Bengal Commitment [Jan 2012]

Today, the State of West Bengal is infamous for its negative work culture. Aggressive trade unionism cripples the industrial growth over the decades. However, very few players like crane manufacturer TIL could hold their nerve and cherish the success. To increase its footprint in the state, TIL has recently invested Rs.600 crore. R Nandagopal, Vice President (Equipment & Project Solutions), TIL speaks to Subhajit Roy and highlights the commitments of his company
Mr. Nandagopal, you have recently inaugurated the Changual facility in West Bengal, when are you going to start the commercial productions?It’s a bit early to talk about volumes as of now as we have recently commissioned the Port and Construction Equipment factory at Changual near Kharagpur in West Bengal. This year we will try to get most of the prototype development happening like the primary crushing plant. In the next 4 – 5 months we will be rolling out a series of prototype machines.
From Changual facility which is the Unit 1 of port and construction equipment facility, we will roll out crushing & screening products for aggregate and mining applications under license from Astec Aggregate and Mining Group, a part of Astec Inc., US.  Also made under license will be the double barrel hot mix asphalt plant again in partnership with Astec. The plant will also make rubber tyred gantry cranes in technology partnership with Paceco Corp, a part of MES- Mitsui Engineering and ship Building-Japan. The state-of-the-art facility in Changual has been designed using concepts of demand flow technology & lean principles.
With about 60 per cent market share in the mobile crane category, what made you to think of venturing into crushing & screening products segment?   If we look at the history of the company, TIL started with Caterpillar dealership which is basically construction and mining machines. Then we had lifting solutions which was the crane side of the business, but we were missing in the crushing and screening side. If we talk about roads, TIL has everything for laying the roads, we have material handling as far as road is concerned but not the raw material supplying equipment which is the aggregates and the mix to be supplied. So, there was a gap in the kind of portfolio we offer in the infrastructure space. This new portfolio will complete our offerings to the infrastructure equipment segment.
Can we expect that within the next few years you will be venturing into road building equipment business too like the soil stabilisation?Our partners already have equipment that can be used for soil stabilisation but right now we are not focusing at this level. We are still on the surface level, we are not going below the road but it’s a possibility as our partners have the machines available.
You have recently laid down the foundation of one more factory near Kharagpur, what kind of production are you looking at that facility?It’s not for one more facility; it’s for a complex, a land area of 104 acres where we are looking to start with new crane facility. We have an existing crane facility in Kolkata which is filled to the brim with capacity and cannot handle any more volumes, it’s just bursting at the seams in terms of production but then the market size is there. Therefore, this facility will help in expanding the capacity as well as the portfolio for cranes. Initially we will deliver Rachstackers from Hyster. Afterwards we will build another factory that will bifurcate into Rachstackers and Forklifts of the Hyster brand. Therefore, we will have one crane facility in Kolkata, second crane facility at Vidyasagar Industrial Park in Kharagpur, and the third facility at the same complex will be for Hyster range. In addition, we will set-up a crane refurbishing facility for rebuilding old cranes and the corporate training facility to provide authoritative training for cranes and Caterpillar equipment at the same facility.
Recently you signed an agreement with Mitsubishi, what kind of collaboration is it and what are the opportunities you are looking at?For our range of port equipment which is the container handlers for key side and container handlers for ship to shore cranes, the technology partner is Mitsubishi Engineering Ship Building. We do not have any stake from any of our partners; all of our partnerships are licensed agreements which are for technology sharing.
We have another agreement with another company called Mitsubishi MEK, a machinery company from Japan which is part of the Mitsubishi group, this is again not a technology agreement as such it’s a dealership agreement where we are bringing in tunnelling equipment which is what we call as road headers.
How do you define TIL now with venturing into different verticals?Ultimately, the objective of TIL is to gain a significant presence in the infrastructure space. We would not like to limit ourselves to a particular segment and wish to spread our wings across the spectrum of infrastructure.
With very limited players in the crushing & screening segment, how are you planning to maintain your significant presence?We are possibly the last mover in the industry – we have got all the big players here. There are disadvantages of being the last mover in any industry, that’s the challenge we face. The positioning of our products is another challenge because we are not aiming to be a price player, we would be playing up there with established players in terms of pricing and even there we would offer our products at a premium. Volatility in the sentiments of the market is the third challenge; people are hesitating and are apprehensive about investment. To counter these challenges, we have decided to go after the target segmented market strategy and we have been successful in seeding whatever we had to do.
We have targeted segments in terms of applications and geography. In terms of getting the premium and the breakthrough in terms if volumes, we would like to be different in the features we would offer.
Our equipment will have certain features which would be differentiated from what is available in the market. That is something we would keep highlighting and get certain breakthroughs. The challenge would lie in terms of building up on that breakthrough where we would step in with differentiated products. Also, we would look at response time that is even if we have one machine in Goa we will post our service engineer there, we are stocking parts at Sesa Goa site. So, we are reducing response time enormously whenever there is a call from a customer. Performance guarantees is another step that we would look at, the kind of availability guarantees, owning and operating costs. We will go upfront and discuss about our offerings; if we default, compensation will be offered.
You are doing business from West Bengal where setting-up business itself is a herculean task. How do you find the present business environment of that part of the country?There are no disadvantages in the work culture in West Bengal. There is a different mindset, the work culture is different. The traditional heavy industry is not doing well in the state which has been there for a long time. However, TIL has proved itself successful started its journey with the crane factory in1962. We have seen the rise and fall of the Left Front there. We have gone through when they were at a peak; we have never had a problem in that factory such as labour strike.
We have built the new plant with an investment of about Rs.150 crore. For the new facility, we put our first pile foundation in October 2010, the first column for the factory was raised on May 27th 2011 and November 19th 2011 we commissioned the factory.
Did you face any problems with regards to land acquisition?Land acquisition has always been a controversial and sensitive topic across the country. Though we have had some difficulties, there was a commitment from our owners to the state of West Bengal; they are committed to that State very emotionally. So far things have not gone radically wrong, things have gone fairly well.
The overall investment we are looking at these two complexes is very significant.  We are looking at an investment of Rs.600 crore and direct employment opportunities would be around 3,000. Lot of corporate responsibility is being undertaken by TIL. On the whole, it is going to be prosperous economical and uplifting of the surroundings that will start with education and health and so on.

1