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We must continue to listen to the market

We must continue to listen to the market
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Urbanisation and growth in Tier II and Tier-III cities is a big driver for the elevator and escalator industry, says Otis Elevator MD

With the number of high-rise buildings rapidly growing in India and 100 smart cities likely to be commissioned within a decade, elevator manufacturers are gearing up to seize the rising business opportunities. The new government’s thrust on infrastructure, including commissioning of new airports and metro rails, will lead to higher demand for elevators, escalators and travelators (moving walks) and a dozen odd leading elevator companies in India are competing to grab orders and enhance their market share. Global pioneer Otis Elevator Company (I) Ltd., which has been in India for the last 61 years, is making a strong bid to beat competition through energy-efficient and technologically superior elevators.

In an interview with The Hindu, Managing Director Sebi Joseph said the company is investing in a factory at Bangalore to double the manufacturing capacity and revamp the company structure to stay close to customers so as to enhance business.

Edited excerpts:

What is the current size and potential of the elevators, escalators market in India?

India’s elevators and escalators market is estimated at around 45,000 units as compared to China’s 4.80 lakh units annually. China is the world leader in elevator and escalator sales followed by India. In India, most sales come from elevators. Escalators account for less than 2 per cent of sales. 70 per cent of elevator sales come from the residential segment. Urbanisation and growth in Tier II and Tier-III cities is a big driver for the elevator and escalator industry. Infrastructure is another big growth area. The Indian elevator and escalator market is expected to grow at a double digit rate of 12-15 per cent.

The government has announced plans to set up 100 smart cities and many more new avenues are opening up. What is Otis Elevators’ growth target?

We will be able to grow mid-double digit to high-double digit. We would like to grow more than the market, which is growing at 12-15 per cent. We will be targeting a growth of 16-17 per cent.

What are your latest sales turnover and net profit figures?

Our annual report for 2013-14 is yet to come out. In 2012-13, we reported net profit of Rs.103 crore on sales turnover of Rs.1,048 crore.

A decade-and-half ago when people thought of elevators in India, it was Otis Elevators only. Today I believe it is not so. Why?

Other brands are here. It is good for competition. But you must understand that Otis invented elevators in 1853, and pioneered many technological innovations, including Gen2, which was launched globally in 2000. And, if you look at last year, we were the market leaders in India in terms of value. Globally, we are the leaders, and even in India, we were the leaders in terms of value. Last year, we won the largest elevator contract in Indian history from Hyderabad Metro to provide 670 elevators and escalators. We have the largest service portfolio of 60,000 elevators, which is large part of our revenue. We have the industry’s largest service network with over 80 centres covering all of India.

About 15 years back, not many players were there in India. There was some sort of lull for a couple of reasons. To my honest opinion, sometimes market leadership brings some sort of complacency. This complacency is, in my opinion, out of arrogance. We need to continue to listen to the market, listen to customers and provide the best product and services. Service excellence will be the cornerstone, and we have clearly realised this.

In fact, after I came back to India in 2012 after my stint in the Gulf as Managing Director, we restructured the organisation to come closer to customers.

Can you elaborate on the restructuring exercise?

Earlier, we had two verticals — one for sales and installations and the other for servicing and selling of services. Both the verticals were headquartered in Mumbai. In that arrangement, everything was centralised. There were advantages but considering that India was a vast geography, we decided to restructure the organisation into four profit centres. We created the four zones to make the organisation more agile, and remain closer to customers and our people. This strategy is paying up.

What is your investment plan in India?

We have a facility in Bangalore, which was set up in 1995. We are currently expending it. We are doubling the manufacturing capacity to 10,000-odd units per annum. That will make it the largest elevator manufacturing facility in India. We have a test tower too, which will be the tallest test tower in India. The expansion will be completed by this quarter (September 2014). The manufacturing floor area is going to be triple from the earlier one. This is going to be a green facility. We decided to invest in this factory because of our confidence in India, and also the growth we have seen in the vertical transportation market in this country.

This year, there was some lull but I think we are going to grow the market in the coming months. We have very positive outlook of the Indian market. Market can grow in the range of 12-15 per cent and this will help us in capacity utilisation.

Our flagship product is Gen2. We have sold around 2.5 lakh units across the world, including 10,000 units in India. The Bangalore factory started manufacturing these elevators in 2010. This is a completely green product, and has energy saving of up to 75 per cent. Since going forward green products will have traction in India, we are making lot of changes in the products to suit local conditions.

Where is the market heading for?

Now the market is upgrading to higher rise segments, and is demanding elevators with higher speed. This year we are launching elevators that come with a speed of 1.75 meters per second as compared to 1 meter per second now. Come next year, we will come out with products with even higher speed. That is looking at the growth of the Indian market.

What opportunity are you seeing from the infrastructure sector?

The opportunity is huge. With infrastructure as a sector poised for growth, we have set up a new infrastructure vertical and have appointed a director with considerable experience in the field.

The aim is to grow business in this area as well, which consists of metros and airports.

Can you name some of your latest landmark projects in India?

We are installing 10 escalators and 49 elevators at the 52-storied Kohinoor Square in Mumbai. Some of the elevators in this building will travel at a speed of 6 metres per second. In 2013, we won the elevators and escalators contract for Hyderabad Metro Rail Project. We are supplying and installing 670 elevators and escalators, including some Gen2 elevators. This order was one of the largest single contracts in the history of the Indian elevator and escalator industry. Apart from this, we are supplying 222 escalators for Phase-III of the Delhi Metro.

Besides, we have 100-year legacy in India. In 1892, we installed the country’s first elevator in Kolkata’s Raj Bhavan.

When I was in the Gulf, I had the privilege of overseeing the final execution at Burj Khalifa in Dubai, where we had installed 72 elevators, including 30 units of Gen2.

lalatendu.mishra @thehindu.co.in

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Printable version | Oct 20, 2018 10:18:42 AM | https://www.thehindu.com/business/Industry/we-must-continue-to-listen-to-the-market-says-otis-elevator-md/article6324345.ece

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