Fifty years into the country, Sweden-based Atlas Copco is witnessing heightened sales of compressors, mining, power and construction equipment. Ronnie Leten, global president and chief executive officer of Atlas Copco, says growth is strong across all sectors and the potential for tapping into local competence looks immense. In an interview with Sharmistha Mukherjee, he says with more than half of the country’s population below 25 years, the phenomenon evolving in local markets is possibly irreversible. Edited excerpts:
With the effects of recession moderating, what is your global business outlook? We are seeing increased demand from almost all quarters, except for southern Europe since the end of last year. There is good development in North and South America, strong growth in the Asia-Pacific regions, particularly in Australia, China and India. We have seen around 40 per cent growth in India in the first six months of this year.
How do you see your business evolving in India? We had done a comparative analysis of markets globally between 2001 and 2009. India was at number 16 then, now, it is among our top five markets. It is expected to soon bounce to the number four slot. India is important to us, firstly, because of the strong growth it is depicting in the local markets. Secondly, it has a lot of local competence. Around 600,000 engineers come in from schools annually, compared to 1,500 in Belgium. As a global company, we want to tap into that talent pool.
So, are you looking at hiring more Indians? Yes, definitely. We have a group of over 200 engineers here, who work on our international businesses. The group works for China. There is scope for an engineering centre here. The number is set to go up in future, as we are looking at hiring people for information technology, financial and communications services.
The additional advantage is the communication channel from India, which is favourable time-wise – in the morning you can communicate with eastern parts, in the afternoon with Europe, and in the evening with America. Besides, everyone here is fluent in English.
There have been instances of labour unrest in China. Does that make India a more attractive destination for you? China is our largest market. What you have read about in reports did not affect our operations in China. As a corporate policy, we offer health insurance, pension, competitive wages to employees. We don’t want to buy talent, we want people to grow with us. But India is definitely on our agenda for getting in more CEOs.
More than 50 per cent of the people in this country is below 25 years of age. What is happening here is irreversible.
But would you look at exporting more from India than China in future? In absolute terms, we export more out of China at present. In relative terms, we export more from our facilities here. China is the manufacturing hub. We make 12 per cent of our revenues from China, compared to four per cent from India. But this is likely to go up significantly over the next 10 years.
So, what kind of investments are you going to make in India? We are going to invest Rs 100 crore over the next two years to extend our facilities in Hyderabad and Nashik. We are considering setting up a new plant near Pune.
When it comes to construction equipment, issues often crop up related to the use of machines after a project achieves closure. Are you looking at leasing equipment? It is true second-hand machines have little use. But with new technology coming in at a rapid pace, the second-hand market is bound to get obsolete. We will focus on driving sales of new equipment, which is important for offering sustainable productivity to customers.