As the Indian automotive industry brace for another hard year, ETAuto gets top honchos to outline their path for 2020, if they anticipate any turnaround this year and views on mega-events like the Budget and Auto Expo.
In the fourteenth of the series, ETAuto spoke to Jayant Davar, Co-Chairman, and Managing Director of Sandhar Technologies.
Q. What’s your take to the slowdown scenario, and corporate strategy to tackle it?
In my working career in the auto industry, I have never undergone a phase where there has been a drastic cut in sales in every possible segment, ranging from passenger cars to construction equipment. This kind of prolonged slowdown phase is something new that I have witnessed in the three decades of my professional life.
But fortunately, the majority of the industry had a relatively stronger balance sheet as compared to what we saw during 2008-2009 and 2012-2013. However, whenever there is a slowdown and uncertainty about the recovery phase. a lot of companies take to prudence.
That means they have to lay off thousands of people, cut capital or maintenance expenditure to bare minimum. We too have cut expenses in the areas of advertising, exhibitions, sponsorship and improve productivity. So, I guess prudence is what takes shape every time when the industry or economy fails to grow.
Q. Do you feel the worst is over and recovery on the way in 2020?
Honestly, I can't say. There are several aspects into the picture which are quite weak, whether it is the availability of finance with NBFCs and the lack of credit ratings with the individuals.
Currently, more than 50 per cent of our vehicles are dependent on financing and the credit market is still struggling. I don't know when this situation is likely to improve.
Also, the confusion over BS-IV is yet to die. People are waiting for the BS-IV stocks to be sold first at steep discounts before the others pay a premium to buy BS-VI vehicles. So, I feel the picture is still unclear and only get to know in the next couple of months if we have really struck rock bottom or not.
Q. How do you see the Budget shaping the sector?
We all know that the demand is lacking severely. If the government could come up with measures in the budget to accelerate demand then that will bring a huge change to the entire economy and not only to the auto industry.
Within the automotive sector, we had requested the government for the scrappage policy which is long overdue. Secondly, to reduce the GST to 18 per cent. On the premise of transportations cars is not a luxury, but the need of the hour, and therefore a 28 per cent taxation on the automotive sector makes it much more expensive.
Besides, the R&D is also in a confused state, especially on the MSMEs front. There need to be some sops for innovation and research to continue in the automotive sector and spruce investments in infrastructure.
Q. Will Auto Expo cheer-up the sombre market sentiment?
Definitely. This time there will be a huge amount of diversity in the new launches and new products that will be put on the display. We will also get to know India’s readiness for future mobility.
Q. Three Key-factors that kept you going during this protracted slowdown?
Demand is the most important factor for us as we are in the manufacturing business. So based on this the three main factors are:
* Proactiveness in investing in new technologies
* Being agile and looking for low-cost reforms
* Keeping an eye at diversification
Q. Technologies you admire in mobility?
We are seeing the wave of electrified vehicles, the majority of which are based on lithium-ion batteries. I would like to see some alternate technologies coming like sodium-ion. Sodium is available abundantly for local production. It will be much cheaper and easily recyclable. So, I’m looking forward to the technology of sodium-ion becoming much more prevalent in the electric vehicle space.
Amongst other technologies for the powertrain I believe that hydrogen fuel cells are something that will be positive and will takeover.