Ashok Leyland John Deere Construction Equipment Company Pvt. Ltd is a joint venture between Ashok Leyland and John Deere. In recent years, Leyland Deere has emerged as a key player across the backhoe loader segment in India. The company has also been training operators on the operation of backhoe loaders, product features and benefits, scheduled maintenance and daily checks.
P. Ravishankar, CEO, Ashok Leyland John Deere told Sandeep Menezes that the backhoe loader market will grow at a rate of about 5 per cent to 10 per cent CAGR over the next few years.
Excerpts from the interview:
What have been Leyland Deere’s main achievements since it launched its first product –the 435 Backhoe Loader in November 2011? Tell us about Leyland Deere’s long term business strategy?
Leyland Deere had launched 435 Backhoe Loader in the last quarter of 2011-12 financial year with a major focus on large customers. We have sold close to 1300 machines till date. In the last quarter of 2013-14 we have launched 435E backhoe loader which is targeted for First Time Buyer (FTB) / First Time User (FTU). We intend to grow our presence in the backhoe market with these products for now.
The backhoe loader segment in India is very competitive with many global players vying for market-share. According to you, what makes Leyland Deere products a frontrunner in this competitive segment?
In terms of mileage we are better than competition, we save ½ litre per hour of operation which translates to savings of Rs 60000/- per year only on fuel. In terms of uptime we are at 90 per cent level due to durable parts. This level of uptime of our products is highest in the industry which translates to quicker return on investment. Our revolutionary service offering CARE – i which stands for lowest Cost of operation delivering highest Availability through most Reliable product/s with Easy to do business with Intelligent Product and Processes reduces MTTR (Mean Time To Repair) to less than 5 hrs. This ensures 20-25 per cent savings to the customers.
How much growth do you foresee in the Indian construction equipment market over the next five years? Tell us about the main growth drivers?
The market for construction equipment has been one of the most severely impacted in the past two years. The new government, with its focus on infrastructure, will hopefully help restore some growth.
National Highway expansion program of 4 lane to 6 lane projects by NHAI, State Highways development programs and rural roads development programs typically increase the demand for backhoe loaders. Agriculture land development and associated irrigation projects also provide momentum for growth in backhoe loader segment. We hope to see several projects start work in these areas, with a stable government in place.
Land development, building construction and industrial development projects will also add to backhoe loader utilization. Blue metal quarries to support road construction, as well as reopening of the mining industry opening up will support the growth of demand for backhoe loader, as the last mile material handling is economically managed with a fleet of backhoe loaders. Based on the various initiatives, we estimate that backhoe loader market will grow at a rate of about 5 per cent to 10 per cent CAGR over the next few years.
What is the size of backhoe loader segment in the overall Indian construction equipment market?
Size of the backhoe loader segment is expected to be around 22,000 to 24,000 for the year 2014-15. Based on the various infrastructure development programs and mining industry, the backhoe loader segment size could touch around 30,000 in 2016-17.
Interest rates have started to soften although they remain high, and most equipment sales happen through financing rather than self-purchase. What has been its effect on the industry?
The impact of softening interest rates has not yet been felt in the market. However, this could support the FTB / FTU segment with more and more operators becoming owners.
Currently, there exist a huge shortage of equipment operators and technicians. Tell us about the extent of shortage and ways to mitigate it? Does Leyland Deere intend to assist in training?
Leyland Deere already assists in training the new operators. Operators are trained on the operation of the backhoe loaders, product features and benefits, scheduled maintenance and daily checks in order to ensure that the operator and customers are aware of the product. As and when required, operators are also trained on the scheduled intervals and call center activities to report product issues and take quick and appropriate actions to improve the uptime.
India is not governed by stringent equipment safety norms like those prevailing in the EU and US. Going forward, do you feel that equipment safety norms need to be strengthened in India?
Yes, equipment safety norms should be strengthened in India with features like ROPS, FOPS Cab, etc., on which regulatory bodies like ICEMA & ARAI working to improve safety norms. Leyland Deere is the only backhoe loader manufacturer in the country with ROPS (Roll Over Protective Structure) and FOPS (Falling Object Protection System) cabin. This provides operators the confidence to operate the machine and will enhance productivity.