每日吃瓜

The growth potential for earthmoving equipment in India has never been disputed. All sectors like power, roads, ports, etc. will drive demand. With increasing investment in the infrastructure sector, the earthmoving equipment industry foresees huge demand for CE in the coming years. However, a lot depends on the implementation and monitoring of new initiatives. According to inputs from Off-Highway Research India, after a decline of 15 per cent in 2013, the market for construction equipment in India is expected to decline by a further 16 per cent in 2014. However, the situation is likely to improve from the first quarter of 2015 as the government?s initiatives start bearing results and construction activity picks up. According to Samir Bansal, General Manager-India, Off-Highway Research, the industry is estimated to continue growing in the long term to reach a level of 89,000 units by 2018 at a CAGR of 17.5 per cent over 2014.

According to Amit Gossain, EVP - Marketing, Business Development and Corporate Affairs, JCB India, the future prospects are strong for the industry as infrastructure is one of the key sectors for the government. He says, ?According to the recent allocation of Rs 37,800 crore to National Highways Authority of India (NHAI) for roads and Rs 14,000 crore for rural roads, I believe roads will be one the major sectors to drive the equipment demand in the coming years.? He further adds, ?The upcoming 100 smart urban hubs across the country-for which Rs 7,600 crore has been allocated-will again be a huge opportunity for the CE industry. Upcoming airports in tier I and tier II cities, development of industrial corridors, energy (thermal and hydroelectric power plants) telecommunications, water and sanitation will create a market for construction equipment companies.?

Excavators
Within the Indian construction equipment industry, the crawler excavator segment is the largest by value and the second largest, after backhoe loaders, in terms of number of units sold. The current projected demand for crawler excavator by 2017 is 23,000 units, as compared to 2012 projection of 40,000 units by 2016 - a contraction of the projected market by almost around 50 per cent. As the Indian market matures, there will be a higher demand for specialized machines like excavators.

Mining and quarrying are two of the major applications where tracked excavators are used, and accounts for approximately 30-40 per cent of the overall excavator market here. Roads and highways are huge growth enablers for the construction equipment market, as also growth enablers of the CE industry because they not only use the large construction equipment but also generate secondary demand in cement, steel and mining, whichall require a large number of earthmoving and construction equipment. In the last two years, excavators market has been down by at least by 20 per cent and it will take more time for the market to recover to the 2012 level.

Says Bansal, ?Within the Indian construction equipment industry, the crawler excavator segment is the largest by value and the second largest, after backhoe loaders, in terms of number of units sold. The demand for crawler excavators stood at a level of 2,500 units in 2003 which increased significantly with each passing year to reach 9,904 units in 2008. Thereafter, it suffered a drop of 20 per cent in 2009 but rebounded to 11,457 units in 2010 and this further increased to its peak level of 15,000 units in 2011. Due to the prevailing unfavourable economic scenario in the country, the market for crawler excavators declined to around 10,500 units in 2013. Then again, given the amount of infrastructure work yet to be completed in India, the outlook for the crawler excavator industry is positive in the long run, despite a drop in sales in the last couple of years. Off- Highway Research estimates that the demand for crawler excavators will reach a level of 23,000 units by 2017.?

The crawler excavator is one of the most competitive product segments in the Indian construction equipment market, and the models which are currently available in the market offer varying levels of technology. There is an increasing demand for excavators less than 10T today where the FTBs are the prominent buyers. It is not replacing the backhoe market but finding its own niche applications in terms of 3T, 6T and 8T class; so first-time buyers are in the range of less than 10T class.

Mini-excavators
Mini-excavators are used in niche applications like plantations and in populous urban areas where space is a big constraint. These machines are also used in agriculture applications and construction activities like foundation work, trenching, tunnel works, ditch cleaning and cable-laying wherein the machine has to work in restricted areas. With the increasing shortage of manual labour, dependency on machines will continue to rise and this will help in the growth of the mini-excavator market in the coming years. Bansal says, ?In contrast to the more mature construction equipment markets of Western Europe, North America, Japan and China, where compact equipment accounts for a large proportion of machinery sales, the demand for mini-excavators in India has remained modest. For the purpose of comparison, in 2012, the mini excavator market stood at 43,391 units in Europe, 22,625 in North America, 24,000 in Japan and 26,650 in China, whereas it was only 363 units in India.? According to Bansal, the market for mini-excavators is expected to reach 1,000 units by 2017.

