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Construction Equipment CONSTRUCTION EQUIPMENT JANUARYJUNE 2017 2015 (As of June 23 2017) For updated information, please visit www.ibef.org 1 CONSTRUCTION EQUIPMENT ❖ Executive Summary…………………...……. 3 ❖ Advantage India…………….………..………4 ❖ Market Overview and Trends…………...…. 6 ❖ Porter Five Forces Analysis .......................15 ❖ Strategies Adopted……………….….…......17 ❖ Growth Drivers…………………….....……..20 ❖ Opportunities…………………......................32 ❖ Success Stories…………………….............34 ❖ Useful Information…………………………..39 JANUARYJUNE 2017 2015 For updated information, please visit www.ibef.org 2 CONSTRUCTION EQUIPMENT EXECUTIVE SUMMARY • Construction equipment industry in India is expected to reach USD5 billion by FY20 from High revenues and unit USD3 billion in FY16, in value terms. While, volume sale of construction equipment is sales expected to grow to 96,730 units by 2018 from 76,000 units in FY16. Rising infrastructure • The NITI Aayog estimates total infrastructure spending to be about 9 per cent of GDP by investments 2017, up from 7.2 per cent during the 11th Five year plan (2007–12) Increasing private • Private sector is emerging as a key player across various infrastructure segments, ranging sector involvement from roads & communications to power and airports Growth in real estate • The real estate market is estimated to grow to USD180 billion by 2020 from USD126 sector billion in 2015, driven by demand mainly from residential sector • Construction equipment forms around 7 per cent to 8 per cent of GDP & expected to give Construction equipment employment to more than 3.0 million people in the country by 2020. It also accounts for analysis more than 60 per cent in total infrastructural investment Source: KPMG, FICCI, Corporate Catalyst India Pvt Ltd, Indian Construction Equipment Manufacturers' Association (ICEMA), TechSci Research JANUARYJUNE 2017 2015 For updated information, please visit www.ibef.org 3 CONSTRUCTION EQUIPMENT ADVANTAGE INDIA CONSTRUCTION EQUIPMENT ADVANTAGE INDIA FY16 RobustGrowing Demand demand Attractive Opportunities FY20E • Significant allocation for the • Equipment rental & leasing business in Total infrastructure sector in the 12th Five- India is small relative to developed Total revenues: Year Plan and investment requirement markets & has a strong growth potential revenues: USD3 USD5 of 1 trillion USD is expected to create • The after-sales revenue component in billion huge demand for construction India is currently low & can be increased billion equipment considerably • Revenue from construction equipments • Construction projects worth USD 19.12 is expected to grow at a CAGR of 2.34 million, won by Larsen & Toubro in per cent during FY07-FY20 & reach to January 2017, will help in creating USD5 billion by FY20 construction jobs Advantage India Competitive Advantages Policy Support • Increasing impetus to develop • The material handling equipment infrastructure in the country is attracting industry is de-licensed & 100 per cent the major global players FDI is allowed under direct route • There has been cumulative FDI inflow • ‘Make in India’ pitch to boost of USD24.28 billion in earth-moving investments machinery between April 2000 & December 2016 Source: , Department of Heavy Industries (DHI) Annual Report , CII, TechSci Research Notes: FY - Indian Financial Year (April - March), E – Estimates, CAGR - Compound Annual Growth Rate, FDI - Foreign Direct Investment JANUARYJUNE 2017 2015 For updated information, please visit www.ibef.org 5 CONSTRUCTION EQUIPMENT MARKET OVERVIEW AND TRENDS CONSTRUCTION EQUIPMENT EVOLUTION OF THE CONSTRUCTION EQUIPMENT SECTOR IN INDIA Beyond 2000 1969 onwards 1964 • Most of the technology leaders like Case, Caterpillar, Hitachi, Ingersoll-Rand, JCB, • Private sector started John Deere, Joy Mining equipment, Before 1960 emerging, led by Hindustan Motors Komatsu, Lieberr, Poclain, Terex, Volvo are present in India as joint venture companies, • Bharat Earthmovers Ltd, Earth Moving Equipment Division in or have set up their own manufacturing a public sector company, facilities (or marketing companies) began domestic technical collaboration production of with Terex, UK • Several Indian firms are entering into tie-ups construction equipment for equipment rental & leasing business, in India • Followed by L&T, e.g., tie-up between SREI Infrastructure & Telcon & Escorts JCB • Domestic BNP Paribas. This is expected to drive sales necessity for • They began of equipment in future construction & manufacturing dozers, mining equipment dumpers, scrapers, etc, • In 2016, under the Smart Cities Mission, 83 were entirely met for defence requirements projects have been launched in 20 cities by by imports The Government of India. Source: Department of Heavy Industry (DHI), TechSci Research