About 70% growth in your net profit. What has changed in the past one year? All the uncertainty regarding GST (goods and services tax) and (the shift from) BS-III (to) BS-IV is behind us, so we can now plan very well for the coming years. The safety and emission norms are well-defined. It looks like the ministry has made it clear that 31 March is the last date for production and not sale, so we don’t expect the kind of thing that happened from BS-III to BS-IV. We have been looking to see how we can make BS-VI an advantage as Managing director, Mahindra and Mahindra we switch over, rather than something we are concerned about. When we go to BS-VI, it will not only be about emission but we will also be looking to add to the product so they have better value for the customer.
What about the trucks business and global expansion? We are predicting a first Ebitdapositive year for the trucks business this year. We will also be entering the 10-tonne to 16-tonne segment. Therefore, our CV portfolio becomes complete from 0.5 tonne to 49 tonnes. On the international side, we had taken a call two-to-three years ago to have more market presence than just exporting vehicles. Therefore, now we have a physical presence in four zones in Africa—Cairo, Nairobi, Nigeria and Johannesburg. We also have offices in Sri Lanka, Bangladesh and Nepal. We are setting up CKD (completely knocked down) plants, which will allow us to have a more aggressive export growth.
Growth in the tractor segment: When it comes to tractors, the story is even more exciting in some sense. We are doing three things; the first is to fortify the core, which is the domestic tractor market where we have been the leaders for over 30 years. We have been fortifying it by launching new products. The portfolio is almost entirely new, with three launches in the past three years. Therefore, we believe our domestic tractors business is reasonably well-insulated from any kind of attack. We have established CKD operations in the US and Australia, with Brazil and Mexico coming in recently. Acquisitions over the past three years (such as Hisarlar and Erkunt in Turkey) are giving us good global growth.
Are you actually seeing a turnaround in rural sentiment? It is definitely positive; there’s no doubt about it. Some of it is actually what has happened and the rest is anticipation of what is happening.
What is driving the 40% growth in tractors you saw in the March quarter? It’s a combination of things. One factor was subdued demand because of a slowdown in the tractor industry; another is the increased availability of funds for farmers. The industry was not doing well for two years and then it recovered during the next two. Therefore, if you were to look at the 8-10% average growth, we still have room for good growth. The last two years have been very good in terms of farm incomes. We had four very good harvests—two rabi and two kharif. The support price went up also. That results in reasonably good affordability for the farmer. Everything else is positive in terms of availability of retail financing, interest rates. Everything is adding up to create this demand. Frankly, the kind of growth that we saw in the fourth quarter surprised all of us.
India
NRI
