Interview with Sameer Malhotra, CEO of Shriram Automall India Ltd. (SAMIL)

Company Description: Shriram Auto Mall India Limited (SAMIL), a subsidiary of Shriram Transport Finance Company Limited (STFC); serves as a platform for transaction and provides finance for pre owned trucks and commercial vehicles. It provides asset acquisition and disposal services, refurbishment of pre-owned vehicles, and electronic truck bazaars. The company was incorporated in 2010 and is headquartered in New Delhi. SAMIL is the country’s only organised player dealing in exhaustive range of articles like pre-owned heavy & commercial vehicles, construction & mining equipment, agricultural implements and any very soon passenger vehicles.

Can you please run us through the genesis of Shriram Automall India Limited and the uniqueness of the company’s business model?

Shriram Group was predominantly dealing in pre-owned vehicle financing business for the last 35 years. Shriram Transport Finance Company (STFC), which is the flagship company of the Group, is into pre-owned vehicles’ financing business. That’s where we realised that a lot of our customers, who are into buying and selling of commercial vehicles, had to confront all sorts of middlemen like brokers, intermediaries, etc.  In such a scenario, the transactions were not executed in a transparent manner. So therein we stepped in as an organised player to serve our customers in a hassle-free and efficient manner. We are giving them a platform where all the transactions are happening in a seamless and transparent manner. Initially, we introduced ‘Truck Bazaar’ as a pilot project and later came out with one-stop kiosks which offer intranet-based services. Seeing the good response of both the initiatives, we went a step further by setting up the country’s first automall in Chennai.  Now there are 21 such automalls up and running across the country and another 30 such facilities will be established in the next four months. Our automalls will be ramped up further to 60 facilities by the end of FY 2013-14.

You are the country’s only organised player dealing in pre-owned commercial vehicles (CVs) in close to 100 cities. What specific product range is currently placed on the bidding events  and do you have any plans to add more product lines like pre-owned cars, bikes in this basket?

We started this business with commercial vehicles and diversified later into tractors, construction equipments, etc. We have just entered the pre-owned two-wheeler space a couple of months back. This was done through the online route and we have managed to clinch 100-odd bidding events per month.  We will now aggressively foray in to the four-wheeler space when it comes to passenger and utility vehicles. Through our pilot testing, we are able to organise 1,000 bidding transactions per month. Our primary focus through the online platform will remain on used two-wheelers this year.

There have been quite a few players already present in a non-organised way.  So how is your business model better than them? Could you also brief us about your customer profile as well?

There is no other player in the organised segment in this country. But that doesn’t mean that there is no competition. There are umpteen players in the non-organised segment catering to a diverse set of customers. As I just mentioned, the biggest difference between them and us is that everything is channelised in a transparent manner in our mode of operations. So all the complexities associated with the products like legal implications, RTO paperwork, lien checks, etc, are done away with.  So all these processes are established at the right price points. That again makes us different from our peers. A majority of our customers are end users who are one-truck, two-truck or even three-truck owners looking for an additional product in its fleet. There are also a handful of pre-owned truck owners who are graduating from being a driver to a single-truck owner and then to a two-truck owner. From the seller’s side, a sizeable of them is from vehicle financing companies, OEMs of tractors, CVs, construction equipments & big fleet owners etc.

Will you also be interested in all-new CVs?

At this stage, we are not at all considering it. This is because the size of the pre-owned CV market is so underpenetrated that we are yet to capitalise on that.  The size of brand-new CVs comprising tractors and construction equipment is worth close to 60,000 crore and another 1 lakh crore is the worth of the new car segment. The pre-owned segments will be similar in size and we are gearing up to leverage on that.

You have just mentioned that SAMIL deals in used CVs. Do you have any plans to offer services allied to these products like fleet management solutions and bulk parking?

Parking services are already given to the used vehicles from our end as we have an ample of space all across India. In fact, we are the only player in the country who can provide this facility pan-India. We are not interested in fleet management solutions at this stage.

Are you interested in the franchisee based model? How many units are you transacting per month and what is the sales target that you have set?

Yes, as we expand into tier-II and tier-III cities we will be following this route. Presently, we do close to 5,000-6,000 per month in the offline vertical and close to 1,000 units per month in the online business. As the market is on a downswing, the used CV segment is poised for a higher growth as people are not buying a brand-new vehicle.

As the OEMs are coming out with premium trucks and buses, will you be witnessing a change in the buying patterns of your customers?

Definitely, there will be some change in the buying patterns of our buyers. But the demand will arise from all the segments. If you see the Small Commercial Vehicle (SCV) segment, the growth has been phenomenal. We are still a small market if you compare our size with China. So there is immense scope for growth for all the segments from small to medium to large commercial vehicles. As people are talking about enhanced engine capacities, bigger loads and improved roads; bigger trucks are also gaining a lot of traction. In that case, the customer doesn’t mind shelling out a bit more for additional advantages. So in the future, we will be forming a dedicated team for all the segments of commercial vehicles.

Are there any challenges and obstacles right now?

Yes, there are quite a few challenges. The biggest among them is that of understanding the market. People have yet not realised the difference that we bring on the table. Another big challenge is to educate our own team about the USP of our business.

What impact has the recent economic slowdown had on Shriram as the company deals with various industries and sectors?

The economic slowdown has largely impacted the new vehicles sales. However, we have not seen any deceleration in our sales as we are not present in that segment. In fact, we are expecting a robust growth of 40pc in sales during this financial year. 

Some years down the line are you keen on expanding into overseas markets? If yes, have you earmarked any countries?

At present, we don’t foresee entering any overseas nations with SAMIL. The only reason is that our hands are full right now.  We are busy expanding our business in the domestic market only. India is potentially one of the largest automotive markets globally and SAMIL being the lone player gives us an edge. In the distant future, we may tap overseas markets as the opportunities are knocking us.

How do you see the industrial bidding business in India and what’s your vision for the company?

We are very clear in our vision that we want to be the largest player where all kind of vehicles and equipment transactions are happening. This includes passenger vehicles too.  I feel that as the market evolves, we will be able to see excellent growth in our volumes. People have found our success stories very interesting. Even though there will be an influx of more organised players, we will be having the first-mover advantage.  They can imitate us, but won’t be able to control the client relationship that we have. More than that, we have the additional advantage of market knowledge. Our relationship with the customer is also very good.