Driving sales while retaining market presence remains ever challenging for excavator manufacturers in India amidst prevailing volatility in demand, as product manufacturing and finally placement continues to be influenced by host of market factors, at home and abroad. P.P. Basistha takes stock of the evolving factors and strategies of excavator manufacturers to maintain traction in business.
The challenge for excavator manufacturers in India towards building future sales and retaining existing buyers, amidst present spell of subdued demand, is that, demand largely continues to remain restricted around 20 tons class at present. This is even after mechanization of construction activities started gaining ground from 2005 onwards. Off take remaining restricted below a specified class has eventually been putting pressure on profit margins of manufacturers, which otherwise they might have obtained selling higher capacity machines. Not to mention, it has deterred expansion of product offerings. With demand being restricted to certain tonnage class and crowding of market space by large number of manufacturers, stiff competition is the evident fall out, excavators manufacturers in India presently seem to counter and brace for more in future, till 2015 when demand is likely to expand based on fresh off take of units.
There are numerous challenges for of generating profitable business, following colossal investments being made, when demand is restricted to certain category and falling sales. Continuous and strong engineering innovations have to be carried out, so as to substantiate competitive product placement and the brand name. This is a hard fact which excavators' manufacturers in India are getting gradually reconciled into and carrying out necessary changes in their production systems and products to check brand substitution by customers, in face of ever rising operational costs, on account of growing fuel costs and wages.
The challenge is even more for manufacturers, those who have chosen the promotional line towards offering products that will focus on restricting total operating costs, despite higher initial costs being incurred. The strategy is dicey in the Indian market as buying decision is greatly influenced by the quantum of initial investments, be it good times when rental rates are high or lull when rentals are otherwise.
"Sustainable equipment uptime is the solution to restrict total operational costs. Volvo CE is the first manufacturer to introduce a telematics system called CareTrack that allows remote monitoring and machine diagnostics by using exclusive Machine Tracking Information System (MATRIS)," says, Mr. A.M. Muralidharan, President Volvo CE India.
To ensure higher equipment uptime, Volvo CE India has recently launched customer care centre. Mr. Muralidharan explains, "Customer Contact Center 'V Care' will help customers achieve higher productivity by minimizing their machine downtime. The center will record and process all customer issues centrally and in real-time, giving Volvo CE the ability to monitor dealership customer serviceability and enable them to resolve customer issues quickly and efficiently. The new center is an integral part of Volvo CE's objective to offer customers total lifecycle care – from providing equipment to support and partnership – and ensure customer complete satisfaction. The response of this programme has been positive so far."
The initiatives are likely to retain captive sales. To add on revenue and supplement captive sales, Volvo CE has devised its parts remanufacturing programme. He describes, "Our remanufactured program or 'Reman' is to encourage users to keep their Volvo machines genuinely 'a Volvo'. It allows users of Volvo CE to have their used components renovated to the same condition as new with a warranty backup."
However, the challenge is increasing the ratio of generating profitable business in India for Volvo CE. The company invested Rs.90 crores during late 2011 as part of its manufacturing expansion program at its Peenya facility in Bangalore manufacturing excavators and road construction equipment. To ensure optimum capacity utilization, Volvo CE will require expanding its market network. Mr. Muralidharan informs, "We have been strengthening our distribution network periodically. Presently, we have 13 dealers spread across India to offer enhanced sales and support to customers. As the market grows, we will keep investing in distribution and even our dealers will invest in terms of infrastructure and people."
However, focusing on profitable business from the Indian market while ensuring market expansion, Volvo CE has begun to enlarge its class offerings. Seeing lesser competition above 30 tons class segment, Volvo CE has newly introduced EC380D and EC480D, 38-48tons heavier capacity excavators. Mr. Muralidharan claims, "Response for the excavators has been quite positive."
The D-series excavators come with a turbocharged high pressure direct injection Volvo diesel engine offering maximum power of 279 hp and 343 hp (256 kW) delivering dependable power with high torque, along with lower emissions and noise. A new function called ECO mode has been introduced in these machines as a standard function that helps in reducing the fuel consumption in each mode of operation. The other standard features include, machine tracking and preventive maintenance information, ten working modes based on job site requirements. Mr. Muralidharan mentions, "Advanced hydraulics rugged reinforced undercarriage, heavy duty boom and arm are standard on these machines, and high strength tensile steel arms provide durability in strenuous applications."
