RaIn an interaction with INFRASTRUCTURE TODAY, Katsunori Ushiku, Managing Director, Mitsubishi Electric India (MEI), said that for transportation systems, the company is targeting an annual revenue of US $170 million in India by 2020, partly by strengthening sales and maintenance services for subways and trains, to meet the growing global demand for transportation infrastructure.
How do you think companies like MEI can levarage India's ambition?
Yes, we are participating in India's first bullet train project from both the Japanese and Indian sides. We contribute rolling stocks systems and train equipment, station facility systems, automation (process and other) equipment, air conditioners, elevators and circuit breakers. We are also participating in other Indian Railway projects.
How is MEI contributing to the Indian market's infrastructure segment?
Mitsubishi Electric would be contributing to the Delhi-Mumbai Industrial Corridor (DMIC) with its products and services, once the plan starts rolling. We plan to participate in the DMIC with eco-friendly mass transportation solutions. The importance of public transportation segment in DMIC has encouraged us to set up a factory for the same.
DMIC is India's most ambitious infrastructure programme, aiming to develop new industrial cities, such as smart cities, and converging next generation technologies across infrastructure sectors. The objective is to expand India's manufacturing and services base and develop DMIC as a global manufacturing and trading hub.
While talking about smart cities, we are not working directly towards building smart cities in India as of now; however, we are recognised world leaders in the manufacture, marketing and sales of electrical and electronic equipment. A lot of our products like air conditioners, factory automation systems, power semiconductors and devices, transportation systems, and elevators and escalators will play important roles in the building of these smart cities. Through major engineering, procurement and construction (EPC) work, we support water (source-to-waste treatment) projects across India. We also support the new, MumbaiûAhmedabad bullet train project.
Railcar electrical equipment and HVAC businesses are said to be your strong points. Tell us how they drive growth for MEI?
We have received rolling stock equipment orders of approximately 1,800 railcars from Delhi Metro till date. Our market share of rolling stock equipment in the metro market is approximately 65 per cent in India. We are supporting various metro rail projects like Jaipur, Mumbai, Bengaluru and Kolkata.
In heating ventilation and air conditioning (HVAC) systems, we are expanding our business in room air conditioners (RAC), package air conditioners (PAC) and variable refrigerant flows (VRF). We wish to increase our market share and become a dominant player in the premium segment.
What are the new developments in the company?
MEI has recently set up two new factories in India. In November 2015, MEI opened a factory for transportation systems business in Bidadi, near Bengaluru, India. For transportation systems, Mitsubishi Electric is targeting an annual revenue of US $170 million in India by 2020, partly by strengthening sales and maintenance services for subways and trains, to meet the growing global demand for transportation infrastructure. In May 2016, MEI opened a technical centre for computer numerical control (CNC) business in Peenya, Bengaluru, India. Currently, MEI's CNC sales and service network comprises four regional offices and 11 satellite offices. The new technical centre is a part of the strategy to strengthen our business operations and technical support of CNC activities in India. Our new comprehensive facilities in India will have the assembly, repair, warehouse, training and back office functions under one roof. The technical centre is a small support to the Make in India initiative, where the local assembly and repair will decrease downtime thus supporting manufacturers to have responsive and robust production.
As its new managing director, what are your plans and vision for the company?
The plans and vision for the company include exploring the Indian business diversity to the full extent. Our strategy is to expand the existing business, mainly by strengthening our scope in tier 1 cities and penetrating tier 2 and tier 3 cities. Also, we are focusing and strengthening after-sales activities for all products to give our customers world-class service. We will also place stress on making compliance better and stronger. We will focus on keeping up with the changing technology and innovation and building a strong network.
How do you view the Indian market?
India is an important market for us. With a GDP of 7 to 7.5 per cent, India is definitely one of the hottest business destinations in the world today. Compared to matured markets like North America, Europe or Japan, the potential of
India is tremendous but it will require time and effort for companies to realise it. As of now, India contributes little to MEI's global revenues. However, we have huge expectations from the Indian market and our commitment to the Indian market can be seen from the investments and business interests we show here. We are watching very closely the development and reforms happening in India. We are eager to participate in the infrastructure; for example, basic water treatment plants to meet the HVAC needs of the Indian society as a whole.
What is your marketing strategy for the Indian market?
For the Indian market, MEI has plans to concentrate and focus on selling more HVAC products; electrical equipment used in railcars; factory automation products for industry, process automation and renewal energy segment; semiconductor products for the Indian Railways, renewal sector and medical devices.
In fiscal 2014, our generated sales were Rs 930 crore, and we want to raise this by about 140 per cent to between Rs 2,200 crore and Rs 2,300 crore in the year ending March 2021. Along with selling more HVAC products as well as electrical equipment used in railcars, we are considering opening new facilities to increase local production capacity. The driving sector for growth will be the railcar electrical equipment, factory automation, power semiconductor and HVAC businesses.
For air conditioners, we are looking at geographic expansion. As explained before, the engines of growth of the Indian economy are not limited to metro cities only. This is why we are expanding our exclusive showrooms, Hiroba and Cooling Planets, at a decent pace, and we have 70 Hiroba and 19 Cooling Planets today. The cumulative average growth rate of air conditioning business in India is 38 per cent.
On a division-wise strategy, factory automation is evolving from a product to solutions business, where we are looking at process automation, factory energy monitoring system and complete plant visualisation, also called "e-F@ctory." The cumulative average growth rate of factory automation business in India is 25 per cent.
For semiconductors and devices, we are looking at new avenues for business expansion. As a leading global supplier of semiconductors, it is our duty to propose new technology to industries. In this context, we are in discussion with many automobile companies in India for the development of electric and semi-hybrid technology. This is an industry trend which will gradually see transition from non-renewable to renewable source of energy. However, we will continue supporting the Indian Railways in the traction business with our world-class products.
Elaborate the company's investment plans for the Indian market.
MEI plans to grow its business and share in the Indian market in the coming future. The company has made investments in the recent past on its two new manufacturing facilities in India: transportation system and technical centre for CNC.
MEI has invested in elevators and escalators business and has also established a factory in India in the FY 2016. With the progress and growth of business, Mitsubishi Electric will plan for more expansion-based investments in the near future. We are watching the trends very closely and we are open for new investments in the field of transportation, factory automation and air conditioning systems.
- RAHUL KAMAT