SML Isuzu looks to next Indian government for 'better solutions'
Japanese commercial vehicle manufacturer SML Isuzu is "positive" about India and is expecting a stable government and policy environment after the coming general elections to invest more in the country.
"Political stability is very important to us. Before the election, we won't take any major decisions. We hope that the next government will have better solutions to the economic challenges facing the country," company Managing Director and Chief Executive Officer Eiichi Seto told IANS in an interview.
He said the automobile industry in India is "stressed" due to high interest rates and sluggish economy, and may recover from the second quarter of next fiscal if a stable government is formed after the general election due by May.
"At this moment Indian market is stressed... because of the economic situation demand is depressed," Seto stated, adding that businesses were expecting a stable and reform-oriented government.
On Isuzu's medium to long-term expansion plans, Seto said the company was targeting an increase in market share in the light commercial vehicle segment to 10 percent by March 2015 from the current eight to nine percent.
"We will introduce new models and expand capacity. We are positive on India," he said.
Seto said finances of most of the automobile companies in India are strained due to low demands and the difficult macro-economic situation.
He said the high interest rate due to tight monetary policy of the Reserve Bank of India (RBI) has also hit the industry hard.
"Most of our customers buy products with bank financing. Interest rate is a big dampener," he added.
Seto expressed hope that the markets would recover in the second half of the next financial year.
"We should be patient until the next general election -- may be six months more. After September we hope things will improve," he said.
He said SML Isuzu has witnessed a sharp drop in sales in the last two years.
japan's Sumitomo Corporation controls 44 percent, while Isuzu Motors has 15 percent stake in the Chandigarh-headquartered commercial vehicle manufacturer SML Isuzu, which was previously known as Swaraj Mazda.
According to Seto, SML Isuzu sold around 13,600 vehicles in 2011-12. The sales dropped by 20 percent in 2012-13 and the company is expecting a similar decline in sales in the current fiscal ending March.
Seto said SML Isuzu has retrenched around 200 casual workers and taken several other measures to cut cost. The company employs over 1,500 people.
"At this moment, we are trying to minimise our investments. Once the market recovers, we will make expansions," he added.
(Gyanendra Kumar Keshri can be reached at email@example.com)
(Posted on 23-01-2014)