Anand Sundaresan, Vice Chairman & Managing Director, Schwing Stetter (India).
While 2014 is as fraught with challenges as the preceding year, there are silver linings visible to the discerning eye.
The year 2013 was a forgettable one for the construction equipment as well as the concrete equipment sector. With construction at a virtual standstill, the demand for concreting machinery fell by 15-20 per cent year-on-year (YoY), and considering that 2012 itself had already been a negative year, this represents a decline of 30 per cent from the peaks the industry had reached in 2011.
Adding to the woes of the industry was the continuous weakening of Indian rupee in the last two years and the sudden and considerable dip of the same in the second half of 2013. Many construction equipment manufacturers have a fair degree of import content in their equipment, and have hence been quite seriously affected by the fall of the rupee. On one hand, the foreign exchange fluctuation had its adverse effects, while on the other hand, lack of realisation due to the sluggish market, made the period difficult for many. The uncertain political climate did not help matters either.
With the pie having shrunk, we needed to be more competitive to win the customer over. Moreover, our customers too, are essentially in the same boat as us - managing their businesses in the same weak economic scenario. It was our duty to help our loyal customers to tide over these tough times and we have co-operated with them to the extent possible, to lighten their burden.
The reduction of the market size also meant that competition got fiercer. The effects of that competition told on many. Some smaller companies in the industry had to close business, while many have reduced production substantially due to realisation not matching up, making it just not worth their while. The industry also saw some consolidation taking place, which has resulted in some competition leaving the field. At the same time, we do see new entrants making their way in.
During the peak period, road work and large projects had ensured a demand for larger capacity machines. Now, due to the downturn and few fresh infrastructural projects, the demand is clearly for lower capacity machines. While some metros like Mumbai and Delhi still saw some high-rise buildings calling for high pressure pumps, other projects brought in business for the smaller capacity machines. The fact that the larger machines were no longer growth drivers hurt the topline of many companies.
The year did see an increased interest in the boom pump which has a bright future in the years to come.
Schwing Stetter's year
With our comprehensive and proven range of concrete pumps, transit mixers, batching plants and accessories, Schwing Stetter was better placed than most to weather the slowdown since we could adjust our offerings to suit new needs. We have therefore, done relatively better than industry averages. Support from our parent company in Germany helped us in some export sales.
It was also the year when we rolled out our 20,000th transit mixer, a moment of pride for all of us at Schwing Stetter.
We also focused on the supply of peripheral equipment such as cement feeding systems, weigh bridges, aggregate conveyors, auto lubricating systems, and many more, broad-basing our portfolio to suit the times.
We invested heavily on operator training during 2013. From one training centre in Chennai, we now have four; having added one each in Delhi, Kolkata, and Hyderabad.
Much energy was invested over the year into improving internal systems, quality control, production processes, and support mechanisms. R&D continued full swing into creating solutions for the gaps that we believe exist in the market or in our products, and we hope to keep launching new products as required in the market through 2014.
We have also been working towards further tightening up of systems, improvement of performance of specific machines, and making our offerings more value-added. We expect these efforts to bring in rich rewards in the coming months.
Schwing Stetter has been focusing over the past years on green solutions, and 2013 was no exception. Initiatives at our plants have made them more environment-friendly and green. And we have been working on overall operating cost reduction and lowering fuel consumption of all our equipment. You will find that our machines are among the most fuel-efficient in the market now in every product category.
The year ahead
There is little doubt that India continues to be a potential growth story. I say this with confidence because similar views have been expressed by world-renowned consultants with whom I have been working closely, both in Schwing Stetter and in the association. All it requires is that spark of positive sentiment to get the wheels of industry chugging along nicely again.
The government has taken certain positive steps in the recent past with the Cabinet Committee on Investment clearing many projects. We are hopeful that these will be implemented before the Model Code of Conduct sets in. Once that happens, we cannot expect decisions till the new government takes over. We also hope that the fears even honest bureaucrats have these days about taking decisions due to the overdrive displayed by regulatory agencies are allayed and positive action is forthcoming soon. Overall, 2013 was a tough year but it is behind us. We must now look to the future. While 2014 is as fraught with challenges as the preceding year, there are silver linings visible to the discerning eye. The overwhelming response at the last Excon was very encouraging. Also, whichever government takes up the reins mid-year, it will no doubt have infrastructure as a prime focus area, and so the construction industry should pick up again second half this year.
My advice to my people has therefore, been simple: leadership is not built waiting on the sidelines; it is built by preparing for the race ahead. We have used 2013 to prepare. Now we wait for the demand to pick up to perform.
The new government will have infrastructure as a prime focus area, and so the construction industry should pick up again in H2 this year.