‘Govt should lay down emission roadmap and let industry decide on tech’

G Balachandar Chennai | Updated on July 01, 2019 Published on July 01, 2019

L. Ganesh, Chairman, Rane Group, during an interaction with Business Line in Chennai.   -  Bijoy Ghosh

City-based auto component major Rane Group saw its revenue cross ₹5,000 crore for the first time in 2018-19. The group managed to end the fiscal with around 12 per cent growth despite a challenging second half. Even as the group is preparing for a tough ride in the domestic market, its Chairman L Ganesh, spoke to BusinessLine on a range of subjects including the international operations, BS-VI migration and electric vehicles. Excerpts:

How do you view the current slowdown in the auto sector?

While political uncertainty due to the general election could have contributed to the slowdown, liquidity was a major factor. A very quick recovery may not happen. In the past, whenever we have had a slowdown, it has taken at least a year to see some positive signals for the inventory to get corrected and sentiments to change. So, expecting a quick turnaround could be too optimistic. I would be very cautious about 2019-20 and we are preparing ourselves a little for a tough year.

Are regulatory norms adding to the challenges this time?

Yes. The slowdown is real, there is no question about it. The regulatory issues add to the complication. BS-VI transition is an issue in the sense that the industry is unable to decide on the product mix for the year. How much of BS-IV (vehicles/components) to build and when to switch over to BS-VI? This is going to be more crucial in Q3 and Q4, and our understanding is that in the fourth quarter, there will be almost no build-up of old inventory.

Do you expect any kind of stimulus coming in the upcoming Budget?

A lot of representations have been made. But there is only so much that the government can do. There could be a general stimulus in terms of more push in infrastructure and allocation to certain sectors. But a direct incentive for vehicle purchase... I doubt it.

What are your views on the government’s deadline for switching to electric vehicles?

I believe that the government should specify an emission roadmap, and leave it to the industry and customers to find a solution. This is because a push towards going fully electric has wider implications – the infrastructure needs to be set up, there must be recycling processes or facilities, strategic sourcing plans have to be finalised, etc. I don’t know if anybody has done a study on which vehicle will be more polluting in the long term. Yes, the emission has to be cut. Instead of (the government) telling us to make only electric vehicles from a certain date, it can discuss with all stakeholders and come out with an emission roadmap for say, 10 years. Maruti may produce CNG or other alternative fuel vehicles. Some others may go for hybrids. More technologies will come. The end goal is to cut emission – but for that, the government should not fix the technology; it should leave it to the market and customers, and allow some technology to evolve by itself.

What is your growth outlook for FY20? Will you have a capex similar to last year’s ?

We spent about ₹300 crore in capex across the group companies last fiscal. This time, we have planned ₹250 crore. It will mostly go into setting up of new lines for Rane Madras and in Gujarat. But we will watch closely and plan the capex cautiously. We are also working on a Plan B, because several companies have started working on deferring the capex if things don’t improve as expected.

Do you see opportunity in the light of the trade war?

In the short term, we do see some opportunities coming. Some US companies, which were importing parts from China, are looking to source from the US itself or from other countries. Signs are there. But having said that, I think the trade war itself has global repercussions, especially in the auto industry where everything is interconnected. If the trade war continues, there could be a slowdown in the global economy. That is not good. But India can seize the opportunity that arises, only if the government takes up reforms in the areas of labour, land acquisition and in ease of doing business.

Published on July 01, 2019

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.