七妹导航

What is your view on the concreting industry?
For the past two years, the situation was really bad but we suddenly witnessed a spurt in demand; orders which used to take months and months for closure were getting finalised faster. I do not know whether this is just a flash in the pan or whether the bad days are over because we still are not seeing any major contract awarded per se. Though the Cabinet Committee has cleared some projects, we are not quite sure when they will really take off. Once they start, then we definitely will see a big upswing in the business.

Which sector will drive demand the most?
The growth driver for construction equipment business is the road sector. If you look at it, every hundred rupees spent on a road project contributes to Rs 12 of equipment purchase. So for us, the growth driver for our industry is road projects, which predominantly contribute to the growth of the construction equipment industry. The government has taken a positive step in forming the Cabinet Committee to clear the stalled projects which are worth more than a thousand crore rupees.

What is the status of Pradhan Mantri Gram Sadak Yojana (PMGSY) scheme?
The PMGSY is going on very well. Some projects have already been cleared and are on in full swing, but that is not enough. We need bigger projects to come up.

What is the potential for concrete equipment, especially from the RMC sector?
For equipment manufacturers, RMC segment was not as good as anticipated in the last few years as none of the major players have invested hugely on expansion under the existing conditions. It seems, they are neither expanding nor purchases taking place, but capacity utilisation has gone up in their existing plants. So, there is some growth in the RMC industry, because of the individuals in small towns, especially in the southern and northern part of India, set up RMC units.

What is the trend in the truck mixers segment?
The biggest consumer of truck mixers is the ready-mix industry and its sale has been badly affected. Unless the big players start buying, you will not see huge numbers. Currently, we are operating below our installed capacity. Last year, we increased our capacity but the market has not grown to the expectations. So, there is a lack of capacity utilisation at the moment. The number of truck mixers has come down substantially by almost 40 per cent compared to that of 2011.

What is the demand-supply scenario for batching plants?
Because the big players are not there, selling is not happening. There are multiple factors for this. Firstly, there are no big projects in roads, airports or hydroelectric power projects. These are the projects which require bigger capacity batching plants. There is no major demand for higher capacity batching plants. But, there is a huge demand for smaller capacity batching plants. If you go by the numbers, we are meeting the target, but as the demand for higher capacity has come down, the topline has been hit.

The realty sector seems to offer huge potential. Would you agree?
The realty sector is predominantly dealt with by the RMC industry. Major RMC players have been able increase their capacity utilisation considerably, but there are no new plants being set up, so we are not benefited by that.

The cement sector is also down which has an adverse impact on the RMC sector...
That's true. Their costs have gone up substantially because of power and many other reasons. So they are not going for expansion because, for each ready-mix unit, one will have to spend about Rs 6-10 crore. At this point of time, they are not taking a bold decision to go for investment. Unless they are assured of a committed quantum, they may not invest and instead, look at dedicated projects now.

Has competition toughened with the price wars?
The number of players increased and the demand drastically fell. Some Chinese companies have started to supply at below material costs. We suffered a lot and lost the market share at that point of time. However, we took a stand that we do not want to get into that kind of a race. It does not make sense for us to get into this price war, drop our prices and undercut people. So we stayed away from that and sustained our costs.

How has the slowdown helped you revamp the processes?
In this slow period, we have gone in for a huge cost reduction programme. We had a thorough study done by an external consultant on all our costing structures, material costs, efficiency of production, efficiency of the order-to-cash cycle, etc. They have given us a feedback on how we can cut down on material costs, how we can have alternative sources to bring down costs and how we can improve the efficiency of our production, what design approach we should take in order to offer value engineering, and bring down costs without compromising on quality. All these initiatives have been done in the last one year. We had some excess manpower but we did not want to send them out. Because once the market bounces back, and we are quite confident, tomorrow if not today, then to get new people, train them and bring them up to this level is going to be very difficult. Our people have been with us for so many years and they know our product. So we would not like to let go of these people.

So, is Schwing Stetter ready for all challenges? When it comes to capacity, product range, manpower and servicing, we are quite comfortable and all geared for the upturn. It may take a couple of months for us to reach the old level with respect to our supply chain but that is really not a very big issue.

Has there been any structural change after XCMG invested in Schwing Stetter?
Even though XCMG has invested in our group, there is no direct impact on our company here in India because their investment is only on the holding company, and not directly so. Of course, they are part owners of our company but there is absolutely no interference in the Indian management or our ways of operation. They are quite happy with the performance of Schwing Stetter India and the reputation what we have created for ourselves.

Do you see any change in the market dynamics?
One thing I can tell you for sure is that our concrete market share has improved substantially in the last six months.