JCB India Limited is reaping the benefits of a ripe market that it once helped create, says Vipin Sondhi, MD & CEO
By Mitalee Kurdekar
When earthmoving equipment giants JC Bamford (JCB) first set up shop in India, the year was 1979. There was very little happening within the scope of infrastructure development in the country. The family-owned British company decided to break through this nascent market, in a way leading India into the mechanised earthmoving equipment age. In turn, it helped pave the way for the infrastructure equipment industry as we know it today.
“From that point, our journey has been almost close to four decades now and we have learnt our way through. Because when you come to India with a product that the market has not seen or experienced, then you literally have to create the market. And that’s what we did,” states Vipin Sondhi, MD & CEO, JCB India Limited.
He goes on to speak of the challenges that the company encountered at the very beginning. When they launched the backhoe loader in India, for instance, the only comparison was to animals or horse carts. The company invested a fair amount of time and effort in creating and later building the market, stressing on getting the concept across to potential customers. Of course, once the concept caught on, there was no stopping them.
“Because India is still an emerging market, you can try and introduce new products and technologies,” believes Sondhi. He points out that although the Indian market has been very choppy from 2011 through most of 2015, with month-on-month sales slipping as compared to previous months; it’s started to pick up since the past eight months or so.
“In terms of the growth, I would say that this year looks good. The first six months have been very encouraging as industrial growth has been about 40% over the same period last year,” he professes. With a wide range of 48 models across eight product categories on offer, JCB India is also riding this growth wave, posting similar figures in the bracket of 40-42%. The industry leaders manufactured 18,500 products last year alone.
Manufacturing Prowess
JCB India operates five state-of-the-art facilities in India. The first site is in Ballabgarh, just outside Delhi, which also houses the India headquarters. This is the world’s largest factory for backhoe loaders, and also manufactures diesel engines & generators, telehandlers and skid steers. JCB India expanded operations in 2006-07 by setting up two facilities in Pune to undertake fabrication work, including the welding and assembly of heavy line machines such as excavators, wheel loaders and compactors. Their Design Centre is also located in Pune. The most recent plant is in Jaipur. Spread over 115 acres, the zero-discharge facility was started in 2014 and currently handles fabrications alone.
In terms of raw material procurement, they have indigenised the supply chain network. Building a healthy ecosystem of MSMEs, JCB India has developed close to 400 local suppliers. This means that they do not rely of foreign supplies and, in the case of say the backhoe loaders, almost 95% of raw materials are locally sourced. This also helps to achieve market-centric price points and leads to a more nimble supply chain. In fact, at their mother factory in Ballabgarh, suppliers are located within a 250-300 km distance. Of course, this depends on the product in question. In the case of the large-scale excavators, which are manufactured in Pune, hydraulic components are imported from Japan. The company uses real time inputs on the current economic scenario to forecast demand using direct online systems, while following a Just-in-Time approach to maintaining inventory.
Each facility follows the JCB manufacturing philosophy, an umbrella guidebook that governs how each factory operates and functions the world over. This gives JCB India the advantage of ‘one global quality’, making it possible to export products to over 65 countries. This is vital, given that exports contribute to around 20% of revenue generation.
Automation of operations is product dependant. For instance, the assembly line at Ballabgarh is fully automated, with each backhoe produced in about four minutes. However, in Pune – where large 22 tonne excavators are manufactured – there is no automated moving line. Instead, they have skipped trolleys, where the entire super structure moves forward. That site undertakes flexible manufacturing and can handle five or six different types of excavators from eight tonnes to 12, 14, 20 and even 22 tonne machines, all on the same line.
Given the vastness of the Indian geography, JCB India has a network of 63 dealers across 650 outlets, spanning the length and breadth of the country. These remote outlets provide critical components and customer support, with parts supplied from warehouses in Pune, Chennai, Faridabad and Kolkata. They also have 15 Operator Training Centres in India, offering a month-long certified course on machine operations and maintenance. Women are employed across the shop floor; for example, they contribute to welding and engine making at Jaipur, where they go through an intensive 16-week training programme.
