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Being the major equipment class in the infrastructure development activities, Earthmoving equipment sees further demand growth in future owing to an anticipated growth in construction activities. <p></p><p> Earthmoving is a major work content of all infrastructure developments and mining activities. Wheel loaders, backhoe loaders, dozers, excavators and application-centric equipment are options for the users to choose from to suit individual requirements. Currently the industry growth prospects are on a high with a host of big projects underway and the issues such as GST turning out to be favourable to industry. Projects are taking off in a big way with timelines and quality as major factors. In this scenario, contractors are preferring better efficiency and productive equipment which can give total cost of ownership to them. </p><p> <span style="font-weight: bold;">Infrastructure development is key</span><br />Earthmoving equipment majorly depend on infrastructure development. Currently, with the renewed focus on various infrastructure building activities, such as roads and highways, airports and ports, irrigation, railways, urban infrastructure, etc, earthmoving equipment segment is on a role now. <span style="font-weight: bold;">Sandeep Singh, Managing Director, Tata Hitachi Construction Machinery Company</span>, says, 'Several critical projects have been announced last year, opening up new avenues for the construction machinery industry. All these will lead to a surge in the demand for earthmoving and construction equipment. In the long term, the mining industry overview is positive. This year, we expect the market to recover in the second half given the increased demand for electricity and hence coal.'</p><p>According to <span style="font-weight: bold;">Nischal Mehrotra, Director (Sales &amp; Service), LiuGong India,</span> the changing infrastructure landscape in India has generated significant interest from international investors. The ambitious target set by the government will surely act as a boost for earthmoving equipment market. 'We as an OEM has already anticipated this change and increased our production capacity by 30 per cent. We come up with new models and products to support the current need. Excavator and road equipment have been the topmost products in demand. We expect a growth of approximately 15 per cent for these products in the coming year.'</p><p>'At present, construction equipment sector is mainly dominated by backhoe loaders (more than 40 per cent of total demand) but broad-based growth is expected across products, with each segment expected to see growth. Particularly, the demand for backhoe loaders is expected to grow as it is a versatile machine and can be employed for numerous applications at the job site. Further, factors such as decreasing availability of manual labour and increased demand for mechanisation are expected to provide a boost to the growth of backhoe loaders in particular and construction equipment sector in general,' says <span style="font-weight: bold;">Sachin Nijhawan, Vice President and Business Head, Construction Equipment, Mahindra &amp; Mahindra. </span></p><p><span style="font-weight: bold;">Dimitrov Krishnan, Vice President and Head, Volvo CE India, </span>sees most activities in the road building sector with numerous projects progressing. 'Understandably, we see the highest levels of demand for excavators, compactors and pavers for this application and its associated industries,' he adds.</p><p>Says <span style="font-weight: bold;">Rajinder Raina, General Manager - Strategy and Business Development, Escorts Construction Equipment,</span> 'The current dispensation at the Centre has been relentless in its pursuit of infrastructure development with roads and metros witnessing a never seen before growth. The intent is clear from the fact that the targets for construction of roads, the blueprint and funding mechanisms is clearly laid out in the Union Budget. It has also addressed the hurdles faced in the past and given relief through an exit route to EPC companies which faced problems not attributable to their malafide intentions. The creation of HAM model was a positive step to build and instill confidence in the minds of reluctant contractors. In the conference held during Excon 2017, many EPC players asked for re-introduction of EPC models which the concerned minister assured of considering favourably. The pace and regularity at which the financial closure and award of work is going on, things are falling in place to cross the 30 km per day mark of road construction in 2018. Excon 2017 reflected this mood in a manner which was there to see. The year 2018 should be the best and last decade or more for most of the equipment.' </p><p> <span style="font-weight: bold;">Matching the requirement</span><br />With the government firm on the project completion deadlines and quality of work contractors have to match this expectation and move towards