CASE Construction: Positive on Investment in India
How do you analyze the demand for road construction equipment in the wake of the government's announcement for awarding 8500 km roads projects in this fiscal?
After a relentless slowdown over the past 3 years, wherein almost 20 road projects worth nearly INR 27,000 crores have failed to get bids from the private sector in the last two fiscals, things seem to have started moving in the right direction. The new central government, backed by a development linked agenda seems like clearing all policy related hurdles on a fast track. Announcement of certain development oriented schemes such as 8,500 km of road projects in this fiscal is definitely a sweetener. Although only 2,150 km of projects have been awarded in H1 of this fiscal, the overall result still augurs well considering only 3,169 km of projects were awarded against a target of 9,500 km in last fiscal.
Despite the subdued demand expectation of road construction equipment in this fiscal, the green shoots are encouraging. Clear intention and positive movement showed by the new government in clearing policy related hurdles, we expect this to translate into real demand in the next fiscal. The greater transparency in project allotment through e-auctions, the flagship Swachh Bharat program including river cleaning, focus on more and better quality roads and highways is likely to translate into real industrial demand and employment generation opportunities in the road equipment sector in near future.
Apart from major infra or urban projects, there seems to be good demand coming in from rural roads and irrigation projects, what product placement and marketing strategies are you making to tap this new fast growing area?
Agriculture contributes 14% to India's economy and rural India supports half the population housing 800 million people. Developing the rural infrastructure, especially irrigation and roads, therefore is paramount to sustain the population's livelihood and to improve mobility and connectivity. Rural road flagship schemes such as PMGSY have yielded exceptional results over the past decade making rural India's growth exceed that of urban India for the first time in last 5 years. All of this, backed with 158,000 km of new roads planned in rural areas in the on-going 5 year plan, indicates strong growth prospects of construction equipment in rural India.
To specifically cater to the rural requirements, our latest EX series Loader Backhoe with FPT engine, provides unparalleled fuel efficiency and operator comfort from probably the largest cabin on any backhoe in the industry. This facilitates in comforting the machine operator to work in the remotest of the locations without worrying too much about frequent re-fuelling or looking for a shelter space intermittently.
CASE has been a multi-product company; how do you rate its business performance for 2014 and your assessment for 2015?
Since April 2011, when Case acquired a 100% stake in its erstwhile joint venture company, we have delivered on our commitments made to the market, our customers, and to our stakeholders. We have so far invested in excess of USD 50 M in our Indian CE business arm, strengthening our assurance to the Indian market. We believe in the long term story for India infrastructure development and the construction market. We see a huge opportunity in that.
Business performance for 2014 has been consistent with our plans wherein we have increased our market share in the Compactor segment to remain the no. 1 player. We have also consolidated our strong position in the Loader Backhoe segment to remain top tier and have started selling our enhanced product range in the Indian market. 2015 is likely to follow the same track to make CASE emerge as an even stronger force to reckon with, in the Indian CE industry.
To enhance our product portfolio from among the worldclass delivery of Case Construction Equipment, we have so far introduced to the Indian market Skid Steer Loaders, Motor Graders and Wheel Loaders. We upgraded our bestselling Tandem Compactor, 752, to suit the evolving requirements of our customers. We topped it up with the launch of EX Series backhoe loaders and 1107 DX compactor in India at the start of 2014. We do have a lot more plans in terms of other product lines and other products in our portfolio which we will share with you in the coming months.
What have been the market response to your EX Series backhoe loaders and 1107 DX compactors which were launched last year? What innovative technologies are placed in your products which ensure maximum productivity and minimum operation cost/downtime?
The new 1107DX with its superior drum shell thickness, wider drum span and higher operating weight provides unparalleled compaction efficiency to its customers in road building. The resulting requirement of lesser number of passes for a comparable job coupled with a highly fuel efficient water cooled turbo charged BS3 engine, brings down the operating cost to the lowest level among all comparable compactors in the Indian market. New styling for improved operator visibility and a superior operator platform with enhanced safety features makes 1107DX a clear winner.
With EX series, CASE Construction, which manufactured the first Loader Backhoe in the world, brought the strong and robust CASE DNA "S"tyled Backhoe boom in India for best reliability. EX series, which is available in 76 HP, 86 HP and 96 HP variants, also bring forth the power of world's most reliable and fuel efficient FIAT engines for the first time in the Indian CE industry. Several hundreds of thousand FIAT engines are successfully running in India in automobile and tractor segment and with the introduction in the Loader Backhoe segments it further strengthens our leadership position in the engine segment as well.
