Schwing Stetter is known globally as the preferred concreting equipment manufacturer for the past 78 years. Its Indian subsidiary, Schwing Stetter India, was set up in 1998 and has played a key role in shaping the Indian concreting industry. Anand Sundaresan discusses the challenges in the construction equipment industry, offers remedies, and reveals plans to introduce new products at Excon. Interview by Renu Rajaram.
How important are events like Excon for players in the construction equipment industry?
Excon is a very good platform for us to launch our latest and state-of-the-art equipment and also exhibit improvements in our existing products. Being the leader of Excon Roads Shows Committee, I along with some of my senior industry colleagues conducted road shows in over 20 locations within India and in two locations abroad. Special care was taken to see that we cover Tier 2 & 3 cities, and to invite government officers, decision makers and policymakers. We are hopeful that many stakeholders pan-India will visit the Excon show in large numbers and make it a grand success.
Over the years we have seen that business starts booming immediately after the Excon trade fair. So we are hoping that this time also Excon will bring momentum in business for the CE industry.
Schwing Stetter is unveiling five new products along with five new variants at Excon 2013.
We are, of course, planning to introduce five new products and five new variants from our existing products. These products and variants are developed based on the inputs and feedback received from our customers. Our sales and service persons frequently interact with our customers and get to know their requirements. We invite you to visit our stall in Excon 2013 to see our latest developments.
How has the overall performance of the CE industry been and how are your company’s products placed to meet demand?
The last one and half years have been a very challenging time for the Indian construction industry. The economy is passing through severe downturn. Sadly, no major infrastructure projects have been announced, which has taken a toll on the Indian construction industry. Undoubtedly, this downturn has a negative impact on our business and also on all the other construction equipment manufacturers.
With regard to our products, we have a very wide range of products to cater to all types of concreting work and we also offer customised products for specific projects for the customers, working very closely with them.
What are some of the major issues facing the construction equipment sector today?
The going was extremely good until 2011 in spite of a dip due to the global recession in 2009. The last two years have been, indeed, very challenging for our industry. In anticipation of massive investment in infrastructure projects, most of us have invested a lot and have expanded our capacity substantially, whereas, currently, the capacity utilisation is only 50 per cent. We are forced to retrench some of the skilled workmen. But when the business bounces back, it will be difficult to get them back. If we get new workmen, it will take six months to a year for us to train them.
Besides this the high cost of funding has resulted in lower off-take of equipment. Also, the high interest rates and heavy depreciation in Indian rupee have increased our input cost substantially.
Can you discuss Schwing Stetter’s manufacturing facilities, capacities and investment?
Today, Schwing Stetter India owns over 40 acres of manufacturing facilities in Chennai with more than 26 branch offices and sales depots and service engineers placed in several specific project sites where large numbers of our equipment are deployed.
In 2001, we commissioned our first manufacturing facility in Irungattukottai. Our second plant was set up in 2004 followed by the third plant in 2006. In 2012, we invested in our fourth plant and increased capacity of our transit mixer facility.
We started our first operators’ training school in Chennai about seven years ago and currently, we have two more training schools in Delhi and Kolkata. Our plans are to increase these training centres in other cities also so that it will be easier for our customers to get their operators trained.
Our first service centre in Chennai was started in 2005 and the number has increased to nine today, at various places across India. We are in the process of investing further for establishing a few more service centres and training centres in the country.
Tell us about Schwing Stetter’s investment in R&D.
We being a 100 per cent subsidiary of Schwing GmbH, Germany, the primary R&D for development of any new equipment or technology takes place in Germany. However, the German equipment cannot be directly introduced in India. Therefore, we need to take some specific steps to adapt it for the Indian market. We do a lot of R&D work for introducing new products based on the inputs we receive from our customers on their requirements, limitations, problems and so on. We have much equipment in our product range which is exclusively developed for the Indian market, taking into consideration all the local conditions.
Added to this, because of the climatic conditions, topography and demography of our country, we need certain special features in our equipment, especially in case of batching plants for which we spend a lot of time and money in meeting the customer requirements.
In spite of economic slowdown globally, the cement and concrete sectors have continued to post robust growth. Is this trend seen in the construction equipment sector? And what are your expectations for 2015?
The economic slowdown has definitely affected the top line and bottom line of all construction equipment companies. The rupee devaluation has further severely impacted on our bottom line because there are still many components being imported; whereas, on the positive side, this has forced us to speed up our process of indigenisation.
By 2015, I feel the economy should be stabilised and hopefully we can expect to have consistent and foreseeable growth. In any case we would like to be a dominant player in the concreting equipment business in India.
What is your opinion on the role of the government in bailing out the economy in these troubled times?
Government is the biggest customer for construction companies and in turn for construction equipment manufacturers. Unless government starts releasing tenders and contracts for infrastructure projects, it will be extremely difficult for our economy as well as the construction equipment industry to grow. We are banking heavily on government investments which may also need policy changes in certain areas. On a short-term basis, definitely, government can look at offering some concession on excise duty for capital goods and generally government should also look at the tax-related issues where there is huge ambiguity.