The bC India show will facilitate closer interaction among German technology suppliers and the Indian construction industry, paving the way for increased global interest in the Indian market. Hence it would be a “win-win” situation for the industry, says Rajesh Nath, Managing Director, VDMA India. Excerpts from the interview.
Could you tell us a bit about VDMA, its objectives and its India-specific strategies?Being a trade promotion body, we are focused on services to our member companies across the various industrial sectors. VDMA India office acts as a bridgehead and facilitates a tie-up between German and Indian companies by liaisoning with Indian companies in a broader way.
The technology platform among the German manufacturers elaborated a Strategic Research Agenda (SRA). The 450 manufacturing companies involved in the process define the most important research topics of German manufacturing industry, as follows:
Intelligent products: Future products will provide cognitive aspects and will be able to receive and handle manifold information.
High performance: Integration of highly dynamic components into the production facilities, and the maximisation of performance, flexibility and quality of the associated production equipment.
Energy efficiency: Alternative technologies to generate, distribute and use energy.
Product design and configuration: Product designs with half of the development time and directly resulting in the construction of customer-specific products with highest reliability.
Adaptive production: Adaptive production systems will continuously adapt their structure and configuration to their tasks and environment.
What have been the sale trends in the global markets, especially for VDMA’s member companies?The turnover of the German construction equipment and building material manufactures rose to approximately Euro 12.6 billion in 2011 making Germany one of the most important construction machinery manufacturing nations. Also, 75 per cent of the German equipment in this sector is exported. In construction machinery, Germany has a market share of around ten per cent whereas in building material machinery it is above 14 per cent.
For the German manufacturers in this sector, China is the most important market. However, the Chinese market is facing a slowdown at present which has been largely compensated by the healthy growth in the Russian market.
How have VDMA and its member companies responded to the high regional growth opportunities in terms of investments, resources and logistics?The VDMA member companies in the construction machinery sector have responded well to the challenges in the Indian market. The reputed manufacturers have been in India since many years and have a dedicated and trained service set-up besides sales offices in various regional centres.
How do you assess the growth potential in India, and on a wider scale, in the BRIC nations?In an emerging economy such as ours, economic growth is highly dependent on investments in the country’s infrastructure. The investment spend on construction equipment was at around 3-3.5 per cent during the 10th Five Year Plan which rose to around 4-4.5 per cent during the 11th Five Year Plan. As the government has now focused efforts on escalating productivity and adherence to timelines in the infrastructure projects, in the 12th Plan, we expect the investment spend on construction equipment to rise to around 5-5.5 per cent which would be spread over the next five years. Overall, we expect the construction equipment industry to grow by 15 per cent CAGR in the next five years.
Among the BRIC countries, Brazil is expected to see investment growth in infrastructure of about 14 per cent CAGR in the period 2101 up to 2015. For Russia, this is expected to be 7 per cent CAGR in this period. In India, it is expected to be around 8 per cent while China is expected to attain a CAGR of around 12 per cent.
What is your take on bC India as a business platform for VDMA’s member companies?During bC India 2013, VDMA member companies will participate and display their products and latest technology. Due to the infrastructure projects and construction activity in India, it has become an important market for construction equipment. Further with India becoming an important outsourcing hub, we find German companies increasing sourcing components and castings for various industries. Hence the growing Indian market and the investment in core sectors offer optimal opportunity to the German machinery manufacturers and technology suppliers.
What is the total number of member companies participating in bC India? Is there any increase in numbers?In first edition of bC India, about a hundred German companies had participated and this year also, German participation is strong with the number being 99. Out of this, around 50 per cent of the exhibitors are VDMA members. The show would facilitate closer interaction among the German technology suppliers and the upbeat Indian construction industry paving way for increased global interest in the Indian market.
How do you look at investment potential in India?India presents a vast potential for overseas investment and is actively encouraging the entrance of foreign players into the market. India is also one of the few markets in the world which offers high prospects for growth and earning potential in practically all areas of business. With the Indian economy expected to grow by around 6 per cent, the key indicators of construction sector, namely, cement production and steel consumption will register satisfactory growth.
The challenge in India lies in delay in projects due to problem of land acquisition and financial closure. Further there are substantial numbers of small and medium size construction companies who look at option of low cost equipments. The construction and infrastructure industry in India is growing but still has to reach economies of scale and work in an organised manner.
Has any of the member company already invested here in India, or in the process of investing?We find an increased interest of the German companies to set up manufacturing/sales and service facilities in India. We have good examples of leading manufacturers like Wirtgen, Herrenknecht and Liebherr setting up recent production facilities. Further, companies like Schwing Stetter, Putzmeister, Haver IBau, Humboldt Wedag are already well established in India and have a substantial place in the Indian market. Others like Bauer, Loesche, Hess to name a few, are catering to the Indian market through their sales and service offices. In the recent past, we had Hazemag setting up joint venture with Hari Machines. Hence we are sure that the next few years would see many more German companies in the construction machinery sector establishing their presence in India.
What has been the total value of export of equipment into India from VDMA’s member companies? And what kind of a contributory role does VDMA play in this?The export of German plant and machinery to India in 2011 attained a record figure of Euro 3.69 billion which was a growth of 18 per cent.
The export of German construction equipment and building material machinery to India in 2011 attained a figure of around Euro 120 million.
The Indian office of the German Engineering Federation (VDMA) helps to support the German machinery manufacturers in the Indian market and facilities tie-up and collaboration with the Indian industry. It is a one point contact for the Indian companies interested in German technology and for German manufacturers seeking information on the Indian industry and contacts to the Indian companies.
Could you brief us on the initiatives by VDMA to ensure safety?Automation can improve the quality of work for employees by reducing exposure to unhealthy or unsafe environments. Automated systems increase productivity and efficiency, thereby making projects more economically viable.
For all product manufacturing, our member companies use the finest quality of raw material which has been approved by stringent quality assurance protocols. They maintain the products quality with assurance and the quality is controlled by different protocols of stability studies. Our member companies have established processes and documents, specific to the product verification, validation, monitoring, inspection and test activities and the criteria for product acceptance. This ensures that the German companies manufacture products and machinery as per stringent quality and safety norms with efficient utilisation of raw material.