‘Growth will come, that is certain as we are behind other nations’

Founded in 1972, Shandong Lingong Construction Machinery Co., Ltd, located in Linyi, China, is a national large-sized backbone enterprise in construction machinery industry and is ranked among the top five wheel loader manufacturers worldwide. SDLG branded products include wheel loaders, earth-moving scraper and excavator series, road machinery series, mining truck series, and small-sized construction machinery series serve the value market.

B. Sridhar, Head, SDLG Business, Volvo India Pvt. Ltd talks to Sandeep Menezes on the impact of the slow down in the CE segment.

 

Excerpts from the interview:

 

Although the equipment industry is not growing currently, what growth do you foresee post elections?

We are hoping for the best because once a stabilized government comes in, there will be steep growth. I think there lot of infrastructure areas such as roads, power plants etc has to be developed. Growth will come, that is certain as we are behind other nations currently. If infrastructure areas such as roads, airports, ports etc witness projects taking-off then every machine whether excavator, wheel loader, motor grader, soil compactor, etc., everything will grow.

Raw material costs are rising while the market slowdown is not allowing manufacturers to increase prices. Customers are increasingly demanding huge discounts from OEMs. Comment.

It is an interim problem. When there is a recession or slowdown in the market, this is bound to happen. It is not something which we have not seen. It has happened in the past also but once the stabilized government comes in place and growth happens, the mindset of customers and contractors will change.

What is the quantum of localization in SDLG products?

Currently it is all imported. Nothing is localized. Moreover, the Rupee depreciation has impacted us to the extent of around 15 to 16 per cent due to our imports of equipment.

Going forward, does SDLG have plans to manufacture products in India?

Manufacturing products in India is a good option provided there are volumes. Everything is based on volumes. If the total market increases then it is viable to put up a plant. But if the market is flat then it is better to wait for the situation to improve.

Around 90 per cent of equipment sales are routed through funding from financial institutions. How has the recent hardening of interest rates affected the equipment market?

Predominantly financing in India is done in the same way, irrespective of whether interest rates are high or low. Interest rates fluctuate slightly depending on the situation but that does not have a major impact. The most impact is from the current slowdown facing the market. There is only a slight impact due to currently prevailing high interest rates.
Once new projects actually take-off, everything will be back to normal.

What is the current quantum of trained equipment operator shortage across the industry?

There is no shortage of operators, but there is huge lack of skill levels in operators. We are training operators in all our customer locations. Operator training programs are continuously being initiated by our company. Our customers also send in their employees for product training. We then identify if the employee is good for wheel loader, excavator or motor grader and provide training accordingly.

What is SDLG’s future business strategy in India?

If the market growth returns then we will want to launch new products to cater to future requirements. We want to have products that cater to all segments such as roads, mining, port applications and general purpose. We have 13 dealers around India and 36 branches. There are also around 65 to 70 service technicians apart from engineers and managers. We also have on-site support for fleet owners. This helps in reducing downtime.

Tell us about SDLG’s newly launched products?

We have launched the G9190 motor grader—a 15.8 tonne grader. It has got unique improvements in transmission, axle etc. with the highest capacity in India. It has all types of safety and productive features built-in.

Isn’t this a bold move to launch this new product in a flat market?

The equipment market is flat today, but we have good faith about future growth in India. There is expected to be huge infrastructure development in India therefore equipment market growth has to happen.

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