Founded in 1972, Shandong Lingong Construction Machinery Co. Ltd (SDLG) is a large-sized Chinese enterprise in construction machinery and is ranked among the top five wheel loader manufacturers worldwide. In 2006, SDLG collaborated with Volvo to learn management experience and technical support in the CE industry. B. Sridhar, Head – SDLG Business, Volvo India Pvt. Ltd, explains the current scenario in the Indian construction equipment in an interview with Sandeep Menezes.
Six months after a new government in New Delhi, how do you rate the scenario in the construction equipment industry?
We can’t say that the market has changed completely. But there is positive sentiment because of the many new initiatives the government is considering. Some of the projects, in the road sector, for instance, have already commenced in parts of the country. But whatever decisions are taken at the ministerial level has to percolate into the market. This has not happened yet. It will take time because major investment and land acquisition must also happen.
We want the government to remain focused and action should happen on the ground. GST delay is a big issue for all manufacturers. Today, manufacturers are suffering because of the various local laws and rules. With the clear majority that this government enjoys, we feel that GST will be implemented within the next one or two years.
How long will it be before the construction equipment market thrives again?
Our feeling is that it will take another six to eight months for the construction equipment market to start growing again. If most stalled projects are kick-started by middle of 2015, it may take another two years. But, going forward, there is only growth ahead.
What are your thoughts on the government’s ‘Make in India’ campaign?
As of today, we don’t have any plans but, going forward, if there is a need then definitely we would like to do it. In future, if the market grows exponentially, then we have to support that growth; we can’t import everything, we will also have to manufacture here. It all depends on the market growth in future. Even in importing there are constraints because then we have to depend on vessels and also other issues have to be cleared. Therefore, as long as the volumes are less, we will continue to import but if the market grows and volumes pick up, then we will also have to rethink.
Safety during project execution is an unresolved issue across India.
If you look at our products, it complies with all safety norms in India, in terms of emissions and safety. We have safety features incorporated in the products because it is a big concern for us.
In our motor graders, we are supplying FOPS and ROBS cabins so that even if any accidents happen the operators will not get any injury. Also, these cabins are air-conditioned which leads to extra comfort for the operators.
Interest rates have not softened to the extent expected and most construction equipment is purchased in financing mode.
We have financing tie-ups with all the leading NBFCs and banks. Therefore, if the customer profile is good then financing will not be an issue.
As far as interest rates are concerned, there is a worry because it is high. But it also depends on growth and machinery requirements. We feel that going ahead the rates will come down.
What about the shortage of trained equipment operators and technicians?
We have our own operator training school in Bengaluru. Whenever we sell machines, we also train the customers’ workers. A few of our dealers get youth from the ITIs and we send our trainers to train them.
Over the next two years, how much growth do you foresee for SDLG in India?
We expect a year-on-year growth of around 20 per cent for SDLG in India. The main drivers for this market growth will be upcoming infrastructure projects like the proposed bullet train between Mumbai and Ahmedabad. Once all these projects commence then the ancillary segments will be needed to support the execution of these projects. Therefore, going forward, there will definitely be growth.
SDLG and Volvo CE both operate in India. How does a customer differentiate between the two brands?
We want to bring up both the brands in India. Therefore, we will not dilute any brand since our strategy is of dual brand. We will grow both the brands and continue offering products as per the needs of the market.