India's Construction Equipment Industry Analysis
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This research was an attempt to assess the current status of Indian construction equipment industry and the underlying opportunities and challenges. However, the aspects and objectives that were dealt in the research are; the current structure, status, competition, financing opportunities and challenges of Indian construction equipment industry. The research was conducted wholly based on secondary data. Following are the key findings of the research.
Indian construction industry has entered into a new phase, where prospect of the industry appears extraordinary bright. Indian construction equipment industry is passing through a phase of hurried renovation, where the shifting is taking place from low volume concentrated use of equipment structure to high volume explicit one. Apart from these, the current and future trend also shows that the key segments of construction equipment that will have potential market prospects are excavators, loaders, dozers, dumpers and cranes.
The growth of Indian construction equipment industry is the outcome of the fast liberalization and globalization of the Indian economy and the construction sector. The real competition in Indian construction equipment industry has been created by foreign players such as Volvo, Komatsu and many others. These companies are leaving no stone unturned to exploit the opportunities in Indian industry. The industry is at the critical juncture (particularly for domestic players) and therefore companies need to equip with safety measures in relation to post - WTO market setting.
1.1 Indian Construction Equipment Industry Background & Historical Trends
Construction and mining equipment cover a variety of machinery such as hydraulic excavators, wheel loaders, backhoe loaders, bull dozers, dump trucks, tippers, graders, pavers, asphalt drum / wet mix plants, breakers, vibratory compactors, cranes, fork lifts, dozers, off-highway dumpers (20T to 170T), drills, scrapers, motor graders, rope shovels etc. They perform a variety of functions like preparation of ground, excavation, haulage of material, dumping/laying in specified manner, material handling, road construction etc.
These equipment are required for both construction and mining activity. With a wide production capacity base, India is perhaps the only developing country, which is totally self-reliant in such highly sophisticated equipment. India has only a few, mainly medium and large companies in the organized sector who manufacture these.
The technology barriers are high, especially with respect to mining equipment and therefore the role of SME’s is restricted to manufacture of components and some sub-assemblies. Prior to the 1960s, domestic requirements of mining and construction equipment were entirely met by imports. Domestic production began in 1964 with the setting up of Bharat Earthmovers Ltd. (BEML), a public sector unit of the Ministry of Defence, at Kolar in South India to manufacture dozers, dumpers, graders, scrapers, etc. for defense requirements under licence from LeTorneau Westinghouse, USA and Komatsu, Japan. In the private sector, the Hindustan Motors’ Earthmoving Equipment Division, was established in 1969 at Tiruvallur, near Chennai with technical collaboration from Terex, UK for manufacture of wheel loaders, dozers & dumpers. This factory has since been taken over by Caterpillar for their Indian operations.
The machines manufactured by Caterpillar in the Tiruvallur factory are marketed by TIL and GMMCO. In 1974, L&T started manufacturing hydraulic excavators under license from Poclain, France. In 1980 and 1981, two more units, Telcon and Escorts JCB commenced manufacture of hydraulic excavators (under license from Hitachi, Japan) and backhoe loaders (under license from JCB, UK) respectively. Escorts JCB has been taken over by JC Bamford Excavators Ltd. U.K. in 2003 and is now called JCB India Ltd. Volvo and Terex Vectra is the most recent entrants in the Indian market. Volvo has set up their manufacturing unit in Bangalore.
At present they are only manufacturing tippers and the other equipment are imported from their parent company and marketed in India. Terex Corporation USA and Vectra Ltd. U.K. have formed a joint venture, which has started manufacturing construction equipment like backhoe loaders and skid steer loaders from May ’04 at Greater Noida with an investment of USD 12 million. Other equipment in the Terex range are being sold through their agents in India. Most of the technology leaders like Case, Caterpillar, Hitachi, Ingersoll-Rand, JCB, John Deere, Joy Mining Machinery, Komatsu, Lieberr, Poclain, Terex, Volvo are present in India as joint venture companies, or have set up their own manufacturing facilities, or marketing companies. The industry has made substantial investments in the recent past for setting up manufacturing bases, despite small volumes and uneconomic scales of production compared to global standards.
1.2 Aims and Objective and of The Study
This research was aimed to assess the current status of Indian construction equipment industry and the underlying opportunities and challenges. The research was conducted on the foundation of following objectives
- To assess the current structure, status and direction of the Indian construction equipment industry.
- To assess the competition in Indian construction equipment industry
- To assess the financing of Indian construction equipment industry
- To assess the opportunities and challenges of Indian construction equipment industry
- To develop strategies for competitors (domestic players) in Indian construction equipment industry.
- To assess the technology, managerial, operational, of the Indian construction equipment industry.
Construction equipment is machinery used to build and demolish bridges, buildings and other structures. These machines usually save labor, time and money. One of them can do more work in an hour than a hundred of workers using hand tools could do in a day. The chief kinds of building machines include earthmoving machineries hoisting, material handling machines and pumping machines. Other construction machinery used are for preparing the land and materials for construction. Demolishing machines are used to demolish structures and buildings.
The Indian construction equipment industry today faces stiff competition, great opportunities and challenges, but India has a total command over all these things as according to confederation of the Indian industry report, 2005 as for engineering and capital goods base. The Indian engineering manufacturing sector has been growing at the rate of about 5.9% in the nineties. India today produces a variety of machinery whose range is quiet wide and deep. Rapidly increasing construction sector has been the indication of good times for companies manufacturing construction equipments.
This project discusses the Construction Equipment industry in India. The structure of Construction Equipment industry in India has been well and truly detailed and mentioning all the requisite facts and figures. Also mentioned are all the factors influencing the Construction Equipment industry in India. A special mention of the suppliers list is made as suppliers are the inseparable part of the Construction Equipment industry in India. The important suppliers are JCB, Atlas, BEML, Caterpillar, Ditchwitch, Komatsu , Ashok Leyland, Escorts, Greaves Cotton, Ingersoll Rand, TETRA, Volvo,
Besides all these Indian Equipment Financing companies such as Business Financing, SREI, HDFC , GE Capital, Indian Financial Services have also received requisite expression in this project. Also discussed at the end is about Construction Equipment industry in India facing problems, challenges and opportunities and its future.
