In India, the demand for used machines has nearly doubled from 2008 to 2009
… says Cesar Rodriguez, founder & managing partner, Machine Point Consultants SL - an international trading company that engages professionals specialised in selling second-hand machinery in the plastics sector. It has core expertise in machinery for film extrusion & converting; extrusion of pipes, tubes & profiles as well as thermoforming products, among others. In this exclusive e-interview with Sarita Kutty, Rodriguez outlines the prevailing scenario in the used machinery market in India and the complexities involved in used machinery transactions.
On trends in the Indian plastics processing sector…
India is already on its path of becoming the fifth largest consumer market in the world by 2025. It is projected that the total Indian consumer spending will be approximately $ 1.77 trillion by 2025.
Talking of plastics specifically, India has the potential to become the export hub for processed plastic goods, mainly due to low manufacturing costs. Reports indicate that export of finished goods from India could reach $ 200 billion by 2012 in addition to the estimated market of $ 300 billion. This is the simple reason why a lot of foreign players including us are keen on investing in the Indian market. Further, a lot of joint ventures are expected to take place in the Indian plastics processing sector.
On trends related to used machinery for plastics processing in India, vis-à-vis the European markets…
The demand for used machines in India has nearly doubled from 2008 to 2009. It is also the fourth largest country in terms of demand for used machinery. This makes India a very important market for MachinePoint, as we have witnessed a lot of demand for European used machinery here.
However, the word ‘used’ is not always employed in the correct sense. In fact, most of the processors associate the term used machinery with cheap machinery, whereas this is not always true. Further, it has been observed that almost every processor is on the look out for opportunities to purchase cheaper used machines but are seldom in an urgency to buy them. This results in increased demand but the order conversion rate is very low from this region.
On the contrary, in European regions, the conversion rate is much higher; in fact, the number of machines sold is three times higher. This is because when European processors look for a particular machinery they tend to finalise on the deal in a short span of time, while Indian processors take a very long time when it comes to selecting a machinery that suits their process and also while negotiating on the price factor.
Moreover, Indian processors do not find used machinery made in Europe cost-effective – more so in the case of smaller machines – as the cost of transportation invariably increases the price of the machine.
However, when it comes to buying complex and bigger machines, European technology does make a difference, and the transportation costs too seem to be negligible.
MachinePoint’s strategy to tap these opportunities…
We have plans to increase our presence in India in the years to come. Being financially sound too has helped us get involved in big projects. Besides, we even offer financial support to buyers. Our banks have financial tie-ups with most nationalised banks in India and this helps in extending any help, if required, to local buyers. Moreover, we offer only good quality machinery that can be sold without any sort of refurbishment or immediate attention to the functional parts of the machinery.
And while the used machinery market is full of small entrepreneurs trading in used machines, MachinePoint has managed to professionalise this business by reaching a critical mass, which makes us the largest European used machinery seller. We have presence in most of the major European markets, and this is they key to having a wide portfolio of good quality used machinery for sale. Though we are headquartered in Spain, we have presence in Germany, Italy, Poland, Russia, etc, and also have tie-ups with local sellers. I consider this absolutely essential, as it helps during the price-negotiation stage.
Selling machinery can be quite cumbersome if done without the right experience, but thanks to our specialisation, our network of international professionals(lawyers technicians, machine manufacturers, forwarders, riggers, brokers, dealers, agents and auctioneers), and our commitment to the highest quality of performance, we have already sold machines in 52 different countries to the satisfaction of both buyers and previous machinery owners.
We select the best machinery and provide the best engineering & logistics service to our customers. We also take care of collection, legal agreements, dismantling, packaging, loading, transportation, custom formalities, commissioning or repairing the machinery. In the near future, we plan to expand our global presence further.
Equipment/machinery for plastics processing on offer from MachinePoint…
We offer used machines for two highly different industry sectors: the plastics sector and the beverages sector. In the plastics sector, we offer used machines for extrusion (pipes and profiles); packaging (film, bags, film extrusion, film printing, etc); thermoforming and blow moudling. For injection, we only concentrate on injection machines for preforms and caps, while for the beverages sector, we offer used machines for dairies, soft & carbonated drinks.
Future of used plastics processing machinery sector…
The key drivers which contribute to the growth of this sector include innovations/new technologies coupled with high output machines and less power consumption. Since a lot of machinery manufactured in Europe meet these criteria, there will be a lot of demand for used machinery from this region. Further, knowledge base of the plastics processing machinery, new technologies - both in case of imported and indigenous machinery - would bring in a widened horizon for entrepreneurs. Having said this, we are aware that in order to compliment our products, we would need support from a few American brands, and we are working to incorporate some of these in our portfolio.
Further, a few Asian brands are also making their presence felt in this arena with highly innovative machinery that also has a good residual value. In line with this, MachinePoint may also look at supplying used machinery brands from this region.
Any advice for Indian plastics processors…
Yes. If Indian plastics processors are on the look out for used machinery from European brands they should make a quicker move. This will increase their chances of not losing out on opportunities.
Also, as the whole process of selling and buying used machinery is lengthy, complex and involves risks, they would benefit if they avail the services and advice of a reputed company who would serve as an intermediary and help them assess the entire deal through to the finalisation stage.
Further, price always seems to be a constraint with Indian buyers of used machinery, and they tend to negotiate on the price even before zeroing in on a machine. Hence, I would suggest that before negotiating on the price factor, they should check out the working of the machinery to ensure whether or not it fulfils their needs and expectations. In fact, there have been several instances where Indian buyers tend to exhaust European sellers when it comes to price negotiations; and then everything changes once the machines are inspected, thereby creating a lot of tension between buyers and sellers.
Also, before they consider buying a used machine from Europe or America, processors should bear in mind the transportation charges, and also make sure that it is worth the price; else they could opt for a new machine that is made locally.
“India has the potential to become the export hub for processed plastic goods, mainly due to low manufacturing costs. Reports indicate that export of finished goods from India could reach $ 200 billion by 2012.”
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