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Rural, semi-urban areas bright spot for tyre industry amid COVID-19 challenge: MRF

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Robust demand for two-wheelers and tractors across rural and semi-urban areas in the country remain bright spot for domestic tyre industry amid the challenging business environment due to COVID-19 pandemic, according to MRF Chairman and Managing Director KM Mammen. Normal monsoon and expectations of a bumper crop augur well for the rural economy, he said while addressing company’s shareholders through its annual report for 2019-20.

“It has been two months since the government lifted the lockdown and we are still finding our way to establishing economic levels of production. We have had to deal with COVID-19 cases in our manufacturing plants from time to time and this has affected our production momentum,” Mammen noted.

Fortunately, demand for tyres, particularly from the farm and commercial sector, has not been affected much and the company is able to cater to these market segments, he added.

Mammen noted that the forecast of a normal monsoon and its timely onset has boosted the expectations of a bumper crop output, which augurs well for the rural economy.

“This can strengthen rural income and demand, which will see a spurt in demand for two-wheelers and tractors. Thus, a recovery in the rural economy will be a relief to the Indian tyre industry,” he added.

Terming government’s decision of prohibiting import of tyres as a welcome step, Mammen said the initiative would definitely alleviate industry concerns to a great extent.

The tyre market leader noted that currently the automobile industry is passing through tough times as demand for four-wheelers and two-wheelers is at an unprecedented low.

“The industry has moved to BS-VI vehicles which are slowly getting absorbed in the market and we are expecting to see a fair growth in demand for vehicles, and I am sure that the automobile industry will come out of this slump with reasonable growth in the near future,” Mammen said.

He said MRF, which reported a total income of Rs 16,322 crore for the year ended March 31, 2020, is focused on strengthening its position through this period of uncertainty with uncompromising emphasis on quality.

“It has been one of the major factors helping us take a leadership position in the industry in almost all the segments of the market,” Mammen said.

The company noted that automobile industry would see new trends, with the industry trying to recover from the COVID-19 pandemic-induced recession.

There could be a preference for personal mobility, with entry level vehicles standing to benefit, it said.

E-commerce would see more traction which will drive sales of light commercial vehicles, while two-wheelers also could see traction since they are used for last mile delivery, it said.

The way forward for the automobile industry and the tyre industry is not clear given the uncertainties brought about by the pandemic and the road to recovery will not be smooth given the impact on disposable incomes, consumer behaviour and credit availability, the company noted.

Some experts estimate that auto industry volumes will be down by 25 per cent in financial year 2021, MRF said.

“The bright spot would be the rural and semi-urban areas. Tractors and two-wheelers are likely to do better than other segments,” it added.

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Actively scouting for a partner for passenger vehicle business: Tata Motors

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New Delhi: Tata Motors is actively scouting for a partner for its passenger vehicle business in order to be ready for growth in the next decade which would see huge investments going into new technologies, regulations, according to a top company official. The auto major is looking for collaboration even as the process to carve out passenger vehicle (PV) business as a separate standalone unit gathers steam.

Earlier this year, the auto major’s board had approved to form a separate entity which would house the PV business, including the EV vertical, by transferring relevant assets, IPs and employees directly relatable to the vertical for it to be fully functional on a standalone basis.

“The whole purpose of subsidiarisation is to actively look for a partner because this is a reality for all of us that a collaboration can unleash a bigger potential in the next decade which is going to see significant investments in new technologies and regulations,” Tata Motors President Passenger Vehicles Business Unit (PVBU) Shailesh Chandra told in an interview.

The collaboration would also help in reducing product lifecycles and enhance new product launch intensity, he added.

“All this requires huge investments and agility is also the key. So this is something which we are actively looking into,” Chandra said.

He noted that while the subsidiarisation process is on, the company is alongside “actively looking for a partner” to create assets and capabilities with a win-win situation for both.

When asked about the timelines for both the initiatives, Chandra noted: “There are no specific timelines..as far as subsidiarisation process is concerned, converting the business into a separate legal entity, we would like to accelerate in a year and as far as partner is concerned it is an active work which we will continue to work on.”

On the company’s performance in the PV segment, Chandra said that despite lockdown Tata Motors posted double digit growth during the first half of this fiscal.

“This has resulted in a market share of 7.9 per cent in the passenger vehicle segment..the company’s product range has been appreciated for safety and pleasure of driving,” he said.

Chandra said the PV segment was witnessing growth revival as sales grew by 18 per cent in the July-September quarter this fiscal.

“A big part of it is pent up demand which has been a big factor for the growth. There was 20 per cent de growth last year because people wanted to wait for BS-VI products leading to pent up demand in the last year itself. Further two months of lockdown this year has led to huge pent up demand,” he noted.

He added that demand would sustain during the pandemic period due to people preferring personal mobility over public transport.

“It remains speculative how the things would turn out to be beyond that and festive season because there is something offsetting these positive trends –pent up demand combined with personal mobility needs.

“It is the whole macro economic situation which is not witnessing growth, GDP is expected to see a 10 per cent decline. We will have to see the overall effect of that post the festive season. So far indications are that it will sustain,” Chandra said.


