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Scaling the challenges of equipment market

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Escorts Construction Equipment manufactures and markets a diverse range of construction and material handling equipment like Pick n Carry cranes, Backhoe Loaders & vibratory compactors. The company pioneered the concept of Pick ‘n’ Carry cranes in India in 70s.

They have a nationwide network of over 140 strategically located support locations, over 400 company trained dealers service engineers, giving it one of the best market reach in India for the sales and service at the site of application/projects.

In an interview with Masterbuilder, Rajinder Raina, General Manager-Marketing, Escorts Construction Equipments shared his insight on the new product launch, the current market scenario and innovations that go in making the firm a name to reckoned with.

 

Rajinder Raina General Manager-Marketing, Escorts Construction Equipments
Rajinder Raina
General Manager-Marketing,
Escorts Construction Equipments

 

Here are a few excerpts from the discussion.

What is the new product launch that is happening? Kindly enumerate on the specifications of the model?

We have recently launched a new backhoe loader by the name JUNGLI. It is a Backhoe Loader for rough terrains and hostile underfoot conditions. Generally, backhoe loaders are associated with soft strata like earthworks, basement, canals. Jungli is essentially for over burden removal in mines, river bed sand mining & such like tough jobs. It has high wear resistance buckets for abrasive surfaces & high tensile strength for cutting through hard strata. It has been designed to be right at the top for rough & tough applications where other machines fall short on toughness parameters. The components such as the bucket, boom are made from high tensile steel with high thickness of the steel plates used. The bucket has high abrasive wear resistant special steel.

Today, the customer/user has a variety of Backhoe loader brands to choose from for general purpose applications but for touch applications there is not much to choose from. It is this slot that Escorts designed JUNGLI for.

JUNGLI is a 76 h.p; 4 wheel drive machine with specially designed bucket made out of special steel with hard faced stiffner plates & hardox side cutting blade material for cutting into hard strata.

Heavy duty structure fabricated out of high tensile steel. The dump height & ground reach are better than the competition. The loader bucket capacity the backhoe bucket capacity is higher than the completion too.

The bucket break out forces & loader arm break out forces are much higher than the most of the competition.

Higher productivity coupled with better fuel efficiency reduces the operation cost to make it the best in class.

The four wheel drive makes it versatile for all types of underfoot conditions. The engine is turbocharged with an inline fuel pump which offers a very high abuse value given the fact that the site conditions for what the machine is designed is expected to be hostile/abuse prone.

The machine has caught the fancy of the customers with an eye catching colour that is combat colour of a battle tank. It goes with the BRUTE look which is the way it has been positioned in the market place.It works & looks different.

 

jungli-1

 

What is the potential market response that you are expecting from ‘JUNGLI’?

Looking at the current market trends in the coming 2 years or so the volumes are going to exceed 30,000 units. About for 10 to 15 percent of this comprises tough applications. Out of these 30000 units approx. 27000 units would be sold for soft strata for which 6 major players are competing & one of them being a leader with a major share of the market. leaves rest to fight it out for rest of the market, which is too small for so many players. JUNGLI will fill this niche segment of 3000 units? How much & how soon is something we are working for right now. The first reactions are really encouraging.

The government is taking initiative such as ‘Sagarmala Program’ for the waterway in respect to events like this will your project get an upheaval speed?

Projects like Sagarmala & AMRUT throw up huge demand for equipment. Chinese domestic market for construction & material handling equipment reached record levels on the back of many such massive projects. The best part about such projects is that it creates sustained demand for a long period. The industry looks forward to such game changing projects.

Give an insight on the fuel efficiency and USP of your models?

Today margins of business are very low, especially for backhoe loaders. More than 60 percent of the market is dominated by renters and small time hires. Competition is very high and when you quote competitive rates you have to see that you keep your operating cost minimum. In operating cost 60 percent goes into fuel which asks for high fuel efficiency in machines because the cumulative saving makes a big difference. Fuel economy, therefore, is very important in a competitive atmosphere. In this regard, JUNGLI is a remarkable product. While as most of the 4 wheel drive backhoe loaders have around 90 horsepower, JUNGLI delivers it all with a 76 hp engine. The machine gives 10 to 15 percent saving of fuels. Any product which has high fuel consumption will evidently suffer in the market.

After the new model is coming what are your market share expectations? Will there be owners or renters will have upper hand like now?

The ratio of hirers to owners will not change much, if at all the skew will be towards rentals. Even the mining owners are moving away from owning machines. Their core focus will remain mining ,not operating machines, which they will outsource, but for some.

 

 

jungli

 

Does the application of warranty of products and services applicable in Indian markets just like the firms outside India gives, as was visible in Bauma China too? What is the impact of this?

Comprehensive Maintenance Contract [ CMC] makes huge sense for major fleet owners who are working on projects where time is on premium. For the owner, CMC ensures a definite uptime of the machines at a defined/predetermined cost. This makes budgeting that much easy & sans surprises. Such value added services will be a game changer for any player. However the format, terms & conditions are still evolving in India to minimise the grey areas in the contract. For major projects, it can set a brand up & apart in the market place.

Has demonetisation affected business flow in any manner?

It will not have a major impact as most of the companies do not accept cash. Retail hiring segment will get affected for some time as most of the transactions are done in cash. The pain will last for a while for the hirers & users but in the long run it will help the small hirers to build their books of account & thereby scale up their business. Today, their financials are so week that financing becomes a problem. Proper transaction will improve the financial health of their business & lead to ease of equipment finance which will help demand. The good news is that our industry reported growth in November’16 as against Oct’16 as also the same maonth over the last year. Our industry will be a big beneficiary of demonetisation albeit some minor hurdles which pale out compared to the long term positives. The unorganised sector will get the much desired shape. I welcome the great initiative by our PM Mr Narendra Modi.

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