It is world’s second-largest builder of railroad locomotives and provides the technology that drives diesel locomotives in the Indian Railways (IR) today. The $1.8 billion (Rs 8,800 crore) Illinois-based Electro Motive Diesel (EMD) sees revenues from India overtaking those from China by 2011. As completes 50 years in India, the company’s president and CEO John S. Hamilton spoke to Hindustan Times. Excerpts:
How does India compare with China as far as your business goes?
Both are very strong markets that are witnessing high growth. The nature of our business in both the countries is different. China is bigger in terms of revenues but in India we have much more confidence and have been here for a much longer period of time. Currently, the revenues from China at around $120 million (Rs 585 crore) are nearly double those of India’s $70 million (Rs 340 crore). In two years though India would be bigger than China as the latter is close to stagnation while the former is revving up.
Is corruption a big issue for doing business in India?
Absolutely not. We are aware of India’s reputation but on an individual basis we have never faced a problem. In fact, we have found that the process here is very transparent. We have done business in over 73 countries and there are no particular shortcomings here.
IR has managed a turnaround here by making freight earnings subsidise passenger travel. Have you seen similar instances abroad and is this sustainable?
This is a very widely-adopted model as passenger traffic is often seen as a means of mobility and not for commercial purpose. There are certain state-managed operations in Europe and in Egypt that have turned around their business on this basis.
Your association with IR just turned 50. What have been the high points in this journey?
The start up itself was a high point as we recognised the potential of India early and are proud of that. Other important milestones are the technology transfer agreement in 1995 and IR’s decision to only use EMD engines. Also we are proud to be driving modernisation in railways through our technological innovations.
Since you are so bullish about India and its prospects would you ever look to set up manufacturing here and go solo?
It is possible but we do not have any such plans right now. In a market where there is only one buyer it is very risky to put in a lot of investment. In some far off future it may happen but not now.
The global recession has almost everybody worried. How have you fared so far?
The situation in North America and Europe is pretty bad and that has impacted us adversely. At the peak of the downturn, sales were down 20 per cent but they have improved somewhat and are down 16 per cent. In the near term, we are looking at double-digit topline decline because we had a peak year last year.
Which are the markets where you are witnessing growth? Is India one of them?
We are witnessing modest growth from Brazil, Australia, South Africa and especially China and India. India accounts for 20 per cent of our sales outside of North America and around 10 per cent overall and I would love to have more markets like India. Many markets would be proud of the growth that India is witnessing.