Metso Bullish on Investment in India
Metso is an international technology corporation that serves customers in the pulp and paper industry, rock and minerals processing, power generation and other selected industrial sectors. Metso Corporation comprises three business areas: Metso Paper, Metso Minerals, and Metso Automation.
In 2007, Metso Corporation’s net sales totaled over EUR 6 billion. It has business operations in approximately 50 countries, and has almost 27,000 employees. Its biggest production facilities are located in Finland, Sweden, the United States, Brazil, China, France, Germany, South Africa, Italy, and India.
Metso has been in the news regularly for the last six months or so with ongoing developments like setting up of an R&D centre in Tampere, Finland, big orders obtained from companies in South Africa, Brazil, and Canada. What is more brewing at Metso’s end which can be shared with us.
Metso has witnessed continuous solid growth in emerging markets, which last year accounted for 43 percent of all orders received. All in all, Metso’s business volumes in these markets have more than doubled since 2004. We believe, it is only a matter of time until these areas account for the majority of our business. We expand our operations in areas like China, India and South America where our customers are experiencing strong growth. India is a high priority market for Metso and our business has grown rapidly in the past five years.
What are Metso’s growth plans for Indian market?
India is one of Metso’s fastest growing markets. The country ranks very high in our strategy which emphasizes the increase of our global presence. Apart from catering to the domestic customers, we are considering steps to establish India as a sourcing base for its operations in Asia.
We expect orders from India to grow significantly in the next three years. So far, a large part of our business in India comes from the road development sector. In the near future, we expect a new wave of business to come from emerging areas such as development of Special Economic Zones and other real estate projects, airports, and commercial aggregate segments. Most recently, our growth has been rapid in India.
Metso’s Growth Strategy in India has been largely successful due to factors such as local management, continuity of investments, flow of technology and focus of service here.
What are the kind of investments have you made in India till date?
We have invested close to 41.7 m Euro in the last one year alone. Our recent investment in India is towards expanding our manufacturing base. This also includes investment of Euro 30 million by setting up Metso Park. After further study of the growth trends in India, Metso will make more investments. Apart from catering to the domestic customers, Metso looks at India as a sourcing base for its operations in Asia.
What is Metso Park and what is the progress on the same?
Metso is setting up a new 49-acre multi-functional industrial facility called Metso Park, involving an investment of close to EUR 30 million. This will be set up in Alwar, Rajasthan, and is one of the biggest organic growth investments by Metso Corporation.
A first of its kind for Metso, this industrial park will not only cater to the demand of the Indian customers but could also help meet sourcing demands of Metso companies in other countries. The Metso Park facility will be fully operational by the year 2010 and we plan to eventually employ close to 700 people. The new facility will host both Metso’s own operations and those of a few select partners. Metso will have partners of both Indian and European origin operating out of Metso Park. The Metso suppliers and partners will make additional investments into the Park which will be over and above the investment by Metso.
How important is Indian market in your Asia growth strategy?
India is a large market with high economies of scale with local market characteristics. Metso’s strategy is to establish a substantial local presence in all the main markets to continuously enhance our service to our customers.
We believe, India will play a vital role in the development of Metso’s global business. We are considering steps to establish India as a sourcing base for our operations in Asia and are strengthening our manufacturing and operations base by setting up ‘Metso Park’ in Alwar. This industrial park will not only cater to the demand of the Indian customers but will also help meet the demands of Metso companies in other countries. India today is ahead in Knowledge Process Outsourcing and it will become a strong basis for our expansion here, so whether manufacturing is increased or not India would stay ahead in global engineering and research outsourcing.
How much do the services business contribute to your overall revenue?
When we enter into a relationship with customers, it’s a partnership. After joining hands with our customers, our relationship is built on extensive know-how and longterm commitment where Metso’s service capability plays a big role. Metso’s goal is to provide solutions and services that improve the productivity, usability, and quality of their customers’ production processes. Our pursuit of improving the productivity and competitiveness of our customers’ industrial processes through their entire life cycle is built on three corner stones: in-depth knowledge of our customers’ core processes, automation expertise and large base of installed machinery and equipment.
