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Saurabh Kalra Global Logistics and Supply Chain Management April 2011 batch S P Jain School of Global Management (Singapore Dubai)
Why Foton
Number one in China and growing at rapid pace 2020 Development strategy
Becoming one of worlds top vehicle manufacturer Established strong partnership and joint ventures with global leaders Cummins; Daimler Potential growth of automotive sector in India Stupendous!! Driver for Foton in India Relevant local experience, world best proven Foton technology and innovative principles
Sources : 1. Karvy Institutional Equities India Research April 2012 2. Avendus, India Equity research Automobiles, Commercial Vehicles, Feb 23. 2012 3. Care Research Indian Commercial Vehicle Industry September 2011
Mazda Dominance of top 3 players due to sales and service network resale value diversified product portfolio captive financing abilities CV industry highly dependent on interest rates, fuel prices and raw material prices
Sources : 1. Karvy Institutional Equities India Research April 2012 2. Avendus, India Equity research Automobiles, Commercial Vehicles, Feb 23. 2012 3. Care Research Indian Commercial Vehicle Industry September 2011
Sources : 1. Karvy Institutional Equities India Research April 2012 2. Avendus, India Equity research Automobiles, Commercial Vehicles, Feb 23. 2012 3. Care Research Indian Commercial Vehicle Industry September 2011
Nehru National Urban Renewal Mission scheme in Dec 11 and moderation in IIP growth HCV CAGR 13.3% FY12E FY14E (domestic) mainly due to completion of golden Quadrilateral & North-South-EastWest corridor
Sources : 1. Karvy Institutional Equities India Research April 2012 2. Avendus, India Equity research Automobiles, Commercial Vehicles, Feb 23. 2012 3. Care Research Indian Commercial Vehicle Industry September 2011
manufacturing and import costs in case of imports Importance of distribution channel: Product availability High after sales service levels desired
Facility Decisions
A test market (e.g. Andhra Pradesh) to be selected for
vehicle sales. spare parts distribution and after sales service Subsequently, direct retail shop delivery of vehicles from Pune in selected states Distribution network to be expanded pan India in subsequent years Centralized warehouses in major metros like Delhi, Kolkata, Chennai with increase in volume
Make/Buy decision
Initially, Engine to be outsourced to domestic/ overseas vendor Engine to be assembled inhouse in subsequent years Other components To be bought out This would result in cost saving, risk sharing and benefits of
leveraging technology developed vendor base Initially some components to be imported from China, Indonesia, Pakistan, Kenya Localization of imported components in subsequent years:
Development cost minimized in initial years
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Inventory Decisions
Inventory decisions Tactical and operational Inventory decisions highly dependent on demand of product,
supply of components, roll out time etc First year inventory decisions to be based on First year sales forecast Quick product delivery at customer end
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be based on domestic market Export considerations in subsequent years E.g. choice of Mumbai/ Gujarat/ Chennai as a port for export in later years
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Thank you