Chennai: The Firodia Group, promoter of Force Motors Ltd, has slashed its revenue growth estimate for this fiscal to 16% from 67%, following its exit this week from a joint venture that produces heavy commercial vehicles (HCVs).
“We will definitely go close to Rs 3,500 crore,” Force Motors managing director Prasan Firodia said at a company event in Chennai on Tuesday. “Because of the business units we’ve retained and the business units which we’ve pulled out of... with that kind of reorganization, a Rs 5,000-crore target may not be doable this year.”
File photo of the assembly line at the MAN Force Trucks Pvt. in Pithampur. Bloomberg
The group—comprising Force Motors, the joint venture and auto parts maker Jaya Hind Industries—had a revenue of Rs 3,000 crore in the year ended March. The Pune-based firm ventured into the heavy vehicle business through a joint venture with Germany’s MAN Truck and Bus AG in 2003. On Monday, Force Motors announced it will sell most of its 50% stake in the venture to MAN Truck.
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Prasan Firodia, MD of Force Motors, talks about the new launches the company has in store for customers and whether interest rate hikes are hurting growth prospects.
The HCV sector has grown slower than the light commercial vehicles (LCVs) sector as the Reserve Bank of India’s spate of policy rate hikes have made heavy vehicles more expensive. Goods transporters are adopting the hub-and-spoke model, relying on LCVs for last-mile delivery.
HCV sales grew at 5-6% in the first half of this fiscal, constrained by rising interest rates and high diesel prices, said Yaresh Kothari, automotive sector analyst with Angel Broking.