“Across organization, we have frugal mind-set and always believe in delivering more with less. We are extremely lean and probably we have the most compact trucking plant in the world, which can produce 80,000 trucks out of 75 acres of land. We offer relevant modernization to our customers in the best economic pricing,” shares RS Sachdeva, Chief Operating Officer, VE Commercial Vehicles Ltd (VECV), during an exclusive interview.
Fuel efficiency enhancement is number one area where every company is making rapid strides in commercial vehicle space. This is aimed at reducing the parasitic losses as well as enhancing engine efficiency. This is achieved through extensive electronic features in vehicles because with the BS-IV emission norms implementation on the vehicles, all the engines need to have the Electronic Management System (EMS). Companies are deploying means to use engine management systems and ensure that engine auxiliary features work only when it is required. By doing so, you conserve engine power and improve fuel efficiency.
Secondly, companies are working towards enhancing product reliability and improvising the cabin for drivers so that they can ride for longer period of time without any discomfort. We believe ergonomics has a bigger role to play in improving the turn-around time for the vehicles.
If I look at the performance in last one year, the industry was hit by three major challenges. One was Demonetization in November 2016, then came the product upgradation from BS-III to BS-IV. The Supreme Court suddenly gave a verdict that BS-III vehicles can’t be sold post April 2017, which had hurt initial sentiments of the organizations as we were not ready at that point in time and on top of that, we had BS-III inventory, which was not allowed to be sold post April 2017. And now that GST has been rolled out, it has also imposed some initial hiccups. These three disruptions slightly slowed the growth pendulum of the industry.
After de-stocking in June, and then re-stocking post July 2017, the CV sales have picked up tremendously well. Although there were apprehensions of such a growth, however industry was able to achieve 35% growth in September’17. October also augured well for us. Looking at such a performance, we are now highly bullish about growth in the next 6 months because GST is getting stabilized. GDP growth is also growing as per estimates. There are newer policies which are on the anvil to be announced by the government, which would shape the things to come. For instance, Vehicle scrappage policy will also be a turnaround for us. This would essentially mean that vehicles older than 15 years would need to be scrapped. All in all, yes there are challenges, but with government’s continued thrust and industry’s foresightedness towards opting for new technologies and the ability to adapt quickly, things are moving in the right direction for the industry.
It has been the empowerment and excitement in the role given to me and the ability to contribute towards organizational growth. These are the enablers, which have helped me to be a part of this organization for 25 years now. We have seen major transformation in this industry over this period. Power to weight ratio of the vehicle has improved tremendously. It has become much higher today. About a decade back, 25-ton vehicle was driven by only 120hp engine. Today the same capacity vehicle is being run by 230hp engine. Secondly, the driver comfort has been improved tremendously. Earlier it was always doubtful that vehicles traveling from Delhi to Mumbai and back will return in 2 weeks or not, but these days, it’s the certainty that instead of monitoring vehicles for weeks, they monitor it in hours. That’s a huge change that is shaping the growth of CV industry in the country. The turn-around time has improved in addition to power to weight ratio and driver comfort. Emission level improvement is also one of the biggest differentiators these days and in parallel, fuel efficiency of vehicles has also enhanced dramatically. A decade back, 16-ton truck used to give an average fuel efficiency of 3kmpl and today it’s not less than 5kmpl even with the BS-IV emission norms. The reason for this transformation is because our fleet owners have become much more organized. They are more productivity focused and tolerance for poor durability and reliability has drastically reduced because their customers are also asking for stricter provisions to be followed.
The entire value chain has become much more visible now-a-days. We have become much more integrated than we were earlier as an entire ecosystem and that’s perhaps the biggest transformation we have seen.
It’s only customers’ satisfaction through aftermarket, which will be the differentiator in times to come. The industry in unison is working towards that. After-sales service has also seen a dramatic shift over the period. For instance, at VECV itself, there are now 280 touch points across the country where our vehicles can be serviced and repaired. Automation has entered in the aftermarket industry in a big way. Our dealers are also better equipped now. In future, you will find JD Power surveys also getting conducted in the CV space, thereby increasing competitiveness in the product quality. Lot of innovations are happening in the space and this is the best time to be in the commercial vehicle industry. With the invention of telematics, vehicle tracking has now become a reality and anyone can trace and track the vehicles. Volvo Trucks in India is the first truck manufacturer to introduce the European design, high performance trucks with the latest technologies. To provide the complete solution, Volvo Trucks in India pioneered the Driver Training concept in commercial vehicles segment.
