Demand for earthmoving equipment is hitting a new high on the back of infrastructure expansion.
According to the Off-Highway Research Indian Annual Review 2018, construction equipment sales in India grew 17 per cent in 2017-18, building on the 36 per cent upswing witnessed in the previous year, notes Ajay Aneja, Brand Leader, CASE India. 'The demand for earthmoving equipment in 2017 was close to 58,000 units, driven mainly by road projects awarded by the government,' says Nischal Mehrotra, Director, Sales & Marketing and Product, LiuGong India.'Overall, the construction equipment market has witnessed ~5 per cent CAGR in the past five years, during which time earthmoving equipment has contributed to 70 per cent of sales.'
'Significant budget allocations for infrastructure creation have created growth opportunities, helping JCB India close 2017 as a record year with nearly 30,000 machines being retailed,' shares Jasmeet Singh, Head, Corporate Communications and Corporate Relations, JCB India.'Road and highway projects have been generating consistent demand as have irrigation and water conservation projects. Railways, airports and housing have shown potential and we are hopeful that they will start driving demand.'
'Demand for backhoes alone has grown at over 20 per cent YoY in the past two years, giving us sales of over 1,000 units each year,' says Manish Arora, Business Head, Mahindra Construction Equipment.
'Larger excavators, wheel loaders and motor graders used in mining are seeing more moderate growth this year than in the previous year,' says Dimitrov Krishnan, Vice President and Head, Volvo CE India.'After this year's budget, the first phase of the Bharatmala project and allocations for urban rail and airport expansion projects have been key demand drivers.'
In this fiscal, projects aiming to augment the capacity of the country's major and minor ports under the Sagarmala programme have been of interest to CASE, for also entailing the implementation of rail, road, inland waterway and coastal shipping projects, the creation of SEZs and skill development of local population, which is a major focus of CASE's bidding, explains Aneja.
'Roads, railways, metros, power stations, irrigation, sand mining, stone mining were the major drivers of demand and will continue to be, while coal and iron ore mining are yet to take off, notes Rajinder Raina, an expert in construction and material handling equipment.
'Introducing the hybrid annuity model (HAM) for roads and tender reforms like an exit clause on PPP models have been great enablers, as has GST, by compelling inadvertently delinquent retail hirers to book their transactions.'
Growth by machine type
Within the earthmoving equipment pie of 50,000 units, the share of excavators grew the fastest in the past four years because of the nature of projects being awarded, mainly greenfield road projects of longer lengths, observes Raina.'The share of crawler excavators grew from about 22 per cent to more than 33 per cent on volumes, but in value basis it grew from 40 per cent to more than 55 per cent. Motor graders grew a little as well.'
In 2017, the backhoe loader segment grew by 11 per cent, compactors by 16 per cent and motor graders by 20 per cent, says Aneja, a feat he expects to be repeated in coming years.
Near-term prospects
Backed by government and private-sector investments in infrastructure development, Arora expects the overall Indian construction equipment market to clock a CAGR of 6.2 per cent during the current five-year plan. He lists the Make in India campaign, the Smart Cities initiative with an emphasis on low-cost housing, the Bharatmala and Sagarmala projects, Dedicated Freight Corridor, bullet and metro-rail projects and smaller airports as other drivers that will create demand for new equipment as well as increase the utilisation of the existing fleet, giving a boost to the after-sales market and rental business.
However, Arora expects a marginal decline in demand in 2019 owing to the general election before the increasing demand for mechanisation driven by the decreasing availability of manual labour further boosts growth.
In what's left of 2018, Krishnan expects good demand for mining equipment as projects are taking off.'We expect 40-50 per cent growth for all Volvo construction equipment products,' he predicts. And in future, he sees growth opportunities in the mining segment, specifically coal, because the government is opening coal mining to private companies to increase production capacity.'Additionally, if the government addresses the legal bottlenecks in iron mining, those production volumes should pick up,' he adds.'And irrigation projects and sea ports will also contribute to demand.' Mehrotra expects the Bharatmala project, which aims to provide seamless connectivity in backward and border areas, the construction of 9,000 km of national highways, the UDAN initiative in the airways sector and the Dedicated Freight Corridor, to boost demand.
He also expects the Mumbai-Delhi Expressway and Mumbai-Nagpur Expressway to be auctioned this year.
Best selling machines
In the earthmoving equipment category, the versatile backhoe loader enjoys over 40 per cent of the market, says Arora.
'Our backhoe loaders continue to remain the preferred choice for customers while excavators have emerged as an exciting product line as current opportunities have increased demand for this category,' says Singh. JCB excavators range from the 3 tonne mini to the 38 tonne tracked model.
