All indicators are pointing towards a strong V-shaped recovery: JCB India MD

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Construction equipment (CE) is an important part of the infrastructure growth story, as these machines are used at almost every construction site. The domestic construction equipment industry has seen a gradual revival since the lifting of the lockdown, and is hopeful that as more infrastructure projects start or resume work, it could see more growth and recovery. A strong focus, along with a sustained spend on infrastructure development would result in multiple long-term benefits, Deepak Shetty, CEO & Managing Director of JCB India, said in an interaction with BusinessLine. Edited excerpts:

How was the revival of the CE industry in the post-lockdown period?

Covid-19 has had an unprecedented effect on several industries, and it resulted in an extremely challenging period in 2020. All infrastructure development projects had temporarily come to a standstill in the months of April and May due to the unforeseen pandemic. It had a deep impact on the construction equipment market and its demand during the time. We had to calibrate our production to match the lower demand during the period of the lockdown. However, the months of June to November have seen green shoots. Resultantly, the demand for construction equipment has also improved. As the markets gradually reopened, we have resumed operations at all our manufacturing facilities in India.

How has the December quarter been, and what is the demand outlook?

The quarter ending December 2020 has been encouraging for us and the industry. We feel that all indicators are currently pointing towards a strong V-shaped recovery. However, we must note that we are not out of the pandemic as yet. Any disruption to the business by way of another lockdown can be detrimental. During this phase, we launched the industry’s first dual-fuel CNG Backhoe Loader in India. We also inaugurated our largest Parts Centre in Bhaproda, Haryana. This facility will cater to the parts requirement of our dealers and customers in northern India, and also for exports.

Are the Central government’s measures supporting the recovery process?

New projects being announced despite the pandemic is a welcome step, and it will certainly help in improving the sentiment. We believe the government’s impetus on the construction of roads and highways has always played a pivotal role in the growth of the sector, and that must continue. With sustained focus and investments in the infrastructure sector, the next year looks positive. Infrastructure creation opens up opportunities for allied industries like raw material, quarrying, equipment manufacturing etc, while also creating jobs and livelihoods.

Are there still challenges in supply chain areas?

From a manufacturing standpoint, the supply chains which were disrupted by the national lockdown and the subsequent intermittent lockdowns, have now rebooted. Having said that, it is still early to predict anything, and everything depends on how the pandemic plays out. For instance, the situation can get extremely challenging if multiple cities where our suppliers, dealers and customers are located go into a lockdown once again, as the movement of our products will be restricted. Our supply chain is spread across India and any disruption in one part of the country can affect operations and have a cascading effect on manufacturing volumes due to which it can affect sales.

Is there adequate lending support from financiers?

There are still some liquidity-related challenges that the industry is facing. Transmission of loans needs to be strengthened further — NBFCs and banks should not become risk-averse about funding. The release of payments to major infrastructure companies is a positive move, and will certainly help all stakeholders. There is also an opportunity for a dedicated infrastructure fund which can be useful for funding infrastructure projects. Rising input costs, particularly steel, off-late needs to be looked at.

How have you tweaked business plans due to Covid-19 disruption?

JCB has remained committed to the India growth story. Rural India, where we have a significant presence, is also set to emerge as the new growth driver for us in the coming days. With over 700 outlets in India, JCB India is staying as close to our customers as possible. JCB’s made-in-India machines are exported to over 110 countries. Through this indigenous manufacturing of globally competitive products, we are also ensuring our support to ‘Atmanirbhar’ vision. In the new normal world, there is going to be a significant scope for digitisation and automation. Technology and innovation will become the key drivers of growth. Greater focus on adoption of technologies will be given as these can increase the efficiency of the machines.

How has the pandemic changed the pace of digital transformation?

As we go ahead, a strong focus will be laid on manufacturing innovative products, which exhibit a seamless blend of technology and digital innovation in terms of design, performance, efficiency and safety. The utilisation of smart technologies and their unmatched benefits like enhanced productivity, safety, security and versatility to customers and end-users will play an important role. JCB India has already been adopting significant integration of digital technologies in products, processes, factories, etc. in the form of telematics, IoT, big data and machine leaning. We use technology to connect with our teams, our dealer engineers and over 1,60,000 JCB machines across the country through our advanced telematics technology-JCB LiveLink.

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