challeges of indian hcv:

What are the various challenges faced by the Indian heavy vehicle industry? How can these
challenges be met?
The challenges involve showing enough resilience to cope with any future downturn and then
revive.

The other challenges involve meeting expectations of better quality and technology especially in
terms of construction and mining trucks. Also raw material cost is another concern. When the
industry was growing earlier, the raw material prices were galloping, then during the recession
they fell. Now again raw material prices have started to rise.

With new international players entering the segment leading to increasing competition, there are
new cost pressures on the manufacturing side and selling pressures on the price side. The
consequence is that the margins get squeezed.

In the meantime, all unnecessary items and processes need to be thrown out of the window and
one has to become more efficient. Cutting cost has to become a religion as this is the only way
one can deal with this margin squeeze.

Is not the Indian heavy commercial market crowded?

The Indian market for heavy commercial vehicles is huge with lot of potential but there are hardly
any players - there are some players who have collectively nearly 70 per cent marketshare.

This is not a crowded market and big enough for few more players to come in. Many of the new
players coming in are into the construction and mining vehicle segment, which is an emerging
segment; these new players are not really entering the mass market - but I think they do have
plans to enter the mass market later at some stage. This increased competition will move from
pure price to price-to-value concept.

With highly fluctuating fuel prices, there has been an increasing trend towards fuel efficient heavy
commercial vehicles. Comment?
In all segments of Indian industry fuel efficiency is very important. For example in the mass
market type of trucks the most significant value addition is fuel consumption.

Fuel consumption is an extremely important component for saving cost – we all need to work for
cutting down fuel consumption. Instead on standardizing trucks, there is a need of customizing
them for basic applications in order to ensure that for particular applications it gives the best fuel
consumption.

Our vehicle on a relative platform are better fuel efficient being more modern therby giving more
earnings.

Therefore even if the owner has to pay a slightly higher price for buying an AMW truck – they still
make more money.

http://www.projectsmonitor.com/AUTOMOB/india-will-need-better-modern-trucks

http://www.sae.org/events/cve/presentations/2006indiaarya.pdf- challenges of tata

Concern Areas
Inflation, Interest Rates & Liquidity
Fuel Price Hike
•direct impact on the ownership cost, freight operator's profitability and
volume growth of the Auto sector
Soaring Raw Material Prices
•Accounts for 70 % of total cost for Manufacturers
•Prices on a upward trend
•Badly affecting the margins as these costs cannot be passed on to
customers due to high competition
meeting the strength and requirements of the customers

FINANCIAL POSITION
make one comparision lik this
Peer Comparison
Ashok Leyland Tata Motors Swaraj
Mazda

CMP 34 (Face Value = 1) 420 296

P/E 9.61 8.64 10.83

NPM % 5.83 6.96 3.75
Last Dividend 150 % 150 % 55 %
EPS 3.53 49.65 24
ROE 22.3 25.98 27
ROCE 20.11 19.8 21.50