Construction Equipment Demand Forecast – 2014
The increased investment in different infrastructure sectors, is well expected to create huge demand for construction equipment across the value chain during the 12th Five Years Plan period, S.A. Faridi and P.P.Basistha report.
As per the recent estimates of Reserve Bank of India (RBI) and Asian Development Bank (ADB), the Indian economy is expected to grow @8.2 percent during 2011-12. The projected moderate growth of the economy is largely based on inflationary pressures, volatility in oil and on commodity prices, and this moderate growth in Indian economy is going to be one of the vital instances in world's financial history. This is just expected to keep the demand of Construction Equipment (CE) firm contrary to what it was during 2007-08.
Based on the projected GDP growth, an estimated amount of around $1300 billion is planned to be invested in different infrastructure sectors during the span of 8-10 years. Sectors planned for infrastructure investments are railways with an amount of $165 billion, roads $150 billion, mining $70 billion, thermal power $50 billion, and hydro power $15 billion. The airport projects will be having an investment of $45 billion, seaports $25 billion and urban infrastructure $780 billion.
For the infrastructure development, which is completely based on the targeted massive investment, the construction equipment manufacturing industry estimates that CE demand would go up to around 100,000 units during 2014 which include: backhoe loaders, crawler excavators and dozers, wheel loaders, asphalt pavers, motor graders, air compressors, dump trucks, concrete and asphalt batching plants, concrete pumps, piling rigs, compactors, and mobile cranes. According to the industry sources, around 60,000 units were sold during 2010.
In line with the projected demand, the market value of equipment is expected to be a mammoth over $6.5 billion during 2014 with earthmoving sector continuing to make headway and is expected to command a value of $3.7 billion.
Over the last 3-4 years, various new entrants have made inroads into the Indian construction equipment industry that include some of the biggest names from Japan, USA, and Korea. Simultaneously, a number of domestic companies are being seen expanding their capacities or diversifying their product portfolio through collaboration and tie-up arrangements.
The projected demand of equipment will be stimulated by positive demand fundamentals, led by good deal of projects lined up for infrastructure development by the private and the government sector during the mid and the long-term. The requirements are going to be in both core and industrial projects such as power, steel and logistics sector comprising warehouses and logistics parks.
According to a research report, there are five important trends that would shape the evolution of the industry. The report also highlights the imperative to exploit the emerging business opportunities of these five trends wherein four of them are growth opportunities following investment in infrastructure sector; the increasing dominance of price and value focused customers; deeper engagement of global equipment players in India; and increasing opportunities for exports. However, one trend of increasing competition among the products imported from other low cost countries like China could potentially challenge industry growth and it is an important factor that players would need to address more pro-actively.
In addition, this concerted push by the industry as well as Government could equally split between exports and the provision of India specific products and services. Tremendous opportunities would be for introducing India specific products that include low-priced multipurpose equipment to attract new customers and to increase greater mechanization in important projects.
Investment for infrastructure development lined up by various states and industrial investment will create demand for equipment further. According to Mr. Raghavan Ramaswamy, Vice President, Construction Segment, Sandvik Mining and Construction, India, "going by the cyclic nature of the construction sector, demand of construction equipment across the value chain is well likely to remain stable during 2011-14 and would be led by clearing of pending projects by the government. Completion of elections in the states would also be further creating demand led by new project clearances in the medium and long-term."
The demand of many important equipment segments in the long-term, would be closely influenced by the trend of economic growth which is well expected to remain firm. According to Mr. Rajesh Sharma, Vice President & Head Marketing, Sales & Product Support, Escorts Construction Equipment Limited, "the demand of Construction equipment is linked with the investments in Infrastructure and construction activity. The share of construction GDP as percentage of total GDP is consistently growing for the past 10 years during which it rose from 5.8% to 7.3 % of the total GDP. The investment multiple is set to grow on an average by 2.5 times across the infrastructure spectrum. Thus, the scenario is set for a long and a sustainable growth in the demand of construction equipment. In fact the demand is to double itself in every four years. This is true for Mobile and Crawler cranes as well. The top 4 infra sectors, in terms of the quantum of present and future investments, are Urban infrastructure, Ports, Power and Roads. All these sectors are strong users of Mobile and Crawler cranes.
