Construction equipment makers are hopeful that the much-awaited trade fair will reflect the industry’s positive sentiment, and bring them much business.
By Mitalee Kurdekar & jayashree Mendes
The construction industry is gearing up for its biggest trade fair, Excon 2017. From December 12-16, the industry will gather at the Bangalore International Exhibition Centre (BIEC), Bengaluru, where 1,000-plus exhibitors are expected to set up shop, with an estimated turnout of 40,000-plus visitors from India and abroad.
Given that the economy is looking up and Government announcements such as the BharatMala Pariyojana are sounding good tidings for the industry, the 9th edition of the event – which is being organised by the Confederation of Indian Industry (CII) – ought to abuzz with business deals. So how are construction equipment (CE) makers preparing themselves?
Making it Count
Explaining their approach, VG Sakthikumar, MD, Schwing Stetter Sales & Services, and chairman of Mechanisation Committee, Builders Association of India (BAI), states, “As one of the largest exhibitors at Excon 2017, Schwing Stetter’s products target a massive audience, from small customers to large corporate, across various segments. Schwing Stetter will showcase the latest progressions in construction engineering with emphasis on latest products, equipment & technology, with specific emphasis on efficiency, productivity, safety, environment protection and construction quality.”
The company will be displaying 46 products, of which 16 are new introductions and will be launched at their 3,200m2 space during the fair. In fact, this year, Schwing Stetter India’s stall size is the biggest ever when compared to the last editions of Excon.
On the other hand, JCB is keen to project itself as a complete solutions provider. “Our machines have always been versatile, efficient and durable. But the shift that we’re now trying to create is that of becoming a full scale infrastructure equipment company. From backhoe loaders, we are now moving towards excavators, compactors, skid steer loaders, telehandlers and generators. Therefore, JCB is trying to become a one-stop shop for any person wanting to get into a trade or wanting to buy any sort of equipment that is useful in the development of infrastructure,” claims Jasmeet Singh, head of corporate communications and external relations, JCB India.
KYB-Conmat is launching three new products – Side Discharge Conveyor, 1 Tonne Rack & Pinion Elevator & Paving Concrete Machine for city roads – at the fair, in addition to displaying the new generation of Stationary Batching Plants, Mobile Batching Plants, Road Paving Machines, Canal Paving Machines, Elevators, Concrete Pumps, as well as Transit Mixers from 6m3 to 8m3 capacity with PTO & Slave Engine.
Kalpesh Soni, GM, marketing, KYB-Conmat, says that they are looking forward to South Asia’s premier construction equipment show. “Excon is going to be one of the biggest business opportunities for the construction equipment industry. It is a great opportunity for all the manufacturers to meet local and international customers at one location. I believe that Excon 2017 will bring in more customer footfalls than Excon 2015, because the market sentiment is upbeat. This edition is taking place at a time when we are enjoying good growth as an industry. It is not only a great platform for many international firms to announce their arrival in India, but also gives them a platform for new product launches,” confesses Soni.
Tata Motors has upgraded their 230HP prima engines to 250HP, and 280HP engines to 300HP. For better fuel efficiency, they are developing solutions internally, as well as with Cummins and other driveline partners for providing best-in-class fuel economy. In addition, they have adopted the SCR emission control technology for all vehicles deploying engines of 150HP and above, in-line with global trends, which gives better environmental compliance along with longer engine life. They have also deployed a state-of-the-art telematics system (Tata FleetMan), which helps transporters to keep a track of their vehicles on a variety of parameters like vehicle position, driving habits, fuel consumption, productivity, uptime etc.
“With a strong demand from road construction, and mining sectors, Tata Motors has done exceptionally well in the tipper segment with almost 50% market share. This year, our focus at Excon is on the mining and road construction industry, as there is positive movement in macro-economic indicators in these segments. Also, we are showcasing the product superiority/exclusivity with globally renowned Cummins SCR technology, ULTIMAAX Suspension, factory-fitted comfortable AC SIGNA cabins and light-weight, but stronger tipper bodies,” says Rajesh Kaul, head, sales and marketing, Medium and Heavy Commercial Vehicles (MHCV), Tata Motors.
