to the positive sentiments generated in the construction, mining and e-commerce sectors there seems to be a small uptick in the sector. It is expected that the Indian economy will return to its growth trajectory around 2022. The MHCV segment will rebound in line with that. If the government introduces measures like a scrappage policy, reduces taxes or gives a big boost to infrastructure spending, the recovery could be faster.
What are the things that you see working DICV and where do you think there is still scope for improvement?
Being part of the global powerhouse of Daimler Trucks & Buses, we have full access to Daimler's vast array of state-of-the-art technologies. This makes our products workhorses, reliable and efficient. We will focus on expanding our reach within the country to reach more BharatBenz Customers.
Tell us about the manufacturing capacity and capability of DICV.
DICV produces 9 to 55 ton trucks as well as buses at our state-of-the-art manufacturing plant in Oragadam. This plant spreads over 400 acres (160 hectares), including a highly modern test track, company headquarters, R&D and training operations. With one global quality standard, DICV also produces Daimler Trucks' brands of FUSO, Mercedes-Benz and Freightliner in addition to the made-for-India brand ‘BharatBenz'. Products and parts are exported to more than 50 markets in the Africa, Asia, Latin America and the Middle East.
The annual capacity of the truck plant is up to 72,000 units and up to 4000 units for the bus plant. We believe not only in producing green products but also in ensuring the environment that they are rolled-out from also meets energy-efficient standards. Our solar power facilities have a capacity of 3.3 Megawatts, and are able to provide more than one fourth of the average daytime electrical power needed. DICV also has a water harvesting pond on an area of 27,000 square meters, able to hold over 65,000 cubic meters of run-off water. This is used to charge ground water and irrigate the in-house landscaping projects.
There is a lot of talk about providing customised solutions to different customer segments. What is DICV doing on this front?
With the new generation of BharatBenz trucks, we are looking to move away from the traditional tonnage classification. Instead, we will focus on creating ‘the best truck for every need', customizing vehicles for use applications and targeting specific sectors such as e-commerce.
A concrete example of this is the new 5228TT model launched in June. With an all-new 4x2 tractor configuration, this model achieves the lowest TCO and highest GCW in its class and is specially designed for applications like cement, tankers, parcel, market load and tip trailers.
How satisfied are you with regards to the overall product portfolio of DICV? Do you see any additions in the times to come?
In January 2020, we introduced an entire all-new portfolio of BSVI-compliant trucks and buses and recently launched India's first 5228TT on a 4x2 tractor. We are continuously monitoring the market and will introduce products to fill gaps in the line-up on a priority basis.
Give us an overview of your exports business.
Exports has been a key pillar of our strategy from the beginning. Our top export destinations include Central Africa, MENA, and South East Asia. The majority of our exports are FUSO products. We export BharatBenz trucks to Nepal and Bhutan, Mercedes-Benz trucks to Indonesia, and Freightliner trucks to Mexico. We export a large number of variants based on our proven MDT and HDT product platforms as well as our bus platforms. In addition, we export a sub-9t product to Middle East markets. All variants are individually configured and tested to meet the very specific requirements of each market. Last year we reached cumulative export milestones of 30,000 units and 125 million parts sent to over 50 markets worldwide.
Very recently, you signed your second MoU with the Tamil Nadu government covering Rs.2,277 crore of investments. What's the progress on that front?
DICV signed a second Memorandum of Understanding with the Government of Tamil Nadu several months ago covering INR 2,277 crore of investments. This investment is directed towards expanding our product portfolio, investment in technology, digitalization and represents approximately 400 jobs.
It demonstrates our unshakeable confidence in the long-term potential of India as a market for commercial vehicles, and our ongoing commitment to the country as a whole.
DICV has just launched its used vehicles business. What prompted this move at this time?
We are expanding into the used trucks market with our newly launched programme ‘BharatBenz Exchange'. With this, truck owners can get new Bharat Benz trucks in exchange for their used ones which can be of any brand. Over last years, many customers we interacted with wanted to experience a BharatBenz but did not have demand to buy new trucks. Now is an opportunity to for them to exchange their truck of any brand with a brand new BSVI BharatBenz. Apart from that, anyone who is looking for a used truck can now buy a refurbished BharatBenz which will also be offered with warranty and maintenance contract. Basically, both the sellers and buyers of used vehicles will benefit from the peace-of-mind and ease that this platform offers with most of the stress and hassle being taken out of the process.
Demand for new MHCVs (medium and heavy commercial vehicles) continues to stay stressed due to COVID-19 and other factors, so we believe that it is the right time to launch the BharatBenz Exchange programme. We are also seeing traction in customers who want to buy used vehicles partially due to BSVI, which has increased the price-gap between new trucks and old commercial vehicles. Over and above that, the used truck market in India is quite substantial in volume but still largely unorganised. The customers are looking for a transparent, trustworthy and reliable product offering which will be our endeavour under BharatBenz exchange. Our endeavour here is to also provide entrepreneurship opportunities to drivers under Driver to Owner Program under BharatBenz Exchange.
Where do you see the CV industry in India heading in the next two years? What position do you envisage for DICV in the market in that time?
We believe India will recover sooner and better from the crisis than many other economies and growth would start to return in 2021 from the low level of 2020. In the next 2-3 years, the CV industry could return to the market volumes we saw in 2019.
DICV's focus remains on sustainable growth, and we are convinced we will be able to make positive contributions to the success of Daimler Trucks & Buses.
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