Jagannathan looks at the growth of one of the earliest
Finnish investments in India, the Chennai-based Kone Elevators.
In March this year A Sankarakrishnan, managing director,
Kone Elevators India Private Limited played host to the
Finnish prime minister Matti Vanhanen. With a justifiable
pride he showed his guest around the South East Asia's
largest elevator plant to the prime minister.
of the earliest Finnish investments in India, the Rs258
crore turnover Kone Elevators, then called Beacon Kone
Limited, was started as a joint venture between Kone Corporation
and Best and Crompton Engineering Limited as.
initial years were difficult; in 1992, the company's turnover
was just Rs10 crore while the accumulated losses were
Rs14 crore. It was then that Kone Corporation infused
Rs7 crore into the company and also bought out Best and
since then it has been a smooth upward climb for the Kone
Elevators. In 2001 the company established a global software
centre to develop embedded system software for lift applications.
year 2004 turned out to be a landmark year for the Kone
Elevators. The company, through its subsidiary Tiger Elevators
Private Limited, took over the 5,000-unit elevator maintenance
portfolio of Bharat Bijilee Limited, which makes the Olympus
brand of lifts, for Rs33 crore.
Indian engineering talent, Kone Elevators set up a global
engineering centre to export lift drawings to the American
market. In the same year it overtook Otis Elevators to
become the number one in the domestic market.
order from the Delhi Metro Railway Corporation for 150
elevators and 71 escalators, and another order for 18
lifts from the government General Hospital in Chennai
along with other orders have boosted the company's top
and bottomline in the recent times.
the lift at the rocket launch pad in Sriharikota has also
been supplied by Kone Elevators. This lift has been made
from special steel so that the heat generated during a
launch does not damage it.
year, we grew by 40 per cent while the industry grew by
15 per cent. Our market share is around 28 per cent. And
our order book is full for the next two years," says
company also exports elevators to Nepal and Bangladesh
and some hardware to Singapore. "The exports revenue
is around Rs2 crore."
15,000 lifts under its maintenance agreement, nearly 20
per cent of the turnover is from maintenance services.
According to Sankarakrishnan, the trend amongst the buyers
and users is to leave the maintenance work to the manufacturers
200 units to 580 units per month
its gains, Kone Elevators has decided to accelerate growth
through expansion. It was only last October the company
increased its capacity by 2,000 units to 6,000 units per
annum. Five months later, the company has embarked upon
an expansion programme to increase the capacity to 7,000
units. A substantial escalation from the 200 units per
month that the company was making barely two years ago.
And with these expansions the monthly output will be around
addition, the company will be setting up a training centre
for its services and maintenance team. The total outlay
works out to Rs24 crore.
company's expanded capacity will be around 35 per cent
of the total industry size of 20,000 units annually. In
value terms, the domestic elevator industry is estimated
at around Rs1,000 crore (new units) and the replacement
market is around Rs80 crore.
about the market for the elevators, general manager, marketing
and key accounts, B R Chandran says, "The domestic
demand is around 20,000 units per year and in value terms
it is around Rs1,000 crore."
north and western regions comprising Delhi, Mumbai, Ahmedabad
and Pune are major markets for lifts on account of their
high rise buildings. "They would account for 70 per
cent of the sales while the remaining 30 per cent is from
the four southern states. Amongst the southern cities,
the demand in Bangalore is growing. But in general south
is not a big market for elevators."
Kone Elevators is present in all the segments commercial
(IT parks, hotels, hospitals etc), industrial and the
residential the company sees sizeable demand from
upcoming crop of IT Parks. According to Chandran some
software companies like Wipro, CTS, TCS, etc insist only
on Kone lifts when they build their own premises or when
they lease space in a building under construction.
other focus area is the retail sector. According to one
estimate around 800 malls would come up in three years
time. Each mall would sport atleast two elevators and
three lifts. To cash in on the emerging opportunities
like the retail sector, Kone Elevators is negotiating
wi6th industrial groups that have announced major retail
investments to become the sole vendor for the elevators
and escalators for all their malls and outlets.
growth in the IT sector in turn has a positive cascading
effect in the increased demand from the residential segment,"
the growth in demand in residential segments for large
companies like Kone Elevators and others has been a tad
slow as builders often opt for locally made cheaper lifts.
Chandran, "As lifts are in the common areas, residents
are usually not particularly bothered and later get bogged
down in the maintenance once they start living."
however feels that with increasing safety lift and escalator
accidents being reported, safety consciousness is increasing.
For instance in Chennai, an old lady was trapped and crushed
to death between the floor and the lift in front of her
husband. In another incident a lift in a high rise corporate
building plunged three-floors in a free-fall injuring
around 15 people. The building, owned by a financial conglomerate,
immediately replaced all the lifts with the Kone Elevators.
about accidents and experiencing the comforts of good
lifts in their office premises, discerning apartment purchasers
now look at the elevator brand while zeroing in on a property.
And quality builders are changing to lifts manufactured
by the big five Otis, Kone, Schindler, Mitshubishi
these five players share 75 per cent of the global demand
for lifts and around 8,000 players share the balance 25
per cent, he says. In India there are several small operators,
manufacturing lifts. "In Gujarat alone there are
around 180 lift manufacturers some making two lifts per
month," Chandran remarks.
other challenge for manufacturers is that each lift, elevator
and escalator is custom built. "The lift specifications,
features, the button panel, position indicators differ
from building to building and even from lift to lift within
the same building. We have to coordinate the needed components."
about the market trend he says monospace lifts (lifts
without machine rooms) are gaining in popularity. Similarly
lifts without counter weights have a better demand as
these carry more passengers, "Seven persons in place
of five in traditional lifts. But we are yet to start
selling it here," he says. Chandran also
hopes to gain from more modernization / replacement orders
as many of the lifts installed in the high-rise buildings
are nearing the end of their life span.