"Backhoe Loader is by far the most popular construction equipment in India, accounting for more than 35% of all the construction equipment sold in India. We introduced a new Backhoe Loader–DIGMAX in April 2010 and in no time we crossed 500 machines' volume. This undoubtedly has been the fastest building up of volumes in the launching phase – a record in the industry. Over the next three – four years we see Escorts-Digmax establishing itself as one of the preferred choice of the customers. We definitely see ourselves as one of the top two companies in terms of market share in this segment," says Mr. Rajesh Sharma, Vice President-Sales & Marketing, ECEL in an interview with S.A.Faridi.
What is the market response to ECEL's new Backhoe Loader—Escorts Digmax. Do you think its introduction in the market has helped company to script another successful story?
The market has responded to ESCORTS DIGMAX in most positive manner. The positive response manifests in robust order bookings and machine dispatches, which in fact, have been more than what we expected in the initial phase. We introduced DIGMAX in April 2010 and in no time we crossed 500 machines' volume. This undoubtedly has been the fastest building up of volumes in the launching phase – a record in the industry. The performance feedback from the customers has been very positive and heartwarming. As expected, customers have appreciated all the distinct features and performance parameters which make DIGMAX a unique Backhoe Loader in an industry which is full of look-alike products. Going by such a tremendous response, we quickly shifted gears and brought forward the planned capacity expansion - by full six months!
The whole scenario looks very positive and encouraging and we could say that we indeed have scripted another successful story for our company. ESCORTS – DIGMAX is surely on its way to becoming one of our core products.
How would you see Backhoe Loader market developing in India and the market share the company expects with its new machine in the next three-four years?
Backhoe Loader is by far the most popular construction equipment in India, accounting for more than 35% of all the construction Equipment sold in India. The volumes have grown from 3500 units in year 2000 to over 25000 in year 2010. The growth trend is likely to continue and we could see annual sales volume crossing 30,000 mark as early as by 2013-14.
The Indian backhoe loader market has traditionally been dominated by a 76 HP machine with a very few units sold in category of 90 HP+. This is because the market demand is dominated by hiring segment which requires low hourly fuel consumption as one of the most important criteria of the purchase. This scenario is likely to remain and we do not see any major shift on this account. Additional to this, what customers have been asking is the more muscle to make machine performs well on tough strata and applications. These seemingly contradicting requirements have been managed rather nicely by us in DIGMAX which delivers the best cutting forces and lifting capacities without increasing the fuel consumption, thanks to superior design and intelligent hydraulics. Over the next three – four years we see Escorts-Digmax establishing itself as one of the preferred choice of the customers. We definitely see ourselves as one of the top two companies in terms of market share in this segment.
Apart from the existing tie-ups with Zoomlion, Manitou, and XGMA–are you planning more such tie-ups with global construction equipment player to bridge the gap if any and strengthen your market hold further?
We have been in the forefront of the Construction and Material Handling Equipment Industry and have consistently endeavored to offer a wide range of products in this space. The existing tie ups with Zoomlion for the complete range of Truck Cranes and All Terrain Truck Cranes, Manitou for Telescopic Handler and Aerial Work Platforms, XGMA for Wheel Loaders and Motor Graders have been brought in with the philosophy of bringing the best technologies and solutions to the country.
There are many new things which are in the pipeline. It will be premature to talk about them at this point of time. I can only say that very soon we will announce some new products and tie ups which will further enrich our equipment offerings.
How optimistic ECEL is about material handling market which has been witnessing down trends for the past couple of years. Would it grow fast in tandem with construction equipment market on the back of huge investment poured in manufacturing, power and mining sectors? What are marketing challenges and how ECEL is at an advantageous position to meet them as one of the pioneers in MH segment?
The demand for material handling equipment such as cranes & forklifts is growing well. The demand is growing consistently at a clip of 15% to 20%.The outlook is positive and we, as a leader, are well poised to maximize our gains in this segment. Our advantage stems mainly from two factors-one factor is our clear technological and range advantage over competition and the other is our reach and access to the market across the country with a network of over 110 locations. For the last 4 decades we have been the leaders and pioneers in mobile material handling equipment segment and that is what we intend to remain in future as well.
A word about your dealership outlets network and related technical services being rendered to the user of your products and services.
We always take pride in stating that the concept of dealership in construction and equipment handling industry was first pioneered by us in early 70s and over the period our network of dealers have acquired valuable experience and capabilities which are unmatched in the industry. The network has grown to 110 locations and is well equipped to provide efficient sales, service and parts support with workshops facilities to our customers across the country. Also, our network is the most stable network which has seen a very low dealers change over. Some of the Network Partners have been with us for the past 35 years which speaks volumes on experience and stability.
Tell us in brief about ECEL's training centers at Ballabgarh and Bangalore.
The company has set up a training facility in Bangalore for imparting skills for equipment operation and maintenance. The training facility is built over 76 acre of land and has accommodation and training facilities for over 200 persons at a time.
The facility, curriculum, methods and processes and skill certification for the training program has been accredited by CIDC (an organ of Planning Commission). This was for the first time in the industry that such a training was envisaged and rolled out . The response has been tremendous and uptill now more than 1500 operators have been trained under the aegis of this program.
Besides this, we also undertake customized trainings on the special requests of our customer to address their special needs to enable them to harness equipment usage to its full potential.
The fiscal stimulus seems to have done wonders to the construction equipment sector whereby the sector has imported goods taking advantage of zero percent import duty and these imports account for 112% of domestic production. How would such types of unbridled imports affect the long-term growth of the domestic sector?
The zero percent import duty is applicable only for select projects and equipment and not all across. Over 80% of country's requirement of construction and material handling equipment is being met by the local manufacturers. However, for certain categories of equipment such as mobile telescoping slewing cranes, the import-especially the pre-owned equipment is very high, in fact higher than the new equipment manufactured in the country. The threat to domestic manufacturers is largely from the imports of used (pre-owned) equipment which generally get imported after spending their useful life abroad. Such imports are done through a dubious process of under invoicing and without meeting the safety and CMVR regulations and therefore they are imported at a fraction of the new equipment price of locally manufactured machines. This impact local manufacturers negatively. Most of the major countries, like China, either have banned imports of used equipment all together or have heavily regulated to insulate negative implications to their local manufactures.
How do you see the CE market growth in 2011 and onwards? How is ever increasing input cost, distortions in taxation, import duty hurting Indian OEMs? What could be corrective measures taken to create an enabling business environment for OEMs as well as for the CE industry?
The negative implications of spiraling prices of commodities like steel, rubber and oil on demand had been seen in the past, especially in 2008.
Stable prices of commodities are essential for a growing economy like India especially for important sectors such as infrastructure and construction where the activities are estimated and planned on long-term basis. The inflationary trends in commodities increase the cost of ownership and operation of equipment which dampens the demand which in turn manifests in the slow development of infrastructure.
In my view, if the inflationary pressures continue to remain high then CE growth rate will slowdown significantly in 2011 and onwards. But having said so, I am also optimistic on government's intervention on making the prices of commodities, such as steel, stable and realistic by a slew of measures because growth of construction and speedy development of our infrastructure are essential for achieving our overall GDP growth rate goals.