Voltas Ltd is a Tata enterprise and a leading engineering solutions provider and project specialist. The Mumbaibased company offers engineering solutions for a wide spectrum of industries including electromechanical projects, mining and construction equipment, and material handling equipment. Milind M. Shahane spoke to Sandeep Menezes about prospects in the mining and construction equipment sector and his company's upcoming plans.
What is the current scenario in India's mining and construction equipment segment?
The industry was growing very rapidly until 2008 with growth rates of nearly 25 to 30 per cent per annum because a lot of equipment was needed by the construction and infrastructure segments. Now it is growing at a much slower pace of about 10 per cent. But since India will see a lot of construction and infrastructure projects, we can safely predict a future growth of around 5 to 8 per cent. If recession ends completely and the market picks up again, the industry rate can go up to 10-15 per cent.
How is the presence of foreign players affecting the Indian mining and construction equipment market?
All the global players are already present in the Indian market. Some also manufacture in this country. These global players are across product categories. Companies in Japan and Europe definitely have high-technology products, in the sense, their machines are more sophisticated and have better features like advanced electronic controls and better product finish. Whatever is manufactured locally is also equally good in performance.
It also depends on the price because the additional features that foreign manufacturers offer come at a much higher price. Some customers will pay but many others won't pay extra.
Indian manufacturers have definitely caught up. The presence of foreign players has led Indian manufacturers to upgrade their products and also increase the market size and, therefore, overall their impact has been positive.
What are the recent trends in India's material handling equipment market?
The material handling equipment segment is similar to mining and construction equipment. It is a slightly different segment in that it is equipment used in handling loads. The growth in MHE was also 25 to 30 per cent up to October 2008. However, the segment shrunk by almost 30 per cent in 2008-09. Now we are again seeing some growth of around 5 per cent.
India is the only existing growth market for mining and construction equipment. China has already grown and Europe and USA are already mature and hence require fewer equipment.
What are your plans on the exports front?
Our exports are around 10 per cent of our turnover. We plan to target more exports but then the global markets are extremely competitive. Currently, we export mostly to the Middle East and Africa because regulations in other developed countries is very strong in terms of safety, emission norms etc. For instance, US and European regulations mandate that engines should be Euro IV compliant but in India we are still at Euro II level. We can still export to countries that have similar regulations like India, such as countries in the Middle East and Africa.
Also, the volumes of Indian companies need to grow so that products become competitive. China has 10 times more volumes in its local market than India. So if our volumes grow, our products will become more competitive.
Do you face major challenges while providing electrical and mechanical solutions for infrastructure projects?
We have been doing such projects both in India and overseas. In the overseas market, the major challenge was getting people to execute these projects. The timeframe for executing these large projects overseas is very short. Therefore, mobilising the required manpower overseas is a challenge.
In India, the challenges are different and mainly consist of infrastructure bottlenecks like power availability at the site, transporting material on time and delays occurring due to regulations and clearances.
Tell us about your company's future business strategy.
We are looking at infrastructure projects for electrical and mechanical works overseas as well as in India. Water sector is another area that we are focused on.
In the infrastructure sector, we are strong in certain segments like buildings, airports and commercial real estate. We need to do more in the industrial segments i.e. electrical and mechanical works in industries.
We also have a strategy to grow in the power segment where a lot of investment is happening.
In engineering products, we have further growth plans in the mining and construction equipment segment because a lot of investment is happening in mining. Likewise, there will be requirements for MHE in the warehousing and industrial segments.
We will also be upgrading our products to meet international standards and try to fill product gaps with certain models that we don't have currently.
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