The Italy headquartered Berco Group supplies undercarriages on a just-in time basis to its main earth moving machinery OEMs all over the world for initial assembly.
S. Sakthi Kumar, Chief Operating Officer, Berco Undercarriages (India) Pvt. Ltd in an interaction with Sandeep Menezes says that most OEMs are badly affected in the domestic market and few have started exporting.
Excerpts from the Interview:
The equipment industry is not witnessing a growth, therefore, is there any increasing pressure from OEMs to reduce prices?
As far as Berco is concerned our import content is more. Therefore, we were badly affected by the currency fluctuations. To overcome this scenario, we have decided to look out for some local suppliers in India to develop parts. Every customer is urging us to bring down our cost which is not possible as of now. So, we plan to focus more on localizing the product.
What is the quantum of imported components in Berco’s products? Tell us about Berco’s attempts to localize its product range?
As of now, at least 95 per cent of our components are imported. We are trying to reach localization level of at least 35 to 40 per cent in next one year and are confident in achieving this.
What has been the impact of Rupee depreciation on Berco’s operation in India?
We are affected as every other player. But, although the market was very down, our business has done better. We were down by five per cent in the business last year compared to the earlier period.
Which segments do you feel will witness higher growth in near future?
We feel that mining and coal segments will witness higher growth in near future irrespective of whichever government comes to power. Even if the new government comes in, they have to clear projects and then release tenders therefore the real activity will happen only around January 2015.
Do Indian customers understand product life-cycle costs or still only look towards initial price?
The trend is definitely changing. We are witnessing certain positive signals and slowly things are improving. But most of our OEMs are badly affected in the domestic market but few have started exporting which ultimately gives us some good business.
What is the quantum of Berco’s current exports?
Berco’s exports currently are very less. We export only to our own companies Berco USA or Berco China. We have set up our machine-shop in our facility at Hyderabad wherein we manufacture shafts for rollers, which we have started exporting to our parent organization in Italy as well as China.
Does Berco have any future growth targets? Did Berco launch any new products recently?
We foresee some good prospects and it will happen. If we believe in it and work towards it then it will certainly happen. We have recently started this complete frame assembly set to many Indian customers those who manufacture drill machines, mini pavers, or mining equipment like roof support machines.
We are looking at targeting new OEMs like those manufacturing excavators and buses.
Safety and quality standards are currently not stringent in India. Going forward, do you foresee any change?
Everything starts with safety and everything ends with safety.