Chennai: Kobelco Construction Equipment India is increasing localisation to lower the cost of owning and operating its excavators, while retaining its core technology.The Japanese machinery maker is raising localisation in three new excavator models launched on Friday in the 19.1-24-tonne category, targeting the infrastructure sector, to nearly 70% from 48%-50% previously. The move involves sourcing engines and other components locally to expand beyond the premium end of the market.“The biggest change is that we have moved from a Japanese-made engine to an Indian-made engine supplied by an American company, offering equivalent technology. This is the most significant step in increasing localisation,” Moses Eddy, director of Kobelco Construction Equipment India, said at the company’s factory in Sri City near Chennai.“At similar selling prices, we are looking at reducing lifetime ownership costs by around 30% in the new products,” he added.Lower operating costs could make Kobelco machines more attractive to smaller contractors, equipment-hiring companies, and customers in markets where imported components have contributed to the perception that its equipment is expensive to run.While Kobelco commands about 25% market share in the premium end of the 20-tonne excavator segment, which accounts for 20%–25% of the market, its share of India’s overall excavator market is only 5%-6%, partly because its machines have often been perceived as expensive.The company now believes the combination of local sourcing and Japanese engineering can help reduce lifecycle costs, particularly for customers operating in price-sensitive segments. However, it will retain the core engine, hydraulic and electronic systems while increasing the share of locally sourced components.The company expects its turnover to reach Rs 2,500 crore this year, up from around Rs 2,000 crore currently, including exports. It expects to grow by 8%-10% in a good year, depending on market conditions.Exports are becoming a more significant part of Kobelco’s India strategy. Close to one-third of its production is now exported. The company shipped about 600-700 machines last year and expects exports to reach around 800 units this year, provided logistics constraints ease following the West Asia conflict.Its Sri City factory has an annual capacity of 3,000 excavators, which can be ramped up to 3,500 units. It has invested around Rs 900 crore in India so far.