Similar views were expressed by Mr. Aniruddha Moharir, Divisional Manager-Cranes, Voltas Limited. The demand of mobile cranes is expected to go up by 11,750 units during 2014 whereas it was 8000 units in 2010.
There has been a steep increase application of tower cranes in areas of infrastructure recently as compared to its traditional application area of real estate. As per Mr. Ram Babu Cheruve, Director, CMAC, "tower cranes will be finding its increasing application for cooling tower construction in thermal power projects as well as chimneys." A recent directive has been passed by the Ministry of Environment to increase the height of chimneys in upcoming thermal power plants to prevent pollution and this will definitely enhance the demand of tower cranes in a large way for upcoming power plants. Nonetheless, traditional real estate will continue to be one of the demanded areas for tower cranes. An estimated, 700 units of tower cranes is likely to be in demand during 2014 up from 200 units which were sold in 2010.
A new emerging area to propel the demand of tower cranes will be hospitality sector. As per recent reports from hospitality consultants and industry executives, branded hotels in India will double their rooms to nearly 125,000 in the next five years due to growing inbound tourist arrivals and growing economy.
The demand of forklifts, as a material handling machinery is also well likely to be remained firm from industrial manufacturing sectors led by production capacity additions through Brownfield and Greenfield expansions. As per Mr. Neville. H. Wankadia, Deputy General Manager-Marketing, Godrej Material Handling, "The demand for lifting and transporting heavier loads by industrial manufacturing sectors, will put in requirement for forklifts. Market size in terms of value for material handling equipments including cranes is estimated to be US$870 million during 2014. While demand of forklifts is expected to be around 7500 units during 2014 as compared to 4000 units in 2010.
The growing demand of equipment on positive GDP projections is also counted by Volvo CE. According to Mr. A.M. Muralidharan, MD, Volvo India, "based on positive forecast economic growth both public and private enterprises in India, are investing heavily in the construction industry with multibillion dollars in areas like road construction, ports, power plants, telecommunication sector, urban infrastructural developments, and so on. The earthmoving segment is driving overall industry growth due to strong demand from government backed infrastructure projects. Based on industry projections, the demand of excavators is likely to go up to 14,000 units during 2014 from 10,500 units in 2010 and that of backhoe loaders is expected to go up to 32,000 units from 23,000 units in 2010.
Mr. Muralidharan informs, "in the next 2 years, Volvo will have a well thought of strategy that will move us forward. Currently we are in the execution phase. In the next 4 – 5 years, we do not see any reduction in growth. Volvo CE will be bringing a wider-than-ever-before audience of customers more products and services that are attuned to the needs of contractors in India."
The wheel loader manufacturers are optimist about demand of road construction, owing to planned expansion by mineral based industry such as coal, iron ore, and steel. However, manufacturers see the demand of wheel loaders from new areas as well. Mr. Sandeep Bangur, Executive Director, Dozco India Private Limited, points out, "wheel loaders have their abilities to carry heavy material loads depend on the bucket sizes. The machines are equally capable of handling diverse materials both in construction, mining and industrial applications. The demand of wheel loaders is well likely to grow from all these sectors based on the value on attachments the machines can provide." It is expected to be 4500 units during 2014 as compared to 2500 units in 2010.
The equipment manufacturers high on growth of road construction sector also linked with project finance importantly includes, excavators, hydraulic rock breakers, rigid, and hydraulic tippers.
The road construction equipment manufacturers share themselves, heightened business confidence due to large number of projects lined up for development. The market value of road construction equipment is estimated to be US$560 million during 2014.
