Despite the slowdown in the economy and infrastructure sector in India, the $60.138 billion (in 2011) construction and mining equipment major is bullish about India.
After launching the backhoe loader manufacturing facility, the company is now planning to invest $150 million in a manufacturing plant for Perkins powerful 4000 Series engines.
In an interview with T E Narasimhan, Caterpillar's Country Manager for India, China and ASEAN, Kevin Thieneman said these engines are manufactured only in UK right now. He added, Caterpillar India continues to look for additional ways to invest in India to support our growing base of customers.
Thenaman is of the opinion that increasing power deficit is impairing the efficiency of manufacturing operations and reducing their global competitiveness. Edited excerpts:
Giving the current slowdown in India, how bullish Caterpillar about India?
The GDP growth contraction in first quarter this fiscal from eight per cent plus forecast to 5.3% is a matter of concern to Caterpillar.
However, we are bullish on long term prospects for the mining and infrastructure industries. While both these sectors have traditionally been controlled by state-owned enterprises, increased emphasis on private participation is opening up more and more opportunities for both domestic and international players.
This certainly indicates acceptance of global standards and best practices which is bound to present great opportunities to foreign players like us.
This also puts Caterpillar in a position to offer specific solutions that can bridge the gaps critical to the progress of the Indian industry.
Having stated this, Caterpillar India continues to look for additional ways to invest in India to support our growing base of customers.
Any Government action/ policy required to boost the sentiment?
To promote growth, competitiveness and the overall well-being of a country, Government has the responsibility to maintain appropriate levels of productive investment in infrastructure while providing a level playing field for private investors and suppliers.
Public financing should continue to comprise the bulk of infrastructure investment and much more is required to improve the situation in infrastructure space through reforms.
Despite several plans to introduce single window clearance mechanisms, there have been little visible improvements. A holistic reform in the power sector is also imperative to put the power sector on a strong growth path.
Today, the increasing power deficit is impairing the efficiency of manufacturing operations and reducing their global competitiveness
In 2011, Caterpillar announced $210 million investment plan for India including setting up an engine manufacturing facility, for electric power geneneration sets and expanding off-highway truck manufacturing facility in Chennai. What is the current progress? Where will the facility come up for engines? Is there any revision in the investment?
No other region of the world can match the growth opportunities that Asia presents for Caterpillar and its dealers. In particular, the aggressive plans for infrastructure development in India represent a tremendous opportunity to serve existing and new customers.
In April 2012, Caterpillar launched the company’s new backhoe loader manufacturing facility in Thiruvallur near Chennai. The new facility not only strengthens the company’s growing presence in India but also augments the distribution channel for this popular earth-moving machine by bringing in enhanced local production capabilities.
Caterpillar has decided to invest $150 million in a new plant to manufacture Perkins powerful 4000 Series engines in India.
It is envisaged that the workforce will grow from 60 employees at the plant’s inception to approximately 450 when it opens in 2013.
The 4000 Series is currently only manufactured at Perkins’ Stafford facility in the U.K.
The India plant will serve the growing demand from the Asian markets while the Stafford facility will concentrate on supplying customers in Europe, the Middle East and Africa and South America
Overall is there any change in Company's business strategy in India? Earlier the company had said that the focus will be on domestic markets; considering the current scenario will India be a sourcing point for Caterpillar Inc?
India continues to be our focus for long-term. In fact, Caterpillar’s presence in India is stronger than ever today.
We currently employ close to 3,000 people in India across five facilities and are investing in our operations across to support the ever-increasing customer base here.
India is already one of the primary sourcing hubs for us. About 80-90% of the off-highway trucks that are manufactured in India are exported.
How is the backhoe loader manufacturing facility in Thiruvallur near Chennai doing? What is the current capacity and utilization?
The facility is close to or near capacity, but we should not give unit volumes. Presently our dealers are in the process of ramping up their branch network. It will increase from 132 branches to 176 branches by 2013.
In April 2012, you said this facility will cater to domestic market. Still the plans remains the same?
We will continue the production of the current 424B Model in two variants. We plan to add more models in the next 2-3 years, both for the domestic and the export market.
By 2015 where do you see Caterpillar in the Indian market in terms of market share?
We are bullish on India given the huge growth potential of the economy and we hope to capture a significant share of the market. Caterpillar is a global leader in most markets and we aim to be the same in India.