Despite the Rs 2,500-crore concrete equipment industry registered nearly 40 per cent fall in the market and is under severe pressure, there is tremendous growth opportunities in the long term. Under the veil of the recent lull and inactivity, the industry has been busy with fresh investments, new joint ventures (JVs) and technical collaborations, new product launches and product diversification to meet the challenging future demands. Agith G Antony finds out the trends.
Of course, the concrete equipment market structure and the market dynamics have changed over the last couple of years. The market witnessed major consolidation drive where the top two German players in India over decades were acquired by Chinese companies; companies having specific focus on certain products diversified product portfolio; companies that hitherto focused purely on small and medium segments suddenly started pumping fresh investments for new manufacturing facilities and upgradation and furthering their focus on higher capacity machines to cater to the premium segments. Besides, the market witnessed several JVs with foreign collaborators, with couple of dormant players fighting back with renewed vigour, and not surprisingly some of the known names losing the battle.
One perceptible shift in the concrete equipment industry is the fight back by the domestic players - companies that have been hitherto focused on small and medium segments emerging out with renewed vigour. Ajax Fiori who pioneered the concept of self loading truck mixers in the country long ago is a name to reckon with. It recently announced an investment of Rs 1,000 million and has also entered into technical collaboration with Junjin of South Korea, one of the leading manufacturers of concrete pumps and has launched a range of high performance concrete pumps of capacity from 40-120 cu m/h. The company also revealed its plan to widen its range in concrete pumping and placement further by introducing placing booms in the next stage.
To expand its offerings in concrete batching and mixing plants, the company is widening its indigenous manufacturing range of planetary mixers in technical collaboration with Eurostar of Italy. The new manufacturing facility being set up at Gauribidnur will have the capacity to roll out 300 batching plants per annum that can be rapidly scaled up to 600 plants per annum. The company has also recently opened a state of the art parts logistics centre and corporate office of 30,000 sq ft in Peenya, Bangalore thereby widening its product basket. Ajax Fiori has been quite bullish on the concrete equipment market. It re-branded itself to aggressively strengthen its position as manufactures of self-loaders, batching plants and pumps and is hell-bent on tripling its turnover in five years time.
Says K Vijay, Managing Director, Ajax Fiori, "Despite the sluggishness of the last few quarters, we are optimistic about the medium and long term prospects of the Indian concreting equipment industry. We intend to increase our turnover three fold to Rs 1,000 crore by 2017-18." He adds, "Today, we take pride in saying that Ajax Fiori has the competency and is investing further to expand and provide more innovative and cost-effective solutions for the construction sector. Having foreseen the product's suitability across various applications and the increased demand across geographies, Ajax Fiori has ambitions to create a significant presence beyond Indian shores in the coming years."
Another domestic player that has come out with flying colours is Universal Construction Machinery. The major focus on Universal too had been on the small and medium segments. News investments and joint venture with Zoomlion for a wide range of concrete pumps not only has widened its product portfolio, but has also made it more competent.
According to Ranjit More, Vice Chairman, Universal Construction Machinery and Equipment, the concreting equipment market in India is worth about Rs 2,500 crore out of which Rs 500 crore is small and mid- sized while Rs 2,000 crore is heavy equipment. "We have a significant presence in the small and mid-sized segments but the new products developed by the Universal R&D will enable the company to grab a considerable share in heavy concreting equipment in the next three years." More adds, "Upgradation of existing products will be on the agenda which will include improving the efficiency, fuel economy, energy consumption and performance thereby increasing the overall output. Improving manufacturing processes would include improving and streamlining process layout, machine orientation, material movement and machine shop and in the process improving the entire value engineering. The product development would initially concentrate on concreting equipment and passenger material lifts."
