Shenu Agarwal, the new Managing Director and CEO of Ashok Leyland, is clear about his vision to take the company to the next level. With investments made in the right products and processes, all it needs to do is to focus on winning.
Agarwal was Chief Executive of Escorts' agribusiness for more than seven years and associated closely with the transformation exercise. He told Mobility Outlook that while the customer profile of the commercial vehicle (CV) segment is different from agriculture, the backend is the same. “I have a good understanding of how the company (Ashok Leyland) operates but I have to learn the aspects of how the customer behaves,” he said.
According to him, the competition in the CV segment is less fierce than in the tractor industry which has more than 18 players of different sizes against six key ones in CVs. It is this difference that prompts him to believe that there is something that he can do here in a better way.
However, the CV industry operates at fairly low margins of 5-10% while this is15-20% in tractors. “It is slightly scary...operating at sub-10% EBITDA makes it hard to invest in the future,” said Agarwal.
Market Dynamics
The CV industry is changing much faster the tractor segment. “We can be more forward looking. That’s the name of the game in the CV industry,” he added. Agarwal used to run the ship tightly in his previous organisation with absolute control over cost. “I think I can do this at Ashok Leyland too,” he said.
The new chief sees interesting opportunities at Leyland which has great strengths in terms of products and geography. However, there are some areas for improvement as well; its market share can be 'more encouraging' in some parts of the country. This presents a huge opportunity -- in the short term -- to accelerate the pitch and grow market share considerably in the quickest possible time.
Agarwal sees a similar kind of dissonance on the product side where Leyland is strong in many segments and relatively weak or even absent in others. These present a 'simple opportunity' to grow business in the short term.
According to him, the industry is dynamic especially in areas such as emissions, alternate fuels, safety norms etc. “Ashok Leyland is a challenger in the market; we are not the leader. As a challenger, we should love change and until it happens, there is no opportunity to aim at leadership. Only when there is a big change can we do something different, reposition ourselves and create a different pitch in order to challenge the leader'.
Reiterating that he loves to be in a challenger space, Agarwal is confident that with its inherent strengths, all that is required of Leyland is to focus more on winning.
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