As far as component makers go, they too are upping their game. Balkrishna Industries (BKT) recently launched an ultra-advanced range of tyres, specifically for high-speed cranes. The tyre 445/95 R25 enables heavy high-speed cranes to journey at speeds of 80 km/hr. “Each product passes over 450 stages of tests. The result of this rigorous practice being that BKT’s products are known for their reliability and have the lowest claim ratio in the industry,” informs Rajiv Poddar, joint MD, Balkrishna Industries (BKT).
There has been a shift in how products are perceived and received, what with growing consumer awareness. When one adds the positive outlook on regulatory policies and the government’s intent and announcements on investments in infrastructure such as roads, demand for quality products is naturally expected to be on the rise in coming years. For air compressor manufacturer, ELGi Equipments, the combination of these factors spells good news. The company is confident that there is a need for superior air quality and reliability, which is also expected to stimulate growth.
“In line with this trend, we have now shifted our focus to develop eco-friendly products with low maintenance in a bid to encourage consumers to migrate from traditional products to more energy-efficient alternatives,” suggests Anvar Jay Varadaraj, head of marketing & corporate communications, ELGi Equipments. His company is a regular participant at Excon. This year, they will be displaying their trolley-mounted diesel- and electric-powered screw air compressors. PG 550 – 200 is the new trolley-mounted diesel-powered compressor that will be kept on display. This more productive model comes with a pre-filter that makes the compressor more efficient and enhances the life of the compressor.
Market leader Atlas Copco is focusing on product localisation, developing new technology products and promoting existing high quality products from its global product portfolio. The company is making large investments in R&D. “We cannot ignore that customers are also scaling up in terms of quality and service expectations and we will continue to provide them with time tested Atlas Copco technology. More and more customers are moving towards higher pressure band to have better productivity, e.g. customers who were earlier buying a 450/150 compressor are more or less going for a 500/175 unit, which results in higher penetration rate with very small increase in fuel consumption,” says Nitin Lall, GM, Atlas Copco (India), Power Technique Customer Centre.
Anticipating this shift in customer requirements, the company has been ready to fill the need gap with their compressor range (216/316). Similarly, in other segments like waterwell, new launches such as electric and dual pressure compressors are the latest additions to their portfolio.
While the sector received a boost with a renewed focus on road building from the current government, causing the market to grow by roughly 16% in 2015, and further by 39% in 2016, there is still a massive amount of work yet to be done across the country. This will call for large volumes of equipment to complete it. Considering the prevailing conditions as far as Government intent and policy go, and other foreseeable factors, CE vendors are expecting the market to follow an upward trend in the coming years as well. As a result, they are busy readying themselves for the oncoming onslaught of demand.
“Investment in the infrastructure and road building sector with projects like BharatMala are the main growth drivers for the construction equipment industry. With these investments set to go up, demand for construction equipment is expected to rise and the equipment sales are estimated to expand at a CAGR of 6.2%. Being a recent entrant into the industry, we intend to capitalise on this growth by providing superior products that offer customers good profitability over the life cycle,” professes Sachin Nijhawan, vice-president and business head, Mahindra Construction Equipment.
To keep up with changing customer needs, Case has been tweaking products and course correcting. Case India recently introduced a revolutionary technology called Eagle Eye, useful for enhancing the performance and efficiency of the machine. This is an Asset Monitoring System that combines internet, cellular and GPS technologies. The system helps to keep an eye on every significant detail such as real time location of the machine, operating hours, cumulative hour meter reading and warning text alerts for critical parameters.
“With an objective to bring quality infrastructure, the Government has taken several initiatives like Smart Cities, Make in India, Swachh Bharat, national highway projects and rural road flagship schemes. All these will collectively bring a positive outlook to the infrastructure industry in general and construction equipment industry in particular. Case is ready with its product offerings to cater to the growing demands of the construction equipment industry after all the initiatives taken by the present government,” according to Shalabh Chaturvedi, head, marketing, Case India.