JANUARYJUNE 2017 2015 For updated information, please visit www.ibef.org 7 CONSTRUCTION EQUIPMENT MAJOR SEGMENTS OF THE CONSTRUCTION EQUIPMENT INDUSTRY Earth-moving equipment Material Road building handling & equipment Construction equipment cranes Concrete equipment Source: Department of Heavy Industry (DHI), TechSci Research JANUARYJUNE 2017 2015 For updated information, please visit www.ibef.org 8 CONSTRUCTION EQUIPMENT CONSTRUCTION EQUIPMENT – SEGMENT DESCRIPTION • Earth-moving equipments is the largest segment of the construction equipment sector in Earth-moving India; these equipments primarily find use in mining & construction equipments • Equipments include backhoe leaders, excavators, wheeled loaders, dumpers/tippers, skid steer loaders • Material handling equipments have 4 categories: storage & handling equipments, Material handling and engineered systems, industrial trucks & bulk material handling cranes • There are 50 units in the organised sector for the manufacture of material handling equipments and many units in the small-scale sector as well • Concrete equipments are used to mix & transport concrete Concrete equipments • They include equipments such as concrete pumps, aggregate crushers, transit mixers, asphalt pavers, batching plants Road building • Road building equipments are used in the various stages of road construction equipments • Widely used ones are excavators, diggers, loaders, scrapers, bulldozers etc Source: DHI Annual Report, TechSci Research JANUARYJUNE 2017 2015 For updated information, please visit www.ibef.org 9 CONSTRUCTION EQUIPMENT INDIAN CONSTRUCTION EQUIPMENT REVENUES ON AN UPTREND Growth in revenues from construction equipment (USD billion) By FY20, construction equipment industry’s revenue is estimated to reach to USD5 billion. CAGR: 2.34% In FY16, India construction equipment industry 6.5 grew at a Y-o-Y of around 3.45 per cent over the previous year 5.1 5.0 4.6 4.3 4.2 3.7 3.9 3.9 2.9 3.0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY20E Source: The Boston Consulting Group, Mahindra Website, TechSci Research Notes: CAGR - Compounded Annual Growth Rate, FY - Indian Financial Year (April-March), E – Estimate YoY – Year on Year JANUARYJUNE 2017 2015 For updated information, please visit www.ibef.org 10 CONSTRUCTION EQUIPMENT CONSTRUCTION EQUIPMENT SALE ON AN UPTREND With infrastructure investment set to go up, demand for Total no of construction equipment units sold construction equipment will rise further. (‘000) Sale of construction equipment in India is estimated to grow at a CAGR of 6.18 per cent, in volume terms & reach to 96,700 units by FY18 from 50,000 in FY07 CAGR: 6.18% 96.7 With sale of 76,000 units construction equipments, the industry has witnessed growth at a CAGR of 4.76 per cent 76.0 72.2 during FY07-16. 66.4 68.2 59.7 60.7 With sales of 21,869 units of construction equipment, during 55.9 50 45.5 January 2016 to May 2016, the industry recorded increase 40.5 in sales at a rate of 47.6 per cent, over the same period during the previous year. Concrete Show India 2017 was held at Mumbai, Maharashtra, with more than 100 Indian and global manufacturers & suppliers from industries such as concrete, FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY18E construction, construction equipment, etc., participating in the event. Source: NBM & CW, Mahindra Website, TechSci Research Notes: CAGR - Compounded Annual Growth Rate, FY - Indian Financial Year (April-March), E – Estimate YoY – Year on Year JANUARYJUNE 2017 2015 For updated information, please visit www.ibef.org 11 CONSTRUCTION EQUIPMENT ‘EARTH MOVING’ IS THE LARGEST SEGMENT BASED ON REVENUES Unit sales of equipments By 2016, backhoe loaders & crawlers are estimated to reach 5.20% 7.00% 5.92% 70 per cent of the total construction equipment; crawler 2.97% 4.00% 3.62% 4.45% 4.65% 8.24% 6.00% excavators is anticipated to grow from 23 per cent in 2015 to 7.00% 7.24% 10.72% 10.34% 35 per cent in 2016 10.00% 18.96% Crawler excavators is expected to be the fastest growing 23.00% 28.95% segment by 2018, mainly on demand for mid-sized crawlers (20T) from the construction segment & their versatile usage 49.46% 43.00% 39.28% Backhoe loaders & crawlers excavators are expected to account for over 68.23 per cent of total sales by 2018 2014 2015 2018E Others consists of Asphalt Finishers, Crawler Dozers, Mini Backhoe Loaders Crawler Excavators Mobile Cranes Excavators, Rigid Dump Trucks, etc. Mobile Compressors Compaction Equipment Wheeled Loader Others Source: NBM & CW , Indian Construction Equipment Manufacturers’ Association, TechSci Research, Off-Highway Research Note: E - Estimated JANUARYJUNE 2017 2015 For updated information, please visit www.ibef.org 12 CONSTRUCTION EQUIPMENT NOTABLE TRENDS IN THE CONSTRUCTION EQUIPMENT
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