After establishing its manufacturing plant in Pune, Sany India is investing Rs100 crore for fabrication and to increase product range with higher local content. In an interview with AurtoParts Asia, Deepak Garg, Director and CEO, Sany South Asia, and Sany Heavy Industry India Pvt Ltd, said the company will also leverage its wide product range and strong financial support to increase its market share in India, Middle East, Africa and South Asian countries.
Q: What is the role of Sany India in the group’s overall business?
A: Sany India covers the entire product range and business of the group for South Asian market, which includes India, Bangladesh, Nepal, Bhutan, Maldives and Sri Lanka. Apart from that, being a manufacturing base for South East Asia, Middle East and Africa regions, Sany India also acts as a sourcing base for these regions for some of the products manufactured in India. Revenue-wise, Sany India contributes around four percent to the group’s total revenue. About 55 percent of our business comes from excavators and the rest comes from cranes, concrete, road piling and ports equipment. Our annual capacity is 4,000 excavators, 1500 mixers, 500 other equipment. Our utilization rate is 80 percent. We have invested around Rs 600 crore so far.
We opened the Pune manufacturing facility in 2009 and until 2014, we were not doing well and neither did the industry due to slow down in the economy. After increasing investments in infrastructure in 2014, we see a turnaround in the construction equipment industry, and last three-four years have been good for us. We grew by 100 percent yoy in last three years.
Q: Do you import only from Sany China? How do you plan to increase the localisation rate?
A: We are not largely depending on China for Imports. For excavators, our key components such as engines, hydraulics such as pumps, control valves and motors, are from Japan. We also buy some range of engines and hydraulic cylinders locally. Our current import content is 65%, but we are trying to buy more and more parts locally. Most of the high-value parts are sourced outside China. We have also localised a few hydraulics parts as our Japanese suppliers now have joint ventures in India and have started manufacturing some of our components here. The main constraint for localisation is non-availability of technology. Technology for some of our key components is not available in India, so we have to depend on imports for the time being. This is the case with all other excavator manufacturers in India.
This year, we are investing Rs100 crore in our existing plant to establish localisation of different fabrication components, and this will help to achieve a higher level of localsation. This investment will generate more employment and export.
Q: How will you tap the growing opportunities in India?
A: Sany Group has distinctive advantages in the construction industry. We got the largest portfolio for construction equipment in India, whereas most of our peers are single -product- line companies. We have diverse portfolios, having earth moving, road equipment, concrete equipment, port, piling equipment and hoisting solutions. We are the only company in India that offers a complete hoisting solution, having a range from 25T to 3000T of cranes. We have clients including L&T, Power Mech Projects, Sanghvi Movers, GR Infra, BSCPL Infrastructure, ECI Engineering, JMM Infra, NCC, HCC, Shapoorji Pallonji, Gammon India, Afcon India and many others. We will continue to localise our products in India, so we are expanding our product range. We have recently started tower cranes manufacturing in India. We have also increased the range of our locally manufactured transit mixers and are making batching plants. Going forward, we will manufacture pumps, mining dump trucks and localise three more models for cranes and few for excavators this year.
We will introduce new products in India from our global portfolio and as soon as we hit a certain volume, we will manufacture them in India. We will increase our export volumes to the Middle East, South East and Africa markets.
Q: How do you plan to increase revenue?
A: Sany India has got two revenue models. One is what we make and sell from India, and another category where we trade some of our globally manufactured products due to lower volumes. Both put together, we are close to Rs1500 crore, out which India book has a share of Rs1100 crore. For FY 17-18, we will be close to Rs 1600-1700 crore and India book will have Rs 1100-1200 crore out of it.
Q: What about service and spare parts supply?
A: Services are connected to equipment, applications and projects. For excavators, we have 29 dealers in South Asia, and they have more than 120 offices and 400 service engineers and 200 sales engineers, and spare parts depots. The service is rendered by our dealers for excavators, while for other equipment such as cranes and piling, we have our own engineers based out of major locations and project sites.
For spare parts supply, we do a full analysis of machine and its application, population, working performance and based on that we stock them at the central stocking depot. We have multiple logistics modes such as air, road, and railways. We do inventory planning and keep insurance parts, such as engine, pumps, and control valves. We stock around Rs 65-70 crore worth of spare parts.
Q: What are the challenges?
A: Today the challenge is the competition with high capacity, but I think if India continues to have a better demand, there could be supply chain constraints. Getting required spare parts will be a herculean task. While we have the capacity, our vendors don’t have the capacity. We need to understand, we are dependent, for some of the components, on Korea, Japan and China. If global markets do well, and spare part suppliers prefer those markets than a price sensitive market like India. India will have supply constraints and the whole industry will face the challenge.
We need to work out the supply chain with different alternatives. We are also working with suppliers to increase their capacity. We are also leveraging buying power of the group to book our suppliers to avoid supply constraints.