The ‘Make in India’ mission is a huge step in the right direction.

Amarnath Ramachandran, Managing Director, Arx Mining and Construction Equipment.

How do you see the government’s ‘Make in India’ programme and mission motivating industry to participate in it? How is this helping the construction equipment sector to improve its technological status and competitiveness in the global market?

The ‘Make in India’ mission is certainly a huge step in the right direction. While there is a huge impetus on manufacturing products here and also an incentive for overseas companies to setup JVs or wholly owned companies here to participate in our growth story, our industrial infrastructure is still lagging.

A huge manufacturing jump will call for new, large modern industrial areas, with good facilities, manpower availability and logistics. Our construction industry is riding on the efficiency of the NHAI. Other industry needs agencies like this to boost their growth. We can say that the Make In India programme is truly successful when the manufacturing contribution to GDP increase substantially and we bridge the forex deficit by exporting quality goods.

Foreseeing the government’s strong commitment and stable sentiments in the market, how do you evaluate your company’s growth in the coming years?

While the order book in some segments are good, execution is still painful due to instability in the overseas supply chain. Undue delays and very long lead times put a strain on cash flow. While shipping from the west has improved, both in terms of time and cost, crippling energy costs in Europe have made key aggregates more expensive. At Arx, in the coming year, will add on rough terrain / All terrain cranes to our cargo handling portfolio and a very large mining excavator to our mining portfolio. We also plan to export our products.  So, while the Indian demand will provide a stable base, Europe will help us enhance margins.

What are your views on making India as a global construction equipment manufacturing hub?

Only small to medium machines have aggregates which are fully localised. While there is no customs duty or inputs for exports, lack of availability of key aggregates for larger machines are unavailable which is a critical requisite for India to become a global construction equipment manufacturing hub. This, again, increases lead times for manufacturing. If Indian companies are planning to manufacture aggregates, then a lot of expenditure is required for R&D and also for application engineers to sell and validate installations.

The Chinese have joint ventures with a lot of aggregate companies to produce in China. We don’t have too many of those, except for a few sectors like backhoe loaders, cranes, compactors and excavators.

Tell us on your export market and important initiatives to cater to the requirement of International market?

Our export market initiatives are around building quality into the product itself. Cabins, sheet metal components have to be aesthetically good apart from functioning well also. Having one build in the shopfloor ensures consistency. As our prototypes are still under validation, we will commence seeding machines in key areas after the first batch is made, we will start with Sub-Saharan Africa, Middle-east and Southeast Asia first.

What is your future strategies at a time when technological disruptions are rapidly defining businesses in the sector?

The way forward as a business in the future is very interestingly poised. There is a very strong global call to stop fossil fuels, diesel engines, etc. On the ground, in India, we need to have infrastructure to start getting CNG/LNG freely. This will reduce emission. Since a majority of our power generation (75%) is from coal, and we still have a shortage of power. Going fully electric would mean more mining for coal. The best intermediate option is to plan two phases:

Clean diesel / petrol hybrids. Move to battery operated vehicles in which the batteries are charged with a small diesel / petrol engine. Hydrogen fuel. This option would keep the strain off the grid.

At Arx, we are working with some concepts of electric and hybrid prototypes. We plan to launch an all-electric / hybrid empty container handler soon.

How is the scarcity of skilled operators affecting the prospects of the construction equipment market?

There is no alternative other than to train operators to fit our requirement. Our industry also faces an additional challenge that project sites are in remote locations. The younger generation, like their predecessors, feel that the cities are more attractive.

CE manufacturers are now under pressure to manufacture machines which are not only cost effective, but also comply with the emission norms. What are your views on it?

There is no getting away from emission norms as they are here to stay. It is, for the better part, a level playing field as everyone has to adhere to the same. The cost of tier change is, however, huge and the government needs to formulate a scrap policy for older machines to keep the demand up. The first year’s impact is the highest as most customers will pick-up second-hand machines to be more profitable. One way forward to lessen this impact is for government tenders to mandate new equipment for new projects for a few years.

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