“As an OEM, we are consciously ensuring at these tough times to stand by our dealer network, suppliers, especially MSMEs, other partners, and more importantly our customers… because growth will come back in sometime, but it is important for all of us to sail through the troubled times and strike a balance in the stress they go through with our strengths”, says Puneet Vidyarthi, Brand Leader, CASE India Construction Equipment, in an exclusive interaction with Dhiyanesh Ravichandran.
Excerpts:
Lockdown impacts
Construction is a significant pillar of the economy, second only to agriculture. A sudden lockdown for a significant period has seriously impacted the growth path of this sector. For equipment industry, it was a double whammy, as the industry was already facing issues liquidity crunch resulting in subdued sales even before the pandemic. With gradual unlocking, we restarted our manufacturing operations from mid-June with all necessary safeguards, but restarting takes longer time owing to critical processes and raw materials supply chain constraints. As an industry together, we are coming out of it.
On the other hand, supply of parts from our side and restarting of dealership activities was swift. Mining and sanitation (civic) activities was part of essential services during the lockdown, so we were able to ensure necessary services and spares availability to support those customers. Further, there was no shortage of any of our products – either locally assembled or imported – as we had enough inventories. On the whole, we could very well manage the lockdown impacts.
Rollercoaster ride for CE industry
It has been a turbulent period for the CE industry since the end of 2018. Right when the industry reached new growth levels, the sluggishness in demand for CE began from the start of FY 2019-20. Despite the odds, Excon 2019 turned out to be really promising, but again by March this year, uncertainties started emerging, even before industry recovered from a continuous three quarters of stress. Now, the pandemic has put addition stress on the industry’s entire set of activities. Post lockdown, we were some improvement in the months of July and August, with road sector picking up and buyers preponing their purchases before monsoon.
Going forward, we expect demand to pick up further in September. Post monsoon, the October-December quarter should see some decent recovery in market place, only to help the industry post a notable growth in the first quarter of 2021. With union government’s commitment towards road building and pressure on state governments to kick-start rural employment and economic activities, we expect fair allocation and prioritization of money to construction and road projects, which can boost the demand for CE.
Fleet utilization and labour shortage
It is true that the fleet utilization levels were not up to the mark for over 7-8 months even before the pandemic begun. Order books of our rental fleet and that of other rental companies and our customers are not full for a longer period. However, with gradual unlocking, the equipment utilization is going up, we could concur that with the telematics data of our customers. It may reach the tipping point soon, but with the easing of construction activities picking up and new equipment purchases will improve the scenario in the coming months. Also, fleet utilization is directly dependent of fund flow and quick payments of dues for contractors. Things are improving in that regard as well, with banks enhancing liquidity and government clearing funds for projects. So, by the end of this year, the situation should ease.
Massive migration of labourers during the lockdown has made labour shortage a new normal. However, it’s a blessing in disguise. We may see a scenario in the coming months where construction and other economic activities – especially involving MSMEs – growing in semi-urban and rural centres as well, as workers are getting reskilled at their native places to suit local labour markets. Further, this will also push productivity and efficiency paraments within the CE industry, with enhanced skill sets and more machines or high-capacity machines in place.
Commitment to customers
CASE India Construction Equipment is committed to constant improvement and enhancement of our products as ever. We will continue bring sophisticated technology products and more options for customers, more so in terms of health and safety aspects of operators, and invest further in training. In these times of the pandemic, our maintenance and service teams are even more connected with customers than before; customers are also realizing the integral importance of telematics. We are also doing a massive outreach programme with our customers since the lockdown, to understand their changing needs and priorities.
In the current scenario, customer satisfaction and retention are of prime importance to any OEM. Our priority during the pandemic is to ensure that the existing machines are running. We have retrained and reskilled our service professionals wherever there were gaps in terms of competence and product knowledge. Thus, the efficiency of our service network has been greatly improved. We clearly understand the need and importance on aftersales service at this time, and are fully committed to it.
As an OEM, we are consciously ensuring at these tough times to stand by our dealer network, suppliers, especially MSMEs, other partners, and more importantly our customers… because growth will come back in sometime, but it is important for all of us to sail through the troubled times and strike a balance in the stress they go through with our strengths.
A new ‘Future’
Medium- and long-term growth for the CE industry – perhaps for the entire economy – may shrink a bit, but it is also projected that India’s GDP growth would reaching higher levels over the long-term. Manufacturing landscape is going to face significant shifts in terms of quality and production levels, while strong emphasis on ‘self-reliance’ will resulting in Indian companies investing in R&D and process capabilities, thereby improving quality level to that of global standards.
Exports will grow up significantly in the coming years. In our case, we foresee exports of components and key aggregates to our group companies abroad. Further, the upskilling of labour force should help the construction industry as whole, together with rural economy having a much larger role to play in the coming years.