What India need is better infrastructure in order to progress. The government has also embarked upon massive road and pavement construction projects such GOLDEN QUADRILATERAL connecting / interlinking all four metro cities like Delhi, Mumbai. Kolkatta and Chennai
The government decision to throw open the construction of roads, bridges, ports and airports to private sector and to allow 100% FII / FDI (Foreign Investments) in real estate projects like (EMAAR) has provided a boost to the industry thereby generating demand for construction machineries. Housing and infrastructure projects are expected to grow about 20% per annum for the next 15 years.
2.2 Current Status of The Industry
Ramping up quality and quantity
The Construction equipment industries are the biggest beneficiaries of the construction boom. Although the past few years have seen increased levels of mechanization and improved quality, Indian construction equipment and materials are still below international standards. The current status of the construction equipment industry is discussed below.
The size of the construction equipment market current stands at between $2.5 billion and $3 billion and it is growing at an average rate of about 30 per cent year on year. It is expected that the industry will expand to $12-13 billion by 2015, including $2-3 billion of exports. This implies annual compounded growth rates in excess of 50 per cent between 2008 and 2015.
The largest share of that growth will come from the domestic market driven on the demand side by increased infrastructure spending and on the supply side by the industry’s drive to increase mechanization and equipment penetration. The rest of the growth will come from the exports of components, services and equipment. The key infrastructure sectors that are expected to drive demand are roads, urban and residential construction and mining.
Amongst the three modes of procuring equipment in India –that is, buying, leasing or renting – leasing is the most popular. While renting is suitable for projects of shorter duration, buying involves huge upfront payments. Constructions and mining equipment is manufactured by a few medium and large companies in the organised sector. The role of small and medium enterprises is restricted only to manufacturing of components and some sub-assemblies. Domestic production began in 1964 with the setting up of Bharat Earth Movers Limited (BEML), which is engaged in the manufacturing of dozers, dumpers, graders, scrapers, etc., for defence requirements. Some of the key players manufacturing equipment for the Indian market are L&T, Telcon, Escorts, JCB India Limited, Ingersoll Rand, Greaves, Caterpiller, Komatsu, Joy Mining Machinery, Case, John Deere, Lieberr, Poclain, Volvo and Terex Vectra. These companies are present either through joint ventures, or have set up their own manufacturing facilities or have a marketing presence.
BEML supplies equipment to nearly half the total market. Companies such as BEML and Caterpillar are leaders in dumpers and dozers while Larsen & Toubro – Komatsu and Telcon lead in excavators and JCB India in backhoe loaders.
In the last few years there has been some restructuring through acquisitions and joint ventures, which in turn, has reflected the interest of international majors in the domestic market. Many international players have also appointed selling agents for importing and selling equipment in India.
Despite the growth, there are some inherent problems faced by the construction equipment industry. In India, the demand for construction equipment is more than the supply. Hence, most leading manufacturers have invested in India for manufacturing to meet this gap.
The industry is trying to induct international levels of technology as demand and the scale of operations increases. However, the levels of mechanisation continue to be low compared to the international market. This is primarily because the Indian market cannot absorb the cost of latest technology. Since most the construction equipment is hydraulically operated, the Indian construction equipment industry has to predominantly depend on imports, primarily from European countries. The fluctuations of foreign exchange rates and the non-availability of adequate quantities of equipment are other constraints.
Construction equipment manufacturers also struggle to cope with the low availability of trained manpower, not only for producing equipment but also for operation and maintenance. Manufacturers are doing their best to train not only their own employees but also customer’s operators and services technicians.
Indirect taxes on construction equipment are quite high. These range between 21 and 38 per cent, based on interstate differences, compared to 20 per cent in France and Germany and between 12 and 17 per cent in Indonesia. The government could reduce this tax burden by eventually replacing all indirect taxes such as excise, sales tax, octroi and entry tax with a single tax.
It is true construction companies have ramped up significant capacities in terms of equipment over the past few years. However, due to rapid growth, there is still a mismatch of supply and demand in terms of construction equipment. Delays in deliveries of equipment result in delayed mobilization and completion of projects. Further, prices of construction equipment have steadily increased over the past few years, partly due to the high demand, and partly due to increase in input costs. Domestic equipment has a 10-15 per cent higher downturn than imported machines. There is also a lack of skilled manpower to operate and maintain machines as the industry is largely dependent on unskilled labour.
Another major issue that has becomes apparent is the financing of construction equipment. The concept of renting equipment has been mooted but the rental market in India is not very well developed. At present, there are very few players and tax issues also play a major role in this industry. The very first equipment bank in India –Quipo- has been fairly successful. However, with more world leaders expected to enter the renting domain and various models being worked out by rental companies, the situation is expected to improve in the future.
In the future, one can expect major global manufacturers to enter the equipment arena by producing India-specific products while addressing factors such as quality, cost to customer and delivery. It is also essential to make available the easy hiring of equipment through a ready stock of good quality equipment.
The last few years have witnessed a phase of restructuring in the industry through acquisitions and joint ventures. This also reflects the active interest of international majors in the domestic market. Many international players have also appointed selling agents for importing and selling complete equipment in India.
The construction and mining equipment industry is dominated by a few large manufacturers in each product segment. BEML supplies to nearly half the total market. BEML and Caterpillar lead in dumpers and dozers while L&T-Komatsu and Telcon lead in excavators and JCB India in backhoe loaders.
2.3 Structure of The Industry
71% of the sector comprises of public limited companies including PSU’s and 29% private limited, or joint ventures including closely held private limited companies.75% of the companies manufacturing in India were involved in the entire range of activities like design and engineering, manufacturing, erection, servicing and commissioning. There are only a few companies who act as selling agents for international players. There are others who manufacture and also import complete equipment or in SKD condition from their principals abroad and market them.
