The recession had an impact on sales of Changlin India if not critically, but noticeably ever since it surfaced during the end of 2008. The economic downturn resulted in slow down in off take of the equipment due to delay in the commissioning of the projects and also in awarding newer project contracts. The contractors preferred to wait for new tender clauses for the projects in the pipeline due to general election resulting in orders to slow down. Overall our target to double our sales during 2009 as compared to 2008 got impacted owing to the economic retrogression. Changlin India achieved an increase of 60% in its sales during 2008 as compared to 2007.
What are your expectations for the coming fiscal?
Quite positive. The new government has shown its renewed commitment for increasing its investment in infrastructure development programmes, precisely in road construction projects and other core infrastructure projects as well. Based on the commitment shown, and overall positive returning business sentiment, I am really optimist on the sales revenue part. Based on indications of economic revival and also our long–term plan, Changlin has stepped up the process of recruiting more people for sales promotion and service back up. Besides, we are also increasing our components stock till our manufacturing begins in India so to provide adequate back up support to our customers. As per Changlin this is quite important to retain customers and create new customers as well. Further, for enhanced sales promotion, we would be undertaking a complete brand rebuilding programme. The holistic initiatives planned is expected to provide Changlin a better breakeven in its business operations.
Buoyed by strong indications in revival of the construction sector, Chinese construction equipment major Changlin is in the process of revamping its business operation in India. In concurrence, the company is going strong on its manufacturing plans in India based on a long–term business strategy. Partha Pratim Basistha spoke to Mr. Wice Li, Executive Director, Changlin Engineering Services India Pvt. Ltd. to learn about the Chinese manufacturer’s business plans.
As you have mentioned that the customer support is key for Changlin—How this is more in offering desired products and solutions based on the customers requirement? How have your product line offerings and solutions performing for customers been enabling them to have better return on investment, precisely during the recessionary periods when equipment utilization is less?
I would answer the question in two parts. Firstly, Changlin offers array of products and solutions, comprising wheel loaders, dozers, for meeting assorted customer requirements, pneumatic rollers, soil compactors, tower cranes etc under various capacities, all imported from China. Our wheel loaders offering are quite extensive for various loading applications.
Next, Changling’s equipment are known to be quite efficient in its performance. The equipments are fuel–efficient and robust allowing the customers to have better return on investment. I would like to highlight that to provide better equipment to customers so as to have better ROI, we have been taking customer feedback on a sustained basis to develop better products as a research and development initiative. Our engineers including myself are always at the job site to obtain customer feedback on performance of the equipment to undertake necessary modifications on the machines enabling them to provide better output and better ROI even when equipment utilization is less. The initiative overall allows us to make our products more competitive in its positioning.
There has been news doing rounds on your manufacturing facilities in India. What is the status quo? When and where the plant is expected to be commissioned in the country and what would be the equipment that would be rolled out of the plant?
We are planning to come up with a manufacturing plant in India to provide cost competitive products. The plant would be coming up near Chennai. We are in the process of purchasing land for the same, which is expected to be completed by the end of this years. While the plant is expected to be commissioned by the end of 2010. The plant would be constructed in two phases. Initial investment for phase-I is expected to be at the tune of $10 million. The plant size would be of 20,000 square metre bearing a maximum annual production capacity of 10,000 units. Equipment, planned to be rolled out of the plant would comprise wheel loaders, motor graders, pneumatic tyre rollers, and soil compactors.
Would the plant be part of Changlin’s global sourcing chain in concurrence with meeting the domestic market requirements?
Apart from meeting the requirement of the Indian construction and mining sector, the plant would also look into the needs of Middle East and African markets.
What would be the localized component of the product line to be rolled out of the plant.
Initially, we would be looking for 10% localization component for the equipment produced. However, down the line as volume picks up we would be looking for 70% localization of components. Localized components would comprise wheel loader buckets, seal kits, hoses, hydraulic pipes, and oil pipes. Local Cat and Cummins engines which would be installed in the machines. Besides, fabrication, casting and forging would also be done at home. As of now, our technical team is in the process of creating a data base through evaluation of engineering skills of potential vendors on their ability to adhere to Changlin’s engineering standards. Based on the data base created, we would select and categorize vendors for procurement of components.
With plant operation being planned, what would be your initiatives to strengthen your dealership and distribution network?
Currently, we are in the process of revamping our dealership network. As of now our concentration has been in Andhra Pradesh with four dealers and Hyderabad being the component depot. However, with manufacturing operations being planned we are targeting to appoint 10 more dealers across entire India.