Caterpillar: "We Are Balancing Our Act for the Indian Market"

Continued ever increasing pressure on margins, coupled with extended payments during the recent past have resulted towards stretched financials of institutional buyers and equipment rental companies, resultantly forgoing fresh equipment acquisition. At par, equipment users are looking towards optimum utilization calling for reliable services. Addressing the evolving business scenario, preparedness is getting higher in Caterpillar India's camp, essentially through introduction of newer solutions and services. Mr. Ramesh Tipirneni, Country Manager, Caterpillar India spoke to P.P. Basistha on the company's game plan to leverage its brand image and commensurate sales in the long-term in the ever increasing competitive Indian market.

What is the evolving bearish demand trend and contrarily higher services expectations? How is Caterpillar India looking to meet the same?

With a constrained cash inflow in India the construction market has been witnessing constricted sales. However, demand of project developers for quality products at competitive prices, delivering quality output, matching ever rising job specification standards have been going up, especially in road construction projects. The scenario is challenging for prospective buyers as majority of them have stretched balance sheets, deterring them from going for outright acquisition of premium equipment. Based on restrictive cash flow, contractors are opting for competitively priced equipments that also deliver total lifecycle costs. Taking cognizance, Caterpillar India is making products that are built in India for India and they deliver higher uptime, at economical prices, supported by reliable product support through their dealers.

What is the strategy towards avoidance of brand substitution and building up sales?

We have recently launched our ‘Built for it' campaign. The marketing campaign has been introduced to strengthen the Cat® brand awareness amongst customers. We have been successful towards building up customer loyalty through this campaign. One of our major achievements was that we have made greater in-roads in the backhoe loader and excavator market. Based on the rising trend of the corporates, to offload their equipment assets to minimize financial liabilities and opt instead for large scale hiring of equipment, we are well positioned to service the rental market through our dealer model. To cater to the rental buyers, both our dealers, GMMCO and TIPL have carried out significant investments to increase their sales and rental coverage by adding more stores and branches and increasing manpower for strengthening services and support.

As part of offering price competitive solutions, are you promoting used equipment and also refurbished support services?

Yes, our dealers are also in the used equipment business.

Cat® Certified Used machines are high-quality machines that have been inspected and serviced to strict Caterpillar standards. Every used machine that achieves ‘certified' status has undergone a rigorous 140 point inspection and is serviced using genuine Cat parts, fluids and filters. Cat Certified Used machines include a wide range of products – from articulated off-highway trucks, paving rollers and motor graders, to excavators, backhoe, skid steer and wheel loaders – Sold with 12 month Powertrain and Hydraulics Equipment Protection Plan.

These machines are either sold or offered on hire to contractors. To offer competitive solutions, our dealers have set up rebuild shops at their locations. The dealers take back worn out engines, turbo chargers and other equipment that are used in various equipment and rebuild or remanufacture them, backed by Cat Certified Used certification. This gives a newer lease of life to the equipment with assured services support.

What are the other support services that Caterpillar is rendering to the dealers to leverage their services?

Based on the growing requirements of the contractors towards optimum equipments utilization, higher uptime and low operating costs, Caterpillar and its dealers work with customers to provide best solutions for efficient operations, better loading and hauling and also to lower fuel consumption.

Could you tell us about the manufacturing facility that produces backhoe loaders?

The state-of-the-art manufacturing facility for producing backhoe loaders is located at Thiruvallur in Tamil Nadu. The plant has enabled us to undertake extensive localization that have been well received and meets customer's expectations making the equipment suitable to Indian job conditions. The new facility has ensured sufficient reduction of lead supply times, post placement of orders.

What are the other products being manufactured at Thiruvallur? Is there any plan to expand the range of the products being made?

A few of Caterpillar's key manufacturing facilities in India are located in Thiruvallur. Apart from our Building Construction Products division that produces two variants of backhoe loaders (which are mainly used in construction and road works sectors); a new facility that produces skid steer loaders (also used in sectors such as mining, construction, etc.) is also located in Thiruvallur. The Machines Division located close by produces four variants of off-highway trucks (40, 50, 60, 100 ton) used in mining and quarry operations. The facility also manufactures hydraulic excavators. Based on the future demand, we will look towards increasing the product range.

Has there been any introduction of newer products for the Indian market in recent past? Will you continue with the production of Hindustan wheel loaders?

We will keep manufacturing the ‘Hindustan' range of wheel loaders at Banda, Maharashtra. We have been strengthening our transmission, engines product line and hydraulic rock drills through upgrading our production systems.