Since each piece of the equipment in this product category has substantial value, a number of companies have a turnover of over 100 crores and the larger ones have a turnover above Rs.1000 crores. The technology barriers have made the industry less fragmented in the mining machinery sector whereas it is fragmented in the road construction equipment and the material-handling segments. The international trend in the earthmoving and mining segment is one of consolidation. This trend is also beginning to be seen in India. Some international companies are looking at the prospects of enhancing their market presence based on higher investment in mining and infrastructure and also using their Indian operations to meet demand in South and South East Asia.
The industry’s expectations of the likely future evolution in this sector is represented here in graphical form. Most of the current players expect that new players will enter the Indian market.
There is great need for improving infrastructure as it has been accentuated by the rapid growth in economy. Of late many development authorities, State government and even companies have started investing in infrastructure development projects.
Though the volume of construction equipment in India is far too small compared to countries like china and also by global standards, India does produce a variety of construction equipments such as the earthmoving machinery used to excavate, land and level earth and rock, tractors, trailers, wagons, crawler tractors, bulldozers, scrapers, shovels, draglines, heisting and material handling machinery such as cranes and derricks, material lifts, pumping machines, demolition machinery and machinery used to prepare land and materials for construction.
Today, there is much emphasis on infrastructure development. The government spends very little on infrastructure with the result India sells very little of any category of construction equipment. It is shocking to learn that china sells 10,000 excavators energy year but in India, we sell only about 1500.
In terms of volume, the construction equipment industry is worth Rs. 4,000 crore. Whether it is roads, bridges, ports, airports, urban infrastructure, or power plants- civil construction has a very important role to play. The use of modern tools enables productive work. The rapidly increasing construction sector has been the forerunner of good times for companies manufacturing construction machineries and equipment. There has been a flow of demand for transit concrete mixers, bar- bending and cutting machines, excavators and backhoes and earth rammers on account of the substantial increase in real estate and construction activities.
New and expanding housing and infrastructure construction ventures have generated a considerable demand for construction machinery manufacturing and servicing together with erection, commissioning and maintenance. More and more multinational companies are now entering the Indian market on their own strength, whereas previously the trend was to forge joint venture associations with Indian companies. Also, a major portion of the annual budget has been invested by the Central government in infrastructure, irrigation and mining projects across the country. Due to all these factors these has been a substantial increase in the utilization of construction machinery.
The boom in the requirement of construction machinery has brought us several large orders from west Asian and African countries. Thus the exporters of construction machineries too have a boom period. Most of them have made huge profits due to the threefold increase. The demand for construction equipments has also risen because of major Indian construction works working on overseas projects.
The construction equipment sector has a wide range of products
The technology leaders in the construction equipment sector are: Komatsu,Caterpillar, Hitachi, Terex, Volvo, Case, Ingersoll-Rand, HAMM, Bomag, John Deere, JCB, Poclain, Bitelli, Kobelco, Hyundai and Daewoo. Except for the last 3, all the other companies are present in India either as joint ventures, or have set up their own manufacturing facilities, or marketing companies.
In the mining sector, the leaders are: Wrigten, Atlas Copco, Liebherr, Joy Mining Machinery, Hitachi, Komatsu, Terex, Ranson & Rappier, Bucyrus Erie and DBT. Out of these companies, DBT does not have any technology transfer and neither is it manufacturing in India. Joy Mining Machinery has a small operation in India to manufacture spares and provide sales support. However, these are the two leaders in continuous mining and long wall equipment in the world.
In the construction equipment sector, the level of technology prevalent internationally can be made available in India through joint ventures. However, the equipment currently being manufactured in India is not of the same size. For example for a 15 Cu.M. hydraulic shovel, the manufacturers do not feel the need to bring in the technology due to low volumes and uncertain demand though the companies have the manufacturing facilities and design capabilities to manufacture the same in India.
Some of the other reasons for not manufacturing the latest equipment are:
- The Indian market cannot absorb the cost of the latest technology
- If manufactured in India for export markets, most of the components will have to be imported
- Equipment adhering to the latest emission norms cannot be used since the quality of fuel required for them is yet to be made available here. At the same time, off highway construction and mining equipment do not need stringent emission norms in India.
The construction equipment sector in India has evolved over the years and is at present in an intermediate stage of development. The industry is trying to bring in international levels of technology as demand and the scale of operation increases.
The users are now not looking at only the initial cost of the equipment, but focusing on total costing, or cost per ton of usage. It is anticipated that 5 years hence, the need for more and more mechanization and enhancement of scale may lead to change in the level of technology in use.
Advances in technology have allowed an increase in haul truck and rope shovel size. For example haul trucks are now being manufactured upto 400 tons capacity. Here the increased machine size has provided an opportunity for increased production.
2.5 Management Effieciency
The industry is quite mature in terms of marketing abilities as compared to the other sectors of the capital goods industry. Majority of the companies have strategic planning programmes in place and have well chalked out business strategies at all levels.
In order to enhance their market share, companies need to improve quality and service followed by reduction in costs, increase in product range and finally adopt more aggressive marketing strategies. The competitive edge lies in satisfying customers by delivering higher quality products at lower prices.
Strategic alliances are already in place among 60% of the companies surveyed. These are primarily focused on developing and combining competencies with the help of other organizations in terms of marketing, after sales service etc. Only 45% of the companies are interested in growth through mergers and acquisitions.
The level of quality consciousness is on an average higher than the other sectors probably ecause the companies are larger and many of them are associated with international companies either for manufacturing or marketing their products. Another reason for higher quality consciousness is that more companies in this sector are well versed with the soft technologies being used worldwide for enhancing competitiveness and quality. Approximately 90% of the companies covered under the study have either implemented, or are implementing soft technologies like six sigma, lean manufacturing etc. 100% of the companies manufacturing in India are ISO certified.
It was noticed that the percentage of scrap due to errors in manufacturing is between 2% & 5% and the percentage of labour hours spent on reworking was 4%. All the manufacturing companies train their workers on quality concepts. However the percentage of workers who received company sponsored training on quality concepts in the past two years varied from 20% to 100% in some companies.
