Ashok Leyland Ltd. is a challenger and not a leader in the automotive sector, which offers it an opportunity to bring change, according to Shenu Agarwal, who was appointed as managing director and chief executive officer in December last year.

"Somehow, the CV industry doesn’t realise that it has to make more money to be able to invest in the industry. It is our responsibility to bring the change and invest in the change," he said.

Prior to this, Agarwal was the president of Escorts Kubota Ltd. He was chief executive for the agribusiness for more than seven years and associated closely with the transformation of Escorts into a leadership position by ushering in contemporary global standards of design, quality, and manufacturing.

In this free-wheeling interview, he articulates his thoughts on several key issues.

Edited excerpts from the interview:

As the head of the Hinduja flagship company, what is your brief?

Shenu Agarwal: Ashok Leyland is a purpose-driven company. Therefore, the vision is to be among the top 10 globally in the commercial vehicle space. That’s the brief.

Ashok Leyland has come a long way in the last few years. Number one priority is to make the brand more prominent across the globe. In 75 years since its inception, the company has developed a lot of capabilities and relationships and partnerships.

The industry, in the meanwhile, is changing very fast—a lot of changes happening—be it in technology or in the marketplace. Ashok Leyland is a challenger and not a leader, even in India. Therefore, it is a great time for Ashok Leyland.

Challengers have the great chance to disrupt the existing model. We welcome the change. The change gives us a chance to create a different position. The whole industry is plagued—I don’t know why—by a few players.

In every other industry, there will be a long tail. But in our industry, we don’t have a tail. The entry barrier is very high—both from the technology angle and distribution point of view. So, it is not easy to enter this space. If at all a tail exists, it is not there in the traditional space. Only in the new alternative business, the tail exists. So, we have very few players—three or four—with significant brands. In the core traditional old business, there is no tail.

Surprisingly, the profitability levels are very low in this business. The industry still has around 6 to 8%. If you look at any other industry—even within the automobile space—I come from the tractor industry where the profitability is anywhere between 15 and 20%. What we see in the CV space is one-third of it. The competition in the tractor industry is even more intense. It has eight or nine strong players. And, they have a long tail as well.

Somehow, the CV industry doesn’t realise that it has to make more money to be able to invest in the industry. It is our responsibility to bring the change and invest in the change. Otherwise, who will do this? This is very important, not just for the betterment of the industry but also that of the whole nation. The issues like carbon have to be handled somehow. Those are the focus areas for us now.