Value Addition and Fine Tuning at Sandvik

Hakan Kingstedt
Sandvik Asia Ltd, subsidiary of Swedish company Sandvik AB, commenced its operations in India Way back in 1960. Ever since its inception, the endeavor of Swedish construction and mining equipment major has been to lay emphasis on adding value to its product line at par with its global standards. Focuses have also been in integrating its global engineering skills with that of Indian operation.

Now, with demand of the Indian construction industry for quality equipment with less operation costs at all time high, Sandvik Asia is bracing itself up to further integrate its global skills for advanced product output in tune with changing demand pattern for advanced products in India.

P.P Basistha had an opportunity to have a round table discussion with top echelons of Sandvik Asia during Excon 2007 to learn more about the company's new operation strategy in India and its business development plans. The top brass on the discussion table consisted, Mr. Hakan Kingstedt, Managing Director & President, Sandvik Asia Ltd, Dr. Thomas Schulz, President Construction, Sandvik Mining & Construction, G.V.R. Murthy, Vice President-Construction Segment, Asia Pacific, Sandvik Asia Ltd and Mr. V. Venkataramana, Vice President- Construction Segment, Sandvik Mining & Construction for Sandvik Asia Limited. Excerpts of the Discussion

Products Customisation
Value Addition & Fine Tuning at Sandvik
Demand of the Indian construction industry is at its full for quality products on the back drop of steady mechanisation of construction activities. Demand of quality equipment is also to bring down costs of operation as margins are under acute pressure brought by competition. On account of this, our renewed endeavor would be to develop customised construction and mining products, which would essentially involve less operation costs. To develop products, involving less operating costs, we are involving the customer more and more for developing the equipment.

Operating Cost
Our experience in India says that the customer is very intelligent in calculating cost per ton involving the utilization of the product. We would lay greater focus in utilizing the knowledge input of the customers. This would be further dovetailed with our global engineering and knowledge pool to develop products involving low operating costs. Knowledge input of the customers would be derived from the conduits involving our sales and distribution channel and also very much from the end users.

Engineering Integration
Value Addition & Fine Tuning at Sandvik
The engineering integration would be done through strong focus on research and development, synthesised with the inputs derived from the customers. We would like to point out that Sandvik already have global products for global customers. The products have certain set standards, which can be well used by customers across the globe. However, to further reorient the construction and mining products as per Indian requirement, we would inculcate our global engineering skills into our Indian operation.

Sandvik operates across the globe. There is a continuous interchange of engineering and R&D skills within our centres of operation again supported by a strong global network. The global skills in place would be utilised in developing products for the Indian market.

HRD
To develop advanced products based on global expertise our top most priority would be to develop human resource skills. Our engineers are being trained as per our global standards. It would be important to point out that at Sandvik training is being imparted to the engineers at various levels of construction and mining equipment. This is to make the engineers much well accustomed with every part of the machine, involving the hydraulics, mechanical system, safety components etc in the course of its manufacturing process.

Making the engineers understand every working parts of the machinery would enable them to impart training at operator's level. This is very muchprerequisite as because in India the paradox is machines are not utilised as per their potential. Through proper training the issue would be addressed at our end. We would like to inform that we have started our mining and construction academy at Pune to create diploma engineers to address the issue of shortage of skilled manpower in the country.

Price Sensitivity
We are very encouraged to see that there is a paradigm shift in perception of the Indian construction industry fraternity in paying a higher price for a quality product. No more the industry is skeptical in paying more for an advanced product. Notwithstanding, to iron out any skepticism, we are carrying out our marketing by saying our prospective customers that they should look drilling and crushing as an integrated process. By looking into drilling and crushing as an integrated process customers would be able to well perceive that the machines are able to produce output at the lowest cost per tonne.

This would drive down the idea well that the investment costs could be higher but the machines have low operating and running costs owing to its rugged features involving its drilling rigs in the rock drilling machines. However, to add that to make our products price competitive, we are focusing on increased localization but of course strictly adhering to global standards.

Equipment Availability
The issue of equipment availability is being addressed by developing human skills on a continuous basis so as to ensure proper service support to the machine for its smooth operation. Emphasis on annual maintenance contracts are also being laid in an increasing order. On finance to ensure physical availability of the equipment Sandvik is on a lookout for an increasing tie-up with banking and financial institutions.

Future Plans
Sandvik is planning to open a new manufacturing facility very shortly in India. This will be the sixth such initiative by our company that already has manufacturing facilities at Pune (cemented carbide & hss tools, rock tools, rock processing equipment design center for material handling), Hosur (kanthal heating elements) Mehsana (stainless steel extruded tubes) Hyderabad (rock tools) and Chiplun (cobalt powder).

The new project is already on line with Sandvik Mining and Construction looking for a suitable location-proximity to port and ease of logistics-for land acquisition. The new plant will mainly target the fast pace of growth in mining and construction segment. The new plant will not only add capacity but also new products.

In Pune, Sandvik is setting up a high speed steel taps plant under Sandvik tooling division at a cost of Rs 45 crore. Products being manufactured in India have expanded to now include high precision tooling products are less than five years old and are being manufactured in India.

Apart from these, Sandvik is focusing on engineering design and training that can soon become important part of global operations. Sandvik has established training academy for service engineers for mining and construction equipment at Pune-first in India.

Sandvik's Business Area in Mining & Construction
Rock drilling and rock crushing machinery, haulers, Loaders, and other range of material handling equipment and rock drilling and cutting tools cover the product range of this business area.
NBM&CW January 2008
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