Atul Auto is setting up a new production facility with a capacity of 60,000 units near Ahmedabad: Jitendra Adhia, President-Finance

Jitendra Adhia, President - Finance, Atul Auto, talks about the impact of COVID on his company and resumption of production among others during an interview with Swati Khandelwal. Edited Excerpts:

Q: How much production has started at your company? Also, tell us about the kind of impact that COVID has had on your company? 

A: As far as the resumption of operation is concerned, then we have commenced the production with 30-40% strength. I don’t think that we will be able to do anything special related to production this month because the automobile sector depends more on the availability of the vendors. It will be difficult for us to have a smooth momentum until the vendor doesn’t gear up himself. However, we expect that we will be able to use 10-20% of our capacity but it seems that things will start settling in the second fortnight of June. So, we are gearing up and lining up things accordingly. We expect that July onwards things will start pouring in place.

Q: How many of the dealerships have been opened till date and what is the response from the consumers’ side?

A: 70-80% of our dealerships are open now. But as far as football of the consumers is concerned than it has been very low and is moving at a slow pace. We expect that demand will increase after additional relaxations will be granted in the lockdown in June. We have been into discussions with the dealerships that have remained closed for two months and found that they are just trying to settle with the opening of the dealerships and are engaged in completing the carry-forward jobs of the past. They are also trying to bring back people who have moved out. When it comes to enquiry than it has been very low and we will have to wait to find the changes that may come in the segment shortly. Finance is another aspect in the three-wheeler business and as far as finance is concerned than the financers are yet to open their new yearbooks and announce new year schemes. Apart from routine, there is a second aspect this year in which BS-VI will be effective from April 1, 2020. Thus, there are many changes in business patter and vehicle prices. These things will be addressed now – as we have been under a continuous lockdown since March 22, 2020 – and everyone will have to complete their homework in a right manner and introduce new schemes in the market and adopt new patter of marketing. So, I think that these things will take another month or more.

Q: RBI has announced a rate cut in the recent past and few of the auto companies are tying with the banks to come up with flexible EMI schemes for consumers. So, tell us about the initiative of Atul Auto for easy financing?

A: Atul Auto has its tie-ups with almost every financial institution and we have done good business with them in the past. During our discussions related to the future, they have assured us that they will come out with attractive schemes. However, when it comes to the three-wheeler segment then they have not plied on the roads for the last three months. It is obvious, the first focus will be on collection. So, none of the financers has turned up with a clear strategy for the segment yet. Although we also believe in the fact that we will have to come with several actions whenever the market will open and I think that we will have to wait for another one month to understand these things.

Q: What is your product pipeline and will you continue with the expansion plans that had made earlier or there can be any change in strategy of expansion? What strategy will you have on the export market?

A: As far as expansion plan is concerned then we are expanding with the same volume of our existing capacity, i.e. our Rajkot plant has a capacity of 60,000 units and a similar capacity is being installed near Ahmadabad. And, 90% of the work related to the project was completed by the end of March 2020 after which it was delayed to the lockdown. The work on the project will be completed after further easing in lockdown is announced. When it comes to run the commercial production then I think there is a need to wait because the demand in any way is going to be at a low level. That’s why the commercial production can be delayed but expansion work will be completed. 

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In terms of exports, the situation is quite liquid yet as the situation in overseas market is similar to the situation of India. However, we have started dispatching small orders from this month and are hopeful that we will be able to get regular orders from countries where lockdown will come to an end. At the same time, I would like to inform that we were working on diesel three-wheeler with a focus on rural and semi-urban markets. In the recent past, we also introduced our alternative-fuel three-wheelers. Fortunately, it is getting a good response in the overseas as well as Indian market. But we are not aware of the conditions that will emerge after the lockdown is lifted. And, we will have to look at the economic situation and arrangement of finances for the same.