The last financial year was Force Motors’ best in its history, both in terms of revenue, and profit. The OEM clocked INR5,000 crore, and booked INR152 crore of net profit. But the two years before that, which also saw the Coronavirus pandemic, were no less than trial by fire for the OEM’s MD Prasan Firodia. “It was very painful, those two and a half to three years,” he recalls.
The extended lockdown periods also led to capacity utilisation drop by around 50%, to levels of 35% or so at Force Motors. However, that “painful” period also triggered the company to engage one of the ‘Big Four’ accounting firms Ernst & Young for a major cost optimisation drive. A key decision under this initiative was to close down the 30 year old agriculture tractor business, and focus all resources to build its core businesses.
And the core, Firodia says, is, “creating, I would say, best in class, shared mobility, passenger transport solutions, whether it is a Traveller platform, the mono bus platform, the utility vehicle platform. So we want to focus on these segments.” Force Motors has invested around INR 1,500 crore to develop products in order to play to its strengths.
Internationalisation strategy
The third generation entrepreneur Firodia now wants to use some of his company’s products for an international play. Force Motors has recently set up its first overseas assembly line, in Kenya, for its Traveller vans. And, one base may not be enough to tap the Africa opportunities. “We are looking at definitely one more assembly location there. Assembling there locally, from a tax point of view, from everything, makes a lot of sense,” says Firodia.
Apart from the African continent, Middle East and Latin America are markets where Force Motors wants to gain presence in. It has already dispatched about 35 units of its Urbania, a premium van brand with 9- to 17-seater configurations which Force Motors hopes to compete with established van makers in overseas markets.
Launched about a year and a half ago in the domestic market, the Urbania has sold over 3,000 units. “That segment doesn’t exist in India. There is no market. So now we are building that segment and creating that market,” says Firodia, and also adds that the appetite to pay a premium fare compared to the fares for the Traveller is growing.
“At the end of the day, the end customer has to accept it. And now there is demand coming from end customers,” says Firodia. Organisations like Boeing and JP Morgan have also bought the Urbania, he says.
Urbania is also one of the new range of monocoque vehicles that Force Motors plans to enhance its competitiveness with. The other monocoque platform is for buses. The OEM has launched 33-seater and 41-seater monocoque buses to compete with products from commercial vehicle biggies like Tata Motors and Eicher. In a segment of around 50,000 buses a year, Firodia says his company has managed to get a share of around 7% in the first year.
EV journey with Traveller EV
Like other CV OEMs, Force Motors is also taking baby steps into the emerging Electric Vehicle (EV) segment. Its bread and butter brand, Traveller, will lead the 66 year old OEM’s entry into the new-age industry. The Traveller EV has obtained the mandatory homologation certificate, and a “few customers” have already bought the vehicle.
“Everything is done, but we are not in a rush. We want to go a little easy, do a lot of validation, clock our kilometres, and those number of cycles, then we’ll push out,” says Firodia about the EV market push plan. He’s also not in a hurry as the charging infrastructure “is still not where it should be”.
4X4 SUV market play still on
In all this, one would wonder if Force Motors would also move away from the relatively small but image and profitability generating 4X4 SUV space, where it has a presence but not significant yet with sales of around a hundred units a month. When asked if Force Motors will continue making and selling the Gurkha, Firodia says, “for sure” it will.
Enriching the human capital
While E&Y has been commissioned for Force Motors to be leaner and more competitive with cost optimisation, and digitalisation of its operations, the company is partnering with reputed management institutes for “human capital development”. “Already 140 of our mid level leadership has had training by S P Jain Institute of Management and Research. Now we’re taking our senior level leadership to very reputed, ‘A category’ institutes across India’,” says Firodia.
Firodia and team are devising and executing multiple strategies across the various functions of product and value chain, building on human capital, and digitalising the entire organisation, right from back end to front end to telematics to cloud to data management to CRM to everything. He has to if the legacy player wants to script a sustainable growth story in the increasingly disruptive, and technology intensive era.
As for the growth outlook this year, Firodia says it may not be as impressive as last year, but a 10-15% growth in topline is what the target is. Force Motors’ record year of FY24 also was the first year of profit after two consecutive years of losses.
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