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Hyundai Construction drafts India market strategy

December 9: As a market strategy, Hyundai Construction Equipment India does not want to be “full line” player in the mining and construction industry in India. Rather, it wants to focus on its strength area, which is the excavators, especially the 20-ton, in which it has a significant presence with a 19% marketshare, a senior official from the company told ICMW.

He also said the company aims to consolidate its position in India in the next five years and then look at inorganic expansion with a full line.
The company, a 100% subsidiary of South Korean biggie Hyundai heavy Industries (HHI), which entered the Indian mining equipment market in 2008, expects to buck the industry trend and close December 2015 with a topline of Rs 1,000 crore, which would be a 10-12% growth over the previous calendar.

“This calendar, we would be growing almost by more than 10% in revenue terms over last year,” the official further informed.

Investment

The company plans to invest Rs 100 crore in the next 2 years in India, the official said.
The Indian subsidiary has already invested around Rs 800 crore but part of it is in the form of share capital. If this component is removed, then the fund injection in India would amount to around Rs 400 crore.

“The Rs 100 crore investment will happen in organic growth – capacity addition – and will be largely funded through internal accruals,” the official said.

EPC players

The company is targeting the large engineering, procurement and construction (EPC) players in India in a big way on account of their tendency to buy in bulks, the official said.

Terming the EPC players as “strategic customers’, the official said: “Hyundai Construction’s retail clients are one-off. They buy in ones and twos. But when we talk of strategic customers, we mean big customers with a fleet of machines. And they have captive use.”

Fork-lifts

Hyundai is aiming to bring in material handling equipment like fork-lifts in India by 2015. It will import them from South Korea initially. Depending upon the market acceptability, it will move towards manufacturing these within India

Commenting on excavator market in India, the official said it has seen a sudden decrease of around 15% in 2014 against the previous year.

“The excavator industry did not grow because the mining industry has been down. The excavator market in India last year was at 10,400-odd machines. In the last five years, year-on-year, there had been an almost 11-12% growth. However, there has been a decrease of around 15% in 2014 versus 2013,” the official said.

“Five years back, the excavator market was at 14,000-15,000 units per annum and the industry was talking in terms of a 23% CAGR. Today, the market is down to only a little over 9,000 excavators,” the official further informed.