Tata Hitachi grapples with weak rupee, poor demand

Aug 22 2013, 01:10 IST
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SummaryTata Hitachi and the country’s entire construction equipment industry, being dependent on imports (45- 50%), is reeling under the foreign exchange ‘tsunami’

Tata Hitachi and the country’s entire construction equipment industry, being dependent on imports (45- 50%), is reeling under the foreign exchange ‘tsunami’ as well as fighting continued weak demand in the domestic market.

The rupee-US dollar exchange rate, which stood at R54-55 a year ago and is currently hovering around R63.50, is said to have hurt the industry badly.

“We are trying to recover from the foreign exchange tsunami as the entire industry sees a minimum of 40-45% imports”, said Tata Hitachi managing director Ranaveer Sinha, talking exclusively to FE.

Major components such as ‘tracks’ and others such as hydraulic pumps, motors and control valves, which form the heart of most machines, have to be imported by all players with a manufacturing base in the country. These components are imported mainly from from South Korea, Japan, China and Italy.

Depending on the currency the equipment manufacturers were dealing in for imports, the models they were producing and the market segment targeted, players such as Caterpillar, Komatsu, JCB, Volvo, Lugong, Hyundai and LeeBoy are all said to have taken foreign exchange hits, the intensity being different in each case.

Desperate to find ways to cut the import bill, industry leaders, such as Tata Hitachi, have been trying to rope in global manufacturers to set up shop in India for manufacturing construction equipment components.

“Talking of India’s growth story, we have been able to convince Kawasaki to tie up with Wipro for setting up a facility to manufacture some of the hydraulic components now being imported. The volumes have to be sizeable to interest the manufacturers. Similarly, Berco of Italy has been urged to come and assemble tracks while Germany’s ZF Friedrichshafen AG has already started a facility in Pune to produce axles and transmission systems,” said Sinha.

Though 70% of its production comprises excavators of different capacities, the slowdown coupled with the unfavourable foreign exchange situation has been adversely affecting production of its entire range of equipment.

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