We will refrain from price discounting in sales

Following modest business enquiries in 2013 and 2014, Liebherr India is positive about 2015. That is when it expects that the excess capacities of crawler and mobile cranes will get absorbed paving way for fresh acquisition by renting firms. Demand is probably expected to be buoyed by many ongoing projects and to those in a final stage for being awarded. The ongoing expansion in state owned power sectors and Wind Mill sector will surely gain momentum by the end of this year as then demands for fresh units will start. However, going by the present positive indications, fresh revival of business is more likely to be countered by heightened competition among crane OEMs vying for share to grab business. Liebherr will refrain from resorting to price discounting in order to get business. Instead, its focus will be to create brand value among its customers through product support initiatives to retain business. Sitting in the company’s new plush office in Kolkata, Mr. A.K. Somani, Representative, Director, Liebherr India spelt out strategies to retain business to P.P. Basistha, Excerpts:

Business in 2013 and assessment for 2014

The demand for medium and higher capacity mobile and crawler units was virtually nil in 2013. Though there has been no fresh enquiry until now for higher capacity (1000-3000 tonner) but enquiries for medium capacity like 400 to 750 tons have started coming. However, we have delivered six unit of 100 tons mobile cranes to Reliance Jamnagar refinery third phase expansion projects. We are looking for growth opportunity in demand by end of 2014 from energy and power sectors as many ongoing Greenfield projects are reaching the stage of undertaking lifting jobs. However, it will be required to see how soon the excess fleet in the market gets absorbed. As of now, it is expected that market size of units between 350-600 tons to be at 2-3 machines.

Expectations from the rental companies

The rental market is showing certain signs of heightened activities with employment rate of equipment going up, creating optimism among major buyers to go for fresh acquisitions. Equipment have been finding jobs in cement units going for expansion in a major way. Companies are keen to acquire higher capacity units where competition is less. A positive trend has been emergence of smaller rental companies and first time buyers, looking for lower capacity units. However, the hiring rates are compressed owing to excess capacity in the market, making rental companies to keep their purchase decisions on hold for now.

Will price discounting be taken up to promote sales?

We will absolutely refrain from price discounting to tap emerging business. This will be at par with our earlier business approaches even when demand was in retrogression. This is because Liebherr mobile and crawler cranes are high value equipment with lower operating costs and higher resale value. The new evolving demand order is more about offering technical support supplementing product offering to consolidate market presence. Instead, refraining from strategies of lowering prices or introducing newer models, our focus will be on service support to strengthen our training, timely parts support through sizeable inventory backup.

Liebherr India has set up its own warehouse. In order to focus on service and support, Liebherr India will further strengthen its manpower by hiring qualified service engineers. Our intention is to keep offering value to our customers through our reliable products, superior after sales support and continued induction of additional service engineers in our team. Valued customer support is important for us, as most of our business in India come from existing customers. With the induction of advanced cranes in the Indian market, we will strengthen our training support. On site operators training will also be rendered along with factory training.

Business positioning & key strengths of product support

One of our key strengths of product support is our new warehouse set up in Kolkata this year wherein we will store components worth Rs.60-70 crores. Another new key strength of our product support is training and repairing support for the hardware. We have appointed a service engineer cum welder and got him specially trained at our factory in Germany. The welder is well acquainted with modern techniques. I would like to apprise you that based on our fine-tuned product support initiatives, Liebherr India is better positioned to offer product support as compared to other manufacturers because, we have got full-fledged complete business set up in contrast to other European manufacturers in India. We are going to expand our service centers in Chennai, Hyderabad and Bangalore apart from the existing ones in Kolkata and Mumbai.