Universal also announced its tie up with Zoomlion and launched new Zoomlion range of concrete pumps during the Excon. Says Rajesh Kawoor, Vice President (Concrete Business), Universal Construction Machinery & Equipment. "As we specialise in concrete mixers and concrete batching plants, it was very easy for us to develop truck mixers. We want to be a total concrete solution company. We were missing out on concrete placing equipment like concrete pumps, concrete boom pumps and stationary concrete placers. As we are providing equipment with the highest quality and reliability, we decided to provide the world's best placing equipment. Zoomlion was also looking for a stable and reliable partner for handling their business in the Indian subcontinent and this partnership came through."
Kawoor adds, "We have launched Zoomlion-Universal high pressure concrete pump which is Zoomlion's highest selling model worldwide and can comfortably place concrete up to a height of 220 m (Approximately 70 floors considering floor height of 3 m) or horizontal distance of Approximately 750 m." He further adds, "We have also launched our self loading mixer of capacity 2 cu m and 4 cu m which is fitted with a powerful engine and 4 X 4 transmission. These self loading mixers also have four wheel steering feature allowing minimum turning radius, maneuverability and flexibility."
Greaves Cotton, maybe a pionner of JVs in the concrete equipment industry India is also back with a bang after couple years of silence. It was Greaves that brought transit mixers and concrete pumps (Cifa range - Italy based) to the Indian shore. Greaves have widened its products range which includes batching plants, transit mixers and concrete pumps. Says R Nandagopal, Chief Executive Officer, Construction Equipment Business, Greaves, "I think the entire industry is looking forward to a revival of sentiment and infrastructure. Whichever government comes, they have no choice but to make sure that infrastructure growth kicks off again. We have a roadmap which is spread out for almost two years in terms of new product introduction. We have been following that road map and you will see launches with more variants of the boom pump and various specifications, for both the Indian and overseas markets."
At Excon, Greaves launched the first of its 37 m three-axle truck mounted boom pump - GCP3709Z. According to Nandagopal, the four-arm Z-fold type boom offers increased flexibility and manoeuverability in areas where space is a constraint. Best suited for mega projects such as airports, metro projects, mono-rails, flyovers and high rise infrastructural and residential projects; Greaves GCP3709Z provides superior productivity and pumping efficiency thereby ensuring faster completion of projects, reduced down-time and higher output.
Global players too are spreading their wings and widening the product basket. Putzmeister whose core focus was on concrete pumping technology has spread its wings further and has acquired Simem for its range of batching plants from 20 cu m to 400 cu m capacity and also acquired Intermix in Europe which is a well-known transit mixer group. Says Wilfried Theissen, Managing Director, Putzmeister Concrete Machines, "Putzmeister has a long and exciting history in pumping, mortar, concrete and Shotcrete pumping as well. This was and is Putzmeister's world but as we are constantly adapting to our customer needs we now also move into batching plants and transit mixers, to be able to offer a full range of Putzmeister products. As technological leader we joined forces with the best players in the field. The latest example is the acquisition of Simem a world leader in batching plants, deal which will be finalised very soon. We have also bought Intermix in Europe which is a highly reputed transit mixer manufacturer."
Liebherr is another global player who has invested in the country. At Excon, Liebherr showcased the space-saving batching plant Compactmix 1.0 with 60 cu m capacity per hour and in house - manufactured truck mixers. Compactmix 1.0 A-T R is a popular model in Liebherr's extensive range of batching plants and is capable of a maximum discharge output of 60 cu m of compacted concrete per hour. The space-saving overall concept and the flexible 180¦ truck mixer approach angle underneath the plant enables positioning the mixer in a relatively small area. Despite the compact construction, all components are within easy and convenient reach. Most of the steel parts are zinc-coated, ensuring excellent corrosion protection and therefore a long working life. Schwing Stetter is the one and only player that have developed all range of products under one roof. The company unveiled five new products along with five new variants at Excon 2013. The newly launched products span across the concrete pumps and batching plants segment. SP1300, SP3000, and TSM 20.8 are the new concrete pumps while CP 45 and H1J are the new batching plants. The new product launches strengthen Schwing Stetter's expertise in concrete technology. According to VG Sakthikumar, Whole Time Director - Operations, Schwing Stetter India," the newly launched products demonstrate high levels of quality and efficiency as our mantra is to deliver the best-in-class concrete solutions for the construction industry. We hope to showcase our expertise with more such remarkable products and continue to re-define the construction space by employing the best-in-class technology." Says Anand Sundaresan, Vice Chairman & Managing Director, Schwing Stetter (India) "Due to our comprehensive and proven range of concrete pumps, transit mixers, batching plants and accessories, we were better placed than most to weather the slowdown as we could adjust our offerings to suit new the needs of our customers. Sundaresan adds, "We have done relatively better than industry averages. We invested heavily on operator training during 2013. From one training center in Chennai, we now have four having added one each in Delhi, Kolkata and Hyderabad. Much energy was invested over the year into improving internal systems, QC, production processes, and support mechanisms. R&D continued full swing creating solutions for the gaps that we believe exist in the market or in our products and we hope to keep launching new products as required in the market through 2014. We have also been working towards further tightening up of systems, improvement of performance of specific machines and making our offerings more value-added. We expect these efforts to bring in rich rewards in the coming months."
