It was beaming Vincent Tan of Volvo Construction Equipment (CE). The President – Sales Region APAC (Asia Pacific) of the Swedish giant had reasons to feel happy.
As the Indian arm celebrating its 20 years in the country, Volvo CE, one of the major businesses for the Volvo Group in India, is preparing for the strong growth curve on the back resumption of industry growth and a bright outlook for the market in the country.
The mining and construction equipment industry in India is expected to end the calendar year 2017 with a strong note as the industry with a decent growth after 2-3 years of challenging period.
For Volvo CE, India is certainly the biggest market in outside China in the Asia Pacific region.
“In the last three years, we have seen the Indian market grow more than most other markets in the Asia-Pacific region. We see India becoming a bigger and a more important market for Volvo CE,” said Tan at the recently concluded EXCON 2017 in Bangalore.
With a humble three-member team in 1997, Volvo CE in India has grown into a couple of hundred-people organization now with a world-class factory in Bangalore.
Volvo CE is the only major construction equipment manufacturer in the country serving three major industry sectors: mining, road building, and construction.
Vice President and Head of Volvo CE India, Dimitrov Krishnan, who takes us through the journey of the company in India and its sustained commitment to the market, feels proud of company’s long heritage in India and its growth in the past 20 years.
“India has its ups and downs but our commitment has remained constant. We owe so much to our customers and this anniversary is as much a celebration of our partnership with them as it is of our 20 years of operations here,” he said.
Volvo Group in India started its business in India with Volvo Penta, which started here in 1993. Today, it is a ? 5,000 crore group having strong presence different businesses.
Volvo CE has had several firsts. It introduced articulated haulers at a time when the market did have any clue about it. It was also among the first to introduced telematic solutions in India. The company rolled out the first seven-metre paver, which has more or less become the standard in India.
More than half a century after they invented the concept, Volvo Group celebrated the production of the 75,000th articulated hauler in July 2017. Having produced more than half of the articulated haulers ever made, a staggering 50,000 Volvo haulers are still in regular use around the world.
Krishnan pointed out that it Volvo CE India was not just introducing products in India, but creating industry-leading benchmarks. “We have redefined productivity and the result is that the whole segment is improving. Our contribution is basically driven by our core competence in fuel-efficiency. Everybody is competing with us and the fuel efficiency game has actually been redefined by us. We also work with customers to keep the uptime high in order to help them achieve better profitability,” he said.
Citing an example of company machine’s performance, he said ground preparations for a new runway at Bengaluru’s airport were completed at a record pace with support from 18 machines from Volvo CE.
“Today, over half of coal-mining is done using a Volvo excavator and carried by a Volvo truck. We are a significant player in road construction equipment. The most significant is yet to come, Krishnan added.
The company has also established a customer centre in Bengaluru for operator training. In 2016, it trained close to 1,300 operators and the total trained was more than 11,600 till the end of December 2016.
He pointed out that continuous innovation also a major factor in making its presence felt in the Indian market.
India is also a centre where a lot of R&D happens for products that are not sold here. It has electronics and telematics teams also in India.
Volvo CE has been designing and developing products for road construction, with the exception of specific products for cement roads.
“An excavator is a versatile product used in road construction. For concrete roads, we do not have a concrete paver, but (we have) everything else that is required to build a base for the road which is called the DLC (Dry Link Concrete),” he said.
Discussing growth prospects and challenges, he said the industry grew about 15 per cent two big disruptions – demonetization and GST implementation.”
New products to boost share
With a bigger focus on infrastructure development in the country, the road ahead is favourable for the company.
“We have about six per cent market share in excavator (20-tonne segment) category and we would like to improve that hopefully by a few percentage points. We will make a significant impact with our latest product EC2000D,” said Krishnan.
Earlier, the company was present only in about 25 per cent of the market. With the exactor, the addressable market size grows to about 80 per cent. With this expansion, the company expects significant growth in market share in the future.
“We need to make this product successful with our support offerings and making the new type of customer base comfortable with the Volvo brand,” he said.
The company said EC200D will offer class-leading fuel economy and reliability. It has very high expectations on the new machine given the strong growth in demand expected in this equipment category.
Road building has been one of the busiest sectors in the Indian construction industry over the past two years, and the EC200D is expected to become a big hit earthmoving applications.
“We expect the EC200D will appeal to large construction companies, as well as owner-operators and contractors. We’re also expecting strong interest from rental companies. The specifications and design of the EC200D make it a perfect option for the rental industry, he stated.
The new unit sits alongside the EC210D in the company’s range allowing customers to select the right 20-tonne Volvo excavator for them. The EC210D offers a higher-spec than the EC200D, making it suitable for heavy-duty applications such as mining or quarry work, as well as general construction duties.
