"Continued Emphasis on Economising Total Ownership Costs will be Key to Retain Volvo CE's Presence in India"
Volvo Construction Equipment (CE) India has been growing in difficult and comfortable times. In the present spell of slowdown, how has the company been able to handle the present pessimism within and outside the company and remained stable to contribute to the global Volvo’s business targets?
We have adopted a multipronged business strategy to build up our presence and stability in the important Indian market with strong existing demand fundamentals in infrastructure sector. Our most vital initial strategy to build up presence has been our large scale capital expenditure at our Indian facility in 2012. To gain better recognition in the Indian construction equipment market, we have continued with our thrust to economize total cost of ownership, which has been our core value behind product placement. Volvo CE has continued to introduce newer products such as soil compactors and tyre rollers with better fuel efficiency for the Indian market. Introduction of D-series excavators with five–seven percent fuel efficiency has also been one of our major initiatives for the Indian market towards retention of our presence. Response for the new D-series excavators along with our other medium and heavier products have been quite positive that has allowed us to stabilize our position among top three excavators manufacturers, eventually allowing Volvo CE contribute towards its global business targets.
To make the products cost competitive, we have been able to attain 10% indigenization. Further localization will be carried in phases.
From time to time, the government has been tweaking its policies to fast track the road construction business. Why have such policies failed to dispel gloom pervading in road sector, where lies the business fortune of construction equipment industry?
It is an irony that despite having well formulated road project development models through public private partnership or viability gap funding, road projects have not taken up to the targeted desired levels of the government. This is despite the fact that the government has been looking at issues to check exodus of project developers from the sector in the recent past. The causes are not hard to decipher. Foremost, there has been dearth of clarity in business models in PPP projects, primarily on the terms of revenue sharing, that should allow the contractors get proper returns. Appropriate revenue sharing models has brought some good private participation in developing and operating airport projects in a sustained manner in the country. Second, policies have been short in addressing issues of tardy land acquisition process and environmental clearances that have continued to plague the road construction sector. This is despite the fact that National Highway Authority of India has been announcing slew of projects from time to time. The issues need to be addressed on right earnest to fast track road construction business.
Appropriate project management is also a vital issue for enhancing the pace of road construction in India. What has been Volvo CE’s initiative towards improvisation of the same?
Project management is absolutely essential for targeted completion of the road projects as per their schedule set and also for ensuring proper quality of roads. India has made good progress on both the fronts, ever since mechanization of construction gaining grounds. However, there lies scope for optimization of efforts at par with western countries. On part of Volvo, for appropriate project management, we have our training programme ‘ Raasta’. The programme imparts training to site engineers teaching them vitals of project design and better project management. We have been carrying the training in collaboration with couple of state highway authorities. Besides, we have formed an affiliation with Visvesvaraya Institute of Technology, for imparting valuable information on bridge and road project construction. The information is being disseminated by lecturers with prolonged global exposure in road projects. I will like to explain that there are wide benefits of proper project management as it will enable the contractor derive the benefits of an advanced machines since issues of synchronization in availability of materials viz timely availability of asphalt or aggregates are being addressed in the same.
How has devaluation of rupee affected Volvo’s business in India. What are the measures taken to neutralize the impact of currency devaluation?
As like other original equipment manufacturers, importing good volumes of their components, we have also been impacted by currency devaluation. However, we have opted to go for indigenization of our products. Localization of critical components of our D-series excavators has been a major initiative in this direction. Taking the initiative further, we are planning to localize components going into our road construction equipment being sold in India. As a concurrent measure to offset the weakening of local currency, we have also taken up exporting excavators and road construction equipment to Middle East and African countries. This has allowed us to hedge the volatility of the local market to a certain extent.
However, as a long-term measure, to build up our business, we are looking towards making our products better oriented for Indian work site applications by carrying out modifications in the buckets of the excavators, attachments of the wheel loaders, and in the piping kit of the hydraulic rock breakers, making them more adaptable to work in various quarrying areas.
But what about cost reduction of the products, so as to make them more attractive for Indian buyers, precisely through your telematic control system ‘Care Track’ ?
Our products deliver on high productivity while minimizing cost of operation throughout their lifecycle. Based on our knowledge on product we will look to carry out engineering improvements so as to reduce total operating costs in spite of the higher initial buying expenditure.
To supplement further towards enhanced product uptime, Volvo has its own telematic control system ‘CareTrack’. It has delivered immense benefits to end users of the products in terms of operation and productivity. It monitors the utilization pattern of the equipment on job site, taking the cue of which the operator can carry out improvisation in operation and altogether productivity. There are numerous operational bottlenecks at the construction job sites, precisely backward and frontward integration for removal of overburden through timely deployment of the tipper trucks at sites or availability of boulders for aggregates preparation. Care Track tracks the gaps, which can be evaluated for improvisation in productivity and thereby reducing operational cost of the equipment. The other benefits offered by Care Track is that it can detect the fault of the equipment and pass on the information to the dealers, which will allow the dealer to plan the maintenance services accordingly enabling the dealer ensure optimum products and timely parts support.
What is Volvo’s plan to participate in the 7th edition of Excon 2013. How will your participation in the mega construction equipment event help the company to promote your products and services and add fresh business dimensions to the company?
We would be showcasing our entire range of advanced products including SDLG wheel loaders. The participation will indeed add brand value to the company. There are also certain plans to unveil newer products all which expected to add fresh business dimensions to the company.
NBMCW November 2013
