Construction equipment maker Leyland Deere has sold just about 500 backhoe loaders in the country since its rollout in January. It could have sold more but it wants a measure of the market The joint venture between truck-maker Ashok Leyland and US company John Deere has tied up only 20 dealerships in the South; it is yet to make inroads into the rest of the country.

This has been a “conservative” launch, admits the venture’s CEO, P. Ravishankar. But the economic slowdown is not the reason, he says. “The slowdown should worry an industry leader with large volumes. For an entrant, it is all about focused marketing.”

Grassroots customers

Leyland Deere has largely tapped the tier 1 and 2 retail customers at the “grassroots” who supply to large contractors. “If we get their goodwill and acceptance, then it builds across the industry,” says Ravishankar.

The market for backhoe loaders (used in digging) in India is approximately 33,000 units a year. “But it is too premature for us to talk numbers. We will take our first ‘numeric’ view after we are pan-India.”

Leyland Deere has started appointing dealers in the West. By the year-end, it is targeting 45 dealerships across the country. It is not aiming at “a huge explosion in volumes now”.

“We want to ensure what we offer is ideally tailored to the Indian market and a small niche of customers.”

Leyland Deere’s ‘435’ backhoe loader, at Rs 24 lakh, is priced at a marginal 3 per cent premium over competitors’ offerings, chiefly JCB and Caterpillar. The strategy is not to get into a price war, says Ravishankar. The vehicles come with a two-year warranty; traditionally, it is just one year. “This is to reduce the risk to the customer who is going to switch from a well-known brand.”

The company promises to restore running repairs (barring engine overhaul) within half-a-day. “We are careful in selecting the dealership node. The 100-km radius around the node is our catchment; we don’t sell beyond that. Because after-sales service is important.”

The backhoe loader is manufactured at the company’s plant in Gummidipoondi, near Chennai. The front-wheel loader will be Leyland Deere’s next launch in 2013-14. The company will take a call on other launches as the market progresses.

Leyland Deere aims to reach full plant capacity (8,800 units) by 2017-18. “The bulk of this will come from backhoe loaders.”

Backhoe basics

A backhoe loader is essentially used for trenching and digging. But only in India is it used to demolish bungalows and other old buildings. This is the kind of peculiarity Leyland Deere is keen to understand.

“In western countries, breakers and imploding devices are used to bring down buildings. But in India, the backhoe loader is repeatedly swung on the sides of buildings to bring them down,” says P. Ravishankar, CEO.

Since this puts “terrific pressure” on the parts of the equipment, “we redesigned the entire geometry for the backhoe loader to take higher loads,” says Ravishankar.

The company launched the backhoe loader in January. But the learning has not stopped. “We are constantly looking to add applications as we study the Indian market deeper.”

The result: Leyland Deere wants to add rock-breaking capabilities in its device, something that its competitors already offer.

Customer trials are also being conducted on the JV’s next launch, the front-wheel loader, in Pune (where the venture has an engineering centre) and in the US.

(This article was published on August 8, 2012)
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