New Delhi: For Gulshan Singh, a Patna-based contractor of roads and bridges, the British brand JCB is synonymous with earth-moving machines, be it a backhoe loader or a pick-and-carry crane.

“JCB kuchh bhi kar sakta hai. (JCB machines can do almost anything)," Singh said in a phone interview, referring to the workhorse abilities of these machines.

It is the ubiquity of these machines in the construction industry that has made it almost a generic name for earth-moving equipment, in the same way that Xerox is associated with photocopying and Unilever’s Surf is synonymous with detergents.

Today, three out of every four construction equipment sold in India is a JCB, illustrating the absolute dominance of the British company in India. JCB is one of the few Western manufacturers that have been able to establish such supremacy over the local market and is a prime example of an overseas company that has prospered after setting up factories in Asia’s third-largest economy.

JCB India’s managing director Vipin Sondhi credits the acceptance of the brand to the quality of products, customer service and easy availability of parts and service.

“The brand is built over trust and innovation over the number of years that we have spent in the country," Sondhi said in an interview on Wednesday.

As Prime Minister Narendra Modi visits the US later this week to attract investments and seeks backers for his “make in India" campaign, he will be able to showcase JCB and a few other such companies as examples of how
foreign companies can benefit by shifting manufacturing to India, home to 1.25 billion people.

Modi is seeking investments in manufacturing to lift India’s economic growth rate and create more jobs for the nation’s current working-age population of 800 million, a promise that helped Modi’s Bharatiya Janata Party to sweep to power in national elections earlier this year.

The Prime Minister faces the difficult task of re-igniting investors’ interest in the manufacturing sector, which has received a setback as companies struggled with high borrowing costs, delays in completing land acquisition and securing environmental clearances, and fuel shortages.

JCB India’s revenue rose more than 12 times to 5,862 crore in 2012-13 from 450 crore in 2001 as India embarked on the ambitious Golden Quadrilateral road project that aimed to connect Delhi, Mumbai, Chennai and Kolkata, creating demand for construction equipment.

“Frankly, until 2003-04, infrastructure was not even in the lexicon of India," Sondhi said.

Until 2003, JCB was selling fewer than 3,000 machines a year. Its production capacity at the Ballabhgarh plant has increased from 10 units a day in 2001 to 50 a day in 2009 and 100 per day in 2013. At its Pune facilities, where it makes excavators, JCB produces 4,500 units a year.

At the end of 2013, the Indian operations of the UK company accounted for 17.5% of its total revenue.

The initial push in India was provided by a partial change in management in 2003 after the Staffordshire-based company bought out Escorts Ltd’s stake in a joint venture. While firms in the West cancelled expansion plans because of the global financial crisis, JCB India expanded its operations as it sought to take advantage of the Golden Quadrilateral project, started in 2001 by the Atal Bihari Vajpayee-led government.

JCB opened its first manufacturing facility in 1979 at Ballabhgarh near Delhi, and since then built two factories in Pune and one in Jaipur, which is expected to be operational shortly. Besides, it has a parts and technical centre and a design centre in Pune.

The company’s sales declined for the first time in five years to 5,532 crore in the year ended 31 March from 5,862 crore in the previous year, because of sub-par economic growth and as construction of infrastructure projects ground to a halt in the past two years.

“This clearly shows the decline in construction and infrastructure activities in the country," said Sondhi.

From a situation where customers had to wait for more than two months for its products in 2009-10, JCB has recently been forced to shut the assembly lines for 10 days a month.

Globally, the company trails behind rivals such as America’s Caterpillar Inc. and Japan’s Komatsu Ltd. In emerging markets, it’s a relatively new entrant in Brazil and faces stiff competition from local companies in China but in India it has managed to claw back the market share that it lost in recent years, said a consultant with a global consulting firm requesting anonymity.

“They control around 75% of the market, which is commendable. None of the multinationals such as Ace Construction, Mahindra, Escorts or Caterpillar have managed to make a dent," the consultant said.

To hedge itself against declining economic activity in the country, JCB has gradually shifted its focus toward exports and its shipments to markets in South Asia, Africa, and South-East Asia have steadily increased from 55 units in 2010 to 1,681 last year.

“This year is going to be even better," Sondhi said.

Today, Sondhi feels vindicated. His team is now making and exporting JCB Ecomax engines, which power the firm’s wheel loader range.

“We are really proud of the work that our design team in Pune and ITI trained staff have done. Today, we are exporting engines back to the mother country (UK)," he said.

Constant efforts at indigenization has cut import content to 15% and in some of its popular products such as a backhoe loader to 3-5%.

Apart from the hydraulics system, which it imports from Japan, the firm makes most of the critical components in India.

According to Rakesh Batra, partner and national leader (automotive practice) at EY, such economies of scale has helped the company.

“The sheer scale that they operate on has given them an advantage," Batra said. “But they need to understand that they are not on the top in all the segments."

At the moment, Sondhi is most concerned about the domestic market.

“After all, we are the derivative of the projects awarded for infrastructure development in the country," he said.

After having grown at 8.9% in 2010-11, India’s GDP slowed to 4.5% in 2012-13. Growth has since picked up with the economy expanding 5.7% in the quarter ended 30 June. Still, many economists are sceptical whether the country will be able to sustain the faster pace of growth.

JCB is looking to make the most of what the business friendly Modi government is offering. Modi has promised swifter approvals to companies and a plan to improve the nation’s creaking infrastructure. It is closely monitoring all regulatory processes to make them simple and reduce the burden of compliance for companies. It has also identified 25 sectors in which India has the potential to become a world leader.

“Clearly the optimism is back in the economy and we do believe situation will improve," Sondhi said.

The total size of the earth-moving equipment industry was $3 billion at the end of 2012 and is expected to rise to as much as $20 billion by 2020, Sondhi said, citing a November 2013 AT Kearney report.

India has a huge potential but the country needs to realize it, he said. “We request the government to get the infrastructure projects moving," Sondhi said.

Sondhi is lobbying the government to identify 50 such projects and put them on priority as projects of “national importance".

While steps have been taken to address issues related to land acquisition and environment clearances, the country still needs to set up long-term debt fund for projects that could take 5-10 years to fructify.

Setting up a mirror body both at the centre and state levels to monitor the progress of such projects will help, he added.

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