Sustainability initiatives also play a key role for JCB India. They use emergent technologies that are environment friendly; for example, their diesel engines are one of the most fuel-efficient in that category. At the same time, innovative technology ensures an emission-compliant engine too. Factories, especially the newer ones, are green facilities.
Designer Moves
The Indian business, which is a fully owned subsidiary of UK-based JC Bamford Excavators Limited, enjoys a seamless relationship with its parent company. “The support we get from our parent company is fantastic. We have never felt as if we are some other player, operating in some other part of the world. In fact, even in terms of manpower, we have got a free flow of talent on both sides, so that gives us the advantage of getting things done quickly,” says Sondhi.
When it comes to the sharing of technology or R&D too, there is ample collaboration between the two entities. Besides, JCB India boasts its own state-of-the-art Design Centre, in Pune, which designs emerging market-centric products, including products for India and other parts of the world. This happens to be the largest JCB Design Centre outside the UK, so a lot of the design work for other parts of the world is routed through India and carried out by the 400 Indian engineers working there.
“These products are not just tweaked; they are developed there. India has got a great reputation for developing things at a lower cost because of its frugal engineering. In that sense, Indian engineers can achieve or have the ability to achieve remarkable results within a lower cost base. That’s why we are leveraging that philosophy here and also developing products for the world market. This approach gives us the bandwidth to operate across different geographies, because of something that was developed frugally in India,” Sondhi proudly states.
Launch Mode
The last year-and-a-half has been extremely busy for JCB India, with multiple product launches taking place. In mid-2015, they introduced the Made-in-India telehandlers and skid steers. “These two product lines are quite new to India and were brought in given that material handling is going to be one of the brighter sectors for this industry. As India grows further, there will be a greater requirement for doing things safely, productively and bringing the global best practices to India. And this is most important in the area of material handling,” believes Sondhi.
Telehandlers are an evolutionary product that can vertically stack aggregate and handle palletised loads, leading to better productivity on site. On the other hand, the new range of skid steers are used where there is a restriction of space. The small, versatile machine can have, not just one bucket, but different types of attachments in the front. Again, it improves the efficiency on site. At last year’s Excon, JCB India also launched a larger 5.5 tonne wheel loader called 455ZX and a smaller loader called the Super Loader, meant for high dump applications and based on their 2DXL model. This range will be further enhanced in the coming months.
In addition to these products, a new telematics technology called Live Link was brought in as well. It helps keep track of each machine in a fleet. As opposed to the earlier method where the owner or the contractor would have to keep contacting each of the machine operators every few hours, with Live Link, a black box has been installed in each of these machines. That black box relays data through mobile telephones and remotely transmits necessary information about the machine on your smartphone. This revolutionary technology is already installed across 25,000+ machines, making them Live Link enabled.
And these launches couldn’t have been planned at a better time by JCB India. Despite the rough market scenario over the past few years, there now seems to a positive sentiment among buyers and hence hope for consolidation. Post a time when projects were not taking off, land acquisition was a challenge and the cost of borrowing was too high, the government has now announced major plans for the infrastructure sector. Physical infrastructure is the form of roads, highways, schools, hospitals etc. will be in focus; making room for manufacturers of earthmoving equipment like JCB to blossom. But it is early days.
“The government’s efforts for building physical infrastructure have to carry on uninterrupted for at least another 15-20 odd years. That will give you the sustainability of achieving the right numbers. We have had two clear quarters of growth so far. But we still need to exceed our own expectations that we have set out through the years,” admits Jasmeet Singh, head, corporate communications.
The company’s revenue for 2014-15 amounted to Rs 5,600 crore. Yet, keeping the current economic landscape in mind, JCB India is making more ambitious plans for the near future. “If you were to look at the growth of the industry over the last six months, say from January to June 2016 versus January to June 2015, there is a growth of about 40%. Roads and highways is a segment that is actually spearheading this revival. Whether it is national highways, state highways or village roads, it covers everything. So for us, it’s very important that this focus on physical infrastructure remains. The Make in India thrust is actually transforming the entire business landscape. Both of these are contributing to a healthy business environment, which is leading to new infrastructure activity and people investing in equipment to complete their projects. We are therefore targeting a 20% increase in sales,” Sondhi finishes off on a positive note.