Local legend: Deepak Garg

As far as career highlights go, presiding over the fastest growing company in the construction equipment industry is nothing to sniff at. That’s exactly what Deepak Garg has achieved as Managing Director of Sany Heavy Industry India. Over the course of five years of leadership, he’s led the subsidiary of China’s Sany Group to be an industry leader, through a coherent and focused strategy.

Having joined in 2014, Deepak was charged with the responsibility of evolving Sany’s presence in India into a large corporate structure. Though the company had been present in the country since 2002, it was due to rapidly evolve in the years that Deepak led it.

In achieving this, his previous five years of managing supply chains across three of Tata Hitachi Construction Machinery’s factories would be indispensable. Sany India still represented a big step up, and an ambitious strategy was required.

Fortunately, Deepak had settled on a clear path to building up the company’s domestic presence. "The biggest change, I would say, was first of all enhancing Sany’s brand image," says Deepak.

"I think that was the biggest challenge we had, because although we were quite big globally, in South Asia we had a very small presence. At first, I think a mindset change was required around the brand.

When I say brand, that means focusing on the customers first, and then the other stakeholders. That was very important, so we worked very aggressively on promoting Sany’s brand in India.

"Next was localisation. I brought in an experienced management team from the domestic industry in the first six months of my tenure. We recruited some of the most renowned talent from the industry to Sany, with very challenging targets over a three- or five-year horizon. Within two years, the results of that meant we were more than 99% local. The other change in terms of localisation was localisation of the R&D. We undertook this because all markets call for some customisation, some localisation of technology, to meet the local requirements."

Deepak also ensured the company’s products were localised en masse. Over the past four years, Sany India has localised more than a quarter of its products, which began with the production of the SY200C-9 excavators from the company’s facility in Pune Industry Park, among other offerings.

In 2014, Sany India acquired the biggest market share for Indian crawler cranes, and today this strategy has inflated the company’s revenue to 10 times what it was six years ago. Comprehensive though these changes were, Deepak led further changes in Sany India’s approach to the market.

"On the market side, there were three major changes," he says. "Number one was our distribution network, which was revamped completely in two years’ time, since 2014. We got into very aggressive network expansion, which resulted in very deep reach for customers, enhancing our service and parts support, which is key to the success of the business.

"What we worked on early was our own team development to support this dealer network. Distribution is one area that we focused on, and today the change that we have is that we are ranked first in some of the key product lines today in the infrastructure segment. That includes products like piling rigs, cranes, and other products where we are already number one.

"In some of the high-volume products like excavators, which is the largest sector of the machinery industry in India, we were ranked number 10 in the business five years ago. Today, we are the fourth largest. That’s all happened over the past five years."

In the next five years, Deepak wants the company to go from a top-five market player to top three, and eventually top two. But one of the more intriguing elements of Deepak’s vision involves Sany India’s place within the wider Sany Group.

Strategically, he’s working to ensure the Indian subsidiary becomes an overseas hub for a wider collection of regions – including South–East Asia, Australia and Africa.

Indeed, the company has a vision of India being a hub for the company in all regions, besides China and the Americas. It’s ambitious – but given Sany India’s success over the past five years, there’s no reason to think it’s impossible.

While this strategy is largely set by the board, it’s Deepak’s job to pursue it as part of the Sany India team. First and foremost, he believes that for India to become a hub, it must also be able to be a hub for talent – while the company has heavily localised its workforce, it also needs to ensure that workforce is highly skilled.

"In the Group, we’ve realised that India has a lot of talent, and this talent can help us go global," Deepak asserts.

We recruited some of the most renowned talent from the industry to Sany.

"That remains a challenge, because we need a lot of talent to achieve this, and we’ll need good Indian talent to actually work better than we are today. That’s going to be a bit of a challenge.

"Second thing – within the Group, we need to be competitive. When I say that, I don’t mean with other manufacturers. We first need to compete with the Group’s own factories if we want to make India a global hub.

There are cost and quality challenges to meet to ensure that what we make in our global factories can come out of India at those competitive costs. That is one of the biggest challenges I see going forward, and that’s what will drive us to go global in terms of outsourcing from India.

"The third is that somewhere down the line we may have some challenges when we look at cost competition. Some companies are supported by government policies, which are much greater than in India in some cases.

That could be a challenge for us, because being an Indian company now, we will have to work or use exports or whatever benefits are available from our government. There could be some disparities in that when we go outside India.

"Talent, cost and quality – these are the three biggest challenges that I see going forward to achieve these goals."

In response to currect economic difficulties, Deepak believes Sany India needs to get competitive in the face of these challenges, balancing cost with quality, while also introducing technological innovation into Sany India’s facilities.

"There has to be a clear focus in the market to create a differentiation on technology, network and distribution support," he explains.

"Most important is introducing IoT into our processes, systems and equipment. These are some of the key actions that we will focus on within 18 months’ time to come out of the situation that we have."

Unfortunately, the Indian economy is also plagued with financing issues. Deepak’s solution, however, is to establish a financing company under the umbrella of Sany Group. It’s already been registered, he says, and the plan is to have it up and running by the end of the year.

The move will no doubt go a long way towards providing a source of certainty amid an uncertain environment and should strengthen Sany India’s financing over the next 18 months. In turn, Deepak believes this will allow Sany India to aggressively build on its exports.

This includes not only the broader South Asia region but Africa too, with aims to increase equipment exports from 20% to as much as 35% of all products.

The improvement of Sany India’s distribution will be a long-term process but will certainly provide a base for Deepak’s aim of Sany India being a hub for the Group.

"If you look at our vision," explains Deepak, "which you can see written under our logo, we believe that ‘Quality changes the world.’ That’s the first thing that differentiates us from our competitors in whatever regions we operate today.

