“Government must establish clear policy for vehicle importation and emission standards”

Nalin Welgama is the Founder and Chairman of the Ideal Group. An old boy of S. Thomas’ College Mt. Lavinia, he is a Chartered Accountant by profession. Welgama functions as a Senior Consultant to Baker Tilly Merali’s, while also chairing Ideal Motors Ltd., S A Welgama & Sons (Haulage) and S A Welgama Estates and Agencies.

A well-respected industry captain in Sri Lanka, Nalin was always a vehicle buff. He possesses over 30 years of experience in the international automotive industry, given his leadership in the import and distribution of continental cars and commercial vehicles.

He hails from a family business, S. A. Welgama & Sons Ltd., which pioneered and continues to be in the forefront of road haulage and transportation founded in 1931, which also has diversified businesses in large scale rubber cultivation and substantial free hold real estate.

Following are excerpts of an interview with Welgama:

Ideal Group Founder/Chairman Nalin Welgama

Q: What was the reason for staging Ideal Vision? 

A: Ideal Vision ‘Auto & Lifestyle show 2017’ is a unique concept which is far different to the traditional motor shows that we witness on our shores. This event will showcase all the various business lines of our Group under one roof, along with our partners who contribute to our business verticals. It’s a must visit for everyone, a one-of-a-kind show. We are showcasing our product strengths from a motor cycle, scooter, three-wheeler, light truck, medium truck and heavy truck to SUV, double cabin pickup, electric car and the latest diagnostic maintenance, renewable energy, finance, automotive spare parts, white goods, electronic goods, IT and many more!

Q: Having been in the vehicle business both here and overseas for a significant period, what are your predictions as to the future of this industry?

A: The world leaders fully appreciate the ills of harmful carbon emissions and are fully committed to minimise this. The Paris Agreement which brought 175 or so countries together shows the true commitment of all world leaders. 

Q: What is your view of electric cars and do you think that they are gaining popularity both here and overseas? Why is there not much support for this category of vehicle from the Government? 

A: One of the biggest emitters of carbon to the atmosphere are vehicles with combustion engines. Elon Musk named his company after Nikola Tesla, the father of ‘Free Energy,’ who advocated that the sun can generate electricity for free without any harmful ill effects. We have witnessed the rapid rate at which Tesla has progressed, making it the fourth largest car company surpassing car giants like BMW on valuations. It is believed that we will have 100 million EVs by 2025. Prime Minister Modi is also fully committed to transforming India to EVs by 2030. Our President is also a keen believer of renewable energy and was a key participant at the Paris Agreement last November

Q: There is a dearth of trained technicians and engineers. How does the Ideal Group propose resolving this? 

A: We do have a dearth of trained technicians, most of whom are overseas in search of better prospects. The time is ripe to try to lure them back home by introducing state-of-the-art workshops in keeping with modern trends. We have successfully achieved this with the setting up of our Ideal Choice Premier Workshop in Ratmalana. It is equipped with cutting-edge technology and I believe is a one-of-a-kind workshop. As a result it has attracted a lot of highly-trained Sri Lankan expats, particularly from the Middle East.

Q: What are your thoughts on vehicle assembly plants and will Mahindra be setting one up in Sri Lanka?

A: We have been patiently waiting for the most opportune moment to enter the vehicle assembly arena. The criteria has now been fulfilled, I feel. Mahindra has an impressive line-up of SUVs to offer. We at Ideal Group are very customer centric and have an unmatched number of Regional Repair Centres (RRC) and workshops around the country to tackle any type of job. This infrastructure is a clear advantage. We are therefore keen to set up an assembly plant with the equity participation of Mahindra in order to make a ‘people’s car’ for Sri Lankans. We need technology from our principals who are fully committed to do this. They will also introduce Indian component manufacturers to Sri Lanka for the parts we intend localising so that they can help improve and enhance our local component manufacturers to meet world standards. The second phase shall be for our local companies to access the lucrative Indian auto components market, taking advantage of the FTA we have with India.

Q: Would the Ideal Group be diversifying into other areas and agencies apart from Mahindra?

