indiamarkets: What are the typical problems the Indian construction equipment industry faces today?
Ghandy: Well, in a nutshell, we don’t have a level playing field because our infrastructure costs are 26 per cent higher than what a foreign manufacturer faces. This is in terms of power tariffs and cost of finance. Added to this, unfortunately, are certain government decisions, for example, permitting zero import duty equipment for certain projects while at the same time, the same equipment made in India incurs sales tax.  There is no level playing field. These are the points we have taken up with the government. How much of these will be resolved in the coming budget, we don’t really know, but we are hopeful of a positive outcome.

indiamarkets: A number of Indian companies are forming alliances with major foreign players. Is this a welcome change?
Ghandy: We will have to do this because there is no time to bring up new designs for developing technology. We have to go to the big players to get new technology. Otherwise, we will be nowhere.

For the last 15 years, Telcon has had a tie-up with Hitachi. Hitachi today has a 20 per cent stake in our company.

indiamarkets: With IT growing, what would be the impact on the construction technology industry?
Ghandy: Well, I think it has made our operations more efficient. On the one hand, it gives us more information. Secondly, concepts like B2B applications and using websites to advertise our spare parts and catalogues are other ways in which IT can be used in this industry.

indiamarkets: What are Telcon’s plans for the future?
Ghandy: Well, basically, we would like to become a one-stop shop. Our first plan is to widen our product base. Today, we are essentially seen as an excavator manufacturer and we have a majority share in the excavator market. But we would like to widen our product range so that we can offer our customers a complete solution, rather than just an excavator.

indiamarkets: In India, construction equipment is not used much - unlike in China and other countries. In this context, is it good for a company to focus on a niche market, like Telcon does on excavators - or should it broaden its base?
Ghandy: Again, it depends on certain factors. To some extent, you need to broaden your base because otherwise there are not enough volumes to remain viable. The more you broaden your base, the less focused you become on technology - so you tend to dilute that a little. We have to try and get the best.

indiamarkets: Where does the Indian construction equipment stand, in terms of technology, when compared to key players at the international level?
Ghandy: Well, if we are talking equipment alone, we are right up there. If it is about applications, we are not really all that good because we might be using a first class excavator for one part of the job and a razor train to move materials form one place to another. So there is no consistent level of technology throughout the whole process. That is what we basically need to develop. But again it’s a problem because the unemployment rate is high in India. A number of factors have to be balanced.

indiamarkets: What is the role of the small and medium entrepreneur/enterprise in the construction equipment arena?
Ghandy: I think there is a larger role for them as ancillaries rather than as equipment manufacturers because technology is changing so fast that a small unit just can’t keep pace with it. It is much better for a smaller or medium sized unit to become an ancillary to a larger company or to become the manufacturer of an attachment for a larger manufacturer. That offers it the synergy as well as collaboration.

indiamarkets: What should be the survival strategy for SMEs? What if an SME supplies a particular ancillary product to a large company, but is not able to keep pace with changing technology?
Ghandy: In such cases, the major manufacturer has to help out the SME. Because, after all, the SME is making the product according to his designs. Of course, you should have some of your own R&D. But this is not the same amount as the large manufacturer can afford or requires. For example, if I am offloading a frame to an ancillary, the design is mine. He does not have to design the frame. Basically, what he needs to do is have a design capability for his fixtures, for his production processes.

indiamarkets: In terms of quality of products, where does the Indian SME stand?
Ghandy: I personally think they are very good. Yes, we do blame our ancillaries for not giving us quality products. But we don’t demand quality products. If the ancillary person knows that he cannot get away with supplying bad quality, he will produce quality products. Plus, he will need help – see that his plant is properly equipped and that he has a proper layout. This kind of assistance will have to be provided.

indiamarkets: Why is that even after fifty years we still burn tar on the road?
Ghandy: Again, it is firmly a question of volume. When you give a contractor half a kilometre of road to build, he burns tar in a drum because he cannot afford anything better. If you give him a 100 kilometres of road to lay, he has to buy equipment to do, otherwise he can’t do the work.

indiamarkets: What is the future of the construction equipment industry in India, say five years down the line?
Ghandy: I hope it would be very good. I think the government has ignored infrastructure building for too long and if India has to grow, it has to have good infrastructure. Without infrastructure, you just can’t survive. Infrastructure requires construction equipment. The two go together.

indiamarkets: Excon 2000 - Is it mainly for generating more business or awareness?
Ghandy: Both.

indiamarkets: Can you tell us more about the kind of business that will be generated at this event?
Ghandy: Firstly, Excon will showcase the construction equipment industry. It is to show everybody what we are doing, what we are able to do and what the future is. Also, companies can display new equipment so that customers can see it more closely. It can be demonstrated; customers can see at leisure how it works. They can be told of the productivity gains that arise from using that particular equipment. More than for the major manufacturers, I think it is going to be a tremendous opportunity for the ancillaries because today many major manufacturers do not really know which people can do a good job. I think this will be a marvellous opportunity for them.

indiamarkets: For your niche area of excavators, who are the major customers?
Ghandy: Well, we supply machines for mining, for granite quarrying, marble quarrying, and limestone quarrying for cement industry. We also supply machines for irrigation projects and for road works.

indiamarkets: Any interesting statistics you would like to share about the construction equipment industry – in terms of growth and the volumes it can generate?
Ghandy: Well, growth has not been substantial. If you look at the annual growth rate for the last 10 years, it has been 14 per cent, which is not bad. But when you start from 0 if you grow 14 per cent, you don’t end up at too big a figure. Overall size-wise, our industry is minuscule. I remember, around three or four years ago in the whole of India, we sold around 5400 pieces of construction equipment. That same year, Japan itself sold 82,000 pieces. So you can see the difference. Therefore, there is tremendous potential for growth in India. Unless infrastructure projects really take off, I don’t think we will be able to meet the demand, we will have to grow at the rate of 25-35 per cent to meet the growth.

indiamarkets: In a sentence, can you give us a punchline for Excon 2000?
Ghandy: It is a facilitator for growth. And while Excon may be small, we are hoping that in the future, Excon would be much larger and much more important. We would love to see it reaching the levels of Bauma, the biggest construction equipment exposition in Europe, held in Germany so that it can really showcase construction equipment, as it should be.

The interviewer can be contacted at pradeep@indiamarkets.com