the technologically advanced equipment. This has improved the scope of new technologies such as Telematics. Says Mehrotra, 'Customers are more focused on the quality of work along with meeting contract deadlines. LiuGong India has launched its full range of excavators, dozers and compactors in addition to existing product lines of motor graders and loaders. Technological advancements in loaders has been incorporated in terms of variable displacement pumps and variable horsepower engines so that the fuel cost can be controlled. People are shifting towards technologically advance machines keeping in mind the cost effectiveness of the product along with the quality of output. Now customers prefer higher capacity application-specific equipment to achieve project deadlines.'</p><p>According to Nijhawan, government's stand on project timelines has impacted the smaller and medium contractors to shun the jugaad technology and opt for optimised solutions. He adds, 'Our Mahindra RoadMaster G75 is a key example. Since our launch of the optimised motor grader RoadMaster G75 suitable for the developing world, we have already booked more than 150 units in just three months against the total industry volume of 600 last year. With the contractors made accountable for the deliverables on the output, it would create a need for products which suit the needs of Indian sub-continent of balancing the machine cost and providing quality output.'</p><p>With the project timeline in focus, contractors are now looking for productive machines. According to Krishnan, Indian contractors have traditionally favoured backhoe loaders as the preferred machine for many tasks, including earthmoving. But as the market matures, customers are favouring the improved productivity and efficiency that excavators can deliver. 'Our customers appreciate the cost savings and operational efficiencies that Volvo technologies bring them. Particularly in the current work environment, where projects are getting bigger and timescales are getting tighter, contractors are looking to equipment and technology to bring them some advantage,' he adds. </p><p>According to Raina, it is not only the government, even the contractors are keen to complete and deliver the projects on time to earn the incentives linked to early/timely completion of projects. 'It avoids the cost over-run or the executing agencies and the contractors which keeps the wheel moving in a manner that the resources comprising machine and men are sweated to their optimum levels and also the companies can take up more projects. For the earnest contractor, it is a win-win situation that he could be looking for a contractual agreement.'</p><p> <span style="font-weight: bold;">Products and solutions</span><br />Earthmoving equipment are the most commonly used construction equipment. This has resulted in introduction of a vast range and capacities of equipment by various OEMs. Mehrotra explains, 'As one of the reputed CE manufacturer globally, we have a full range of products which can contribute to the cause of building new India. We have products for mining, material handling and road equipment. We have a full range of excavators (3T- 50 T), wheel loaders (2T-12T), motor graders (150HP-280HP), compactors (4T-16T), and dozers (75HP-540HP). </p><p>Nijhawan describes on Mahindra's range, 'Mahindra Construction Equipment with its Mahindra EarthMaster range of earth moving equipment include backhoe loaders which has helped the industry to break-free from the limitations of the old technology. Available in the market in different variants namely VX, SX, SX 4WD, SX90 and TX along with a slew of over 30 attachments, make our backhoe loader a truly versatile machine. We also have SXL front-end loader and DrillX, a unique piling solution. Also as mentioned earlier, we have also ventured into road construction equipment segment with launch of our truly optimised motor grader for the developing world under the category RoadMaster.'</p><p>Says Raina, 'With the thrust on highways, expressways and metro rails etc, we have launched a number of new models in the last one year. This included the top-end 12 tonne compactor model EC3212 and CitySmart 15 crane during the Excon 2017. These products will help us garner not only added market share but the top-end clients comprising corporates and fleet owners.'</p><p>Singh elaborates on Tata Hitachi's comprehensive range of excavators, 'We offer 2T to 40T hydraulic excavators for the infrastructure sector, 45T to 120T for the mining sector and the ultra large 190T to 800T excavators for specialised heavy-duty mining. These products, amongst others, are a part of our latest EX Super series and the technologically advanced ZAXIS GI series. Our two-pronged product strategy addresses both the value and premium segment of customers.' </p><p>According to Singh, the value segment has products belonging to the EX Super series of excavators - combining advanced technology and low running costs to enable a high return on investment. 