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S. Shanker

Mumbai, Sept. 8 Huge investments lined up for steel, power, minerals and ports have thrown up a tremendous opportunity for the material handling equipment (MHE) industry in the country.

The MHE industry is sitting on a Rs 1.2 lakh-crore pie, spread over the next seven years (2007-14), given that the outstanding investments in the core verticals rest at about Rs 16.6 lakh crore, say Mr Pritish Chheda, research analyst, and Ms Prerna Jhavar, Research Associate, of Emkay Share and Stock Brokers Ltd.

The Government’s thrust on infrastructure development to sustain the strong GDP growth has triggered off major investment outlays in the core sectors.

Increasing demand for commodities such as steel, iron and coal on the back of this infrastructure build has also resulted in private players ramping up their capacities.

The cumulative proposed investments in steel, power, minerals and ports stand at about Rs 16.6 lakh crore and the total outstanding investment in the economy is Rs 47 lakh crore over the next decade, they say.

The Indian MHE market has been pegged at about Rs 5,000 crore. Larsen and Toubro is a key player in the segment, with revenues of over Rs 2,000 crore and commanding a 40 per cent market share, followed by Elecon Engineering Company, TRF Ltd and McNally Bharat Engineering with revenues between Rs 100 crore and Rs 500 crore.

The annual size of the MHE industry is set to grow at about Rs 12,000 crore, the estimates say. It is estimated that 81 million tonnes of capacity addition will take place in the steel sector by 2014 and that the outstanding capex as of June 2007 was Rs 60 lakh crore . The MHE segment stands to benefit by 22 per cent of the capex per tonne, at about Rs 62,000 crore .

The outstanding investments in the mineral sector as of June 2007 was about Rs 99,000 crore, and it would open up opportunities for supply of processing plants, coal washeries, grinding systems, excavators, and conveyors. This would translate to an opportunity of about Rs 17,000 crore.

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