overview of indian construction equipment industry q1 fy 2019 … · 2018-09-26 · email:...

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Vinay HP

Overview of Indian Construction Equipment Industry – Q1 FY 2019 update

Construction & Infrastructure

1

ICEMA – AGM

Aug 1, 2018

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Source : Feedback analysis

ICE industry has grown at 24% during FY 18 compared to the previous year and at CAGR of 28% from the revival period of FY 16

50,850

65,750

73,340

64,110

52,400 49,700

56,540

74,990

93,100

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

Industry crossed the mark

achieved during 2011-12

Vol in units

Note FY indicates April to March Financial year


Infrastructure investments in Roads, Irrigation, Railways and Metro drove demand whereas Coal and Iron ore mining, Power, Oil & Gas and Real estate had muted demand

53,180

8,350 6,300 6,150 1,010

64,650

11,910 6,120

8,740

1,680

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Earthmoving & Mining Concrete Road MHE MPFY 2016-17 FY 2017-18

Volume in Units(22%)

(43%) (-3%) (42%) (66%)

(%) – Indicates growth rate compared to same period of FY 2018

Overall CE sales FY 2017-18 FY 2018-19Growth in FY

2018-19

Vol 74,990 93,100 24%


The overall industry grew by 29% in Q1 of FY 2018-19 compared to Q1 of FY 2017-18

13,854

2,773 1,545 1,787

415

17,760

3,755

1,490 2,700

650

-

5,000

10,000

15,000

20,000

Earthmoving & Mining Concrete Road MHE MPQ1 2017-18 Q1 2018-19

Volume in Units(28%)

(35%) (-4%) (51%) (57%)

(%) – Indicates growth rate compared to same period of FY 2018

Overall CE sales FY Q1 2018-19 FY Q1 2017-18Growth in FY

2018-19

Vol 26,355 20,374 29%


Government focus on announcement of major new projects was low, while focus was largely on ensuring stable execution during Q1 of the ongoing and awarded projects

Mumbai – Nagpur Expressway

Mumbai Trans Harbour Link

Bharatmala project

Bilaspur-Leh Railway project

Amaravati-Vijayawada bridge project

12 km flyover cum bridge in Patna

Water conservation projects in state of Telangana, Andhra Pradesh, Madhya Pradesh, Rajasthan and Gujarat

Rural housing projects and economy housing schemes from government

Solar and wind mill power projects

Smart city – Development of flyovers, roads etc.,

Key projects awarded & projects which drove Q1 sales

Chennai-Salem Expressway

River conservation project in Madhya Pradesh

Major announcements


Earthmoving and Mining equipment industry grew by 22% in FY 2017-18 and growth in Q1 of FY 2018-19 is 28% compared to the same period of last year

EquipmentSales during FY 2017-18 – Vol

(Units)% Change from same

period FY 2016-17

Sales during Apr-June FY 2018-19

Vol (Units)

% Change from same period FY 2017-18

BHL 37,345 22% 10,530 44%

HEX 22,550 24% 5,910 8%

WL 2,600 30% 845 49%

MG 980 13% 246 12%

SSL 450 5% 117 -2%

CD 375 -33% 45 -53%

Dumper 350 -15% 67 -27%

Earthmoving & Mining


Concrete equipment industry grew by 43% in FY 2017-18 and growth in Q1 of FY 2018-19 is 35% compared to the same period of last year

EquipmentSales during FY 2017-18 –

Vol (Units)% Change from same

period FY 2016-17


Vol (Units)


Transit Mixer 5,180 42% 1,685 38%

Concrete Pump 1,470 18% 563 45%

SLCM 3,590 54% 980 40%

Batching plants 1,335 57% 377 16%

Others 335 16% 150 11%

Concrete equipment

Others include – Boom pumps, placer booms and recycling plants


MP industry grew by 66% in FY 2017-18 and growth in Q1 of FY 2018-19 is 57% compared to the same period of last year

EquipmentSales during FY 2017-18 –

Vol (Units)% Change from same

period FY 2016-17


Vol (Units)


Crushers 1165 94% 400 50%

Screens 515 26% 650 70%

Material processing


Industry has always witnessed a cyclic trend; a dip in Q1 ending and Q2 due to monsoons

0

5,000

10,000

15,000

20,000

25,000

30,000

Q1 Q2 Q1 Q2 Q1 Q2 Q1 Q2 (E)

2015-16 2016-17 2017-18 2018-19

Volume in Units

Overall CE sales

+4%

-12%

-10%

-13%

% Indicates the growth or dip in Q2 vs Q1 of the financial year


Pre-monsoon had less impact on sales during Q1 and Q2 sales will be stable

Q2 of FY 2017-18 had witnessed pre GST orders, which carried forward to July

Q2 of FY 2018-19 has no major impact on sales in States of North & East India

Pre-monsoon had less impact on sales during Q1 and Q2 will be stable

Push from Government to achieve targets is enabling stable execution of projects across pan India

Concrete road projects driving equipment sales of select Earthmoving , Concrete and Material processing

equipment

In South, Water conservation projects in states of Telangana and Andhra Pradesh will drive the equipment

sales


Call to action Recommendations for the Government


Skill Development

OEMs

• Currently there is no common certification process for Skilling by MORTH – which has it own training module and certification process

• Most of the finance institutes are not willing to fund for equipment operated by unskilled operators

Finance companies

• Expensive equipment are operated by unskilled operators who tend to damage the equipment and reduce productivity

Government

• There is scarcity in availability for skilled labours who are required to meet the targets set by government. This is affecting the overall productivity of the industry

To have a common certification program across the

industry through a single platform

Government should give recognition for skilled

mechanics and operators

Current Issues Prospective solution

Making skilled operators mandatory at CE sites will

reduce accidents and improve productivity

Making skill mandatory for licensing mechanism

Allotting budget for skilling for CE industry and have

more training institutes recognized & certified by Govt

Measures to implement


Technology

OEMs

• OEMs face the issue of introducing new technology

for better productivity due to non availability of

skilled personnel to operate the same

Government

• Government needs innovative methods on the raw

materials used and equipment used for the project

which is currently very limited and implemented only

in few projects

Insist on site monitoring and equipment monitoring

through Telematics

Mandatory registration of equipment – irrespective

of off-highway or on road


Become an enabler for Equipment banks with latest technology helping smaller companies for projects like PMGSY, Rural works

Equipment guidelines for projects – review on a regular basis. Better technology, better productivity



Policies

Government funds are not sustainable for long

term growth of the infrastructure sector

Banking sector is still conscious funding for

infrastructure projects

Projects delays are largely because of lack of

decision making from Government

Legal issues to settle the disputes

Private sector companies are over bidding without

adequate due diligence

Government has to introduce policies which can make funding easier for finance companies or lenders

Government to define a period or specific guidelines for handling disputes

Create equipment standards based on technology and lifecycle costs


Urgent revival of PPP model

Government needs to design bidding which stops intense competition

Pass CEMM Act and set out Rules



Projects & Funding

Infra projects should be given for operation and

maintenance to private sector

Derisk by clearing land clearance and all other

approvals in place to ensure top companies bidding

for key projects

• Create SPVs with all approvals in place for private sectors

to come in

Government to create a shelf of derisk projects

Delayering the process of finalising projects which will help the private sector

Prospective solutions Measure to implement

Projects related

Current issues

Equipment industry is not reliant on public sector

banks for funding

Funding related Measure to implement

Government to take measures to recapitalize banks & move forward which will help project infra & funding

Thank You

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overview of indian construction equipment industry q1 fy 2019 … · 2018-09-26 · email:...

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