After nearly a two-year long lull, construction equipment makers are looking forward to early signs of revival of domestic mining and road construction sector. The revival has come at a time when construction equipment market in the rest of the world is hit by a recessionary trend.
“We are very optimistic about India,” Luis De Leon President Global mining products division of Caterpillar Inc told Business Line. The company also started using its Indian facility as sourcing hub.
Leon along with his team was here early this month to showcase Caterpillar products at the International Mining & Machinery Exhibition (IMME) before Coal India Ltd rolls out for a multi-billion dollar equipment purchase plan, beginning next quarter.
Global mining scenario
The prospect is immense. Market sources say coal sector was the major buyer of the company’s high value but “longer life cycle” equipment in India. Ask him about the rest of the world and Leon says: “Everybody is either holding up fresh investments or slowing down.”
“Right from Indonesia, Africa to the US and Australia, stories of production cut and job loss rule the global mining industry. Slow down is also visible in China,” says official of another major global gear maker, which is now pinning hopes on India.
And, they are not merely looking forward to CIL. “Captive segment has started coming up slowly. And, since they are relatively faster in decision making, we expect an increasing flow of orders from this sector,” the company said.
The Union Government is expecting captive production to increase by nearly four-fold in the next five years.
The emerging prospect is attracting everyone. If smaller underground equipment makers like Valley Longwall is hoping to clinch an order from the Singareni Collieries Company; Belarusian government-owned Belaz has set up its country arm and launched a range of opencast products for the Indian market.
Even tyre makers like Apollo Tyres had launched the high-value OTR products at the recently held mining expo, targeting a slice of the emerging opportunities in construction equipment market.
Mining is not alone. There is a slow but definite upturn in the road construction sector, another major consumer of gears such as excavators, bulldozers, dumpers.
“Road construction sector has started picking up, as many construction companies who had run into liquidity crisis are opting for debt-restructuring,” says Sumit Mazumder Vice-Chairman of TIL Ltd, one of the Caterpillar’s India dealers.
He, however, hastens to add that the growth is nowhere near the government projections. “In my estimation, the country is adding approximately 2-3 km of roads a day, as against the target of 20 km a day,” Majumder says.