Yellow Dot Awards 2019

The highlight of the Equipment Times Award – the Yellow Dot Awards 2019 – at Excon was an insightful panel discussion on the “Opportunities in the Construction Equipment sector and the way forward.” Participants included M. V. Rajshekhar, Director – Mining and Construction – BEML, who was also the moderator, Anand Sundaresan, Past President ICEMA and past Chairman IESC. Vikram Sharma, Advisor India and South India, Kobelco Construction Equipment India. Arvind Garg, Chairman, Executive VP and Head Construction Mining and Machinery Business at L&T.  Sandeep Singh, MD, Tata Hitachi Construction Machinery. We present the panel discussion verbatim for our readers. [/vc_column_text] Excerpts:

MV Rajshekhar: We had a great first day at Excon today. Looks like lot of opportunities are available and we had a great speech by Nitin Gadkareeji. It was like a dose of silent bottles to all of us and lakhs of crores he was mentioning. At a point we lost track of how many lakhs of crores are coming in the industry. Also, Narendra Modi saab has told that economy should touch 5 trillion dollars by 2024 and construction equipment industry should be third largest by 2022. And with all these opportunities and the great things like automation, intelligence, big data, future looks exciting and great. However, with all great things there are many challenges.

We have the greatest people of construction industry here today. I take an opportunity on behalf of all of you to ask questions to our panellists where we get the best insight on way forward.[/vc_column_text]

Sandeep Singh,
MD,
Tata Hitachi Construction Machinery.[/vc_column_text][ultimate_spacer height=”10″] I will start by asking  Sandeep Singhji MD of Tata Hitachi. You have seen first day of Excon what were your expectations and how you are projecting Tata Hitachi in this exhibition? What growth you are expecting by the end of this exhibition?               

Sandeep Singh: The feedback I got was, though there was good number of footfalls on the first day, it was not as good as last time. But we are happy, we were not expecting too many people to come on the first day. We normally get more on 2nd  3rd and 4th day. I will not discount it much, because I believe looking at industry scenario, the kind of slow-down we are facing in the industry we are not surprised. But if the quality of walk-in and footfall is good, then that means, the Excon is doing its job.  The feedback we got from others was  they were very happy. That is one part. The second part is Excon as an exhibition is getting better everytime. The infrastructure, the whole layout, the participation, passion of people in the industry is getting better day by day. The kind of equipment that is getting displayed and the kind of technology that is being showcased it is getting better. That way it is achieving its objective. Talking about industry, we are going through a big slowdown. We are not seeing any improvement in the last few months. Going forward, January onwards things will start getting better. It may not be as good as last year, but as long as it starts growing it is a better thing for us.

MV Rajshekhar: As sir mentioned, Excon is getting better with each year. Great work by Excon organisers. Bauma is the benchmark for construction equipment exhibitions. I think Excon is reaching that level.[/vc_column_text]

M. V. Rajshekhar,
Director – Mining and Construction,
BEML.[/vc_column_text][ultimate_spacer height=”10″] My next question is to Garg. We have seen an economic slowdown and probably you would have recommended something to government. Do you have any prescriptions for the industry, and your outlook?

Arvind Garg: Personally, I believe in these difficult times, it is a time to look what we can do better. And this is a time to expand our aftermarket. Mining business is doing well. Coal India has gone on a major buying spree. So, the mining market seems to be doing good. It is only the construction machinery business that is not doing so well. It is a time to look what can we do as an industry to become stronger and better lean and agile. And this is the time to focus on things we have not had time to focus on. So, in our company the focus has been more on strengthening our aftermarket support. We are trying to see how digital can help us. We are also trying to se how do we strengthen our relationship with customers in otherwise trying times and also without financial partners. So, what I am seeing is that sequentially month- on-month there seems to be some recovery. My understanding, when I talk to other partners and companies in industry and friends is there is some improvement. It is my belief that finance companies who had gone in lockdown mode after ILFS crisis have now begun to understand that there needs to be a more calibrated approach towards doing business. They also wanted to do business. And that is happening. I don’t know if this is the right forum but some of the ills that had beset our industry in terms of various practices, those are also getting corrected because of NBFC lockdown. For long term it is going to be good.[/vc_column_text] MV Rajkrishnna: As  Garg said we have heard they are getting some orders. If competitors are getting orders, it is a good news that market is recovering. That is agood thing. Hopefully last part of the year should be good for all of us. My next question is to Mr. Anand. Today Ministry was telling us about road projects it was about 25 lakh crore rupee and I don’t know how much will out in reality, he was talking about one of the important things that cost of operation should be lower.  So, through yourequipments how can we contribute to reducing cost of operations? Construction cost needs to be low.[/vc_column_text]

Arvind Garg,
Chairman,
Executive VP and Head Construction Mining and Machinery Business,
L&T. [/vc_column_text][ultimate_spacer height=”10″] Anand: Well there are many ways to reduce the cost of construction. One is to get equipment at a lower price, people have to go for mechanisation, there is no doubt about that. So, they have to use most modern machines that are more productive. There are those kinds of equipments available and those kinds of equipment, if it is used, definitely cost of construction will come down. But nobody is using that in developed countries. They have all increased the lift thickness from 30 centimetre to 50 centimetre and they are using high capacity compactors to compact the equipment. If you do that automatically you can do things faster and cost of construction will come down. But in the past sometimes we have approached and we have asked to change the specification but nobody wants to bell the cat. That is the reality. 

