The government's commitment to complete 7,300 km of roads in 2012-13 basically translates to a demand for approximately 39 crore tonne of aggregate. And if we calculate using the example of a 200-tph plant which produces approximately 600,000 tonne per annum, the requirement of plants will be 650 units of 200-tph plants for the roads and highways sector alone.EQUIPMENT INDIA casts a keen glance down that road.The Indian crushing and screening market is among the most progressively emerging markets in the world and has seen rapid growth in the last few years. This market is dominated by the construction segment which normally caters to infrastructure projects like national highways, expressways, bridges, rural roads, urban infrastructure, airports, railway ballast, dams, etc. Out of the total market for the CE industry, the share of crushing and screening equipment is pegged at 13 per cent – that is, $30 billion across 2012-17. The demand for CSE equipment has risen, fuelled by the growing demand for aggregates and road-based material. The government's plan to invest Rs 50,000 crore in infrastructure will encourage more projects on the PPP model for infrastructure development. The signs for the road construction segment look very promising too, considering the government's plan to invest Rs 10,000 crore and introduce external commercial borrowing, too. It has planned for 8,800 km of road construction, which will provide more avenues for projects, which in turn, will be a growth enabler for the CE sector. As per the inputs from the user segments, there is the need for better technology to improve efficiencies and more importantly, to bring about a balance between environment protection and growth plans.Says GN Raju, Chairman & Managing Director, Nawa Engineers & Consultants, "The government's commitment is to complete 7,300 km of roads in 2012-13. Aggregate required for each km of a 4-lane highway is 53,125 tonne; and aggregate required for 7,300 km is 38.78 crore tonne. Taking cost @ Rs 225 per tonne, the total market size for aggregates is Rs 8,775 crore in 2012. If we calculate via the 200-tph plant which produces approximately 600,000 tonne per annum, the requirement of plants will be 650 units of 200 tph plants in the roads and highways sector." Raju adds, "If we assume a reduction factor of 40 per cent to assess a realistic need in this segment for 2012/13, then the number of plants required will approximately be a minimum of 390 plants in 2012-13."Raju continues, "The government in its Budget speech has reaffirmed its commitment to complete 8,800 km of roads in 2012-13. NAWA is totally focused on the business importance of the roads and highways sector and is geared up for capacity provisioning for the manufacture of a majority of the required numbers of plants for this sector in 2012-13."Says Raghavan Ramaswamy, Vice President, Sandvik Construction, India, "The investment in the roads sector (as per 12th Five Year Plan projections) is expected to grow at 16 per cent per annum in the nominal term. This should translate to an annual growth in the demand of aggregates to nine per cent per annum. Therefore, the expected demand of aggregates is expected to increase by almost 50 per cent by 2016.The current economic trend shows high demand in the aggregate sector, especially the roads sector. In the recent past, there has been high demand for sand and concrete used for road / highway projects. This has provided a positive impetus for the sale of crushing equipment, too. So, the growth potential is very positive for India. Compared to Western countries, the Indian market is not saturated and there is ample room to enhance productivity through mechanisation and sheer expansion.''Growth potentialHighlighting on the growth potential for the crushing and screening equipment for the next five years, from 2012-17, Ravi Thakur, Managing Director, Amarshiva, says, "The construction industry is expected to churn out nearly 46 billion tonne of aggregate needed for the core construction and infrastructure industry till 2013, for various projects such as roads, dams, ports, industrial corridors, etc. This translates to a requirement of over 26,500 CSE plants by 2017. The demand for aggregates and sand is steady; the surge and the dips in demand and the prices are due to various reasons. Overall the demand will be positive and there will be consolidation in capacities from medium to big capacities."Speaking about the trends, Ramaswamy points out, "The most evident trend is the move towards mechanisation, electronics and the standardisation of quality norms. This also indicates the inclination towards productivity and quality-oriented projects. In order to maintain our market lead, we have listened to our customers and put into practice many new solutions, leading to lower operating costs, fuel economy, reliability in operation and ease of maintenance, combined with improved operator health and safety."Somnath Bhattacharjee, President-MHS&EPS, TIL says, "Life cycle cost is becoming increasingly important along with better reliability, higher productivity and improved quality of finished products resulting into better earning potential for the end users. Customer value proposition of the offered solution in terms of customer profitability, technology & reliability and customised aftermarket support