If I benchmark our products, the quality of our products stands out completely. Now, that’s one of the biggest advantages that we see for our products. This is one of the biggest differentiators, and our customers talk about this.

"Another thing that differentiates our products is the technology. We actually deliver an absolute advantage to the customer. When I say absolute advantage, it’s like if you have two cars, where both have the same capacity engine, the same driving comfort, but one has better speed and power, and all of that. Now, that’s what Sany’s equipment is famous for. There is a specific absolute advantage to the customers with each and every piece of Sany equipment, in terms of operating efficiency and operating cost, and that’s something that our customers appreciate."

Deepak also believes that Sany India’s service and flexibility is a key advantage. He says the company’s customers tend to praise its flexibility, which stands out from other OEMs in the market.

Few customers, says Deepak, want their OEMs to be rigid. Equally, the company possesses a diverse product range, while many competitors might have 90% of their business on one product line.

Sany India, on the other hand, produces equipment for road making, concreting, piling and wind energy. The benefit for customers is considerable; rather than shop around many different manufacturers, construction companies can simply buy everything from Sany India, which provides a one-stop shop for the industry.

Building on that, Sany India offers a specialised team to support customers at their building sites, since the company’s expertise extends across much of the equipment the customer deals with.

Sany Group’s strengths in this regard have also been enhanced by acquisitions, such as that of Putzmeister in 2012.

Since that acquisition, however, Sany and Putzmeister had been operating independently, but the concrete equipment marketing for both companies has now been integrated as a combined entity operating across the South Asia region.

There has to be a clear focus on the market to create a differentiation on technology, network and distribution support.

The benefits, Deepak says, will be "better market access, leveraging the efficiencies of both the companies, and the potential to become one of the largest players in the concrete equipment business in India".

When it comes to partners, Sany India isn’t exclusionary – Deepak says the company maintains many partnerships with small organisations because of their quality, their size being irrelevant.

Sany India has helped nurture some of these smaller partnerships, and they’ve grown alongside the manufacturer. "It can be a guy who was lifting scrap for us when that was only one tonne per month. Today, it’s maybe 100 tonnes a month," says Deepak.

"We didn’t change those partners just because they were small." Equally, Sany India maintains strong partnerships with big global groups, like Isuzu, Mitsubishi and Kawasaki, though these relationships also extend to the Sany Group as a whole.

Locally, Cummins and Wipro are both major partners, and Deepak maintains personal relationships with their leaders, as a means of keeping its partners close.

For example, Deepak says he’s known the last four Managing Directors of Cummins personally, keeping contact with them almost every quarter.

Leadership figures at Wipro, meanwhile, often want to tour Sany India’s facilities, with multiple visits over the past year to discuss strategies.

Sany India maintains a similar relationship even with those larger international suppliers, and Sany Group’s other factories in China and Europe. "One is how we absorb their latest technologies," Deepak explains.

"We encourage our suppliers, like Cummins or Kawasaki, to offer us the latest technologies. We always demand the latest technologies, and when they come out with these new technologies, we do a blind trial as well.

We always look for advantages and we are always willing to try something new, so that our partner will invest in these components or try out these components. That’s something that’s a very strong partnership mechanism with all of our suppliers. We give them a technology boost.

"Second, we don’t just cut down suppliers because of some cost issues. We never do that. If we have a problem, we will talk to them repeatedly and help them to reduce their cost, rather than just demand a reduction in cost.

We work in partnership with them; we work out some technical leverages to see how we can reduce our cost, while reducing their cost simultaneously. Making demands isn’t the way. We work like this in all our partnerships.

We work like this with suppliers like Cummins, and even local suppliers. There is a big auto industry here, and we have so many suppliers around us so we work with them.

We communicate with them. We invite them to speak. We explain the situation and reach a consensus.

"The most important thing, at the end of the day, is that they’re looking for a consistent cashflow. Despite our challenges from the market side, we try our best to keep our partners insulated from this, so that we don’t affect their cashflow. We always maintain a consistency of cashflow to them. Here, it is very important that even if we have some financial problem, we don’t avoid them. We communicate with them. We invite them to speak. We explain the situation and reach a consensus on any issues that we may face."

Deepak admits that Sany India is now 75–80% dependent on these partners, so he can ill afford to have a poor relationship with them, or to miss out on their cuttingedge technologies.

Sany India’s partnerships with companies like Cummins, Mitsubishi and the China-based Sany Mitsubishi joint venture provide key components like pumps, motors and control valves, which are essential in the construction of hydraulics.

Deepak himself has worked to help these partners establish local presences in India, so that companies from Korea, Germany or Italy have been able to benefit from the same workforce localisation that Deepak has prioritised.

After all, he says, the main reason any company would partner with Sany India is that they believe in the partnership and Sany’s commitment to them. As an example of how he’s helped drive the transformation of other companies, Deepak took an active role in encouraging a joint venture between Wipro and Kawasaki.

In 2011, the two companies set up a hydraulic pump facility with Deepak’s encouragement, and his involvement in the process means he’s built up a robust partnership with both companies. Such a personal emphasis on relationships means huge benefits for Sany’s supply chain.

Despite difficulties in the market, Deepak is already looking beyond them. He doesn’t believe they’ll last long, and he’s confident that others in the industry should take the same approach.

"In these difficult times, I would only say that the industry shouldn’t be disheartened. I think these are passing times, and going forward, the market is going to be robust for the infrastructure industry, number one," he says.

"Number two, the most important thing for the industry is to work on making India more competitive by improving efficiency, and by offering better technology to the customers. Third and most important, we cannot remain behind in terms of IoT. As an industry, we are all working towards it, and that’s one of the key pillars of success for the Indian construction equipment industry."

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