The IMD forecast of above-normal monsoon has drummed up hopes of revival of rural demand for the auto industry.

Speaking to Bloomberg India TV, Mahindra & Mahindra’s Chief Executive for Automotive Division, Pravin Shah, said sales may outperform SIAM’s projection of 8-10 per cent growth in FY17 if the monsoon projections turn into reality.

The IMD has predicted above-normal rainfall for the first time since 1999, after two years of below-normal monsoon. How does it impact your company?

The projection of normal monsoon and better-than-1999 projection surely gives us a good feeling. It is going to help the auto industry, especially the rural market, where we have been facing a substantial drought-like situation over the past two years. With the normal monsoon projection, we expect economic activity to move faster and grow. So far as M&M is concerned, our presence is also good in the rural areas. With the portfolio that we have, it will surely help improve the volumes and we expect to see good growth going forward as economic activity improves with the monsoon forecast. The auto industry body (SIAM, or Society for Indian Automobile Manufacturers) has forecast just 8-10 per cent growth for FY17. I am sure that if the IMD forecast becomes a reality, the outlook for the auto industry can be re-looked.

In M&M’s tractor volumes, there is growth of almost 20 per cent year-on-year as on March 2016. However, from FY11 to FY16, the volumes have shrunk from 6 lakh units to 4.95 lakh. What is the kind of upswing you expect if the monsoons are as good as forecast? What is the growth you expect for FY17?

I do not directly look after the tractor business. If the IMD forecast becomes a reality, in the first quarter (April-June) we expect around 10 per cent growth. And if the monsoon is normal, the spread across India is normal, I am sure the tractor industry along with small commercial vehicles — which are going through troubled times for three years now –will start seeing positive growth.

If you talk about agri-business, M&M has been expanding beyond the agri equipment segment. What is the kind of expansion you are looking at in that space?

I will not go into the specifics of it. We have set up an agri company and we have our own expansion plans. With positivity in the overall economy and arrival of monsoon, surely we should be able to execute our growth plans in the agri space.

A lot of peers are coming up with new launches in the SUV segment. So there is a lot of competition. What is your market share in the SUV as well as compact SUV segment?

You are right that competition has increased in the SUV space. And we welcome that. Talking about M&M, we continue to be a market leader in the industry. We enjoy 40 per cent market share and I am happy to say that we have revitalised and added new products, both in the traditional SUV and compact SUV space. We have added Mahindra KUV3OO and KUV1OO over the past six months. KUV1O0 was launched in January. The addition of these two products has helped us increase our market share for the year ended March 2016. Everything looks positive, including the forecast of 7.6 per cent GDP growth, inflation under control and interest rates softening. With a wider product portfolio and availability of finance, we hope to see better times going forward.

What type of impact will the recent policy changes like imposition of infra cess and ban of diesel vehicles have on auto sales?

While the auto industry has started seeing some sort of recovery, the levy of infra cess of 1-4 per cent is a cause of concern. I am sure it will get absorbed in the price. It will have some dampening impact. Going forward, as and when GST comes in, all extra levies are subsumed into a single rate and that will help the auto industry.

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