Thaindian News

Chennai, Feb 14 (IANS) Escorts Construction Equipment is planning to expand its product line by launching backhoe loaders, diesel engine forklifts and high capacity cranes.Currently, the Rs.6.5 billion (Rs.650 crore) earthmoving and construction equipment major makes machines like pick and carry cranes, front-end loaders, vibratory compactors, forklifts, tower cranes and road pavers.

“The prototype of our 76 horse power (hp) backhoe loader will be ready this July and the commercial launch will be at the year-end. We have invested around Rs.200 million (Rs.20 crore) for developing the product, the design of which is being validated by an American company,” Escorts managing director Kamal Bali told IANS on phone from Faridabad.

For the Escorts group, it is the second coming into the domestic backhoe loader market as the non-compete agreement it had signed with the Britain-based JC Bamford Ltd (JCB) had expired in January 2008.

Escorts had a 40:60 joint venture with JCB that sold JCB Escorts backhoe loaders. The British company bought out Escorts’ holding in 2003 and is now selling under its own brand JCB.

Agreeing that competition in the sector would be tough, Bali said: “Our brand equity is still high in the market. The important aspect in this business is having a wide sales and service network so that the downtime of the backhoe loaders is minimal.”

However, he added that the domestic market for backhoe loaders was down in the last six months.

“The industry had earlier predicted 20,000 units for 2008, but it went down to 13,000 units. Our expectation is that the market will grow to 16,000 to 20,000 units over the next three years,” Bali said.

Escorts is also planning to launch diesel engine-powered forklifts this April in technical collaboration with China’s Heli.

“We will make around 2,000 units in three years. The outlay for this project is Rs.50 million,” Bali said.

Escorts will also launch 23-tonne pick and carry cranes that are required in big project areas like power plants and refineries.

The new products will be rolled out of its Rs.1-billion plant at Ballabhgarh in Haryana, commissioned last October.

Asked about the possible impact of the economic slowdown on sales, Bali said: “We don’t see the markets for our products slowing down in medium to long term” though some verticals may face temporary problems due to global financial crisis, liquidity crunch and the higher interest rate regime.

Escorts hopes to sell 5,000 units of different products this fiscal, logging an increase of 500 units from last year.

“We command more than 52 percent market share in the hydraulic mobile crane segment and over 25 percent in vibratory compactors (rollers) segment. We are either significant or niche players in each of the other product categories of tower cranes and forklift trucks,” he claimed.

(Venkatachari Jagannathan can be contacted at v.jagannathan@ians.in)