The Hindu Business Line : Volvo may make construction equipment in India

Mr Keith J.Ellis, President, Asia region, Volvo Construction Equipment Division, at a press conference at the India Mining Summit in Kolkata on Wednesday. — Parth Sanyal

Kolkata , Nov. 24

THE $30-billion Volvo group is planning to manufacture construction equipment in India.

Though the advantages of setting up shop at its existing facility at Hosakote in Karnataka have been stressed, the company has said it is open to exploring opportunities elsewhere in the country and possibilities of acquisition. Volvo currently manufactures heavy commercial vehicles in India.

Addressing a media conference at the Mining and Machinery Exhibition organised by CII here today, Mr Keith Ellis, President, Asia region, Volvo Construction Equipment (CE) division, said that the division was currently "studying" the possibilities of manufacturing Backhoe loaders in India. Backhoe loader is one of the many construction equipment manufactured by Volvo.

Without giving any hint of the quantum of possible investment, he said that the company was looking for "selective investments" in the Asian region. "The last time we invested in China. The next one will be in India."

Though it entered the country with excavators in 1997, the company feels that the existing market conditions do not leave enough scope for Volvo CE to manufacture excavators in India.

"Though the Indian market has matured a lot since I came here first in 1999 and is witnessing increasing demand for world standard equipment, the excavators sector is still fragmented and dominated by low-cost products. We do not think manufacturing of excavators to be a profitable proposition in such an environment," Mr Ellis said.

The company, however, finds hope in Backhoe loaders, which is used in all kind of infrastructural activities. "India is the largest market for Backhoe loaders with market size ranging up to 6,000 units." Overall, construction equipment business in the country is growing by 30 per cent.

Volvo currently sells over 300 units of construction equipment in India. "We are expecting the business to be double this year," Mr Ellis said.

Construction equipment currently contributes 13 per cent of the group's turnover globally, second to trucks & buses (67 per cent). The share of the division is expected to grow up to 20 per cent in the next few years with emerging opportunities in Asia. Business in Asia is increasing by 35 per cent.

Controlling 11 per cent global market share in construction equipment, Volvo is the "largest manufacturer of 9-18 litres heavy duty diesel engines".

Apart from trucks and construction equipment, Volvo has substantial business interest in marine and industrial engines, aero-space industry and financial services.