Daimler India Commercial Vehicles Ltd is bullish on the Indian market. It plans to launch at least a dozen products to take on the established players, Ashok Leyland and Tata Motors. It is creating its own infrastructure ? human resources (both management and workers base), vendors, dealers and agents to ensure a smooth entry into the Indian market. In an interview with R Ravichandran of FE, Marc Llistosella, managing director and CEO, is forthcoming on the company’s overall strategy. Excerpts:
Give us a projection of the CV industry in India.
The CV market?s revival reflects the strength of the industry and the support it receives from Indian customers. India is under-estimated in my view.
It holds the future for the global CV market. The perception among banks, institutions has changed dramatically towards this industry. When India is considered to be important for whole world, why not for Daimler. Though we know we need to wait for sometime before a positive cash flow, but we have decided to go ahead with six years of upfront investment.
It is a clear obligation for Daimler to fulfill its shareholders? interest and to be in the growing market. We believe that soon every one out of five commercial vehicles in the world will be out of India and Daimler is here to play a major role.
What is the status on your search for a strategic partner or partners for your Indian operations?
We were looking for partners when we wanted to enter the Indian market. Things have changed dramatically, since our relationship with Hero ended two years ago.
We don?t require any strategic partners now. Daimler India is a strong 500-people network in Chennai, including a 150 strong R&D staff and 30-40 foreigners.
We are looking for partners for enlarged dealers network, agents to facilitate relationship between Daimler and customers, partners for after-sales and service and banks and financial institutions for funding our products.
What is the update on projects that you have initiated?
We will be in a position to launch our products by mid-2012. The joining of German’s engineering/designing capabilities with that of India’s cost of planning and skilled workforce will ensure our stay.
Our value proposition for vendors will be 25% better than other competitors. Around 400 vendors are already in place and a few test dealerships are being worked out.
What are your production targets and funding obligations?
We plan to produce 36,000 units a year initially, which will be doubled over the next few years (possibly by 2014). We are looking at funding options such as tie-ups with banks, financial institutions (including truck finance companies). We also have plans to float our own financing arm? Daimler financial services ? to fund our products.
Captive financing is an additional funding solution for us to leverage and we don?t rule it out. It may have to be a equity capital base of Rs 300 crore-Rs 500 crore, depending upon the developments.