Backhoe loaders
It?s a fact that the market has been reduced to one-third of the actual market size, and currently, supply is more compared to demand, and the industry is not very hopeful for a turnaround, especially in this financial year. According to Sunil Tiku, Senior Director - Sales& Marketing, Terex Equipment, the plant hiring segment, a major demand puller is not yet out the woods. Money has not yet been paid to them by the original project contractors, for various reasons. Typically the demand from plant hiring segment will follow the capex programmes of large contractors, and we are seeing some good movement in this segment. We hope that in January-March quarter 2015, plant hirer segment will start contributing to the CE industry growth. In 2014, the demand for backhoe loaders is estimated at around 25,000 units in India. Most this demand is from the plant hiring segment.

In spite of the prevailing economic slowdown and its adverse impact on the earthmoving equipment sector, in the last couple of years, backhoe loader market has witnessed a spurt of new/upgraded models. LeeBoy India, which launched its first backhoe loader - the LeeBoy 699 (99 hp, 7.6T) in July 2013 - is all set to launch its new model- the LeeBoy 679 (80hp, 7.5T) in November 2014. With a main objective of helping its customers increase the productivity and offer enhanced operating experience to the operators, Terex launched an upgraded version of TLB 740 and 844 series of backhoe loaders in March 2014.In July 2014, Caterpillar unveiled its upgraded model, 424 B backhoe.JCB India introduceda new version of India?s highest selling construction equipment JCB 3DX - the new ?JCB 3DXcellence? in 2013;in November same year, CASE launched newEX Series backhoe loaders - the 770 EX, 770 EX Magnum and 851 EX - ranging from 76 hp to 96 hp. Escorts launched Digmax II in 2013 and ACE revamped its existing range with some added/improved features and renamed it?Digmaster? All the new models launched in the last couple of years have multiple features that help the end-user enhance productivity, reduce fuel consumption and optimise O&M cost, and ease of operation and maintenance. OEMS have focused more on enhanced efficiency of engine, hydraulics, transmission and structural stability that can bring more value to the user.

Most of the OEMs have gone that extra mile to see drivers? comfort levels, ease of maintenance and serviceability, and ease of operation are enhanced.

Observes Rajinder Raina, General Manager - Marketing, Escorts Construction Equipment, ?Wheel loaders and skid steer loaders have a limited market size in India whereas backhoe loaders still remain the product that offers the highest volumes in this industry. Backhoe loaders touched approximately 32,000 units in2012 but came down to around 28,000 units in 2013. In 2015, the number is expected to cross approximately 30,000 yet again. Loaders touched 2,800 units mark a couple of years back then dipped. With the opening of mining, it could hit the same numbers again. Skid steer loaders is below 500 unit market, where not much likely to happen in next couple of years. Clearly, back hoe loader will drive the demand in this vertical.?

Despite a heavily contracted backhoe loader market, almost by one-third; ever-increasing competition - not only from new entrants but also from other product segments such as wheel loaders, skid steers and mini excavators; and heavily skewed supply demand equation, OEMs have not left any stone unturned. For the market leader, it is to protect and retain its customer base, while for others it is to bite into the major pie and also to develop new customer base spread across geographies. Concepts such as Total Cost of Ownership (TCO) have assumed greater importance in an environment where sales continue to decline. On the other hand, end-user segments are grappling with issues like shrinking business and escalating costs of operation and growing overheads. It was logical for OEMs to innovate further and come out with value-added features that help enhance productivity, whereas the end-user segments? major focus is on fast and better output, efficiency of their operations, etc. In brief, improving machine performance, optimising O&M cost, and ease of operation has assumed greater importance. And that is what the backhoe market has been witnessing for the past two years.

Wheel loaders
The slowdown in the road projects, coupled with de growth in the mining sector has negatively impacted the demand for wheel loaders. According to Abhijit Gupta, Managing Director, Case New Holland Construction Equipment (India), the current overall demand is down in 2014 across verticals. The wheel loader segment for construction continues to remain low thus far into 2014 whereas for the mining sector, it further dipped in 2014 due to the slowdown in mining. On a positive note he adds, ?Opening up the mining sector will boost the demand for wheel loaders. In ports, we expect that once the economy picks up and the traffic in ports also picks up, the demand for the wheel loader will pick up.?

