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To improve infra sector, govt needs projects to be executed on ground: Vipin Sondhi

Interview with MD & CEO, JCB India

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Jyoti MukulSudheer Pal Singh
Last Updated : Jan 24 2013 | 1:49 AM IST

The government might say it is trying hard to kick-start the economy with an infrastructure push, but the country’s largest construction and earth moving equipment supplier, JCB India, is anticipating flat growth this year. Vipin Sondhi, managing director and CEO, tells Jyoti Mukul & Sudheer Pal Singh the government needs to focus on getting projects going, and not on reforms. Edited excerpts:

How important is the India market for the company?
India is the single largest market for the company, where we sell 25 per cent of our machines. All our products are adapted for Indian working and fuel conditions, which are far more stringent than anywhere else. We have launched the new generation of Backhoes, which has additional benefits for our customers. We have not shied away from bringing out new products here.

When there has been a general slowing of growth, how did you manage to grow (JCB India’s revenues grew 15-20 per cent in 2011-12)?
There were still projects on the ground. Activities in the infrastructure sector started slowing 10-15 months back. The lag effect of it is catching up with us now. It is not a happy situation.

What kind of investment and capacity are being planned for your new facility in Rajasthan?
The Rajasthan government has announced the project but we are not talking about it at the moment. We have to adjust our programmes according to the market. Our current (annual) capacity is 30,000 machines.

How do you compare the progress in national highways with that of rural roads?
It is just 7,500 km of national highway projects compared to 150,000 km of state and rural roads, so they will be far more beneficial. In the past three to four years, PMGSY has given us growth.

Where do you see growth coming from in the future?
Roads can drive much more. It spawns a lot of development. If the railways are investing more in rail lines, we benefit. DFCC and DMIC (the proposed Dedicated Freight Corridor and the Delhi-Mumbai Industrial Corridor) could be 15-20 year programmes and we do see an opportunity but do not know what stage of execution.

Are your margins under pressure?
They have been but we have been to absorb some increase through internal efficiency. There is inflation but there is counter-pressure. When you have a slowdown phase, commodity prices will come down.

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Do you see things improving for the infrastructure sector?
People talk about the governance and reforms angle, but even on the ground we have 25-30 projects of national importance that have already been approved and financially closed, but are stuck with inter-ministerial issues like environment or some other clearance. Announcing another 100 programmes is not the answer; getting these executed on the ground is the answer. Let’s get them going on ground and create a momentum.

What policy challenges do you see for the industry?
Coordination, between the Centre and the states, is important for land acquisition and environment clearances. Besides, bankable projects are needed with funding and financial closure. All this can be done through institutional mechanisms or by having a regulator.

But how do you get over challenges of land acquisition and creation of large infrastructure?
We can only move forward. If the PM’s meeting on infrastructure has happened, that means there is some determination to move things. Once the wheel starts rolling, the sentiment changes very fast. Nobody is arguing against infrastructure being built. What is being argued is that all stakeholders get equitable compensation. Are we recreating the environment elsewhere? Do we have consistent, constructive and prospective policies for all this.

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First Published: Jun 22 2012 | 12:21 AM IST

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