Escorts: Making Inroads into Global Markets

For Ajay Mandahr, CEO, Escorts Construction Equipment, the company’s growth in the near future will come from increased exports to global markets as Indian products are finding many takers for their ruggedness, performance & value proposition.

An exclusive interview with S.A.Faridi

How is the Indian market for construction equipment changing vis a vis the global standard?

If you see global trends, we can say that our machines are at par with global features and technology integration. People are moving to safer equipment, autonomous operations, operator comfort, and are looking at highly efficient operations and less of emissions. No doubt, India is also catching up with all these requirements by developing new machines with advanced features, many of which are in the pilot stage. In fact, build in-safety & aggravating movement cut off etc., are finding acceptance.

Since higher productivity also depends on operator comfort, this aspect is also under consideration. Comfort includes ergonomic cabins, with the joystick, steering and gears within easy reach of the operator, and intuitive controls, etc. I believe that new technologies will get vertically integrated and horizontally deployed in the products.

At Escorts, we are working on hybrid technology for our entire range of equipments. Escorts launched an electric tractor in 2018 and now we have started to get seed the machines in the global markets.

Adding more advanced features would make machines more expensive. How can Indian manufacturers address the cost issue?

The trends that are happening globally are seeing escalations in India as well. But India being a price-sensitive market, we are making advancements frugally. Our cost economies are well maintained, we work as a value innovators i.e. value to cost impact is carefully studied & incorporated in our designs. The product are tested for both the operators & sight safety before it’s commercial launch. Many global manufacturers are developing products with this frugal mindset in India & taking these products globally.

So, an international product coming to India, getting frugally engineered and customized as per customer requirement to deliver more value per machine, is the current trend.

Are Indian machines at par with international brands with respect to integration of advanced technologies?

Technology per se is not different, globally. What we are bringing into our products is, more or less, at par with international technologies. We are giving the same kind of value to the customer, the same kind of operational efficiencies (if not better), and providing the appropriate level of safety required – all within our kind of working conditions. So, we are in no way behind global brands. The only difference is that international companies make their products based on the customer requirements of their countries, and bring the same machines to India and sell them here, whereas, we build in India and for India, while looking at the aspirations of Indian customers. But the products we are taking to the global markets are designed and manufactured to International standards at much competitive price point.

How can Indian machines compete in global markets?

Frugality sells everywhere. Operations have become very standard now: a crane will lift a load of a certain weight and within a certain radius, but if your machine can deliver this with more safety, acceptable comfort, and a higher economical value, then people will accept these products and be even willing to switch to them.

I feel that more and more products will start going from India to global markets as costs are very competitive in India. This is what happened in Tadano, which came to India, planned a product for the Indian market based on Indian aggregates, while maintaining high international standards of safety and other regulations. That’s the game all other players need to play.

What value do Indian machines offer over and above their performance?

We do have to look at the value proposition of Indian machines. Money really has no colour; if I have to spend an ‘x’ amount of money in material handling at site, I will try to get the maximum value from the dollar that I spent. If you see us, we start small by seeding the machines in focused market, and once customers begin to see value in the product, we start gaining a market share.

If you see the ‘fit and finish’ of India products, it is not up to a very high standard, but functionally, our products are better than what global markets ask for. Our machines are subjected to more abused kind of operations; and are, therefore, more sturdy and rugged; plus, they are customized as per project requirements. So, it was okay to sacrifice fit and finish to some extent but now Indian manufacturers are realizing that this could be an important differentiator.

Since, functionally, Escorts machines give more value for money, we are growing globally also. Today, 8% of our revenue comes from exports and we are now aiming at 30-33%. To achieve this, we have to meet European and American emission laws and standards for material handling, earth moving, etc. So, while we design and build machines for the Indian market, we also keep adopting standards available in Europe and USA so that they become a global product.

Is Artificial Intelligence (AI) the future of construction equipment?

We are doing experiments in AI such as digital analytics, etc, but essentially all this is happening on the front-end in order to come closer to the customer and to better understand his needs and expectations. Robotics is being used in a limited way for standardized operations in our manufacturing, but we still have to maintain a human interface because robotics has not matured to the level where we can avoid human interventions.

At Escorts, we use a certain amount of robotics for manipulators, for welding jobs, and for critical painting jobs which are harmful for humans. I think autonomous, digital etc will go into the future and will see a lot of development happening and a lot of technology changing as AI is still evolving. I feel, this technological transformation is still work-in-progress and will go through several layers of evolution before reaching a steady state.

Telematics and connected products are making life much easier for us. Going forward, we plan to incorporate diagnostic tool based on AI gives insights into the common complaints that a product can have and helps us diagnose and rectify the faults remotely.

How is Escorts dealing with the lack of well-trained manpower issue in the CE industry?

Escorts was the first company to establish a big training center in Bangalore for training our operators, and also our service & sales teams. We have certification courses and we constantly work on our recertification and upgradation programs. So, a lot of work is going into this activity. In 2018, 3500 people were trained here, so training is an essential part of our Group’s plans.

What new Escorts machines are in the pipeline?

In the near future, our JV with Tadano, will be introducing the Truck Crane in the Indian market. First to come would be 60-ton category followed by 80T. This portfolio will keep expanding based on market requirements. Besides, we will be introducing several new products in both material handing & earth moving space. The products will be revolutionary in the Indian context and shall inform you the details at appropriate time.

How strong is Escorts’ dealer and service network?

We have about 65 dealers with about 120 touchpoints in the India. Last year, we started an initiative for setting up authorized service centers. Today, we have 550 such centers connected with 24 distributors. Our job is to provide training to these centers. First, they become customer touchpoints, following which, we certify them as authorized service centers and then they start getting connected to the distribution network for spare parts.

Touchpoints are very important for us as they give companies a much more leverage in the marketplace. Our response time is much faster which reduces turnaround time of the machines. With parts and service capability available at customer doorstep, Escorts assurance get further reinforced.

What is your strategy for entering global markets?

Our aspiration is to become a major player in global markets, we have started seeding into bigger markets and are getting a very positive response. We are working towards going global with majority of our products in both Material Handling & Earthmoving portfolio.

We are a niche player in backhoe where we sell a heavy duty & rugged machine for tougher applications in Indian markets. The domestic market is overcrowded, so we are looking outside India for growth. We are working directly in some international markets and are looking at contract manufacturing as another option to grow.

What kind of growth has the company witnessed in the last few years?

Our business is growing around 30-35% CAGR for the last 3 years and we are confident of achieving similar figure (if not more) in future as well.

Our future growth is build around new products, category expansion and increased participation ratio. Innovative technology will help us to further expansion of the served markets.

I expect the CE market to grow at around 12-15% CAGR during the next 4-5 years. At Escorts, we remain optimistic of this industry growth. However, on short terms basis, the market may remain cyclical but the Indian growth story remains intact and strong.