Bullish on Kobelco's Growth in India

Bullish on Kobelco's Growth in India
"Japanese company Kobelco has a long history of developing construction equipment machinery, recently opened its new manufacturing facility at Sricity near Chennai. The SK210LC-8 which is the first model to have been launched with local manufacturing is a beefed up version of the original imported machine. In our localization, great effort was made to adapt the various components as well as the final products to the exhaustive needs of the Indian market. As the construction equipment market has been growing at over 20% and particularly the excavator market at 30% this year, we expect most of the programmes in the infrastructure to move faster, due to the pull exerted by the economic activity growth all around. We are looking at a very rapid growth for Kobelco in India in the next two years, given that we have one of the most fuel efficient and high productivity machines," says Mr. Vikram Sharma, Managing Director & CEO, Kobelco Construction Equipment India Pvt. Ltd in an interview with S. K. Khanna.

Since Kobelco’s operations in India, its focus has been to give indigenous tilt to its expertise in manufacturing process. Would you like to enlighten us more to understand Kobelco stress on indigenous expertise in manufacturing centric to country’s specific needs?
Kobelco is of the belief that while it is essential to be price competitive through indigenization, yet the final product should provide the deliverables same as the Kobelco products imported from any part of the World. In our localization, great focus was kept to adapt the various components as well as the final products to the exhaustive needs of the Indian market. The Indian customers usage practices, and the prevailing site conditions were studied in great details by the Indian and Japanese Team Members together for a few years, before the localization programme was commenced. The result has been the development of Products which meet the tough working conditions in India, yet delivering the unbeatable performance of Kobelco.

Howis this expertise being leveraged to expand your operations?
With one of the main drivers of the indigenization being cost reduction and more competitiveness, the Kobelco machines have been packaged to serve the requirements of a large user base. The SK210LC-8 which is the first model to have been launched with local manufacturing, is a beefed up version of the original imported machine. Care has been taken to adapt these for stringent operations in the mining and rock quarry segments.

What is the current status of company’s new facility in Chennai, how it is set to add new muscles to the company?
The Construction Equipment market has been growing at over 20% and particularly the Excavator market at 30% this year. This high growth is despite the fact that some of the major segments such as mining, and road building are not moving very fast. In the coming years, we expect most of the programmes in the infrastructure to move faster, due to the pull exerted by the economic activity growth all around. We are therefore very positive about the situation in the next two years and also for the next decade.

Our manufacturing facility at Sricity A.P. (near Chennai) has been in full production since April 2011. The faster availability of the machine from this Plant has enabled us to increase our sales by more than 100% over last year.

How Kobelco is well placed to render comprehensive products, components,after sales and technical services to support its clients? Also a word about company’s vendor development initiatives.
In the last few years, Kobelco in India has already introduced Excavators in the range of 14T to 85T. This wide range is sufficient to cater to all the needs of the Indian markets and we therefore plan to consolidate with this range.

We are represented across the country very comprehensively with a Dealer network of more than 55 outlets. We also have two Parts Centres, at Noida & Chennai to support the networks with all the required parts and technical services.

Our Vendor Development programme commenced a few years before we started manufacturing in India. We have developed a very strong vendor base already, which is able to respond to the increasing production plan.

Please let us know what are Kobelco’s important initiatives to tide over the manpower crunch?
Bullish on Kobelco's Growth in India
By manpower crunch, I presume that you are referring to the general shortage of skilled labor across the country. This question therefore needs to be addressed from two perspectives, first one being about Factory workmen. Our operations are not very labour intensive, so we have not faced much problem of the trained manpower. We have also reduced the difficulties by hiring labor from across the country, and then training them intensely before commencing production. We will continue to train and develop the workforce to our standards and requirements.

On the other side, there is a problem of finding trained operators, to operate the Customers machines effectively. This is a major challenge with all the manufacturers, since unskilled operators could result in underperformance and low life of the machine. As an Industry, we are reviewing this issue, as to how we could help the customers create a pool of skilled operators.

In view of increasing input-cost, higher interest rate, induction of Bharat III emission norms, how difficult you are finding to keep equipment price stable while maintaining their quality and reliability?
We have introduced our latest machines in India which are already emission compliant to Tier III norms. We do not face the prospect of upgrading our machines in the near future on this count. However, other input costs, coupled with higher interest rates, and the adverse foreign exchange situation has put a lot of pressure on the total cost of the equipment. Keeping the equipment prices stabilized at one level, is becoming very difficult not only for us but also I presume for most of the manufacturers.

How would you look at the company’s growth in the coming years given the inherent strong fundamental at your command?
As I have mentioned earlier, we are looking at a very rapid growth for Kobelco in India, given that we have one of the most fuel efficient and high productivity machines. Over the past couple of years, we have noticed that customer acceptance has grown very rapidly, and we are proud to be associated with so many customers who are repeat buyers of our products. It is therefore obvious for us to expect a good growth in the coming years.

What are Kobelco’s plans to participate in the forthcoming industry mega event—Excon 2011 and what are the equipment you will display at the event? Do you think that this event will pep up construction equipment market?
Excon 2011 is a major event, and presently the largest construction equipment Fair in the Country. The participation of all the major manufacturers in India, Global Manufacturers, and Vendors at this Fair brings about not only an exposure to a vast group of customers but also results in high number of sales transactions. It would not be out of place to say that before and after this event, there is always an increased activity in the market place. Excon therefore is a pep-up pill for the Construction Equipment Industry.

In addition to showcasing our Excavators, we propose to focus on the after Sales Support activities of our company.
NBMCW November 2011
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