November 2008 | Gayatri Kamath
A constructive strategy for growth
An aspiration to be among the 25 top world-class players is driving this construction equipment company down the path of growth and profitability. With the 2008 JRD QV Award sitting pretty on his shelf, managing director Rana Sinha talked to Gayatri Kamath about Telcon’s acquisitions, ambitions and achievements.
Telcon started in 1961 as the construction equipment division of Telco (now Tata Motors) with the manufacturing of cranes in collaboration with P&H, USA at Jamshedpur. In 1999, the unit was hived off as Telco Construction Equipment Company. Those initial years were a hard struggle as the company had to focus on restructuring operations and processes in order to compete in the marketplace.
We reached the leadership position in the Indian construction equipment industry in 2004.
Telcon achieved a sales revenue of Rs2,735 crore during the year 2007-08 which was a growth of 49 per cent over the previous year. Our net profits during 2007-08 were Rs324 crore, a growth of 77 per cent over the previous year. Employee strength is at 1,600 as on March 31, 2008. We assemble 100 per cent of our products and manufacture more than 40 per cent of components and aggregates in-house.
To reach the level of global top 25 companies by 2012, the company has formulated a five-year strategic plan called Game Plan 2012. This plan incorporates several strategic directions including:
- Expanding product range through partnerships with Hitachi and other global associates.
- Expanding presence in under-penetrated markets.
- Acquiring technologies through partnering or acquisitions (to become what is known as a full liner).
- Exporting components to Hitachi and other global associates.
- Exporting fully-built machines to Hitachi and other global partners for select geographies.
One key component of Telcon’s mission and strategy is to become a full liner. In the industry, the concrete equipment value chain (comprising dry bulk tanks, concrete batching plants, transit mixers, concrete pumps, and concrete pavers) has been identified as a key market segment. In fact, the growth of the ready-mix concrete business in India is expected to drive demand for transit mixers and concrete pumps by about 30 per cent over the next five years. This is where Serviplem, the world’s sixth largest manufacturer of transit mixers, fits in. In March 2008, we acquired Serviplem; in return we got access to superior technology, a manufacturing footprint in Europe and China, and a distribution network in Europe, the Middle East and China. Telcon will launch a range of transit mixers in India at the end of the year.
R&D and innovation are key levers used for achieving our vision and mission of becoming a full liner. Even our core competencies hinge on our R&D capability and innovation.
The growth in Indian GDP along with projected investments of over $500 billion in infrastructure, construction and mining projects over the next five years, has meant that India today is a preferred destination for global players such as Caterpillar, Komatsu, Volvo, Terex, JCB, Kobelco, etc. Other high-growth economies such as Brazil, Russia, and China, and countries in the Middle East, eastern Europe, Africa and South East Asia have also experienced a similar influx.
Climate change is a part of Telcon’s core competencies. Based on customer requirements, we embed green technologies at the design and development stage so that we not only surpass customer expectations but also conform to triple bottom line. Our proactiveness has meant that Telcon is a pioneer in the construction equipment industry’s green movement.