Road Equipments Industry Analysis

Road Construction Equipments:

Global Majors Flock to Tap Indian Demand
M.K. Prabhakar, Associate Editor

he road construction sector has witnessed a bumpy ride in the last few years. There was an initial euphoria when the government announced its plan of constructing 20 km of world-class roads in 2009. Then came a period of sluggish growth with a change at the top in the Ministry of Road Transport & Highways and NHAI finding it difficult to find sufficient number of bidders for many of its projects. The recent economic uncertainties were adding to the pressure. This is when the Prime Minister, Dr.Manmohan Singh,

realizing the crucial importance of roads in fuelling economic growth did a thorough review of the road sector in June 2011 and said that it was time action was initiated to bridge the deficit in both quality and quantity. His clarion call that roads are a vital infrastructure and despite improvements, the sector still needs efforts to upgrade the quality, as well as length of India's National Highway network buoyed the sector to a large extent. The process of awarding projects picked up steam subsequently and the road sector was

well and truly on the fast track. This was when the global economic uncertainties began to impact the Indian economy and finding funds for road projects became a challenging task for the authorities concerned. With the National Highways Authority of India (NHAI) deciding to raise up to ` 10,000 crore through Public Issue of Tax Free Redeemable Non-Convertible Bonds, things have started looking up for the road sector. According to the Union Minister for Road Transport & Highways,

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Road Equipments Industry Analysis

construction equipment market. Several European manufacturers for example, reeling under the impact of continuing recession in the European market have started focusing more on the Indian market. While overseas manufacturers were already there, recent times have witnessed an increase in the influx. India, along with the BRIC countries is expected to be one of the key markets for road construction equipment for global majors. Influx of Overseas Equipment Suppliers The inherent demand for infrastructure development has meant that the economic slowdown notwithstanding, industry experts believe that the market for construction equipment in general and road construction equipment in particular will have a steady growth rate. When quizzed about the recent economic downturn impacting the sales of road construction equipment , Mr.A.M.Muralidharan, Managing Director, Volvo India Pvt Ltd, subsidiary of Volvo CE, The Indian Construction equipment market has potential to grow six-seven times from total revenues of US $3 billion in 2012 to US$22.7 billion by 2020 and from over 60,000 units in 2012 to 330,000 in 2020.To realize this growth opportunity, the industry needs to have an

The Indian Construction equipment market has potential to grow six-seven times from total revenues of US $3 billion in 2012 to US$22.7 billion by 2020"

A.M.Muralidharan
Managing Director, Volvo India Pvt Ltd,

key customer requirements and forging strong partnerships with dealers and suppliers and building a strong manpower pipeline. Some of the key enablers to drive the construction equipment industry will be the role of government in speeding up projects, financing of construction equipment and key role played by Public-PrivatePartnership in projects. Volvo CE offers a wide variety of road construction equipment in India including, wheel loaders ( Tier 3 engine) 3 ton to 45 ton range, hydraulic excavators ( Tier 2)- 11 ton to 70 ton, compactors- vibratory soil compactors of 11 ton , vibratory

Dr.C.P .Joshi, about 21000 km of road projects are to be awarded by NHAI in the next 3 financial years. The ministry has pegged the target for financial year 2012 as 7300 km. This apart, around 1000 km of expressways in various parts of the country have been planned. With project deadlines and quality parameters getting stricter, the latest road construction equipment has come to the rescue of road contractors. In a strange way, the economic uncertainties elsewhere in the globe have had a positive impact

Road projects have gained importance due to thier direct influence over economic growth

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Road Equipments Industry Analysis

2009 Units Rs.cr

2010 Units Rs.cr Units

2011 Rs.cr

2012 Units Rs.cr

2013 Units Rs.cr

2014 Units Rs.cr

Asphalt Finishers Compaction Equipment Crawler Dozers Motor Graders Total Road Construction Equipment

920 2787 562 342 4611

322 418.1 505.8 212 1100

1150 3400 700 600 5850

402.5 510 630 372 1915

1350 3800 800 700 6650

472.5 570 720 434 2197

1500 4200 900 800 7400

525 630 810 496 2461

1600 4500 1000 900 8000

560 675 900 558 2693

1650 4800 1050 950 8450

577.5 720 945 589 2832

Demand for Road Construction Equipment in India as per Off-Highway Research

asphalt compactors of 8 ton to 10 ton capacity, motor graders (Tier 3 engine) 15 ton to 22 ton, articulated haulers (Tier 3 engine) 25 ton to 40 ton operating weight, paver finishers- 5.5m to 10 m and pneumatic tire rollers of 22 ton capacity in the country. The company had introduced six new products to the Indian market a few months ago including the locally produced EC210 B Prime and EC 290BLC Prime excavators, the 70 tonne EC700C crawler excavator, the DD100 and SD110 compactors, the LG 220 wheel loader and the P6820 asphalt paver. Giving his take on the topic of the recent economic slowdown affecting the sale of road construction equipment, Mr.Ramesh Palagiri, Managing Director and CEO of Wirtgen India, subsidiary of globally renowned Wirtgen Group, considered a pioneer in road construction

