In line with Mahindra corporate philosophy-RISE--it is indeed to the credit of Mahindra Construction Equipment that within a short period of time it has been able to acquire a technological status wherein others took a decade to reach. To attain this, what enabling milieu the company has created/practiced to translate its vision into a satisfying CE business reality?
RISE has three pillars, Accepting No Limits, Alternative Thinking, and Driving Positive Change. Mahindra's backhoe loaders, EarthMasters, have been designed keeping RISE culture in mind. When we started the EarthMaster project a few years back, we studied the Indian market and found that the paradigm was to provide rugged but simple products. The technology level of the Indian backhoe loaders was behind the ones found in the developed markets. It was clear to us that the market would value fuel efficient and low maintenance cost products. Operator comfort was not adequately addressed in spite of very high operating hours, while contemporary machine information systems and communication technology was not available in the Indian machines. There was no focus on aesthetics too. We decided to buck the trend and brought in the most fuel efficient product with advanced engine and hydraulics technology, improved operator controls with joysticks and a very innovative operator feedback system using text and voice coupled with a low cost telematics system that works on the mobile network. We were not dissuaded by conventional wisdom that Indian customers do not value advanced features and electronics. This approach has worked for us today and we are able to sell our product on performance and features and not on price. Our sales have grown by 48% in the first half of this financial year as compared to same period last year, despite very difficult market conditions.
Mahindra has recently launched a new variant of Mahindra EarthMaster brand of backhoe loaders-Mahindra Earth Master LX catering to various applications. What are its various technical attributes as different from those in the CE market place and how has the market response been to this new variant so far?
After being in the market for two years, we have now increased our portfolio to include products at a lower price points. We expect bulk of our sales to come from our high end VX variant, but to cater to the price sensitive segment we now offer two more variants LX and SX at different price points. This enables customers, who want the basic value proposition of EarthMaster but are not able to or willing to pay a higher price, to buy the brand by omitting some advanced features such as joysticks and REMOTECARE. We also see a clear niche in the market where the side shift feature in backhoe loader is not required, but still the customers end up paying for it despite not putting it to use.
Shortly we will also introduce a 4-wheel drive version of the Mahindra EarthMaster with specialised attachments.
Now having tested waters in BHL segment market; what are company's plans to scale up other construction equipment?
We are looking at a portfolio that includes a range of Earthmoving products as well as materials handling products. Our approach is to enter into new categories only if we feel we can bring a competitive advantage in terms of the product or some other aspect of the value proposition. We have fairly mature capabilities in strategy and product planning which we use to search for an opportunity in the market and then work purposefully to deliver a differentiated offering in that space. You will see us entering into a new category in the next financial year.
A word about your dealership network, pre - and post-market technical services, spare parts facilities, and steps to create a strong vendors base.
We have built a dedicated channel for construction equipment. Most of the M&M dealers have been selected keeping in mind their background, ability, previous experience and also their suitability in this line of business. We also have quite a few dealers who are new to the M&M family. We have a total of 44 dealers today with over 150 sales and service outlets.
The dealer network is supported by Mahindra & Mahindra's twelve Area Offices along with a central warehouse & 10 regional warehouses for stocking spare parts. We have a well equipped customer call centre which provides support in nine different languages.
M&M's strong relationship with its vendors has always been a source of competitive advantage. We have been able to leverage the vendor base of our Automotive and Farm Equipment Sectors to develop a product that is high on performance and also provides advanced technology at an affordable price.
What has been the impact of present slowdown spell and the fall of rupee on Company's business performance this year?
Currently, the scenario in the CE industry is challenging and without any growth; however India's equipment penetration level relative to our population is far below global levels. Hence India continues to be a high potential market for construction equipment and M&M's investment in this segment will continue as planned originally. As M&M is still in a stage of penetrating the backhoe loader market, we were able to show a very high growth rate of 48% in the first half of this financial year without being affected by the fall in overall industry volume.
The fall in rupee has resulted in increase in the materials cost since some of the components are imported.
How is the company's Remote Care Programme proceeding and industry's feedback on this?
The summer for the CE market has been a dull period. Winter months could be more harsh, say the analysts. Will spring time next year bring the much needed cheers in the CE market? What is company's assessment and how CE market will unfold next year?
In next few years, size of the Indian CE industry, by volume, will begin to approach that of Europe. India along with China and Brazil is poised to be one of the three large & growing CE markets globally. This has led to various new players entering the industry. Even though current year is challenging, we see good potential in the industry and continue to invest steadily.
What are company's plans to participate effectively in the mega CE event Excon 2013 to be held in Bangalore and the company's new products, services and marketing resolves proposed to be unveiled at this mega event?
EXCON is the showcase event in India and we look forward to making the most of this platform.