JCB India Ltd, the local arm of UK-based manufacturer of construction and earth moving equipment J C Bamford Excavators, has announced it expects India revenues to remain flat this calendar year as subdued economic activity has led to a slowdown in sales.
The Ballabgarh, Haryana-based Indian subsidiary, holds over 70% of the market in the construction equipment space in India. It witnessed a 15% decline in revenues in 2012.
"JCB India's gross revenues stood at around Rs 5, 500 crore last year, declining by around 15%. This year, the expectations are revenues will remain flat at the same level," JCB India Managing Director (MD) and Chief Executive Officer (CEO) Vipin Sondhi said.
He was speaking at the inauguration of JCB's fourth manufacturing facility in India at Jaipur in Rajasthan. He attributed the sales slowdown to the cyclical nature of construction equipment business where revenues dip every 6-7 years and the lacunae in policy and governance.
He, however, added "the India business will pick up pace thanks to the reform measures taken by the government over the past six months" referring to the formation of Cabinet Committee on investment (CCI).
Also present on the occasion was JCB CEO Alan Blake who said India's handling of the global financial crisis of 2008-09 has given investors like him the confidence to continue to invest in the country, particularly in the infrastructure space.
"The conservative Indian economy better managed the global crisis. We are a long term player in India which is a very important market for us. Our Jaipur investment is a vital next step to strengthen our position in this market," he said.
India accounts for over 30% of JCB's global sales and Blake said he wants india's share to grow further. Globally, JCB recorded a six% decline in revenues at around $ 4.1 billion last year as sales dipped in key markets including India, China and parts of Europe.
Blake said that hit to revenues was offset to a large extent by higher sales in other markets including Russia (15%) and Brazil (9%). Business grew 10% in Latin America.
The 67 year-old company currently sells over 300 machine types in over 150 countries. The company entered India in 1979 and is the largest manufacturer of construction and agriculture equipment in the country.
The company offers 24 models in india including backhoe loaders, shovels, excavators and cranes. Annually, it sells over 60, 000 machines in the country which are rolled out from two factories in Pune, Maharashtra and one factory in Ballabgarh.
The company would invest around Rs 500 crore over five years to fully commission the new facility coming up at Jaipur. The company said it was yet to work out the details regarding the capacity of the new facility but the 150 acre factory would be used for fabrication works initially.