The average number of hours per person of training provided was approximately 16 hours per person varying from 6 hours to 35 hours per person per annum.
Most of the companies were quite responsive to customer complaints and the average number of days taken to respond varied from ½ a day to 5 days in some companies.
More than 70% of the companies have undergone business process reengineering for higher customer satisfaction. It has been observed that the majority of the companies in this sector are between medium and high users of computerization.
This level of computerization is also comparatively high compared to the other sectors of the capital goods industry. Yet the percentage of IT expenditure to sales in the last one year i.e. 2004-05 was a meagre 0.5% of the total sales i.e. Rs.32 crores was invested by the industry towards computerization either for ERP / SCM / CRM.
ERP or enterprise resource planning is an industry term for the broad set of activities supported by multi product application software that helps a manufacturer to manage the important functions of its business including product planning, parts purchasing, maintaining inventories, interaction with suppliers, providing customer service and tracking orders.
Supply Chain Management (SCM) is the management of the entire value added chain, from the supplier to manufacturer right through to the retailer and the final customer.SCM has the primary goal of reducing inventory, increasing the transaction speed by exchanging data in real time and increasing sales by implementing customer requirements more efficiently.
CRM (Customer Relationship Management) entails all aspects of interaction a company has with its customers, whether it be sales or service related. CRM is an information industry term for methodologies, software and usually internet capabilities that help an enterprise manage customer relationships in an organized way.
Companies need to be in constant touch with their customers over the electronic media. The percentage of companies using ERP solutions is high with quite a significant number also using CRM for better customer relationship management. However, all the players need to be better integrated with both their suppliers and customers to strive to be the market leader.
After-sales service is an important aspect of a company’s successful business strategy because all customers would like higher productivity and utilization from their machines in order to be cost competitive. Hence this is an area no company can afford to ignore or accord a lower priority to. All the companies surveyed whether manufacturing, or trading, offered after-sales service to their customer and it was also noted that 70% of them have entered into this field in the last ten years. Equipment manufactured by the industry is mostly mobile and hence subjected to higher wear and tear and consequently maintenance requirements are higher. Users rate machines with lower downtime higher. Hence, training of maintenance personnel both of manufacturers as well as users’ is a very important aspect of managing customer relationships. This is also evident from the fact that all the companies spent on training and the majority of them (60%) spent more than Rs.1 lakh per month. Only 40% of the companies spent less than Rs.10 lakh per annum on employee training.
The average response time for responding to customer calls is 24 to 48 hours and in premium service contracts it varied between 12 to 36 hours. 91% of the maintenance calls were completed within the specified time frame.
From the user feedback, it emerged that the deliveries of most of the companies were delayed. Hence many customers preferred to import second hand machines. Scheduling is therefore required to be strictly followed by all the companies for manufacturing, and approximately 90% of them use one, or the other software to enhance efficiency in manufacturing. Yet the percentage of companies where the shipments are before/within the due date is very low at only 50%.
A clear distinction was noticed in terms of reasons for late delivery.
- Companies predominantly manufacturing construction equipment have attributed more than 70% of their late deliveries to delay in customer clearance.
The reason for late deliveries is attributed mainly to the growth in domestic demand, which was not foreseen earlier by the companies. Delays were therefore mainly attributed to capacity constraints. A fall out of delayed delivery has been higher imports both for new machines, as well as second hand machines. This issue can be tackled by enhancing capacity of both the manufacturers and their sub-suppliers, tighter monitoring and scheduling and by greater usage of ERP / SCM.
Benchmarking With International Companies
Some broad indications in terms of benchmarking of the industry on the basis of financial parameters have been done against a few global players.
The companies against which Indian companies have been benchmarked are Caterpillar, Komatsu and Volvo. They are the leaders in their respective fields.
2.6 Operational Efficiency
The CII survey results showed that there has been a good growth rate in terms of sales due to the higher investments by the user sectors. Though exports have also risen, the percentage of exports to sales is low due to lack of competitive advantage of machines built with indigenous technology. Wherever machines are built under technology transfer, companies face restrictions on the export market territory from the technology provider. The power consumed to sales has shown a decline because all companies are now conscious about energy conservation and use various methods like automatic switching of systems and higher efficiency / low consumption electrical appliances etc.
Value added for an industry is the difference between the value of the output and the value of the input namely raw materials & bought outs. In other words we can attribute this difference to the value added to the product by the company. The value addition has risen over the years because more manufacturing has taken place in 2003-04 in place of trading as compared to the earlier years. It has again shown a fall due to the rising raw material prices in 2004-05. Inventory on an average was found to be 26 percent of net sales. Average Turnover of Inventory for 2004-05 was found to be 4. The international benchmark is between 5 - 7.
The number of days sales outstanding is on an average within 90 days, which is at par with the engineering industry. This is also in keeping with international trends.
Cost of wages to sales was found to be 11.8 percent in 2004-05. The range varied from a low of 3 percent to a high of 28 percent.
For Caterpillar Inc. the ratio was 19.8 percent.
The employee productivity is fairly low as compared to international companies. Sales per employee on an average for the industry was found to be Rs.35 lakhs but
for the manufacturing companies it was found to be Rs.32.5 lakhs. This is the reason why though the cost of wages per employee is very low at Rs.4 lakhs, the lower productivity of the employee offsets the advantage. The value added per employee was only Rs.11 lakhs. The global standards for employee productivity i.e. sales per employee is in the range of Rs.160-175 lakhs.
The industry in India witnessed a tremendous jump in profitability in 2004-05 over
2003-04. The return on capital employed is 24 percent and has increased by 85 percent over 2003-04. The PBIT has increased by 112 percent and PAT by 145 percent.
The PBIT Profit Before Interest and Tax to sales on an average was better in the case of Indian companies as compared to international companies operating worldwide like Caterpillar Inc. Komatsu or Volvo at 12 percent.
However the capital employed has gone up by 14 percent since many companies had undertaken debt restructuring. Most of the companies have a very low debt ratio. In fact some of the companies have zero debt.
