LeeBoy India Construction Equipment Pvt. Ltd. is a wholly-owned subsidiary established by Singapore Technologies Engineering Ltd.’s (ST Engineering) land systems arm, Singapore Technologies Kinetics Ltd. (ST Kinetics). Believing in industry is growing continuously, Mr Ramachandran talks about some present trends observed as well.
Growing industryOver the past 10 years, the India CE industry has been reading a lot of articles and surveys about massive growth. While there has been a substantial increase in numbers, the growth has not consolidated and has been accompanied by a couple of massive downturns. The parameters for gauging the exact growth rates are numerous. Political stability, availability of finance, monsoons (or lack of them) all lead to a very challenging and volatile environment.
LeeBoy has focused on building a global spec machine for emerging markets and gradually introducing more machines from the American portfolio like asphalt pavers, concrete curbing machines, asphalt pavers, distributors and pothole patchers. The LeeBoy focus continues to remain on the road construction segment and the portfolio is fine-tuned towards this.
ChallengesThe challenges to sustain long-term potential are as explained by Mr Ramachandran as follows:• A strong political will to improve infrastructure: roads, power, airport, telecom, etc.• An inclusive growth agenda• Steady growth rather than in spurts• Global statesmanship to ensure that India gets to execute projects in other countries that will also help to reduce the current account deficit• Stringent quality and safety standards to ensure that quality of product improves. This will also increase exports and the end-sale prices which will contribute to an increase in GDP.
Present trendsRight now, there is a sharp change in sentiment even though this is yet to percolate into increased buying at the grassroots level. At first, the dead stock has to move. A lot of equipment is available with financiers who will auction/reschedule debts. Things will improve by the end of 2015.
“The trends is procurement continue to be the same as before. Most key aggregates like large axles, transmissions, hydraulics are imported from Europe/USA,” says Mr Ramachandran. “However, the latest procurement trend has seen a lot of Indian contractors moving to the Middle Eastern and African markets.”
Most of the high volume aggregates like engines, axles, transmissions have been localised (In machines like the backhoe loaders). For the rest, buying from the European plants of the same supplier is continued. As the market evolves and the volumes pick up, these will also get localised.
For this to happen, there has to be a massive change in the mindset of the entire industry – both in machine building as well as end-execution.
Procurement-related activities “The challenge in the CE sector is to maintain cash flows as we have to forecast long lead items up to 4 months in advance. Then match them with shorter lead items and continuously sustain these,” informs Mr Ramachandran.
The long lead items are high value and constitute a large part of the cost. There are close to 800 line items in a machine and the machine cannot be despatched if any item has an issue or is not available.
As each item is validated, it is not possible to flip suppliers overnight. Storing large inventory increases the delivery effectiveness but reduces financial effectiveness. So it’s a combination of keeping a close watch on customer requirements, supplier capacity and efficiency, logistic resources (good reliable forwarders, clearance agents, etc.) and striking a balance between efficiency and price.
LeeBoy strategyLeeBoy’sw supply chain works as a 3-month firm and 9-month rolling plan. The company works with very experienced vendors who also understand its requirements clearly. Its key to high efficiency in sourcing is a close watch on customer requirement.
The company works on SAP and closely monitors lead times at its various suppliers on a weekly basis. This helps it to get a clear MRP run which is very close to actual. Constant visits to suppliers ensure that the status is known and there are no sudden unpleasant surprises.
Important for customersFinally, Mr Ramachandran gives some important tips to customers which should be considered while procuring construction equipment:• Expected life of the machine in a number of projects• Type of work at hand and matching this to machine specs (calculate expected usage and idle hours upfront) • Understand what features are available on the machine and how these features are relevant• Stability of the company • Contact person and flexibility of the company. Direct access to senior people vastly enhances the quality of service.
—————————————————————–The latest procurement trend has seen a lot of Indian contractors moving to the Middle Eastern and African markets.
-Amarnath Ramachandran, Vice President and Head Business Development, LeeBoy India Construction Equipment Pvt. Ltd.——————————————————————–boxThe establishment of LeeBoy India is part of ST Kinetics’ strategy to grow its CE business globally and become a more significant player in the road construction and maintenance equipment, crawler excavators and backhoe loaders industry. After having successfully launched the 785i LeeBoy motor graders and concrete batching plants. Now, it is all set to introduce a slew of new products and solutions to the Indian market.