Roads and water supply have the highest intensity of use of construction equipment.

Rahul Shorey

National Head, Construction, Tata Hitachi

How do you assess the Indian CE market revival in the post-Covid pandemic scenario?

It is first important to put this in the context of how the CE industry in India behaved during the two years of the Covid-19 pandemic, to understand how the market will behave going forward. In 2020-21, during the first year of the pandemic, the CE market grew by 9% even when the economy registered negative growth. The pandemic did have an impact during the lockdown period, but the industry recovered rapidly due to pent up demand and government focus on infrastructure activities.

Last year, despite the devastating second wave of the pandemic, some segments of the CE industry did grow. However, issues other than Covid-19 impacted the market. In the case of wheeled equipment, the transition to CEV-IV emission norms and the consequent substantial price increases impacted customer sentiment significantly, with some segments showing negative growth in the range of 15-30 per cent. Although growth was seen in the excavator segment, it was mainly due to the high base effect of H1. Based on all these factors, the CE industry saw an overall negative growth of 9 per cent in the previous financial year.

The signs going forward are encouraging given the government's thrust on infrastructure development as announced in this year's budget, with significant outlays in several areas. A 35 per cent increase in Capex was announced for this fiscal with water supply, railways, PMGSY and Swachh Bharat Mission seeing significant increase in allocation. Other key infrastructure activities like highway construction and urban infrastructure have seen marginal growth in budgetary allocations. What will become important for the growth of the CE industry is the execution of all the projects announced. With the general elections nearing in early 2024, we do expect that execution will increase, driving CE growth this year and the next.

What is your overview on the ongoing infrastructure development programs in the country? What kind of demand are you experiencing for your products and solutions in these projects?

One way to look at this would be to map the specific programmes as demand drivers for the various segments of our product portfolio. A large part of the investment in NIP, amounting to nearly 20 per cent, is in roads and highways. These investments include:

• National highway and expressway development under Bharatmala, which is a significant driver, that can propel demand for our construction range of excavators from 20-tonne to 45-tonne excavators, wheel loaders, backhoe loaders and attachments like rock breakers.
• PMGSY and PMAY for affordable housing drive demand for 7-tonne to 10-tonne excavators and backhoe loaders.
• State highways and district roads development programmes drive demand for 10-tonneto 20-tonne excavators, backhoe loaders, wheel loaders and attachments like rock breaker.
• Various irrigations projects undertaken by the states drive demand for 7-tonne to 35-tonne excavators, backhoe loaders, wheel loaders and attachments like rock breaker.
• Jal Jeevan Mission to ensure water in all homes drives demand for mini excavators, 7-tonne to 10-tonne excavators, backhoe loaders and attachments like rock breaker.
• Railway capacity augmentation, dedicated freight corridors, station redevelopment and electrification by 2023 will drive demand for construction range of excavators from 10-tonne to 20-tonne excavators, wheel loaders, backhoe loaders and attachments like rock breaker.
• Coal and iron ore mining also added to the demand, with coal production increasing by 10 per cent and Iron ore by 25 per cent respectively last year, on the back of recovery in economy and growing exports. This is driving demand for over 35-tonne class excavators, mining class wheel loaders and dumpers.

To leverage all these demand drivers, we have the full range of excavators to address any opportunities across the infrastructure, construction, agricultural and mining applications.

Our mini excavators TMX20 Neo, ZAXIS 23U and ZAXIS 33U already address the opportunities from increased mechanisation, urbanisation, agriculture and deployment in rural water supply programs.

The construction range of excavators from 7-tonne to 40-tonne offer opportunities to capitalise on investments in irrigation, infrastructure, construction, mining, and quarrying applications. Further, customised machines are also available with a wide range of attachments like long reach, long arm, clamshell bucket, tunnelling, rock breaker and orange-peel grabber, to name a few. This range of excavators consists of EX70 Prime; Super+ series that includes EX130, EX200, EX200 tunnel excavator, EX210 and EX215; and premium ZAXIS GI series that includes ZAXIS 140, ZAXIS 220, ZAXIS 370 and ZAXIS 400.

Opportunities for the mining range of over 45-tonne class excavators are immense, particularly led by coal with Coal India thrust on modernisation and upgradation of equipment to bring in the latest cutting-edge technologies in larger mining excavators and dumpers, as well as new mines. Our mining range consists of ZX470GI, ZX650, ZX870GI, EX1200 Hitachi excavators EX1900, EX2600, EX3600 etc. This is complemented by Hitachi mining wheel loaders ZW310, ZW370, ZW550 and a range of Hitachi dumpers.

Our offerings in excavators are complemented by our range of backhoe loaders under the SHINRAI brand, as well as the country's first and only indigenously developed fuel efficient hydrostatic TL34H PRIME wheel loader, which are used in a wide range of applications across industries from construction, stone quarrying  and mining.

How do you look at the future demand trends and opportunities for construction equipment?

