Ashok Leyland's output at 75% of pre-Covid levels: COO Anuj Kathuria

Commercial vehicle (CV) sales are improving month-on-month against the backdrop of demand from e-commerce as well as pick up in infrastructure and mining projects. The country’s second-largest CV maker Ashok Leyland’s (ALL’s) chief operating officer (COO) Anuj Kathuria spoke to T E Narasimhan, revealing how a segment shift happened more towards intermediate commercial vehicles (ICVs) and tippers. Edited excerpts:


September retail numbers for overall CVs showed an improvement month-on-month. What are the factors driving this growth and is there any shift in segments?


While demand for light commercial vehicles (LCVs) continues to increase, ICVs and tippers are also seeing good growth on the backdrop of demand from e-commerce, fuel supply companies and micro mile connectivity players, among others. The ICV segment accounted for one fourth of the total industry volume (TIV) last year, but this year, it is one third, which is a big shift. Within the ICV, smaller segments (10-11 tonne) or an extension of LCVs, are growing faster. Tipper is the other segment growing faster on the backdrop of road construction and other infrastructure projects and mining activities picking up. Both these segments, which used to account for nearly 50 per cent of last year’s TIV, now increased to 65 per cent.


For Ashok Leyland, will the ICV and tipper contribution be the same?


Yes, today the volumes are largely driven for LCV, ICV and tippers. It will take some time for long-haul demand to revive which, in turn, will increase high tonnage truck sales. Generally, for the CV industry, the third and fourth quarters will be good and we hope for some demand revival for this segment in these quarters. By that time, a lot of additional capacity created due to the revised axle load norms will be absorbed.


Overall, how do you see the third and fourth quarters as well as the entire fiscal year panning out?


We expect the festive season to be good. If all goes well, fourth quarter sales will be higher than last year’s fourth quarter. The year, as a whole, will definitely be lower compared to last year, since the first quarter was completely washed out.


Since demand is reviving, how much has the capacity utilisation gone up at ALL factories?


For LCVs, it is almost 100 per cent and for trucks it is close to 70-75 per cent of pre-Covid levels.


Federation of Automobile Dealers Associations of India’s (FADA’s) retail numbers show that ALL’s market share dropped to 11.34 per cent in September this year from 14.99 per cent in the same month last year. Why?


FADA numbers do not give the true picture since it covers the entire spectrum starting from sub-one tonne to 55 tonne. ALL’s offerings start from 2.5 tonnes. If you look at the segments where we are present, we either retained or increased our market share.


The bus segment continues to be under pressure. Why?


Fleet operators are not operating and many of them have obtained moratoriums. There is zero demand from the school segment while there is minor demand from the staff moving segment. Except for Gujarat and Delhi, no big orders were placed by state transport undertakings (STUs). Last year, STU orders were alone around 10,000 units, while this year, it is expected to be around 50 per cent of last year; mostly in the second half of the fiscal.