Business Daily from THE HINDU group of publications
Wednesday, Oct 11, 2006
Talk of stake sale speculative: Eicher Motors
Action in the Indian commercial vehicle industry has been heating up with Daimler, Scania and Volvo looking at a larger footprint in India. Mr S. Sandilya, Non-Executive Chairman, Eicher Motors, said that talks of companies picking up stake in Eicher Motors are speculative. Excerpts from CNBC-TV18's exclusive interview:
Is this a rumour or are you in talks with any of these companies?
Whatever has come in the papers, regarding people picking up stake is all speculative rumours. We don't have any confirmation on that. It is just that the media likes to speculate and come out with something sensational.
No truth about the parties involved or no truth that you are looking out for a technology partner?
At any point of time in the commercial vehicle industry or any industry for that matter, there are global players who keep talking to people in various countries. The same is true in India also.
Almost all the world players will be talking to Indian companies. But this is not to say that XYZ is actually dealing with somebody and trying to finalise something.
As and when things get finalised, it will of course get reported. So to say that people don't discuss is not right. Many companies are discussing things, but who is discussing what, and at what stage nobody would know.
Do you feel the need for a technology partner?
It is not a question of we feeling the need, so far we have managed. We had Mitsubishi as a collaborator; they have given us technology. We had built on that technology and developed our own new products.
In the complete LCV, HCV range, we have come out with our heavy commercial vehicle totally indigenously developed. So in terms of capability for meeting the emission norms, and meeting with future technology, we do have the capability.
However, if there is an opportunity in the international market to tie up with people and if it is going to be a win-win situation for our company and the international company, then it is worth it.
What is the DaimlerChrysler stake in Eicher Motors at this point? Have they shown any interest in increasing that stake in your company?
Daimler does not hold any direct stake. Mitsubishi Motors Corporation has around 3.5 per cent stake in our company and that has been the case for quite sometime. They had started this collaboration in the mid 80's and that continues.
DaimlerChrysler owns a significant stake in Mitsubishi Motors and so obviously there is an indirect holding of Daimler in Eicher Motors. So whether they would be interested in taking up further stake or not is totally speculative.
In terms of business, what share does Eicher have at this point and what is your year-end target?
Eicher Motors is growing significantly. It has had a growth rate of 24-25 per cent so far in the first 5-6 months and it has been growing at par with the industry. In certain segments it has grown even above the industry, for example in the 7-11 tonne segment we have grown significantly higher than the overall industry growth rate in the LCV and medium commercial vehicle space.
Overall, the growth rate is reasonable. We are comfortable with the kind of growth and we hope that in the year-end we will have significant growth, either comparable or higher than the industry growth.
What is your market share at this point from the entire pie?
In the 7-11 tonne segment, our market share will be about 35 per cent plus, and in the entire CV segment, it will be around 9-10 per cent market share.
Where do you stand in the CV cycle - have things improved with a drop in oil prices?
Actually this CV industry cycle has been difficult to predict in the recent past. In 2006-07 we thought it could be moderate or negative, or marginally positive, but the first five months have proved totally different.
Growth has been significant, but I don't know how long this kind of high growth will last. But it will suffice to say that there is growth between 8-15 per cent per annum on a consistent basis. That will be good for the industry because it is in tune with the overall economic growth in the country.
With the focus on road construction and the Union Government promising to put more money and more private participation, I think the CV segment is going to have a significant future in the next 5-10 years.
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