Today, we are at a turnover of around Rs 850 crore and are looking at increasing the turnover of both the topline and bottomline, says Rajinder Raina, General Manager - Marketing, Escorts Construction Equipment. Excerpts from the interview.
What is the impact of the economic slowdown on the earthmoving equipment industry?
There are two aspects to the current market situation, one is market is down and you expect it might carry on like this for a few months and then there will be improvement; but there is some scepticism in the industry. That is the status as of now. But I hope the government will be forced to take a decision with elections around the corner. They will have to infuse funds, show some growth; everybody needs money and they will have had to give the go-ahead to some projects. By the last quarter of this calendar year, things should stabilise and start improving. Maybe by August or September, we will be seeing the worst and thereafter things may improve.
What is the demand-supply scenario for backhoe loaders?
In India in the last 3-4 years, the supply position has been consolidated with the entry of a few new players; all players are robust and none of them is a small player. Installed capacities are much higher, the production this time is much lower, but if you ask me about demand versus supply, would be enough for next 4-5 years. I do not think supply is an issue. Demand is an issue right now. There has to be a demand pull in the market.
What has Escorts performance been like, in the last couple of years?
I do not think anybody has been untouched by the economic slowdown. The only matter is how you manage things during this time. There are two aspects to this: One is, you become proactive, you get closer to the customers. When the pie is sinking you attack the pie, so you try to increase your market share by improving on the package. You give more value deliverable to customers, like extended warranties or packages where you give them more visits and more confidence on all levels. This time, since there is a slowdown, I have more engineers available and lesser equipment to attend to, so instead of three, I give the customer six visits. I give them package deals this monsoon; these are some freebies which are offered to lure the customer so he finds value with me. One of the most important things is that in the earthmoving industry, nobody buys the equipment with his own resources, these are all funded. It has become an expensive matter because the rates have gone up. So we have tied up with financiers and try to give some relief to customers through the financiers.
What are your expectations for this fiscal?
By the end of this calendar year, we might see the market stabilise; as I see it, by October there will be signs of stability. Of course, nobody can predict anything and no one can look into a crystal ball. However, I feel we have seen the worst.
Why should a client come to Escorts?
We offer a complete package of equipment which is almost a one-stop shop for the customer. We have a vast footprint in the country as far as service outlets are concerned. Right from the places in the northeast and Ladakh, to places down south in Kerala, we have a good spread. We have the back- up of parts availability.
Thus, we have a product range, we have a footprint, our presence is not city-centric, but is more project-centric. We have been in the industry for 60 years. The liability of brand equity that we have in this industry carries us through to a huge degree. There are some companies who came, left the scene or diluted focus on products because things did not work their way. But we have consolidated, added, we have not left out any particular area of operation.
Do you have any investment plan or product launch for this fiscal?
We are thinking of entering a couple of product areas. We are in talks with some people overseas for bringing in some products and that will give us a major push. Today we are at around Rs 850 crore turnover and we are looking at a major increase in turnover on both the topline and bottomline. Our huge strength is our service set-up so we are bringing in products which are service-intensive because that is where we will get leverage.