JCB India, the market leader in the construction equipment space, is betting big on growth opportunities in the future. The company, which wrapped up calendar 2010 with sales of over 21,000 units, is now eyeing new export markets.

“Asia-Pacific is critical to us and we have been exporting to Indonesia from our Pune plant since late last year. We expect 2011 to be a lot better and see opportunities emerging in the Middle East and Africa,” Mr Vipin Sondhi, MD & CEO, told Business Line.

India is JCB’s single largest market if one were to segregate the businesses in Europe and the UK (where it is headquartered). It also has a facility in China where it is a relatively late entrant. This is expected to help the Indian operations from the viewpoint of sourcing components.

“This option is always on the cards and we must constantly evaluate it when we add volumes. Though sourcing from China could become a large opportunity, the fact remains that there is a lot of good work being done by local suppliers,” Mr Sondhi said. Many of them are in the auto component business and keen on getting into infrastructure-related areas.

This calendar will see JCB launch new products, some driven by the need to increasingly participate in the heavy line business. The company is also getting ready for Bharat Stage III emission norms with the development of its own engine capability.

Like other businesses, construction equipment also went through a rough patch in the global slowdown of 2008-09. It was only from the second half of 2009 that things began looking up. Last calendar turned out to be a particularly good year for JCB and has become the reference point for the future.

“We are back to the growth story and have enhanced market share from 51 to 53 per cent. From a quality standpoint, it is my view that we have achieved a world-class stature,” Mr Sondhi said.

It was also during the downturn that JCB built the world’s largest backhoe facility near Faridabad as part of a conscious decision to keep investments going. Its capacity is 100 machines daily and the plant achieved 80 per cent utilisation in 2010. The Pune plant houses the fabrication and heavyline business units.

The slowdown saw JCB pull out all stops to ensure that its suppliers and dealers coped with the strain. “We were with them preparing for the upturn which we knew was bound to be steep. The downturn was a time to get back to basics while ensuring that morale remained high,” Mr Sondhi said.

However, some suppliers delayed investments and today this is proving to be a heavy price to pay especially when businesses such as tractors, auto and construction equipment are growing. “There is a huge stress on the system and this could constrain growth and even affect quality. We have to be doubly careful,” he said.

The company believes that one of its biggest strengths is its distribution network of over 350 outlets and 4,000-and-odd trained dealers. Operator training schools is yet another key initiative which is being carried out in over a dozen centres. “We have trained 15,000 people so far and are keen on scaling this further. There is a ready market for these operators given the growth of the industry,” Mr Sondhi said.

 

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