As per Mr. Arun Savanur, Vice President and Head, Construction Equipment Division, Greaves Cotton Limited, "the large volumes of road projects planned for development will lead to demand of all range of equipments from the road construction sector." According to Mr. Ramesh Palagiri, Managing Director & CEO, Wirtgen India Private Limited, "led by volumes, it would be demand of quality road projects to be completed on timely schedules, will lead to demand of quality road construction equip- ment." As per industry estimates, backed by project demand, demand of road compaction (vibratory + static) is expected to grow to 5200 units in 2014 from 3200 units in 2010. Motor grader is expected to grow to 950 units from 600 units in 2010. The Demand for bulldozers is expected to grow to 1400 units during 2014 as compared to 900 units in 2010. While asphalt pavers is likely to see a demand of 1650 units in 2014 from 1150 units during 2010.
Though positive demand is well anticipated led by development of newer projects however, inflation could continue to be a source of concern for projects developments and equipment production. According to Mr. A.M. Muralidharan, led by inflation, we anticipate increase in the production costs of equipment as these are tied to aspects like increase in raw materials prices and labor/ workforce availability at the manufacturing and project sites. However, according to Mr. Raghavan Ramaswamy, "rising inflation will come as a boon as there would be strong focus on timely completion of projects by contractors on the backdrop of stiff penalty clauses. This will in turn put in demand of quality equipments backed by adequate and customized after sales support based on project requirements by the contractor."
Newly emerging trend, necessitated through demand of tailor made concrete solutions would create demand of concrete equipment. As per Mr. Nagesh Kudva, Director, Conmat Systems Private Limited, "led by increase in job volumes and tight completion schedules, there is an increase in requirement of mobile concrete batching solutions from contractors. Being mobile, the machines can help to cut down cost of operations by minimizing time for erection, and dismantling, besides providing low operating costs.
Similar views are echoed by Mr. Ajit Patel, Managing Director, Apollo Infratech Pvt Ltd, "mobile concrete batching plants will be facing firm future demand owing to their ability to provide ready equipment availability by avoiding foundation and additional installation costs."
Size of concrete equipment in terms of value till 2014 is expected to be around US$1.25 billion where the demand of transit mixers is expected to be around 9000 units, Concrete batching plants 2800 units, and concrete pumps around 3600 units.
The demand of foundation equipment is well likely to go up, keeping the infrastructure projects lined up, essentially from projects in power, and metro rail construction which has got vital components of foundation. However, according to Mr. Sanjoy Chakrabarty, MD, Soilmec India Pvt Ltd, "the wholesome requirement from construction sector would create demand of foundation equipment but it would require to be seen that how far the new projects lay importance to the foundation component. This will make the job specialized for contractors in turn putting in requirement for newer solutions, thereby creating additional demand of foundation equipment." According to Mr. Tejdeep Singh Sehmbey, Director, Rotary Construction Machinery India, " there would be demand of piling equipment from the Indian construction sector that are cost competitive in term of owing and operating." Besides these, as per Mr. Sunil M, Associate Vice President (Marketing) Construction Equipment Division, Revathi Equipment Ltd, "There is going to be a tremendous potential for the smaller Piling Rigs in view of all the construction activities initiated in the sectors of Power Plants, SEZ’s and other industrial and commercial construction. Moreover clients are getting increasingly cost conscious and looking at economical but at the same time highly productive machines."
The fundamental of mid and long-term positive demand, led by infrastructure development, will spur a demand for construction equipment from across the sectors. However, issues of land acquisition, material linkages for functioning of industrial projects, litigations, timely availability of raw materials, deviations in projected cash flow from the projects and most importantly, the availability of authentic detailed feasibility reports and bankable projects have to be given a closer look to stimulate equipment demand.
