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Escorts expects the strong sales momentum in its construction equipment business to continue and hopes for a double-digit growth this fiscal.
On the back of about 16 per cent growth in the construction equipment industry in FY19, driven by all major segments, Escorts’ construction equipment volumes, including both manufactured and traded products, grew 24 per cent to 5,544 units as against 4,486 in FY18. Volumes of backhoe loaders, pick ‘n’ carry cranes and compactors went up by 23 per cent in FY19.
“If we look closely at the construction equipment segment, we find encouraging momentum. We expect that our construction equipment business will continue to grow in mid-teens in the medium to long term. We will be launching an exciting array of innovative products,” Nikhil Nanda, Chairman & Managing Director, Escorts, said in the company’s latest annual report.
The ₹6,262-crore company, which makes equipment for farm, construction and railway sectors, believes that the country’s construction equipment market will continue to be driven by infrastructure investments. Also, the successful implementation of the Goods and Services Tax (GST) bolstered the demand for equipment in the country by aligning tax rates across States at a single point.
The company has formed a joint venture with Japan’s Tadano Group, one of the world’s leading manufacturers of mobile cranes, to make rough terrain and truck cranes.
The company’s served application segments of earthmoving (backhoe loaders), material handling (cranes) and road-building equipment (compactors) together constitute over 60 per cent of the industry, and including excavators, the same is about 95 per cent of the total construction equipment industry.
Market growth
In volume terms, the market for backhoe loaders grew to 47,200 units in FY19 from 38,600 units in FY18; that of cranes to 10,200 units from 8,100 units; and compactors to 5,000 units from 4,200 units.
Escorts plans to focus on lowering material cost, expanding dealer outreach and enhancing export footprint going forward. It will stay focussed on launching new products and global technology collaborations for domestic and overseas markets, supported by a strong product mix and an extensive distribution network.
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