Vipin Sondhi is the managing director and chief executive officer of JCB India Limited, which exports construction vehicles to more than 50 countries including Nepal. He was recently in Kathmandu to attend JCB’s Dealers’ Meet which devised the company’s plans for 2015. In an interview with New Business Age, Sondhi talked about new products of the company, their demand in Nepal, and what gives them a competitive edge in the market, among other issues. Excerpts:
You are in Nepal this time to attend JCB’s Dealers’ Meet. Is it a periodic event?
The Dealers’ Meet is an annual event where we plan for the year. There are two reasons for holding it in Nepal this time. One is, of course, to expose all our dealerships to this beautiful country. Two – and this is more important - we have seen our dealer in Nepal that is MAW led by Vishnu Agrawal grow very rapidly. From 100 machines in 2012, he has sold 492 machines in 2014. With more infrastructure projects now scheduled in Nepal, we anticipate more growth. So, we are here to see the opportunity and thank our customers as well as our dealer.
Of JCB’s product range, do you export all to Nepal?
Yes. What is launched in India is made available in Nepal within 25-30 days.
What are the most demanded JCB products in Nepal?
The backhoe loader and the tract excavator are the two most demanded vehicles here. MAW has built the backhoe loader market from the scratch. We have a product called ‘pick and carry’ crane which is a lift-all crane. We also launched three new products in December 2014 in India. Two of them are already available here. The third one will be available once MAW places the order for it.
Could you tell us something about the quality and efficiency of your products?
All our plants – we have five plants in India – are of global standards. We export our products to 50 countries in the Middle East, Africa, South East Asia, Russia and Latin America. Our products compete with the best products from anywhere in the world – whether it’s Japan, Korea, China, the UK, Europe etc. [Companies from] all these countries also manufacture [construction equipment] in India. Even the Indian market has the best quality machines. So, in terms of quality and reliability, they [JCB products] are of global standards. Then comes the use and emerging markets, which is, let’s say Nepal and India. We tend to use our machines at least twice as much as people overseas do. So, suppose they use [the machines] 1,500 hours a year overseas, we tend to use our machines 3,000 hours a year. It applies to everything – whether it’s a car or anything. We use everything to the maximum. The working conditions in our countries are very hard, in terms of the soil.
Therefore, the steel structures of the machines are very robustly designed for India and Nepal. So, the quality and reliability of our products is much higher than products from anywhere in the world. Diesel prices, except for the past six months, are extremely important for the operating cost. JCB has the most-fuel efficient machines in the earthmoving industry.
Besides fuel efficiency, what are the other factors that give you an edge over your competitors?
What does a customer want? Imagine that you are a customer who uses a machine which costs somewhere between three to five million rupees and that you have a major project to complete. If you don’t complete it on time, you will either lose it or you will be liable for penalties. And you are not operating in Kathmandu; you are operating in a difficult terrain 800 kilometres away from here. So, what do you want? You want the manufacturer’s authorized and trained service and parts persons to be available close to you. No other company in Nepal except JCB through MAW offers nine service centres across the country. And we are expanding our services; that nine is going to be 12 soon. Technical support, trained and authorized by JCB, will be stationed in 12 different areas by the end of 2015. Because the customer wants a JCB-authorized service centre near him/her when the machine breaks down. But the customer’s first consideration is whether it’s a quality and reliable machine. Our machines are exported to more than 50 countries. So, they are world-class.
The customer also wants the operating cost of the machine s/he uses to be the lowest. Through our experiments and test-runs, we have shown that our machines are the most fuel-efficient. Another factor is if all the costs are put together, JCB gives the highest value for money spent on buying the equipment.
Do you have any plans to launch any new products this year?
I mentioned the launching of three new products in January, this year. The first one is a diesel-run generator. MAW has already sold such a generator. We also launched another new product called Loadall a month ago in India. MAW doesn’t have this product at present. This product is meant for carrying bricks and cement in a safe, productive and efficient manner for [the construction of] two- and three-story buildings. The third one, which is perhaps the most interesting, is a small machine called skid-steer. We call it Robot. When you have narrow streets and narrow areas as in Kathmandu, how do you clean the sewerage and the garbage? How do you dig up? There is not enough space for a large machine to operate. This machine (Robot) can turn around with its axis as well. This machine too will come to Nepal once the orders are placed.
A couple of years ago, JCB’s market share in Nepal was said to be around 65 per cent in the heavy-duty machines category. Has the market share increased since then?
The market share has increased. Let Vishnu [Vishnu Kumar Agrawal, managing director, MAW] explain it. But the market share cannot go up endlessly. What we should be able to do is to provide the customers with as many products as possible so that they don’t have to go to different manufacturers for different products. So, we are providing the widest range of products.
Vishnu: At present, we have 68 per cent market share in Nepal’s earthmoving industry , including 72 percent market share in the backhoe loader segment and 49 per cent in the tract excavator category. These two are our major products.
What is the monetary value of your market share?
We do not generally calculate the monetary value. Most of the backhoe loaders are priced at IRs 35-40 lacs. Similarly, the price of tract excavators is between 70 to 85 lacs [Indian Rupees]. In the backhoe loader segment, we have the costliest products.
What about your partnership with MAW?
It’s been excellent. I am very pleased with their performance. As I mentioned earlier, we have seen 500 per cent growth in four years in Nepal.
How important is the Nepali market for you?
It’s extremely important – strategically or otherwise. Some people might say that it’s a small market. But the point is it’s a rapidly growing market. It is very strategically located vis-à-vis our manufacturing plants. It’s very easy for us to supply the spare parts to this market. As Nepal grows - it will from the infrastructure standpoint – it will become more and more important for us.
Are you present in other South Asian countries, besides Nepal and India?
We are present in Sri Lanka and Bangladesh. But for us, the Nepali market is bigger than these markets.