There are various suppliers for construction in India
- ASHOK LEYLAND
- ATLAS COPCO
- THE ESCORT GROUP
- INGERSOLL RAND
- LARSEN AND TOUBRO (L&T)
- TATA – TELCO/ VOLTAS
- DITCH WITCH
- 11) JOHN DEERE
- ASHOK LEYLAND
Since 1955 Ashok Leyland has been a major presence in India's commercial vehicle industry with a tradition of technological leadership, achieved through tie-ups with international technology leaders and through vigorous in-house R&D.
Access to international technology enabled the Company to set a tradition to be first with technology. Be it full air brakes, power steering or rear engine busses, Ashok Leyland pioneered all these concepts. Responding to the operating conditions and practices in the country, the Company made its vehicles strong, over-engineering them with extra metallic muscles. "Designing durable products that make economic sense to the consumer, using appropriate technology", became the design philosophy of the Company, which in turn has moulded consumer attitudes and the brand personality.
Ashok Leyland vehicles have built a reputation for reliability and ruggedness. The 5,00,000 vehicles the company has put on the roads have considerably eased the additional pressure placed on road transportation in independent India.In the populous Indian metros, four out of the five State Transport Undertaking (STU) buses come from Ashok Leyland. Some of them like the double-decker and vestibule buses are unique models from Ashok Leyland, tailor-made for high-density routes.
Thus Ashok Leyland offers a wide range of products from 7.5 tonnes to 49 tonnes in haulage vehicle from mumerous special application vehicle to diesel
To offer world-class technology that is relevant and affordable to the Indian customer is the philosophy that drives R&D at Ashok Leyland. Over the years, this philosophy has been translated time and again into products that seamlessly integrate
The company is believed to be one of the world’s premiur manufacturer of construction tools. The products and services range from compressed air and gas equipment, generators, construction and mining equipment, industrial tools and assembly systems to related aftermarket and rental. In close cooperation with customers and business partners, and with more than 130 years of experience, Atlas Copco innovates for superior productivity.
Atlas Copco Construction and Mining Technique develops, manufactures and markets equipment for the mining and construction businesses - including demolition, waterwell drilling, oil and gas industry, exploration drilling and ground engineering. All the products are designed to help achieve the highest possible productivity with the lowest maintenance cost besides the company’s world class products - the successes are due to our commitment to the industry, our interaction with customers and our drive for groundbreaking innovations.
AtlasCopco’s Construction and Mining Technique business area develops, manufactures, markets and services rock drilling tools, construction and demolition tools, drill rigs and equipment.
JCB India is a part of the world renowned and legendary company J C Bamford Excavators Limited (JCB), one of the prominent players in the construction equipment industry and amongst the 3 largest players in the world, producing over 275 different models, which are sold in over 150 countries.
JCB India is the largest construction equipment manufacturer in India, growing at an enviable pace and surging ahead with ambitious development and expansion plans through launching revolutionary products and adherence to world class JCB corporate identity norms. Today in India, JCB has a park of over 65,000 machines and one out of every two Construction machines sold in India is a JCB.
Company Information JCB India Limited, India’s largest manufacturer of Earthmoving and Construction equipment is a fully owned subsidiary of JC Bamford Excavators Limited (U.K).
Today JCB is the fastest growing company in the Indian earthmoving and construction equipment industry. The company is a pioneer in the industry and has been recording excellent growth rates. It has ambitious development and expansion plans through launching revolutionary products and adherence to world class JCB corporate identity norms. Today in India, JCB has a park of over 65,000 machines and out of every two Construction equipments sold in India, one is a JCB
JCB India has modern manufacturing facilities at Ballabgarh in Haryana and at Pune in Maharashtra. The manufacturing facilities at Pune comprises of two plants.
Plant-1, is a component manufacturing plant and is export-oriented. It caters to the needs of JCB factories both in India and abroad.
Plant-II, is a Heavy Line manufacturing plant that produces Excavators, Wheel Loading Shovels and Vibratory Compactors.
JCB India therefore offers a diverse range of unmatched Backhoe Loaders. Wheeled Loaders, Excavators, Skid Steer loaders, Telehandlers and Compactors:
BEML Limited is a premier ISO 9001-2000 Company in India and the second largest manufacturer of earthmoving equipment in Asia. A four- decade-old multi-locational and multi-product company, BEML has vital applications in diverse sectors of economy such as coal, mining, steel, cement, power, irrigation, construction, road building and railway. It has expanded its product range to cover high-quality hydraulics, heavy-duty diesel engines, Welding robots and undertaking of heavy fabrication jobs.
A public sector undertaking, BEML commands 70% market share in domestic earthmover industry. Nearly 40% of its equity has been divested to financial institutions and public. BEML has its corporate headquarters and central marketing division in Bangalore.Quality is the hallmark of excellence. At BEML, a Corporate Quality policy emphasising total quality management ensures that quality system adopted companywide to meet stringent standards and requisite performance criteria. A separate Quality Division spearheads the thrust towards total quality. All the manufacturing units in the company are under ISO 9001-2000 certification.
BEML equipment work in inhospitable terrain under gruelling operating conditions. In order to ensure optimum performance of equipment each product is tested in working conditions in the company's own tracks and fields.
V. The Escort Group
The Escorts Group, is among India's leading engineering conglomerates operating in the high growth sectors of agri-machinery, construction & material handling equipment, railway equipment and auto components.Having pioneered farm mechanization in the country, Escorts has played a pivotal role in the agricultural growth of India for over five decades. One of the leading tractor manufacturers of the country, Escorts offers a comprehensive range of tractors, more than 45 variants starting from 25 to 80 HP. Escort, Farmtrac and Powertrac are the widely accepted and preferred brands of tractors from the house of Escorts.
