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  • JANUARY 2015 11MARCH 2017

    CONSTRUCTION EQUIPMENT

    For updated information, please visit www.ibef.orgMARCH 2017

  • JANUARY 2015 22MARCH 2017 For updated information, please visit www.ibef.org

    Executive Summary.... 3

    Advantage India...4

    Market Overview and Trends.... 6

    Porter Five Forces Analysis .......................15

    Strategies Adopted........17

    Growth Drivers.......20

    Opportunities......................32

    Success Stories.............34

    Useful Information..39

    CONSTRUCTION EQUIPMENT

    MARCH 2017

  • JANUARY 2015 33MARCH 2017 For updated information, please visit www.ibef.org

    EXECUTIVE SUMMARY

    High revenues and unit

    sales

    Construction equipment industry in India is expected to reach USD5 billion by FY20 from

    USD3 billion in FY16, in value terms. While, volume sale of construction equipment is

    expected to grow to 96,730 units by 2018 from 76,000 units in FY16.

    Rising infrastructure

    investments The NITI Aayog estimates total infrastructure spending to be about 9 per cent of GDP by

    2017, up from 7.2 per cent during the 11th Five year plan (200712)

    Increasing private

    sector involvement Private sector is emerging as a key player across various infrastructure segments, ranging

    from roads and communications to power and airports

    Growth in real estate

    sector The real estate market is estimated to grow to USD180 billion by 2020 from USD126

    billion in 2015, driven by demand mainly from residential sector

    Source: KPMG, FICCI, Corporate Catalyst India Pvt Ltd,

    Indian Construction Equipment Manufacturers' Association (ICEMA), TechSci Research

    CONSTRUCTION EQUIPMENT

    Construction equipment

    analysis

    Construction equipment forms around 7 per cent to 8 per cent of GDP and expected to

    give employment to more than 3.0 million people in the country by 2020. It also accounts

    for more than 60 per cent in total infrastructural investment

  • ADVANTAGE INDIA

    CONSTRUCTION EQUIPMENT

  • JANUARY 2015 55MARCH 2017

    Growing demand

    For updated information, please visit www.ibef.org

    ADVANTAGE INDIA

    Source: , Department of Heavy Industries (DHI) Annual Report , CII, TechSci Research

    Notes: FY - Indian Financial Year (April - March), E Estimates, CAGR - Compound Annual Growth Rate, FDI - Foreign Direct Investment

    FY16

    Total

    revenues:

    USD3

    billion

    FY20E

    Total

    revenues:

    USD5

    billion

    Advantage

    India

    CONSTRUCTION EQUIPMENT

    Attractive Opportunities

    Equipment rental and leasing business in

    India is small relative to developed

    markets and has a strong growth potential

    The after-sales revenue component in

    India is currently low and can be

    increased considerably

    Construction projects worth USD 19.12

    million, won by Larsen & Toubro in

    January 2017, will help in creating

    construction jobs

    Policy Support

    The material handling equipment

    industry is de-licensed & 100 per cent

    FDI is allowed under direct route

    Make in India pitch to boost

    investments

    Competitive Advantages

    Increasing impetus to develop

    infrastructure in the country is attracting

    the major global players

    There has been cumulative FDI inflow

    of USD24.28 billion in earth-moving

    machinery between April 2000 and

    December 2016

    Robust Demand

    Significant allocation for the

    infrastructure sector in the 12th Five-

    Year Plan, and investment requirement

    of 1 trillion USD is expected to create

    huge demand for construction

    equipment

    Revenue from construction equipments

    is expected to grow at a CAGR of 2.34

    per cent during FY07-FY20 and reach

    to USD5 billion by FY20

  • MARKET OVERVIEW AND TRENDS

    CONSTRUCTION EQUIPMENT

  • JANUARY 2015 77MARCH 2017 For updated information, please visit www.ibef.org

    EVOLUTION OF THE CONSTRUCTION EQUIPMENT SECTOR IN INDIA

    Source: Department of Heavy Industry (DHI), TechSci Research

    Domestic

    necessity for

    construction and

    mining equipment

    were entirely met

    by imports

    Bharat Earthmovers Ltd,

    a public sector company,

    began domestic

    production of

    construction equipment

    in India

    They began

    manufacturing dozers,

    dumpers, scrapers, etc,

    for defence requirements

    Private sector started

    emerging, led by

    Hindustan Motors

    Earth Moving

    Equipment Division in

    technical collaboration

    with Terex, UK

    Followed by L&T,

    Telcon and Escorts

    JCB

    Most of the technology leaders like Case,

    Caterpillar, Hitachi, Ingersoll-Rand, JCB,

    John Deere, Joy Mining equipment,

    Komatsu, Lieberr, Poclain, Terex, Volvo

    are present in India as joint venture

    companies, or have set up their own

    manufacturing facilities (or marketing

    companies)

    Several Indian firms are entering into tie-

    ups for equipment rental & leasing

    business, e.g., tie-up between SREI

    Infrastructure and BNP Paribas. This is

    expected to drive sales of equipment in

    future

    In 2016, under the Smart Cities Mission,

    83 projects have been launched in 20

    cities by The Government of India.

