Your company has been an important player in the Material Handling Segment and now you are foraying into Crushing, Screening and Asphalt Mix Plant and Machinery business. What is the rationale of this move–is it a product restructuring process plan or a bigger diversification plan to play a pivotal role in the construction equipment market?
The core activity of TIL has been in the arena of infrastructure development. It makes business sense to expand the spectrum of products that cater to infrastructure development. Hence our foray into Asphalt Mixing Plants, Crushers and Screens is a logical expansion to play a pivotal role in construction equipment.
What are the important technical attributes of your new product line different from those already in the market including incorporation of latest global technical standards?
As far as Hot Mix Asphalt plants are concerned, our product viz. the Double Barrel Hot Mix Asphalt Plant would be a technological pioneer for India. A patented technology by Astec Inc of USA, the plant will be a continuous drum mix type and brings the famous Double Barrel to India. It is a technology that is not only state-of-the-art but can also be categorized as Green Technology. With the focus shifting to (i) reduced cost of construction, (ii) conservation of asphalt and aggregate, (iii) preservation of existing pavement geometrics, (iv) preservation of the environment and (v) conservation of energy, the double barrel technology will be a pioneering effort in India with focus on
Reclaimed Asphalt Pavement (RAP) – the use of RAP will help the contractor recover 100% of the aggregate and residual bitumen.
Warm Mix technology – With a focus on saving energy, the warm mix technology will help produce hot mix at much lower temperature in the range of 110-130 deg C as against the conventional temperatures of 140-160 deg C.
With respect to Crushers & Screens, we would introduce unique products and features.
With the increasing construction activity, the availability of sand is a constraint in many states and the focus is fast shifting to M sand. ASTEC technology focuses on the screening of the aggregate dust from the crusher using frequencies as high as 4200rpm. The dry screening process is definitely an advantage over the wet classification process and also saves the customer the hassles of handling wet silt and requirement of large quantity of water.
The crushing solutions are the state-of-the-art from Telsmith and KPI– JCI which will focus on reliability and deliver to the customer maximum production at optimum power consumption. The introduction of the hydraulic Jaw Toggle adjustment as against the conventional spring adjustment with a replaceable toggle end reduces maintenance cost and enhances productivity.
Please tell us in brief about your manufacturing facilities, their locations and the production plan for this product line?
We are setting up a greenfield plant at Kharagpur, about 120 Kms South of Kolkata on NH 60 on a land of about 40 acres. The unit is already under construction and is expected to be commissioned by mid 2011. The factory shed will be about 22,000 sq mts and will incorporate the latest in terms of manufacturing architecture. The entire process will be in-line and based on Demand Flow Technology and Lean Manufacturing principles. This plant will be a hybrid plant manufacturing Hot Mix Asphalt Plants, Crushers and Screens, Port Equipment. But over a period of time, we intend to diversify the products into dedicated plants as the volumes mature. We are also acquiring state of art Plant and Machinary for the process.
TIL has acquired two sites at Kharagpur. One measuring 100 acres which is already in our possession and another of a total of 200 acres of which 160 plus acres is already in possession. These assets will get utilized over a period of time in creating an industrial complex with several manufacturing facilities dedicated to product lines.
In view of initiating new product line—what would be the company’s focus on R&D and related technical services support system for product development program in coherent with different niche business areas?
With respect to the new product lines, we would bring a comprehensive range of equipment from global leaders. For example, in the area of Crushers & Screens, we would not only manufacture Primary, secondary and tertiary crushers and screens, but also provide static plants, mobile plants, and portable plants. All this call for intensive product engineering in terms of making the product India – compatible apart from successful indigenization of these products. Since much of the technology is new, this poses its own challenges for product indigenization and product updations. This implies tremendous focus on developing in – house engineering capabilities and also on product improvements as things evolve. We would naturally look at the possibility of extending the range by in house design wherever our collaborators do not have a required sized product.
Alongside product engineering, lies an equally vital task of developing the product support systems and processes. We would need to develop competencies to service these equipment, develop the right parts inventory models and stocking patterns across the population centers. The area of developing the right support model is perhaps one of the most challenging tasks ahead of us.
Apart from product engineering and product support, we need to develop in country capabilities for vendors to cater to our component and spare part requirements. Supply Chain Management would be one of the critical success factors as we gear to manufacture and market the new product line in India.
As we mature in the new product lines, product upgrades would become an important ongoing activity. As India emerges as a global engineering center, we would be looking at developing robust engineering capabilities which we would then extend to our collaborators to take benefit of.
What is your assessment about market growth of crushing, screening and asphalt plant and machinery in the next 2-3 years and what specific infrastructure development areas are you looking for higher growth of your product line?
With an estimated investment of about $1300 billion in the next 8 to 10 years in Indian Infrastructure, we expect robust growth in both the Crushers & Screens and Hot Mix Asphalt plant. When one were to look at Crushers and Screens, the expected investment in Roads, Railways, Ports, Power and mining leads us to be very optimistic of a high level of sustained growth. So also, in the case of Hot Mix Asphalt plants, the estimated investment of about $160 billion in road construction and the stated vision of 20 Kms a day of road construction, will fuel the demand for asphalt mix. While the current rate of road construction needs to increase pace to achieve the objective of 20 kms a day of roads, we are sure that we will get there.
For this product categories, we would be looking at Roads, Railway projects, Power plants, urban construction and of-course mining to fuel the demand and would be out targeted segments.
While there is demand for high-end products and services but the market is quite sensitive about prices. How the market can be sensitized that price should not be the criteria if the value of money is well established?
I think the question itself contains the answer. Yes, the Indian customers are price sensitive, and they tend to expect better products at lower prices but the key to price realization is the fact that we need to tell a value story to the customer. A story that can be backed by performance guarantees and deliverables as committed. We need to show the value proposition not in abstracts but in concrete terms by putting the customers in profit, which is the corporate theme for TIL. We have the products which are differentiated, technology which is state of art, a value proposition that is solid and hence we are confident we will succeed in the Indian market. We are clear that we need to demonstrate in the field of superior deliverables. We are quite proud of the fact we have had some success already in the area of crushers and screens and we look confidently forward.
Given the fact that onwards margins could face headwinds from inputs price increase, rate of interest and taxes etc, how would you like to ensure that price competiveness of your new product line on a sustainable basis to take competition head on?
There are certain critical success factors here that we need to get right as far as competitive pricing is concerned. At the outset, there will be certain products in our new portfolio that will be at a substantial premium compared to any other product in the market and this is basically due to the technology involved.
Where we need to be competitive, we will be very aggressive in the indigenization process. Localisation without compromising on performance parameters is the key. It is here that product engineering has also been innovative in making the products India compatible – both in performance and in price. We need to be very focused on developing a vendor base and vendor quality and pricing, that will deliver competitiveness. Supply Chain management hence is of critical importance. We definitely ensure that we will keep costs down and flab out in our manufacturing process. We have put our best effort to bring out a Plant which is truly state of art in terms of the manufacturing process and our cost competitiveness starts here, right from designing of the plant. On top of this, comes the most important factor–the human resources. We intend to design the most contemporary of work practices which will revolve around empowered teams, multi skilling, self-certified quality processes, and a motivated and young resource base. We will endeavour to make sure we do the things right first time.