The government has to address issues like long-term funding for road projects, faster land clearances and introducing more stringent prequalification criteria for contractors who are bidding for road projects. The blocks have to be cleared to expedite a healthy growth in this sector and to attract the private sector for BOT projects, says Rohit Punjabi, Assistant Director (Strategy and Marketing), Liugong India. Excerpts of the interview.
How do you assess the performance of the road construction equipment segment in the last two years?
The Indian road-building equipment market is worth Rs 800-1,000 crore per annum and is likely to grow at the rate of 10-15 per cent per year. The demand for road-building equipment looks promising. Last year, the road construction equipment market stood at an industry volume of 2,500 machines and it is expected to grow at the rate of 5-10 per cent in the coming years. While we wait for more investments to happen in national highways, there is a lot of state highway projects that are picking up in Uttar Pradesh, Rajasthan, Bihar, Karnataka, Tamil Nadu and the North-east (NE) region. We are confident that there is a lot of work to be done. We expect the market to be at its peak in 2015-2016.
To what extent has the inactivity in the NHAI projects impacted Liugong´s performance?
Fortunately, Liugong sales were not adversely affected last year since we focussed well, acted aggressively and grabbed the available opportunities in the market.
Has the government initiated any positive moves for fast-tracking the NHAI projects?
Acquisition of 5,000 hectare of additional land, together with the enforcement of the new Land Acquisition Bill will contribute to ease the existing situation and helps in faster implementation of projects. NIC has developed a monitoring programme for better monitoring of roadwork progress and should basically be used to identify bottlenecks in projects and removing them at the earliest. Such a move will also benefit private investors by increasing the accuracy in estimating the required clearances in each project.
How do you assess the growth potential from the road sector, especially from the NE states?
The road infrastructure is relatively deficient in the NE region, although the region´s per capita road density is significantly higher when compared to the rest of the country. Given the low density of population and the hilly terrain of the region, this is the expected outcome. To address this, the Ministry of Road Transport and Highways (MORTH) has been paying special attention to the development of national highways in the region. The ministry has earmarked 10 per cent of the total allocation for the NE region. The total length of national highways in the region is 8,480 km and these are being developed and maintained by three agencies - the state Public Works Departments (PWDs), Border Road Organisation (BRO) and NHAI. Sufficient funds have also been allocated in building the road infrastructure in the NE states.
Brief us on the range offered by Liugong for the road sector.
We have a complete range of products for road equipment, which is not just compaction and paving we have excavators, wheel loaders, etc. We are engaged in providing a wide range of road graders to our most reliable customers. The range we offer is manufactured under the supervision of experienced professionals as per the industry norms and standard.
These machines are widely used in the construction of roads and highways. Liugong offers graders in the range of 150-215 HP for construction and mining applications, the most popular model being the 414BSIII and CLG418, which are mainly used in construction projects. Liugong´s motor graders are set to redefine performance, fuel efficiency, and operator comfort. Liugong also offers the finest road compaction equipment. The CLG611BSIII caters to the soil compaction needs of the sector. These machines are built specially for Indian roads.
What are your views on the growth potential for the road equipment segment by 2020?
Currently, the road equipment sector is experiencing a slowdown, as a number of road projects are stalled or going slow. Growth in this sector will pick up only if the government ensures a good mix of BOT and EPC projects. However, the next year will be quite challenging as it takes time for the implementation of the steps taken by the government.
Very recently, Cabinet Committee on Infrastructure (CCI) cleared a roadblock for the implementation of four big ticket projects. After seeing all these positive measures taken, we can expect the demand for road-building equipment to rise by 2020.
Will you have any new launches in 2014?
Liugong India has launched a 3- tonne class wheel loader in 2014 especially for the Indian market. The new product, the CLG836BSIII, will be a game-changer for Liugong India and the most fuel- efficient machine of its portfolio. Apart from this, the company has plans to launch a small class wheel loader also in 2014, the details of which shall be discussed later.
The next year will be quite challenging as it takes time for the implementation of the steps taken by the government.
Road construction equipment market is expected to grow at the rate of 5-10 per cent.