'Most of Volvo India's equipment is sold to opencast coal, iron, chromite and limestone mines, with some used in specialised underground mining applications,' says Krishnan. Volvo excavators suited to open cast mines include the bestselling 30-tonne EC300D, 38-tonne EC380D and the 48-tonne EC480D, and in the larger classes, the 75-tonne EC750D and the 90-tonne EC950E.
Growth in the mining sector is conducive to growth in the earthmoving equipment segment, observes Aneja. CASE offers a range of crawler dozers and motor graders customised for Indian users. CASE crawler dozers come in three models: 1150L, 1650L and 2050M in the 13, 18 and 20 tonne classes powered by a 6.7-litre, six-cylinder engine by FPT Industrial. The proven hydrostatic transmission ensures that the CASE dozer delivers maximum pull and push power during turning, unlike mechanical transmission offered on dozers by competitors.
CASE India's 865B motor grader is ideal for mining applications for featuring a multi-radius moldboard design that provides a mixing effect, whereby the material is pushed on the ground and rolled.
CASE graders are also equipped with a hydraulic pitch control feature that helps the operator to control moldboard pitch adjustment, advanced engine and hydraulics, automatic ZF transmission and a multi-curvature moldboard. Both the dozer and grader equipment are installed with a unique trip meter on the operator dashboard that continuously monitors fuel consumption, hours operated and operating temperatures.
Bigger is better
Larger models seem to be gaining ground among customers. 'We are seeing an uptick in all our product categories, especially in larger product categories,' says Singh.
'In the mining industry, Volvo CE's larger equipment is doing well,' notes Krishnan, affirming that Volvo's EC480D 48-tonne excavator is its biggest seller in India,'a mainstay in mines with its reinforced heavy-duty boom and arm built from high-strength tensile steel offering extra reliability in severe applications.' Attached to the arm is a bucket with a capacity of 1.77 cu m to 3.8 cu m.
At a mine in Kankanee, Dhanbad, an EC480DL excavator delivered over 90 per cent uptime, working up to 22 hours a day for four years (ending earlier this year) with only limited stoppages, he shares.
Incidentally, the large class EC950E excavator is Volvo's newest product in India that affirms the trend of using higher capacity equipment, particularly when working with hard and heavy materials. Krishnan expects the larger class models to become bestsellers within two to five years as customers look for larger equipment.
In the wheel loader segment, bigger wheel loaders like the L220H (bucket capacity of 2.7 cu m to 9.5 cu m) and the L350 (bucket capacity of 6.2 cu m to 12.7 cu m) are popular with large mining companies. Customers can reduce traffic in mines and improve mining cycle efficiency with higher-capacity wheel loaders like the L150H wheel loader (bucket capacity of 2.7 cu m to 9.5 cu m) and the Volvo FMX 460 tipper, Krishnan suggests.
Features to look out for
JCB introduced innovative performance enhancing features in its backhoes during Excon 2017 (December). Jasmeet Singh, Head, Corporate Communications and Corporate Relations, JCB India, elaborates:
Automated manual transmission: Facilitates automatic change of gears as the machine moves to ease the operator's job, reduce fatigue and increase productivity. SOS switch: Allows the operator to reach out for help without using his mobile. When the switch is pressed, SMS alerts are sent out to a select few registered numbers.
Economy and power modes: Selecting one of two modes depending on the task at hand helps save fuel. In power mode, the engine power maximises productivity while the economy mode conserves fuel.
'Guide me' home light: Ensures that the working lights of the machine remain 'on' for 30 seconds after the machine is switched 'off' to give the site staff enough time to walk away safely.
Smart App machine diagnostics: Through a Bluetooth dongle that can be paired with a mobile device, the service engineer can zero in on any technical fault much faster.
The Chinese Connection
Chinese equipment is well accepted by customers, says Nischal Mehrotra, Director, Sales & Marketing and Product, LiuGong India.'Setting up a manufacturing base in India has strengthened customer loyalty and trust. Also, over the years, customers have realised that Chinese equipment is on a par with products made globally.' Customers look for features that matter, he adds.
For instance, advanced analysis tools for dynamics and stiffness simulation are used to ensure that LiuGong wheel loaders have a strong structure and extended machine lifetime, especially the front and rear chassis, hinge joints and arms. LiuGong excavators have a strong undercarriage, box type frame, tracks and heavy-duty reinforced boom and arm for high durability and strength.
Some safety features to look out for in LiuGong machines are rollover protection structure to protect operators from injuries caused by vehicle overturns or rollovers and falling object protection systems involving installing an engineered reinforcement onto a vehicle roof to reduce possible injuries in case of a falling object. LiuGong's JV with Cummins ensures its machines are fitted with fuel-economical engines.
- Charu Bahri