A leading material handling and construction equipment manufacturer, we manufacture and market a diverse range of equipment like cranes, loaders, vibratory rollers and forklifts. Escorts today are the world's largest Pick 'n' Carry Hydraulic Mobile Crane manufacturer. Escorts have been a major player in the railway equipment business in India for nearly five decades. Our product offering includes brakes, couplers, shock absorbers, rail fastening systems, composite brake blocks and vulcanized rubber parts. In the auto components segment, Escorts is a leading manufacturer of auto suspension products including shock absorbers and telescopic front forks. Over the years, with continuous development and improvement in manufacturing technology and design, new reliable products have been introduced.
Ingersoll Rand is an $8 billion global diversified industrial company, driven by employees who are proud to offer products and solutions people use every day to create a positive impact in their world. Driven by a 100-year-old tradition of technological innovation, the company enable companies and their customers to create progress.
In every aspect of your daily life, the company’s market-leading brands and the products, services and solutions it offers are a growing part of your world. Chances are that today, one of the company’s brands has helped you or those around you create progress.
The company’s customers count on the reliability of our family of industrial and commercial brands and they have outlined three ways to get to know our company and our brands better.
In recent years, Ingersoll Rand has transformed itself into a multi-brand commercial products manufacturer serving customers in diverse global markets, and away from the capital-intense, heavy-machinery profile of its past.
Today, the company has a global diversified industrial firm providing products, services and solutions to transport and protect food and perishables, secure homes and commercial properties, and enhance industrial productivity and efficiency.
Our customers count on the reliability of our family of industrial and commercial brands, such as Club Car golf cars, Hussmann stationary refrigeration equipment, Schlage locks, Thermo King transport temperature-control equipment and Ingersoll Rand industrial equipment. Through these brands—and a 100 year-old tradition of technological innovation, we enable companies and their customers to create progress.
Larsen and Toubro (L&T)
Larsen and Toubro is an Indian conglomerate, with diverse interests such as construction, hydraulic equipment, electrical and electronic power services, fertilizer projects, medical electronics and information technology. It generates almost 85% of its revenue from the construction business. Founded in 1938, the company is headquartered in Mumbai, India.
Larsen & Toubro Limited (L&T) is a technology, engineering, construction and manufacturing company. It is one of the largest and most respected companies in India's private sector.
Seven decades of a strong, customer-focused approach and the continuous quest for world-class quality have enabled it to attain and sustain leadership in all its major lines of business.
L&T has an international presence, with a global spread of offices. A thrust on international business has seen overseas earnings grow significantly. It continues to grow its overseas manufacturing footprint, with facilities in China and the Gulf region. The company's businesses are supported by a wide marketing and distribution network, and have established a reputation for strong customer support.
L&T believes that progress must be achieved in harmony with the environment. A commitment to community welfare and environmental protection are an integral part of the corporate vision.
L&T KOMATSU is a joint undertaking with equal equity participation, it is the supplier of the latest technology concerning road construction equipments and heavy earthmoving machineries. The company has manufacturing and marketing facilities worldwide. Komatsu’s manufacturing unit in Bangalore includes Hydraulic and Machinery works and is ISO 9001 certified for hydraulic pumps, motors, hose assemblies etc.
TELCON AND VOLTAS are the two Tata Group companies cater to the equipment needs of the construction industry.
Telco Construction Equipment Company (Telcon) manufactures a range of earthmoving machinery and construction equipment. It is the largest manufacturer of hydraulic excavators in India, offering eight models that range from 2 tonnes to 60 tonnes in size. The company also designs and develops products indigenously and customises solutions to suit the requirements of its customers.
Telcon revolutionised the Indian construction equipment industry, with the introduction of the V-series of hydraulic excavators, and was the first to introduce mini-excavators in the country. The company enjoys a 90-per cent share of the crawler-crane market in India, and is the only Indian manufacturer that produces 100-tonne cranes. Also among its products are backhoe loaders, mining shovels, wheel loaders, vibratory compactors, motor graders, asphalt plants and dumpers.
The company manufactures construction equipment that is used in major infrastructure projects in India. It has remained a market leader for the past five years, despite stiff competition. It has revolutionised the Indian construction equipment industry, with the introduction of the V-series of hydraulic excavators. The company has an extensive customer base that includes government and institutional buyers, and contractors. The company was the country’s first construction equipment manufacturer to receive the ISO 9001 certification.
Areas of business
The company has used state-of-the-art technology to manufacture excavators and backhoe loaders. It enjoys a 90 per cent share of the crawler crane market in India. It is the only Indian manufacturer that produces 100 tonne cranes. These are the largest machines made locally. The company was the first to introduce mini-excavators in India, and its brand EX60, is the most successful machine to be made in India so far, with more than 1,300 machines being sold in the last three years. It is the largest manufacturer of hydraulic excavators in India, with over 6,000 machines in the market. It offers the widest available range of hydraulic excavators, eight models ranging from two tonnes to 60 tonnes in size. The company can indigenously design and develop products.
The company has collaborations with Hitachi Construction Machinery Company, Japan, for hydraulic excavators and cranes; and John Deere, USA, for backhoe loader technology, Lebrero, Spain, for compactors and CESAN, Turkey, for asphalt plants.
Locations The company has a countrywide network of sales, service and spare parts offices. It has modern manufacturing expertise with the latest machine tools and automation facilities, such as robot welding and machining centres, at Jamshedpur and Dharwad.
Established in 1954, Voltas is India's premier air conditioning and engineering services provider. It offers engineering solutions for a wide spectrum of industries in areas such as heating, ventilation and air conditioning, refrigeration, climate control, textile machinery, machine tools, mining and construction, materials handling, water management, building management systems, pollution control and chemicals.
The company's strengths lie in the design and manufacture of industrial equipment, the management and execution of air-conditioning and public work projects, the procurement, installation and servicing of technology based systems, and in being a representative of global technology leaders.
Voltas's operations are organized into four independent business-specific clusters: air conditioning and refrigeration business group, international operations business group, unitary products business group and engineering products business group
Caterpillar is one the most leading manufacturer of construction equipments. Today it manufactures its products in 45 plants in the USA and 60 plants located in 20 countries outside US. A totally owned ancillary of Caterpillar Inc. Caterpillar India Pvt. Ltd. (CIPL) has been built in as Indian company formed in Thiruvallur, Tamil Nadu in Feb 2001, following the acquisition of the earthmoving division of Hindustan Motors.