MV Ramakrishnan: Lot of customer education is also required, where they can select the right equipment. Now my next question is to Vikram sir. What are the trends you are expecting in the construction equipment sectors and vis a vis the Indian construction equipment sector. Since most contractors, around 50% are organised and 50% are unorganised. So whatever trends are coming, the intranet of things, and big data, how much of it can the industry take it? And same with emission norms from October 2020, we are going for BS4 emission norms, how you read from here?     [/vc_column_text] Vikram: Starting with emission norms. What I would say is, this is a very important step not only from point of view of the environment, public health, public wellbeing, etc but also from point of view of upgrading technologies. In India we have a mix of equipments which date back quite a lot, to very modern, and all of us are working to make it more and more efficient and modern. I think in our kind of environment in this country, where we are not a very disciplined group of people. Things have to be put as a rule and norm, and I am very happy about this step to be taken because you will find we will get into more and more efficient equipments, much better technology uses etc. I see this as a necessary and good step. The other thing you mentioned looking at how things would move forward given various kind of contractors. I would say that somewhere within the next 5 years I see a major change in the way things are being handled as far as contracting is concerned, as far as project executions are concerned, and efficiencies will go much higher in terms of both financing and as speakers have mentioned we will move towards cutting down on balance sheet sizes by getting into leasing and renting. And I can see that some of the major NBFCs are seriously now working towards that size. I also have a feeling as more and more cost cutting comes into operation and as the minster has made it very clearly, contracting companies would now look at handling projects in a very different way not only in terms of how working capital is utilised and how the materials are used, but also the technology is used in construction playing a role  or mining and other things. So I feel we are moving more and more towards bigger companies and taking contracts and may be sub-contracting will go more specialised. It just wouldn’t be anyone would take up a job of small contracting etc. So I think we are moving more and more towards what we see overseas, specialised companies, much more technology usage, and much more innovation in work, with more focus in cost cutting and cost utilisation and higher productivity. That is what I see going forward and that is a great opportunity for all of us because we will be able to bring in lot of equipments which today may look far ahead as far as time placement is concerned. But five years from now we will be dealing with very different equipment along with what we are doing.  

MV Ramakrishnan: There will be more aggregation of contract works and more subcontracting.               

Vikram: I think that will be lesser, that is my feeling. It will be more specialised and much bigger.              [/vc_column_text]

Vikram Sharma,
Advisor India and South India,
Kobelco Construction Equipment India.[/vc_column_text][ultimate_spacer height=”10″] MV: Before we move ahead, I’d like to ask Sandeep, sir you have introduced new backhoe loaders, there are big people who are selling 1000 and 20000 and all that. What is your strategy and how do you enter such a crowded market with a new product like backhoe loader?         

Sandeep Singh: Tata Hitachi was always there in backhoe loader form very beginning. I joined 4.5 years back so Telcon, Tata John Deere and when I was in JCB we used to compete with John Deere at that time. John Deere used to command 80% of the market share at that time. So, this machine was conceived about 5 years back to be developed and produced locally without any major intervention from Hitachi because Hitachi doesn’t have backhoe loader. But India being a very major market, the decision was taken that we should, because we are very strong in excavator. We have a very strong dealer network and if 35-40% market is backhoe loader, why not be in this space. Not only because of us, but because of strength of dealership and profitability. That was basic understanding at that point of time. Strategy is, you know the customer, many of our excavator can be backhoe loader customer, give them good experience, good product and quality product with low maintenance cost and better efficiency. But do not beat of the volume for three years. You will not see Shinrai selling in numbers for three years. We are pretty clear about it. There is no pressure for sales team and dealers, there is no pressure of giving discount, but to give a good machine. After 3 years, if customer says this machine is good they will buy more, if they feel this machine is not good, we will not sell many. As of now market is down, but we are okay and doing well. But you will see day by day Shinrai getting better. [/vc_column_text]

Anand Sundaresan,
Vice Chairman,
Schwing Stetter India.[/vc_column_text][ultimate_spacer height=”10″] MV: Thank you. Last question now. Talking about alternate fuels, CNG, LNG, bio diesel, are we prepared now for it?  

Arvind Garg: Actually in commercia vehicles, I see the trend which are coming in. For instance in Scnia Buses and trucks now we are beginning to look at bio fuels and we are seeing how we can blend them. Now even green buses running on ethanol have come in. But I see this is going to be a trend and requirement. So, I think after we cross emission norm hurdle, the industry will have to start looking at alternate fuel as well. I am not sure whether we have done much. Off course, hybrid machines is an alternate where fuel consumption will be lower and machines would be far more fuel efficient. But prospect of using bio fuels is something that we will have to truly explore. I think it is homework and work in progress, and it is something we will have to look at.     

MV: Any questions from the audience?               

Audience Member: Most construction equipments are moving towards digitisation. How well equipped is Indian construction manufacturers are to move in to that direction? When we are moving to that direction, what is the kind of security measures, because the threats of cyber securities are rampant, so what kind of preparedness industry is having in that area?          

Arvind Garg: As far as preparedness of our industry to adopt digital is concerned, I think that was the first part of your question, almost all leading manufacturers now have a lot of digital and telematic on the machines. So every single manufacturer who is represented here, because we also have global partnerships, those features are coming in and we are also seeing that customers are very early adopters. India is a country that loves IT. If we are able to explain benefits of digital to our customers, there is tremendous amount of adoption that is taking place. I would rather think that a lot of local people will now get into the space of developing cost-effective solutions that will help digitalised machines in a much larger manner.[/vc_column_text][/vc_column][/vc_row]

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