S Senthil Kumar, General Manager - Dealership Business, TV Sundaram Iyengar & Sons Ltd.
We expect an impetus on infrastructure growth. Consequently, there will be a growth in demand for construction equipment, says S Senthil Kumar, General Manager - Dealership Business, TV Sundaram Iyengar & Sons Ltd. Excerpts from the interview...
Could you elaborate on TVS´s journey with Escorts?
We have been associated with Escorts for the past 25 years, starting with Escorts cranes representing them in Tamil Nadu and Kerala. Later we expanded our business to backhoe loaders, forklifts and road compactors. Now we deal in the full range of Escorts construction equipment in these two states. Two years back, we were in recession and the numbers came down. Earlier we were selling about 800-900 units but in the past few years this number has come down to 200-215 units. Last year, sale has slightly improved by a marginal 15 units. However, this year we expect to sell about 300 machines. The turnover was Rs 25 crore last year, while this year we expect to touch Rs 45 crore overall with sales, service and parts. So far, we are doing in line with our expectations and the market is also reviving. We are observing a good movement in roads while infrastructure is also booming. Encouraged by this positive market movement, we are focusing on backhoe loaders and north Kerala territory. Earlier our focus was only on south Kerala. We are also giving a special focus on forklifts and road compactors by appointing an exclusive person for this business in Tamil Nadu and Kerala.
Which product sells the most?
The 12 and 14 tonne cranes and the new generation cranes TRX and F !5 are getting popular. Customers are appreciating the safety features provided in the new cranes with the exception of hirers who are only concerned with cost of the equipment. Corporates prefer new generation cranes but in hiring segment also we sell in large numbers.
Which safety feature of the new generation crane attracts corporate customers?
Safe load indicator which prevents the crane from over turning attracts the customers. Even on steep gradients, these cranes perform well and it is adding value to the corporate customers like L&T.
Which is the largest customer segment for Escorts equipment?
We sell more cranes to timber merchants, container freight handlers, hirers, granite mining and industries like refinery where a lot of materials is being handled. Road compactors are sold to civil contractors and government road projects. Forklifts are sold for container stuffing/de-stuffing, to industries like TVS Raje, Sundram Clayton, etc.
What is the average rental rate for cranes? What are the average selling prices?
For 12 to 14 tonne cranes the prevailing rate is about Rs 750 per hour while we offer a price range close to Rs 15 to 25 lakh.
How do you visualise this market in the next 5 years?
We anticipate a change in governments in Tamil Nadu and Kerala. With this change, we expect an impetus on infrastructure growth. Consequently, there will be a growth in demand for construction equipment.
What is the competition scenario on Escorts spare parts?
We face tough competition in spare parts. Crane spare parts are like a commodity. There are a lot of local suppliers providing cheaper parts and for forklifts there are parties who directly import either original or similar parts from Korea. Escorts pricing is higher and we have to rely more on the reputation of TVS to sell parts.
What are the challenges you see in this business?
Competition from ACE is a major hurdle, especially in the lower end market for 12 and 14 tonne cranes because they offer very low prices.
On the forklift front, timely delivery is a major concern as Escorts is dependent on Doosan Korea for the same.
Lastly, we feel the heat of the frequent upward revision of equipment and spare parts prices by Escorts.
Do you have any product diversification plans in the near future?
Currently we handle Escorts, JD, Palfinger and JLG, and for now we will continue. Diversification, if any, depends on the future developments.