We are trying to boost our presence in the defence logistics segment: V Sumantran

Interview with Vice-chairman, Ashok Leyland

The Indian automobile industry is going through one of its worst phases. Demand for commercial vehicles, regarded a barometer of India’s economic health, has dropped consistently for almost two financial years. While the downturn has forced India’s second largest commercial vehicle maker Ashok Leyland to tighten its belt and divest interest in non-core assets, vice chairman V Sumantran tells Sharmistha Mukherjee focus has increased on enhancing product range. Edited excerpts:

Sales of commercial vehicles hit a record low in the past three years in August this year. What is Ashok Leyland doing to tackle the downturn?

The commercial vehicle industry is closely linked with the economy. The slowdown in award and development of infrastructure projects, the disruptions in mining activity is bound to have an impact on sales of CVs. But that said, I am not giving up hope of the country returning to growth rates of 7.5-eight per cent.

Meantime, we are working on enhancing our product portfolio. We have entered new categories with Dost and more recently with the Stile. We are continuously exploring opportunities to plug gaps in our product range.

What other models would we see coming in from Ashok Leyland over the next few months?

As a company, we have been developing products aligned with our core businesses, be it Dost, Stile or Jan Bus. Next year we will introduce a larger LCV Partner, which we have been working on with Nissan. The Partner will be on a completely different platform with a three-litre engine and about five-six tonne payload. So, we will have three major platforms in the first phase of our alliance with Nissan. Cumulatively, volumes should touch 80,000-85,000 units a year. Going ahead, variants will spin off from each of these platforms.

That apart, we are making multiple efforts to boost our presence in defence logistics with a heavier truck programme.

Recently, your chairman said Ashok Leyland would divest non-core assets, which started off with the sale of Defiance. Are other subsidiaries on the block?

We have divested our testing and validation acquisition in Defiance. We bought it in 2007 and it was profitable. It was not core to our business, so we thought it would be logical to divest interest in it. We will do more of that as we have to invest in the future. The standard formula in a downturn is to tighten your belts, recalibrate costs and scale down investments as long it is not strategic or part of the core.

You have mentioned you see the economy returning to growth rates of around eight per cent. Is there any signs of recovery in sight, has the market bottomed out?

As an Indian, I hope the worst is over. The country cannot drift the way it has.

The monsoons have been good. Policy changes have been initiated. Hopefully, things will get better.