The Hindu Business Line : Telcon aims to be a billion-dollar company by 2010

Telcon, a subsidiary of Tata Motors, had earlier made plans to achieve Rs 3,500-crore turnover by 2010. Under the guidance of their recently appointed new Chairman, Mr Praveen Kadle, it now foresees becoming a billion-dollar (Rs 5,000-crore) company in the same period.

In an interview to Business Line, Mr Rana Sinha, Managing Director, Telcon outlined the roadmap towards the projected goal. Excerpts:

How does the company foresee the recent infusion of funds and increase in stake by Hitachi Construction Machinery?

Certainly this is a good sign because Hitachi is world leader in hydraulic excavator technology and they hold the top position when it comes to this technology. They have come reduced their charges for technical knowhow and royalties are being reduced to one-third of their original cost. This gives us cost-competitiveness. Plus, their experts help us achieve global quality standards to introduce better products in the market. This will help us become a source for their global manufacturing. They also want to use our engineers for creating an R&D base in India. The engineers would be outsourced for servicing equipment that need a lot of service support.

Can you elaborate on becoming a global hub for sourcing components and vehicles?

This business is very vast in its product portfolio. It starts with mini-excavators as low as one-tonne class, and goes up to 800-tonne class. Each such excavator is as big as `Bombay House', while the smallest in class is a bit smaller than a small car. Within this range, there are 130-150 different models in the marketplace. So, when we talk of being a global hub, we look at certain models of this range where India is the source to cater to international markets such as Africa and South-East Asia. Besides product range, we look at components as a source for Hitachi's manufacturing plants in Japan, America and Europe.

The Hitachi global headquarters in Japan looks after markets all over the world. It has several sources across the globe to cater to marketing needs; India will now be one of the sources. The people who service the market will decide which product is suitable for a particular market; we will be a centre of excellence in manufacturing.

How does the domestic front improve and where is the focus?

On the domestic front, the entire marketing knowhow and technology is with us, so understanding segments and prospective customers lies with us for India and neighbouring countries. We intend to bring in more fuel-efficient vehicles with the help of Hitachi. We are also looking at bringing in IT and telecom into something as mundane as earthmoving or mining. Now, the machines will be equipped with GPS (global positioning systems); one can now monitor the vehicle irrespective of the distance between the administrative office and the site of operation.

Profit after tax has increased by more than 100 per cent. Where does the company see itself in the next five years?

In the last three years turnover has increased from Rs 500 crore to Rs 1,300 crore. In the next five years, we should be close to a billion dollars (Rs 5,000 crore) in turnover. Currently our profitability is in lines of leaders like Caterpillar. The construction equipment industry is growing at 35 per cent a year and we are growing at 40 per cent, so production is based on confirmed orders.The growth is primarily due to the infrastructure boom in the country over the past two years and it is likely to continue for certain more years. In order to meet the domestic and export market demand, we need extra production capacity and we are considering various sites and additional expansion capacities.

Under the new Chairman's guidance, what is the vision for the company?

We had a made a five-year plan some time back, in which we were looking at becoming Rs 3,500-crore company by 2009-10. But now there is a renewed push and we are aiming to cross this figure much earlier and become a billion-dollar company by 2010. We intend to retain our 54 per cent market share for excavators; in backhoe loaders and wheel loaders, the company enjoys 12 per cent and 20 per cent respectively. In the last two segments, we intend to become the second largest player in the country. JCB is the market leader for backhoe loaders while Caterpillar is the market leader for wheel loaders.

There is another thrust in the area of equipment for roads. We have developed our own motor grader. The pilot tests are carried out with various contractors and we have just commercially launched the indigenously designed motor grader. For road making, our product range also includes compactors, we have two types, a soil and asphalt compactor. These compactors were made in technical collaboration with Spanish company Liberero. This company is also looking at India becoming a hub for manufacturing of compactors for the South-East Asian markets. Besides these two products, we have a third product called the asphalt batching plant.

Being a subsidiary of Tata Motors, how are the company's operations related towards the auto industry?

Certainly, there are synergies with Tata Motors. We use some of their engines, like the 497 NA (naturally inspirited engine) or the 497 TC (turbo-charged) for the small excavators. We also use the 697 series for the wheel loaders. Tata Motors has another subsidiary called HV Transmissions and HV Axles, so we are working towards procurement of axles and transmission from this subsidiary. We are also looking at certain Tata Motors commercial vehicle dealerships. They will help us identify certain areas that can be tapped and identified as a lucrative business opportunity. Their presence in semi-urban and rural areas helps us benefit in building out network throughout the country. Many of our earth-moving equipment work in conjunction with Tata motor trucks, so they help us in being our logistics solution provider, as raw materials have to be transported from the source to the finishing plant. We are looking at synergies between the two companies for prospective clients who are looking at one-stop solution in the field of mining and construction.

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