Focus on localisation

By admin June 17, 2013 8:55 am IST

“In the last 2 years, we haven’t seen improvements in many policies around infrastructure, land acquisition, and environment clearance”
– Manojit Acharya, Executive Director, Demag Cranes and Components (I) Pvt. Ltd.
Focus on localisation
The crane industry is very much fragmented. Practically all companies, with a couple of exceptions, are family owned. By revenue, about 70 per cent of the market is held by the top 10 manufacturers. Demag Cranes and Components (I) is a part of material handling segment, specifically electrical overhead travelling cranes (EOT cranes) or gantry cranes. Demag is the first professionally managed, multinational crane manufacturer to start operations in India and one of the leading crane manufacturers in India.

EOT crane industryThe EOT crane industry has seen rapid growth over the past 5 years. Demag estimated that the market to grow at a CAGR of 10 -12 per cent between 2010 and 2015. However, on account of global slowdown and a cascaded effect in India, the industry has seen many investment plans being deferred. This has slackened the pace of growth. Demag expects a flat year through 2013.
Demag under Terex bannerUnlike 2011, Demag saw a growth in revenue in 2012. Also, US-based Terex Corporation has acquired Demag in 2011. The acquisition was completed as per EU norms in early 2012. Last year was also a year of consolidation and integration for Demag. Its India operation too was integrated with that of Terex India. Demag is now the material handling business segment of Terex Corporation. Under the Terex banner, its presence in India is now much bigger with 3 manufacturing locations in Greater Noida, Chakan and Hosur.
Policy paralysisDemag believes that a policy paralysis has dampened the India growth story. In the last 2 years, the industry hasn’t seen improvements in many policies around infrastructure, land acquisition, and environment clearance. This has obviously affected the sentiment, and hence the active flow of investments in most areas. While there are many projects still active on paper, there is no activity on the ground or shop floor. In certain areas, where policy was not the culprit, a low or no confidence perspective led to deferred investments.
Initiative to fight constraintsDemag will continue to invest time with its customers and ensure that they are able to derive the best out of their current equipment. The company initiated training a couple of years back. All its engineers undergo a certification for sales and service prior to being deployed in the field. The company has extended this to its customers and this has led to great appreciation by them. Its service contracts are modified and tailored to meet customer requirements. Demag is actively engaged in upgrading and modernising old cranes, both Demag and non Demag with a view to increasing their safety, reliability and performance. It has executed some very complex projects involving non Demag cranes which are working well now. This helps its customers defer their capex spends and continue working with their older equipment for another 5 to 10 years.
Focus is on localisationDemag’s current focus is on localisation. About a decade back, it imported cranes. Later, it started assembling them in India. For the past few years, design, manufacture and services have been offered from India, earlier from its plant at Hinjewadi, Pune. Later, Demag shifted to a larger plant at Chakan in 2010. The new plant enabled Demag to manufacture much larger capacity cranes. It now manufactures cranes as per IS and DIN standards. Its process cranes are localised with very little import content.