'These excavators work in a wide variety of applications in various geographies across India commanding best-in-class resale value,' he claims. Singh further adds, 'For the premium segment, Tata Hitachi has launched the ZAXIS GI series of excavators, fitted with industry leading hydraulic technology to ensure unbeatable performance, high fuel efficiency and high durability. The highlight of this series is the optimised hydraulic system and the improved engine which showcases Hitachi's technological prowess and expertise.' </p><p>Tata Hitachi also offers refurbished 3T payload wheel loader TL340H with hydrostatic technology - the first in the country in its segment, providing best-in-class fuel consumption, ease of operation and maintenance, according to Singh.</p><p>Volvo CE offers excavators with most popular being the EC480D, EC750D and the EC950E for mining. Smaller sites make use of more versatile options such as the EC350D. 'In the class of 50T and above, we are the leading supplier in India.' claims Krishnan. 'Our latest excavators include the EC210D, EC250D, EC350D and EC950E. The EC210D features a robust frame combined with optimal engine power and hydraulic pressure to provide superior digging forces. It also has increased hydraulic flow for responsive and accurate control in grading and combined operations,' he adds. According to Krishnan, the EC250D delivers increased power and digging force as well as faster cycle times for greater productivity. The excavator is equipped with a powerful six-cylinder diesel engine, rated at 138 kW (188 hp). As with all Volvo units, fuel efficiency is a major focus and the EC250D includes the company's unique ECO mode. </p><p>The EC350D has an operating weight of between 34,300 kg and 38,700 kg and its maximum bucket capacity is 2 cu m. Equipped with a 210 kW-rated engine, the excavator delivers faster cycle times, high digging power, and low fuel consumption. It also features Volvo's ECO mode, which automatically switches the engine off during idle times. The EC950E is the largest excavator ever built by Volvo and has an operating weight of 89,960 to 91,840 kg. Its durable wear-resistant components guarantee maximum uptime and profitability, while its power delivers good productivity.</p><p> <span style="font-weight: bold;">Innovations to drive growth</span><br />Equipment manufacturers are focusing on innovative features to their new range of equipment to match the growing requirement of productivity and efficiency. Says Mehrotra, 'LiuGong has always been a believer of providing the best quality advanced product to its consumer at an extremely affordable cost. We do believe and understand the customised need of the customer. All the excavator models launched in India are of premium segment, same as supplied in the European market. We are providing a complete solution by offering the full range of equipment manufactured from our Pithampur plant, supporting 'Make in India' initiative.'</p><p>Says Nijhawan, 'Innovation is the order of the day and we believe in providing the products and services which help the industry to rise. Mahindra Construction Equipment has always strived for giving the best to its customers. It is for the same reason that we came up with the backhoe loaders after four years of research and over 20,000 hours of machine testing, which offers best-in-class fuel efficiency (4.5* ltr per hr).'</p><p>He further adds, 'We were the leaders to provide telematics for remote care and joystick for ease of operation in the traditional backhoe loader segment. With the launch of our new telematics system DigiSense by Mahindra group, our equipment are loaded with advanced technology to track performance in real-time. Further, with better technology and design enhancements, our equipment is able to lower lubricant refilling requirement with extended service intervals, thus reducing the overall maintenance cost and improving total cost of ownership.'</p><p>Singh explains the innovations in Tata Hitachi range, 'Tata Hitachi has migrated technology from the EX series to EX Super of excavators and ZAXIS series to ZAXIS GI series of excavators where features like online access to location of equipment, online health monitoring system, etc have been included. In addition, the company has introduced ConSite, a next-generation service solution that utilises Information Communication Technology (ICT) to deliver monthly reports to customers providing both summary reports that give an overview of the operation of all the fleet owner's machines, and detailed reports that show information about individual machines.' Customer education programmes are conducted to help them infer the data and take necessary initiatives to improve site efficiency and thereby profitability.