Interview with Rajesh Shrivastava, General Manager, Marketing & Dealer Development, Terex Equipment Pvt Ltd

Could you give a brief about Terex and how the company has been doing of late? And what are your products which are popular in the Indian market today?

Terex is a US based company which operates through five verticals and one of the verticals is Terex Construction and that is where our company belongs. We are based out of Greater Noida and what we manufacture here is backhoe loaders and skid steer loaders. The global technology which was available with Terex was indigenised for the Indian market and that’s when the plant was set up here and we manufacture these machines here for the Indian market. So broadly speaking most of the designs are tailor made for the Indian market. There is a stark difference between the backhoe loaders which are operated in India and the ones which are operated in western countries. These are used as utility machines there and they help you accomplish your routine work. Here it is an earning machine, it has to earn for its master. So the whole principle of design then changes. You have to make it more reliable, you have to increase the service life, and you have to focus on issues like lower operating cost as someone has to make a living out of this machine. Lately we have also been seeing the revival of the mining market, the mining of aggregates, coal, etc and as a result we have tied up with a Chinese multinational corporation which will bring in wheel loaders. They manufacture wheel loaders for the mining market and tomorrow we will announce our strategic tie up with the world’s largest manufacturer of wheel loaders which is Lonking Holdings Limited. We are focusing now on the mining market in the hope that the government will sort out all the mess which happened and the mining market will see a very bright sunrise. As the government is on the right path and the Supreme Court is involved, a whole lot of water has already flown so we are hoping fresh water will start coming in and this would be a right timing for us to bring these products. On the general market side in the backhoe segment we are the number three or number four player in the market after JCB, ACE and Caterpillar. So Terex is number four with a 6pc share in the market. We do about 1000-1200 units a year. That is very small compared to the size of the Indian market which is about 27000-28000 units, we are about 5pc of that amount. We are inching up our new backhoe model which will be launched tomorrow. So we hope to get an additional 3-4pc market share out of this new launch. They are a completely new generation of backhoe loaders. What Terex was making in India has been shifted and the new generation is being brought in now. It is called the series 70 or the 7^th generation of backhoe which Terex has rolled out. I think the market is ready for it, it is a work horse and again as I told you it is designed to earn for the master. As for the backhoe loaders and skid steer loaders which we make, both have a double digit CAGR growth. Last year was a little down, but even in the downturn it had a double digit CAGR. So these are the two exciting segments to be in and Terex is in both of them.

Terex entered the Indian market in 1995 with fierce competition in the market. Most of the players are on the expansion path. So what is your current strategy?

From a corporate perspective, Terex is open to both inorganic as well as organic growth. The last five to six years Terex really did not look at inorganic growth or even organic for that matter as we were never sure about how the government rules and regulations would change or if they would be in our favor or against us. Now we are very optimistic as the government has acknowledged the fact that there should be policy stability which will make investors feel confident. So now we are planning for acquisitions, inorganic and organic growth. So the first step is to tie-up with Lonking Holdings Limited. After another 5-6 months down the line, once the framework stabilises and we are very clear about what the government plans to do in the next two to three years we will get into the make in India scheme with Lonking. Then we will follow the make in India policy as well. Right now we are just carefully sitting and watching how the make in India plan rolls out and the moment it rolls out we will be the first ones to jump in. In fact we have already jumped in – we have announced a tie up with Lonking Holdings, we will keep evaluating the situation every quarter and will immediately jump in the make in India scheme. One is to expand our manufacturing base here and the second is to explore the markets outside of India like the SAARC and ASEAN regions. ASEAN holds a lot of potential. For the Indian market we are already present to a large extent and have 53 dealers. The Indian strategy is to strengthen these dealerships. The real challenge is to make these dealers responsive to the customers. In India as I said the customer profile has gone very rural. It is the rural youth which is now coming up with 5-6 Lakhs of rupees and wanting to invest, they pick up a machine and put it on hire or do some contracting work themselves. So those are the people who are mainly our customers. Until now our network was urban centric. It is a massive shift and we need to train all dealers to become rural centric. So in India we are focusing on that shift from urban to rural. Markets unfortunately are two steps ahead of us. The markets have already shifted we were the ones who did not realise it. So now we are running full steam to change the focus of our distribution network to become more rural centric. At the same time we are expanding outside India into other neighboring markets. So we have an aggressive plan for ASEAN and SAARC regions. We have already established a very decent market share in Nepal, Thailand, Indonesia and Malaysia. We plan to keep aggressively moving on that path as we have a cost advantage unlike these markets which are typically occupied by major Japanese, Chinese and Korean players. All three of them are not as cost competitive as Indians are. For India we will redesign the distribution network to be more rural focused as that is where the growth is coming from and that is where the customers are coming from. The immediate plan is to complete the tie up with Lonking Holdings and just wait for another quarter to see how the make in India program rolls out. So we will have the Lonking range of machines manufactured in India soon.