The Union Budget 2022-23 has demonstrated continuity and consistency over the previous year, with focus of driving growth by increasing Capex to Rs 7.5 lakh crores. Within this Capex outlay, the following ministries and programmes are seeing growth over the previous budget:

• Roads and highways from 1.96 lakh crore to 2 lakh crore
• Water resources driven by Jal Jeevan Mission increased 33 per cent from Rs 45,000 crores to Rs 60,000 crores
• PMGSY increased 36 per cent from Rs 14,000 crores to Rs 19,000 crore
• Swachh Bharat Mission increased 19 per cent from Rs 8,000 crore to Rs 9,500 crore
• Railways, including borrowings, increased 14 per cent from Rs 2.15 lakh crore to  Rs 2.46 lakh crore
• There are also increases under PMAY, Metro Rail, AMRUT and Smart Cities programmes

Roads and water supply have the highest intensity of use of CE among the major identified demand drivers. The increases in the above-mentioned outlays are enabling drivers for a healthy growth in the CE industry this year.

Further, the proportion of greenfield multilane highways increasing and the PM Gati Shakti Master Plan for expressway being formulated, the increased intensity of CE deployment in these projects will further add to the demand. In addition, the huge backlog in construction has led to extending the target to complete Bharatmala to FY27, which will expedite execution in the coming years. An announcement of start of the Ken-Betwa river linking project has also been made. And Prime Minister's Development Initiative for North East Region will fund infrastructure to the tune of Rs 1,500 crores.

All this should enable a double-digit growth in equipment used in these applications like excavators, road construction equipment, and crushers, among others.

The long-term view is also similarly optimistic. Bharatmala 2 is already in the works, and at least three more river linking projects are in advanced stages and are likely to be implemented in the coming years. Jal Jeevan mission targets 2024 to provide piped drinking water to household in rural areas. Railways will need investment of nearly US$740 billion till 2030, more than half of it in construction and upgradation of lines. Coal India is targeting 1 billion tonne of coal production by 2024 and 47 coal mines have been auctioned for commercial coal mining. All this will drive sustained demand for a range of construction and mining equipment as well as customised equipment over the years ahead.

The infrastructure development and construction activities are expected to be on fast track in the coming years. How are you gearing up to cash in the emerging opportunities?

We at Tata Hitachi are steadfastly invested in a deeply customer-centric philosophy that enables us to constantly evolve according to market expectations. We have been pioneers in introducing the technologically advanced, cutting-edge equipment in the Indian market. Tata Hitachi hydraulic excavators are already renowned for their superior hydraulics, leading to superior performance and enhanced fuel savings. Our machines are also known for their reliability, durability, and ease of maintenance.

Our expansive service network, which is the largest in the country in the excavator segment also plays a key role in bolstering our position as market leaders. These include our Field Diagnostic Vehicles (FDVs) and mobile workshops that ensure faster reach and immediate on-site resolution of service-related requirements.

We have set up a full-fledged reman centre at our Kharagpur plant supplies refurbished hydraulic equipment and aggregates at a fraction of the cost of a new equipment or parts. We also offer a comprehensive range of support solutions that include Full Maintenance Contracts, Annual Maintenance Contracts and Extended Warranty, which help strengthen our relationship throughout the customer life cycle experience.

In terms of the environment too, we have already met our obligations by migrating our wheeled equipment to CEV-IV emission norms and are at an advanced stage of developing excavators that are future-ready in terms of emerging emission norms.

With this context, we can see that the future offers immense opportunities for Tata Hitachi to grow and leverage the opportunities offered by the growth in the economy of the country. We will continue to leverage our strengths enumerated above to take advantage of these opportunities by investments in products, services as well as extending and investing in our dealer partners. We will introduce newer products across the excavator range keeping in mind both customer as well as emerging industry requirements tailored to their needs. These could be in terms of newer products as well as customised machines as well as a range of attachments to choose from.

What are your plans at EXCON this year? Are you launching any products?

We will be putting up on display our range of compact, infra and mining equipment, including our recently launched CEV-IV compliant Shinrai backhoe loaders, TL340H PRIME Series hydrostatic wheel loader. We will be launching ZW225 our all new 5-tonne wheel loader, and our new cutting-edge indigenously developed mini excavator. We will also be showcasing our Prime series EX70, all-new EX200 and ZAXIS Series range of hydraulic excavators. Our support solutions on display will include a range of attachments and genuine spare parts, and our array of service offerings.

Apart from equipment, we will be exhibiting our cutting-edge telematics solutions, ConSite and InSite. We will also present eDost, our newly developed digital platform designed for real-time connect with our customers and other stakeholders for all their needs, from products, services, attachments, and even industry-related information.

What are your expectations from the EXCON platform in the new market scenario?

To put this in context, during the pandemic we were successfully able to leverage digital channels for deploying a large part of activities, both internal and external. These activities ranged from sales and production related activities to promotion and marketing related activities.

We must however, bear in mind that the construction equipment industry has traditionally been very much physical in nature, from manufacturing to marketing to sales to service. With EXCON now taking place again, we at Tata Hitachi are eager as an industry leader to be able to launch new products and showcase our solutions physically to customers after this two-year gap.

EXCON gives us the ability to give customers, policy makers and other attendees a first-hand touch and feel of our machines, which is important in an industry like construction equipment. The forum also provides us an opportunity to demonstrate our technologically advanced and future ready solutions, including our green range of equipment that come with the promise of being more environmentally friendly.

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