Home Managing Growth is a Bigger Challenge Binod Agarwal, President Dear friends, At the outset, I express my profound thanks to the Council for re-electing me President of this august body to steer its affairs for one more year. My special thanks to the Past Presidents of FADA and you - the automobile dealer fraternity for continuing to show your faith in me. I must confess that we have been able to achieve very little compared to what we had set out to do when I took over the reins of this organisation last year. However, your continued confidence and trust strengthens my resolve and gives me encouragement. Simultaneously, it also puts a lot of pressure on me to deliver. I take this opportunity to reassure my fellow automobile dealers that although I have a daunting task at hand, I shall, with your support and cooperation, try my best to live up to your expectations. It is heartening to note that the automotive industry has posted a healthy growth this fiscal so far. It is all the more comforting that the robust performance of industry comes on the top of good showing during the last 3 years. As I have said umpteen times through this column in the past, the industry and the trade cannot afford to be complacent. The past experience shows that the industry had, from time to time, slipped into cyclic slowdown and even recession after a few good years. That the economy continues to post a perky performance consistently and is on a strong footing is an encouraging sign. The latest data released by CSO should cheer all of us. The statistics reinforces the fact that India is a happening place and on its way to become a global economic power. The Monsoon season rainfall from June 1, 2006 to September 6, 2006 was normal/excess in 69 per cent of meteorological sub-divisions, which is a good news keeping in view that the Indian economy is still dependent on good monsoons to stay on a high growth path. Overall industrial growth was 10.6 per cent during April-July, 2006 as compared with 8.9 per cent in April-July, 2005. It is the manufacturing sector that once again stole the show with a growth of 11.8% during this period. July 2006 figures are even more impressive with industry growing at 12.4% and manufacturing sector at 13.3%. All this augurs well for automobile industry and trade. Inflation hovering at around 5% is on leash. In short, the economy is firmly placed with strong macroeconomic fundamentals. However, uncertainty over global oil prices and firming up of interest rates are the sore points in an otherwise bright scenario. Adverting to activities of FADA, we have ambitious plans and agenda. Complexity of dealership operations in today's environment with a gamut of laws and regulations governing automobile retail trade and service industry on one hand and competitive pressures on the other, throws up a big challenge for automobile dealerships. Dealerships are confronted with host of issues ranging from shrinking margins and viability, grappling with variety of complex laws to trained manpower availability. FADA, as an organisation of automobile dealers is alive to the current and emerging challenges and has initiated a number of measures to enable automobile dealerships to stand up to these challenges. Helpline Service for FADA members and launch of training courses to train Sales Executives, Service Supervisors and Spare Parts Supervisors for meeting the manpower requirements of automobile dealerships are the major activities initiated in the last 2 years. While Helpline Service has evoked tremendous response, the training programme has not exactly gone the way we had expected it to go. I am of the view that the problem of manpower availability is going to assume a serious proportion with economy growing at a robust pace. Poaching is not restricted within a particular sector of economy; various sectors are vying with each other to woo the trained people. Many sales executives working in automobile dealerships have been lured by banks, finance & insurance companies and other businesses. Automobile dealers should, therefore, pitch in with their support to ensure that the programme succeeds. The programme aims to address in a small measure, one of the major problems facing automobile dealerships today, which is going to become acute in the days ahead. The fact that automobile industry continues to be on a high growth path is enthusing. However, managing growth is a bigger challenge. As more and more vehicles come on the roads, we are likely to be confronted with the challenges of environment pollution, road safety, traffic congestion, land planning, etc. Similarly, multiplicity of taxes on motor vehicles at the local and State levels is a constant bugbear of automotive trade. It is ironical that while the taxes on motor vehicles at the central level are being rationalised from time to time, the State Governments seem to be working at cross-purposes with the Central Government. In fact, motor vehicles have become a favourite whipping boy with the State Governments when it comes to raising revenues required for their developmental and non-developmental activities. Service tax is another area where a lot of confusion abounds with various Commissionerates taking different interpretations of service tax provisions, perhaps to achieve their revenue targets, giving rise to disputes and litigation. Overcoming these challenges requires a concerted effort on the part of all players. It is in this context that FADA has always endeavoured to work in partnership with Government, industry, allied businesses, NGOs and other stakeholders for removal of speed-breakers in the growth path. As a result of these efforts, a Task Force on Auto Retail was formed within FICCI. The objective of constitution of this Task Force was to draw the attention of the Government to the significant role being played by auto retail sector in national economy and to secure its rightful place as a major segment in retail sector. Carrying forward its objective, the Task Force organised a Conference on "Auto Retail - Framework for Growth" on 19th September 2006 at New Delhi under the banner of FADA and FICCI jointly. I am happy to inform that the Conference was a grand success and achieved, to a large extent, its purpose of bringing various stakeholders at a common platform. The conference also helped in highlighting the contribution of auto retail in national economy and its issues and concerns. I am thankful to FICCI for joining hands with FADA in its endeavour for sustainable growth and development of automotive business as whole. I am also grateful to the Hon'ble Union Minister of Shipping, Road Transport and Highways, other Government authorities and esteemed guest speakers for sparing their precious time to share their views and thoughts with the automobile dealer fraternity. Outcome was all the more satisfying inasmuch as the response of the Government authorities was positive on most of the issues raised at the Conference. I would like to assure here that we are not going to rest on our laurels and will continue our endeavour of working together with the Government authorities, industry and other players to overcome the challenges currently facing us and emerging on the horizon. I shall welcome your valuable suggestions and inputs. With best wishes, Yours sincerely, Binod Agarwal