We have forayed into surface mining and coal related equipment, and we are very much on target in terms of the port equipment that we will launch shortly. We will definitely get into ship unloading and loading. We will also go into higher value products, says Abhijeet Pai, Managing Director, Puzzolana Fabricators. Excerpts from the interview.

How do you assess the current scenario of the construction equipment market?
In the last two to three months, we saw some improvements and we feel that the market will rebound in the short term. However, we are a bit wary about the long term; we really believe that the market will be back to normalcy by 2014-15. Till that time, we are looking at various strategies to meet the requirements of the customer. Cost-per-tonne becomes the key area that we are working on.

Has the present slump impacted your bottomline?
The bottomline has definitely been impacted because the cost of the end product is the same whereas the raw material costs and inflation has hit it badly. Also, growth is stagnated in the current scenario, and we really need some policy changes and reforms to revive the market. The fact that the government is keen on more annuity projects instead of BOT, gives us some respite; we feel there will be more liquidity in the market. The government has been targeting 20 km of road a day; even if we achieve 10 km a day to start with, that alone could change the dynamics. The market would bounce back if we could achieve those numbers.

Over the last couple of years, diversification seems to be the plan for Puzzolana.
Our core focus is on crushers from 100-1,200 TPH. In the semi-mobile and stationary crushers we account for about 45 per cent market share in terms of volume. We can manufacture 20 plants a month. Given the situation where markets stagnated, it became rather imperative that we widen the product basket and try new verticals. So we have forayed into surface mining and coal related equipment, and we are very much on target in terms of port equipment that we will launch shortly. We will definitely get into ship unloading and loading. We will also go into higher value products.

Is the launch of the surface miner part of the strategy?
Yes, of course. It has been part of our endeavour to bring world class technology; we have tied up with superior technology suppliers to develop a product required by the Indian customer and we have been very successful. The surface miner has been in operation for the last ten months and we have crushed up to 12,000 tonne per day. The biggest advantage it offers is reduced fuel consumption. The fuel consumption vis-a-vis the competition in the market is lower and cost of earning will possibly be lower by 20 per cent over a time. Not only are we talking of initial cost but also cost of earning, which give us great satisfaction. We feel this is the product of the future for surface mining contractors.

What has been the response?
The contractor who has used it in his mine is very happy and we are also getting good reviews from international companies and personnel coming out to view it. We are already in discussion for three more machines for other customers based on the success of this one. As per the feedback from the contractor, we have also improved the cabin for better visibility.

How do you differentiate your product from the competition?
The surface miner is totally indigenously designed and developed for Indian conditions. It is a sturdier and heavier machine, powered by Cummins 950 hp engine. The machine is working in the Bhubaneshwar area and this machine is able to cut hard rock formations up to 50 MPA, that too without vibrations on the machine. It can cut at least 800 tonne per hour with a 2.3 m drum with a 300 mm depth. We are also coming out with 4 m drum which can do almost 1,200 tonne per hour.

With the design itself, we are able to get double the life, and that makes a difference. The technology of cutting is different. We expect this to be a great success because the cost of operation will come down drastically, 35 per cent on fuel and 50 per cent on tool cost. Even the component life is much better because all components are designed so.

What kind of investment has gone into this?
We have been investing steadily in our R&D. In the last three years, our R&D spend has been upwards, roughly about five per cent of our total turnover.

Puzzolana seems to be more focused on indigenisation...
From our perspective, we are developing products for Indian market. We have done our homework; we are trying to bridge the technology gap, where we can help the Indian consumer grow at a better pace, at the same time, we attempt to save foreign exchange for our country. India is becoming a manufacturing base and we want to be a part in this growth.

How are things on the export front?
Our core focus is on crushing, which is only growing. We have increased our team members, and have augmented manufacturing facilities for the same. In crushers, I am very happy to state that we have entered new markets like the Middle East and Africa. In fact, what is missing in India is actually being compensated by exports. The growth is coming through exports now.

How long will you be able to sustain the price which is low?
There are multiple factors, engineering being one of the most important keys, and the excellent manufacturing practices we have set in. On the other hand, we have the advantage of the sheer volumes that we do. We have a very good fabrication and casting development team in India. In addition, we are looking at a long-term association with our suppliers. The suppliers also see a long-term opportunity with us and they develop track systems, hydraulics or different aggregates at par with the global standards. With this arrangement, we are able to minimise the cost in the best possible ways we can, in this situation. However, our focus is not the initial cost; it is cost of earning always. Our mantra is that our cost of earning should be lesser than anybody in the market.

What is your take on the slump in the Chinese CE market?
The price war has already started from China perspective. The slump in the Chinese CE market is definitely a concern for us. But India can compete with volumes.

In ten years' timeline, where do you see the company?
Where crushers are concerned, we want to be amongst the top three in the world. Today we are in the top ten. So I believe we are close to our target. Definitely, we have to open up new markets, which we have already started.