Kobelco one of the top companies in the world, has entered India's construction equipment sector with definite plans to set up manufacturing facilities in the next 12-18 months. It aims at leadership role in India. It has brought one of the most advanced line of excavators into India with plans to introduce other type of equipment subsequently, say Vikram Sharma, President & CEO, and Kenji Sakamoto, Executive Director, Kobelco Construction Equipment India Private Limited in an interview with SKK.
At the outset, it would be relevant to ask what prompted Japan’s Kobelco to make its entry into Indian construction equipment sector. What challenges it poses to a new entrant like Kobelco to market its products and services in the present competitive construction equipment business environment?
Kobelco is amongst the top companies in the world in the field of Hydraulic Excavators with a very strong presence all over Asia, Europe, and America through its joint venture partner New Holland. It is but natural therefore that Kobelco has entered India, due to the great potential that this market offers.The challenges that we face in India, are the ones faced by any new entrant, namely the existing brand loyality of our competition, development of an effective distribution channel, and creation of strong brand and presence, in a vast country like ours.
What is your overview of the technological developments worldwide in the construction equipment sector and how these developments in the products and services are being incorporated to turnout new improved versions to benefit users?
One of the most prominent focus area in technology development, is the requirement of Efficient Friendly Machines. The need of the hour is to produce machines, which give better production and productivity, and at the same time be economical in terms of fuel consumption. Such machines environmentally save natural resources such as hydro carbon fuels, as well as reduce polluting emissions. Kobelco hastaken the lead in bringing the Tier III Environment Compliant Engines, coupled with various technologically advanced control systems, which optimize the load on the engine and the system, so as to meet all these requirements. Our machines would be a great boon for the domestic users, since they will give increased output at much lesser fuel cost. Also consistently Kobelco machines provide the greatest comfort to the operators, and those who are working in the proximity of the machine through low sound emission.
These advantages are already being felt by users, to whom we have supplied these machines in India already. The segment of users are spread over Mining, Road Construction, Metro Rail Systems, Large Excavations etc.
In simple words, Kobelco has brought one of the most advanced line of Excavators into India.
What major segments of construction equipment are set to grow in the country in the wake of current infrastructure boom?
The current infrastructure boom in India is happening all across, in all major segments of earth moving, material handling and construction. Therefore, it is the most happening time for all types of construction equipment. However, in any of the projects a major parts of the work is in terms of earth handling, and therefore the Earth Moving equipment are likely to see the largest growth in terms of numbers and market penetration.
Please tell us something about Kobelco, its international presence and presence in India; Company’s product range and services and how these have an edge over others in terms of ease of operation, operational efficiency and overall cost effectiveness?
Kobelco Construction Machinery, Japan is a subsidiary of Kobe Steel and has its presence directly in all parts of the world. They are represented with New Holland in Europe and America, through a joint venture. As mentioned earlier, Kobelco is amongst the top few selling brands in the world due to its high focus on 3 E’s of Enhancement, Economy & Environment. The Indian, company, Kobelco Construction Equipment India Pvt. Ltd., is a joint venture between the two giants from Japan, Itochu Corporation and Kobelco Construction Machinery. Currently, we have launched the 20T & 35T Hydraulic Excavators, and are shortly going to bring other big excavators, followed by the Midi’s. Subsequently other type of construction equipment will also be planned.
In terms of cost effectiveness, we have done testing of our equipment with equivalent competiting range, both in Japan and India. I am very happy to inform that we have had much better Fuel Consumption (10-15% better than competing brands tested), along with an equal percentage of higher production and productivity. Our machines are provided with Air Conditioned Cabins and have a smooth response to the controls.
What market share your company is looking for in the next two-three years. Do you have plans to set up manufacturing facilities in India and use it as an export hub, apart from serving the domestic requirement?
We have very definite plans to setup manufacturing facilities in India, which we would take up within the next 12-18 months. Currently KCM, Japan is extremely busy with their 2nd Plant construction in Thailand. In terms of our market share plan in near future, we would certainly aim for leadership in the category that we operate.
India is a vast market—how your company plans to have an efficient countrywide distribution network of dealers, after sales and support systems to render your clients a comprehensive service?
We have established a very effective distribution network of Dealers, who are already operational in 21 States. Our Product Support is headed by a highly experienced Japanese Director, Mr. Yamakoshi who has a sizeable team of Service and Parts personnel located across the country. We are also headed by Mr. K. Sakamoto, Executive Director, who has had experience in Construction Equipment field in Africa, Middle East etc., supported by Mr. Akihara, Director Marketing. Through the vast combined experience of our team, Service and Parts support has the greatest focus.
Training also takes a very high priority, in the culture of Kobelco. We carry out Level – I, II III programs for our and Dealers technical personnel. It is also mandatory that adequate numbers. Of Dealers Technical Personnel get qualified upto Level – II. Also the Dealers have to stock until these 2 conditions are met, we do not start the sales activity in his territory.
Lot of churning is taking place in the industry to widen its business platform and product portfolio. How these developments would augur well for the further growth of the construction equipment sector and improvements of its technological status?
Yes, there is lot of churn taking a place in the industry, with many new international players entering the Indian market, as well as the existing ones increasing and improving the product range. These developments would catapult the Indian Construction Equipment Industry to the next generation of machines, which would benefit the customers immensely. The latter technology machines are certainly more productive, and would therefore enable projects to be completed faster, enabling new ones to be taken up.
What enabling policy provisions and support is needed from the Government to put the construction equipment sector on fast track?
One of the focus points of the government should be to some how restrict the entry of outdated and much used equipment. This has been taken up many times by our industry association, since we find that such machines are being regularly imported by many small traders, mostly through under invoicing, and also without any after sales product support facilities. Such equipment causes loss of productivity and finally money down the drain for users.
The other important factor to look at is that construction equipment generally form 15-25% of any project cost. The duty structure for imports as well as domestically, should be kept as low as possible. Currently, most of the states impose a 12.5% VAT on this equipment while only handfuls are at 4%. This should be uniformly reduced to 4% or lower, all across.