    Before 1960

    1964

    1969 onwards

    Beyond 2000

    CONSTRUCTION EQUIPMENT

  • JANUARY 2015 88MARCH 2017 For updated information, please visit www.ibef.org

    MAJOR SEGMENTS OF THE CONSTRUCTION EQUIPMENT INDUSTRY

    CONSTRUCTION EQUIPMENT

    Construction equipment

    Earth-moving equipment

    Material handling and

    cranes

    Concrete equipment

    Road building equipment

    Source: Department of Heavy Industry (DHI), TechSci Research

  • JANUARY 2015 99MARCH 2017 For updated information, please visit www.ibef.org

    CONSTRUCTION EQUIPMENT SEGMENT DESCRIPTION

    Earth-moving

    equipments

    Earth-moving equipments is the largest segment of the construction equipment sector in

    India; these equipments primarily find use in mining and construction

    Equipments include backhoe leaders, excavators, wheeled loaders, dumpers/tippers, skid

    steer loaders

    Material handling and

    cranes

    Material handling equipments have four categories: storage and handling equipments,

    engineered systems, industrial trucks, and bulk material handling

    There are 50 units in the organised sector for the manufacture of material handling

    equipments and many units in the small-scale sector as well

    Concrete equipments Concrete equipments are used to mix and transport concrete

    They include equipments such as concrete pumps, aggregate crushers, transit mixers,

    asphalt pavers, batching plants

    Road building

    equipments

    Road building equipments are used in the various stages of road construction

    Widely used ones are excavators, diggers, loaders, scrapers, bulldozers etc

    Source: DHI Annual Report, TechSci Research

    CONSTRUCTION EQUIPMENT

  • JANUARY 2015 1010MARCH 2017

    3.7 3.94.3

    4.64.2

    5.1

    3.9

    6.5

    2.9 3.0

    5.0

    FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY20E

    For updated information, please visit www.ibef.org

    Growth in revenues from construction equipment

    (USD billion)

    Source: The Boston Consulting Group, Mahindra Website, TechSci Research

    Notes: CAGR - Compounded Annual Growth Rate,

    FY - Indian Financial Year (April-March), E Estimate

    YoY Year on Year

    By FY20, construction equipment industrys revenue is

    estimated to reach to USD5 billion.

    In FY16, India construction equipment industry grew at a Y-

    o-Y of around 3.45 per cent over the previous year

    INDIAN CONSTRUCTION EQUIPMENT REVENUES ON AN UPTREND

    CONSTRUCTION EQUIPMENT

    CAGR: 2.34%

  • JANUARY 2015 1111MARCH 2017

    5045.5

    40.5

    59.7

    72.266.4

    55.960.7

    68.276.0

    96.7

    FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY18E

    For updated information, please visit www.ibef.org

    Total no of construction equipment units sold

    (000)

    Source: NBM & CW, Mahindra Website, TechSci Research

    Notes: CAGR - Compounded Annual Growth Rate,

    FY - Indian Financial Year (April-March), E Estimate

    YoY Year on Year

    With infrastructure investment set to go up, demand for

    construction equipment will rise further.

    Sale of construction equipment in India is estimated to grow

    at a CAGR of 6.18 per cent, in volume terms & reach to

    96,700 units by FY18 from 50,000 in FY07

    With sale of 76,000 units construction equipments, the

    industry has witnessed growth at a CAGR of 4.76 per cent

    during FY07-16.

    With sales of 21,869 units of construction equipment, during

    January 2016 to May 2016, the industry recorded increase

    in sales at a rate of 47.6 per cent, over the same period

    during the previous year.

    CONSTRUCTION EQUIPMENT SALE ON AN UPTREND

    CONSTRUCTION EQUIPMENT

    CAGR: 6.18%

  • JANUARY 2015 1212MARCH 2017

    49.46%43.00% 39.28%

    18.96%23.00% 28.95%

    10.72%10.00% 10.34%

    8.24%7.00%

    7.24%

    4.45%6.00% 4.65%

    2.97% 4.00% 3.62%5.20% 7.00% 5.92%

    2014 2015 2018E

    Backhoe Loaders Crawler Excavators Mobile Cranes

    Mobile Co