Ashok Leyland John Deere Construction Equipment Company Pvt. Ltd (Leyland Deere), a joint venture of Ashok Leyland of India and John Deere of USA, aims to seize opportunities of the robustly growing construction equipment sector. P. Ravishankar spoke to Sandeep Menezes on the company’s experience at Excon this year.
What was the main reason for launching Leyland Deere’s second product, the 435E backhoe loader?
We had the 435 backhoe loader earlier also which you saw in the last Excon. It provided us with a platform for a performance machine for customers who had time bound projects or heavy duty work. Based on our experience with that machine, which witnessed nearly 1,200 such machines in the market, the customers in the hiring segment came to us and said that you have a wonderful and durable platform, but can you give us something that is cost optimised because we hire by the day, week or month.
Therefore, we sat with those customers and asked what would be beneficial for you. Two things came out: first was fuel average, because fuel constitutes nearly 40 per cent of the operating cost of machines; second was the general cost of service and machine. This is the result of the whole optimisation process.
The new machine during trials with customers gives half litre per hour benefit. This translates into 3,000 hours per year which is a saving of around Rs.90,000 to Rs.1 lakh.
Now with the market down and recessionary conditions existing today, this is giving customers a very viable option for reducing costs. Then we went into all the service fills like transmission oil fill, hydraulic oil fill etc., so now we have got a 15 to 16 per cent saving on fluids and consumables by tweaking the service intervals and service quantities. This saves another Rs.50,000 to Rs.60,000 per year.
Therefore, we provide the customer an option to lower his cost structure by nearly Rs.1.5 lakh per annum.
So this new machine will lower operating costs.
Most of these machines are typically financed by a financer who puts in margin money of between Rs.4 lakh to Rs.4.5 lakh while the remaining is financed by the financer itself. If you calculate the Rs.1.5 lakh a year saving, then within a three-year tenure the customer gets his margin money back in addition to the ROI that he is deriving from the loan. In the long term, this machine is important because India is one market where cost is important and customer will always buy a product which gives him cost benefits.
But isn’t it a bold move to launch a new machine in the present challenging scenario?
We are not the only ones doing it; many other manufacturers are also doing it. A manufacturer who responds to pressure and gives a solution in terms of viability will help the customer and market.
In what way have interest rates impacted the equipment sector?
We work together with financers. It’s not only us but all industry participants work with financers to provide various forms of financing. Sometimes we help in bringing down the cost of funding for the end user, because events like Excon put all three stakeholders, the manufacturer, financer and customer, on a platform to access how best to make use of an opportunity or situation collectively.
The government policy due to inflation and various other macroeconomic factors is a given. How do we optimise ourselves is the way we look at it as a manufacturer. Therefore, we will continue to work with customers and financers. One way is to reduce operating cost, acquisition cost and funding cost.
What is the level of indigenisation in your machines?
It’s very high. Around 95 per cent localisation has been achieved; therefore, we can proudly say that our machines are made in India. Ashok Leyland gave us the engine part of the technology while John Deere has worldwide capability in structures, power-trains etc., so they allowed us to quickly work with suppliers. In fact, our suppliers appreciated the quality of interface of our engineers. We now have the skill to quickly localise any stuff.
Projects are not taking off and the economy has slowed down. As a leading CE manufacturer, what is your forecast for the coming years?
In the long term there is no change to the India growth story. I mean, more than 18 to 24 months, it’s a very strong story. There are deficits compared to our neighbouring countries like SAARC and there are challenges compared to emerging growth markets like China and South America, there is no doubt about it.
The demographic dividend that we have along with a young population will drive our long-term growth. The challenge for all is to manage this window in between of around 18 to 24 months.
If we as an industry through events such as these and through our products help catalyse the industry towards recovery, it will then be much faster.
Does Leyland Deere intend to expand its dealer network?
We are continuously expanding and currently have 40 main dealer points. Each main dealer point has around two to three branches in tier II & III type of locations. Currently, we are operating with around 155 touch points across the country.
DISA India Ltd reiterated its ideal solutions for the earthmoving and construction sector at Excon 2013. The company highlighted the Wheelabrator ‘Pass Through Machine’ at the event. This pass through shot blasting solution can be harnessed for various applications like construction equipment, cranes girders, vessels, infrastructure parts etc. The machines are developed with aim to prepare the surface for the painting needs and wheels are oriented in such a way that the maximum parts surface is exposed for the direct blasting. While designing the machine, new techniques are being utilised to simulate the job coverage parameters.
Overall, DISA and Wheelabrator have delivered 10 machines of this family to various construction equipment and tower crane suppliers in India. Today, the company is proud to announce the localized production of the same.
DISA also announced the introduction of the DISA Silo Vent Filters which are specially meant for venting of silos fed with powdered products.
India is a big market with much potential for our products. The Pass Through Machines and the Silo Vent Filters ensure that we increase our offerings for various segments and be able to cater to a wide array of industries,” Viraj Naidu, Managing Director of DISA India Ltd, said.