Volvo Group India, which had invested ₹2,500 crore so far in the country, would shift its focus from selling trucks to coal mining sector to construction, long haulage and irrigation sectors, said Kamal Bali, president and managing director.
“In the truck business, we have mainly been into coal mining,” said Mr. Bali said in an interview. “That was where most of our trucks have been sold and today, more than one-third of coal in mines are being moved by Volvo trucks. Here, there is a limitation in terms of numbers and therefore, we are expanding to other segments such as construction, irrigation and long haulage.”
India requires investment worth $777.73 billion in infrastructure by 2022, according to India Brand Equity Foundation report released in January. In the road sector, investments through public-private-partnership is expected to be in the region of $31 billion during the next five years.
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Highway projects
“One out of three major national highway projects use Volvo equipment,” said Mr. Bali. “Now, we are focusing on the excavation and road equipment side. That’s the real plan over the next three to four years. We are looking at higher volumes and are bullish on India.”
“Construction equipment is growing at the fastest pace since the last three years. It will continue to grow at the fastest pace among all our business for the simple reason that the penetration level of construction equipment in India among the lowest.
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“This means existing stock of machines in the whole country is very low. The need to build infrastructure is very high. Which means demand will be higher and there are no existing stocks. For the next seven years, this will be a segment which will see the fastest growth.”
Volvo Group India set up its first truck plant at Hosakote in Karnataka in 1998. Subsequently, it set up a bus manufacturing facility at the same place and later a construction equipment factory at Peenya in Bengaluru.
The firm also had a engine manufacturing facility in Pithampur which it set up as a joint venture with Eicher Group.
Mr. Bali said Volvo Group had invested in increasing capacity at its factories by investing about ₹300 crore during the last three years.
“We just finished our wave of capex. When you invest in capacity, you always invest for the next five to seven years. Now, what will happen is two to three years down the line we will again review our plans to see if we need more in the coming years. Capex can be plant and building, machinery, new products or new markets.
“We are ready for the next five to six years. We have taken care of our expansion plans already in terms of capacity. If we want to introduce new models, some sort of balancing investments may continue. We will not shy away from these. India is among the eight most important countries for us.”
Volvo Group India’s revenue has grown about 35-40% in the last two years, he said.
“We are in the right segments of the Indian economy. We need to put our best foot forward.”