We at L& T have been at the forefront of the evolving trend towards hybrid and electric concepts

- ARVIND K GARG

Senior Vice President and Head, L&T Construction & Mining Machinery

How do you view the demand trend for hydraulic excavators in Indian infrastructure development activities?

The hydraulic excavator (HEX) industry has had a far better growth as compared to many major markets globally. The CAGR over the last 9 years has been over 8% despite two years of disruptions during the pandemic and the ICEMA Vision 2030 report which was prepared in consultation with BCG also predicts a double-digit growth over the next few years. Indian Government's focus on growth driven by Infra development and manufacturing is fueling demand growth. The various ongoing infrastructure projects under the National Infrastructure Pipeline, National Monetisation Pipeline and Gati Shakti - National Master Plan for Multi-modal Connectivity, an integrated infrastructure development plan for seamless connectivity for movement of people, goods and services from one mode of transport to another and to facilitate the last mile connectivity, are all in favour of a healthy pace of infra development.

We have seen many mega projects such as PMAY, PMGSY, AMRUT Mission, and Jal Jeevan Mission, touching even the neediest sections of society.

Under the connectivity projects, the government is planning many new airports and ports. The government's allocation of Rs 3,100 crore to build new airports, helipads, water aerodromes, and advanced landing fields will improve regional air connectivity, drive up land prices around the proposed sites, and add value to the real estate sector. The outlay for infra development is constantly improving year after year and we expect this trend to continue.

Metro projects are also being executed at a pace unimagined a decade ago. This will result in India to be a global leader in metro projects and demand drive for CE.

Expressways are now extended pan India. Many cities will be benefited from this and this will help in quick movement of goods and help commuters save time.

With these investments, more job opportunities will be created, and we anticipate significant growth in the real estate sector. This means more commercial, residential, and retail development planned for tier II and III cities, which will help strengthen the local economy even further.

The government is also launching a new initiative to develop "sustainable cities of tomorrow," with Rs 16,000 crore allocated towards this effort. The investment has the potential to transform multiple cities in India, improving their quality of life and providing seamless infrastructure, mobility, and urban sustainability. As a result, we can expect the real estate potential of such cities to increase significantly in the long run.

Overall, there's a stable demand and plenty of exciting growth opportunities in these sectors, and we're optimistic about the future of Indian infrastructure development activities.

What is your take on the revival of the excavator market?

Any market will have some minor demand fluctuations in the short term. The excavator market has been stable and has had a steady growth owing to the increase in infrastructure development activities, the growing demand for urbanisation, and the rise in mining activities. Additionally, the emergence of technologies such as GPS, telematics, and IoT in excavators has enhanced the performance, fuel efficiency, and overall productivity, which are well appreciated by potential customer.

We expect to end FY23 with a healthy performance and are well-positioned to make the best out of the emerging opportunities during the next year as well.

How is technology evolving in excavators regarding productivity, fuel efficiency and operational efficiency?

Customer expectations have as always been the products with superior technology, fuel efficiency, productivity, longevity and above all, a good parts and service support system. While some new entrant customers had preferred equipment with low entry barrier for ownership, it is evident that over the next few years the focus will shift towards life cycle costing as the industry matures. Customers will over the next few years make choices not just on initial cost, but on life cycle costing and productivity. Komatsu and L&T have always kept the long-term advantages to the customer as the core of our business and product offerings. The emerging technological trends in our range of products are centred around sustainable technologies, in line with India's commitment to achieving carbon neutrality by 2070, as stated at the COP26 Summit.

We offer a comprehensive range of biodiesel-compatible Komatsu equipment, including hydraulic excavators, dump trucks, wheel loaders, crawler dozers, motor graders, and water sprinklers. We have also introduced electrically operated excavators in India and recently supplied Komatsu PC3000 electrically driven excavators for the mining industry in Central India. We are also exploring the introduction of battery-operated CE and hybrid machines soon. We recently showcased our hybrid excavator at the bauma CONEXPO INDIA 2023 event in Greater Noida.

Additionally, our ICT tool - Komtrax, available on the Komatsu range of products, generates energy-saving reports with detailed insights into load conditions and modes. These insights help customers explore improving machine utilisation and efficiency methods, eventually leading to fuel savings. The norm of the day is connected machines with telematics and digitalisation. We focus on safety, operator comfort, ultra-low emission, product versatility, and higher productivity too.

How is the trend evolving in hybrid and electric concepts?

As a leader in the construction equipment industry, we at Komatsu and L&T have been at the forefront of the evolving trend towards hybrid and electric concepts. We recognised the importance of reducing our carbon footprint several decades ago and made strides in developing electric excavators, demonstrating our commitment to zero-emission equipment.

Our latest initiatives include launching Komatsu's biofuel-compatible mining equipment and promoting cleaner energy sources. We are currently working to install a biofuel blender at mining sites, enabling the use of biodiesel that meets ASTM requirements. Our portfolio comprises electric excavators, dump trucks, and electric-powered hydraulic shovel models for coal mining, highlighting our dedication to cleaner energy. In the years ahead, we plan to introduce hybrid machines and battery-operated electric excavators, further bolstering our reputation as a leader in sustainable construction equipment.

In bauma, we also showcased the Komatsu hybrid excavator, Komatsu HB365, and we have had a good response to the product. We are expecting the demand for such hybrid machines will eventually grow. We firmly believe that these technologies have the potential to reduce emissions and enhance operational efficiency significantly, making them an attractive option for companies seeking to reduce their environmental impact and meet sustainability goals.

What are the critical challenges regarding cost, technology adoption and buying trends?

The construction equipment industry like the automobile segment is witnessing a shift in customer behaviour with respect to cost and technology adoption in two distinct segments. There is also a new segment emerging, which wants the best of technology and a competitive pricing.

A large section of our  customers expect products with superior technology, fuel efficiency, productivity, longevity, a reliable parts and service support system and life cycle costing while some customers prefer equipment with a low entry barrier for ownership, and subsequently moving to the premium machines. This trend is observed in several emerging markets, including India. But gradually customers will choose machines based on life cycle costing and productivity rather than just initial costs thus moving to premium class machines.

While newer and more advanced equipment can offer benefits such as improved efficiency, reliability and productivity, the cost of upgrading or replacing existing equipment can be a significant barrier for some companies. We are offering a machine exchange program for such customers. With many premium equipment manufacturers offering longer warranties and service packages, it is becoming more attractive for customers to go for adoption of premium technologies.

We opine that the market will move towards premium products with superior technology, performance and life cycle costs with a long term benefit in mind.

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