The product range of AMW Motors Ltd, one of India’s leading HCV manufacturers, covers the entire range of heavy-duty applications in mining, construction, power, petroleum, roads and highways, other infrastructure projects and general cargo transportation. The company’s world-class manufacturing facility in Bhuj, Gujarat, produces vehicles for a wide range of civilian and defence applications. R.N. Rao, in an email interaction with Prashant C. Trikannad, spoke extensively on growth prospects for the Indian commercial vehicle market.
What is AMW Motors’ business and investment outlook for the Indian commercial vehicle market in 2015-16?
There are visible signs in the last three months that the industry has seen the bottom and we see the CV sector growing at rates of 20-25 per cent in the fiscal year. It must, however, be pointed out that the base is pretty low as 2014 was an extremely bad year for the entire industry. We are seeing upward movement in freight rates, operators are more optimistic, and the industry is definitely looking up. Mining activity is picking up, and infrastructure industries like steel, cement and power are seeing increase in production. Repossessed vehicles are getting absorbed and repayment cycle is improving in financial sector. We expect cost of finance to be more competitive and easier, as RBI has signalled an easier interest regime. There are huge expectations from the Union Budget in terms of stable, long-term economic policy. Labour law reforms seem to be on the anvil and the government’s thrust on manufacturing is an excellent initiative.
What has been the impact of the new government’s policies and reforms, particularly in the construction and infrastructure sectors, on the commercial vehicle market?
There is a lot of excitement and expectation from all sections of industry and the CV sector is no exception. The new government has made several announcements to speed up economic growth and we feel that the approach is holistic, transparent and augurs well for long-term prospects. The industry expects major initiatives from the government on infrastructure and its funding, creating and sustaining a robust investment climate, and stress on implementation.
Which key sectors are likely to boost sale of trucks in coming months? Which range of AMW trucks is likely to have greater demand?
The CV industry is very closely linked to core and infrastructure growth and we see the thrust on manufacturing as an added advantage for our sector. We expect cement, steel, mining, power, road and port infrastructure to grow at healthy rates, which in turn will have a positive impact on our sales. As consumer demand grows, we also see increased requirement for haulage vehicles of all weight classes.
At AMW, we foresee our tipper and other specialised vehicles doing extremely well and are also gearing up for high demand for our haulage vehicles in the M&HCV segment.
What type of trucks is manufactured by AMW? Could you tell us about your current manufacturing plants and capacity?
AMW’s product range covers the full range of M&HCVs for haulage and standard as well as specialised vehicles for the core and infrastructure segments. Currently, AMW manufactures trucks ranging from 16-49 tonnes catering to all the major tonnage categories.
The company’s state-of-the-art, fully integrated manufacturing facility in the highly industrialised state of Gujarat, is spread over 2 million sq. metres and produces vehicles for a wide range of civilian and defence applications. The plant has a capacity of 50,000 commercial vehicles per annum, besides tippers and other specialised vehicles for mining, road and highways, and other infrastructure sectors.
What is the current size of the Indian truck market and what is your company’s share vis-à-vis total market share?
The M&HCV (16 to 49 tonnes) segment is expected to end the fiscal year 2014-15 with volumes of approximately 145,000 trucks. We expect volumes to grow by 20 to 25 per cent in the coming fiscal. We have fairly high market shares of approximately 30 to 35 per cent in our chosen segments in the M&HCV space.
Could you tell us the total number of units sold by AMW in 2014-15 and what are the expected sales for the next financial year?
We expect to end fiscal 2014-15 with close to 5,000 trucks and believe that we will grow at over 100 per cent and cross 10,000 trucks next year. We expect this by organic growth as the market grows as well as increased market shares with the introduction of new products and variants.
In terms of innovation and technology, how does the Indian truck sector compare with its global counterparts, say, in the US, Europe, and China?
In the past few years, we have bridged the technology gap to quite an extent. As infrastructure grows, the demand for higher horse power trucks and faster turnaround will lead to more sophisticated power train technology, stricter quality, and emission and safety standards. This is also true of other technological developments as Indian customers are experiencing technologically more sophisticated products. Total cost of ownership will become even more important as competition grows and more and more fleet operators (as against owner drivers or single truck owners) enter the business. Reliability, after market preparedness and maintenance become important consideration.
AMW believes that customers should get the best of operating efficiencies and a high Return on Investment. The change in emission norms will lead to new-generation trucks. Also, Telematics will play a greater role in the CV industry.
Does AMW Motors have specific expansion plans next fiscal?
We have adequate capacity to meet demand for the next couple of years and are prepared for rapid ramp-up of production and see much better days ahead. We will focus on modernisation and technology upgradation in our manufacturing and expansion and added expertise in our after- market operations. Our capability to be flexible and adapt to diverse applications have stood us in good stead.