There is no company like Ditchwitch in the manufacturing of tenchless and trenching equipments. With India in a branch of Kawin International Inc. which is involved in construction equipment technologies for the past 23 years. Ditch Witch offers the right mean and resources to capture the new opportunities generated in the Indian market place.
It provides various complex technologies for manufacturing projects it has become the Underground Authority worldwide due to its added facilities dedicated to sales and marketing, training and testing. Its products are a benchmark for other companies.
XI. John Deere
The John Deere company was founded in 1837, the company is one of the oldest industrial companies in the United States. It has expanded its market to the Asia – Pacific zone, India being of the most developing countries in the last five years. The company decided to introduce skid steer loaders in the Indian market as they are the most efficient and innovative machine introduced by them.
The company manufactures mobile equipment for construction, public works, material handling and is renowned for its worldwide forestry equipments.
Besides manufacturing the company distributes and finance full line of equipment for use in agriculture lawn and ground care. The company also provides credit and other services to customers around the world.
2.8 Capital Investment
The capex plans however are not so encouraging as compared to the profitability seen by the industry. Only 50 percent of the companies have capex plans and the amount is only 300 crores over the next 3 years.
Machine and labour utilization. In 2003-04 the capacity utilization in this sector ranged between 50 percent to 85 percent depending on the market conditions. By and large the more efficient companies were operating at a level of 85 percent or more capacity utilization.
It is interesting to note that the industry is experiencing delays in delivery due to capacity constraints. Yet at the same time the capacity utilization and levels of utilization of labour are not significantly high. This can be attributed to breakdowns as a result of inadequate maintenance, absenteeism, sub-contracting due to the attraction of lower prices and delays in receiving materials and components due to delays in imports. Machine breakdown ranged from 0.5 to 10 percent and most of the companies followed systems of periodic and preventive maintenance. Supply Chain. Procurement lead-time was very high in this sector ranging from 2 weeks to 6 months.
The reason being that this industry has a large number of proprietary items, which need to be imported, and 35 percent of the raw materials generally comprise of imported components. These components have to be imported because of their non-availability in India and hence most of the companies require an average of 1 month to 6 months as procurement lead-time. Most of the companies are procuring 50 to 80 percent of their raw materials and bought out components within a radius of 200 kms. from their manufacturing base .The lead time is high compared to global leaders.
Though 100 percent of the companies have their vendors rated and have fairly good supply chain management systems, yet the procurement lead-time is very high due to the following reasons:
- Lack of proper port/airport infrastructure
- Cumbersome procedural delays while importing
Lack of high level of computerization and integration with the supplier network
2.9 Financing SREI Infrastructure Finance Limited
Formerly SREI International Finance Ltd.), the Leading National Infrastructure Equipment Finance and Infrastructure Project Finance Company is amongst the largest Non- Banking Financial Institutions (NBFIs) in the country with an asset base of more than US$ 890 million (Rs. 4000 crores). Having prudently identified India’s infrastructure sector as its principal growth area, SREI has built a unique business model, which revolves around financing of infrastructure, construction and mining equipment, infrastructure projects and renewable energy systems. In order to serve its customers better, SERI also offers a bouquet of other financial services: distribution of insurance products (life and non-life), investment banking, capital market services and venture capital services through its subsidiaries.
The Company has established its identity by delivering customised solution to its customers, being on the forefront of innovations and strengthening its expertise in financing of infrastructure equipments – oil & gas, power and others, construction, mining, infrastructure projects. It has a in- depth knowledge in sectors like roads, power and ports.
Its main business division in Infrastructure Equipment Finance and it holds a dominant position in India in the construction equipment financing industry. The company mainly does activities such as leasing out and hiring purchase of infrastructure and construction equipment and machineries to a variety of construction companies and small and medium scale ventures involved in civil and mechanical construction for numerous infrastructure projects and other associated activities.
In addition, through its associate concern Quipo Infrastructure Equipment Ltd. (QIEL), SREI has pioneered the concept of renting of construction equipment in India under the brand name of Quipo.
SREI is the only infrastructure financing company from India to get listed on the London Stock Exchange.
Funded services from HDFC Bank are meant to directly strengthen the day-to-day working of small and medium business enterprises. The HDFC Bank caters to virtually every business requirement of an SME such as from working capital finance to credit substitutes, from export credit to giving construction equipment loan.
The HDFC Bank understands how much of hard work goes into establishing a successful SME (Smaller, Medium, Entrepreneur). The Bank also understands that your business is anything but “small” and as demanding as ever. As your business expands and enters new territories and markets, you need to keep pace with the growing requests that come in, which may lead to purchasing new or updating existing plant and equipment, or employing new staff to cope with the demand. Whatever the situation, HDFC Bank tries to solve your financial problems.
Business Financing Solutions
The Business Financing Solutions Company provides financing solutions for the current investments in excavators, dozers, backhoes, graders, scrapers, articulated trucks, loaders and other construction equipment. The Company’s transactions vary from $50,000 to $30 million + The Company delivers customized products to their consumer’s specific requirements.
Commercial Distribution Finance
The Commercial Distribution Finance Company is the leading supplier of particular financing solutions to the construction and industrial equipment industry. Their target point is to provide specific credit requirements of equipment distributors, rental houses and dealers. They fine tune financing solutions to their customers and help them to be successful in their ventures.
Vendor Finance basically creates flexible financing tools, thereby making it easy for their customers to get the construction and industrial equipment they need from dealers, manufacturers and distributors. The Company offers ingeniously structured financing products from loans to leases to fulfill the unique cash- flow requirements of the customers in this challenging industry. The transactions start at $5,000 onwards.
GE Capital Solution
The GE Capital Solution Company finances equipment and assets for companies that provide building, developing construction and contracting materials or services.