equipment, quipped, Irrespective of the economic slowdown, the recent contracts awarded for new road projects have been on the rise. Wirtgen India has registered a 20% growth last year and expects a 15 -20% growth this year too. The growth registered in the first half of last year was good, but the pace slowed down a bit in the second half. According to Mr.Ramesh Palagiri, Wirtgen Group offers a complete line of solutions for road building as well as rehabilitation like Wirtgen Milling machines, Wirtgen Soil Stabilizers, Recyclers, Wirtgen Slipform Pavers for concrete paving, Vogele range of pavers for asphalt and a complete range of compaction equipment from Hamm. Giving an example of machines that have been widely accepted in India, Mr.Ramesh Palagiri gave the example of the new

Irrespective of the economic slowdown, the recent contracts awarded for new road projects have been on the rise. Wirtgen India has registered a 20% growth last year and expects a 15 -20% growth this year too. The growth registered in the first half of last year was good, but the pace slowed down a bit in the second half

Ramesh Palagiri
Managing Director and CEO of Wirtgen India

India is fast emerging as the preferred choice of overseas road construction machinery suppliers

311 Soil Compactor manufactured at the company's new production facility near Pune, which is a machine specially designed for the Indian market with German expertise and which has been well accepted in the Indian market, with the company receiving positive feedback about the product from customers. According to Mr.Ramesh Palagiri, the company plans to launch production of tandem roller in India by the end of this year, followed by asphalt pavers. Infrastructure development continues to be the talking point in industrial, as well as political circles of the country. It has become imperative for the government to focus on infrastructure

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Universal Construction Machinery

Road Equipments Industry Analysis

There is tremendous potential for the construction equipment industry, given the infrastructure deficit in the country

Vipin Sondhi
Managing Director & CEO, JCB India

development, as a means to achieving and sustaining rapid economic growth. This is one factor that has led to a strong positive undercurrent flowing in the construction equipment industry, despite the economic ups and downs. According to Mr.Vipin Sondhi, Managing Director & CEO, JCB India, a market leader in road construction equipment, the fact that infrastructure is the key for growth has now become a dominant theme across political parties. JCB India is among the earliest global names that had set shop in India with an Indian subsidiary. The company is now considered a market leader in construction equipment in India. An optimistic Mr.Sondhi while speaking about the immediate future for the construction equipment industry, of which road construction machinery contributes a significant chunk, had remarked recently that, There is tremendous potential for the construction equipment industry, given the infrastructure deficit in the country. He further added that the Indian construction equipment industry is expected to grow at a compounded rate of about 21 % to reach the size of US $23 billion by 2020 from the present levels of about US $ 3.3 billion. JCB India offers a wide range of equipment catering to the road construction equipment. It had recently announced launch of new variants of its popular range of backhoe loaders consisting of models, 2DX,

3DX, 3 DX super, 3 DX xtra and 4DX. It has also recently added the JS 120, a 12 T tracked excavator to its already wide range of excavators. The compaction equipment offered by the company includes its soil compactor model- VM 115 and tandem roller models, VMT 850 and VMT 1860. As expected backhoe loaders still lead the race when it comes to the most extensively used type of construction equipment in the country. No road project in the country is today imaginable without the omnipresent presence of these versatile machines. Several leading global players are eyeing this particular product segment. One of the recent entrants has been Leyland Deere, a joint venture between commercial automobile giant Ashok Leyland and John Deere a global industry leader in construction equip-

Cognizant of India's huge appetite for construction and infrastructure development, we are well-placed and wellequipped to tap the huge potential that exists

Dr.V. Sumatran
Chairman, Ashok Leyland John Deere Construction Equipment Company Ltd and Executive Vice-Chairman, Hinduja Automotive Ltd

We have the ability as a global company to review components. In the short term we can review the total product offering, see how we might be able to enhance what we have already and incorporate anything new that the market may require. I guess we have the advantage of being a global business. We have the buying power, if you may call that, of getting the right components for product development from overseas and bring them here to our plant and then improve the product