Despite the challenges faced by the government in funding its ambitious plans surrounding infrastructure projects, India’s investment in infrastructure is estimated to have risen to Rs 37 trillion between 2013 and 2017. This marks a 56% growth from the Rs 24 trillion spent in the preceding five years between 2008 and 2012. “We expect these trends to continue and they augur well for the construction equipment industry. We expect that this will lead to rise in demand of both ownership and rental of construction equipment,” predicts VA Vanmeeganathan, country head, India region, and MD, Caterpillar India, Material Handling and Underground Division (MH&UD), Tiruvallur.
In anticipation, Hyundai Construction Equipment has recently launched mini excavators for agriculture-related, plantation & space-constraining jobs. Also, they have recently upgraded their excavator series to the ‘smart’ series, after considering the usage pattern and changing customer needs in India. Durability & fuel efficiency have come up as the top criterion among customers when it comes to selecting equipment in India. To help, the ‘smart’ series helps by reinforcing high stress areas of the machine and applying a fuel-saving kit for improving operational efficiency. Looking at the opportunity in the logistics & warehousing segment, they had launched a material handling & warehousing equipment vertical in India, back in 2015, and are now offering a one stop solution to their customers’ material handling & warehousing needs. These developments have also helped them add new customers to their list.
“The current growth is majorly coming from new customers and the unorganised rental sector. Established players are still hesitant in buying new equipment. After the GST is in place, we expect the change in user preference from ownership to usage-driven, this would give rise to organised rental and leasing in India,” suggests Sharwan Agnihotri, head, marketing & business development, Hyundai Construction Equipment India, adding that, during Excon, they would be launching a wheeled excavator as an application solution to concrete spreading in concrete road building, along with a technologically advanced mining machine R480-9S.
Echoing similar sentiments, Vivek Hajela, GM & head, construction equipment business, Larsen & Toubro, says, “The rental equipment market is slowly evolving in India. But it continues to remain mostly unorganised. Efforts by large equipment rental and leasing companies to enter standard construction equipment did not succeed much. However, with the Government focus on bringing most businesses into the formal sector, there is a likelihood of the rental market getting more organised. The GST implementation may, in turn, shift purchases to ownership by contractors.”
Putzmeister is being cautiously optimistic. “The outlook for the concrete equipment manufacturer has never been better; roads, industrial corridors and smart cities will all need substantial amounts of mechanisation to fulfil the ambitious timelines set by the Government. The morale of the industry is improving and the number of enquiries is increasing, but the number of sales is still not shooting through the roof, as it should be. Particularly, companies with a long track record in the market are still suffering from bad debts and underfunding,” warns Wilfried Thiessen, MD, Putzmeister India.
Tata Hitachi feels that the surge in demand for machinery will be beneficial for both contractors and hirers. Adds Sandeep Singh, MD, Tata Hitachi Construction Machinery, “As an organisation, our focus is on our demand drivers in the market – infrastructure and mining. In infrastructure, there has been a spurt in roads and railways construction, leading to an increase in the demand for excavators. We are also seeing a significant demand from major and minor irrigation projects from some of the South Indian states. As far as the mining segment goes, in the long term, the industry overview is positive. This year we expect the market to recover in the second half given the increased demand for electricity & hence coal.”
Tata Hitachi’s comprehensive range of excavators includes 2-40 tonne hydraulic excavators for the infrastructure sector, 45-120 tonnes for the mining sector, and the ultra-large 190-800 tonne excavators for specialised, heavy-duty mining. These products, along with others, are a part of their latest EX super series and the technologically advanced ZAXIS GI series. The company is following a two-pronged product strategy, which addresses both the value and premium segment of customers.
However, it remains to be seen how quickly demand will pick up. Today, a number of large contractors have overstretched balanced sheets. Large contractors are also PPP-averse and more inclined towards EPC as a first preference, and HAM as a second preference. As Amarnath Ramachandran, president and director, LeeBoy India Construction Equipment, puts it, “The result is that we need more contractors to execute. This logically and organically shifts focus to the rental industry. So while large contractors are increasing projects, the rental industry is also growing rapidly. Machines that were considered expensive a few years back like slip-form pavers, large batching plants and motor graders are now available on rent as well.”