</p><p>Singh adds, 'We have also introduced a remote fleet management system with our Global e-Service offering. This allows the customer easy access to on-site machines, helping him access operating information real time to increase machine productivity and reduce downtime. This is a convenient and simple system which has been designed to give customers valuable information regarding the operations, maintenance, system parameters and alarms of their machines from the convenience of their offices.</p><p>The 2017 edition of Excon saw us launching INSITE based on a globally recognised product platform. INSITE is customised to get the best out of Tata Hitachi's popular range of products. This Telematics suite will be available on the EX series of hydraulic excavators, backhoe loaders and wheel loaders.' </p><p>Krishnan describes innovative features in Volvo excavator ranges, 'Both the EC210D and EC250D are equipped with intelligent work modes, including the new G4 work mode. Operators can choose a mode to suit the task at hand, from I (Idle), F (Fine), G (General), H (Heavy) and P (Power max) modes. Choosing the correct mode ensures added versatility and increased productivity.'</p><p> <span style="font-weight: bold;">Rental market</span><br />For earthmoving equipment segment, rental market is a major demand driver. However, the rental market is not picking up as the way needed. According to Raina, rentals in India are yet to come of age because there aren't many big players to call it an organised sector in earthmoving equipment industry. 'There is room enough for a few players to enter this segment with commitment on output and the cost of it. The hirer shall have to come up with a model which delivers beyond the ordinary dry and wet leasing of equipment. It has to be a comprehensive package compelling enough for the EPC contractors not to buy equipment and take the rental route instead.' </p><p>Looking at the future of the rental market, he comments, 'I see a clear cut possibility of an equipment aggregator entering the market offering tailor-made rental solutions providing end-to-end rental and service solutions. With major projects coming up, the rental market should ideally move towards organised sector from the current retail and small time hirers.' </p><p>Nijhawan also comments on the same lines, 'In the developed markets, rental services play a huge role. As the Indian market develops, the shift would be eminently visible as well going forward few years down the line. Upcoming with the trend, Mahindra Construction Equipment has already entered the rental vertical with a slew of service offerings, primarily catering to large corporates. Within a year of the launch, we have bagged sizeable amount of projects from major corporates across the country, which we are executing.'</p><p>Krishnan is positive on rental market as he says, 'We expect the rental market will continue to grow in India for some time as the country's economy matures. </p><p>Excavators will likely be a key product line in the development of the rental business here.'</p><p>Singh explains the rental market trend in In India, 'The recent years have seen a tremendous increase in the purchase of construction equipment, mostly by hirers, with the equipment available in any part of the country. The issue of stressed balance sheet of most construction companies have led to an asset light balance sheet move by almost all of them. This has further given a boost to hiring of equipment and increased purchase by hirers. However, with the issue of erratic cash flow to construction companies and generally in the industry, several moves to expand the organised rental market have not been very successful till now.'</p><p>'Several projects have been announced and timelines of completion are falling due to the stress given to infrastructure by the government, the construction companies as well as contractors using construction equipment on rent definitely are preferring newer machines due to the aspect of increased availability and reliability of these machines,' he adds.</p><p>Mehrotra points out a different trend, 'We find a considerable shift of the rental equipment into the main stream. With the new government policies, contractors are more inclined towards buying their own products. Overall, rental business is still going at a slower pace. </p><p> <span style="font-weight: bold;">Market challenges</span><br />When the market is growing, challenges also are growing at different levels. Major challenges can be meeting the market requirements in terms of quantity, quality and price. There are also challenges in the operational space such as availability of trained operators for operating new equipment. Mehrotra opines, 'With the market is growing, there can be demand-supply gap in future for some specialised equipment. Major challenge will be to handle the aftersales support system effectively as the number of customers increased in rural and remote areas. We have to strengthen our aftersales support team from OEM to dealers. We will be coming up with more touch-points and more trained manpower near to the customer sites to give better machine availability to project sites.'