Think of cranes, loaders, vibratory rollers and forklifts and the name Escorts Construction Equipment, the manufacturers and marketers of a diverse range of construction and material handling equipment, will immediately come to mind. With their presence in 110 locations across the country, supported by over 500 company-trained dealers and service engineers, Escorts is constantly striving to fill in all technological gaps.
The Escorts Group gets its synergy from sharing best practices across the various verticals and it is this spirit that drives the group to newer heights. With a strong presence in diverse fields, starting from agri-machinery, construction and material handling equipment to railway equipment and auto components, its strong focus on technology makes it a much-trusted player in the industry. Escorts Construction Equipment manufactures and markets a diverse range of construction and material handling equipment. Technological and business collaboration with world leaders over the years, globally competitive indigenous engineering capabilities, over 1,600 sales and service outlets and footprints in over 40 countries, all have been instrumental in making Escorts a genuine Indian multinational.
In the beginning
Escorts has been recognised as one of the best engineering companies to bring in a significant number of new technologies in the country. It started manufacturing the first pick-n-carry crane in India. Yamaha motorcycles were brought to India by the Escorts Group in a 50-50 joint venture. In the mobile telephony sector, Escotel was the first concern that paved the way for a number of technologies that followed. Later, consolidation became the group's priority and some of the ventures have been divested, some given away and some in the process of being consolidated. Today, Escorts operates in four corporate divisions: agri-machinery,
construction and material handling equipment, railway equipment and auto components. Escorts today is probably one of the few companies that has made its products indigenously. Engineering has been a core competence. 'When we bridged this engineering competence, we also added manufacturing strength to it. Today, we want to be known as an engineering company. But at the same time, we are in the trading business and give the same quality of service for both types of products, traded or manufactured. We have gone through ups and downs, both financially and commercially but we have not diverted from that engineering competence,' says GVR Murthy, Head Construction Equipment Division, Escorts Construction Equipment.
Against all odds
As a common factor that has impacted the whole industry, the slowdown has had an impact on Escorts as well. 'I can safely say that yes, we follow the market but we are still better off than the market. That means we still continue to be the leader, claims Murthy. Escorts is one of the few players who makes an entire range of products and face widespread competition in different segments. Murthy adds, 'We hold different positions in different segments. For instance, for pick-n-carry cranes, we are the market leaders with over a 15 per cent market share. And in compactors, we are in the top three.'
This positioning can sometimes be beneficial and sometimes pose challenges, too. The advantage is that it can give the customer the same service across products but skill sets are a challenge. Escorts has been working on this using its experience of 40 years. They have sold almost 70,000 units in the country; in its marked product, Escorts almost sells 65-70 per cent of the required products in number of units.
When asked what they were doing about that 30 per cent gap, Murthy has this to say, 'Leave us for a while and we will come back with that 30 per cent, too.'He adds, 'Everybody knows that the industry is down. So we are taking this opportunity to consolidate and be ready for upcoming opportunities. It is a challenging process. Whatever predictions were made in 2004-06 were delayed by only two years. If somebody says that this will be the market in 2019-2020, I will say it may just be delayed by a couple of years.'
Optimistic about the future
Considering the current tough market conditions, a revival in the overall market and a sustainable future growth in performance may seem a stretch. However, Escorts is all set to take up the challenge and go ahead with concrete plans to achieve newer heights in the coming years.
'We have Plan 2020 which is driven by the promoters though we are all part of it. We would like to be recognised as one of the best engineering companies in the country first, then the financial targets will follow. But that recognition is important and we are working very hard towards it,' Murthy concludes.
'Our machines are accepted globally.' Today we are focusing on the SAARC countries and we recently also started working in Russia. It may take six more months before we are ready to make any concrete announcements, says GVR Murthy.
What are the major challenges you face?
If you go back to the India of 20 years ago and see the photographs of the construction industry, you will recall the iconic image of a woman carrying a basket on her head and a baby in her arms. But that was then. Today, things have changed and that change needs to be acknowledged. And that change includes a lot of technological growth. The industry is capable of giving the country the desired pace of growth. Now the question is how do we produce high-tech equipment to use that technology? Do we have the requisite after sales service? We have come a long way, but in the coming years, we need to be able to provide the right after-sales service and the training to make optimum use of our technological advancements. We also need to encourage skills-set development to operate these technologies. We need to develop training, operations training, service training and ensure man-machine integration. We are doing that at Escorts and along with soft skills, we also build on the technical skills of our people. We have a service centre in Bangalore that offers training to our people.
What is the impact of the stricter emission norms on OEMs like you?
We are ready now. Two years ago, there was talk of this but now the entire industry is ready. I think the next phase will be Bharat IV but I don't know when it is going to come. We did the engineering to beat the emission norms and we used Escorts engines for a while because we can produce 90 kW/year. The rest of them, we will buy. Our suppliers are also emission-compliant. Whenever the next phase is announced, we will be ready. Our engineering is able to adapt to these changes.
Could you tell us about the growth potential on the exports front?
We are very small today because we are in the consolidation phase right now. Today we are focusing on the SAARC countries and we recently also started working in Russia. It may take six more months before we are ready to make any concrete announcements. The good thing is that our machines are accepted globally. What helped us is our engineering excellence. Right now, though, we are taking baby steps towards those targets.
Where do you see the company, five years down the line?
We would like to be recognised as one of the best engineering companies in the country first and then the financial targets will follow. In our agri-business, we have been developing new products, one after the other. In the construction industry, there may not be new innovations but there are long-term products. For instance, for our backhoe loaders, though we are not market leaders, we are introducing the telematics technology. The new machine will have a telematics player and the customer will know on their mobile phones when their engines begin, what time they stop, the kinds of stoppages experienced, etc. The drive to take the business and its growth forward is there from all stakeholders and our team, too.