The HESS Group
is a leading international
concrete products machine manufacturer with
subsidiaries in Europe, North America, South
America and Asia. Manoj Kumar
HESS Concrete Machinery India Pvt. Ltd. told
that the company is not
here to compete with Chinese manufacturers
or low-cost local players but instead create
new quality benchmarks.
Last year the equipment market was largely flat. How do you foresee
the market in near future? Tell us about your company’s future
business strategy in India?
In our segment, we expect a 30 per cent market growth year-on-year basis.
This year the market is moving well at least in our segment and I am sure
there will be a big improvement in this sector. Hess is here to show the right
technology and quality and not in competition with anyone. Currently we are
more focused on products for light weight concrete (AAC), Blocks/Fly
Ash/Paver Machines, Batching & Mixing plant, Concrete Pipe and Manhole
machines and Wet Cast Press Machines.
We are inaugurating our new production facility in Bangalore and another
service facility in Delhi. Shortly, we will be starting new service facilities in
Mumbai and Kolkata. Therefore one production facility at Bangalore, and
three servicing facilities at Delhi, Mumbai and Kolkata will enhance
the position of Hess in India. The main investment will be at the Bangalore
facility which is estimated at around three to five million euros. In the
first five years, the production from Bangalore plant will be for local market
but then later develop this facility to export certain products to
The new Hess India facility is located in Jigani - Bommasandra Link
Road, near Electronic city of Bangalore with a facility to design, fabricate
and assemble the concrete plants for different applications. Apart from that service and parts will be taken care from the same facility which
already employ 32 staff and will increase to 50 by middle of this year.
Going forward, do you have any growth targets in India?
We have been in India since the last three years. In last financial year, we did
Rs 25 crore locally and overseas another Rs 60 crores. This year, we are
looking at Rs 100 crores and next five years the target is Rs 500 crores. We
are not here to compete with Chinese manufacturers or local players so
quality is one of the main targets which we focused at this moment. As the
technology leaders we are here to create new benchmarks which will uplift
the industry standards. At present the concrete block and paving stone
industry considered as an unorganic sector which needs to change. For this
the main change required is in the mindsets and creating basic awareness
for this industry.
Most projects in India are on L1 basis while your focus is quality.
In India many customers want German quality and technology at
Chinese prices which is absolutely impossible. In this case we workout
best the possibilities to maintain the German quality with Indian price
which is possible. As you know that Chinese players are dumping the
material with very cheap prices and they are absolutely not interested
in after sales service. Ultimately this will force to the closure of several
units and automatically affects the entire industry. Worldwide this
industry is doing very well and as I mentioned the main threat is from
the Chinese suppliers and second problem is from the government side.
Just imagine the low cost Chinese equipments are either duty free or
less taxes and at the same time the high quality and top end technology
from Europe needs to pay high import duties. So basically the
government forcing investors to bring the cheap goods to our country.
This system and attitude needs to change and in future definitely we are
planning to organise or support further workshops for youngsters or new
comers to this industry. Of course without the support of government it is
not that easy.
We are investing in India because Hess is serious about this market. Our
company has confidence in the Indian market and knows that this market
will remain for the next 30 to 50 years.
Do you have any expectations from the upcoming budget?
One thing that we could look at is transfer pricing. Many European and
US companies prefer India vis-à-vis China. If favorable policies are
adopted in India then everyone will invest in India instead of China – but
at the moment there is no alternative to China as the political system is
capable to handle it properly. If you are importing equipment from Korea
or China then the import duty is six per cent and in some cases there are
exemptions which are mostly low quality products. But if one is
importing from Europe or US then you have to pay 26 per cent duty plus
the freight cost.
Therefore ultimately, you are pushing people to go with the Chinese
market. Instead of that it should be the other way with higher duty on
Chinese products and lower duties on good quality European products.
If this approach is adopted then, we will get high technology products in
India and the entire scenario will change. Another interesting factor is
our governmental and bureaucratic system accepting the defeat before
the match starts and always thinking negatively but I hope this will
Recent weeks have witnessed interest rates softening although it
remains high. Since most equipments are purchased through
financing mode, how has it impacted your sector?
We are in discussion with several international groups for investing in India in
different methods but this will take some time. Already few of our existing
clients have shown interest and started certain studies in India. As a proud
Indian from my personal side as well as from the company we are trying to get
the maximum inputs to India. More or less the same we are talking to banks
and other financial institutions and private equity players. At present in India
the financial institutions providing assistance in the form of lease and loans to
certain equipments in my opinion needs to expand to major sectors. Of course
this takes time but we are already in discussion with some of the major players
and expecting some results in near future.