Schwing Stetter: a ready mix success
By Venkatachari Jagannathan | 17 Apr 2001
1
Two years back when DM 1 billion-turnover Schwing Stetter, GmbH, the German ready mix concrete (RMC) machinery manufacturer set its eyes on India, it found all the right ingredients for success.
A liberalised economy that needs fast paced construction activity for growth, a market that has been using RMC machines, the stagnating 100 million tons per annum cement industry looking out for new opportunities – these were the signals that prompted the German company to pitch its tent in India.
Its expectations didn't fail. The Chennai-based Schwing Stetter (India) has hit the pay dirt from its second year of operations. The Rs. 5 crore equity-based company closed the calendar year 2000 with a turnover of Rs. 27 crore and a net profit of Rs. 1.85 crore.
"Our target for this year is Rs. 39 crore," says Mr. Anand Sundaresan, executive director. According to him Schwing Stetter (India) has rolled out 250 truck mixers, just more than 60 concrete pumps and 10 RMC batching plants. The company manufacturers 30/60 cubic metre/hour batching plants, truck mixers and pumps of different models.
In addition the Indian company also markets higher capacity equipments of its German parent for a commission. "While no truck mixers were imported, around 15 mixing/batching plants and 75 pumps were brought in from Germany," he says.
As mentioned earlier RMC machines are not new to Indian construction industry. Big domestic
construction companies have been using imported equipment while executing major projects like dams, power plants etc.
"Though there are a couple of domestic manufacturers, no one produces a fully automatic RMC machine," claims Mr. Sundaresan. There are some Indian agents for foreign RMC plants. According to him, the demand for RMC plants is increasing and RMC is now being looked favourably even by small builders.
Speaking about the market trend, Mr. Sundaresan says that the demand for RMC is good in cities like Hyderabad, Bangalore, Chennai and Mumbai. In fact Mumbai accounted for a large share of the market till a year back thanks to the construction of several flyovers.
In line with the global trend, cement companies like ACC, L&T, India Cements, Madras Cements and big construction companies like Gammon India have started RMC projects. But the trend is slowly changing now. More and more small builders are also going in for RMC plants, says Mr. Sundaresan.
"The price difference between RMC and the conventional concrete preparation is around 10 per cent. But one is assured of quality," he adds. This is difference will further come down when RMC plants- manufactured by companies like Schwing Stetter (India)- cost less. Agreeing with that Mr. Sundaresan says that the cost hinges on component localisation. While importing the critical hydraulics Schwing Stetters' import content has come down to 15 per cent. "The other advantage of localisation is freeing scarce cash from being locked up in inventory," he adds.
The company, which used to import the huge mixer drums from Germany, is now importing only the high grade steel plates and does the welding in Chennai.
Meanwhile with demand for its machinery growing at a fast pace, Schwing Stetter in order to keep up with the demand is setting up a greenfield project at an outlay of Rs.18 crore at Irrungattukottai, near Chennai. "If need be, additional equity infusion will be made apart from debt financing," replies Mr. Sundaresan when queried about the mode of financing the new project.
The Indian company apart from servicing the existing equipment in neighbouring countries will be exporting engineering drawings/designs from Chennai. Schwing Stetter (India) has a software technology park unit for the purpose. According to Mr. Sundaresan, plans are afoot to ramp up the software operations by hiring additional hands.
More than its commercial success, what is interesting to note is the company's employees' welfare measure. The two year-old company has set up an education fund with a corpus of Rs. 1 lakh to help deserving children of its employees. The company intends to double the corpus provided the performance for this year is satisfactory. Given the market trend one need not doubt the corpus doubling by year end.
A liberalised economy that needs fast paced construction activity for growth, a market that has been using RMC machines, the stagnating 100 million tons per annum cement industry looking out for new opportunities – these were the signals that prompted the German company to pitch its tent in India.
Its expectations didn't fail. The Chennai-based Schwing Stetter (India) has hit the pay dirt from its second year of operations. The Rs. 5 crore equity-based company closed the calendar year 2000 with a turnover of Rs. 27 crore and a net profit of Rs. 1.85 crore.
"Our target for this year is Rs. 39 crore," says Mr. Anand Sundaresan, executive director. According to him Schwing Stetter (India) has rolled out 250 truck mixers, just more than 60 concrete pumps and 10 RMC batching plants. The company manufacturers 30/60 cubic metre/hour batching plants, truck mixers and pumps of different models.
In addition the Indian company also markets higher capacity equipments of its German parent for a commission. "While no truck mixers were imported, around 15 mixing/batching plants and 75 pumps were brought in from Germany," he says.
As mentioned earlier RMC machines are not new to Indian construction industry. Big domestic
construction companies have been using imported equipment while executing major projects like dams, power plants etc.
"Though there are a couple of domestic manufacturers, no one produces a fully automatic RMC machine," claims Mr. Sundaresan. There are some Indian agents for foreign RMC plants. According to him, the demand for RMC plants is increasing and RMC is now being looked favourably even by small builders.
Speaking about the market trend, Mr. Sundaresan says that the demand for RMC is good in cities like Hyderabad, Bangalore, Chennai and Mumbai. In fact Mumbai accounted for a large share of the market till a year back thanks to the construction of several flyovers.
In line with the global trend, cement companies like ACC, L&T, India Cements, Madras Cements and big construction companies like Gammon India have started RMC projects. But the trend is slowly changing now. More and more small builders are also going in for RMC plants, says Mr. Sundaresan.
"The price difference between RMC and the conventional concrete preparation is around 10 per cent. But one is assured of quality," he adds. This is difference will further come down when RMC plants- manufactured by companies like Schwing Stetter (India)- cost less. Agreeing with that Mr. Sundaresan says that the cost hinges on component localisation. While importing the critical hydraulics Schwing Stetters' import content has come down to 15 per cent. "The other advantage of localisation is freeing scarce cash from being locked up in inventory," he adds.
The company, which used to import the huge mixer drums from Germany, is now importing only the high grade steel plates and does the welding in Chennai.
Meanwhile with demand for its machinery growing at a fast pace, Schwing Stetter in order to keep up with the demand is setting up a greenfield project at an outlay of Rs.18 crore at Irrungattukottai, near Chennai. "If need be, additional equity infusion will be made apart from debt financing," replies Mr. Sundaresan when queried about the mode of financing the new project.
The Indian company apart from servicing the existing equipment in neighbouring countries will be exporting engineering drawings/designs from Chennai. Schwing Stetter (India) has a software technology park unit for the purpose. According to Mr. Sundaresan, plans are afoot to ramp up the software operations by hiring additional hands.
More than its commercial success, what is interesting to note is the company's employees' welfare measure. The two year-old company has set up an education fund with a corpus of Rs. 1 lakh to help deserving children of its employees. The company intends to double the corpus provided the performance for this year is satisfactory. Given the market trend one need not doubt the corpus doubling by year end.
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