Class offerings are also being enlarged by Caterpillar India. It has recently launched 320 D series-2 hydraulic excavators. According to the company officials, "The new 320D Series 2 Hydraulic Excavator is an exceptionally reliable, highly productive machine that lowers operating costs through reduced fuel consumption and simplified routine maintenance. The 320D Series 2 machine features a new engine, capable of taking on spurious fuel, powerful hydraulic system, durable main structures and a refined operator station. The excavator can be configured with a standard or a long undercarriage based on the job site requirements."
Officials explain, "Compared to its earlier predecessor, Cat 320D, the 320D 2-series 2 is powered by Cat 7.01 engine that is more robust to inferior fuel. There is a 3% fuel consumption reduction for the 320D 2 series 2 as compared to 320D. The new dual fuel filter technology minimizes owning and operating costs. With the technology, the service interval for 320D 2 series is 500 hours as compared to 250 hours in 320D with a C6.4 Engine. One of the unique feature of duel fuel technology is that when idling, it ensures that less fuel is burned to have the engine running." 141 HP or 105 KW Cat C7.1 engine, in 320 D 2-series meets U.S. EPA Tier 2, EU Stage II regulations and China Stage 1 regulations.
Cat 320 D 2-series is equipped with standard eco-mode power setting, while condition monitoring as part of standard feature is ensured with PL522 which is a cellular based Product Link and is equipped with the latest release of Vision Link® 2.7. According to Caterpillar officials, "The user interface provides customers a mobile optimized web application, the ability to schedule automated delivery of Vision Link reports, and remote access to on-board payload system information. The mobile application is available on, BlackBerry, Android/Chrome and Windows operating systems."
Fitted with a smaller and high efficiency pilot pump and newly designed main pump, Cat 320D 2-series also claims to have 3 percent enhanced hydraulic efficiency. Caterpillar official claims, equipment efficiency is also increased by minimizing extra gap between gears and gear case in order to reduce oil agitation.
To build up revenue base, Cat India has in place remanufactured support and tailor made customer support agreements, categorized into gold, silver and bronze categories in association with its exclusive dealers Tractors India Limited covering Eastern and Northern India and Gmmco covering Southern and Western India. The US origin company, also offer services like rent to purchase, trading of existing machines, and short term rentals.
The challenge for excavator manufacturers in India towards building future sales and retaining existing buyers, amidst present spell of subdued demand, is that, demand largely continues to remain restricted around 20 tons class at present. This is even after mechanization of construction activities started gaining ground from 2005 onwards. Off take remaining restricted below a specified class has eventually been putting pressure on profit margins of manufacturers, which otherwise they might have obtained selling higher capacity machines. Not to mention, it has deterred expansion of product offerings. With demand being restricted to certain tonnage class and crowding of market space by large number of manufacturers, stiff competition is the evident fall out, excavators manufacturers in India presently seem to counter and brace for more in future, till 2015 when demand is likely to expand based on fresh off take of units.
There are numerous challenges for of generating profitable business, following colossal investments being made, when demand is restricted to certain category and falling sales. Continuous and strong engineering innovations have to be carried out, so as to substantiate competitive product placement and the brand name. This is a hard fact which excavators' manufacturers in India are getting gradually reconciled into and carrying out necessary changes in their production systems and products to check brand substitution by customers, in face of ever rising operational costs, on account of growing fuel costs and wages.
The challenge is even more for manufacturers, those who have chosen the promotional line towards offering products that will focus on restricting total operating costs, despite higher initial costs being incurred. The strategy is dicey in the Indian market as buying decision is greatly influenced by the quantum of initial investments, be it good times when rental rates are high or lull when rentals are otherwise.
The initiatives are likely to retain captive sales. To add on revenue and supplement captive sales, Volvo CE has devised its parts remanufacturing programme. He describes, "Our remanufactured program or 'Reman' is to encourage users to keep their Volvo machines genuinely 'a Volvo'. It allows users of Volvo CE to have their used components renovated to the same condition as new with a warranty backup."
However, the challenge is increasing the ratio of generating profitable business in India for Volvo CE. The company invested Rs.90 crores during late 2011 as part of its manufacturing expansion program at its Peenya facility in Bangalore manufacturing excavators and road construction equipment. To ensure optimum capacity utilization, Volvo CE will require expanding its market network. Mr. Muralidharan informs, "We have been strengthening our distribution network periodically. Presently, we have 13 dealers spread across India to offer enhanced sales and support to customers. As the market grows, we will keep investing in distribution and even our dealers will invest in terms of infrastructure and people."
