"We have managed our business quite well during the slowdown affected months in terms of either grabbing more market share. . . We have completed the first phase of our expansion plans and are in a position to deliver over 8000 units of various equipment that we manufacture annually. We are focusing on manufacturing and selling more of those products which are high on the value chain. As a strategy, we always put our efforts to focus on value sales. It also reflects in our constantly evolving product profile and product sales mix over the years. Our route to maintaining our market leadership is through improving value proposition for the customers. We are participating in Excon 2009 and are planning to showcase some of the new offerings from our manufacturing range as well as from what we just distribute on trading basis, says," Mr. Rajesh Sharma, Vice President Marketing, ECEL, in an Interview with S.A.Faridi.
Despite recession, what have been the key factors in the growth of ECEL in the last 1-2 years enabling it to have a seamless expansion programme with modern facilities to consolidate its position in the domestic as well as export market of construction equipment space?
One of the key factors has been that we managed our business quite well during the slowdown affected months in terms of either grabbing more market share in a lower demand scenario or by bringing cost efficiencies into our operations. We had faith in a quick recovery in demand and believed that slowdown was going to be a short lived phenomenon. Accordingly, instead of resorting to knee jerk reactions, such as pruning experienced manpower which could have had long – term negative implications, we focused on improving market shares and cost efficiencies. We also continued our expansion plans with setting up of the new facility and addition of several new businesses.
What kind of volume ECEL expects from present expansion? Will ECEL focus on Value Sales or Volume Sales to lift its market share?
We have completed the first phase of our expansion plans and are in position to deliver annually over 8000 units of various equipment that we manufacture. The market demand in the first half of this fiscal was much better in comparison to the second half of the last fiscal. We are very close to achieving the peak volumes which we achieved in 2007-08 before the slow – down.
We are focusing on manufacturing and selling more of those products which are high on the value chain. As a strategy, we always put our best efforts to focus on value sales. It also reflects in our constantly evolving product profile and product sales mix over the years. Our route to maintaining our market leadership is through improving value proposition for the customers.
What differentiated products or services that ECEL prospective clients can look for from ECEL ends following its innovative and induction of state-of-the-art technology in its expanded facilities focusing on quality and technical superiority?
Our new facility has improved the quality of our products immensely, especially in the areas of fabrication and painting. This will help us in opening new markets outside India.
On technology front also we are constantly working on developing new features for our existing products as well as new products altogether. With state-of- the-art infrastructure for manufacturing and engineering now being in place, we are well poised to launch a number of new products in earthmoving and lifting equipment segments in months to come. These new products will be much superior to the products of our competitors in terms of quality and technology.
ECEL has been one of the pioneers in providing its customer solutions beyond its manufacturing range, collaboration with leading global manufacturers in marketing and distribution catering to the demand of its customers. What has been the latest initiatives including that with Chinese company, Zoomlion? How this will be a win-win situation for both the parties and particularly complement ECEL's existing range of cranes and material handling solutions catering to large infrastructure projects?
Our exclusive distribution agreement with Zoomlion has already come into operation in July, 2009. Zoomlion as you know is one of the best known companies for mobile cranes. With this tie up, we complete our range of lifting solutions and will be in a unique position to offer cranes spanning across Pick and Carry Cranes, Yard slewing Cranes, Rough Terrain Slewing cranes, Truck cranes, All Terrain Cranes, Crawler Cranes, and Truck Loaders.
We have also signed a distribution agreement with Manitou BF of France for marketing their range of Tele handlers and Access platforms in the country. Manitou is the global market leader for Tele handlers with a 35% market share in the world. We have already collected orders for Zoomlion and Manitou equipment from leading infrastructure companies.
To complete our product range for the Road projects, we have signed up an exclusive distribution agreement with a leading Chinese company Xiamen XGMA for marketing their range of wheeled Loaders and Motor Graders. China is the world's largest manufacturer and user of wheeled loaders with annual sales of 150,000 units and Xiamen XGMA is one of the top 2 or 3 manufacturers with annual sales of over 25000 units. Xiamen XGMA manufactured the first wheeled loader in China in 1964 and is known as the Mother Company of all Chinese loaders.
What are ECEL plans to participate in the forthcoming Excon 2009 to be held at Bangalore in November this year. What new products and services are proposed to be launched? How much such events promote technical transfer mechanism and business development and technical collaboration?
We are participating in Excon'09 and are planning to showcase some of the new offerings from our manufacturing range as well as from what we just distribute on trading basis. Events like Excon are indeed quite helpful as they provide an excellent opportunity for developing a network among customers, technology providers components suppliers, and the manufacturers.
Was there anything in construction equipment industry's wishlist which has not been accommodated in the latest policy moves in infrastructure and financial reforms? Any further suggestions from your end?
There are quite a few things which require the Governments' immediate attention.
One of them concerns with the unbridled imports of used equipment which has not only harmed the local manufacturers in terms of affecting the sale of new equipment but also made India as one of the favorite dump grounds for equipment which have out lived their useful life. This also compromises safety and all other environmental regulations relating to exhaust and noise pollution. It is very ironical that local manufacturers have to obtain CMVR and other certifications relating to pollution whereas old equipment are allowed to be imported without such requirements. About 10 years before China banned imports of used equipment altogether. This resulted in a huge growth in demand of new equipment and helped local Chinese manufacturers to grow. This also improved safety in equipment usage. We need similar initiative from our Government.
Also considering infrastructure development a national priority, Government should prepare a framework for involving PSU banks in customer financing more aggressively for equipment buying as they have done for tractors to boost mechanization in agriculture sector.
Then there is one aspect concerning development of human resources for construction equipment operation and maintenance so that a safe and efficient usage of equipment could be ensured at customers' end. There is no policy framework on developing skills required for operating and maintaining construction equipment in the country. Initiatives from manufacturers in this regard also have not received any substantial support from the government.
Government is already working on removing the hindrances in a free flow of equipment across states and on a uniform VAT across the country. One hopes that these will be taken care of at the earliest.
Skilled and unskilled manpower to handle manufacture of sophisticated equipment is becoming a rarity. What could be done at the macro and micro level to cope up with the situation? What are ECEL initiatives to tide over manpower crunch?
At macro level, a national policy framework is required that addresses this issue more holistically by integrating it with school and technical institutes’ curriculum and by providing a proper infrastructure at all levels.
At micro level Government should encourage and participate with manufacturers who have taken the initiatives in this respect. We have set up a training school in Bangalore over an area of 76 acres with boarding and lodging facilities to accommodate 200 trainees at a time. We provide classroom and practical training in operation and repair of our equipment. Our training curriculum, infrastructure and courses have received accreditation from CIDC.
Buying equipment through upfront payment has become difficult. Are you exploring the possibility of tieup with financial institutions / banks to provide relief to your dealers and others?
We have tie ups practically with all the NBFCs and private banks who are into construction equipment asset financing business. Over 90% of our sale is facilitated by such arrangements.
As I have mentioned earlier, PSU banks are not as aggressively involved in this sector for customer financing as they are in agriculture sector for providing finance to buy tractors and implements. One wishes that it changes soon as the reach and geographical penetration provided by PSU banks (such as SBI) is very good and cannot be matched by private banks and NBFCs. It will help the customers from rural and small towns to buy the construction equipment at reasonable interest rates.