Re-affirming our commitment to and our conviction about the Indian market, we have also extended our Valueline range with new products, the BG 26 and BG30 rigs for bigger diameter and deeper piles with Kelly drilling, says Jagpal Singh, Managing Director, Bauer Equipment India. Excerpts from the interview.
How do you assess the current CE market scenario and its growth prospects, in the short and long term?
This year has been tough for most CE manufacturers, especially for foundation equipment manufacturers. We do not anticipate too much of a change in the present scenario for foundation equipment industry in the short- term perspective, as there is too much of equipment already lying in the market for lack of work, or available for sale due to non-payments for works already executed. But the silver lining is that the newer projects which are being launched have considerable work where deeper and bigger diameter piles are being explored. This will give rise to a demand and introduction of higher-end equipment which is not available in the market.
But in the long term, the CE industry, including the foundation industry in India, has huge potential due to requirement of infrastructure development across the country. After the correction of the present demand-supply mismatch, there lies a huge potential for foundation equipment in roads, railways, Metro, hydro, marine and urban infrastructure development projects in the coming years.
Which are the major issues to be addressed on a war footing? Are you looking for any sort of regulatory reforms?
There has been an overall slowdown in Indian infrastructure activity due to the lack of investments in new and ongoing infrastructure projects by the government. Contractors are not keen to participate in new BOT projects due to non-viability, delay in land acquisition, inflations due to delays, high interest rates, delay in payments, etc, which is directly having an impact on the purchase of new equipment. The government needs to urgently push the investments to bring the positive sentiments back in the infrastructure business.
Critical issues like land acquisition should be appropriately addressed so as to enable implementation of projects. The infrastructure development sector can also be explored for priority sector lending for generating liquidity at low interest rates, thus leading to faster execution of projects. Even FDI in infrastructure development can give a push to the growth.
Specifically for foundation equipment industry, the government can help by advocating and proper enforcing codes and specs through proper channels, while at the same time, they should encourage newer ideas and concepts of consultants and designers
What is your take on the downward trend in the Chinese CE market?
There has been a general downtrend in the worldwide CE market and it has impacted that market also due to their economic slowdown. As far as Chinese CE manufacturers dumping their equipment in the Indian subcontinent is concerned, I think that customers in this region do not look only at the price, they look at other equally important factors like product support in terms of parts and service, resale, operating cost, parts pricing, distribution network, etc, on which the majority of these manufacturers have to work on.
Some manufacturers might make a limited dent in the segments where equipment does not clock too many working hours or where they are not put under strenuous working conditions, or their downtime doesnt affect further in-line machinery. But we are unfazed by this, as Bauers philosophy is not to just sell equipment but to provide complete solutions to the customer.
Given the current scenario of devaluation of rupee, high cost of funding and ever-increasing cost of input materials, what is Bauer Indias strategy to keep costs competitive?
Equipment manufacturers, especially importers or where imported content in the equipment is substantial, are under pressure due to market conditions. We at Bauer India are trying to insulate ourselves and help our customers by making investments in parts stock and providing locally trained manpower for minimising downtime, giving them flexible repayment options at low interest rates so that the equipment can be amortised in more than one project. We are giving customers the option to stock or buy re-conditioned aggregates (with warranty) to bring down costs.
We are also exploring the opportunities of manufacturing tools and Kelly and sourcing components locally in our short-term to mid-term strategy so as to bring down costs. In addition to this, we are open to re-conditioning old equipment of customer at highly competitive costs to help them realise better resale values while making new purchases.
The cost of average equipment in India is still very low as compared to international market prices. How long will you be able to sustain the same pricing levels?
We work with our customers, right from the planning stage to the execution stage for better results, as we see a big opportunity in this for building better solutions. Here lies the biggest strength of Bauer Equipment, not only being a supplier of equipment but also having the engineering knowledge of developing projects with our customers and the involved parties. Considering this, our price points would always be different from others but all efforts are, and will be, made to bring down costs without compromising on safety, productivity and incorporating the latest technological advancements; Our Valueline range of equipment which has been specifically developed for the Indian sub-continent, is the best example of this thought the process.
Given the intense competition, what is Bauer Indias core focus on providing value addition to its customers, especially in terms of servicing the customer?
During this tough year for foundation equipment industry, we have worked literally on all aspects for providing the maximum availability of equipment for our customers viz, the opening of workshop in Mumbai, availability of trained service engineers and parts/consumables in Mumbai, Chennai and Delhi, training the customers service staff, reconditioning capability of aggregates in Mumbai, etc. We have also worked with our customers on training the operators about various operational and functional issues which has led to better utilisation of equipment. Apart from this, our sales team has been working closely with our customer on providing valuable insights on the new developments in the new and existing projects.
