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Caterpillar India to test waters before new launches

S. Muralidhar

NEW DELHI, May 27

CATERPILLAR India, the subsidiary of earthmoving equipment major, Caterpillar Inc of the US, is planning to conduct an all India market survey to finalise the specific types of earthmoving equipment that the company should launch in the Indian market.

After the completion of the takeover of Hindustan Motors' (HM) earthmoving equipment division (EED) in February this year, Caterpillar has decided to look beyond the tipper trucks and backhoe loaders that were being manufactured by HM in collaboration wi th the American major.

According to company sources, the market survey is expected to be conducted to gauge the appetite for new mining and construction equipment that Caterpillar can potentially manufacture locally.

Caterpillar had announced that it intends to make off-highway trucks, wheel loaders and track-type tractors in HM's Thiruvallur plant near Chennai and wheel loaders and back-hoe loaders at the Pondicherry plant.

Caterpillar is also proposing to make the Indian operations a separate profit centre, independent of its operations in the Asia-Pacific region.

In addition to India, Caterpillar has large operations in China and Indonesia. The company is also planning to source components substantially from Indian vendors and its own operations also.

Caterpillar will, however, continue to be a joint venture partner with HM in Hindustan Power Plus Ltd, which manufactures diesel engines and generator sets. While the two partners hold 37 per cent each in this joint venture, the remaining 26 per cent is held by institutions and the public.

It may be recalled that HM has signed an agreement with Caterpillar to sell its EED for a consideration of Rs 337.50 crore. The agreed sale price was inclusive of net current assets, both the manufacturing facilities at Thiruvallur and Pondicherry, near Chennai, and HM's engineering and education centres.

Set up in 1969, the erstwhile EED of HM has been manufacturing, at its two facilities in Thiruvallur and Pondicherry, dumpers, loaders and track type tractors under licence from Caterpillar, since 1984. It had a turnover of approximately Rs 355 crore dur ing the year 1999-2000 and currently enjoys a market share of about 50 per cent for dumpers and 70 per cent for loaders.

The manufacturing facilities at these plants have strengths in the area of fabrication of structures, accurate machining of critical components and a defect-free assembly process. Over 9,000 HM earthmoving machines from the company's plants are in operat ion all over the country.

The American earthmoving equipment company is considered the world's largest manufacturer of earthmoving equipment. It is best known for its extensive range of machines catering to the construction, infrastructure and mining industries and its fail-safe logistics for efficient after-sales service. The company ensures onsite delivery and replacement of its machines' components within 48 hours anywhere in the world.