What is the current status of India’s elevator market?
India is the second largest market for elevators in the world and there is increasing demand across the country due to its growing population, urbanization, and numerous infra projects in the pipeline. The country’s elevator market is estimated to be 50,000 units a year. KONE India holds over 20% of the market share and its revenue is growing at 5 to 9%; it contributes about 3% to KONE’s global sales.
What new business opportunities is KONE tapping as India urbanizes and infrastructure development intensifies? What about replacement market?
Currently, the residential market makes up about 65-70% of our sales while the rest is contributed by hospitality and other commercial projects. We are also involved in Smart City projects and in many metro rail projects including Delhi Metro where we have provided more than 350 units.
The market has been challenging for the past few years and the company is currently growing at single digits. However, we always take a long-term view. With many projects in the pipeline such as affordable housing by 2022, development of smart cities, airports and metro rails, and accelerated trend in high-rise construction due to increasing rate of urbanization, we expect to see a rising demand for elevators and escalators in India.
Opportunity is coming from the replacement market as well. Demand for replacing older units is growing, and we are very strong here too. Some states have ruled that after 20 years, elevators should be replaced, and this rule is coming to other states as well. This is because the usage of elevators in India and their maintenance is not good & it’s important that elevators are modernized or replaced for safety. However, the demand for replacement has to come from building owners and the end-users. The former generally look for refurbishing the elevators or for parts replacement.
How do you see affordability of KONE’s elevators for affordable housing projects?
We are doing extensive R&D for making elevators for the Affordable Housing segment, which will be at par with KONE’s assured quality, but at affordable prices. These will neither be cheap nor of low quality as we will never compromise on the safety of the users.
The KONE brand is known as a premium brand due to quality and not pricing. KONE has been dedicated to People Flow for over 100 years now and has become an industry-leading company with its innovative, safe, user-friendly and energy-efficient solutions. We are a premium brand for sure, but our pricing is not necessarily premium. Our pricing is based on the values of quality, safety and services that we offer to our customers.
KONE is investing a lot in ensuring safety of the user. Our safety features may be more expensive than that of our competitors, but we feel that the higher cost is justifiable; in fact, even our customers appreciate our emphasis on safety. The elevator industry of India is evolving and like the Western countries, is increasingly focused on safety, which, earlier, was a neglected area.
KONE is also known for its timely execution of projects. Today, about 70% of our customers are repeat buyers. This is because we are completing and delivering projects on time, and quite often, well before the due date. It is our advanced technologies and systems and our trained service team that enable faster execution and higher quality. For instance, with our scaffold-less installation technique, we can install an elevator in very less time.
We conduct skill development training for our employees for efficient and timely operation and maintenance services to our customers and our sales and service offices are present across the country.
KONE has been leveraging digitalization to improve speed, efficiency and customers’ experience. Please elaborate on the company’s initiatives in this area.
KONE announced the launch of elevators in India, connected by IoT. Should we expect to see all new elevators from its new facility IoT equipped?
Constantly developing technology is an integral part of KONE’s commitment to improve the flow of urban life. For us, innovation means sustainability and making better use of energy and resources to improve customer experience through real-time transparency. For users, it means a better, personalized experience through the whole elevator and escalator journey, from access to destination.
KONE strategy globally is to bring the Internet of Things to elevators and escalators, and in connecting the services. In a few years, all our products will be IoT equipped. Our aim is to integrate digitalization and develop more advanced products to cater to a fast-changing business environment. We will tap exciting and unique ways to improve customer and user experience as well as the quality and productivity of our operations.
KONE has been on the Forbes list of world’s most innovative companies eight times. It has been offering groundbreaking technologies such as machine learning, artificial intelligence, augmented reality, quantum computing, block-chain technology, etc to innovate the safest, intelligent and the best people flow solutions. In collaboration with IBM Watson - a recognized leader in cognitive computing, we are enabling faster repairs and less fault.
Digitalization also has the potential to improve speed and efficiency. Our Technology & Engineering Centres and our manufacturing units are bringing the innovations, services and solutions faster and closer to the customers. These Centres along with our research and development facility provide engineering and technology know-how to KONE’s Indian and other manufacturing units across the world.
Please tell us about KONE India’s new factory in Chennai.
Our newly commissioned ₹450-crore manufacturing unit at Pillaipakkam in the Sriperumbudur industrial corridor near Chennai is designed to be future-ready. It has been set up to consolidate our manufacturing operations, strengthen our market presence, and enhance our exports. It is the largest elevator production unit in this region, where KONE’s global quality elevators will be produced, while keeping in mind India-centric requirements. In fact, products that will roll out off from here will be 80% localized.
The factory has plenty of scope to expand, so, we are now ready for the future too. The capacity enhancement is mainly for India, but it will also be an export hub to markets like Middle East, South East Asia, Nepal, Bhutan, Bangladesh and Sri Lanka. To enable a sustainable built environment, the new facility is designed as per the Indian Green Building Council (IGBC) norms for energy savings, water efficiency, reduction in CO2 emissions, improved indoor air quality, and judicious use of resources with sensitivity to their impacts.