According to Sundaresan, 2013 was a forgettable year for the construction equipment industry as well as the concrete equipment sector. With construction at a virtual standstill, the demand for concreting machinery fell by 15-20 per cent YoY, and considering that 2012 itself had already been a negative year, this represents a decline of 30 per cent from the peaks the industry had reached in 2011. Says Sundaresan, "Adding to the woes of the industry was the continuous weakening of the Indian rupee in the last two years and the sudden and considerable dip of the same in the latter half of 2013. Many construction equipment manufacturers have a fair degree of import content in their equipment and have hence been quite seriously affected by this fall of the rupee. While the foreign exchange fluctuation had its adverse effects on the one hand, lack of realisation on the other hand due to the sluggish market made the period difficult for many. The uncertain political climate did not help matters either."
Sundaresan adds, "The reduction of the market size meant that competition got fiercer. The effects of that competition told on many. Some smaller companies in the industry had to close business, while many have reduced production substantially due to realisation not matching up, making it just not worth their while. The industry also saw some consolidation taking place which has resulted in some competition leaving the field. At the same time, we do see new entrants making their way in."
According to Wilfried, the concrete equipment market started going down in September 2011. He says, "Well, I would say it is more than 18 months; things started going down in September 2011, so it is over two years now, and I cannot see it improving really, until after the elections. Hopefully by the end of 2014, and in the next two to three years, the market should pick up. It absolutely has to pick up; the needs for infrastructure, housing, power plants, water treatment are huge."
Wilfried adds, "On our part, we have been doing quite well. We have steadily increased our market share. The global market in India is down but we have compensated by exporting to our neighboring countries, for example, South-east Asia, South Africa, Japan, and Brazil. Basically, we have improved our quality significantly so that the products made in India are acceptable in countries which demand high quality standards. Especially Japan and we are successfully exporting to them."
On a positive note Rajesh had this to say, "Currently the concrete equipment industry is under tremendous pressure but there is good scope for the concrete equipment industry in the future. There will be lot of construction activity in the future but we have to wait and watch till the market condition improves. To drive the construction equipment industry, the government should take a positive initiative by clearing the projects along with the funding.
Highlighting the shift in demand of concrete equipment Sundaresan says, "During the peak period, road work and large projects had ensured a demand for larger capacity machines. Now, due to the downturn and few fresh infrastructural projects, the demand is clearly for lower capacity machines. While some metros like Mumbai and Delhi still saw some high-rise buildings calling for high pressure pumps, other projects brought in business for the smaller capacity machines. The fact that the larger machines were no longer growth drivers hurt the topline of many companies."
Sundaresan sums up on a positive note, "There is little doubt that India continues to be a potential growth story. I say this with confidence because similar views have been expressed by world-renowned consultants with whom I have been working closely both in Schwing Stetter and in the association. All it requires is that spark of positive sentiment to get the wheels of industry chugging along nicely again."
All these underline one thing - the growth is sure to come, it is just a matter of time - so be prepared, lest you lose.