However, focusing on profitable business from the Indian market while ensuring market expansion, Volvo CE has begun to enlarge its class offerings. Seeing lesser competition above 30 tons class segment, Volvo CE has newly introduced EC380D and EC480D, 38-48tons heavier capacity excavators. Mr. Muralidharan claims, "Response for the excavators has been quite positive."
The D-series excavators come with a turbocharged high pressure direct injection Volvo diesel engine offering maximum power of 279 hp and 343 hp (256 kW) delivering dependable power with high torque, along with lower emissions and noise. A new function called ECO mode has been introduced in these machines as a standard function that helps in reducing the fuel consumption in each mode of operation. The other standard features include, machine tracking and preventive maintenance information, ten working modes based on job site requirements. Mr. Muralidharan mentions, "Advanced hydraulics rugged reinforced undercarriage, heavy duty boom and arm are standard on these machines, and high strength tensile steel arms provide durability in strenuous applications."
Officials explain, "Compared to its earlier predecessor, Cat 320D, the 320D 2-series 2 is powered by Cat 7.01 engine that is more robust to inferior fuel. There is a 3% fuel consumption reduction for the 320D 2 series 2 as compared to 320D. The new dual fuel filter technology minimizes owning and operating costs. With the technology, the service interval for 320D 2 series is 500 hours as compared to 250 hours in 320D with a C6.4 Engine. One of the unique feature of duel fuel technology is that when idling, it ensures that less fuel is burned to have the engine running." 141 HP or 105 KW Cat C7.1 engine, in 320 D 2-series meets U.S. EPA Tier 2, EU Stage II regulations and China Stage 1 regulations.
Cat 320 D 2-series is equipped with standard eco-mode power setting, while condition monitoring as part of standard feature is ensured with PL522 which is a cellular based Product Link and is equipped with the latest release of Vision Link® 2.7. According to Caterpillar officials, "The user interface provides customers a mobile optimized web application, the ability to schedule automated delivery of Vision Link reports, and remote access to on-board payload system information. The mobile application is available on, BlackBerry, Android/Chrome and Windows operating systems."
Fitted with a smaller and high efficiency pilot pump and newly designed main pump, Cat 320D 2-series also claims to have 3 percent enhanced hydraulic efficiency. Caterpillar official claims, equipment efficiency is also increased by minimizing extra gap between gears and gear case in order to reduce oil agitation.
To build up revenue base, Cat India has in place remanufactured support and tailor made customer support agreements, categorized into gold, silver and bronze categories in association with its exclusive dealers Tractors India Limited covering Eastern and Northern India and Gmmco covering Southern and Western India. The US origin company, also offer services like rent to purchase, trading of existing machines, and short term rentals.
Strengthening Portfolio
To ensure business growth amidst the given class constituting the mass market base, Hyundai Construction Equipment India has recently launched R210-7v 'value for money' excavator. According to Mr. Dheeraj Panda, Head Marketing, Hyundai Construction India, "This product was specifically designed for value conscious Indian customers. It is suited for varied application both in rental and hiring. R210-7v is equipped with mechatronics for optimized fuel consumption and productivity. It has lowest operating cost in 20-22T class of excavators, stable in the toughest and most rugged working terrains powered with Kirloskar 6R1080T engine."
Mr. Panda adds, "Strengthening our offerings further, we have also added 9 series excavators in 14T. This is high-end, most advanced excavator in the Indian industry in terms of technology being offered." Hyundai offers excavators from 8 to 120 tons. It presently manufactures 8-22 ton capacity excavators at its Pune facility. To make the products price competitive, Hyundai India claims to have attained 50% localization of the excavators made up from 40% during previous year, allowing it to make its excavators price competitive in India.60-65% sales are from its 20 tons class equipment.
To ensure off take of its new range of excavators, Hyundai India has 29 dealers with 100+ service touch points across the country. To cater to the rapidly growing customer base in Southern India, Hyundai recently added, V Engineering Enterprise and Asha Atuomines Pvt. Ltd as its new dealers. Strengthening to dealership network is vital for Hyundai to maintain hold on its captive customers. The Korean equipment major derives 40% of its equipment sales in India from its repeat customers, while remaining sales is from the first time buyers.
Strengthening presence further in 8-22 tons operating weight class offerings (JS81) to(JS 220LC), JCB India is now offering its new, JS 205 LC-20 tonne excavator. According to Mr. Amit Gossain, EVP-Marketing, Business Development & Corporate Affairs, JCB India, "The new machine will be well suited for applications such as earthwork, quarrying, road construction etc It offers outstanding cycle time and has a rugged and robust structure which makes it highly durable. JS 205LC provides fuel savings worth Rs.5.2 lacs within a span of four years."