HV Kulkarni, Director - Marketing, XCMG Machinery (India) says, ?The industry estimated that the wheel loader market will cross 2,000 machines last year but actually, the total machines sold during this period is about 1,200. So it is 40 per cent less than expected. This was mainly due to the dismal performance of the mining and road sectors. The machines which were purchased the previous year were standing idle. In the ports sector also, less handling of coal affected the use of wheel loaders.? He adds, ?Currently, the supply is more. The people who were manufacturing in India have pruned down their production. We used to import and keep stocks to respond immediately to the customer?s requirement. Now we have stopped keeping stocks because of low demand.? ?This year saw a negative growth for wheel loaders.

However, if things go well after a new government comes to power, there can be 20 per cent growth in the next five years starting 2015. This year will be the period to stabilise things. By 2015, the mining and road sectors should pick up, with scope for wheel loaders to grow.?

Motor graders
Demand for motor graders is closely linked to road building and construction activities being carried out in a country. Sales of motor graders follow very closely the trends of expenditure on the construction and maintenance of roads, so demand for machines will largely depend on the speed at which existing and future road projects are executed. The backlog of pending road construction work in the country as well as the government?s ambitious infrastructure development plans offers enormous potential for growth in the market. Bansal throws light on the market trends. According to him, at the start of the new millennium, when road building activity was low, sales of motor graders stood at around 100 units. As infrastructure and construction projects gathered pace in the following years, demand increased by a significantly peak at 553 units in 2008. Bansal explains further, ?Following the global economic crisis in 2008, the market dropped to 342 units in 2009, but recovered soon to 529 units in 2010 and remained at that level even in 2011.

However, sales again dropped by 40 per cent in 2012 and a further 13 per cent in 2013 to finish at 276 units.? According Off-Highway Research estimates the motor grader market is likely to grow to 300 units in 2014 and to 750 units by 2018. Motor graders are available in a wide range of sizes to suit different application requirements. In India, we can roughly divide it into three broad categories - upto 150 hp, above 150 and up to 250 hp, and above 250 hp. According to Bansal, the less than 150 hp category is the most popular, and almost all machines of this size are used for standard road construction jobs. This segment accounts for over 60 per cent of the total motor graders sales in the country. The mid-segment is from above 150 hp and upto 250 hp, and this category is deployed both for road construction projects by contractors wanting higher productivity, as well as for the maintenance of haul roads. The share of this segment has varied between 26-38 per cent during the last five years. Bansal adds, ?The machines in the over 250 hp category are primarily sold to mining companies for the maintenance of haul roads in mines. These units are expensive and their utilisation is usually low owing to the intermittent nature of the work. Their replacement cycle is therefore long and so demand for this category has been small over the years. Although, there is a steady demand for these machines, but the segment?s share has varied between 3-11 per cent of the total market during 2009-2013, depending on the rise and fall in road construction activities.?

Despite the muted demand for motor graders due to stalled NHAI projects, and sheer lack of new projects, coupled with the de-growth in mining sector, motor grader segment is expected to register good growth once the new government remove the bottlenecks of the road sector and come out with bankable projects. Lack of awareness on the versatility of this unique piece of equipment, and therefore its limited use, has adversely impacted the growth of the motor grader segment. However, there is increased use of GPS guidance and laser control technologies for better grading.

Tiku sums up with a positive note. ?The government?s focus on the infrastructure development is a welcome sign after years of policy paralysis,? According to him, the focus is on implementation methodology of projects by way of private participation or joint working and financing models between government and private players, emphasis on infrastructure development in the north-eastern states, and creation of smart cities augurs well for the CE sector. A confident Tikku says, ?We forecast a big demand pull for all types of CE. High productivity backhoe loaders and specialised site equipment, skid steers would see some good times. With focus on mining sector to support the power and steel companies, wheel loaders are expected to outperform their previous year?s sales volumes.?

Opportunities

• Create 100 smart cities and industrial clusters
• Dedicated freight and industrial corridors with linkages to mining belts
• High priority for modernisation of railways
• High speed bullet train connectivity between all major cities
• Diamond quadrilateral project linking Delhi, Mumbai, Chennai and Kolkata
• Development of railway network in the border areas and the Northeast region
• Develop 16 new ports in the country along with Special Economic Zones (SEZs)
• Development of waterways and inter linking of rivers
• Integrated Ganga Conservation Mission named ?Namami Gange?
• Emphasis on power sector especially the renewable solar and wind energy, besides providing tax benefits for thermal power project developers
• Pradhan Mantri Krishi Sinchayee Yojna? for assured irrigation
• ?Swachh Bharat Abhiyan? to cover every household with sanitation facility by the year 2019