</p><p>Singh highlights a different aspect, 'The current growth in the CE industry is almost entirely being led by government investment in infrastructure. Therefore, any slackness in sustaining the growth in investment from the government will have an immediate effect on the growth of the CE industry. The industry has built sufficient capacity based on the growth rates in the earlier part of the decade, adjusting the production to demand is not an issue.' </p><p>On GST, he say, 'GST has been implemented and given the various changes as well as the varied reports to be filed, this is also a challenge for the industry, affecting working capital. This is an even bigger challenge to most of our customers, as they are now forced to employ skilled chartered accountants and are still to understand the procedures etc.'</p><p>According to Krishnan, The market is on track for increased activity with the associated investments in new machines. Continued focus from the government will support this. 'We are using this time of lower activity in the mining sector to review our products and services and in particular, continue our ongoing investment in our dealer network to ensure we can provide our mining customers with the advanced level of support they often require,' he adds.</p><p>Raina sees some challenge in equipment pricing as he comments, 'As the competition grows, price shall remain a big challenge in India and unless the OEMs are able to carve out a niche for themselves and position their products the very survival shall throw the challenge, particularly, when the market starts getting flat or when customer expectations are high and the manufacturers have to match the service expectancy levels of the buyers/users.'</p><p> <span style="font-weight: bold;">Growth opportunities</span><br />According to Off-Highway Research, in 2017 backhoe loaders accounted for 43 per cent and crawler excavators 25 per cent of the total market. Backhoe loaders and crawler excavators will remain the most popular among earthmoving equipment. According to Mehrotra, the coming years as a golden era for the earthmoving equipment sector of India. 'As a number of projects have been declared and the policies and guidelines drawn by the government, many projects in roads and highways, bridges, aviation, railways, metro rail, and irrigation are expected to join India in their lengths and breadths. All this will lead to the growth of the earthmoving equipment sector. Smart city project will also give boost to the earthmoving equipment demand.'</p><p>According to Singh, The Budget allocation for infrastructure projects has seen a growth of at least 10 per cent year after year. 'The capex spend in the first seven months of the year was 30 per cent more than that of the same period on a year-on-year basis. In particular, the spend on key infrastructure drivers - roads and rural development was above 60 per cent of Budget for 2017-18, resulting in a strong demand for the construction equipment industry in the first half of the year. Going forward, the reduction of GST rates will reduce the prices of CE giving a further boost to purchases.'</p><p>Krishnan observes, 'In the short to medium term, we see a very bright outlook for the market. India has a lot of potential thanks to the government's strong push for infrastructure development. This will almost certainly lead to stronger growth in the construction equipment industry.' </p><p>Raina sees great opportunity in short term. 'Next two years will see the market grow in double digits. What is more important is that there would be a rejig in customer priorities on price, technology, deliverables and service. It will be very important for any and every manufacturer to get his matrix right. As the number of players in each segment is too many and unless one has one or two star products, it is going to be too tough to battle it out in the marketplace.'</p><p> <span style="font-weight: bold;">Future bright</span><br />On a positive note, Mehrotra concludes, 'We are going to invest more in our existing set-up in India to enhance our production capacity which will create more job opportunities and revenue to government. We support Make in India and try to develop our India plant as an export hub for SAARC and Africa market.'</p><p>Considering the responses from the industry, their customers are looking for technologically advanced equipment to be employed in the upcoming projects which are time-bound and focused on quality. The recently concluded Excon has witnessed the display of new range of technologies and solutions with a focus on innovation. Overall the future looks perfect in terms of smart technologies that can bring in more productivity and efficiency to the earthmoving equipment. </p><p> Even the contractors are keen to complete and deliver the projects on time to earn the incentives linked to early/timely completion of projects.</p><p> Rental market needs to pick up and the rental players need to work in an organised way to meet the future construction needs.</p><p></p>