Further, to sustain the need, it would also be necessary to have pro-development policies from the government to bring about rapid execution of planned projects. To ensure that projects are initiated and executed on time, it is imperative for the government to award projects on time in order to facilitate faster execution. Nevertheless the requirement may go up with the availability of credit through project/equipment financing options that are available from leading financial institutions in the country, issues related to policies, land acquisition and funding have to be sorted out in order to maintain the projected growth trend.
The pre-requisite would be good project planning for faster delivery and completion of projects. All in all construction equipment players will have a unique opportunity to exploit the huge business potentials of the sector and in doing so, garner their share of US$6.5 billion revenue potential. But companies still need to pursue growth enabling initiatives in terms of enhancing the quality, delivery and sales services, catalyze latent demand in unchartered markets and expanding dealer and channel network coverage to explore and address the new markets.
As per the recent estimates of Reserve Bank of India (RBI) and Asian Development Bank (ADB), the Indian economy is expected to grow @8.2 percent during 2011-12. The projected moderate growth of the economy is largely based on inflationary pressures, volatility in oil and on commodity prices, and this moderate growth in Indian economy is going to be one of the vital instances in world's financial history. This is just expected to keep the demand of Construction Equipment (CE) firm contrary to what it was during 2007-08.
Based on the projected GDP growth, an estimated amount of around $1300 billion is planned to be invested in different infrastructure sectors during the span of 8-10 years. Sectors planned for infrastructure investments are railways with an amount of $165 billion, roads $150 billion, mining $70 billion, thermal power $50 billion, and hydro power $15 billion. The airport projects will be having an investment of $45 billion, seaports $25 billion and urban infrastructure $780 billion.
For the infrastructure development, which is completely based on the targeted massive investment, the construction equipment manufacturing industry estimates that CE demand would go up to around 100,000 units during 2014 which include: backhoe loaders, crawler excavators and dozers, wheel loaders, asphalt pavers, motor graders, air compressors, dump trucks, concrete and asphalt batching plants, concrete pumps, piling rigs, compactors, and mobile cranes. According to the industry sources, around 60,000 units were sold during 2010.
In line with the projected demand, the market value of equipment is expected to be a mammoth over $6.5 billion during 2014 with earthmoving sector continuing to make headway and is expected to command a value of $3.7 billion.
Over the last 3-4 years, various new entrants have made inroads into the Indian construction equipment industry that include some of the biggest names from Japan, USA, and Korea. Simultaneously, a number of domestic companies are being seen expanding their capacities or diversifying their product portfolio through collaboration and tie-up arrangements.
The projected demand of equipment will be stimulated by positive demand fundamentals, led by good deal of projects lined up for infrastructure development by the private and the government sector during the mid and the long-term. The requirements are going to be in both core and industrial projects such as power, steel and logistics sector comprising warehouses and logistics parks.
According to a research report, there are five important trends that would shape the evolution of the industry. The report also highlights the imperative to exploit the emerging business opportunities of these five trends wherein four of them are growth opportunities following investment in infrastructure sector; the increasing dominance of price and value focused customers; deeper engagement of global equipment players in India; and increasing opportunities for exports. However, one trend of increasing competition among the products imported from other low cost countries like China could potentially challenge industry growth and it is an important factor that players would need to address more pro-actively.
In addition, this concerted push by the industry as well as Government could equally split between exports and the provision of India specific products and services. Tremendous opportunities would be for introducing India specific products that include low-priced multipurpose equipment to attract new customers and to increase greater mechanization in important projects.
Investment for infrastructure development lined up by various states and industrial investment will create demand for equipment further. According to Mr. Raghavan Ramaswamy, Vice President, Construction Segment, Sandvik Mining and Construction, India, "going by the cyclic nature of the construction sector, demand of construction equipment across the value chain is well likely to remain stable during 2011-14 and would be led by clearing of pending projects by the government. Completion of elections in the states would also be further creating demand led by new project clearances in the medium and long-term."
