The situation for commercial vehicles is now optimistic and the worst is over, feels commercial vehicle CV major Ashok Leyland Limited (ALL). The second quarter of the current fiscal proved to be even stronger for revival than the first. The company believes the October2009-March 2010 period will play a crucial role in its anticipated 20% growth.

With strong exports and fresh orders for buses from various state governments and the possible price hike of 1.5% to 2%, the company hopes to regain its lost market share in the current fiscal, says K Sridhar, chief financial officer, ALL, in an exclusive interview with FE?s R Ravichandran. Excerpts:

The market for CVs seems to be recovering. What are your views on this?

Things have changed for the better. The industry has moved from cautious optimism to being optimistic and strongly believes that the worst is behind. Since April this year, the rate of fall has subsided. If one had noticed the growth in August, the growth in September was found to be more reasonable.

What are the factors driving the revival of growth of the CV industry?

Optimism, owing to a stable government at the Centre, the availability of easy finance for CVs due to stimulus packages from the Centre, which made banks refinance NBFCs in a big way, and the step taken by the surface transport ministry to meet the shortage of funds for highway project developers have all contributed to the growth. Also, the Centre?s JNNRUM scheme will play an equally important role in reviving the growth of the industry. Under the scheme, a host of state governments have come with tenders for 15,000 buses to provide rural folk with a quality transport system across 45 cities.

What is the growth projection of the CV industry in the current fiscal?

Looking at all the positive factors, base effect and improved optimism, it is expected that the industry will register a remarkable growth?around 18% to 20%?and the second half of the fiscal will play a major role in this. The volume of the industry is likely to touch or even cross the 200,000 mark, against last fiscal?s 180,000.

What is the projected growth of Ashok Leyland?

Being an important and major player, we expect reasonable growth and hope to end the fiscal with 62,000 units or even more, with a decent growth in our financial aspects. We hope the company will gain its lost market share by at least 2 percentage points, compared to the last fiscal.

What are the factors that drive growth for Ashok Leyland?

We have witnessed a pick up in our truck sales in the last few months and have also won bids for supplying a huge number of buses to state governments (5,100 buses) under the JNNRUM scheme. Being the only CV maker to have an assembly plant in Sri Lanka, Ashok Leyland expects to sell more vehicles this year. We expect to sell close to 3,000 units and in Bangladesh, the company hopes to sell 1,500 units, taking our overall exports to 7,000. We expect our exports to register a 15% growth in the current fiscal.

What do you think about your ongoing expansions in India?

Our Uttarakhand plant, with a capacity to manufacture 50,000 units, is set to be functional by early next year, taking our total capacity to 150,000 units per annum. We have introduced trucks and buses with the latest Bharat emission standards, factory-fitted cabbed vehicles and low floor vehicles to boost our overall sales. The Rs 2,000-crore capital expenditure plan, spread over a period of three years, is on and will proceed accordingly.

What are your views on the joint venture projects?

Our light commercial vehicles (LCV) joint venture with Nissan is underway and we will start bringing out products from early 2011. Given the global slowdown, both the partners have identified a few products to be introduced earlier. We plan to manufacture these products in Ashok Leyland?s existing facilities. These plants can manufacture up to 65,000 LCV units, and the number can be slightly increased. Our joint ventures with Siemens VDO and John Dheere and our overseas venture Alteads are going ahead according to their original plans. Overall, we expect to fare better this fiscal.