Budget 2020 expectations: Atul Auto's price hike will be based on market response, says Jitendra Adhia, President

Jitendra Adhia, President Finance, Atul Auto, talks about his expectations from the upcoming budget, new plant, BSVI and price hikes among others during an interview with Swati Khandelwal. Edited Excerpts:

Q) What are your expectation from the upcoming budget?

A) We are expecting a lot from this budget and you are well aware of the situation through which the auto sector is going at present. The segment of the sector to which we belong has more expectations including GST rate cut and the availability of more liquidity in the market through NBFCs. At the same time, the interest rate for the micro commercial vehicle should be softened. Scrappage policy that has been awaited for a long time in the auto sector should be introduced. These three segments will be very important for us in the budget.

Q: Recently, you have put a plant with a capacity of 60000 units. When is it going to commence and which geographies are you planning to cater from it?

A: Commercial production will be rolled out in the new plant is likely to start from March-April 2020. The expansion is about to complete. As far as geography is considered then we will be covering all geographies from the plant. The new plant has just helped us in expanding the scope in terms of the product portfolio. Besides, we will like to penetrate deeply across the locations - domestic as well as export - where we are functional. 

Q: With about 2 months to go, what is your preparedness with regards to BSVI vehicles?

A: The preparation for BSVI has been completed. As far as the product range is concerned then we are sourcing our engine for diesel three-wheeler from Greaves Cotton and we have our own engine for the petrol/alternative fuel. Thus, we are prepared in both the segments but haven't launched any of our products in the domain. But, our products will be launched in the market at an appropriate time, which is before the deadline. 

Q: What is the expected price hike on products with the launch of BSVI?

A: Atul Auto hasn't announced any price hike and is evaluating many things related to BSVI. At the same time, I would like to inform you that we are not the price makers, so, we will see the market the kind of reaction and then reach to a conclusion on the price hike. 

Q: What is the situation with your exports growth and what is your target from export revenue for FY20?

A: If you have a look at our sales composition then you will find that our domestic sales are somewhere close to 90% and the remaining 10% is contributed by the export revenue. In a mid-term of 3-5 years, we are targeting to increase the export revenue to 20-25% in our overall sales composition. 

Q: What are your CapEx plan and its purpose for FY21?

A: We would first like to consolidate on commercial parts after completion of the current CapEx. As far as production capacity is concerned then it will go up from current 60,000 to 1,20,000 and a new product will be introduced. So, we don't have any major CapEx plan for FY21 but would like to use our commercial investment in expanding our dealer network and to penetrate deeper into the geographies where we are present.