Interview with Ruediger Schroeder, Managing Director, Kärcher Cleaning Systems Pvt. Ltd.

Company Description: Alfred Kärcher GmbH & Co. KG, which established its subsidiary in India in September 2011, is the world’s leading manufacturer of cleaning technology, based in Winnenden, near Stuttgart, Germany.  Kärcher India offers a large product range such as high pressure cleaners, sweepers, dry ice blasting machines, steam cleaners, wet and dry vacuum cleaners, car washers, cleaning agents, drinking water and waste-water treatment systems, water dispensers and pumps for home and garden scrubber-driers, garden pumps, in-plant equipment, vehicle washing systems, industrial high-pressure cleaning systems, water treatment, water recycling, etc.  The main buyers of its machines are in the automotive sector, commercial cleaning, hotels and catering, farming, local authorities, trade and industry, and private households. Based in Noida, the company aims to step up expansion of its countrywide dealer and service network to increase customer proximity.

It’s been two years since Kärcher India became the wholly-owned subsidiary of Alfred Kärcher GmbH & Co. KG post the absorption of Manmachine India Pvt. Limited. How have things progressed since then and how excited are you in heading Kärcher India?

I think Manmachine did a great job in introducing the ‘Kärcher’ brand to India. Suppliers and dealers often have issues on how fast you want to grow and what kind of market penetration you are aiming for. So in 2011, Kärcher GmbH & Manmachine came to the conclusion that it would be the best way forward if Kärcher takes over the (Indian) operations. The management stayed on until September this year and hence there wasn’t any mistrust with Manmachine. We realised the full resources of Kärcher in Germany as well as its growth potential in India. Over the last two years (after becoming a fully-owned subsidiary), Kärcher has opened a number of branch offices in the country. For us, a nationwide sales and service network is essential. So apart from ramping up our distribution here, we have also increased our staff strength over the last two years. Answering the second part of your question, I have been working in India before as the President and CEO of Roots Multiclean Ltd. When Kärcher GmbH approached me to head its Indian operations, I was quite excited because I knew that India is a fast growing market for cleaning machines. And Kärcher, which is the world leader in cleaning machines, has immense expectations from the Indian market.

How important is the Indian automobile market for you? What kind of products are you selling in this space and who are your target customers?

Within the automotive industry, we have two different sectors. One of them is the cleaning machines sector wherein we are supplying to the OEMs at their manufacturing facilities. The other sector would be their (OEMs’) dealers who also need similar products for their service set-ups and showrooms. We have different verticals in the company and the automotive (vertical) is one of our main growth drivers. Within this vertical, we are selling 4-5 different products like high-pressure cleaners, vacuum cleaners, carpet or upholstery extraction units, and steam cleaners. For automobile manufacturers, we are selling a wide range of different products starting from hi-pressure cleaners, industrial vacuum cleaners, automatic scrubbers, mechanised sweepers and also car washing systems.

Are all your products imported or are they assembled here? Do you have any plans to set up a manufacturing facility here in order to price your products competitively and then look for exports?

At the moment, Kärcher India is a sales and service company. We are buying the products from our head office in Germany and distributing them for our customers. So far, most of the products sold here are imported from multiple overseas facilities depending on the product lines. We are running our plants in Germany, Romania, Italy, Brazil and China but the product quality remains the same everywhere. Our range is so wide that we actually don’t know where a specific product is made. We have a centralised warehouse from where the products are shipped into India. Even though we regard the Indian market as among the fastest ones, it is still small in terms of volumes. As soon as the market is reaching certain volumes, establishing a manufacturing base here will be one of the alternatives to enhance our operations. Right now, we have outsourced the local production of single disk machines to a third-party manufacturer.

You are also running overseas R&D centres to develop country-specific products. Do you have similar plans in India?