The demand of many important equipment segments in the long-term, would be closely influenced by the trend of economic growth which is well expected to remain firm. According to Mr. Rajesh Sharma, Vice President & Head Marketing, Sales & Product Support, Escorts Construction Equipment Limited, "the demand of Construction equipment is linked with the investments in Infrastructure and construction activity. The share of construction GDP as percentage of total GDP is consistently growing for the past 10 years during which it rose from 5.8% to 7.3 % of the total GDP. The investment multiple is set to grow on an average by 2.5 times across the infrastructure spectrum. Thus, the scenario is set for a long and a sustainable growth in the demand of construction equipment. In fact the demand is to double itself in every four years. This is true for Mobile and Crawler cranes as well. The top 4 infra sectors, in terms of the quantum of present and future investments, are Urban infrastructure, Ports, Power and Roads. All these sectors are strong users of Mobile and Crawler cranes.
Similar views were expressed by Mr. Aniruddha Moharir, Divisional Manager-Cranes, Voltas Limited. The demand of mobile cranes is expected to go up by 11,750 units during 2014 whereas it was 8000 units in 2010.
There has been a steep increase application of tower cranes in areas of infrastructure recently as compared to its traditional application area of real estate. As per Mr. Ram Babu Cheruve, Director, CMAC, "tower cranes will be finding its increasing application for cooling tower construction in thermal power projects as well as chimneys." A recent directive has been passed by the Ministry of Environment to increase the height of chimneys in upcoming thermal power plants to prevent pollution and this will definitely enhance the demand of tower cranes in a large way for upcoming power plants. Nonetheless, traditional real estate will continue to be one of the demanded areas for tower cranes. An estimated, 700 units of tower cranes is likely to be in demand during 2014 up from 200 units which were sold in 2010.
A new emerging area to propel the demand of tower cranes will be hospitality sector. As per recent reports from hospitality consultants and industry executives, branded hotels in India will double their rooms to nearly 125,000 in the next five years due to growing inbound tourist arrivals and growing economy.
The demand of forklifts, as a material handling machinery is also well likely to be remained firm from industrial manufacturing sectors led by production capacity additions through Brownfield and Greenfield expansions. As per Mr. Neville. H. Wankadia, Deputy General Manager-Marketing, Godrej Material Handling, "The demand for lifting and transporting heavier loads by industrial manufacturing sectors, will put in requirement for forklifts. Market size in terms of value for material handling equipments including cranes is estimated to be US$870 million during 2014. While demand of forklifts is expected to be around 7500 units during 2014 as compared to 4000 units in 2010.
Buoyant Earthmoving
The demand of equipment are closely linked to GDP growth trend would be earthmoving & construction equipment segment as well. As per Mr. H.S. Mohan, COO, Doosan Infracore India Pvt Ltd, "the demand of base equipment like excavators, loaders and even dump trucks would continue to grow by the positive GDP factor. Continuing growth of infrastructure across sectors will create requirement for the equipment." The views were echoed by Mr. Amit Gossain, Vice President Marketing and Business Development, JCB India. He says, the stable performance of sectors essentially like mining will create future demand of the base equipment involving excavators. Focus on urban renewal programmes will create fresh demand of backhoe loaders."The growing demand of equipment on positive GDP projections is also counted by Volvo CE. According to Mr. A.M. Muralidharan, MD, Volvo India, "based on positive forecast economic growth both public and private enterprises in India, are investing heavily in the construction industry with multibillion dollars in areas like road construction, ports, power plants, telecommunication sector, urban infrastructural developments, and so on. The earthmoving segment is driving overall industry growth due to strong demand from government backed infrastructure projects. Based on industry projections, the demand of excavators is likely to go up to 14,000 units during 2014 from 10,500 units in 2010 and that of backhoe loaders is expected to go up to 32,000 units from 23,000 units in 2010.
