How does it feel to be a challenger?

Shenu Agarwal: Being a challenger, everything you do is a gain. Underdogs are okay. I like to work in an underdog space. I don’t like to work in a leadership space. The reason is simple. Leaders are normally —I am not commenting on anybody—very complacent. Underdogs always try harder. Whether they succeed or not is not the issue. But they try hard. Therefore, I feel the challenger’s space is a good space to work in.

Where are you now globally?

Shenu Agarwal: A lot needs to be done. The way it will happen is like this. First, we have to pick some India-like markets where our level of products and technology give us elbow room. That is the first step. Markets like SAARC, Africa, GCC and Latin America ...these are the markets we are focusing on. Over a period, we have already built considerable business. We have a very strong distribution network in many of these countries. We have a product presence, which is getting more and more respect in these countries.

The first step is to aim for a significant market position in these countries. The second step is to go to more developed economies for which we do not have a product range right now. So, the focus is on developing a product range over a period which can cater to countries in Europe, the U.S. and the like.

I think it is a journey. And, we are already in the first step. We are very enthused about the results we are getting. As far as India is concerned, we are number two overall and are trying harder to become a leader. We are now 30% in overall CV. In LCV, we are just about number two with a very small margin.

Talking about the profit margin, do you think that the industry needs a co-operative kind of competition?

Shenu Agarwal: There is a realisation in the whole industry that the change is inevitable. And, this change is there, and you have to respond to that. There is a realisation that to be able to respond to the change you have to invest.

An LNG truck or a hydrogen truck ... they are altogether a different animal. It has to be done almost from scratch. There are going to be huge investments. Whatever the companies had invested in the last 75 years would be of no use. You have to do it from scratch. And, that needs huge investment. The realisation has now come, thanks to the change that is happening.

What do you mean by change?

Shenu Agarwal: I mean the transition in terms of new fuel and newer vision. When profit margins are low, where will the money come from?  If you have to invest in the new vision/technology, you have to start making money. Where will it come from? We have to generate money. We can’t just keep on borrowing. To do that, they will have to have the right differentiation of the products. You have to manage your cost well. And, you have to think alike.  Only then can you invest. I think this realisation has come.

Should the focus be on profit or volume?

Shenu Agarwal: This is a big debate in the corporate world. Some people think market share and profit can’t come together. I have a different opinion. You cannot buy market share. If you think you can do it ... you can do it only for a short while and not consistently. Therefore, market share and profit have to come together. In Ashok Leyland—in the last few quarters—the market share is up and also the profit. Otherwise, it will be just a losing fight.

When production increases, conventional theory suggests that prices should drop. Does it happen that way?

Shenu Agarwal: The inverse relationship between supply and price has outlived its time. There is no dearth of supply now. The customer decides. And, he has a clear choice. You have to create more differentiation and value in the product. It is as simple as that. But it is very hard to do.

In a natural market—which is not influenced—the only way you make profit is either by compressing the cost or by creating differentiation in the product. When we transitioned from BS4 to BS6, we created a very different platform. We are the first one in India to do that. It requires a lot of courage because initially the cost would be high. But it gave us a huge amount of flexibility. We have not yet matured the whole thing though. This is a new way of thinking. Once you have done that, it gives you enormous flexibility and your speed response to the market improves tremendously.