What have been the technology/product/and sales trends for foundation equipment?
If we talk in the Indian context, we are still in the early stages of foundation equipment in comparison with European or Far East markets. We have moved slowly from tripod drilling to Kelly drilling though still we are doing drilling with tripods at a lot of places. Due to sudden slowdown in foundation business in the last one to one-and-a-half years, there has been a kind of slowdown in adapting or adopting to newer technologies in a big way, like CFA,CCFA, FDP, pre-cast piles, soil improvement, diaphragm wall cutter, soil mixing, etc. In fact, some technologies have not even been introduced in India, like soil mixing which has been quite successful in the Far East countries, specially Japan. Even CFA, FDP, pre-cast piles, diaphragm wall cutters, etc, have been used only for very specific projects and have not grown at a desirable pace; in the process, we have compromised on efficiency and cost.
What has Bauer Indias overall performance been so far in 2012? To what extent has the slowdown impacted the bottom line?
Bauer India has been growing steadily in the market and even this year has been good for us as we have consolidated our position in the market by making investments in workshops, training manpower and building stocks of parts and consumables for providing higher uptime for our equipment. This has insulated us from the impact of the slowdown in machine sales. We would comfortably achieve our planned targets as far as top line and bottom line is concerned.
How do you set apart your product in terms of competition?
Bauer is committed towards producing safe, highly productive and fuel-efficient equipment. We are known to be the best solution providers in the toughest working conditions and have always proposed the concept of having fewer numbers but more productive machines. Bauer has a firm belief that the market will move towards higher capacity and more productive machines, as a lot of underground construction activities and high- rise construction will necessitate effective and efficient equipment. With every machine, we state the efficiency factor in the documentation, so our customer can see the direct relation between the power of the diesel engine and the power of the drilling tool. Also for higher capacity, efficiency and production, we offer our premium line drilling rigs, with a tremendous variety of applications.
Safety is not only built in as a prime feature while designing and manufacturing of the machines, but has been adopted as the key fundamental on all sites of Bauer. All our machines are designed according to the latest worldwide standards. All sites where Bauer personnel or equipment is at work, necessary precautions are taken and people are trained to avoid any mishaps.
As the Indian sub-continent market prefers having simpler and easy-to-operate equipment with lesser electrical and electronic functions and also with easier to maintain/repair mechanical and hydraulic functions, we have introduced the Valueline range of rigs which have been specifically developed for the Indian market without compromising on safety, productivity and efficiency. Both the range of equipment, Valueline which is meant for Kelly drilling and Premiumline, which is meant for multi-functionality, are completely manufactured in Germany.
Brief us on Bauer Indias initiative on skill and capacity development.
We at Bauer work with our customers, right from the planning stage of a contract to the execution stage for better results. The biggest strength of Bauer equipment is not being only a supplier of equipment but having the engineering knowledge of developing projects with our customers and all involved parties.
So we work closely with customers on the new developments to suggest the best solutions by helping them adopt new, productive and efficient techniques. We also train their technicians, supervisors and operators by bringing our trained Bauer staff from various parts of the globe with similar or related experiences. We are also open to take Indian contractors or their technical staff to various projects being executed in various parts for studying critical aspects.
There are exclusive certified courses which we do with our customers which are conducted by the Bauer Training Centre, Germany, for training operators so as to have safe and best utilisation of equipment on sites. We are even ready to working with designing and consulting fraternity of various projects to evolve and suggest best and advanced technological solutions.
Is there any more capex/new product launches planned?
Bauer has always believed in continuous research and development on various foundation projects, which results in finding solutions in terms of producing new improved equipment. We had showcased our new developments at our in-house exhibition in Schrobenhaeusen, Germany in May this year and also at the recent Bauma China, which included the new PremiumLine BG39, BG42 and BG46 Rigs with Tier IV engines, new foundation crane MC96, new GB60 Grab base machine and cutter for 150 m cutter depth.
Re-affirming our commitment and our conviction about the Indian market, we have also extending our Valueline range with new products, the BG 26 and BG30 rigs for bigger diameter and deeper piles with Kelly drilling.
How do you look at the growth potential in another three years and how competent is Bauer India to meet all challenges?
We expect the Indian market to mature in foundation equipment and expect the evolvement of quality foundation work. The market will move towards a more productive and efficient equipment and the adoption of newer technologies. This will lead to the emergence of specialist foundation companies who will make a mark on quality and efficiency. And this would go simultaneously with the development of codes and specs of projects with local consultants.
Bauer India being a daughter company of Bauer Maschinen, Germany, has access to the most advanced and innovative solutions in the foundation industry with the full range of equipment, and is fully prepared to meet all the challenges of the local industry in the years to come. We are making investments in the right direction and place, so as to emerge the leading foundation equipment supplier in India.