Mr. Muralidharan informs, "in the next 2 years, Volvo will have a well thought of strategy that will move us forward. Currently we are in the execution phase. In the next 4 – 5 years, we do not see any reduction in growth. Volvo CE will be bringing a wider-than-ever-before audience of customers more products and services that are attuned to the needs of contractors in India."
High on Material Processing
Led by infrastructure development, essentially with good number of road projects lined up both by the Central and States, manufacturers of material processing industry pertaining to crushing and screening are buoyant on demand. As per Mr. Raghavan Ramaswamy, " backed by requisite project finance support and escalation clauses, there are good number of road projects lined up. Based on the large volume of projects and timely completion, there would be committed off take of crushed aggregate outputs from road project developers leading to demand of crushing and screening units both of moderate and high TPH capacity." The market size in terms of value for material processing units is estimated to be $200 million. The demand of crushing and screening would also be led by expansion plans of the steel sector. However, as per Mr. Patrick Brian, Global Sales and Marketing Director, Terex, "future demand of crushing and screening units in India, can be led through development of logistics linkages and multimodal transport support for steady offtake of the stone and iron ore aggregate output. Besides, proper mine and site planning will be essential to create demand."The wheel loader manufacturers are optimist about demand of road construction, owing to planned expansion by mineral based industry such as coal, iron ore, and steel. However, manufacturers see the demand of wheel loaders from new areas as well. Mr. Sandeep Bangur, Executive Director, Dozco India Private Limited, points out, "wheel loaders have their abilities to carry heavy material loads depend on the bucket sizes. The machines are equally capable of handling diverse materials both in construction, mining and industrial applications. The demand of wheel loaders is well likely to grow from all these sectors based on the value on attachments the machines can provide." It is expected to be 4500 units during 2014 as compared to 2500 units in 2010.
The equipment manufacturers high on growth of road construction sector also linked with project finance importantly includes, excavators, hydraulic rock breakers, rigid, and hydraulic tippers.
The road construction equipment manufacturers share themselves, heightened business confidence due to large number of projects lined up for development. The market value of road construction equipment is estimated to be US$560 million during 2014.
As per Mr. Arun Savanur, Vice President and Head, Construction Equipment Division, Greaves Cotton Limited, "the large volumes of road projects planned for development will lead to demand of all range of equipments from the road construction sector." According to Mr. Ramesh Palagiri, Managing Director & CEO, Wirtgen India Private Limited, "led by volumes, it would be demand of quality road projects to be completed on timely schedules, will lead to demand of quality road construction equip- ment." As per industry estimates, backed by project demand, demand of road compaction (vibratory + static) is expected to grow to 5200 units in 2014 from 3200 units in 2010. Motor grader is expected to grow to 950 units from 600 units in 2010. The Demand for bulldozers is expected to grow to 1400 units during 2014 as compared to 900 units in 2010. While asphalt pavers is likely to see a demand of 1650 units in 2014 from 1150 units during 2010.
Though positive demand is well anticipated led by development of newer projects however, inflation could continue to be a source of concern for projects developments and equipment production. According to Mr. A.M. Muralidharan, led by inflation, we anticipate increase in the production costs of equipment as these are tied to aspects like increase in raw materials prices and labor/ workforce availability at the manufacturing and project sites. However, according to Mr. Raghavan Ramaswamy, "rising inflation will come as a boon as there would be strong focus on timely completion of projects by contractors on the backdrop of stiff penalty clauses. This will in turn put in demand of quality equipments backed by adequate and customized after sales support based on project requirements by the contractor."
