Arvind K Garg, Vice President and Head - Construction & Mining Machinery Business, Larsen & Toubro
What is your view on the current market for Large Mining Equipment segment in India?
We are confident that India will soon see a paradigm shift in mining methods and the way in which mining companies deploy equipment, and we shall witness deployment of state-of-the-art large size mining equipment in India for large scale mining operations in the years to come. This will further be consolidated because of the growing concern for environment, health & safety in the mining industry.
What is the year-on year-growth trajectory do you project? What will be the key success factors?
We foresee a demand growth of approximately 18~20 per cent CAGR over the next five years. Key success factors will depend on how effectively the targets as per planning are achieved with execution in the ground level. Timely commencement and hurdle-free operations of major projects in the coal mining sector will be a very crucial factor. Concerted efforts to address land acquisition, R&R issues and regulatory matters will be critical to give the required momentum to the mining industry.
What would be the key performance factors for each category of equipment? What can be the return on capital and break-even point?
In our opinion, a key performance factor for mining equipment will be cost per tonne of material handled. Hence the KPIs will be production, fuel consumed and other operating costs to achieve that production. However, physical availability of the equipment will be a major factor to be considered by buyers while evaluating a purchase decision. Because if the equipment availability is minimal, it does not make economic sense to buy the same even though theoretically the equipment might have lowest cost per tonne.
What is your assessment of the Indian market for large mining equipment categories, over the next 5-10 years in terms of numbers and value?
Coal India has plans to purchase large quantities of Ultra class mining equipment to meet its ambitious production plan for the next five years. This will be the primary driver for growth of Ultra class mining equipment in India. Major captive coal blocks (of state power utilities and others) are also expected to commence operations during FY16-17 through the MDO route. This could open up opportunities for large size mining equipment as well.