Associates India Financial Services
The Associates India Financial Services has made a decision to focus on construction equipment finance and home equity segment in sync with the international policy of its parent Associates Capital Corporation. It was previously known as Arco Financial Services. It has four branches- Delhi, Jaipur, Pune and Bangalore. It is the $90 billion home equity, construction equipment finance and credit card company, that acquired the Arco financial services from Textron for $3.9 billion.
2.10 Tenders for International Contracts
L&T has included its strengths in process technology equipment fabrication, basic and detailed engineering, procurement, erection and project management, construction and commissioning in order to provide single- point responsibility against stringent delivery schedules. Today, L&T is quite capable of accessing technical expertise and implementing process- intensive large- scale turn key projects to continue its leadership position on the strength of the strategic alliances with world leaders. India’s largest construction organization ECC- (The Engineering Construction & Contracts and Division) is built by L&T.
L&T has also built many prestigious projects, wonderful buildings, largest industrial projects, tallest structures, longest flyovers, longest pipelines, highest viaducts and the likes. L&T’s lending edge capabilities has covered every discipline of construction- mechanical, civil, electrical and instrumentation. Apart from these, R&T has also extended its focus to the South East Asia, Russia, Middle East African, CIS Mauritius and SAARC countries. L&T is also developing its market for its construction services in the Africa, Latin America and Indian Ocean rim countries.
Larsen and Toubro has set up sail giant gas injection platforms for the Bunduq Company in Abu Dhabi from its Hazira faculty. This is among the heaviest single module (at 2,400 tonnes) to be loaded out from a facility in India as maintained by the company. In 2004, L&T had bagged this $52.5 million EPC (Engineer, Procure and Construct) contract. L&T is also stated to install the platform in the ___ Bunduq field near the maritime boundary between UAE and Patar by January 15, 2006.
Colossal oil projects for global markets are undertaken by R&T who is successful in on – time implementation of the on- shore stage of the massive platform project. Thus it is the strategic drive of L&T to expand its Regime beyond Indian shore and set up itself in the prime markets of the Middle East and Africa.
L&T also have facilities for compressing and injecting gas. Its GIP platform is a combined single deck type that will be bridge linked to the current gas sweetening platform which will accommodate an assortment of equipment. They include glycol dehydration package, the associated gas and acid gas compressor modules, instrument air and nitrogen package, the associated gas and acid gas compressor modules, pedestal crane, switchgear and control rooms and other sundry facilities for preservation and operation of equipment and the plant.
BEML has unquestionably a significant presence in the sector of earth moving machinery market. Its stronghold is the railway segment, where BEML shows big potential. The Company’s outstanding potential is that it has 25 per share in the rail coaches business, thus speaking volumes about its capabilities. Numerous railway projects such as the metro rail are in the queue. Recently BEML bagged prestigious contracts for the assembly of coaches for Rotem (South Korea) and the Goa sky bus project.
The Metro rolling stock is manufactured by a consortium that comprises of Mitsubishi Corporation, ROTEM (Formerly KOROS) and Mitsubishi Electric Corporation. The initial train sets were built at a Rotem faculty in Korea, with BEML completing the later examples. The trains comprises of 3.2m- wide, light weight, stainless steel coaches with gangways, running in four – coach formations. Each train has seating for 24 passengers and 1,240 standing space.
The maximum speed of this train is 80km/h with a 20- second dwell time at station. Although the design capacity is just two minutes, line/ services intervals are eight to ten minutes.
2.11 Consolidation In Indian Construction Equipment
JCB INDIA India's No.1 Construction Equipment Company further consolidates
JCB India Limited, India’s largest construction equipment company expands by acquiring additional land adjacent to its existing plot here in Ballabgarh, Haryana. India is a very important market for JCB. India is developing at a fast pace with lot of infrastructure development and JCB being one of the leading construction equipment player in India, is well equipped to be a partner in helping build India’s infrastructure. JCB is fully committed towards India & has invested in manufacturing facilities in Ballabgarh & Pune.
Today JCB is the fastest growing company in the Indian earthmoving and construction equipment industry. The company is the pioneer in this field and has been recording excellent growth rates. From 9 dealers and 12 outlets in 1987 to 42 dealers and 264 outlets in 2007, JCB has come a long way. In 2007 JCB India archived the landmark by being the first Construction Equipment manufacturer in India to cross the 50,000 machine sales mark. JCB India has got a wide range that includes, Excavators loaders, Front-end loaders, Articulated loading shovels, Tracked Excavators, Telehandlers, Vibratory compactors and Skid Steers. In all JCB India has got 18 models.
JCB has made an investment of over Rs. 200 crores in Ballabgarh plant in the last 3 years. It is contributing in building India’s infrastructure by making construction equipments used in various construction sites and infrastructure development. Ballabgarh plant, after its expansion, will further enhance the productivity and quality of components used to manufacture the world-class construction equipments at JCB. Employment opportunities will be created by expansion of JCB in Haryana. JCB has adopted a Village and a School and shall soon be adopting ITI as a step to promote and support upcoming societies in Haryana. JCB also runs operator training schools throughout India and is thus helping generate employment opportunities. Currently over 3000 operators are being trained in India and this number is likely to increase substantially in years to come
2. Case Corp. Joint Venture With Larsen and Toubro Ltd
L&T And Case Corp. has together formed a joint business enterprise to manufacture and sell construction equipment, particularly backhoe loaders and vibratory combactors in India.
L&T-Case Equipment Pvt. Ltd manufactures loader backhoes and vibratory compactors at Pithampur, Indore, in Madhya Pradesh. The company plans to expand its manufacturing capacity by three times from the current manufacturing capacity. For the said purpose, the company will be investing around Rs 60 crore in the financial year 2007-08.
The expansion in the manufacturing capacity will help the company to meet the demand for the next four years. By this fiscal end, the company expects to sell 1,550 units of loader backhoes and 600 units of vibratory compactors. In the next financial year, that is in 2007-08, the company is targeting to manufacture around 3,000 units of LBs and 900 units of VCs.
The turnover of the company is around Rs 320 crore and plans to touch Rs 600 crore in the financial year 2007-08. The company is a market leader in vibratory compactors and commands around 45 per cent of the marke
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