Highlights of the AGM (excerpts from chairmanâs speech and
Q&A in no particular order)
Targeting 40K vehicle sales FY17 (I reached the meeting a bit late so missed
this part of the speech, got this from someone).
Domestic sale is their main focus. Exports are
not specifically a focus right now (though they do it currently in a minor
way). But target markets could be Sri lanka, Nepal, Africa, ME
Vehicles business: Traveller has approx 67%
market share (donât know how the market
is defined). Trax and tractor volumes also are growing well
Traveller range has different series â an
ambulance traveler features are a lot different from a school bus to a travel
operator vehicle
Components biz (a lot of qtns were asked on
component business and, like previous year, management answers were very
limited citing confidentiality reasons given that Merc n BMW are fierce competitors)
Chennai facitiy was inaugurated last year. This
year, Chakan facility was commissioned exclusively for Merc (150Cr capex). They
have been supplying since 1997 to Daimler (merc?) and when a plant is
commissioned, it is of course to maintain very long term relations.
No guidance, no. of engines supplied, split
between Merc/BMW, Cap employed for this business etc was shared citing
confidentiality reasons
Asked for segmental reporting, Chairman cited âWe
operate only in one segment and as per regulations required, we are supplying
as much info required and we are in no obligation to share anything more than
what we are disclosingâ. âI am not obliging to shareholders, but I am
protecting the company by not sharing confi. info.â âSuffice to say, we are
going in right direction and business is growing wellâ. (I observed the same tone in last 2 AGMs that I have attended, and to some
extent, I buy the Chairmanâs point. Of course, I do not deep dive like most expert
valuepickrs do, so opinions may differ here)
1200 capex target for 5 years (came up during Q&A n I missed it, if
anyone has attended, please share the details)
No target (segment %) sales b/w Auto,
engines/axles, tooling business. We are open and dedicated to all business growth
Capex to increase capacity really means bringing
efficiencies, debottlenecking. There is no âdefined capacityâ in auto plant.
E.g. I will be able to make x times more Trax than Traveller in my same plant
if the demand requires it. So it is more of efficiency management, streamlined
process to avoid blockage/pile-up and so on.
Fx risk is hedged (anyone attended please elab)
Force One vehicle is largely decommissioned. Donât
expect to see large growth in Minidor (but
may draw new designs for another 4 wheeler last mile vehicle?) (in my opinion,
the management avoids commitment bias and have willingly stopped Force One when
that product was not successful)
We need to constantly monitor the changing fuel
mix and new technologies in fuels. But diesel is expected to remain mainstay
for considerable period. Petrol in heavy duty vehicles not really a nice
choice. CNG vehicles growth gets hampered due to gas infrastructure being
limited to certain cities (e.g of Pune where every evening from 7 to 11, you
will see a huge queue at XYZ CNG station). Electric vehicle technology needs to
be monitored but how much will it be commercially viable needs to be seen. E.g.
US now has as many half electric stations as gas pumps. It took them 20? Years to
build this. While elec vehicles may get cheap to produce, supporting infra is
imp for it to be made commercially
Chairman was very critical of ad-hoc govt
policies and how it is not in right interests of the industry (lot of discussion done in MD&A already
so not repeating it here). Diesel engines are recognized world-wide for the
engine efficiency, load capacity, etc. We cannot solely blame Diesel as a main
pollutant factor. Need a robust and predictable regulation (and not ad-hoc
bans/uplift of bans). Example of how this affects the business â CNG vehicle
sales were approx 20 vehicles (per month?) and when diesel ban was announced,
it shot to 220 vehicles (per month?) and then when the ban was lifted, it comes
down to 30odd vehicles. How are companies expected to strategize and manage
their supply chains and vendors/distributors for such fickle scenario?
Company is focusing a lot of efficiency,
de-bottlenecking, I.T. upgradation and waste management. However, a many of these
things need to be engrained in company culture, which is slow in India (and then he raised the point below)
IR dispute is resolved by SC after a long period.
On an informal basis it was more or less not a deterrent. But formal judgement
by SC has come. âSome employees do not think of company as their breadwinner
and career. They just think of companies as greedy capitalists and just want to
create nuisance for their political motivesâ. Chairman, as also in last year,
was making very strong statements that non-sense by employee unions will not be
tolerated (I saw many employees, who were also shareholders, seated in the
meeting â signaling bias?). Now only 70-80 people remain who have not accepted
the formal settlement and are creating nonsense (out of <400 people in pune
and totally 8000 people across the company).
Now 90-95% production is not dependent on Pune
plant and all their plants function independently so IR disruptions at one
place do not affect the operations at other plant.
GST, according to Chairman, is just media hype
and old wine in new bottle kind of thing (words
are mine here). Multiplicity of taxes, confusion and favorable/unfavorable
structure of tax will still remain. âWhat will happen once GST comes, nobody
knowsâ. Most companies are unprepared and writing rules, creating website and
online interface doesnât make GST work right away
Disc: Invested. Views are personal. Example and data is
unverified and is mentioned âas isâ in the AGM