A: The Ideal Group has already grown to a great oak from its humble beginnings. We are a diversified group with 14 companies contributing very positively to the Sri Lankan economy, employing 1,000 staff and posting a Group turnover exceeding Rs. 17 billion in the 16/17 fiscal year.

Q: How important is CSR to your organisation?

A: CSR has always been a priority at the Ideal Group. We provided drinking water to 600 families in Anuradhapura, an area with a huge incidence of patients with chronic kidney disease. We are presently working on the second stage. We are a caring company. The recent floods wreaked havoc in the Districts of Ratnapura, Kalutara, Matara and Galle. We are setting aside Rs. 10,000 from the sale of all our four-wheeler vehicles from the months of June to September 2017 to help rebuild some of the schools in these areas. 

Q: What other initiatives does the Government need to implement as far as this industry is concerned?

A: I believe the Government has a key role to play. It’s the duty of the Government to establish a clear policy for the importation of vehicles and the emission standards. Our SME sector requires mobility if we are to empower them to uplift their economic standards. This means the light truck segment which serves as an essential tool must be reasonably priced to make it affordable. The Customs tariffs which were around 50% of CIF value were changed in the Budget last November to a unit tax rate of Rs. 1 million per vehicle. This has raised the prices beyond the reach of most. Besides, the LTV ratio which was 90% has been brought down to 70%. The interest rates too have gone up to around 16%, which is unbearable and counterproductive. 

The Government in an attempt to encourage the use of electric cars lowered its rate of duty for cars having an electric motor of below 200 KWH. However, this has an impact on the KM range of such vehicles. The higher range Teslas for example have an electric motor delivering in excess of 200 KWH. These unfortunately attract a per KWh rate of Rs. 55,000 making it more expensive than a car with a combustion engine. Again, a counterproductive measure. Volvo has taken a decision to manufacture only electric and hybrid cars from 2019 onwards, thus halting the production of cars with a combustion engine. We too need to be mindful of these dramatic changes that are taking place around us.

Q: What is your opinion of errant motorists and those who flagrantly violate road rules, mow down innocent pedestrians, etc.?

A: Road traffic safety refers to the methods and measures used to prevent road users from being killed or seriously injured. Typical road users include pedestrians, cyclists, motorists, vehicle passengers and passengers of on road public transport, mainly buses and three wheelers. In Sri Lanka we have witnessed an alarming increase in fatalities year by year. Unfortunately, our motorists do not often obey road rules resulting in a lack of discipline and chaos on our roads. Steps must therefore be taken to implement a penal point system for errant drivers who breach road courtesy and traffic laws. This has proved most effective in countries like Australia, the West and throughout the developed world.

We must also implement a bus lane to ensure a far smoother flow of traffic during peak times. It’s been found that the main contributor to road accidents is driver human error. The advent of the self-driving or driverless cars will minimise the incidence of such error. World blue chips such as Google, Apple and Tesla are already fairly advanced in this field, hence a dramatic change in mobility and the way we live is only a few years away.

Q: Vehicle emissions and pollution are still problems that we face. What measures need to be brought into play to mitigate and do away with these environmental hazards and pollutants?

A: Vehicle emissions have been a major contributor to smog and climate change. The main polluters are China, America and India. China has taken a bold step to encourage the use of electric cars and are providing lots of concessions. India too is providing limited price support for EVs. The Narendra Modi Government has taken a bold step to have only EVs on all Indian roads by 2030. They are also launching a driverless metro train over a 13 km stretch in New Delhi commencing in October 2017. 

The Paris Agreement last November is an attempt by all government leaders to agree and commit to a joint pledge to embrace sustainable development. Blue chip corporates such as Apple are setting up a Green Fund of $ 1 billion to promote renewables. Sri Lanka too is committed to improve solar power generation to around 20% from the present 7%, which is encouraging. I believe the members of our press must take the lead to cover the benefits of renewables and sustainable development. This will no doubt motivate both the Government and the public at large to improve awareness.

Q: What is your vision for the Ideal Group?

A: Aravinda and I are fully committed to drive our business with honour and integrity. We also share a vision to transform our Group into a billion dollar conglomerate.