Holistic Growth at ECEL
Amid slowing confidence in growth across companies, it is heartening to note that Escorts Construction Equipment Ltd (ECEL) has turned a corner recording nearly 39% increase in its sales turnover in the last nine months. How much of this would enhance company market share in CE market?
We have been growing at CAGR of 35% for the last 10 years. The 39% growth achieved this year is even better than the CAGR of the past 10 years.
The growth has been an all encompassing one in the sense that all segments of our products portfolio have grown significantly. In the last 12 months, we have achieved an invoicing value of about Rs.1000 crores.
Market shares have increased in the segments of Pick-n-carry cranes, Truck cranes, Backhoe- Loaders, Tele handlers, Wheeled Loaders, and Motor Graders. While maintaining our market leadership in Pick-n-carry cranes, we have also been able to achieve market leadership in Truck cranes and Tele handlers this year. The growth has largely been in mobile cranes and Backhoe loaders as the sales volumes in these verticals increased significantly. In the segments of Vibratory compactors and Forklifts, we have been able to maintain our shares of the last year.
Would you attribute this performance to ECEL’s competitive edge, focus on improving operational efficiency and prudent pricing policy and above all to its good governance?
We are an Indian company which manufactures and market equipment for the local market largely. This is a plank on which we are differentiating our offerings to the market. We leverage our knowledge and learning of Indian market conditions and customers’ preferences, which we have acquired in the last 40 years as a leading manufacturer and supplier of construction equipment, to our advantage. We have positioned ourselves as a company that understands customers’ preference and accordingly offers equipment and solutions which are designed and built specifically to suit the Indian conditions be it the weather, usage pattern or the terrain. Today, customers need equipment which can perform tough tasks in Indian conditions and that too with fewer breakdowns and lower operating costs. It is also very important to ensure that equipment are appropriately simple in design/technology to match the skillsets available in the market for operation and maintenance. We have adopted the same approach while developing our backhoe loader-Dig Max-which is designed to suit the Indian requirements unlike other backhoe loaders available in the market. Most of the competitive backhoe-loaders have been designed for the markets other than India primarily-such as North American or European market where usage and other conditions are entirely different from what exist in our country.
Equipment that are built for the Indian conditions, supported by the customized service and the deep market accessibility are the three key elements of our business on which we differentiate ourselves from the competition.
Introduction of Escort DIGMAX Backhoe Loader, has been a milestone development in Backhoe Loader market in the country. What has been the market response to this satisfying various technical parameters of users of this equipment? Does it stand taller than others in this segment today?
This indeed has been a milestone development not only for us but also for the industry. The response has been tremendous and on expected lines as DigMax does really stand the tallest among all backhoe loaders available in the country. DigMax is the first Backhoe Loader in the country which has been designed and built to suit the Indian conditions.
How much its intake has added to the market share of ECEL’s in Backhoe Loader category?
We have sold over 1000 units of DigMax in the first year itself, in the year of launch. We are aiming at doubling our sales volumes every year for the next 3 years. Currently, we are focusing on consolidating our manufacturing program further and are in the process of introducing 3 new models/variants in the segment of Backhoe-loaders.
How has ECEL’s strategic alliances with global CE manufacturers helped the company to provide end- to-end product solutions and services to the customers in the market? Are there more such alliances in the pipeline to enable ECEL to establish bigger footprint in CE market so as to penetrate still deeper into Indian market heartland?
Besides our own manufactured range of products, we also offer a number of solutions through exclusive marketing tie-ups with leading manufacturers in the world for distributing their products in India exclusively. This has helped in offering an end-to-end solution to our customers for lifting and construction applications.
Our strategic alliances with global CE manufacturers have fared very well and we have achieved market leaderships for Truck Cranes and Tele Handlers (for which we are representing Zoomlion and Manitou respectively) this year. We have consolidated our market leading position further in the imported forklifts segment with new offerings from Doosan with whom we have a strategic alliance since 1996.
We are also the exclusive distributors for the Wheeled Loaders and the Motor Graders from XGMA (Xiamen Xiagong Group) and here too our sales volumes have improved impressively.
We are always on lookout for the new opportunities of forging such alliances and there are several such proposals we are currently working on.
A word about ECEL presence in various states through deployment of its equipment and services on national and state projects.
After sales service and customer engagement form the backbone of our business. We have pioneered the sales service network in the country in 1971. Our network is not only extensive but also very capable, competent and efficient–the attributes which it has acquired by sheer experience of over 40 years.
With a nationwide network of 18 offices and 110 support locations with more than 575 sales and service personnel across the nation, we have created a market support infrastructure which is considered as one of the best in the country.
We are already working on expanding the network further as we need to multiply our capability to serve the customers in the wake of the stupendous growth which we have planned and we will widen our dealership network to 145 locations from the present 110 in the next one year.
Increased imports of the second hand machinery have been a worry for domestic home grown CE players. What could be corrective measures to offset this disadvantage to the domestic OEMs? As an important player; would you like to take up this issue afresh in the forthcoming CEO’s meeting at Excon?
Government should intervene by regulating, or stopping altogether, the imports of the used equipment into India. As I have explained already, we cannot let India to become a dump ground for the equipment which has out lived its useful life elsewhere. It will not be very wise to fritter our valuable and scarce resources by allowing imports of used equipment at the cost of effectiveness, safety, efficiency and environment. All malpractices adopted in such could not be stopped as there would always be loopholes in the policy and process framework. The banning of such import altogether is the only recourse available. We should take some learning in thisregard from the other developing countries in our immediate neighborhood, such as China and Bhutan, which have banned the imports of used equipment entirely.
I hope this issue will get its due attention in the discussions and deliberations at Excon.
What are ECEL plans to participate in the forthcoming mega event Excon to be held at Bangalore, November this year. What are the new products and services to be launched at this mega event from ECEL end?
We will put 15 of our products on display and some of them will be exhibited for the first time at Excon. Our new upgrade of tandem vibratory roller, 2 new models of Pick-n-carry cranes, 4 WD Backhoe Loader "DigMax 4x4” and a new Loader” LoadMax” will be launched at this event. Besides products from our own manufacturing, we will also display some of the products which we are distributing in India in alliances with the global manufacturers such as Manitou, XGMA, Doosan, Comansa-JIE, and Zoomlion.
Some new aftermarket services, aimed especially at providing solutions to customers who still own very old Escorts equipment which have already put decades of performance, will be unveiled.
At present, CE sector has many opportunities due to Government’s increased focused on infrastructure development as well as challenges — troika of rising input costs, higher wages bill and higher interest rates— putting the sector on the back foot. How can these macro and micro headwinds be managed effectively for the future growth of CE sector in the country?
Inflationary pressures on commodities and input costs, scarcity of liquidity in market, rising interest costs and deadlock on many policy fronts are assuming worrisome proportions which could throttle the growth momentum. While factors such as inflation and interest costs are affecting the short-term prospects only as the situation is bound to improve on these fronts after some time, what is more worrisome is the lack of pace on various policies and reforms related to infrastructure sector for ensuring a long-term and sustainable development. There is a lot of contradiction and confusion which exists among various ministries, planning and executing organizations-both at central and state levels. Many a time we see a myopic viewpoint, which insists on frittering the resources on populist schemes, winning over a visionary one which insists on making investments on developing the long- term assets, such as infrastructure.
But having said that let me reiterate that our country’s need of developing infrastructure is undeniable as well as unavoidable and this is the single most reason which would ensure bright prospects for the future growth of CE sector in the country.
NBMCW November 2011