About the pace of movement, he suggests, “Firstly, from announcements to actual materialisation on ground would be one to two years. Evaluation of the project, tendering, awards, project planning to actual procurement of machines takes time. There is, however, enough existing work to keep the industry going.”
The Need for More
Construction equipment makers are also tweaking equipment to suit current trends and demand. For instance, over the last couple of years, Putzmeister India has made its products lighter, safer and environmentally-friendly, to reduce energy consumption and help customers avoid accidents on the road and on the job site.
Schwing Stetter India, on the other hand, has equipped its batching plants with real time data management options which can be handled online. The company believes that the construction industry has lagged in adopting Internet of Things (IoT). Along with leading IoT solution providers, the company has come out with software integration, which along with smart devices, will capture real time data from the work sites to suit the project management actions.This solution gets the performance detail in dashboard at anytime and anywhere to gauge the machine efficiency, utilisation and case study, the cycle time and also avoid major breakdowns.
Similarly, Mahindra Construction Equipment has launched telematics system, DigiSense. Nijhawan says that all equipment would soon be loaded with advanced technology to track performance on real-time. “We are also carrying out various technological enhancements through improvisations in few key aggregates to enhance fuel efficiency and increase the productivity of our machines thus helping customers deliver higher output than before. With better technology and design enhancements, our equipment would be able to lower lubricant refilling requirement with extended service intervals, thus reducing the overall maintenance cost and improving total cost of ownership,” he adds. Compared to the suboptimal methods used in road construction today, its RoadMaster G 75 is 180% faster, can single handedly handle the work of 30 labourers, has reduced road construction cost and offers higher operator comfort. As compared to the conventional motor grader the RoadMaster G-75 offers 50% more productivity at 35% of the product cost without compromising on the quality of work. The RoadMaster G 75 is powered by the powerful performance Mahindra DITECH engine and is designed to have the lowest maintenance and operating cost in its class leading to increased productivity and profitability for the owners.
Ramachandran of LeeBoy says that their product philosophy has been consistent since the beginning. “We design and build hi-spec machines that are serviceable globally. They are fitted with state-of-the-art aggregates and features that increase productivity for the end-user. These machines are fully loaded with features and offered at an extremely reasonable price. We also include service offerings that are customised to suit customer needs and context. The customers have direct access to us as well as the dealers,” he added.
LeeBoy’s product portfolio includes motor graders, crawler excavators, drill-rigs, backhoe loaders and concrete batching plants. To increase durability and efficiency, it selects partners in each category who have good R&D facilities in-house and have a lot of experience on these applications. Many of them like Cummins, Casappa, Walvoil, ZF, NAF, Safim, Danfoss, Ognibene, Ennovation, Cobo, etc. have a clear-cut R&D roadmap for the future. Apart from this it also selects partners who have a presence in India or are planning to do so in the near future.
Considering the numerous steps that most CE manufacturers are taking, they foresee a bright future for all contractors in India. Whether small, medium or large scale contractors, almost all of them are expected to be active with the kind of contracts flowing into this sector. Advanced technology and better productivity solutions will be the demand drivers in the future.
While India is a country which is emotionally attached to their equipment and hence prefer owning the equipment, there is a growing demand for rental equipment especially in the road sector. Besides this, most companies say that they have seen demand going a step up for rental of higher performance equipment. In terms of compressors, India has seen a growing demand in the power sector, oil & gas, refineries and pharmaceutical industries, says Nitin Lal.
In terms of availability of skilled operators and technicians, ICEMA has created an Indian Earthmoving Equipment Infrastructure Council (IESC), an organisation created to develop and update skills of operators and technicians. Its mandate is to help create training partners ánd infrastructure to meet the growing demand, which is estimated to be 2 million over the next 4 to 5 years.
Most equipment manufacturers are now accredited by NSDC through IESC and doing their bit. However, training capacity by far lags demand, and equipment continues to be operated and maintained by people without formal training. Unless certified and skilled operators are made mandatory, the situation may not change much. In addition, training should be developed into an independent business model with reasonable profitability to attract training entrepreneurs.