I f there is a consistency in market demand, the projections can be more accurate with a good CAGR for earthmoving equipment for next five years, says Sanjay Wadnerkar, Vice President, LiuGong India. Excerpts from the interview...
How do you assess the growth potential for earthmoving equipment?
The growth potential largely depends on the opportunities coming up in the market and is driven by the announcement of different projects by the government. The demand-supply would not be a concern as most of the equipment suppliers including us are running with spare capacity. So even a boom is expected after the budget, the equipment supplier is ready for the demand rise. Mainly road and rail projects will drive the demand for earthmoving equipment. We also see a lot of opportunities in power and mining.
What sort of demand pull you anticipate from the hiring segment?
Hiring segment is yet to get matured in most of the equipment segments. In backhoe loader and excavator markets, the hiring segment is getting stabilised. But since earthmoving equipment is capital-intensive machines, the return on investment really should pick up for the hirer. The emerging opportunities can make some correction in hiring business model because the different types of equipment will have different types of customer needs and accordingly the correction needs to be made in hiring business. But I see a lot of opportunities in refurbished products because the hiring segment is dependent totally on the RoI calculation.
How do you assess the current progress of project execution across the infrastructure segments?
Within the infrastructure segment, we have high hope on roads and railway where our equipment will be used in big numbers. But in power, the trend is not encouraging because of delays and poor responsiveness from controlling agencies. We need to improve that. Various clearances, funding, land acquisition and effective project management will help the infrastructure projects to take up on time which will benefit the economy.
Tell us the latest product / technology trends?
We offer broader range in wheel loaders and motor graders, so that the customers can look for the right product for the right application. We see a lot of improved value for our customers with a value for money kind of product with more local content. As far as technology is concerned, we are partners with many global brands for components. We bring those products into our equipment which brings customer trust and also help us in implementing leading technologies. These components boost the productivity our range of machines because these are leaders in their respective segments; for example, Cummins is leader in engine technology, Kawasaki in hydraulics, ZF in drivetrain systems, etc.
Is financing still a challenge?
We have special financing arrangements with certain banks for our customers. In addition, LiuGong itself is planning to set up its financing arm and the process is on. May be in a year, we will have our own financing arm.
Brief us on the value addition provided by LiuGong.
We did a study on backhoe loaders and found that there are certain applications for the utility of loader that are much higher compared to the excavator facility of backhoe attachment. So we introduced the mini wheel loader which will help the customer to benefit from higher efficiency and speed of the machine compared to backhoe loader. We also see that a lot of infrastructure projects will demand for higher payload capacity of motor graders. So we are introducing motor graders with much higher payload capacity with new engine and powertrain. The new range will be introduced in 2016.