November 27, 2020

Davos 2020: Government should put more money in infrastructure through budget, says Siddhartha Lal, Eicher Motors


Siddhartha Lal, MD & Chief Executive Officer, Eicher Motors Ltd, talks about what can be the biggest takeaways from Davos (#ZeeBusinessatDavos), how to make business sustainable and profitable, budget expectations and the ongoing economic situation of India among others during a candid chat with Swati Khandelwal, Zee Business, on the sidelines of the World Economic Forum in Davos. Edited excerpts:

What do you think is going to be the biggest takeaway from Davos this time around for you and India?
Have come here really to learn and talk to people and stakeholders about what businesses can do from a sustainability angle and what is the economic angle of it as well. Because, it is extremely apparent that if everybody doesn’t chip in – all of us, businesses and civic societies – then there is a disaster on track. The environment is just collapsing on us and it is going to happen in our lifetimes. So, what we can do and how each of us can make a difference, how companies with bigger reach can make a difference. In the end, it does come down to that will the consumer – if all things remain the same – choose the company that is more responsible from a sustainability angle. I am concerned about the future generation – not ours’ or our parents’ generation – and am 100% convinced that it is what we want to do. So, let’s make it an economic thing and say that could be a competitive advantage. This means if we can be much more sustainable then our competitors in our supply chain and how we do everything so that the consumer is going to see this and chose us and we are going to do business. 

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What you are saying is completely making sense as I have heard from a lot of CEOs to whom I was talking about how you can make your business sustainable and profitable even after following the rules of the game. It makes an economic sense at the end of the day…
Try to understand from the Royal Enfield perspective for example, what do we contribute to and where do we take away from. We contribute tremendously off course in different ways to the economy with tens of thousands of employees and their families. It happens in transportation, which is a very basic need. But when you go beyond that then we think that we can contribute a lot towards sustainable travel and tourism. So, responsible tourism is in the air that we are taking up because what we guys do on a motorcycle, touring. Small things at a time we are starting to do weather it is zero plastic in all our events also with water sustainability. But, now we are going back into our supply chain and having a look there and seeing how can we first measure how much energy do we use, the water consumption and effluents and others. Once you measure it properly then you can see how to improve it. So, it is not just meeting regulatory requirements anymore but now are trying to see how to make ourselves zero-burn on the land. 

When it comes to Indian economy that is going through a slowdown and the numbers are not very encouraging. Where is India and how do you see India taking some kind of opportunity/advantage when there are certain stress pockets and how we can leverage it?
India, historically has been in an old fashion way has been green and sustainable, where we used to recycle everything and consumed a lot less. So, India has this traditionally maybe because of the lack of capital or other thing but I think India can certainly. Also, vegetarianism, for example, one of the biggest thing that we get here in form of agriculture – meat production cause the biggest damage to the environment of the world today – which works in favour of India. Thus, we can take a lead in this kind of areas. It is not going to change the economy today as other things need to be done for that. 

But, when it comes to the economy then I think there may be some policy issues but also it is cyclical. When these things come in and things start going down then everyone says that this is not going to go up again and the next five years are going to be a terrible one and all of a sudden you see some green shoots and it seems okay things are active. I tickle all that pinches and don’t get overly down when things are down and not too excited when things are up. We look at the downturn which is in India today and there is no question about that. You should always look at it as an opportunity and how we can do better and how can we lower our cist to make the sales more efficient and how we can focus on other markets, which we are doing. We put the seeds five-six years ago and we are reaping the benefit Royal Enfield for an example where the international sales are up over 100% this year. Thus, we are reaping the benefits of all the stuff that we did in product distribution in the last many years. However, it doesn’t make up for the loss in India because India is very big. So, we are using this opportunity and are investing in all of our businesses. On our part, we can see that the Indian market future is going to be very bright. 

What would be the important growth drivers in FY21 seeing the kind of trend on slowdown as you can’t be oblivious towards what is happening around us?
From the automotive perspective, I feel, the first six months of 2020 (April to September) will still be bit rough because of BSVI in implementation across the board – motorcycles, trucks and everything, and therefore there will be a stiff price increase and we can’t afford to not increase the prices. That is going to affect the demand to some extent and I can’t see how it wound. I see a tough first half and then I see a short of a comeback in the second half. Thus, still, 9 months are there – as far as I am concerned – where we can see the top of green shoots. 

What is your expectation from the budget 2020-21 (#BUDGET2020ZEE)?
These are such complex issue because we have one point of view to look at it and in the end, I hope it will be a breakthrough progressive budget, which allows the business to thrive more. Thus, anything that will help the fundamental nature of the business is important. Off course, people look after tax cut and other sops. Despite that, I think it is a real seminal work of digging down and seeing the fundamentals and putting more money to the infrastructural area as I think this will be the most helpful thing for the economy.

Let us know about the possible launches that we would see from Royal Enfield because there is always an excitement for them? How you will deal with the increasing competition as Bajaj and Triumph are teaming up and the same is the case of TVS and BMW? 
First and foremost, maybe three years ago when BSVI was announced and we were to reframe a lot of our plans for BSVI. So, I would say that the next nine months, even more, are really towards settling the whole thing down. It is not an easy technology to bring out and a lot goes behind this. So, all our vehicles are meeting BSVI but now we need to look after production to get the volumes that we need. There are few interesting new products which are thrown into the BSVI-mix and you will get to see it in a month or two when they get rolling out. In a nutshell, the next nine months is about keeping the head down getting BSVI and it is not about the technology but is about the service. How do you service a fully new engine and others? So, it is more a grinding short of work in the next nine months and then you will see more interesting products. 

Anything related to electric vehicles? 
Absolutely and we are working on different things. But, we don’t need to – from our perspective – to show what we are doing or are the first in the market but we are certainly really working hard on it. At the same time, we are also using this opportunity to see can we reframe personal mobility differently. It is certainly not about sticking some batteries and a motor into Classic. It is not economic right now but is easy to do to just stick a battery but we are going to do something. We are doing quite different but based on what the market requires and the technology that supports much better with a long-term perspective. It is all about urban now and if you see in the big world map downstairs in the situation room and see the urbanisation trends then the bright yellow spot, where urbanisation is happening in India. India is just going to be extremely urban and we have to contain with that. This means pressure on cities is going to be high in India and transportation is important for that. 

Are you hinting towards your participation and contribution towards the public mode of transport kind of thing?
Naturally in any case that comes through our VECV Eicher trucks and buses, where we are also doing electric buses and other things that are super interesting from the urban perspective. 





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