Interview - JCB India's Vipin Sondhi

10 November 2010

JCB India CEO Vipin Sondhi

JCB India CEO Vipin Sondhi

In any industry and any market, the big players tend to be the companies that were there in the early days and made the right decisions along the way. Latecomers are rarely market leaders, but they can prosper if the incumbents lose touch, get their strategy wrong or implode through internal politics.

JCB's success in India is about more than getting in early with the joint venture it established with domestic manufacturer Escorts in 1979. Indeed, with sales of just a few hundred backhoe loaders per year in the 1980s, there must have been many who asked, "Why bother?"

It seems a ridiculous question today, with JCB India (now a wholly-owned subsidiary) operating the biggest backhoe loader plant in the world in Ballabgarh an hour or so south of the capital, New Delhi. The capacity of this extraordinary plant is such that it can produce one machine every four minutes - 100 in a 9.00 am to 5.30 pm shift.

Those unfamiliar with Indian manufacturing might think this is achieved by an army of workers in a factory the size of a small city. How wrong they would be. Not only is the plant the biggest in the world in terms of capacity, but it is arguably the most advanced.

The assembly line is so slick that it employs just 80 people, with sub-assembly and production carried out on continuously moving, synchronised lines. One advantage of this system is that components are delivered to the points where they are needed on the line on trolleys. There are no forklift trucks required, which has made the environment safer and, according to JCB, cut out a staggering 12500 km of forklift movements per year.

The heavy investment in its production facilities has helped JCB retain a commanding position in the Indian backhoe loader market, as Vipin Sondhi, managing director & CEO of JCB India explained, "In India, people say 'Bring me a JCB' because we are synonymous with the backhoe loader, and 8 out times out of 10 it will be a JCB because we still enjoy that kind of market share."

"All those who have worked here in the last 30 years have created that foundation by sitting with potential customers with calculations to show how a backhoe loader will give them a return on investment. That has been done contractor by contractor and hirer by hirer over the decades."

As well as building up manufacturing capacity in India, JCB has put a big focus on bringing along its dealer network over the last five years or so. It now has close to 50 dealers and 330 outlets across India, and a dealer development programme has seen them become more professional

"Five years ago the dealers looked different. There was nothing wrong with them, but they were often mom & pop companies in rented spaces and so on. Now they are world class, with a consistent look and first class facilities. They have become landmarks, and people give directions based on them," said Mr Sondhi.

Another initiative has been to help tackle the much talked-about skills shortage in India, with JCB opening its first training centre in 2006, close to the backhoe plant.

"For every machine you sell you need at least two, and maybe three trained operators, and where do they come from? If you're selling 13000 machines per year, you need 26000 operators. That's where the need comes from, but there is also the point that it is good to do it from the point of view of creating the skills. We felt that by doing this we would not just benefit the business, but benefit the industry as well. So we have eight to ten of these schools around the country now, but it's not stopping there - we're encouraging dealers to do it too," said Mr Sondhi.

Candidates pay INR 8000 (US$ 175) for a month-long course. It is a nominal amount, but it is a lot of money for many in India, and this is why JCB is also establishing partnerships with state governments to expand access to training.

Market recovery

All this should stand JCB in good stead as the Indian construction market bounces back. A key turning point was last May's general election that saw Prime Minister Manmohan Singh's National Congress party retain power with a stronger coalition government. This saw former commerce and industry Minister, Kamal Nath take over the road and transport portfolio and announce his ambitious plans to build 20 km of roads per day.

Such a target is of course music to the ears of a company like JCB, but it is one Mr Sondhi treats with a little caution.

"Everyone has heard about the 20 km target by the minister of transport. People have discussed whether that is too much or too little, but fundamentally it is a very ambitious target because capacity has to be created. Capacity for consultants, capacity to fund, capacity to fund, capacity for contractors and perhaps most importantly getting the state governments on the same page, because land acquisition is a state-level issue.

"What is important is the fact that it is likely to be achieved. I think that is what has engaged a lot of people.

"Leadership at a governmental level is extremely important, and I think we have that now," he said.

It is this growth in infrastructure construction that has encouraged JCB to offer a wider range of products in India, particularly excavators, which are built at the company's plant in Pune

Mr Sondhi said, "We started with the eight tonne model, and we now go up to 20 tonnes, and we fill any gaps that appear in that, but we are looking at heavier machines. The thrust there is in quarrying and mining and heavier construction applications."

Arjun Mirdha, executive vice president for sales & marketing added, "As there is a move to bigger pieces of core infrastructure, you will automatically see a move towards bigger and heavier duty machines."

JCB India of course has a huge range of products to choose from in terms of the global JCB portfolio, should it want to introduce something new to India. However, its most recent move has been to develop a 'Liftall' pick & carry crane - a quintessentially Indian product, and as Mr Mirdha said, "I think it is the first time JCB developed anything away from the UK."

Pick & carry cranes have a distinctly 'home made' look about them, historically being adaptations of agricultural tractors or backhoe loaders with an angled telescopic boom mounted on the front. Mr Sondhi of course was keen to stress that JCB's first foray into the sector followed a serious R&D programme.

"This is an engineered product. It may look crude, but a lot of work and analysis has gone into its design in terms of modelling and testing. In ports, this can stack four containers on top of each other, but the competitor models can only do three, so straight away you have a 25% productivity advantage," he said.

Bright future

With a growing portfolio in a growing market, the future looks bright for JCB in India. Nut like so many companies, it has learnt hard lessons over the last two years, and this is something that clearly informs Mr Sondhi's outlook today.

"I think we must keep the fragility at the back of our minds, but there is certainly a positivity. Infrastructure is growing, so that is positive for the construction equipment industry. There will always be triggers that will retard growth, but we don't expect all of them to happen at once again as they did in the credit crisis," he said.

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