ÁùºÏ²Ê¿ª½±¼Ç¼

We are continuously investing in R&D and production in emerging markets like India and we have tremendous investment plans here in India in the next 2-3 years, says Terry Lee, Managing Director - South Asia, Donaldson. Excerpts from the interview...
Do you see a turnaround of the CE industry in the India growth story in the coming years?
Donaldson has been dedicated to two different market segments, one is off-highway (construction equipment) and the other is commercial vehicles. Construction equipment market in India has grown 19 per cent from 2010 to 2013, which is Rs 300 billion market in 2014, based on the infrastructure expenditures which is about 6-7 times that of 2010. Even though the Indian construction market slowed down in the last couple of years, equipment market has grown and 60,000 units of equipment sold per year. It is expected to be 330,000 units by 2020 which is almost 6-7 times of the current unit sale. The Modi government?s slogan of ?Make in India? has changed the overall lookout of construction equipment manufacturers to invest in India. It is hard to say that we continue to keep growing year by year, but I see a lot of opportunities here. Most of global players are looking at the Indian market. China is a little sluggish now, though it had invested a lot in the last 10 years. At the same time, India is growing with the GDP coming upwards almost 6 per cent. There is a lot of potential to grow in the next couple of years.

How do you look at the ?Make in India? campaign contributing to this initiative?
As mentioned, Donaldson caters to two major segments, off-highway and commercial vehicles. We are OEM suppliers and most of the global players are here along with the local construction equipment manufacturers. Donaldson has already been into those markets/customers and will be achieving our 100 years of service in February 2015. We have already provided our technologies to those global players and developed new technologies and appropriate products to the customers. So we are continuously investing in R&D and production in emerging markets like India and we have tremendous investment plans here in India in the next 2-3 years. With the best technology products to support Indian customers we want to expand our capacity to manufacture the appropriate products to support the local equipment manufacturers.

What is the planned capacity augmentation?
We are planning to improve our capacity by more than 50 per cent within two years. The current capacity cannot support the growing market so we are considering more than 50 per cent capacity increase plan by 2017.

Do you have any India-specific strategies in mind?
Donaldson is a technology-driven company. So we do keep addressing our new technologies to the customers not only the global players but also the local players here where we don?t have share. But those OE customers under Modi?s campaign of ?Make in India? need to export their products to global markets. So they need to compete with other global players. This is where Donaldson see an opportunity to provide its products to the local equipment manufacturers. Even if the cost is higher, these products will improve the efficiency of their machines. Another plan is to localise our products to enable on-time delivery with the right product with effective cost to them.

In the development of filtration media, what are the challenges you face to suit Indian conditions?
Filtration media is one of our core technologies and Donaldson is very proud of that. Donaldson has internal media development group and pilot plants. We invest a lot to develop our own media and ask our suppliers to provide those media to others. We are very proud of those media developments in-house, and the challenge here in India is our media is premium one, for example, if compared in car, our media is BMW. There are differences with local media. Some of the customers in India are always cost-driven and they want low-cost products. We can make it but that won?t be the right product of our standard. So we always provide high quality products. The media cost is always a challenge to me to convince the OE customers and sell the product.

There has been a lot of emphasis on you to produce cleaner engines. Do you think this has put an additional pressure on your company?
I think India is not yet require the Tier 4 emission standards, still it is Tier 2 and Tier 3. But the most advanced and developed countries have Tier 4 requirement. So Donaldson has the technology to develop Tier 4 applicable products which will reduce all the emissions. We work with all the engine manufacturers and supply those products to the customers.

Could you tell us about your R&D and where it is heading?
We at Donaldson invest 2-3 per cent of our income in R&D activities. Donaldson keeps on investing a lot of money in R&D. More than 70 per cent employees in Donaldson are from mechanical engineering background. So Donaldson is a technology-driven and R&D-driven company. We have an engineering R&D department here for engines and industrial products.

What is your strength in the aftermarket segment?
Very precisely, Donaldson is one of the leaders in earthmoving, construction and mining equipment market. Donaldson has one of the best product ranges available in the market for construction and mining equipment which are available in India including Indian and international make machines. In India, we are 100 per cent own subsidiary of Donaldson Inc USA. We do have the wide range of products readily available for our customers, which we import and keep here for the on-time supply. This helps us to gain the market share.

What are the latest products launched for the Indian market?
We have a wide range of air filtration parts, fail filtration parts, lube filtration and hydraulic and transmission. We produce filtration products to all the new construction machinery recently introduced in India as well as the existing equipment brands. We manufacture filters here for the Indian make machines. For imported machinery also we produce the filters here if it is worth, otherwise we import suitable filters and sell here.

What makes you different from competition?
Our products are appropriate and cost effective because we are focusing on heavy equipment unlike our competition. So we have more attention on that segment. We can provide the proprietary product with localisation here in India with cost-effective and on-time delivery to the customers with the right quality products, which make ourselves different from our competition. Our intec system is an advanced technology system. We have developed and renovated products that are half size at the same time better efficient so the customer can save cost. That is the value add we provide with our products.

How do you assess your performance in the last two quarters? What sort of growth do you foresee in the coming quarters?
Last quarter was very good compared to last year and our plan is 30-40 per cent growth in sales. The second quarter was slow but it was not as bad as last year?s sales. Tractor market and equipment market were grown and I don?t think it will go down this year like last year. By the end of this fiscal (July 2015) we see a slight increase compared to last year.

What were the growth enablers of the last quarter?
There were more replacement filter business in demand and tractor market has picked up this year. The tractor market showed 20 per cent increase. These were major growth enablers for 30-40 per cent growth in overall sales. Even the transport segment is improving where we experienced a good growth.

What is your outlook for 2015?
The overall environment is favourable to all the equipment manufacturers and market, but still the construction market and mining market are sluggish. So the question is how the equipment manufacturers can increase their production to survive. They will slowly grow up under the ?Make in India? programme to improve export. Commercial vehicles market will considerably increase our sales with Volvo Eicher planning to increase production by 65 per cent. Daimler also plans to increase production. So 2015 will be a great year for us among the last four years.