In an emerging market like India, the service becomes even more imperative. One of our key goals in 2008, is to enhance our services business in all customer segments and geographical areas. Our services business in Metso Minerals, our largest business area in India, has grown around 50% in 2007 over the previous year. Metso’s total share of services business in 2007 was around 33% of the net sales and our goal is to grow the business over 10% annually.
As an infrastructure company— what initiatives are you taking to provide environment-friendly solutions?
Today’s key global sustainability challenges are directly linked with the everyday work of Metso and our customers. We are using our talent and expertise to advance industrial sustainability development all around the world. A significant portion of our business already involves environmental technology and our intention is to focus our R&D efforts on this front. To reduce the environmental load of our customers, we are focusing on clean-tech innovations, energy efficiency and optimal raw material utilisation and on actively promoting environment-friendly solutions. This comes from a culture of ecoinnovation within Metso. In 2007, over 60 percent of net sales came from our environmental solutions.
Can you share some details in terms of your individual business areas and how your customers in India and across world can benefit from it?
Since Metso set up its own operations in India in 1993, it has served the Indian pulp and paper, power, mining, construction and civil engineering industries through its three business units Metso Minerals, Metso Paper, and Metso Automation.
Metso Minerals’s key customer areas in India are quarries, aggregates production, mining industry, steel mills, construction, recycling and waste management. With nearly 500 customers, Metso Minerals has over 350 crushing plants installed in India in the past decade, including the country’s biggest crushing plant and iron ore enrichment plant. The number of employees of the company increased from 213 in 2002 to more than 600 in 2008. We have recently bagged some big orders and are involved in some key infrastructure projects.
Metso Paper is the leading fullscope supplier of pulping, papermaking and power generation technologies for the pulp and paper industry. Since the mid-1980s, Metso Paper has been supplying fiber systems, paper machine rebuilds and components to the Indian market. The Company’s biggest customer sector in India is the pulp industry, which is actively investing in new fiber lines. Also our power generation solutions are gaining ground and we are planning to establish ourselves with the recent JV with EPT Engineering Services in Chennai.
Metso Automation is the world’s third largest supplier of automation solutions for the pulp and paper industry. Metso Automation, in technical association with BHEL, serves big Indian customers in the energy sector. With more than 150 customers in India, Metso Automation has delivered the max- DNA © Distribution Control Systems (DCS) worth over 12.7 mn euros in India.
Our Minerals business however is the strongest so far in the country due to high demand but in future, we expect our other businesses also to do well.
Please tell us something about your new R&D Centre set up in Finland and its mandate to strengthen the knowledge base in crushing and screening technology and testing services at the corporate and regional level, where its facilities operate.
Metso Minerals’s Research Center in Tampere represents an investment totaling some EUR 3 million and is the largest single investment that Metso Minerals has made in research and development to date. The Center aims to strengthen Metso’s global knowledge base in crushing and screening technology, and research and testing services which benefit global construction and mining markets. The Center includes a state-of-the-art test facility with a fully-equipped rock laboratory for analyzing rock samples. Testing routines will enable Metso Minerals to design crushing and screening processes that are a precise match for customer needs in terms of process capacity, energy efficiency, end-product characteristics and yield. The new center will also shorten new-product development lead-times. It will eventually employ 20 people. The driver behind these investments is strong global demand for efficient and environmentally sound crushing and screening solutions and the overall level of activity in the construction and mining markets.
With construction and mining market becoming increasingly global and India being a major market for Metso, how does Metso blend its global manufacturing policies into Indian market to serve here in terms of energy conservation, environmental safety, ease of operation and other parameters beneficial in Indian conditions?
