Bucher Hydraulics is working globally on three or four factors, to improve the safety, reliability, energy efficiency and overall lifecycle cost of the equipment. These are the main criteria in which direction Bucher Hydraulics R&D is working, says Kapil Sehgal, Managing Director, Bucher Hydraulics. Excerpts from the interview.
How do you look at the concept of green technology with regard to achieving cost efficiency in a holistic way?
Industry at the moment is working in two directions. People are trying to cut costs on their productions but they have to also look into how to improve the fuel efficiency as the cost of fuel is going up every day. Most of our customers want solutions that help reduce the fuel consumption. This is one of the main criteria which we get from the customers. So along with this, most of them do not want to pay higher price for the fuel efficient component. This is a challenge at the moment.
Brief us on the evolution of the hydraulic drives and control technologies for the last one decade.
For the industrial equipment, it has changed drastically. I know that as we are working on many different industrial sectors like the injection moulding machine and the pest technology, there is a whole lot of change. Today people in the industrial sector work in how to match the power requirement with the power generation in a machine so that there is no wastage of energy. The industrial sector is already at that level. And I would say roughly 40 per cent of the machines that are produced in India especially the injection moulding machines are working in that direction.
When we come to off road equipment, the new technologies can see only in niche machines, basically high value machines like rough terrain cranes of 20 tonnes and above. In the crane segment, customers are moving into load sensing technology instead of what was used all these years in the past. So they are evolving but only in a higher segment. In the big machines like pick and carry cranes, they are still using the similar technology what was used ten years ago.
To what extent does the stringent emission norms and increasing demand for highly fuel and energy-efficient equipment have a bearing on the growth of the hydraulic drives and control technologies, especially in India?
These fuel-efficient norms will have a great impact. If we follow the impact or the fuel emission norms what are being followed in Europe, then our off- road level of equipment will rise to a great extent. For example, we have a move from Euro 2 to Euro 3, Euro 3 to Euro 4. But at the moment they have done it by modification itself, rather than doing modifications in the hydraulics to meet the Euro 4 requirement. But when they move to the next level, they would need separate cooling system, highly advanced cooling systems for the engines because, unless you cool the engine, you will not be able to meet the requirements. So then PAN motor drives and other equipment will be needed. Fuel emission norms are very much required if we want to have advancement in hydraulic technology in the off- road machines and its applications.
Could you throw some light on the developments happening in in Bucher Hydraulics R&D, globally?
Bucher Hydraulics is working globally on three or four factors. One, lifecycle requirements are longer. Energy efficiency is one of the things, the products that bring in energy efficiency into the machine. So whatever products are being developed in these days, whether for the agriculture sector, material handling or construction equipment sector, are basically to improve the safety, reliability, energy efficiency and overall lifecycle cost of the equipment. These are the main criteria towards which directions Bucher Hydraulics R&D is working.
How do you look at the interface between an OEM, component manufacturer and the user?
In my opinion, energy efficiency should be user-driven. Unless the user is educated, they don't know from different kinds of technologies. Today advancement in various technologies enables the machine manufacturer to make the machine more efficient. But the users are a bit reluctant to accept the changes. You have to educate them. Sometimes, the OEM has to take a risk, giving them better technology maybe at a better market acceptable price and then educate them and show them the benefits and do some road shows. And then the demand will come.
What are the steps initiated by Bucher Hydraulics to increase awareness among the users?
Bucher hydraulics does not work with users actually. We work with OEMs. And we give our presentations to the OEMs that this is the product available that is being used in the international market and the OEMs are also aware of what kind of technology is used globally. So we work together with them to be able to bring the global technology at their doorstep.
Could you brief us on the solutions provided to the various segments of construction equipment?
We provide manifold solutions in safety valves, load control valves, directional control valves, etc. We have products for excavators, graders, batch loaders; we have products for asphalt laying pavers as well as compactors.
What are the innovative solutions provided in the material handling segment?
In material handling, some customers were using an open central hydraulic, while some others were using closed central hydraulic. But Bucher Hydraulics has offered them low sensing flow sharing technology. There is a new series of valves SV18 and SV22 from our German plant. These valves offer a flow sharing technology. The benefit of flow sharing technology is that even at an idle RPM, the operator is able to operate all the functions together which do not happen in a normal load sensing system. What it does is, when the operator is operating all the functions together, the hydraulic system without any help of electronics will sense the demand for each and every function and will equally divide the flow into them. Sometimes in a machine, he does not need full flow at every point of time. But he wants to do multifunction. Also, we have the solution for multifunction operations even at lower RPM, so that the fuel consumption remains lower.
How do you assess performance in 2012? Has the current inflationary trends and devaluation of the Indian currency adversely impacted the industry?
Bucher Hydraulics is relatively new in India. We started in 2007 and we are at a lower base. In 2012, we increased our turnover by 15 per cent over 2011. It has been mostly through the acquisition of new customers and new occupations. Currency inflation is the biggest challenge. We don't get price increase to the tune of Euro or Dollar exchange rate fluctuation for products that come from Europe, which is a big problem for us. India is a very competitive market and our source plans do not put too much of margins in when they sell the products to Bucher India to be able to support us, and to offer competitive solutions into the market. India is a very price sensitive market. Now if you have a Euro fluctuation from 57 to 72, that kind of pricing change has not come from the market. That has impacted our profitability and capability to offer new and better solutions. Meanwhile, Bucher Hydraulics is moving to a bigger location in another six months time in Manesar, near the Honda plant. On that facility we will increase our value addition in the products so that we can take care of this exchange rate fluctuation in a better manner.
What sort of growth are you envisaging in this fiscal? What are the growth enablers?
In this year, we are targeting around 20-25 per cent growth over 2012. And the enablers are new applications and new customers. Even in these recessionary times, customers are there, who are launching new models, new variants, modifications, introducing new products into the market. It is the right decision. When the market is down, we should prepare for when we can bring out the new products.
Give us a brief on your manufacturing facility, capacity, and whether it is fully utilised. Any more capex on the anvil, any new product launch?
In six months, we will be moving to the new facility. So we are adding new machinery and will be tripling our capacity in the short term. In the long term, we will have enough space available to add new lines as and when needed. We will be focusing on increasing the value addition.
What are the challenges Bucher Hydraulics faces in today's context? And how do you assess future potential?
The challenge today is finding cost-effective plans, I would say, and high performing suppliers. Hydraulics is a low volume market. We do not have the automotive sector or quantity. So that is the biggest challenge where there should be suppliers who would be ready to produce the high level of quality and their commitment, the price competitiveness for the low quantities.
How do you view the future in this regard?
In the coming years, the energy efficiency, the fuel consumption, the lifecycle of the machines will become the major deciding factors. Customers will be upgrading their machines and if we keep on producing the technology of ten years ago, that would be a disaster. So we are preparing ourselves to be able to offer to the customers the product that will bring those benefits in the future. So there is a potential in the market. And if we are able to bring the products that are used in Europe, the high technology machines, to the Indian market, then we see potential. And on the supply side, the challenge will always remain because volumes will never be so big.