Sandvik Mining is a leading global supplier of equipment and tools, service and technical solution for the mining industry. At Sandvik Mining, our entire focus and strategy revolves around safety, productivity and reliability, says Soumitra Banerjee, President, Sandvik Mining, India. Excerpts from the interview.

Sandvik has a stated target of Rs 2,800 crore this fiscal. Given the slump in the mining segment, how close are you to meeting targets?
The Rs 2,800 crore target has been set six months ago considering the great opportunities in the coal sector. We came across specific initiatives in various verticals where we tried to do that and one of the main segments is underground coal segment. There is a big need to develop the domestic coal industry and the challenge is to automate and mechanise the mining process to make it more productive and efficient. Even though currently the underground coal mining has not gathered the expected pace, with lots of pressure on coal industry, we expect this segment to come up. We see that there are a lot of opportunities in underground coal segment, and Sandvik has already geared itself up with specific product lines. Introduction of next generation technology with sophisticated mechanisation and automation can spur fast paced growth in the Indian mining and coal sector. Our new products, Vibrocone crusher, 63 T truck and bolter miner are aimed at increasing productivity and mechanisation to the next level. Compared to surface mining potential, we don't have many projects in underground coal mining.

Today in India, 80 per cent is open-cast and 20 per cent underground mining. But even in this 20 per cent underground mining, up to 90 per cent underground production is basically from manual and semi-mechanised operation. Coal India, Singareni and some private players are talking of giving the blocks to mine development operators (MDOs) where they want to introduce continuous miners, long wall technology; that is the area we are focussing on, not into the semi-mechanised areas. So the potential is huge.

To what extent has the MDO community accepted these advanced and automated technologies?
Over a dozen mines in India are operating with these latest technologies. Most of the major longwall operations, wherever it is inevitable, and mine owners would be able to come up with the latest technology. Though we are not into longwalls, in case of development of panels and longwall gateways, we have specific equipment which can go into that. For Sandvik, this is a much focussed area. But one major area of concern is that the pace of development of underground projects is very slow. So if that is speeded up, we expect a lot of potential. We are talking to all stakeholders. We are talking to Coal India and some of the even private block owners to speed up the projects.

What are the major issues here?
As you are aware, the most important one is land acquisition. There are issues of surface rights; issues from environmental clearance; then in underground equipment particularly there are lot of regimes for approvals need to be taken up. Another major area of concern is the availability of finance. People have already got projects in hand, might have purchased equipment, but finance is not available. In that case also we are trying to look into possibilities in which Sandvik can be of any help through our own equipment finance. All together, the projects are getting delayed.

What sort of regulatory reforms are you looking at?
One thing we need to do is, particularly the users who are block owners or maybe even if it is government players like Coal India, should develop tenders very fast with MDOs and award contracts. If it is a private block owner, he should also have right resources and secondly, the will to develop the project.

When do you expect a turnaround in the market?
In 2013, we expect some of the underground projects to really take off and from 2014 onwards, underground projects should be big.

How strong is the interface between the different stakeholders?
There still needs to be improvement. Work needs to be allocated first, the MDOs have to get clearances, and the financers have to come forward; it is a combination of efforts from different ministries, private block owners and financers.

Being a market leader, what are the initiatives taken by Sandvik in this area?
Our role is to provide equipment and support of the equipment over the lifetime. We have tied up with mine developers, operators, and on a regular basis, we take them and show them operations with similar kind of machines somewhere in Australia or South Africa. We have given them what are the parameters and cost involved. If there are any financing opportunities, we also take them to financers and planning institutes. We are also giving presentations and making them aware about the advantages and benefits of advanced technology that we offer, what they will get out of it, what are the safety features, etc. We are taking all those initiatives to educate the customers and MDOs.

Do you think lack of mining technicians is adversely impacting the industry?Yes, it is. Lack of skilled manpower is one area we need to develop. These kinds of highly underground mechanised operations require a lot of skilled labour and this is one area where we need to focus on. In any case, if we do not have the right kind of operators and maintenance practices, there we are going to have a lot of problems.

Brief us on the steps initiated by Sandvik to address this.In our own capacity, we are trying to recruit people and impart thorough training, theoretical knowledge, and hands-on experience. We will be deploying them across the globe, even to facilities where machines are manufactured so they get assembly experience, and then subsequently go to work in mines and different areas across the globe where the machines are operating. When they come back after 6-8 months of training, they will be quite good. We are taking this initiative to develop our own manpower needs to be backed up by availability of technical pool for the whole industry.

Coming back to safety, what have you done in this area?
Safety is a prime concern for us in mining. DGMS is doing a fairly good job in this area whether it is for surface equipment, or underground mining equipment. Sandvik as an organisation is very much focussed on safety. In fact, safety is the first priority for us and we do a lot of investment in that, even in the time of a slump.

What is Sandvik's core competencies and strength?
Sandvik, particularly in India, has been very strong in hard rock underground mining, especially in metals. We were not too much into the coal sector but iron ore is a major sector. Underground coal will be one of the strong areas and will be a part of global mining strategy.

Secondly, underground hard rock will continue to sustain the strong position. We have continuous miners and shuttle cars which eliminate underground drilling and blasting. For hard rock, we are present in the entire value chain right from drilling to loading to hauling to crushing, etc.

What is your take on the intense competition?
Competition is very strong whether it is open-cast or underground mining. But what differentiates Sandvik is technology, safety, productivity, peace of mind and reliability. That is the reason we are where we are today. All our products are highly productive, safe, and backed up with the entire gamut of after-sales and service support.

Has there been any shift in trends in terms of the user segment?
In the last three to four years, customers have slowly realised that their core competence is in mining, and they are more keen on getting into concepts like MARC so the entire responsibility of equipment, annual maintenance are on the OEMs. And clients today are insisting on cost-per-hour and cost-per- metre contracts. That is a big shift; the other is the increased awareness on safety.

How do you address the issue of devaluation of rupee?
We are trying to localise to as the best possible way that could bring down the import content. We are still importing certain equipment one hundred per cent as the volumes do not justify indigenisation. At the same time, we are trying to reduce the import content in some of the equipment which we are going to launch in the market very soon.

How long will you be able sustain the price levels?
That is a challenge we are facing. We are trying to de-spec some machines because there are certain specifications of the international markets which are not required in India. So even if they are there, the customer does not value them. Hence we will have to de-spec them and get the machine more specified to local market conditions. We are also looking at customer requirements in this market and maybe manufacture at low costs in India or China.

Is there any India-specific strategy already in place?
We have a clear growth plan on how we are going to approach the market in 2015. There are some investments in the product scenario and mining also. If volumes pick up, we will look at local manufacturing. Then we are talking of getting machine specifications to the local market for hard rock, and also looking at opportunities for getting manufacturing in China. We are also concentrating on tools and consumables and also will try to see there are certain areas where we are not present and will try to be there.