“Govt looks in a mood to do business”

“Govt needs to identify some infra sector projects for the next 1-2 years and workout some incentive package that attracts construction companies to invest with confidence,” says Rajinder Raina, General Manager – Marketing, Escorts Construction Equipment
Construction equipment industry in India has gone through a very difficult phase during the last couple years. In FY 14, the size of the market was shrunk by about 35 per cent over the previous year. Rajinder Raina talks about the industry’s expectation from new government in centre.
In 2013, the construction equipment industry in India had hit a record low on y-o-y basis. How do you see the road ahead?From business perspective, the year 2013 was certainly a year better forgotten for all the players in the CE industry. With the new government in place it is hoped that the projects on hold will get started off and the ones waiting for departmental clearances get the nod in quick time. The outlook is promising and movement in the market place should be visible from September 2014 onwards. 
Like many other companies, Escorts CE had also experienced negative growth in FY 14. Why?The fact that the size of the market reduced by about 35 per cent over the previous year, there was no way that Escorts CE could insulate itself totally from the negative growth. However we managed to garner a slightly better market share and thereby post a negative growth which was less than the industry. Also, there was marked improvement in the most important domain of after sales and service.
From a negative growth in past year, you are targeting 10-12 per cent growth in current fiscal. How are you going to make it?Our growth during the current fiscal year is pegged upon two things: expected market growth of about 10 per cent and increased market share in backhoe loaders and road compaction equipment. These two put together should give us growth higher than that of the industry.
We are ready with the product portfolios in backhoe loaders and road compaction equipment which should give us increased market share.
Are you going to introduce any new product or technology to support your growth plan?We are planning to introduce some new variants across the product lines during the current fiscal these products shall incorporate changes in technology, design and other parameters. These changes are based upon the demand coming up from the various project sites.
However, new products introduction is not planned for the first half of the current fiscal year. Our current product portfolio has enough bandwidth to deliver the planned growth for us.
What are your expectations from the new govt. in centre?From the perspective of the industry that we are catering to, sharp focus on infrastructure and road construction will give the desired impetus. The sentiment is already up and the govt looks in a mood to do business. It does not need to re-invent the wheel, decision making at intra and inter departmental levels within defined timelines and the financial closure of the projects should be defined, monitored and measured at regular intervals. Premium needs to be placed on completion of projects with bonus for early or timely completion and penalty clauses for delay.
What are the issues the govt. should take up on utmost priority?Road projects need to be put on fast track to avoid cost over runs. Some of the projects which are stuck halfway are to be cleared off on priority. The target should be to use the monsoon period in a manner that road projects can start off by early September. On the infrastructure front, govt has to enthuse the stake holders through some tangible actions and decision making. This will see lots of foreign investment flow into India which is a must ingredient.
Are you expecting any kind of reforms in the infra sector that will help CE industry to grow?On the equipment purchase front, funding has become scarce and expensive. Govt needs to identify some infra sector projects for the next 1-2 years and workout some incentive package that attracts construction companies to invest with confidence. Also, some tax benefits on equipment deployed in various infra sector projects would be a big help. The biggest relief of course would be the GST.

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