Vinod K Sahay, Head – Sales & Marketing, Medium and Heavy Trucks, Tata Motors.“Our mandate is very clear. We have a dominant market position in the Indian commercial vehicle industry, more so in medium and heavy trucks where we have a 68 per cent market share. Our objective is crystal clear; it’s not just to retain the market leadership position, but to grow it further,” says Vinod K Sahay, Head – Sales & Marketing, Medium and Heavy Trucks, Tata Motors. In an interview with Agith G Antony, Vinod talks in detail about the evolution of the trucking industry and how the same has been transformed by the Tata Motors with its world-class Prima range of trucks. Excerpts from the interview.Could you tell us on the evolution of the trucking industry and the role played by Tata Motors in transforming industry practices? In the last 20 years, the Indian commercial vehicle industry has already gone through a shift from 16-tonne to 49-tonne GVW. In 1980s there were only two-axle trucks available and maximum GVW was 16 tonne. Now from 16 tonne, we have moved on to multi-axle and tractor trailers and we have reached a level where all manufacturers are providing 49-tonne GVW tractor trailers. In India we are not allowed to go beyond 49 tonne. So the only way to improve efficiency of the transport model in India is to increase the kilometre travelled per day. That is what Prima is already doing.It is a fact that the average kilometre covered by an Indian truck in India is just 400 km a day, whereas the European average and American average is 750-900 km. So the same 49-tonne truck doing 400 km a day against a 49-tonne truck doing 800 km a day can change the dynamics. The transformation on tonne has already happened, and the transformation on the kilometre is going to happen, where we have pre-empted the market by offering Prima. People are seeing just what it does and we are going to transform the market. We have done many transformations and we believe that is our responsibility. If we have 70 per cent market share, we need to tell our loyal customers what he should do in future and what more he should do to increase his operational efficiency. It is our responsibility to lead him to the next transformation and that is what we are doing with Prima.What was your expectation while launching the Prima range? There were reports that you were not able to sell higher horsepower trucks, so brought it down.First of all, in launching Prima, our major focus was all about transforming the trucking experience in the industry. Prima is a world-class truck on a modular platform almost as good as any European truck. The day we launched it in Mumbai in 2009, we had clearly stated that the range will be from 180-540 hp, having transmission from 6 to 12 Speed with multiple versions of cabins. The first range we launched was of 280 hp. We have launched 380 hp, and will be launching 230 and 180 hp, too. The total product configuration in Prima is close to a thousand, which has already been designed and configured on the drawing board. Depending upon the market, we will produce it, one by one.All I want to say is that we have introduced only a few models and the response we have got from the market is very much as per our expectation, and in many segments beyond that. Prima’s range is used in applications which we did not market for. People are already demanding higher horsepower. Out of the two tippers we introduced a few months back, one of them has already sold out. So that is the kind of response we are getting.So you believe that you are on the right path?Yes, of course we are on the right path. We do not have any short-term targets. For almost two years, we have had only two products and only in tractor segment. Prima in rigid trucks, has not yet emerged; tippers, we started recently, and in tractors, only two models have been introduced. Once we have a 20-30 per cent range, then we will start running for higher purpose. As of now, we are giving people a taste of what a world truck means and what it will do for them.What is the productivity enhancement one gets by using the Prima range of trucks?We have seen people getting 100 per cent additional productivity. There are customers who are using Prima and covering 800 km per day in tractor application where earlier, he was not completing 400 km a day. So just imagine the increase in productivity. Even if he is paying 50 per cent more for Prima, he is getting a double revenue increase and his operating margin has hugely improved.But given the existing road network, traffic jams, etc, is it really true that one gets a hundred per cent additional productivity?Yes, even though it is a challenge. Our customers are not getting such a huge increase in productivity on every route. We are close to a sales figure of 1,000 Prima tractors which are running in different applications across the country, on all kinds of routes. We are monitoring the kilometres they are covering at the end of every month. We clearly see that anything between 30-100 per cent is the increase in productivity. So, the least efficient route which is very congested and has a lot of toll and octroi points, where the driver is not able to drive very fast, even there he is getting a 20-30 per cent increase in output. That is the shape of things to come.The competition in the trucking industry has changed in the last ten years dramatically.It’s true that competition space has changed in the last ten years quite dramatically and believe me, in the next ten years, it is going to be more intense. Our mandate is very clear. We have a dominant market position in the Indian commercial vehicle industry, more so in medium and heavy trucks where we have a 68 per cent market share. Our objective is crystal clear: it’s not just to retain the market leadership position but to grow it further.But how sustainable do you think the growth will be if you factor in the present state of the economy and the upheavals in the political system?Most analysts across the industry in India and abroad believe that this is not something which is sustainable and they keep giving us examples of various industries in various parts of the world. We aren’t too worried, though. Firstly, Tata is a trusted brand and we are there because our customers love our products and services. But for us, the big challenge is that our customers should not feel that just because they are with Tata, they are being denied something. So if we are having a 68-70 per cent market share in the industry, it is our job to really drive the industry changes and make sure we upgrade. The simple fact is that we do not need a European or an American manufacturer to come to India and tell Indian customers what more is possible in the trucking industry. That is why the second big part of strategy and core strength is our product and engineering team. At any point in time, the way we plan our product strategy, we ensure that we are able to offer our customers a product within the Tata Motors family itself.Can you give us an example of this?In the construction industry three years ago, Tata had one product in multi-axle tippers which was hugely successful, dominating