Irrespective of the current slowdown, most companies have plans to develop their market further in India by setting up new facilities or expanding existing ones, introducing innovative marketing strategies, coming close to customers, and revamping operations in a more productive way.
The demand for construction and mining equipment has been hit hard in the last couple of years, largely due to the high interest rate regime and slowdown in infrastructure. The last year especially, saw regulatory roadblocks, liquidity crunches and a lack of investments which all led to a sharp decline in the demand for mining and construction equipment. Stalled projects and a slow pace of infrastructural investments were among the key factors that hurt construction equipment volumes while the curb on mining in several geographic areas impacted the demand for mining equipment.
Regarding the market slowdown, most OEMs feel that the worst is over. The slowdown was always considered as a passing phase of the economy and a short term effect, so, rather than feeling concerned about the difficulties of the slowdown, equipment players are now working towards the mid-range and long-term opportunities being anticipated. Whenever there is a slowdown, there is an opportunity beyond that. So major players in the construction and earthmoving equipment market are moving ahead with a different strategy to tackle the current slowdown, at the same time, cashing in on the opportunities expected in the long term perspective.
As a strategy to cope with the slow economic environment, many companies are concentrating on process improvements and the removal of non-value adding activities through Lean Management Systems. The tough conditions have forced these firms to return to the basics of improving the overall operational efficiency, reducing waste, adopting better technology to increase output etc. These steps can definitely help keep firms afloat in troubled waters.
Irrespective of the current slowdown, most companies have plans to develop their market further in India through the setting up of new facilities or expanding the existing ones, introducing innovative marketing strategies, coming close to customers, and revamping operations in a more productive way. Says Nitin Chalke, Managing Director - India, Eaton, "We are looking at growing in India. Both our business and services are already growing quite well this year despite the difficult economic conditions. We would like to grow in emerging markets and that includes India. So we are looking at different ways in which we can accelerate growth, on the organic as well as the inorganic levels. In addition to that, we have a very large professional service centre in India which acts as a global support centre for Eaton. That centre is also growing in a big way; it provides services in the field of engineering, IT, finance, supply chain, HR and some other services. For Eaton, India is becoming a very big hub in its global operations."
Nimit Mittal, Chief Materials Officer, Cenlub Systems says, "We are looking at expanding our product range, getting more products to fulfill our customers' needs, and be more cost-competitive. Right now, we are focusing on cost-competitiveness wherein we are maintaining and improving quality, and simultaneously bringing down the costs. We also have plans to set up a new plant, which will depend on the market demand. If the market picks up, then we will go for a new plant, otherwise we will improve and expand our existing product lines."
"We are investing a lot in new technologies, vertically integrating ourselves into the critical processes," says Nimish Varshney, AVP - Marketing, Hydraulie Cylinders Division, Dantal Hydraulies. "Over the last two to three years, we have invested heavily on backward integration, vertical integration into the critical components or critical processes which are required to manufacture hydraulic cylinders. Recently, we have started our own rod processing plant in Gurgaon for processing piston rods, which is a major part of our hydraulic cylinder."
Says Harpreet Singh Wahan, General Manager - Sales & Marketing, Enovation Controls India, "I think though the sentiments of the market are not too positive now, we look at it as a very good opportunity for equipment manufacturers as it is the right time to increase value in their products by using newer technologies and by looking at what is happening globally. When the market is on an upswing, people are very concerned about production and things like that, and R&D and engineering are pushed aside. When things are on a level phase, we have seen renewed focus on engineering. Technology-wise India is 30 per cent behind global standards. I think it is a good thing too, because it will help Indian manufacturers really prepare for the upswing; they should bring in technology at this time."
According to Aditya Teja, Country Manager - OE Business, Groz Engineering Tools, "There is a lot of potential in India. Road projects are hardly 7-8 per cent of what it actually should be. There are a lot of power projects that need to be done. Then there are the river connecting projects, railway projects, Metro projects etc. So, overall, we have very good prospects in India, but the pace of activity has to go up. It is very slow, we are losing out on time and opportunity, and the project costs are going up. If we really have to make a difference, the government will have to make a difference. They will have to fast- track everything and then eventually whatever capacity the machine manufacturer has, he will be able to utilise it in its entirety. The future is bright but the present situation is quite dull. The overall sentiment of the industry is down. The projects are on paper but they have to come onto the ground."
Says Ashish Govil, Head - Industrial OEM Sales, National Engineering Industries, "We are coming up with our fourth plant, so we are definitely increasing our manufacturing capabilities. We are always open to developing new products. So, we will be developing new products, meeting customer's requirement and increasing our production capability. I feel the market is looking up so there should be a revival in the industry; we are increasing our market share, too."
"It gives us a good chance to think on towards the future to develop new products because this is the best time." Says Rajesh Aggarwal, Head of Sales & Marketing, Drive Systems India, Oerlikon. "In the shops also, we are looking at training people and making long-term strategies to stay in the market. The rupee depreciation has given us an edge to be competitive in exports. We are targeting the markets in Russia, Brazil and Turkey in a big way. These markets are opening for us and we will be concentrating on exports too, in the near future."
Sanjay Bakle, General Manager, Danfoss India, sums it up on a positive note, "We truly hope the Indian market develops faster. At the moment, it's a big opportunity. We hope it comes true. We believe it and we bet on India as a company. We are here because we are keen on India, and now we really need to see the infrastructure coming up and the plan being executed. If India does everything needed in infrastructure, it will mean a lot of construction work is going to happen. In that way, India is a huge opportunity."
Sanjay adds, "Also, with more and more OEMs setting up equipment plants in India, component manufactures like us are given great opportunities because the market is developing. It is an opportunity if they make a lot of machinery. We really hope that things will come through and I think everybody is expecting the volumes will go up. We are betting on India, and for us, it's a really bold move."