“The 20-tonne excavator market is the largest with a volume of 11,000 units (having been sold) this year. With our new product, we aim to widen our customer base and reach out to those customers to whom Volvo’s 21-tonne excavator was slightly out of reach. We have come into the mass market with the 20- tonne excavator that comes with a Volvo engine with 165hp, the most powerful in its class. In our estimation, in the 20-tonne ton market, more than half of it is used for general construction work,” said Krishnan.
Deliveries of the EC200D will begin in early 2018 and will be backed by Volvo CE’s service and maintenance support network.
Targets 20,000 machines…
Volvo CE has sold more than 2,000 machines in 2017 and they are targeting to reach 20,000 machines in India.
Presently, excavators and backhoe loaders dominate the sales. However, the company has also seen higher sales of road-building equipment.
“We are also seeing the market in India maturing. Now companies recognise that specialist products deliver better productivity than generalist ones. Hence, sales of excavators have on the rise at the expense of the backhoes, which have traditionally been Indian contractors’ preferred machines. We definitely see that changing, said Krishann.
In 2018, the market could very well cross 1 lakh units from the current 75,000. According to estimates, by 2021, India would sell by about 1.25 lakh units.
Discussing the journey of Volvo Penta, which makes engines and provides power solutions for marine and industrial applications, Miron Thoms, VP and Head of Volvo Penta India, said the company started to see big growth in the power generation business from 2005. “We came as an outsider and today in the imported business, we have 80 per cent market share,” he added.
Thoms expressed happiness over company’s achievement in this business. We helped cut fuel costs by 20 per cent using a Volvo Penta engine when compared with competition. Also, environmental care is one of our cornerstone in the Indian market.
Heading: ‘Committed to building highest quality machines’
Vice president and head of Volvo CE India, Dimitrov Krishnan, who has been spearheading Volvo’s construction business in India, also talked about company’s key focus areas and emerging technologies. Edited excerpts
Can you tell us about your production, quality control, and testing measures?
Apart from our factory in Bangalore, we also have a large and experienced team at Volvo CE that understands the market, and the needs of our customers.
Our production facilities, including the one in India, have some of the highest levels of automation in our industry. We operate under the Volvo Production System, or VPS. It’s a toolkit that includes methods such as Six Sigma – which reduces unwanted variation in processes, and Lean – which eliminates wasted time and material, to create a more streamlined assembly process which helps us offer industry-leading reliability in our machines.
Where are you likely to invest in the coming years?
At Volvo CE, we believe in investing in product development that combines proven technology with an adjustment for the needs of local industry. We are committed to continually developing and investing in machines designed specifically with the needs of our Indian customers in mind.
What has been the impact of Volvo brand in the Indian construction equipment market?
India’s push to expand connectivity among its population and business centers presents a huge opportunity for Volvo CE. Infrastructure development continues to be the key growth driver in our economy and while the country is making strong progress there is still much to be done. We remain the only major manufacturer present in all equipment sectors: mining, road building or general construction. Whatever the demands of the job, Volvo’s equipment offer the company’s hallmark qualities: industry-leading fuel efficiency and productivity levels that customers love globally, particularly in India. Customers in India prefer Volvo machines so much because they can deliver the fuel savings they want but without the need to take on newer hybrid systems, instead utilizing proven designs.
What are some of the new concepts/technologies Volvo is working on?
Volvo CE is at the forefront of technological development and, each year, our parent company, the Volvo Group, invests billions of dollars in research and development to drive new innovations.
Volvo’s pursuit of electrically-driven vehicles could be a game changer. Recently, our company unveiled the world’s first fully-electric compact excavator, the EX2, which is equipped with electric drive systems and electromechanical linear actuators. While it is too early to say if there will eventually be a shift towards electric engines, Volvo CE believes that going electric is the future of our industry.
The EX2 prototype shows our determination to provide zero-emissions machines in the future which will have the same power and force as conventional equipment.
The EX2, however, is just one of a few electric initiatives we have. The LX1, while not fully electric like the EX2, is a prototype electric hybrid wheel loader. At a press event in the US in July this year, we presented results from hundreds of hours of testing that show an average improvement of 50 per cent in fuel efficiency compared to its conventional counterparts. This equates to a reduction of 35 per cent in fuel consumption and greenhouse gas emissions.
Thirdly, the HX1 is a prototype autonomous, battery-electric load carrier. It is one element of a project that aims to electrify a transport stage in a quarry – from excavation to primary crushing and transport to secondary crushing. It has already picked up industry awards for innovation.
What will be your focus areas and objectives going forward?
We will continue to focus our innovation on the three guiding principles of the Volvo Group: quality, safety, and environmental care. We are committed to building the highest quality machines, so Volvo CE models use the latest technology to deliver better productivity and longer up time. Similarly, our attention to greater safety has helped us create some of the most advanced operator cabs in this, or any, industry. And being committed to environmental care has led Volvo CE to produce machines that achieve its famous fuel-saving capabilities.