Demand for equipment to recover by fiscal end
Demand in the mining and construction equipment industry will recover towards the end of the current fiscal followed by a sharp growth in next financial year, said a report brought out by ICRA.
The report said that 2016 promises to be a better year for most of the product segments as a result of the ongoing policy measures leading to absorption of surplus inventory in the market.
“MCE (mining and construction equipment) industry will pick up towards the end of the current fiscal (October 2015 to March 2016), with demand for MCE expected to grow by 6-7% during 2015-16, followed by a sharper pickup of 20-25% during 2016-17,” the report said.
Scale up in demand for MCE is often non-linear, with assured job orders and cash flows triggering strong buying, as construction activity picks-up momentum. In the last one year, the government has announced several policy measures aimed at expediting project executions and fast-tracking approvals to kick-start investment cycle.
However, the on-ground pace of movement has been impeded by variety of factors including sector specific constraints, demand dynamics, tight credit availability and high indebtedness of participants, the report said.