Monday, November 17, 2014
JCB opens 2 factories in Jaipur with Rs.500 cr
~By Michael Gonsalves
Nov 16 2014: JCB India, India’s largest construction equipment manufacturer, which opened two factories in Jaipur with an investment of Rs 500 crore, despite sluggish market for last two—three years, is betting on growth from next year.
“We have invested Rs 500 on our new fourth and fifth factory at Jaipur and it is the single largest manufacturing site in India,” Vipin Sondhi, managing director and CEO at JCB India told Financial Chronicle.
He said despite down turn in the construction equipment industry for the last two-three years, the company continues to invest for the future.
“Due to slowdown in the construction and infrastructure segment of the Indian market, as well as globally, the construction equipment industry de-grew by 20 per cent in India. And JCB India also de-grew lower than the industry,” Sondhi said.
The company’s sales declined for the first time in five years to Rs.5,532 crore in the year ended 31 March from Rs.5,862 crore in the previous year, due to economic slowdown and construction of infrastructure projects grounding to a halt in the past two years.
But in the last three-four months the industry has seen some green shoots with some pickup in sales. “We will even out by the end of this financial year and next year, we expect growth to return,” Sondhi said.
Graeme Macdonald, chief executive officer at JCB group, said except in the UK and North America, where the Staffordshire-UK based JCB, the world’s third-largest construction equipment maker by volume, grew 44 and 10 per cent respectively; sales of its bright yellow diggers had slumped in the rest of the global market.
JCB India, the market leader, which sells one out of every two construction equipments in the country, is the British manufacturer’s largest market by revenue. It accounted for 18 per cent of the total revenue of the parent company.
“We expect sales in India to grow next year after two-three years of declines, aided by higher exports and a new drive to increase infrastructure investment under the newly elected prime minister Narendra Modi,” JC Bamford, chairman at family-owned JCB Bamford Excavators, said.
However, he warned that group-wide revenues and profits were likely to fall during 2014, due to tough trading conditions in countries such as Brazil and Russia, where exports had been badly hit by recent economic sanctions against the Russian government.
“We expect export volumes from India to grow as well as domestic Indian volumes,” Bambord said.
Sondhi said out of the total Rs 5,532 crore sales revenues clocked last financial year, 20 per cent came from exports to about 50 countries.
He said the one million sq ft of new factory space on the 115-acre campus, would be utilised to make components, telescopic handlers and skid steer loaders for the Indian market.
“The new facility will also provide additional backhoe loader capacity from 2015,” Sondhi said. He, however, declined to give details on capacities of the two factories, saying that the capacity would be scaled up as per the market demand.
JCB has 11 factories in the UK, five in India and other factories in Brazil, China and North America.
JCB India manufactures 25 different machines in seven product lines such as backhoe loaders, wheeled loading shovels, tracked excavators, vibratory compactors, telehandlers, skid steer loaders and pick and carry cranes.
Since the company was founded in 1945, JCB has manufactured more than 1 million machines and 200,000 of those have been made in India.
(The reporter’s trip to Jaipur was hosted by the company)