Financial year 2015-16 is expected to give a growth of about 15 per cent over the previous year. Infrastructure is going to be the major growth driver which in turn will set other wheels into motion. Action on the ground by the Government, public and private funding and low crude oil prices will help the cause, says Rajinder Raina, General Manager-Marketing, Escorts Construction Equipment. Excerpts from the interview...
What is the current capacity and capacity utilization?
At present, most of the companies are operating at about 60-65 per cent of the installed capacities. It is capable of delivering hundred per cent of the installed capacity at 3-6 months notice keeping in mind domestic and international vendors.
What are the major challenges in supply-chain management?
The biggest problem today is uncertainty in demand. The manufacturers, not being too certain of about the demand, are unable to give a firm plan to their vendors in turn. It becomes unviable for the vendors, in particular, to adjust themselves to such spikes in demand. The cash crunch in the market puts further strain on the supply chain. The availability of labour with such variation in demand is also an issue.
What is the scope of indigenising production and what are the major challenges?
Fabrication is one major area which has been localised. High technology aggregates are still not localised. The hydraulics and slewing system are still imported because of low volumes v/s very high investments. This is one area where there is a lot of scope for localisation. Engineering design is an area of investment that is a must for the ´Make in India´ campaign.
What are the challenges in manufacturing in terms of availability of power, raw materials, logistics and tax-related issues?
This industry, like other industries, is awaiting introduction of GST that would make life easier and the playfield even. Transportation is still not a well-organized sector in India for various reasons. The availability of trucks, quality of operators and commitment on timely deliveries are huge concerns for the supplier and a matter of dissonance for the buyer.
What sort of policy initiatives that you expect from the Government?
Infrastructure projects need to be cleared on top priority by Government of India, for which, various ministries have to work in complete co-ordination with each other. A five-year plan has to be spelt out by the Government to ensure specific investment from the industry. All the players in this industry are gearing themselves up for 2020; the Government has to commit investments, clearances in an articulate manner to give confidence to the manufacturers who in turn have to align to the Prime Minister´s Vision of ´Make in India´.
Could you elaborate on manufacturing plants with facilities R&D and investment scenario?
Manufacturing plants in India are still fabrication, assembly, painting and basic testing units. The R&D facilities are adaption, value engineering and design changes in fabrication items. This is one area that has room for heavy investments that will give benefits on a long term basis. The investment is related with manpower, technologies and software front. Last two years have seen the industry cut on its slacks and avoidable expenditures. All elements in the supply chain have been revisited to bring down the direct and indirect cost of equipment. Things have to be re-adjusted to low volume levels. However, the room for catering to surge in demand has been kept intact.
Tell us about the initiatives to enhance service to the clients.
Escorts has embarked upon the process of rejuvenating the dealer network by way of expansion as well as reinforcement of the existing network through a slew of initiatives.
What is the percentage of export and how good is the growth potential?
Last two years has given us the confidence that exports will be one of the growth drivers and will also help us sustain the vagaries in domestic demands. SAARC countries, Middle East, Africa and a few other countries comprise our international market, where we have supplied cranes, backhoe loaders and compactors. Special focus in this area and some tie-ups should increase our exports about three folds this year.