We also thrust a lot on the continual improvement of our dealers & drivers to drive efficiency. We have got ‘vehicle installation process (VIP)’, which intends to educate drivers and customers on the maintenance aspect, how to drive safely and in turn enhance fuel efficiency. Driving habits lead to better fuel efficiency. Periodically, we keep on sending them the mailers on the technological upgradations, any new dealer addition in our portfolio, and new schemes of warranty because this plays a very important role in commercial vehicle selection. Today, there is 5-year warranty on drivetrain & powertrains, which used to be just 1-year earlier. So, things are really shaping up well in the after-sales service space in the country.
Across organization, we always believe in delivering more with less across the organizational initiatives. We are extremely lean and probably we are the smallest trucking plant in the world, which can produce 80,000 trucks out of 75 acres of land. We ensure that we offer relevant upgradation or enhancements to our customers in the best economic pricing. We have adapted Volvo Group technology for VECV products at the Indian cost after fully localizing technologies.
Technology roadmap in this industry is quite centred on fuel efficiency enhancements. Enormous thrust has been placed on the fuel efficiency because in India fuel cost is about 45% of the total operating cost, whereas in Europe, it’s just 10%. From that perspective, the operators’ profitability lies in conserving fuel. Second, we are working on light-weighting of vehicles. For the same load vehicle, how much payload you can increase by reducing the curb weight of the vehicle. We are trying various new age materials such as composites and exploring the use of plastics, aluminium and other nonferrous materials, we ensure that the curb weight continues to be the lowest. Additionally, we are working extensively towards electro-mobility and connected vehicle technologies. We are trying ways as to how fast we can convert our buses & trucks in electric vehicles as there has been a government push to electrify the vehicle fleets over next couple of years. We have also prepared our roadmap for conversion from BS-IV to BS-VI, which is slated to happen from April 2020.Lot of investments have been planned towards that initiative.
We have recently introduced AMT (Automated Manual Transmission) technology in the complete range of LMD and HD buses and Medium Duty haulage truck application in the first phase and the same will be extended to other applications later on. This technology has been adapted based on the OptiDrive technology designed and developed by Wabco.
Innovative trucks and buses bring competitive advantage in India’s growing commercial vehicle market. VECV is deploying ‘Modular, Global and Secure’ industry solution experience for an integrated approach to product development that accommodates regional requirements. The deployment is part of the company’s ‘Integrated Data Management’ initiative, which aims to improve quality, streamline the product development process, and deliver business value across the organization by integrating the processes, data and systems of its engineering and manufacturing value chain. Adopting a product strategy to meet diverse regional demands and to localize the development of differentiating technologies is a key concern for many original equipment manufacturers.The 3DEXPERIENCE platform provides digital continuity to accelerate innovation, improve product quality and performance, and reduce engineering lead time and costs. More and more commercial vehicle manufacturers are recognizing the value that it can bring to their business.
The Volvo Group has been in India for almost 20 years and has set up three production bases in the country to manufacture trucks, buses and construction equipment. With this JV, we have taken all the technology support from Volvo. We implement the relevant technology, which will be adopted by the Indian market. Owing to Volvo group technology prowess, we are also exporting our engines back to Europe. Technology transfer has been really smooth over the last 8-9 years and both the JV partners are happy with the progress made by the VECV.
India is already the exclusive manufacturing hub for the MD 5-8 litre, medium-duty Euro VI long blocks for automotive applications for Volvo's home base in Europe. Volvo Group plans to make India the main base for manufacturing engines for industrial applications. We also export around 8~9000 vehicles every year from the VECV plants. Going forward, we are looking at new markets also such as Middle East, Indonesia, South Africa, Europe, etc., over a period of time, we will introduce products in these markets as well.