Higher uptime and integrated service support is claimed to be offered through the JCB's Ecomax engines for the new excavator, "We have designed and launched our "Ecomax" engine to ensure that our customers get the machine and engine serviced at JCB dealerships hence making JCB a one stop solution. Currently, JCB Ecomax engine is fitted into wide range of tracked excavators - JS 120 (63 KW), and JS220 (125KW)." JCB's backhoe loaders, wheel loaders and compactors is powered by Ecomax engines. The engines are available in the range of 76 hp to 150 hp and are available as naturally aspirated, turbocharged or common rail.
JCB India will look for expansion and retention of market presence through its available dealership network with 540 outlets supported by 24X7 dealer service van. Product cost control is being looked through enhanced adoption of lean manufacturing systems.
Liugong India is banking on its dealership network for existing business retention and sales expansion as well. According to Mr.Rohit Punjabi, Asst. Director (Strategy Development and Marketing) Liugong India "At present, our 20 dealers operating across India ensure that our machines reach our customers in any part of the country. The dealers are our biggest assets for business promotion. As part of our expansion strategy, the number of outlets will continue to expand so that we are available 24x7 for our customers."
Liugong India hopes to strengthen its brand in India through what it claims as its advanced engineered excavators. Mr. Punjabi claims, "Liugong excavators perform better while digging and loading at lower operating costs. The excavators promoted in Indian market are being manufactured at our plant in Pithampur. The products have been developed to suit Indian job site applications, besides they have been made maintenance-friendly. Our excavators come with tougher, stronger boom and dippers. Heavy-duty stabilizers have been introduced to achieve longer service life in tough terrains. Improved protected hose routings and other hydraulics are designed in segments to achieve lower replacement costs and longer uninterrupted working."
LiuGong India expects to promote sales further by making its excavators technically well positioned for niche applications. Mr. Punjabi explains, "To make the right product positioning for niche applications, say rock breaking, we will keep researching on the right hydraulic oil flows that may be required for the breakers to function optimally. Comparative aspects like tonnage to weight volumes are also being evaluated for the optimum performance of the equipment in the Indian working conditions. Further, we are continuing to research for better integration of the excavators with various attachments involving the breakers or buckets of various configurations." He adds, "Business from special applications for LiuGong India has been promising and we see further growth in the segment".
LiuGong has its full fledged R&D facility in Pithampur that Mr. Punjabi claims has been instrumental in designing products suitable for Indian applications. He says, "We are planning to manufacture 6-8-20-36 tons class models locally at Pithampur. Forty percent of LiuGong's business in India is from excavators' sales contributed by 20 tons class equipment, 10-12 tons models contribute 15% of excavator's sales, whereas 6 tons provides 5-6 percent of sales. The Chinese construction equipment conglomerate derives 35% of its sales from corporate and remaining from the retail buyers in India.
Business strategies for bigger quantum of localization, incorporation of advanced engineering to make the excavators suitable for desired job site applications are some of the strategies that may bring dividends for excavators manufacturers in India. However, it cannot be looked in isolation. Strategies would have be to be aligned towards ensuring continuous, prompt onsite product and parts support and most importantly, suitable back up market linkages both at home and abroad, so as to hedge business risks and generate profitable business in mid and long-term in India.
Doosan Infracore has chosen to avoid aggressive business promotion for its excavators in India. Steep appreciation of US dollars during last few months has deterred excavators' sales in India by the Korean company. Retrograded sales on account of currency appreciation have been further compounded by curtailment of actual demand. Doosan officials in India see the situation to continue for some time until there is news of some major off take of units. The company will tread a cautious path to keep revenue flowing by keeping its investments in India finely calibrated until demand picks up to a satisfactory levels. "We will look to hedge slowdown in excavators through our offering of Bob Cat skid steer loaders, compressors and other products which are stable in the Indian market. Nonetheless, we will ensure stability of Doosan brand by making available timely product support to our 5,000 excavators working at sites through our 26 dealers in the country, says Mr. S.Manjunath, General Manager, Doosan Infracore India."
The company has plans to begin local assembly of its 8-11-22 tons hydraulic excavators for the Indian market at its facility in Bangalore shortly. Doosan has hex product range of 3.2-8-15-20-22-30-35-38-42-50-70 tons excavators for the Indian market. Sizeable chunk of business is derived through sales of 20- 22 tons class units.
