Soilmec's Future Business Strategy is to Offer Technologically Competitive SolutionsDavide Panzavolta
Soilmec's Future Business Strategy is to Offer Technologically Competitive SolutionsGiovanni Micheletto
Soilmec's Future Business Strategy is to Offer Technologically Competitive SolutionsFederico Pagliacci

Italian piling and foundation equipment manufacturing major Soilmec, has carved a niche in the Indian construction sector. The company has been supplying wide range of foundation equipment to varied core infrastructure projects like metro, rail, thermal power, steel plants, high-rise building etc where foundation equipment have been the most critical component. Soilmec is planning to consolidate its market position in the construction sector as the foundation market in India is bracing up for competition. With their advanced technologies, company is looking to catalyze the demand and in accordance with this, they are planning to introduce newer piling concepts in India pertaining to sheet piling, micro piling, and CFA. Partha Pratim Basistha had a round table discussion with top Soilmec Personnel involving, Giovanni Micheletto, Vice President & Marketing, Davide Panzavolta Area-4-Indo-Asia Sales Manager & Federico Pagliacci, Development Vice President to know their business strategy to take on the competition in India through offering newer technologies and customer support. Excerpts of the discussion.

Soilmec's observation on future demand of foundation equipment from Indian construction sector
In past five years, there has been a big change in the Indian foundation market. Few years ago, the concept of hydraulic piling rigs were relatively unknown to the Indian construction sector barring few major users. Presently, many of the government tenders are floated making it mandatory for usage of piling rigs. There are good number of private infrastructure projects coming up which are putting in good demand for quality machinery as well. Private infrastructure project developers and contractors executing the projects are putting in demand of foundation equipment that are safe to operate. This is one of the major demand trends of foundation equipment from the Indian construction sector, which is asking for large number of machines that are highly productive and safe to operate. And this is where Soilmec would continue to play a vital role in meeting the demand with its technologically advanced machines.

Demand estimate in terms of volume
Soilmec's Future Business Strategy is to Offer Technologically Competitive Solutions
According to our own observation and that of other manufacturers, presently the size of the piling rigs in India is estimated to be 120-150 piling rigs. This is higher than few years back when the size of the market in terms of volume was only 10-12 piling rigs from the Indian construction sector. Now with demand fundamentals remaining strong, volumes of piling rigs in India are well likely to grow. However, it is felt that the growth pace would remain the same. Now with our advanced technologies, we are looking to catalyze the demand. In accordance with this, we are planning to introduce newer piling concepts in India pertaining to sheet piling, micro piling, and CFA. These were the technologies which has been developed and used in Europe many years ago. As the projects are becoming more complex in India, we would plan to introduce these technologies.

Nonetheless, usage of piling rigs is still relatively a new concept in India despite large number of complex projects coming up. What would be Soilmec's initiative to disseminate information for the increased usage of the machine among contractor's fraternity.
There has been good deal of initiative on Soilmec part to promote the concept of piling rigs in India. The initiative taken has led to the growth of piling rigs in India. I would like to highlight that when Soilmec started selling its piling rigs in India few years back, the machine was sold along with Soilmec's own skilled operator. The operators were trained at Soilmec's own training school in Italy. Putting in Soilmec's own trained personnel actually helped in promoting our own piling rigs in a big way in the Indian construction sector. Operation of the machines through trained operators, enabled the Indian contractors to understand the utility of the machines and acquire knowledge on potential application areas in construction where the machine can be used. Deployment of trained manpower brought in positive trend in the foundation market leading to further usage of the machines. Earlier, the approach of the contractor was to get a crane operator to operate his piling machine. This proved to be counterproductive for the contractor from the safety and productivity point of view as well. Not to mention, it deterred the contractor in fully gathering knowledge in understanding the application of the piling rigs. With Soilmec's initiative, this trend has been arrested to a big extent. Our perceivability has altogether led to the development of piling rigs market in India.

What has been your initiative to provide sustained information dissemination as a part of customer support?
Information dissemination on the appropriate application of the machine has been our core business strategy to promote our piling rigs. This as mentioned, has been through providing skilled operators, trained in Italy. With the development of piling rigs market in India leading to demand of machines, we have created a strong pool of Soilmec's own trainers based in India itself, those who would train the operators for new machines being sold in India. Pools of our own trainers have been made available to prevent any possible equipment downtime, as well known that piling equipments are costly piece of machinery.

What are the newer piling technologies being planned to be introduced by Soilmec in India?
Soilmec's Future Business Strategy is to Offer Technologically Competitive Solutions
We are laying emphasis to introduce CFA piling technology in India. This is a technology that has been used and proven in Europe for long. We had presentations on the CFA technology in seminars recently in India and the result is very positive. As an initiative to promote the technology in India, we decided to supply and demonstrate the capabilities the technology could deliver to one of our existing customers free of cost. CFA technology can dramatically increase the production rate of piling as compared to conventional piles.

Brief on the technical attributes of CFA technology
The technology can perform in every kind of soil irrespective of their characteristics without the use of bentonite. This can help in cutting down on allied machinery required pertaining to tanks and other machinery, not to mention the management cost, thus helping to cut down on overall piling costs. Essentially, it is a dry pile that can be used to pour the concrete simultaneously during extraction of the soil. CFA technology can perform with less manpower. This can yield cost productivity to the contractor. Environmentally, the technology is also quite safe. This is as because the soil that has been extracted is not contaminated with bentonite. It can be disposed safely without causing any harm to the environment. However, we would like to point out that the machine has its limitations to perform in hard rock conditions.