Supply chain is notably one of the very important elements. We have been able to manage our supply chain extremely well owing to extensive technology support and ensuring know-how to the distributors. Today we are on the threshold of conversion of our supply chain into a world-class supply chain. We are making sure that our suppliers are situated in the vicinity. Thankfully, we have been able to achieve our objective. Total 39 suppliers have set up their base in Pithampur, adjacent to our factory. Some of them are global players. With this, we have been able to create an unparalleled supply chain ecosystem, which is quite responsive and cost wise economical. Complete automation of the change management system along with the suppliers has also been attained. Additionally, we do innovative sourcing, which ensures that our cost structure remains one of the best in the industry. Our endeavor has always been to achieve innovative sourcing, which is most efficient. Secondly, with GST coming in, irrespective of the location of the suppliers, our cost remains the most competitive. With these parameters, we ensure quality, cost & delivery from our suppliers.
There are two-three levels of development in the surface transportation industry. After GST, we have seen that there has been migration from lower tonnage vehicle to higher tonnage vehicle. Multi-axle vehicles are becoming more popular. With e-commerce expansion, there has been a lot of focus on turnaround time. As mentioned earlier, people have started monitoring time in hours than weeks. Today overall operating economy has been enhanced as fleet owners and drivers are educated. They are ready to adopt new technology so that they are in control of the vehicles and vehicles remains more on-the-road and less time is being spent at the dealers’ side or the service side. Everyone knows that the railway is still not able to harness its full potential and in lieu to that, the trucking industry would continue to thrive. The government’s much needed emphasis on industrial corridors would further set the growth agenda ahead.
With these developments shaping up, multimodal transportation system would become a reality. This would provide seamless movement of trucks in the shortest possible time with improved road conditions. The government of late has been placing a lot of emphasis on multimodal system – from port to road and road to rail. If that happens, then efficiency and the cost structure can greatly be enhanced in the future. This situation will be win-win for all be it fleet owners, distributors or the OEMs.
GST has been one area, which initially was a hitch, but the long-term impact would be extremely favorable for our industry and we have already seen the results of the past two months, which also point towards good times ahead. We have passed on the cost reduction to our customers. Our trucks have become cheaper post GST. To top it all, the roll out of GST has resulted in 30% faster logistics. Secondly, we are also eagerly waiting for the scrappage policy. This policy can enhance the volume by 20%. Going ahead, electromobility will be the gamechanger. This initiative can take the industry to ensure zero emission levels. Having said that, the government should give sufficient time to ensure conversion. Government is also talking about some alternative fuel systems. We are exploring these newer avenues to get ready for the future. All in all, things are moving in the right direction. The government is doing its best to facilitate growth. Road infrastructure is becoming better. In short, there’s no stopping the commercial vehicle industry in the country from hereon.
The country is moving towards building smarter cities with smarter transportation systems. Efficient and smarter commercial vehicles will be the backbone of such an economy. We are fully equipped to take on the demand from the technology side & product side, etc. Last year, we sold 58,000 trucks. This year, we are planning to sell 65,000 trucks. We are geared up to sell 1,00,000 trucks already over the next 2~3 years. Our market share is improving in all segments and we are all set to take advantage of the burgeoning growth waiting to be tapped.
What’s your leadership style?
I believe in team building, delegating task to them and ensuring that they execute to the best of their capabilities. Collaboration at execution is my key leadership mantra.
What’s success, according to you?
Success, to me, is being able to align and contribute towards the organizational success.
What’s your favourite book?
The recent book that I have read is ‘Paradigms: Business of Discovering the Future’. This explains as to how to spot future trends and shift in the way of doing things and how to be prepared to take advantage of them. It delves on three key concepts that are vital for an organization’s future. These are Excellence, Innovation and Anticipation. Excellence is the essential base ingredient for success. Innovation keeps a business alive, takes it into new directions and prevents it from becoming stagnant. Anticipation is the ability to spot potential changes and be prepared to take advantage of them.
Bill Gates & Steve Jobs are two great leaders that admire the most because they believed in thinking beyond and innovating continuously.
When not working, how do you de-stress yourself?
I love sports and music. So, I like playing Badminton in my free time.