Demonetisation to have positive impact in long-term: Escorts CE

Escorts’s newly launched Backhoe Loader EG0A0480

In an exclusive interview with ACE Update, Escorts Construction Equipment’s Rajinder Raina discusses on how IoT is transforming construction equipment segment. He has also spoke about how demonetisation will make an impact on construction equipment industry growth.

Could you apprise us on the status of construction equipment market in India?
Construction equipment market has witnessed a robust growth during the past 12 months. The way things are going in the infra sector, the demand is expected to look north. The sentiment is positive and planning by OEMs for FY 18 is higher than FY 17. Things are looking up with the degree of growth varying from product to product.

Escorts is ready to cater to the projected volumes in different categories and has ensured that the vendors or suppliers are aligned to the growing demand on them. On the front end, our distribution network has been expanded with more parts and service outlets being added on a regular basis for proximity to the work sites of the customers or projects.

How is the advent of new trends such as IoT transforming construction equipment segment?
The fact that our industry is dominated by first-time buyers and users, any such technology takes time to find acceptance. Initial scepticism is not surprising and the time taken for acceptance is on expected lines. Escorts started off with Equipment Monitoring System (EMS) a real time monitoring system that provides vital data to the owner as well as the after-sales service provider. Finance companies too see value in it for tracking of machines, particularly when they are working on long stretches or migrate from one site or state to another. Telematics is the first step in the domain of IoT (Internet of Things) that has a lot to offer as a value added service.

How is it influencing the buying pattern?
Most of the manufacturers offer it as a standard or optional feature and to that extent it is not a differentiator between different brands. It is a value add feature that is being paid for as the returns are commensurate with the cost. The influence is limited to this extent only.

Brief us on the Escorts CE’s initiative in adopting such trends.
EMS makes my after-sales service that much more potent. It helps Escorts sweat its biggest asset, the dealer network in a manner that is so much more beneficial to the customer and the dealerships. The biggest benefit is that the user and the supplier stay connected post warranty period the instances of which are below the desired levels across the industry giving rise to spurious parts market.

How demonetisation will make an impact on construction equipment industry growth?
Demonetisation will hit the equipment industry but the impact will be short term. There will be many positives and long-term benefits. More than 40 per cent of the equipment, across the industry is purchased by retail hirers and most of their business is carried out in cash where proper bookkeeping is not in place. This move will shake them into maintaining records or accounts. Lack of proper books of accounts makes it difficult for such customers to get their equipment financed. Furthermore the lending rates are bound to get reduced which will reduce the cost of finance or ownership. As the banks limp back to normalcy, things are expected to improve from January 2017. Retail hiring not being too organised at present will get benefited big time from structured accounting helping the small hirers to move to the bigger league.

7