Some 60 percent of our business can be considered environmental business as defined by the OECD. Our environmental technology comprises products, solutions and services that improve the environmental performance of our customers’ production processes. In environmental technology, the R&D focus is on renewable energy and bioenergy, energy efficiency, water management, recycling and process optimization, emission management and life cycle services. In the services business, we are using advanced materials technology in our new spare and wear parts products. We are seeing great long-term growth potential in environmental technology. In 2007, about one-third of our R&D efforts were directed to this area. In the years to come, the share of environmental R&D will definitely increase and we must also more actively promote our solutions and services on this front. At the same time, we are seeking new ways to cooperate with external research institutes and other technology forerunners.
As world’s leading company in our field we understand that the coming years will require higher performance from equipment and operators, but also greater sensitivity to environment constraints. Exploring for minerals and extracting and processing them have an inevitable impact on our environment. We see a proactive approach to these challenges as central to our own and our customers’ long-term competitiveness.
What are Metso Minerals’ future plans for India? With already three state-of-the-art facilities operating in the country, are there plans to add more or plans to make Indian manufacturing facilities as an export hub for the parent Company?
India is a priority market for Metso and our business here has grown rapidly in the past five years. We aim to efficiently cater to the needs of domestic customers here and simultaneously we are considering steps to establish India as a sourcing base for its operations in Asia.
Our investments in factory and foundry in India will increase the annual production capacity to 500 crushing plants, 1000 vibrating equipment, 1000 slurry pumps and foundry capacity to 7000 tons. We expect orders from India to grow significantly in the next three years. We are expecting a new wave of business to come from emerging areas such as development of Special Economic Zones and other real estate projects, airports, and commercial aggregate segments.
What are the current growth drivers for Metso Minerals in terms of crushing and screening plants sold so far and how do you see the evolution of Indian market in its favor vis-à-vis competition in current product range?
India is the fastest growing market for Metso Minerals. We have grown over 300% in the country over the past four years. In the last five years, we have grown from 237 employees to 700 employees.
With nearly 500 customers, Metso Minerals has over 350 crushing plants installed in India in the past decade, including the country’s biggest crushing plant and iron ore enrichment plant at (location). The Company’s number of employees increased from 213 in 2002 to more than 600 in 2008. We have recently bagged some big orders and are involved in some key infrastructure projects here. We expect to grow rapidly in the Indian market contributing to the success of our customers.
How does Metso Minerals help its customers in India to select right type of equipment to suit their varied and specific requirements?
Our purpose statement– Engineering Customer Success– reflects the direct correlation between our own talent and expertise and our customers’ success. We enhance the competitiveness of our customers and advance sustainable industrial development. We aim to deliver efficient, high-quality and environmentally-sound solutions that meet our customers’ needs. Our efforts are supported by our global network of experts, close and long-term collaboration with customers, and our solid technology and process know-how. We deliver our purpose through our values: customer success, profitable innovation, professional development and personal commitment. Our success is based on customer satisfaction, continuous improvement of our own operational excellence, a global presence and technology leadership. We aim to strengthen our presence near our customers, expand our services business and better utilize our extensive environmental technology expertise.
Are Government’s business and economic policies conducive to the global business operations benchmark of Metso Corporation?
India is already leading to show the way by becoming world’s leading service provider. The increase of service share in GDP has been most impressive. I believe this is the right way to balance service and manufacturing sector in a large population country like India.
Investing in a country’s physical infrastructure can contribute to economic growth, improve human welfare and has considerable potential for directly increasing standard of living. The development of infrastructure requires large investments that cannot be undertaken through public financing alone. Public-Private Partnership can do better in the development of infrastructure, not only because of the size of investments required but because each brings valuable and necessary interests to the project as a consequence. I believe several initiatives have been undertaken during the last 3-4 years to promote PPPs in infrastructure sectors like power, ports, highways, airports, tourism, and urban infrastructure. These initiatives are in the right direction and offer opportunities for us to participate in India’s infrastructure and industrial development.
NBMCW September 2008
