Portable Energy Division is one of the prominent & biggest divisions of Atlas Copco's Construction Technique business. The division manufactures and develops wide and largest range of portable air compressors, high pressure boosters, generators, light towers, and submersible dewatering pumps. With production centers located in Belgium, Spain, India, US, China, and Brazil, these products are offered to many segments like quarry & mining, construction, water well drilling, oil and gas sectors. With growth of core, industrial and general infrastructure in India owing to the requirement of the burgeoning economy, Atlas Copco is looking to leverage its market presence of the Portable Energy division.
Mr. Norbert Paprocki, President, Portable Energy Division is looking towards the growing business opportunity from the Indian market as truly high potential to enhance its business. However, he also finds challenges galore towards expansion of the business. The challenges include, investigating options for present and future growth, reinforcing multi brand building strategies, supply chain and product development. Not to mention, strengthening research and development competence to produce products based on the requirements of the local customers, so as to leverage the brand image. In an interaction with
P.P. Basistha during his recent visit to the newly commissioned Pune plant, Mr. Paprocki, highlighted the business strategies of the portable energy division to take on the challenges offered by the Indian market, while ensuring business and profitability growth of the company. Excerpts:
While you find the Indian market offers large scope of business expansion, although beset with challenges; do you find the challenges in India akin to the emerging markets or particular to its origin in India?
I would rather put the perspective of challenge as long-term opportunities in India that is akin to any other emerging markets, where all the sectors may not be growing at par. This has been our experience in India, ever since Atlas Copco's existence in India over 60 years. While we saw boom in construction and mining that drove phenomenally our portable energy business few years back, there has been a dip in industry segments related to our business due to various issues related to the local environment. The lopsided demand which I should say is the challenging factor, has resulted in creating and rejuvenating the brand identity and in appropriate products positioning for the requirement of the heterogeneous Indian market. The challenge has been to see that business grows and commensurately it generates decent profits. Being a manufacturer of premium products, as a reason, we have retained our focus on niche markets in India by placing products that ensure total minimization of ownership costs. The business development strategy has been followed by placing products for the niche segments. For generators, we have kept in mind the mining & construction sector where there is a requirement of captive portable power source, portable light towers for road highway projects and portable compressors for big construction & mining projects.
To place the appropriate products, are there any necessary improvisations being carried out, specifically taking into consideration extended usage of the machines, adverse operating conditions, improper maintenance schedule, and deficient knowledge of operators in India?
Yes, we have been carrying out modifications to make the products suitable to Indian conditions, yet retaining their superior quality. Modifications have been made by carrying out design changes in the products. We make the products simple to operate and maintain.. With underlying focus to bring down total ownership costs, we focus on enhancing the productivity and lowering the fuel consumption and thereby ensuring the overall costs are in control.Since, we also export lots of compressors manufactured at our Chakan plant in Pune to Africa, Australia and other countries, we ensure that Indian engines fitted can be operated and maintained in those countries as well.
What are the product support services and operators' training being offered by Atlas Copco? To ensure that our equipment deliver high on uptime and minimal maintenance, based on extended usage of machines in India, we are supporting the products on site through our 40 dealers, providing parts, components, training, and maintenance support. To ensure timely parts availability, we have recently appointed two logistics service providers who render exclusive tailor made solutions based on our requirements for parts availability. Making equipment owners acquainted to carry out appropriate maintenance, so as to get the benefit of minimal total cost of ownership is a challenging task in India, especially with the unskilled labour who are operating the machines We are continuously organising the trainings at site so as to build enough competence at sites which will contribute to the customer's overall business and inturn will give us goodwill in the long run.
With focus on volumes growth and profitability, what are your plans on localization, vendor development, and commensurate product availability?
We have been focusing on localization to make the products affordable in our old Dapodi plant and we have continued the same in our new Chakan Plant to localize the components We have got a comfortable vendor base created over our existence in India in the last 60 years. New vendors are appointed in accordance with our own selection standards. The existing vendors are quite capable of developing new products based on requirements. Assured off take of parts from our vendors, ensures they are able to secure their mid and long-term investments with us. I would like to mention here that when we support our vendors through investments and products off take, we dissociate ourselves from them if found they are not undertaking commensurate investments in upgrading their production systems. Appointing new vendors and shelving association with the existing ones is a continuous process. Hence, we ensure the gap is filled by production and quality optimization by the existing vendors. For timely and required product availability, we have started our new facility in Chakan, Pune, currently manufacturing compressors. Presently, 25% of the capacity of the facility is being utilized, with scope for further utilization depending on the rise in demand. The production systems in the facility can be reconfigured based on the requirements of the market.
Based on volatile demand situation; how do you ensure business viability of your dealers? How do you look towards second hand business in India? Since our dealers distribute wide array of products such as compressors, light towers etc from our stable, they get naturally cushioned from business risks that may arise owing to lopsided demand from any one segment. We have not seen too much downward spikes in our business volumes which ensures that our partner's business remains viable in a long term perspective. Atlas Copco group has many other divisions and we try to look for synergy business and extend the product ranges to our existing partners as a first choice which further ensures that their viability sustains. We look for sustainability in whatever we do, be it operations, profitability, productivity, partnerships, etc We provide support to our dealers through timely parts support and adequate training to their personnel, allowing them to offer appropriate solutions to the customers. Globally we are also investing in used equipment business but in India, we have not invested in this business. We understand that the Indian Customer takes pride in owing the machinery rather than renting it for a long time as they are emotionally attached to their machinery. Further to add here, in India, most of the used equipment business in unorganised, owing to complex tax structures. Another reason, extended usage of the machines here, owing to larger volumes of jobs, they are rendered commercially unviable for reconditioning and sales. Hence, currently we are not looking at selling second hand or used equipment business as a viable option in India.
