Company Description: Eicher
Motors Limited, incorporated in 1982, is the flagship company of the Eicher
Group in India and a leading player in the Indian automobile industry. Its
50-50 joint venture with the Volvo group, VE Commercial Vehicles Limited,
designs, manufactures and markets reliable, fuel-efficient commercial vehicles
of high quality and modern technology, engineering components and provides
engineering design solutions. Eicher Motors manufactures and markets the iconic
Royal Enfield motorcycles. Eicher Motors recorded revenue of over US$ 1 billion
(4,500 crore approximately) in 2010.
You started your career in 1969 with DCM group
of companies. After a year’s stint with DCM and 5 years with Union Carbide, you
joined Eicher in 1975. So how has the journey been for you? Has it been a
satisfying experience?
I think it’s been extremely satisfying. I started my
career with DCM in the area of finance as a senior management trainee. After
being in that area (of finance), I switched over to Union Carbide in Finance
and Systems. In Eicher also, I joined the finance department to start with. And
moving up the ladder from 1975 to 2011, it’s been a 36-year excellent journey
for me. From Finance, I moved over to General Manager, Management and
eventually became the Group Chairman and Chief Executive in 2000. After 6 years
in that position I am now the Non-Executive Chairman since 2006. It’s been a
good learning experience.
What are the unfinished tasks before you in the
company? Are there any strategies that you have in mind?
We normally look at it from the perspective of task and
finishing. But my take on that it is a continuous journey. There is no end to
any organisation’s growth. It’s a continuous journey and if you look at it from
Eicher’s perspective, we started up as a small company. When I had joined, the
company just had a 3 crore-turnover. Today it’s worth more than a billion
dollars. So the company has grown, we have multiple products. It’s a well
diversified company. So therefore, we had our own ups and downs depending on
the business cycles. But as I just said, it’s a continuous journey. Today, wherever we have reached, it is not
something we are content with what we have done. There is a long way to go and there are still
a lot of opportunities to explore. As a company, we would be looking for a
significant growth.
How has the JV with Volvo panned out? How has it
helped Eicher in fulfilling its objective?
If you look at it from the perspective of Eicher, we
have worked with a lot of joint ventures. And the joint venture with Volvo has
been very satisfying. I must say that both the partners have been able to click
very well with each other. And it’s a matching of cultures, if I may say. And
it has benefited both. We have learnt in the process-- in terms of products,
range, etc. The partnership has
been so positive that Volvo has chosen to manufacture medium-duty engines for
global markets in Pithampur.
Are you in talks with the government to
introduce a ‘Cash for clunkers’ policy, especially for high-polluting trucks?
From the SIAM’s perspective, we have always been recommending
during the Annual Union Budget exercises
that we much incentivise the removal of old vehicles (15 years and more)
from the roads. This would be good from various angles because we will be able
to bring the environment pollution under control. Secondly, with the advent of new technology in modern trucks, we
will be able to reduce fuel consumption which will ultimately result in the
conservation of fossil fuels. When you talk about “Cash for Clunkers’, it may
be not be literally in cash. There are other mechanisms to incentivise the
whole programme. It could be through some kind of duty redemption or by
penalisation with high road tax on older vehicles. In my opinion, it is
essential. And it should not be a
one-time policy, rather a continuous exercise. The government is also aware of
this (menace of polluting trucks) and is in favour of doing away with it. It is
not so easy to take a decision on such matters in a democratic nation like
India. Some state governments have already rolled out scrappage policies. I
believe it should be done in a concerted manner.
The company is operating in various verticals
like trucks, bikes (with RE)? What about passenger vehicles, especially cars?
Are you exploring that segment too?
As
you know, Eicher is already present in the bus segment which is a passenger
vehicle. But we have no plans to foray full-time into the passenger vehicle
segment by way of cars at present. It is a question of strategic decision for
company which may change as the time passes.
What kind of learnings have
you derived from your erstwhile JV partner with Mitsubishi for LCVs? Are you
still in talks with the Japanese firm?
Although
we are not in talks with them now, we have benefited immensely in terms of
product platform and technology. Eicher started with LCVs with Mitsubishi, i.e.
