Somnath Bhattacharjee, President & Chief Executive Officer, Material Handling Solutions & Equipment Projects Solutions Business, TIL.
At TIL, we continue to focus on product engineering, new product development and customer satisfaction initiatives, in order to remain competitive. This economic slowdown allows us to intensify our initiatives towards operational excellence, which will eventually help us to reduce and optimise costs across all our functions, says Somnath Bhattacharjee, President & Chief Executive Officer, Material Handling Solutions & Equipment Projects Solutions Business, TIL. Excerpts of the interview.
How do you assess the current overall CE market scenario, especially the mobile cranes segment and its growth prospects?
The Indian CE industry, which also includes the crane sector, has the potential to grow at 20 per cent plus CAGR to reach $20-25 billion by 2020, from the current market size of $3.3 billion in 2010. With the domestic economy enjoying a positive long-term outlook, India will see significant levels of investment in infrastructure development over the next decade.
In the short term, however, crane demand witnessed a significant slowdown and this includes the higher capacity mobile cranes, too. This decline in demand is primarily driven by slower execution and clearance related issues in infrastructure and power projects which hold large potential for higher capacity cranes.
In the mid to long term, rough terrain cranes and truck cranes put together, have a total domestic annual demand of 400 units; pick-and-carry cranes (12-15T) have a total annual demand of close to 15,000 units.
Construction and material handling equipment demand is cyclic in nature and has a significant co-relation with the macro-economic cycle. While the economic activity has experienced a decline, the underlying demand in all the core sectors in India still remains quite strong.
As the economic reforms are moved further with key policy changes, equipment demand in construction, infrastructure and mining sectors is likely to bounce back. In our perspective, the current demand decline of equipment is being viewed as a typical cyclic phenomenon.
What is the demand-supply scenario for different tonnages of cranes?
Despite the current material handling equipment demand scenario, the long-term outlook for the domestic economy remains positive, with significant investment in infrastructure development proposed under the 12th Five Year Plan. Along with this, further structural changes in key government policies are likely to improve the demand outlook.
The market size for mobile crane is estimated to grow steadily 15-20 per cent CAGR in the coming years. Though pick-and-carry cranes of up to 15T capacity enjoy a major share of demand, the requirement for higher capacity mobile cranes with advanced features is growing due to continuous change in heavy lift sizes, besides growing customer preference for mobile cranes with better safety features and technology. While smaller capacity pick-and-carry cranes enjoy approximately 90 per cent of the share in the mobile cranes market, the rest of the crane demand is for truck and truck-mounted crawler and rough terrain cranes. However, when the application is more specialised and involves higher load, longer reaches and severe ground conditions, higher capacity mobile/crawler cranes are used.
Brief us on the product trends in the mobile crane segment.
The current market trend in the crane demand in India is showing a gradual shift towards higher capacity cranes with better design features, safety standard, quality and reliability. As the growth in infrastructure moves to the next level, the size of lifts is also undergoing a significant change, which is driving the demand for higher capacity yet safer and better quality cranes.
The future trend is likely to focus more on higher technology with world class safety standards. The usage of telematics and electronic fault diagnostic systems is also likely to become a future trend in crane design and usage. Over the next few years, the Indian market is likely to follow global best practices and standards for lifting equipment as is seen in construction, earthmoving and other industries.
What is the value proposition offered by TIL for the clients?
For our customers, the uptime of crane is directly proportional to revenue and profitability. Therefore, product quality and reliability are most important in our product development. TIL's engineering team is continuously engaged in product engineering and development, in order to adapt the products better to market and application demand. TIL cranes are recognised for improving the operator's productivity and comfort, for more fuel economy through a better driveline match and for providing state-of-the-art safety features with competitive load chart and specification, besides the quality and reliability. TIL cranes are built on superior technology and design and are supported by its pan-Indian aftermarket network fully equipped to handle maintenance, trouble-shooting, repair and overhauling of the cranes.
How do you look at the growth potential in another three years?
Construction and material handling equipment demand is cyclic in nature and has a significant co-relation with the macro-economic cycle. As stated above, even as economic activities have experienced a decline, the underlying demand in all the core sectors in India still remains quite strong.
How do you assess potential for the export market?
We have world class manufacturing process and infrastructure. We have also achieved world class product quality. In the past, we have exported crane structural components to Europe. Currently we have an export arrangement of reachstackers with Hyster, to get the equipment in a fully assembled condition besides exporting the structural components, to Hyster's European plant in the Netherlands. With the changing exchange rate scenario, we anticipate larger export potential for our equipment range in the near future. Our assets are considerable: an association with the world's leading brands, products are built to global standards, and our local value engineering initiative is constantly working on optimising product costs.