Metso Corporation has unveiled plans for Rs 5.6 billion investment to consolidate its operations in India. The Helsinki-based industrial major is a global provider of equipment and services for the mining, aggregates, recycling, and process industries through its minerals and flow control segments. Other than its acquisition of the valve automation division of Mumbai-based Rotex Manufacturers and Engineers in 2018 and enhancing the capacity of its Metso Park production facility in Alwar, the company is developing a 20,000-tonne foundry in Vadodara. Overall, the investment is expected to increase Metso's crushing and screening plant production capacity in India by 35 per cent. EQUIPMENT INDIA caught up with Pekka Vauramo, President & CEO, Metso Corporation and Markku Simula, President, Aggregates Equipment, Metso Minerals Inc at the state-of-the-art Metso Park to understand the company's strategy for the world's fastest growing economy.
Metso Corp beat the 2018 analyst estimates on the back of strong demand from India, China and North America. What is your outlook for India and global markets for the current fiscal?
Vauramo: We are in a cyclic business and saw orders coming in at a higher rate towards the end of last year. We have started the year with a very good order backlog, with nearly 18 per cent more sales YoY. That gives us the confidence that this is going to be a very strong year.
You are credited with successfully leading businesses in the toughest of market environments. So, what will be your strategy at a time when technological disruptions are rapidly redefining businesses?
Vauramo: The companies and people managing them need to know what is happening in their processes. This is very true in mining, and more so, in aggregates. Mining companies are operating equipment remotely from cities as it is becoming increasingly difficult to relocate manpower to mining sites. We've been getting similar feedback from the world of quarrying. We recently met a customer in India who informed that he was operating his production lines from his iPad, with an operator running multiple lines! That is also a way of running operations 24 hours whenever required.
In such a scenario what would be the new normal for an industrial major like Metso?
Vauramo: If we take a global view, there is not one new normal any longer; there might be regional or local ways of doing things. For example, we may have a fairly standard range of equipment, but when we look at Nordwheelers or Lokotracks here, they are for different kind of jobs. Although we export some Nordwheelers, the bulk of them are sold here in India.
Meanwhile, Lokotracks are primarily sold in North America, Europe and parts of Asia. And then we also see a rapidly growing mid-market in India and China and have a small presence there. What we have learned is that the more we increase our involvement with a market like India, the more we learn about its size and local needs.
Simula: The new normal is probably about fulfilling different customer needs. Rather than providing a one size fits all solution, we are identifying different needs and trying to create solutions and products for them as the new normal is divergent and not convergent.
What are the key trends in the Indian market, especially with regard to mining and aggregates?
Simula: On the aggregates side, manufacturing is clearly a trend. Then the environmental trends have also started to come in because natural sand is getting banned for good reasons. Dust or scarcity of water is another trend. Then curtailment of diesel or energy consumption in the overall interest of the society or our customers is another trend. Then from the business point of view, bigger plants also seem to be a trend here.
Presently you don't have a development centre in India. Are you looking at setting up one as part of increasing your engagement here?
Simula: Of the three locations identified for our R&D resources in aggregates business globally, we are building a development centre here. Although not yet big, it is growing rather fast and will be the main crux of our R&D in resources. In India, we have resources in the Delhi NCR and Alwar. In the long term, we would like to have the development close to Metso Park in Alwar.
Vauramo: Having started recently on the mining side, the number of engineers that we have there is very small. But we can see the potential for more qualified engineers in the area. As Markku said, it will enable engineers to have a good connection with the factory as well.
What are the potential new areas for expansion in the India market and proposed new launches for 2019?
Vauramo: As highway construction and expansion of the railway network progress, we will need to ensure that we have the right product mix, engineering, R&D and factories to supply those projects.
Simula: We can only talk about new products at the time of their launch. Overall, we are broadening our portfolio by creating products for different requirements. Generally, there is a need for bigger and better machines even as automation is becoming increasingly important.
You joined Metso from Finnair. Since the modern aviation industry is all about ensuring a quick turnaround time, are you also looking at implementing the best practices from that sector at Metso?
Vauramo: Maybe the turnaround time is not the best possible thing to implement in this business. However, when we discuss applications for our mobile Nordwheel and Lokotrack crushing and screening plants, it boils down to understanding the customer requirements with regard to mobility inside the quarry or job site. What is felt strongly about in the aviation business is the customer's experience with service that an airline offers. With the introduction of the low-cost model that Finnair was earlier not into, we were able to successfully introduce some of the service elements into that business. And that is something for this industry to also learn. As a provider of good and solid services, Metso has to continue to firmly stand behind its deliveries.
How do you assess the potential of the Indian market?
Vauramo: Personally, I feel really excited to be back in the heavy equipment and industrial business. With regards to India, I would like to say that the country was one of the most positive surprises in terms of success, growth rate and enthusiasm within Metso when I joined the company. Yes, we have also had really difficult times in the beginning but with thing moving in the right direction, we are now doing fine. Simula: India has always been very close to my heart as it's a business culture which is about smiles and making sure that others are happy as well. On top of it, there is this strong sense of optimism here and I appreciate that.
Spread on an area of around 78 acre, the Metso Park in Rajasthan's Alwar district is the global industrial major's single-largest investment at Ç30 million (Rs 235 billion). The land was acquired in 2008 and construction commenced soon after. The site houses mobile and crusher assemblies, vibrating equipment and fabrication factory, minerals consumables factory and a pump plant. The company proposes to also set up a development centre that will be the nucleus of its global aggregates business at the location. Presently, Metso has six manufacturing facilities located in Finland, France, Brazil, India and China (2).
- Manish Pant