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DMG Mori Seiki eyes larger growth in Indian market

DMG Mori Seiki India, the 51:49 joint venture between DMG of Germany and Mori Seiki of Japan, recently opened its largest technology centre in Asia in Bangalore. On the sidelines of inaugural event Dr. Thorsten Schmidt, Member of the Board, Gildemeister speaks to Subhajit Roy about the significance of this centre. He also hinted of setting up a full-fledged manufacturing facility in India
 
Since the beginning of 2010, you are on the job of setting up this centre and today it is inaugurated. How do you feel now?
It’s a feeling of deep satisfaction. Firstly I was personally involved in the selection of the site and location. At a time when the market was going through the recession period in the history of the machine tools industry, we still kept on track and managed to convince the executive board to agree to invest in this technology centre. Today, whoever sees the facility gets the first impression of what we wanted to achieve here, it’s been a good effort.
 
DMG was quite successful in the last couple of years however it was always apprehensive about introducing local suppliers for projects. It was relying heavily on Germany for test cards and time studies to the customers in India which will not be the case with the opening of this facility. Wtith the centre having its own infrastructure now, the company is looking forward to give its best to the customers in India.
 
The centre was scheduled to be opened in early this year. What caused the delay in opening?
A couple of modifications with regards to the set up of the offices and varying calculations led to the delays, nonetheless we are very happy as the facility turned out exactly the way it was planned, so the delay was worth it.
 
Can you share your objectives behind setting-up this technology centre?
The objective is to make the sales and service application department more independent and further utilise the strength of the available infrastructure in the country. With an endeavour to include partners for tooling, fixturing and simulation in this facility; DMG Mori Seiki wants to give the customers the opportunity to develop the right process for their machining challenges. This tech centre has been built to reduce the need of sending components to Germany or Japan for job trials, thus will save considerable amount of time and money of customers.
 
A bonded warehouse is one of the key features located in this tech centre to stock critical spare parts for our machines. This enables storage of spare parts which are available for immediate import. Depending on the import regulations of the customers, they can have tax exemptions and so on. Localisation of spare pars would reduce the service delays and down time of machines. The warehouse currently stocks spare parts worth ` 3.5 crore and it would be enhanced to ` 13 crore by the end of this year.
 
Other features include the training academy. We will impart training to our customers in application, machine operation and maintenance at this tech centre. Therefore, it’s not just the pre-sale or selling of products, but also the after sale that is integrated in this facility.
 
It is quite evident that you have called only customers for the inaugural event. Why?  
This building is built mainly for our customers – they are our prime target group. It is their demand that led to the implementation of this project. I am in India since 2004 on a regular basis and I experience a strong wish of our customers to have this opportunity in an excellent environment to test their components in combination with our products.
 
What is your total investment in this project?
We have invested around 8 million Euro for this tech centre that include the land, building and complete facility.
 
How do you analyse your present performance in India?
The current role of DMG Mori Seiki in India is expected to increase further. We have a target to achieve one hundred million Euro by 2013 as a joint business volume for both companies. We are also contemplating a good share of the Indian companies which is pushing consumption within both the groups.
 
Being a two and a half billion Euro company, we are all set to achieve the target of 100 million Euro which is close to five per cent of our global consumption.
 
Can you share your strategies to achieve the target of 100 mn Euro from the Indian market?
We want to decentralize the organization; the technology centre is an important step, but not the final. We would also like to open technology centres in other areas such as Pune, Delhi and Chennai. So we wish to further decentralize our presence and demonstration opportunities for the DMG machines.
 
Currently, we have employed 101 people and we are all set to grow further. We wish to use this infrastructure in India to fulfil the commitments from the factories and headquarters to display stronger presence in India to learn about the requirements and the circumstances under which companies are using our equipment.
 
Is the technology centre a revenue generator?
Certainly! We are investing in such a building and technology centre to further develop the market and gain additional interest, build relationships with larger companies in India with a much serious approach.
 
Do you have any plans of setting up a manufacturing facility in India?
The inauguration of the technical centre in Bangalore is the first step in the vertical integration of DMG Mori Seiki in India. By introducing tooling and fixturing; we are encouraging suppliers to bring their products here, demonstrate them and document their strengths. This is a step further to enhance the localization of our products.
 
Manufacturing is required to increase market share. Given the serious competition in Indian market, we don’t intend to survive in the mid and long term mainly by importing products. So, production for DMG and Mori Seiki, of course is a clear target in India. On achieving 100 million Euro turnover, we will set up our production facility in India.
 
What are your other CAPEX plans for India?
This year the company plans to achieve 60 million Euro business volume to suffice the requirement in India. Gradually, we will move towards 100 million Euro and then look at selecting the site. Normally we start with productions that are comparable to Shanghai where we can produce 200 – 400 machines in the first year to a capacity of 2,000 machines normally.
 
Are you providing sales supports for neighbouring countries from India?
Occasionally, we have provided services for few individual projects in the Middle East. But we see this as an opportunity for the R&D work – initially with the department heads from Europe. The European R&D departments can come to Bangalore to visit customers, analyse the market and create strong cross border integrity.
 
How do you find the machine tools industry in today’s times compared to some years ago, more specifically in Indian context?
We see a positive development for manufacturers of machine tools in India. The manufacturers are facing different challenges on a regular basis and overcoming with an optimistic approach. Many major local machine tools manufacturers are showing very positive developments. They are systematically analysing the market and introducing machine models subsequently.
 
None of the machine tools manufacturers in India have a big sales structure which is again a big challenge. Nobody should underestimate the time that it takes to develop this. Now they may be satisfied to sell the equipment in India as the Indian market is booming, but at some point it will be required to develop international sales strategy. As far as products are concerned, rather than going for varied products range they should reduce their portfolio with a more focused approach. Overall, they are doing a good job. India has a lot of good engineers and in the future will also be able to compete on an international level without any doubt.
 
When do you see India as a recognized player exporting machine tools to the overseas market?
As I just mentioned it’s not just the machine type, it’s the set up and structure. I think it will take another 5 years.
 
Do you have enough talented manpower to support the technical services?
Our key area is good recruitment, strategy for engineers and programming coupled with utilization of equipment and a good ground for knowledge base. In my opinion one should not rely on manual equipment. Today, I see India on top of the scale with regards to expertise and knowledge.
 
When could we expect your next technical centre in India?
We have a partnership with WALTER Tooling, we are currently building a tech centre in Pune which will have on display exclusive DMG Mori Seiki equipment and our engineers will be stationed there. This development will be finalised this year only. It is going to be a support and services agreement where Volta will get our workstations in Bangalore tech centre and we can use their facility in Pune without any financial implications.    
 
Where do you see DMG Mori Seiki in India in the next 5 years?
On 1st April 2010, DMG and Mori Seiki combined their activities in India and formed the joint venture company DMG Mori Seiki India Pvt. Ltd. We are the strongest machine tool player in the world today. We are learning a lot from each other. The cultures may be different but people are learning from each other as we have a very good number of projects and with plans to implement the best practices from each other, I foresee this co-operation will intensify in the next couple of years.
 

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