the Indian multi-axle tipper segment. But we had to take a call and like most other successful companies, we stopped production so as to make way for a new product. Now we have ten variants. On our conventional platform, all the variants are upgraded - instead of 2516 we upgraded it to 2518 with normal suspension; we have the same 2518 available with bogie suspension, we have a third vehicle which is available with bogie suspension and 9-speed, we have another vehicle on the current range which is available with 230 hp. And now we have the Prima range where we have 280 hp in 25-tonne as well as 31-tonne. We have introduced a 380 hp vehicle in the Prima range.So the point is, we are always going to be ahead of all the competition put together, in terms of our product bandwidth. For any application, for any horsepower point, for any gearbox or transmission or engine horsepower, we will have a product.How do you supplement it with after sales support?That’s one of the core strengths of our company. We are working very aggressively to provide after sales related support. We have started this huge initiative where we are already providing support, especially for off-highway vehicles. We are already the largest as far as the highway service network is concerned but even for off-highway application, we are providing the same support to customers. What we have promised to our customer is operating economics and lifecycle value. We are providing the best lifecycle value for the product and we believe that this is not a segment where people take an emotional decision just for the brand. I believe that we are in the right direction and we should continue to rule the Indian commercial vehicle industry.Since you mentioned the lifecycle, has there been any shift in the buying patterns on the part of the end-user?We had anticipated the shift in the buying pattern and it is happening. We have consolidated more, especially in the heavy truck industry. If you look closely, you can see that the share of FTUs (First Time Users) is just going down and the industry is increasingly concentrated where there are big players and large fleet operators. That is the trend we had predicted and that is the way it is happening.What is the other perceptible change that you have noticed?If you take a closer view of the construction and mining sectors, the shift is more towards a very professional way of deciding which product can give more productivity. In construction and mining applications, tippers constitute only 15-20 per cent of the overall capital expenditure which the customer is making. So if I can give him a tipper with a higher ratio and is more reliable and is able to give a more productive output, then the efficiency of other assets also improves and he understands that very well. And another influencing factor is that contracts are awarded with both incentive and penalising clauses. From that point of view, the customers are willing to pay a higher premium and go for a product which is more reliable, which can do better productive job by having a higher ratio in the same hours allotted.Is the same trend happening in the cargo industry?The cargo industry is still dependent on the quality of roads, because for a customer to get an advantage of higher power vehicle like Prima, he needs to have better roads. It is happening steadily, but this is not in full control of the operator, whereas in the construction and mining sectors, it is the operator who is controlling the entire value chain. For example, instead of buying 2518 if our customer buys 2528 and his productivity goes up and for that he needs to buy one more excavator, he does that: buys another one. Because that is in his control and he does not have to wait for the roads to improve. That is a very distinct change which is happening. So increasingly, in the construction sector, the companies are demanding better vehicles even if they cost more.However good the truck is, unless the operator is trained to use it in a proper way and knows how to reduce the idling time, it is back to square one.Yes, we realise that, not only from the training aspect of increasing the efficiency of the asset the big challenge is driver availability. This is one of the biggest challenges we are facing. At Tata Motors, we do multiple things to address this pressing issue; in collaboration with the state governments, we are opening many private training schools. We have already started in Punjab, and there are six more institutes where the work in under progress. We are also installing simulators in most of our own service training centres and we are going to provide simulators to large dealerships where a driver can learn some of the better driving techniques, by which he may increase kmpl of the vehicle as well as the aggregate life and ensure that the maintenance requirement is minimal.Regarding the importance of long life of aggregates, to what extent does the operator’s efficiency come into play?The real challenge is to go from 6-speed to 9-speed and to 12-speed manual transmission which requires training. So for all our vehicles of the Prima range, we ensure that a good driver can be trained into operating 9-speed. We hold regular refresher programmes. So if a customer is having a hundred Tata tippers at a particular site, we keep visiting that site on a monthly or quarterly basis and organise camps for the drivers.What has been the investment made so far; any more capex on the anvil?Capex is something which we keep doing at Tata Motors. So far the investment that has already gone into creating the factory as well as the range of Prima, has touched Rs 1,100 crore already. We have set up a new assembly plant in Jamshedpur which is a world-class facility. The entire cabin is of robotised design. It is the world’s largest assembly line for commercial vehicle operation in terms of number of work stations, as well as the length of the line. It is almost close to 900 m long, with an output capacity close to 50,000 a year.What is the overall market size for heavy-duty trucks?Last year, we sold about 143,000 heavy trucks with a market share of close to 70 per cent. The total industry volume will be around 200,000. This year, the industry is growing at a rate of eight per cent and we are growing at a rate of 12 per cent. In fact, the cargo segment is having sort of a decline. We have still maintained our numbers but the industry has declined. In our view, the fundamentals of the economy and the work required to be done is quite high so we are quite optimistic that it is a temporary phenomena and we will be back to growth figures very soon.What about the tipper segment?The tipper segment is growing at a rate of 40-45 per cent. Last year, we sold 28,000 trucks and this year we should be selling 40,000 trucks. Out of this, mining accounts for around 40 per cent and 60 per cent is from the construction sector.Where do you place yourself by 2015?Tata Motors is fairly confident that the long-term trend is in the growth segment. We may have some quarters of ups and downs, but if you see the long-term trend in the industry for 4-5 years, we are certainly in the growth mode.