Growing Concrete & Foundation
The demand of concrete equipment would see growth led by infrastructure development. According to Mr. Anand Sundaresan, Managing Director, Schwing Stetter (India) Private Limited, "future demand of concrete boom pumps and trailer mounted pumps in India would be from high capacity segment which has high pumping rate and are able to pump concrete at great heights. The vital infrastructure sector of hydropower would catalyze the demand of the new featured concrete equipments. However, future development of hydropower projects would very importantly depend on how soon project developers are able to provide transportation network connectivity to the job sites followed by qualification of the bidders." Mr. Sunderasan informs, "demand of concrete equipment from hydro electric power projects will be helped by development of transportation and last mile connectivity to job sites." Vital number of upcoming hydropower projects are located at difficult terrains in the country.Newly emerging trend, necessitated through demand of tailor made concrete solutions would create demand of concrete equipment. As per Mr. Nagesh Kudva, Director, Conmat Systems Private Limited, "led by increase in job volumes and tight completion schedules, there is an increase in requirement of mobile concrete batching solutions from contractors. Being mobile, the machines can help to cut down cost of operations by minimizing time for erection, and dismantling, besides providing low operating costs.
Similar views are echoed by Mr. Ajit Patel, Managing Director, Apollo Infratech Pvt Ltd, "mobile concrete batching plants will be facing firm future demand owing to their ability to provide ready equipment availability by avoiding foundation and additional installation costs."
Size of concrete equipment in terms of value till 2014 is expected to be around US$1.25 billion where the demand of transit mixers is expected to be around 9000 units, Concrete batching plants 2800 units, and concrete pumps around 3600 units.
The demand of foundation equipment is well likely to go up, keeping the infrastructure projects lined up, essentially from projects in power, and metro rail construction which has got vital components of foundation. However, according to Mr. Sanjoy Chakrabarty, MD, Soilmec India Pvt Ltd, "the wholesome requirement from construction sector would create demand of foundation equipment but it would require to be seen that how far the new projects lay importance to the foundation component. This will make the job specialized for contractors in turn putting in requirement for newer solutions, thereby creating additional demand of foundation equipment." According to Mr. Tejdeep Singh Sehmbey, Director, Rotary Construction Machinery India, " there would be demand of piling equipment from the Indian construction sector that are cost competitive in term of owing and operating." Besides these, as per Mr. Sunil M, Associate Vice President (Marketing) Construction Equipment Division, Revathi Equipment Ltd, "There is going to be a tremendous potential for the smaller Piling Rigs in view of all the construction activities initiated in the sectors of Power Plants, SEZ’s and other industrial and commercial construction. Moreover clients are getting increasingly cost conscious and looking at economical but at the same time highly productive machines."
Vital & Emerging Trends
Going by the industry's observations, Indian infrastructure industry has the biggest potential for growth and opportunities for investment. Based on the sizeable growth potential, a positive trend in equipment purchase with more players entering into the industry is well anticipated. In the last 3 – 4 years, various new international and domestic players have entered into the Indian market which resulted in diversification of product portfolios and aggressive expansion plans. Now the market is expected to become more competitive and fragmentary in the future.The fundamental of mid and long-term positive demand, led by infrastructure development, will spur a demand for construction equipment from across the sectors. However, issues of land acquisition, material linkages for functioning of industrial projects, litigations, timely availability of raw materials, deviations in projected cash flow from the projects and most importantly, the availability of authentic detailed feasibility reports and bankable projects have to be given a closer look to stimulate equipment demand.
Further, to sustain the need, it would also be necessary to have pro-development policies from the government to bring about rapid execution of planned projects. To ensure that projects are initiated and executed on time, it is imperative for the government to award projects on time in order to facilitate faster execution. Nevertheless the requirement may go up with the availability of credit through project/equipment financing options that are available from leading financial institutions in the country, issues related to policies, land acquisition and funding have to be sorted out in order to maintain the projected growth trend.
The pre-requisite would be good project planning for faster delivery and completion of projects. All in all construction equipment players will have a unique opportunity to exploit the huge business potentials of the sector and in doing so, garner their share of US$6.5 billion revenue potential. But companies still need to pursue growth enabling initiatives in terms of enhancing the quality, delivery and sales services, catalyze latent demand in unchartered markets and expanding dealer and channel network coverage to explore and address the new markets.
NBM&CW May 2011