In an exclusive interaction with Mohana M, Editor, Clean India Journal during his recent visit to India, Markus Haefeli, VP – Head of APAC BU, Tennant Australia & New Zealand, Tennant Company spoke about the potential he sees in the country, both as a country and manufacturing hub, and the role of IPC Tennant India.
How do you analyse the Indian market? Why is it a focus area for you?
The Indian market is very unique for us; some factors make it very interesting.
From a macro point of view, India sits in the middle of Asia; it is a hub for Asia. It is easy to ship to and from India because of its sophisticated logistics system.
The Indian economy will continue to grow and continue to invest in supporting the country, rather than supporting any other country. The size of the nation – 1.3 billion people – makes it a very big market. In the cleaning industry, this market is not yet fully mechanised.
You also have a very interesting pool of educated, passionate, hardworking people to choose from to grow the business. All these factors make it a very interesting proposition.
Over the next ten years, it is going to be very interesting. The US is a huge market for us and we expect India to be that as well.
The IP Cleaning India business – with an extremely strong network, many branches, good people led by an excellent MD, and a very stable base – is very important to us. We need to grow on that base. We are looking to grow in India.
India is a very unique market. How have you customised your products to cater to its requirements?
India is a very price-sensitive market. Tennant products are high-end products which are suited for many applications in the Indian market. e.g cement manufacturing and other dangerous environments where silica/asbestos dust pose challenges and demand rigorous cleaning. This value proposition is very promising.
We have developed a whole range of products that will suit the mid-tier client segment – walk behind scrubbers, ride on scrubbers and sweepers, of different sizes, which we can import at an economical price.
We are also considering manufacturing locally. By the end of 2024, we will have a manufacturing site here in India, which will help us make our products even more competitive.
What factors have influenced you to consider making-in-India?
We have to pay a duty of just below 10% to import products into the country. Customs, transportation and other fees account for another 5%. Bringing the product into the warehouse and unpacking entails additional expenses. If we manufacture locally, we could bring prices down by 16-17% of the import price.
Investing in a manufacturing facility is an investment for the future. We think the Indian market is going to be very big in 5-6 years. We will invest in India as much as it makes financial sense. There is no real limit. India is a real return-on-investment opportunity for us.
We are studying the different options we have to achieve economies of scale. We will buy local parts like pumps and motors, which will help us reduce prices. Will an acquisition make sense? That is also something we will explore. We want to grow in India very quickly, and explore both organic and inorganic ways to grow.
Investing in a manufacturing facility is an investment for the future. We think the Indian market is going to be very big in 5-6 years. We will invest in India as much as it makes financial sense. There is no real limit.
How will your machines meet market demands in the near future?
As I said, India is a price-sensitive market. The products we have developed are simple and low-cost. We have stripped off all the complexities that make them expensive. The people who are using our machines for cleaning may change every week; they need simple machines with an on-off pattern that are very robust, user-friendly and don’t get damaged. We are bringing such machines into the Indian market.
In my visit here, I have met good customers from sophisticated client segments like pharma. For them, it’s not just the machine that is important; other factors like speed of installation, after-sales service, the ability to fix a machine within an hour, parts and consumables, ability to call someone up and get a machine fixed very quickly…also matter. We can deliver that with IP Cleaning India.
How have you incorporated sustainability into your product design?
As an enterprise, it is a very important part of our strategy going forward. Our CEO has put out our targets to reduce Source 1, Source 2 and Source 3 emissions by 2040.
The machines that IP Cleaning India sells are certified for certain sustainability parameters. We also take back certain machines, strip them down, add new components and sell them again. This is less of a business and more of a means of keeping them in circulation; we even warranty them, depending on the condition of the machine.
Many of the machines we import to India are already battery-driven; they are electric vehicles. By 2040, all existing diesel/gas-powered machines will be available in electric versions.