In order to make your products and solutions cost effective-are there any initiative being planned to localize your products and carry out possible vendor development for the same?
The machines would continue to be imported from Italy. There are no plans to manufacture or localize the machines in India as of now or in the immediate future.

Foundation equipments are expensive machinery. The machines have limited applications at core projects during the entire job cycle. As a part of customer support, what are the solutions you are providing your customers to have maximum return on investments for the equipments.
Maximum return on investments on the machine would depend on the extent of job volumes the contractor has in hand. We understand with sufficient job volumes in hand in India ROI is not a big issue. As an equipment manufacturer, we have limitations to provide requisite knowledge to the customer to have maximum return on investment at the jobsite. We can only support the customers extensively with operators training to have maximum equipment uptime.

With Soilmec's prolonged technical competence as understood what would be your take on competition. In the long run, would you be identifying yourself as a premium equipment manufacturer or a mass manufacturer?
Soilmec's Future Business Strategy is to Offer Technologically Competitive Solutions
Our present equipment numbers working in various jobsites across the country is the answer. Based on our long expertise, we have been able to research and develop foundation equipment with cutting edge technology suiting varied customer requirements. Our long expertise, we perceive would go on to reinforce our market position in India. As competition gears up, we would plan to develop technologically competitive products dovetailed with solutions for the Indian construction sector. Soilmec's product portfolio is quite extensive to meet requirements of varied customers. An offering which even our nearest competitors would not be able to offer.

We would try to identify our- selves as a premium equipment manufacturer based on cutting edge technology to provide maximum equipment uptime to customer. However, this would not mean in bringing technically complicated machinery for India. We would look forward to bring in simple machines.

For better customer support and equipment availability-would you appoint dealers?
No, not in the immediate future because equipment requires good deal of concept selling for its promotion and technological support first. With our own pan India network, and skilled workforce of around 50 heads, we are able to perform the job quite successfully. We have three main warehouses for stocking spare parts.ar we have been able to attract talent from Industry. We started our training centre prior to commencing commercial production. We have highly skilled trainers both for service personnel and machine operators. We are running various training programme to increase efficiency.

In developed countries, the share of equipment sold to rental companies is over 50%, whereas in India it is below 10%, what are the key issues for rental business not taking off in India and where do you see rental business in the next couple of years? What enabling business environment needs to be created for its future growth?
Equipment rental business is currently pegged at 7 to 8 per cent of the total construction equipment industry. The developed markets have rental penetration between 50 to 80% of the total construction equipment sold in their domain. India is still at 7 to 8 per cent rental penetration and we are looking at the industry growing to the 15 to 20% in next couple of years. The more the rental penet- ration, the more tilt towards rental.

The medium term outlook for construction equipment rental is healthy and robust, especially from the roads, power and ports sectors.

Interstate transactions for equipment and virtual are both an unwanted stress and challenge to any services company.

Used equipment trends is also picking up in India, and few auction companies are making in roads here, is this a threat or an opportunity to the manufacturers?
While there is good potential for used equipment in India, the market size of which is estimated at about three times the primary market, India does not have an established common platform for trading in used equipment. Again, the current rental penetration in India at around 7 to 8% remains low as compared to the global standards of 50 to 80%. An average of 30% of the equipments sold in Europe and over 60% in the United Kingdom are to rental operators. A robust rental market enables reduction in investments in projects by outsourcing the equipment requirement (including spares and services) and improving capacity utilisation of equipment. The key equipment in the rental fleet in India currently are backhoe loaders, pick and carry (PNC) cranes, excavators, motor graders, and vibratory compactors.

While a number of organised equipment banks have entered into the fray with large fleets (of over 100 equipments), the market continues to be serviced mainly by small fleet owners with less than 10 equipment each. However, there are various structural/ operational concerns that need to be resolved for the Indian equipment rental markets to evolve. Concerns include lack of synchronisation of inter state tax policies (on movement of equipment between states) and logistics of the equipment. Further, the dominance of unorganised market participants that operate on cash transactions (on rentals, thereby avoiding taxes and enjoying an unfair advantage to the larger rental operators) prevents the evolution of a more organized system.

What are the critical policies issues plaguing the CE industry in India that need to be addressed on a priority basis? Also how do you propose to tackle them at the macro as well as micro level for the balanced growth of construction equipment industry?
CE industry is facing acute shortage of industry specific trained manpower. This issue requires government support in terms of policy initiative supporting academics for the purpose. Complexities in interstate transaction and disparity of taxes are one of bottleneck for seamless transaction between states. One of the area which is highly untapped in our industry is leasing of equipment, which otherwise will give boost to business and also will generate mass employment in the industry. Clarity in policies and incentive for this sector is highly called for to give much required boost to this sector. Income Tax norms wrt capital assets need to be more user-friendly to encourage buying.

However, we are doing all possible from our end to overcome with these hurdles through our innovative marketing schemes benefiting customers, a push in above areas are required as policy measure from Government too.
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