‘Construction equipment will grow at an average of 15-20%’

— Vijay Sharma, Executive Director, Terex Equipment (P) Ltd  TerexEquipment (P) Ltd, a part of US headquartered Terex Corporation, is one of India's leading manufacturers of construction equipment. The company, which showcased its products at Bauma Conexpo India 2011 recently, manufactures backhoe loaders and skid steer loaders at its world-class 36-acre facility in Greater Noida. Vijay Sharma, in an interaction withSandeep Menezes, talks about the positive impact that increasing investment in infrastructure will have on the Indian construction equipment sector. We understand that Terex had some plans to augment its manufacturing facilities at Noida. Also, what are your long-term capex plans? We sincerely believe that the overall earthmoving industry in India will grow by at least 10-15 per cent over the next five years. Keeping this in mind, Terex certainly wants to ride the bandwagon and be a part of this tremendous growth story. We have increased our investment levels catering to the burgeoning Indian market. In the joint venture with Vectra, we increased our share from 50 to 99 per cent last year, thus laying the foundation for bringing in advance manufacturing technology and processes. At present, we have a production capacity of 2,500 machines on an annual basis. However, foreseeing the tremendous potential and opportunity available in future, we may plan to ramp up our capacity to address the increasing demand for our products What is Terex's future strategy in India? Do you plan to launch new products?  India is one of the top priority markets for Terex Group. According to various sources, India will need an infusion of nearly $1 trillion investment during the 12th Five-Year Plan (2012-2017) to build more airports, seaports, highways, power plants, railways, and dedicated freight corridors etc. Hence, there is lot of opportunity for capital equipment manufacturers like us to exploit. Till 2015, TEPL has ambitious plans for quadrupling its top line from present levels. To achieve this target, we have already put a strategy in place, which mainly involves the introduction of new product line comprising soil compactors, wheeled loaders, site dumpers, and midi-excavators. We are also in the process of expanding our distribution network aggressively to cater to the needs of our ever-increasing customer base. What will be the impact of the higher infra spend on the construction equipment market? For any economy to grow consistently, it needs an excellent infrastructure in terms of roads, seaports, airports, power plants, railways etc. With investment to the tune of $1 trillion on infrastructure, India's GDP growth is slated to be on the fast track like China. Hence, we strongly feel that Indian construction equipment will be the beneficiary of this scenario and will grow at an average rate of 15-20 per cent over the next five to six years. Tell us about the recent trends in the Indian construction and mining equipment sector. As the Indian government lays continuous emphasis on improving infrastructure to world-class levels, new projects are being awarded and executed at a faster pace. For roads and highways, the requirement will be there for small and midsize machinery while for mining there is a continuous shift towards higher valued and larger equipment. What is the impact of interest rate volatility on disbursement of equipment finance? We don't think that any kind of mild interest rate variation is going to affect India's earthmoving industry in a prominent way for the next six to seven years. Till the government is focused on infrastructure spending, there will be a continuous, strong demand for earthmoving, construction, road-building and mining equipment. However, the macroeconomic factors, especially the economic scene in USA or Europe, and the prevailing political situation definitely have a major impact on the growth story. There is a demand for a new policy on import of secondhand equipment. What does it imply for equipment manufacturers like Terex? In India, the imported machinery can easily be RTO registered anywhere without the need of adequate testing at state transport authorities in different states, while, the machinery manufactured in India has to be tested as well as registered. This naturally does not provide a level playing field for Indian manufacturers. Hence, any policy review by government will have a positive affect on the prospects of machinery manufactured in India. In spite of having the secondlargest global pool of engineers and technicians, India still faces a huge shortage of trained equipment operators. Government can play some major role in this matter but it is with the CE manufacturers that face this problem and we need to work at a solution too. In this direction, most of the manufacturers like us have started a concept of training schools where the operators are being trained on the handling and operation of the latest technologies available. These schools are getting very popular among India's youth, especially from rural backgrounds, as it provides them an opportunity of employment. Why hasn't construction equipment rental picked up in India?  Rental business in India is firmly on growth path, even though it is at a very modest level right now. But if we talk about loader backhoes, which have a dominant share in CE industry of India, there are a very large number of small contractors who are ready to rent out their machines at very low rates. This is one of the reasons why big rental companies may find it difficult to compete in this product segment. However, in heavy machinery like cranes, excavators, compactors etc., the rental business concept is already there and will surely pick up sharply in next three to five years. Source: http://www.projectsmonitor.com/MISC/construction-equipment-will-grow-at-an-average-of-1520

                 

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