‘We’re Committed To India’s Growth’

The leading earthmoving and construction equipment manufacturer JCB India invested in expanding its manufacturing capacities to beat the slowdown, says MD and CEO Vipin Sondhi to Ashish Sinha.

Excerpts:

The earthmoving and construction equipment (ECE) industry is back on track. What is driving its growth?
This growth in the ECE industry is primarily driven by the roads and highways sector. This growth in the sector needs to be sustained, and a lot depends on the execution of the projects that are being announced. Also, sustainable revival led by only one sector is not adequate. In addition to roads and highways, other sectors also needed focus, which seems to be addressed by Budget 2017–2018, with irrigation and railways getting significant outlay.

What were the main reasons responsible for the downturn?
The ECE industry is dependent on projects, mainly infrastructure for growth. The overall economic slowdown and delay in infra projects led to low confidence amongst builders, developers, contractors and other stakeholders, resulting in delay in construction projects. These coupled with land clearance issues and acquisition delays, affected the overall demand for construction equipment.

How did the downturn affect JCB? Can you specify in terms of revenue, production and profit (or loss)?
We, at JCB, were adversely affected due to this downcycle. However, we invested in creating capacities and expanding our manufacturing base, products, and product support network. This was done to be able to cater to demand as it picked up, which it has by over 40 per cent in 2016.

We expanded our product portfolio to 50 products in eight product categories. We strengthened our export programme in the last five years and from exporting to eight countries in 2011, we now export “Made in India” products to over 70 countries. In 2014, we invested Rs 600 crore in setting up a state-of-the-art facility that today manufactures the JCB 30 plus, the 3T Mini Excavator and also Fabrications. We also inaugurated our largest design centre outside of UK not only for India-centric products but also for products and solutions for developed markets.

What was your turnover in the last three years? How has been your performance in 2016?
Our gross turnover in 2015-16 was Rs 6,300 crore. In 2014–15, it was Rs 5,600 crore, and in the financial year before that it was Rs 5,500 crore. In 2016, we sold over 26,000 machines. We introduced a total of 10 new products in 2016, which include telehandlers known as JCB Loadall, skid steers known as JCB Robot, and super loaders and five-class leading products in the premier line segment — the JCB 220LC Xtra (22T Excavator), the JCB305LC (30T Excavator), the JCB 370LC (37T Excavator). We introduced a 5.5T wheeled loader, the 455ZX and a 10.5T road compaction machine, the VM116.

With this new range, JCB is transforming into a full-range infrastructure equipment partner. All these revolutionary products are aimed at maximising productivity and profitability for our customers. These machines will be used in several sectors such as roads and highways, mining, ports, irrigation projects etc., and will contribute towards building India’s infrastructure.

What kind of investments have you made in India? Any current investment in the last three years?
JCB came to India in 1979 and set up its first manufacturing facility in Delhi NCR. This was at a time when infrastructure was not even a part of everyday discussion. Over the years, JCB has invested close to Rs 2,000 crore in India and has remained committed to the Indian growth story. We have always invested during downturn as we always want to be future ready. We invested in the expansion of the Delhi-NCR facility in 2008 and in 2014, we invested Rs 600 crore in two new state-of-the-art factories at Jaipur. We have heavily invested in setting up our design centre in Pune. JCB India is home to the largest design centre in the JCB Group outside of the UK. At this purpose-built facility at Pune, over 400 engineers work to develop India-centric products and also to support JCB’s global design and engineering programmes. Additionally, we made investments in technology and in 2015, we introduced an advanced telematics system known as JCB Livelink in our range of machines. Today, we have over 25,000 Livelink-enabled machines working successfully in India.

How important is export as a component of business for JCB?
JCB India is an export hub for the JCB Group contributing around 20 per cent of our revenues. Middle East and Africa are the biggest export market for us, followed by South East Asia and Latin America. Components are also exported to developed markets such as the US and the UK.

What is the industry’s / JCB’s outlook for 2017?
The overall construction equipment market saw a considerable growth in 2016. With the government giving significant attention to developing physical infrastructure, which includes roads and highways, the activity in the infra space is expected to continue and rise. We expect up to 10-12 per cent growth in the coming years.