The Hindu Business Line : Price cuts to step up growth, says Khattar

Mr Jagdish Khattar, Managing Director, Maruti Udyog, says that the current price cuts are going to have a tremendous influence in the next couple of years, and will provide a step-up in growth.

Excerpts of CNBC-TV18's exclusive interview with Mr Jagdish Khattar:

What is the kind of elasticity and volumes that you expect to see, after these price cuts?

We have seen that whenever excise cuts take place, there is a step-up in growth, provided all other things remain same, and I am sure we will see it this time around too.

This decision of price cuts is going to have a tremendous influence in the next couple of years, since I foresee other manufacturers to come into this segment. Players who have been sitting on the sidelines are expected to come here. Thus, I feel, we will become a real strong base for the small car market.

What do you expect in the Swift diesel version when it is launched later this year? Also, would you tweak any of your other models, to bring them under the ambit of small cars?

As far as the other models are concerned, they have to be considered with other models of other manufacturers. So I do not feel much can be done in this area as of now.

Second, the Swift diesel version, which would be 1.3 litres, would also come under the ambit of the new excise regime.

How much do you see the revenue increasing, after the price cuts?

Well this year, growth has only been at 4-5 per cent in the market, so I feel we should try and aim for a double-digit growth.

Is there any more room for further price cuts, keeping the competitors in mind?

I feel the current price cuts, ranging from Rs 12,000-25,000 are very substantial by themselves, for all manufacturers.

We have also seen that even the consumer promotions, which we had given on Budget-eve in February, when the customers actually postpone their buying, were less than the current price cuts.

Did the Budget have any margin implications for Maruti since we have seen duty cuts in non-ferrous metals like aluminium?

These cuts will have no immediate impact, since we have already entered into annual contracts with our suppliers, which will end this year. Thus, we will be taking these reductions into consideration only by next year.

Do you think GM, Toyota and Ford would try to position their models here?

In the current regime, if the small car segment is going to be a major one where all future growth is, then all major manufacturers would like to play a significant role.

I foresee that as the volumes increase and prices get more competitive, they would also start sourcing from here.

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