It’s more or less the same answer to your previous question. If the market is developing further, the likeliness of this (establishing a technical centre) would also happen. I have been working in India before and am aware that Indian engineers are very talented and can be a part of our global R&D team. Let’s wait and see how times develop for Kärcher.

As mechanised washing industry is evolving over the years, is it curtains down for the manual washers?

I think with the rapid industrialisation of the Indian economy, manual labour is at a certain stage of development we place by mechanical solutions. But the challenge is that it’s not so much of a question of mechanised cleaning solutions taking away people from their jobs. In a lot of instance, mechanised cleaning solutions are much more productive than the manual ones. For example, if you really want to clean a car, you tend to do it by hand. There are so many corners which you can’t reach and remains dirty. So the pressure washers will step in and execute the job completely. In another instance, if you try to clean the carpet by hand, you will not succeed without using a vacuum. So if you want to clean something in an efficient and hygienic manner, you need to resort to mechanised solutions. And to answer your question specifically, the cleaning industry in itself is the biggest employer in the world. If you look at the Indian scenario, how many people are working as cleaners? If you start from just street cleaning to office cleaning to hospital cleaning to contract cleaners, the number is huge. I think the standards for cleaning will go up in India. The total workforce will also go up even if enhanced mechanical solutions are applied. The human factor is still required to perform the task and these jobs will be of much higher standards in the future. This is because you need skilled people to perform those tasks. If you need world-class hygienic standards, you need educated people who are doing cleaning with a high-end machine.

Could you also talk a little about the current strength of your distribution network? Will you now be setting up more sales and service outlets in tier-II and tier-III cities?

We are definitely expecting a strong expansion of our organisation in India. Our goal is to add new branch offices every year in the future. Currently, we are having nine sales and service outlets pan-India which are in the major metro cities. We also have four satellite offices in tier-II cities. Going forward, we will be establishing more such sales and service outlets in non-metro cities.

Has the downturn in the automotive industry really impacted your business? And what are the other challenges that you are grappling with?

Fortunately, the economic downturn has not really impacted our business. This is because the cleaning equipment industry is growing and maybe we are doing better than our competitors. Answering the second part of your question, the biggest challenge is getting the right manpower. We are relying hugely on skilled manpower for our products. Even though we are constantly adding new people, it is not so easy to find them.

Could you tell us the growth projections for Kärcher India in terms of revenues, workforce and volumes?

As we have very small machines, the number of units really doesn’t tell you too much. And since we are a privately-held company, we don’t talk about our revenues in India. What I can tell you is that we have about 180 people on our rolls and are planning to add another 40 this year. Although we are still below 100 crore in revenues, we have very high growth expectations in the coming years. We will definitely grow by over 20pc on an annual basis. By CY 2015, I am sure we will post a 100 crore-turnover.

Lastly, you have maintained that the cleaning industry in India is still in its infancy and has a long way to go. So what could really be done to promote better cleanliness and hygienic standards for this industry in India?

As I said earlier, the cleaning industry, especially the contract cleaners, are growing very rapidly. The guess is that close to 35-40pc of the total cleaning operations is already outsourced in India. The biggest challenge is for every organisation, which is recruiting cleaners, that there is no special education for these workers (cleaners). There is a preconceived notion (in India) that cleaning means a person using a broom or a mop. But that is not prevalent in today’s world anywhere. If you talk about hygiene at places like hospitals, hotels, etc, this (brooming and mopping) is definitely not enough. You need the necessary expertise and the machines to get the job done in a holistic manner. We, along with our competitors and contract cleaners, are trying to start educational institutes for grooming such cleaners. That’s a long way and the government is just starting to realise that too. We, of course, prefer to talk about the hi-tech credentials of our products. But they (govt) often forget that there are a lot of things that need to be done as the economy is growing and the people here are getting cleanliness conscious. I think the biggest thing what we in this industry can achieve is creating some awareness about mechanised cleaning and the requirement for cleaners to do such a job in an efficient manner.