All of this coupled with the tiltable engine hood for easy servicing, heavy duty axles and perhaps the largest and most comfortable cabin on any Loader Backhoe in India, makes EX series a clear winner. The growing popularity of EX series since its launch exactly a year before making the fastest growing TLB model in India is a testimony to the increasing customer confidence in the overall value proposition of the EX series.
Productivity of equipment depends on how it's being used, operator skill and periodic and preventive maintenance. With 'Chalta Hai' attitude in India how would you like to ensure that if machines are being operated and looked after well then the owner will get value for money?
It is not difficult to do so if you do the right things. CASE is aware of those subtle ingredients and we are doing things right. We know that product plays a very big role along with cost. By cost we don't only mean equipment cost, we mean the overall operational and maintenance cost. We mean the value for money invested by the customer. We give due recognition to customer feedback as to implement whatever is needed to maintain our leadership position.
Apart from making our equipment fuel efficient, we have also worked on improving operator comfort and productivity, by providing EX series backhoes with the most spacious cabin in the market. Also in case of our Vibratory Compactors we have isolated the operator cabin from the vibrations to make it more comfortable. This coupled with minimalistic maintenance intervention in CASE machines, be it from regular maintenance point of view (reliability) or longer oil change periods point of view, makes them absolutely trouble free. All of these on a holistic scale of owning and operating cost of the CASE machines, make them the highest value for money offering in the Indian CE market space.
CASE India has been importing and marketing its products such as grader, skid-steer loader, and wheel loader from its parent company. Are these products being modified/customized as per Indian job site requirements before importing? Is there any plan to manufacture them locally in near future?
The product livery from the stable of CASE from the best manufacturing set-ups worldwide have been started to be offered to our discerning customers in India. Skid Steers from USA, Graders from Brazil and Wheel Loaders from Italy represent the best of the best product offerings to Indian clientele. With the offering of these state of the art equipment to our Indian buyers the interest level in owning one of these equipment is palpable. These equipment have undergone suitable homologation to match Indian requirements. The specifications and operating instructions are also rendered suitably to match the sensibilities of the Indian customers.
Of course, the high level of quality emerging from superior workmanship on these equipment couples with high import duty structure make these premium machines in the reach of only the crème de la crème of Indian CE buyers. With the growing appreciation and acceptability of these machines, CASE India is actively evaluating the possibilities of localizing these models which also goes in sync with the "Make In India" philosophy of the incumbent government at the Center.
What is your take on the government's 'Make in India' programme and mission motivating industry to participate in it? Will this help construction equipment sector to improve its technological status and competitiveness in the global market?
Like I mentioned in response to your previous question, we as CASE India are extremely positive to increase our investments in India. As a part of CNH Industrial group, we have taken a long term position on the India growth story and the potential thereof. We already have more than two decade old presence in the CE sector with a manufacturing plant at Pithampur and more than a decade old presence in Agriculture sector with a tractor manufacturing plant at Greater Noida under the brand name of "New Holland". We have recently strengthened our manufacturing presence in India with a new plant at Pune.
The government's 'Make In India' campaign is surely going to garner more interest in the Indian manufacturing sector with concomitant rise in the employability of the masses. CE industry also going to follow suit and we are hopeful of various MNCs to start routing greater investment in India to be a part of the growth story.
CASE India has already taken a cue from this to start transforming our Pithampur plant as a manufacturing hub to cater to our global demands. The new products such as the EX series in Loader Backhoes and the DX series on Compactors are export ready machine built with the finest global manufacturing standards. This is set to benefit the Indian customers due to availability of products with world class quality and reliability.
What is the progress of CASE decision to invest Rs.40 crores in this fiscal to strengthen its brand in the country?
For a product oriented organization such as CNHI, with worldwide investment in Research & Development to the tune of INR 7,500 crore in 2013, India follows the same approach, with heavy investment in our products over past few years. The result of this has been the EX series on Loader Backhoe and the DX series on the Compactors which has been exceptionally well received by our customers.
To supplement our superior products we are committed to the investment in the brand promise which CASE delivers and to sensitise the customers to our 172 year old heritage of delivering superior customer experiences in everything we do. We have already launched a major brand building program in India touching the entire spectrum of agencies associated in the Indian CE market from the machine operators to customers to financiers to our dealers. A program of a scale as large as this will take a couple of years to truly exhibit the outcome, however the directionality is right and we remain firm on our commitment to continue to invest assertively in our overall brand experience for all stakeholders in 2014 and beyond.
Published on:
09 December 2014
Published in: NBM&CW December 2014
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