Sandvik India Eyes New Growth Opportunities

Parag Satpute, Managing Director and Country Manager at Sandvik Asia Pvt Ltd, talks to BW Businessworld. He says the company has made inroads into new applications for the automotive, aerospace and defence sector with its machining solutions and expects to achieve good growth.

How was 2016 for your trade and company?
Sandvik in India has leading positions in tools and tooling systems for metal cutting as well as components in cemented carbide and other hard materials. In 2016, we have not only capitalised on the market buoyancy but also increased our market share, particularly in Mining and infrastructure. Sandvik India is also an important export hub for the Group with manufacturing units in India located at Pune (Cemented Carbide & HSS Tools, Rock Tools, Solid Carbide Tools and Mining and Construction equipment assembly Center), Mehsana (Stainless Steel Extruded Tubes), Hosur (Wire & Heating Technology), Hyderabad (Rock Tools) and Chiplun (Carbide Recycling Centre). We have focussed on various sustainability and quality improvement programs which has generated an impressive export turnover for us.

What are your expectations in 2017?
We foresee a continued positive development through the coming year. The pace of our business within the automotive industry and general engineering did pick up during Q4 of 2016 and we expect that to continue into the next two quarters. We have made inroads into new applications for the automotive, aerospace and defence sector with our machining solutions and will continue to grow here. In mining we plan to enter the UG Coal in a major way and strengthen our aftermarket business through a strong customer focus. With roads and railways construction pacing up, we expect some opportunities in the breaking, drilling and crushing niches in the construction industry. We are looking forward to continued reforms from the government so as to improve the “ease of doing business” in India. The GST will be a very key step and we hope to see some developments on labour and land acquisition reforms. This is important to ensure India remains a competitive place for manufacturing.

Why do you like to attend Vibrant Gujarat meet?
It has been a very valuable experience to be a part of the Swedish delegation to Vibrant Gujarat. We already have a significant manufacturing base in Mehsana, Gujarat and also do business with a lot of customers. This summit gives us a good opportunity to achieve a number of objectives:

- Interact with the government and understand their Vision and priorities for the state

- Showcase our products and offerings to customers

- Understand the plans of other companies and countries towards India and Gujarat

What is the pull factor of Gujarat?
For one it is a highly industrialised state, with a large manufacturing sector and therefore many potential customers for us. It is also one of the states with good infrastructure, access to ports and business friendly policies.

Where does Gujarat stand among other Indian states, according to you?
Over the years Gujarat has emerged as one of the preferred destinations for investment. Located in the vicinity of the Arabian Sea, the state has the highest numbers of ports and one of the largest producer of salt. The state has always been in the forefront when it comes to pharma, chemical and petrochemical companies. Some renowned reports have also ranked Gujarat as one of the top states in terms of Business Climate. For Sandvik, it is an important destination as we already have a large tubes manufacturing unit here and a significant number of customers and we will continue to strengthen our footprint here.

Why does your intent of investments so often remain a promise on paper?
That is not the case. We are continuously investing significant amounts across our operations in India. Today we have 6 large production units, spread across Maharashtra, Gujarat, Telangana and Tamil Nadu. Further we continue to develop warehouses and service centres across key locations in India – the most recent ones being in Nagpur and Dhanbad. We are also growing steadily in terms of employees and now employ more than 3000 people in various functions. Sandvik has five main Research and Development units within India with a combined headcount of around 300 engineers and scientists. India makes up approximately 15% of Sandvik’s global R&D capability. We have invested a Training Academy at Nagpur, an initiative to create a talent pool for the Mining organisation (Service) that would support towards the long term success of the organisation as well as increase the service competency standard of the Mining industry in general.

What are your plans for the rest of India? Any investment plan?
India is one of Sandvik’s top 15 most important markets for Sandvik among the 100+ countries where we operate. This has been possible due to the focus and regular investments in production, R&D, logistics and sales. We have demonstrated that we are in India for the long term and will continue to invest and grow as the business demandsYour views on demonetisation in India?

I think it was a very bold move on the part of the government to curb undeclared funds. I also believe it was indeed needed and will have definite long term gains. The most significant will be if it succeeds to bring in more transactions into the formal economy. However some analysts have forecast a short term decline in the GDP growth due to demonetization and not to forget, the disruptions it has caused in our daily lives waiting in long ATM queues and banks, which had become a thing of the past. From a business point of view, we have not seen any significant impact yet on our numbers.

Your views on GST and its implementation?
GST is one of the most fundamental reforms to be undertaken in India. We in the industry have been eagerly waiting for it and are very happy that it will be implemented in 2017. It should simplify the tax regime significantly and thereby bring down the cost of doing business in India. I believe this will have real and significant gains for the economy and for our business. At Sandvik, we are gearing up for the implementation which will be a huge task. But we have started well in advance and should be prepared in time for the go live date.

Anything else you would like to add?
Today, we hold strong global positions in many segments. To maintain and strengthen these leading positions and boost our growth and returns, we aim to become even more customer-oriented, agile and global. Sandvik’s focus is on long-term value creation for all our customers, shareholders and employees. We need to continue to play a significant role in global industrial developments. India features as an important market in the sphere of things and has a strategic importance in the overall growth of Sandvik. In this journey, safety and productivity shall continue to remain the priorities for Sandvik.