Wednesday, April 16,2014: Headquartered in Herborn, Germany, ‘Rittal-The System’ offers industrial enclosures, which are deployed in a variety of industries, including mechanical and plant engineering, IT and telecommunications. In conversation with Atul Goel and Dilin Anand of EFY, Ajay Bhargava, managing director, Rittal India Pvt Ltd, discusses the company’s plans to penetrate the unorganised Indian enclosure market.
EB: The enclosure business has been your core business in India for the last 15 years. What market share do you have in the country?
The enclosure business accounts for almost 50 per cent of our business in India, but it is too complex to be run with a single strategy. To simplify this segment, we can divide it into two parts. One contains the organised sector, where we enjoy a very high market share through a simple strategy of serving our customers well and growing with them. The second is the unorganised sector, where currently, our market share is low. We are trying to penetrate this market by reducing the cost of our products, enhancing market reach through channel partners, and designing products that meet the Indian customers’ requirements.
EB: What strategies do you apply to reach out to the unorganised market?
We first reach out to the large customers who are using local fabricators. A lot of the major brands use local fabricators as they have been doing so for the last 30 years. They will not shift from these local fabricators unless we create some real value for them.
One of the ways in which we create value is by going to customers and making them an offer that instead of having 100 varieties of enclosures, we can make them 10 varieties that can do the same job. This would make it easier for them to manage inventories and also lower the cost of the product. We tell them we have the capability capability to design and standardise these products for them and probably give them a cost benefit.
Another aspect we play on is that not all our customers are global. However, everybody has ambitions of going global and selling out of India. For that, they need standard products, which is where we come in. First, we look at their aspirations. If they plan to have a global business, they will immediately switch to us because if a defective panel lands in another country, they will have to replace it and pay heavily if that happens. We have Rittal affiliates in many countries and we can provide services in those countries.
We also play on the corporate culture. For example, if a company wants to deal with high quality products, it will look for premium companies that are technically superior, have a strong design capability and the ability to deliver faster. We also have software tools that help standardise variants so that the engineering time is reduced for the customers.
EB: What is it that makes the unorganised sector challenging for an MNC like yours?
The enclosure industry started 50 years back in India. Rittal was not around at that time, as we began business in India only 15 years back. Today, there are many local manufacturers who provide these products, but they are small in terms of scale. The quality is not the best and there is no standardisation in the products, which make them cheaper. So there are thousands of such small fabricators with whom we have to compete now.
EB: Is there a trend that makes an unorganised market look promising in the future?
Let’s take a trend that we have already seen. For example, 10 years back, in the TV industry, you would find a lot of small local manufacturers seen. But none of them exist today, either because consolidation happened or they had to close down as they could not compete with the big brands. The same thing can be observed for computer sales in India. Now you get non-pirated software, predictable performance from the computer and other such factors that improve reliability. This has caused people to shy away from local players and go for reputed brands. The same thing is likely to happen to the enclosure industry.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine