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Export markets leading sales revival, says Bajaj Auto CFO Soumen Ray

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New Delhi: Bajaj Auto is witnessing a strong revival in various export markets, including Africa and Latin America, as they were not hit as hard by the COVID-19 pandemic and subsequent lockdowns as the domestic market, a senior company official said. The company, which exports to around 79 countries globally, reported its best ever dispatches to international markets last month.

“In terms of recovery, international business is doing better than domestic because most of the countries where we export have not been impacted that much by the pandemic and lockdowns as India,” Bajaj Auto CFO Soumen Ray told in an interview.

The demand is very robust and various markets like Africa, Latin America Middle East and South Asia are doing very well, he added.

“We have only two areas of concern, one is ASEAN region where major markets like the Philippines and Cambodia are witnessing lockdowns and restrictions. Other is Sri Lanka, where the government has banned import of vehicles,” Ray said.

Barring these two, the company is witnessing very strong revival, he added.

“It (revival in export markets) is borne out of two factors — severity of pandemic has been less in these regions and thus, the economy is also less impacted,” Ray said.

The company’s export order book is very strong for the next few months, he said.

Bajaj Auto shipped 2.12 lakh units in September to various international markets.

In July-September period, however, two-wheeler dispatches fell 11 per cent to 4,14,271 units as compared with 4,62,890 units in the same period of previous fiscal.

Commenting on the outlook for domestic market, Ray said the company is witnessing increase in footfalls and inquiries at the dealerships.

“Jury is still out regarding the festive season this year. Looking at the response in the first few days of the festive season, our sense is that it is going to be similar or marginally better than last year,” he noted.

On three-wheeler sales, Ray said the revival in the segment depends on pick up in economic activity involving small commercial vehicles.

“Certain economic activity is required for demand to come back. Economic activity here pertains to movement of people from one place to another, relatively short distances, in both urban and rural landscapes,” he noted.

“Till that doesn’t happen, like opening of schools, entertainment areas, why would anybody like to buy a commercial two-wheeler or a three-wheeler,” he added.

He, however, said that situation is improving in the three-wheeler segment and September quarter was much better than first quarter of the current fiscal. MSS RVK


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Tata Motors crosses 40 lakh cumulative production milestone

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NEW DELHI: Auto major Tata Motors on Saturday said its passenger vehicle vertical has crossed 40 lakh cumulative production milestone, nearly three decades after it rolled out its first model in the segment – Tata Sierra SUV in 1991. The company, which over the years has produced models like the Indica, Sierra, Sumo, Safari and the Nano, had achieved the 10 lakh production mark for passenger vehicles in 2005-06 and 30 lakh milestone in 2015.

“This is a very significant milestone for Tata Motors. Very few players in the industry have reached such a milestone. This has been a long journey since we rolled out Tata Sierra in 1991,” Tata Motors President Passenger Vehicles Business Unit (PVBU) Shailesh Chandra told .

Over the years, the company always challenged the conventions and brought in many path breaking products, many times first in the market, like Sierra, Estate, Safari, Indica and the Nano, he added.

With Sierra, the company took its first shot at the SUV segment in the country. The company consolidated it further with Safari.

Further in honour of the legacy of Sumant Moolgaonkar, Tata Motors introduced the first ever multi purpose vehicle in Tata Sumo. With Indica, the company changed the customer perception in terms of how a passenger vehicle is received.

The company set up the PVBU vertical in 1998 and the first product to roll out under its aegis was Indica.

“It was the first indigenously developed car and since then we have always challenged conventions and have strived to bring in technologies which are supportive of the cause of the nation, whether it is safety or things related to sustainability,” Chandra noted.

The company has been focussing not only on the safety aspect of its vehicles but has also been leading the electric vehicle space in the country, he said.

“We have brought a paradigm shift to the industry that safety is also important otherwise it was not taken that seriously and to ensure that we were also the first company to commission crash safety testing in the country,” Chandra said.

The company’s compact SUV Nexon was the first model in the country to receive a 5-star rating from Global Ncap. Tata Motors is also the country’s largest electric vehicle manufacturer with 67 per cent market share.

It currently sells Nexon EV and two trims of Tigor, with different range, in the electric vehicle segment. The company also has ambitious plans to launch further electrified models in the future, with an electric version of its premium hatchback Altroz next in the line.

Chandra said with greater acceptance of its current model line up, the company would be able to reach the next 10 lakh production mark in much lesser time.

“It will take us a shorter time to achieve the next one million production mark. This should be on the back of the Indian growth story as well.

“So the industry should also reach higher peaks. It has been growing, barring last year and this year as well due to the pandemic, but the underlined fundamentals of the passenger vehicle industry remain intact whether it is from penetration perspective or buying capacity of people,” Chandra said.

From all the angles the growth story should come back as the economy also stabilises post pandemic, he added.

“So on the back of that growth and certain actions that we are taking to strengthen our product portfolio and the traction we are already seeing, I am sure the next one million should be faster then three to four million mark,” Chandra said.

The company now sells five BSVI compliant models — Tiago, Tigor, Nexon, Harrier and the Altroz.

Tata Motors has manufacturing facilities at Chikhali, Pune; Sanand in Gujarat; and a joint venture plant with Fiat at Ranjangaon in Pune.


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