- Himadri S Bhattacharjya, MD, Quippo Construction Equipment Ltd
What is the annual market size for these excavators?
Based on revenues, earth moving holds the largest share in the construction equipment industry (62.1 per cent). Major market Players in excavator market are CAT, L&T Komatsu and Tata Hitachi.
What are the market dynamics?
Equipment demand is catered majorly through new equipment finance, equipment rental, and imported used equipment. Over 80 per cent of the construction equipment bought in India is financed. The current rental penetration is around 7-8 per cent in India as compared to the global penetration of 50-80 per cent. However, considering the current financial market, increase in borrowing costs and huge NPAs by banks and NBFC, impacted mining industry, and high import duty, there is more of outflow of equipment from the country. Leasing/rental of construction equipment would be the best available options for the customers in the time to come.
Who are the major players in this market?
The major players in the Indian excavator market are Caterpillar, L&T Komatsu, JCB, Tata Hitachi, Hyundai, Kobelco, Volvo, Doosan, Sany and other Chinese companies. In the global scenario the key vendors are Caterpillar, JCB, Hitachi Construction Machinery, Komatsu, Liebherr, Kobelco, Volvo, Sany Heavy Industry and Terex.
Who are the major buyers for these machines? Do they have any rationalistic or brand preferences?
Major buyers of these excavators are rental companies like Quippo, small unorganised players in equipment rental, various project developers, infrastructure companies, trading houses, various government companies/bodies that use these for their internal use etc. In the Indian market scenario, the preferred brands are Caterpillar - 320, L&T Komatsu - PC200, Volvo - EC210, etc.
What is the export potential of used excavators? Which are the preferred brands and which countries are major importers?
Analysts forecast the global excavator market to grow at a CAGR of 10.69 per cent over the period 2013-2018. The used excavator market is majorly dominated by equipment brands like Caterpillar, Komatsu, Volvo, Hitachi etc. The end-user perspectives for the used equipment market are majorly economical prices, immediate delivery and short term use of the equipment apart from various other reasons. Used excavator market has a huge potential worldwide with majority of equipment now being going to the Middle East and African markets.
What are the growth drivers?
Infrastructure growth holds the key to the industry realising its potential in India. In the 12th Five Year Plan, the government has earmarked approximately $1 trillion for infrastructure investment. Government´s impetus continued to clear policy logjams and improve overall financial health.
The Indian construction equipment sector is made up of five main segments: earthmoving, road construction, concreting, material handling and material processing equipment. Earthmoving equipment and road construction equipment account for close to 70 per cent of India´s construction equipment market. Backhoe loaders account for 50 per cent based on units followed by crawlers about 23 per cent mainly on demand for 20-30 tonne excavators.
The road ahead: India is poised to be the world´s third largest construction market by 2025. All signs point to a country that would be wise to focus on developing its infrastructure. And when it does, demand for earthmoving and construction equipment (ECE) will surge. Growth in a country´s fleet-size ECE stock is highly correlated to the growth of the construction industry. In the near future in India, the bulk of construction growth is likely to come from growth in transportation infrastructure (roads, rail, airports, ports), urban infrastructure (mass rail transit systems, water supply and sanitation, urban housing) and rural infrastructure (rural roads, irrigation, rural housing)-three important sectors for driving ECE demand. With significant infrastructure investment and growth expected in India, it is expected that CE stock will exhibit robust growth in the near future.