6-tonner Canter vehicles that were brought into this country. Besides being highly-fuel-efficient, it was
the best vehicle in its class in those days. And on that platform, we have
built a number of vehicles and variants. And we have made a complete range i.e.
from 5-40 tonner vehicles by extending the technology and upgrading. That
included a variety of products like tippers, trucks, etc. These are the learnings that we got from the
aforementioned Japanese firm in terms of technology of the product. We have
also learnt a lot in terms of manufacturing processes technology. We have also
learnt how to make a highly productive work environment and how to keep your
investments low. At one point of time,
our workers from Pithampur went to Mitsubishi’s plant in Japan to learn certain
processes and shop floor practices. Although they went as trainees, they were
actually working on the lines and that gave them the understanding of the high
level of productivity that the Japanese companies were known for. So when the Indian workers came back with a
high orientation on productivity and quality, it has helped us tremendously. We
have also learnt on capital investments, vendor development, technology
transfer, complete indegenisation. As you might know, Eicher was the first JV
with a Japanese company to indigenise 100pc of the vehicles. This enabled us to
learn a lot about the nuances of component technology and therefore we could
develop parts in the country. Ultimately, this aided our quest for faster
indigenisation. We became a profitable sustaining company among the 4
Indo-Japanese CV collaborators.
Any plans to set up greenfield facilities
abroad? Any plans to get the company listed on overseas’ stock markets?
At
present, we neither have any plans for an overseas facility, nor do we intend
to get listed on stock exchanges in other countries.
Please can you talk about the R&D centre run
by Eicher? What is the current headcount and what kind of activities is carried
out there?
In the area of product development, we are focusing on
three areas. One is in CV segment, the other one is Royal Enfield motorcycles,
and we have our Engineering Services which is into a lot of design work for
auto and non-auto customers. Most of our products are developed with indigenous
technology with a lot of focus on our own engineers conceiving and designing
the products. And it has been very cost-effective way of product development.
Moreover, Eicher has been the first to implement, Quality Function Deployment
(QFD), which is a method to transform user needs (customer voice) into product
design, and to deploy methods for achieving the design quality into subsystems
and component parts, and ultimately to specific elements of the manufacturing
process. Product development is one of our strong points which enable us to
define and develop products which are suited to customer requirements.
Similarly, in the motorcycle segment (Royal Enfield), we have a variety of
products and variants. As far as EES (Eicher Engineering Services) is
concerned, we use extremely modern software and do engineering designs of
components and aggregates for a number of customers. It’s also an
export-oriented business. A lot of non-Indian companies would love to have some
design work done in India because of the cost equation.
Was it a conscious move by the company not to go
below 5 tonnes?
The
point is we didn’t get into the one tonner or two-tonner segments. However, we
were one of the first ones to explore such segments many years ago. We were
also eyeing small engines for such ‘ultra-light vehicles’. But at that time,
the engine had to be imported from a foreign partner. But that partner decided
not to come to India and enter China instead. Hence we abandoned that project.
Subsequently, we took a conscious decision not to enter the segment.
Lastly, being the president of SIAM please can
you delineate your thoughts on the Indian automobile industry? How is it
shaping up? What are the challenges? Are we expecting another kind of a
slowdown?
First of all, the Indian automobile industry
has grown from very small levels to being a very significant player in the
world. The current growth rate that we have had in the last few years has been
very good. The domestic market accounts for a major chunk of the volumes. The
demand is still huge here as there is a higher buying potential. The market is
offering so many opportunities that every global automobile manufacturer is
setting up their assembly / manufacturing operations here. A lot of investments
have flowed in. The government has also recognised that the automobile industry
can contribute significantly to the economic growth. Therefore, they have come with an Automotive
Mission Plan (AMP). This will generate a lot of employment opportunities and
millions of dollars of investment. There is also a lot of focus on the Indian
auto component industry. Keeping all
these factors in mind, the automobile and its affiliated industry is expected
to place us pretty well in the global arena. However, we do expect a slowdown
in the near term. I don’t think the cycles are easily predictable. There are some challenges too in the areas of
infrastructure, fuel prices, interest rates, skill development, etc. With the
economic growth predicted between 7-8pc this year and a better growth
thereafter, the Indian automobile industry is poised for a significant growth.