delivering higher uptime are the key cornerstones of our focus as we believe that satisfied and profitable customers will be the beacon light of our business approach."Thakur says, "With massive infrastructure construction activity under way, crushing and screening equipment is now detached from being exclusively a mining sector domain in the core construction sector domain. The very need for millions of tonnes of road base materials, concrete mixes and asphalt mixes has pitched the need of crushing and screening equipment into the forefront of the construction equipment industry. The manufacturers, both multinational and domestic players of crushing and screening equipment, have turned their entire focus on the aggregate industry. Stone crushing, which was hitherto looked down on as a low-end business, now prominently occupies the same status as that of the construction sector."Mining woesSays Rajen Khoda, Director of Sales, South Asia and the Middle East, Powerscreen, "The closure of mines in Karnataka and Orissa, and the issues relating to iron ore mining have hampered the growth of construction equipment, as has the slow progress in finalising tenders for road projects. Despite this, Powerscreen is still expecting a healthy growth in India during the next five years. As well as continued growth in the mining segment, Powerscreen is forecasting greater levels of penetration of its tracked mobile crushers and screens in the aggregates sector."Supporting the view, V Venkataramana, Vice President, Puzzolana Machinery Fabricators, points out, "The market has slowed down especially in mining, and raw material costs are shooting up, and in general, interest rates are becoming expensive. We are expecting the projects announced now to take off this year. We are not anticipating any demand-supply gap; also, increase in input costs will make the situation tough for manufacturers to achieve growth."Says Viraj Parthi, Country Manager, Terex Mobile Processing Equipment, "The mining sector has got a huge potential for growth sooner or later. In my view, it is not going to happen in near future and again when it will happen, it will be in a much restrained way than earlier. It will take some time for the customers to gain back the confidence to make huge investments. We should also look in to the other mining sectors apart from iron ore, bauxite, coal etc."Says H Sankaranarayanan, Director-Operations, Taurian Engineering, "The mining sector is still dormant. It is opening up in small sections but we cannot expect new growth from this sector. Unless the government puts in place a new mining policy, it is not possible to comment now."On the impact of the latest budget on the construction sector, Khoda says, "It is definitely going to have an impact for equipment on the road sector, particularly the zero duty for three- stage crushing plants. Moreover, with the increase in excise duty for locally produced equipment, the cost to the customer is going to increase. The customers would have not budgeted for this increase and their decisions regarding equipment purchases may be delayed."Says Parthi, "At present, for the financiers, crushing plants are not as preferred equipment as excavators or BHLs are. So at times it gets very difficult to arrange finance if the customer belong to the 'bottom of pyramid', but if we need big volume, we have to cater to this segment. Leasing can be an option for such customers which are very popular in other markets of the world. Though in recent times, the financiers have been very conservative with the CE industry but I am hopeful that this will change in near future."From the policy front, RBI has recently reduced both repo and reverse repo rates by 50 basis points each (from 8.5 to 8 per cent for repo rate and from 7.5 to 7 per cent for reverse repo rate). This is a welcome development for a stagnating economy as this is expected to spark off fresh investments. The infrastructure sector, which is highly interest-rate-sensitive, is expected to benefit from this cut, says Hemant Kanoria, Chairman and Managing Director, Srei Infrastructure Finance. He adds, ''However RBI's actions alone are not sufficient to improve the investment climate in the country. I feel any pick up in investment is now more reliant on the easing of policy-related bottlenecks than on any reduction in interest rates. As we have been saying since the last two years, RBI's efforts need to be supplemented by government action on various policy fronts. To attract investment in infrastructure, transparency and certainty on issues like taxation, land acquisition criteria, environmental clearance norms, are a must. Going forward, I feel fiscal measures should play a more important role than monetary measures. It is imperative to step up investments towards addressing the supply-side constraints that have kept inflation at stubbornly high levels."Says Bhattacharjee, "India will remain as a focus being a key market for all the global and local equipment manufacturers. We believe the increasing global competition will only enable to educate the customers faster towards better technologies and alternatives. However, economy of scale with complete range offering, customer satisfaction and pan Indian aftermarket support with customized solutions are essentially the key success factors for the equipment suppliers."