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Editorial
Light at the end of the tunnel
As per inputs EQUIPMENT INDIA has gathered, the construction
equipment industry is getting back on track. Though it is
too early to say that the pangs of recession are over, there
are clear signs of recovery. While during the third quarter,
October-December 08, the market was almost down by above 70
per cent compared to the previous year, the last quarter Jan-March
09, it has registered an increase in sales, and the slump
has recovered to under 40 per cent compared to the same period
last year. Sales in April 09 have shown a marked improvement
compared to March 09, which normally not the case. This seems
to be a positive sign, and the industry is optimistic that
at least from October 09, there will be a turnaround.
On the other hand, companies with strong financial muscle
have been utilising the opportunity to revamp the production
processes, and have been investing in increasing capacity
to meet future demand. These are highly positive developments
in such a scenario. Recently, L&T Case has set up a new
assembly line and capacity has been increased from 4,000 units
to 10,000 units a year. JCB India has doubled the capacity
of its Ballabgarh factory which can manufacture 100 backhoes
a day. BEML Limited has recently signed an MoU with NFM Technologies,
France, for the manufacture of tunnel boring machines in India.
BEML is also setting up a new manufacturing facility spread
over 400 acre meant for manufacture of heavy equipment like
bulldozers and earthmovers as well as heavy vehicles for Defence,
which would be commissioned by 2012. Terex Pegson & Powerscreen
are going ahead with setting up of its manufacturing plant
in Hosur.
In the material handling segment which has seen a huge up-swing
in the market a couple of years ago, Esquire and CMAC has
joined hands and the new JV aims to penetrate the entry level
segment. Zoomlion, a major Chinese player, has recently announced
setting up warehouse facility for spares and will be importing
heavy machinery for the Indian market.
The equipment rental segment which touched a base of $ 500
million (Rs. 250 crore) in 2007 seems to have been insulated
from the present crisis. Though the penetration rate is currently
just around seven per cent, informed estimates predict that
in the next three years time, this will grow to 25 per cent.
EI feels that it is high time that the government played a
key role for the success of this industry, given the fact
that if this industry penetrates to its expected 10 per cent
of the total equipment sold in the country, there’s
lot of revenue in the offing for the government.
Rather than financial crisis, it is the un-friendly nature
of in-state and cross-state regulatory environment that plays
havoc and dents the growth of this industry. There is an urgent
need to unify the different rules in different states that
as of today, make inter-state transfer a nightmare, for the
rental companies and contracting firms as well. Creating a
trained and skilled pool of workforce is another major challenge,
and the earlier ITIs commence providing complete theoretical
and practical know-how of the construction equipment, its
operation and maintenance, the better. Given the nature of
the industry, a standard equipment rental agreement that spells
out the terms and conditions clearly needs to be in place.
It is heartening to note that the Rental Association of India
is already trying to bring a consensus regarding this and
implement it with the help of various stakeholders.
All said and done, it depends how we look at, or perceive
things -
‘two men looked from behind the bars
one saw mud, and the other saw stars.’
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