Mr. Panda adds, "Strengthening our offerings further, we have also added 9 series excavators in 14T. This is high-end, most advanced excavator in the Indian industry in terms of technology being offered." Hyundai offers excavators from 8 to 120 tons. It presently manufactures 8-22 ton capacity excavators at its Pune facility. To make the products price competitive, Hyundai India claims to have attained 50% localization of the excavators made up from 40% during previous year, allowing it to make its excavators price competitive in India.60-65% sales are from its 20 tons class equipment.
To ensure off take of its new range of excavators, Hyundai India has 29 dealers with 100+ service touch points across the country. To cater to the rapidly growing customer base in Southern India, Hyundai recently added, V Engineering Enterprise and Asha Atuomines Pvt. Ltd as its new dealers. Strengthening to dealership network is vital for Hyundai to maintain hold on its captive customers. The Korean equipment major derives 40% of its equipment sales in India from its repeat customers, while remaining sales is from the first time buyers.
JCB India will look for expansion and retention of market presence through its available dealership network with 540 outlets supported by 24X7 dealer service van. Product cost control is being looked through enhanced adoption of lean manufacturing systems.
Liugong India hopes to strengthen its brand in India through what it claims as its advanced engineered excavators. Mr. Punjabi claims, "Liugong excavators perform better while digging and loading at lower operating costs. The excavators promoted in Indian market are being manufactured at our plant in Pithampur. The products have been developed to suit Indian job site applications, besides they have been made maintenance-friendly. Our excavators come with tougher, stronger boom and dippers. Heavy-duty stabilizers have been introduced to achieve longer service life in tough terrains. Improved protected hose routings and other hydraulics are designed in segments to achieve lower replacement costs and longer uninterrupted working."
LiuGong India expects to promote sales further by making its excavators technically well positioned for niche applications. Mr. Punjabi explains, "To make the right product positioning for niche applications, say rock breaking, we will keep researching on the right hydraulic oil flows that may be required for the breakers to function optimally. Comparative aspects like tonnage to weight volumes are also being evaluated for the optimum performance of the equipment in the Indian working conditions. Further, we are continuing to research for better integration of the excavators with various attachments involving the breakers or buckets of various configurations." He adds, "Business from special applications for LiuGong India has been promising and we see further growth in the segment".
LiuGong has its full fledged R&D facility in Pithampur that Mr. Punjabi claims has been instrumental in designing products suitable for Indian applications. He says, "We are planning to manufacture 6-8-20-36 tons class models locally at Pithampur. Forty percent of LiuGong's business in India is from excavators' sales contributed by 20 tons class equipment, 10-12 tons models contribute 15% of excavator's sales, whereas 6 tons provides 5-6 percent of sales. The Chinese construction equipment conglomerate derives 35% of its sales from corporate and remaining from the retail buyers in India.
Business strategies for bigger quantum of localization, incorporation of advanced engineering to make the excavators suitable for desired job site applications are some of the strategies that may bring dividends for excavators manufacturers in India. However, it cannot be looked in isolation. Strategies would have be to be aligned towards ensuring continuous, prompt onsite product and parts support and most importantly, suitable back up market linkages both at home and abroad, so as to hedge business risks and generate profitable business in mid and long-term in India.
The company has plans to begin local assembly of its 8-11-22 tons hydraulic excavators for the Indian market at its facility in Bangalore shortly. Doosan has hex product range of 3.2-8-15-20-22-30-35-38-42-50-70 tons excavators for the Indian market. Sizeable chunk of business is derived through sales of 20- 22 tons class units.
Preparedness
Despite continuous spell of volatile demand, hydraulic excavators' manufacturers in India are continuing with new product development in concurrence with carrying out improvisation in their existing offerings along with necessary value addition to product support. It seems the readiness backed by the diverse business strategies to expand and consolidate market presence, lies in the mammoth projected figure of the demand of excavators escalating to 40,000 units by 2016 led by a forecasted double-digit economic growth. However, the logic behind the business plans also lies in the cyclic nature of the market. This is while taking cognizance of immediate past demand trends, when after seeing a significant decline in 2009, the demand for excavators witnessed an extraordinary growth with market touching the level of almost 15,000 units in 2011. According to industry estimates, demand for excavators in 2013 would approximately be around 12, 000 units. There is likelihood that the demand can reach 14,000 units in 2014 on account of recent big ticket project clearances made by the government recently. Hence, future preparedness by excavators' manufacturers, taking into consideration the cyclic demand pattern of the market is well planned.
