JCB, which is a market leader in backhoe loaders that sold a record 30,000 machines in 2017, up 10 per cent over last year, too is very optimistic in its outlook. “The momentum has continued well with-in this year as well with a strong first half of the year,” said Vipin Sondhi, managing director and chief executive at JCB. Sondhi expects sales volumes of construction equipment to grow to 1,20,000 units by 2021-22 from 76,000 units 2016-17 and reach $10.5 billion from $5.8 billion in value terms respectively.
A rapid pick up in the pace of road construction projects has boded well for the construction equipment market which went through a rough patch in 2015. In 2017-18, the National Highways Authority of India (NHAI) awarded 7,40 km of road projects, valued at Rs 1.2 trillion, an all-time high. In fiscal 2018, 28 km of roads were constructed every day, more than double of what it was done in 2014.
Arvind K Garg, executive vice-president and head of construction and mining machinery business at Larsen & Toubro, who is also the president of the industry body Indian Construction Equipment Manufacturer's Association (ICEMA) pointed out that since most projects are awarded under engineering procurement and construction mode (EPC) or hybrid annuity, tenders being floated after land acquisition and construction has gained pace.
A continuation in public spending ensured that growth in the construction equipment remained strong in 2017 off-setting the impact of disruptions in business cycles, said JCB's Sondhi adding. Last year saw two major disruptions-- first due to the failure of the authorities to interpret the Supreme Court order on emissions for construction equipment industry and then due to the GST roll out, which is now stabilising. “The continuation of Public Spending during this period ensured that we grew and did not lose momentum,” he said.
"L&T is geared up for a good growth coming in for excavators, motor graders, wheel loaders and vibratory compactors in the near future,” said Garg. The company expects wheel loaders and vibratory compactors to grow by more than 50 per cent, CE demand to advance between 15 to 20 per cent this year as well as next year, provided there is no instability post general elections.
Both Hitachi and L&T are set to add new offerings to their existing line up to ride the wave. Hitachi plans to launch small excavators and a new backhoe loader to its line-up over the next two to three months, L&T plans to introduce new products like pavers and skid steer loaders along with new attachments later this year, to company’s existing products.
To be sure, it has been an all-encompassing growth. Mahindra and Mahindra, a relatively new entrant into the sector too has seen a brisk volume growth and looking to add new products, said Manish Arora, business head at Mahindra Construction Equipment. “Owing to the buoyant market and the product range expansion by the Mahindra CE business, we are currently operating at almost 100 per cent of the installed capacity in all three shifts,” said Arora adding that the company is working towards expanding its installed capacity.