Steve Crowe
Director Network Development and Communications of CNH International S.A

ment. The Leyland Deere 435 Backhoe Loader (BHL) launched by the joint venture is a feature rich model that has been designed to offer superior value by addressing critical considerations such as lower operating cost, higher productivity, and greater uptime. It is rugged in structure, powered by an Ashok Leyland engine of proven pedigree from the 'H' Series platform and replete with USPs like power shift transmission, best in class cabin with larger space, greater visibility, higher breakout forces, and greater dig depths, among others, according to the company. Going into the details of the joint venture , Dr.V.Sumatran, Chairman, Ashok Leyland John Deere Construction Equipment Company Ltd and Executive Vice-Chairman, Hinduja Automotive Ltd, had stated during the launch that , Cognizant of India's huge appetite for construction and infrastructure development, we are wellplaced and well-equipped to tap the huge potential that exists. Dr.Sumatran also hinted that the company could be extending its product portfolio and launching wheel loaders by 2013. Case New Holland Construction Equipment (India) Pvt Ltd, the Indian arm of CNH, considered a world leader in construction and agricultural equipment business, is another

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Road Equipments Industry Analysis

product at a competitive price. But I don't think we will ever be the one to offer products at the cheapest price. There has been a significant spurt in demand for almost every type of road construction equipment in the country. Along with backhoe loaders and compactors, motor graders for example, are another type of road construction machinery whose demand has gone up. Giving an insight into the market potential of motor graders, Mr. Sunil Sapru, President, LiuGong India, a leading player in the field pointed out, In today's construction industry,
Economic uncertainities, particularly in Europe has made several players look towards India for growth opportunities

leading global player that has major plans lined up for the Indian market. The company with its range of products such as backhoe loaders770 and 851, only loader- 770, three models of compactors and 770 extendahoe, is expected to make major inroads into the Indian market. Speaking to The Masterbuilder, Mr. Steve Crowe, Director Network Development and Communications of CNH International S.A when queried about the competition among backhoe loader suppliers and whether the company had made any modifications in feature to suit Indian conditions had

said, We have the ability as a global company to review components. In the short term we can review the total product offering, see how we might be able to enhance what we have already and incorporate anything new that the market may require. I guess we have the advantage of being a global business. We have the buying power, if you may call that, of getting the right components for product development from overseas and bring them here to our plant and then improve the product. Ultimately we wish to provide the market place with the best value for money that we can offer. The right

In today's construction industry, grading plays a more important role than it never has before. In reality this phase of construction represents the very foundation of construction industry. It is absolutely necessary to have a smooth and uniform surface to achieve uniform compaction and density. The market of motor grader in India has increased from 342 units to 450 and it is expected that it will reached to 900 units by the end of 2014

Sunil Sapru
President, LiuGong India

LiuGong's CLG418 is amongst its top-selling machines

grading plays a more important role than it never has before. In reality this phase of construction represents the very foundation of construction industry. It is absolutely necessary to have a smooth and uniform surface to achieve uniform compaction and density. The market of motor grader in India has increased from 342 units to 450 and it is expected that it will reached to 900 units by the end of 2014. The emphasis on quality and the

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Road Equipments Industry Analysis

Dozers are some of the most sort after equipment

subsequent introduction of several new road construction technologies too is playing a key role in increasing demand for road construction machinery. Soil stabilization for example is a technology that is fast finding an increasing number of takers in the country. Road construction equipment like motor graders, vibratory compactors and backhoe loaders are used in the process. Rockwell India for example, is a company that specializes in the field. The company had successfully completed a soil stabilization project for the Prestige Group on the outskirts of Bangalore near Nandhi Hills. Going into details about the project, Mr.Hara Kumar, Vice President Projects, of Prestige Group said that initially a stretch of 200 metres was done as a sample by Rockwell India. The company first analyzed the soil sample and gave recommendations for the mix ideally suited for the project. Going into the details of the project, Mr.Hara Kumar explained, Road construction equipment such as motor graders and vibratory compactors were used as part of the soil stabilization project. Once completed a quality check was done and the road was ready for use

even without topping. After the excellent results obtained during the sample project, the entire stretch of 7.4 km was completed in 2008, with the topping being done only recently in 2011, which speaks volumes about the quality of the road. More Players Expected The renewed thrust on awarding

Road construction equipment such as motor graders and vibratory compactors were used as part of the soil stabilization project. Once completed a quality check was done and the road was ready for use even without topping

Hara Kumar
Vice President Projects, Prestige Group

highway projects is expected to help the growth rate of road construction equipment market hovering around the 25%-30% mark in the next couple of years. Industry experts have pegged the size of the road construction market at approximately a volume of 2500 machines per year in recent times. The growth rate is expected to pick up steam by the end of 2012 with gradual improvement expected in the economy, which could invigorate the bidding process for road projects. Stricter project deadlines, without compromise on the quality front are another key factor that is expected to drive forward the momentum for road construction machinery. While entry of several new types of machinery was the highlight of the earlier decade, the next decade is when market churn is expected to throw up winners, while those not focused on quality and innovation expected to be relegated to the bottom rungs. Adding to the demand is a rapidly evolving rental market. Given the strong demand signals, it won't be a surprise if more overseas players set up shop in the country, either through formation of subsidiaries or through joint ventures with domestic players.

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