The Confederation of Indian Industry (CII) conference on the Indian valve industry – Valves Conference 2008 – was held in Mumbai, on 5 December 2008. The conference focussed on the opportunities & challenges faced by the industry, technological development and road map for enhancing competitiveness in the global market.
Transcript of the welcome address delivered by Mr. A. K. Banerjee, Chairman CII Valve Division & Vice President, Valves Business Group, L&T, is given below.
“Ladies and Gentlemen,
Welcome to CII Valves Conference 2008.
As you are all aware, last week terror struck at the very heart of corporate India…I do not want to take you back to those horrific moments, but before we start the proceedings of the conference, I request you to stand up and observe a minute’s silence in memory of the departed souls…
The world is passing through an unprecedented turmoil. The major global economies are in recession, demand is shrinking and a liquidity crisis is looming large. We have gathered here today to take stock of the situation, identify trends – in technology, manufacture, sourcing and customer requirements – and create a roadmap to excel in these difficult times.
The good news first. The Indian valve industry has not been badly buffeted by the global economic turbulence. The reasons are manifold. First and foremost, India – our biggest market – has weathered the storm much better than many countries. Despite the slowdown, the GDP growth is expected to touch 7%.
Secondly, implementation of committed projects in oil & gas and power sectors – the prime consumers of flow-control products – is fairly on course. These sectors, of course, are not only crucial for industrial growth but also for sustenance of life as we know it, and government investment is expected to continue.
Now let us look at the challenges that we face. In the next fiscal, if the overall situation doesn’t ease up, new projects would be deferred and investments in ongoing projects can dry up. But the increased MRO spend to refurbish the existing plants can be a silver lining.
In the international market, the fall in oil prices has raised doubts about the viability of certain mega-projects, especially in the LNG, offshore and oil-sands space. If the financial closure for these projects gets delayed, it can negatively impact demand, especially for high-end valves. The shrinking economy and fear of a demand recession, can also affect off take of valves from downstream industries such as petrochemicals.
Many Indian valve companies have established significant presence in the export market. The vagaries of forex pose a threat to these operations. At the same time strengthening of the Chinese yuan against the rupee reduces the competitiveness of operations that rely on Chinese castings and forgings.
In these difficult times, we need to increase manufacturing efficiencies, reduce transaction costs and minimise receivables, but most importantly strengthen global marketing. Our internal efficiencies does not mean a thing if the shops are not loaded.
We need to benchmark with global leaders and work closely with customers to develop new markets, and the importance of fora such as the CII Valve Conference which provide the valves fraternity an opportunity to interact with customers cannot be overemphasised.
While the ‘user industry perspective’ session would help the valves fraternity understand the expectations of the customers better, the ‘technology’ session would provide the valve manufacturers a platform to showcase the latest in flow-control solutions.
I hope the deliberations that we have today would lay the foundation for a relationship that would benefit both the valve and user industries”
