Offhighway - IECIAL Presentation - April 2012

7/29/2019 Offhighway - IECIAL Presentation - April 2012

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April 2012

A Review ofThe Construction Equipment Industry

in India

Presented to


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WHO WE ARE

A Management Consultancy that specialises in the research andanalysis of international construction equipment markets.

The largest of its kind in the world.

Formed in 1981 as part of the Economist Intelligence Unit.

Management Buy-Out in 1995.Now privately owned.

Offices in:- London, England - New York, USA - Tokyo, Japan- Beijing, China - New Delhi, India

www.offhighway.co.uk


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Products Included in Overview

Articulated Dump Trucks

Asphalt Finishers

Backhoe Loaders

Compaction Equipment

Crawler Dozers

Crawler Excavators

Crawler Loaders

Mini Excavators

Mobile Compressors

Mobile Cranes

Motor Graders

Rigid Dump Trucks

RTLTs

Skid-Steer Loaders

Wheeled Excavators

Wheeled Loaders


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The Construction Equipment Industry in India

Real growth in demand started in 2003-2004

Huge task of infrastructure implementation to meet the needsof an emerging regional economic power

Particular growth in- roads, railways, seaports and airports- power generation: coal, nuclear, hydro- mining- urban and rural infrastructure- residential, commercial and industrial buildings

No doubting governments ambitions but ability to implement in full, and on time, is suspect

Do not compare with China

Different speeds and direction of growth

Different machine composition, now and in the future


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0

20,000

40,000

60,000

80,000

,00,000

,20,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012* 2013* 2014* 2015* 2016*

India: Development of Sales, 2001-2016*(Units)

*Forecast

Annual Average 2007-2011: 53,784

Annual Average 2011-2015: 100,292


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BackhoeLoaders 34%

CrawlerExcavators 34%Wheeled

Loaders 4%

MobileCompressors 6%

Mobile Cranes13%

CompactionEquipment 4%

Others 5%

BackhoeLoaders 40%

CrawlerExcavators 17%

WheeledLoaders 5%

MobileCompressors

6%

Mobile Cranes17%


Others 7%

BackhoeLoaders 47%

CrawlerExcavators 21%

Wheeled Loaders3%

Mobile

Compressors 6%

Mobile Cranes16%


Others 4%

India: Structure of Sales, by Product, 2006-2016*

(Units)2006

2011

2016*

*Forecast


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Others 4%

Compaction

Equipment

3%

Mini

Excavators

11%

Wheeled

Loaders

37%Crawler

Excavators

39%

Mobile

Cranes 6%

China: Structure of Sales, by Product, 2006-2016*

(% of Total)

WheeledLoaders 62%

Crawler

Excavators17%

MiniExcavators

6%

MobileCranes 7%

CompactionEquipment

4%

CrawlerDozers 2%

Others 2%

2006

2011

Others 5%

Compaction

Equipment

4%

Mini

Excavators

9%

Wheeled

Loaders39%

Crawler

Excavators35%

MobileCranes 8%

2016*

*Forecast


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India: Development of Sales, 2006-2016*(Units)

13,787

5,859

1,906

2,332

1,879

628

749

360

175

550

4,229

2,494

2,446

738

575

528

504

468

40,000

40,000

15,500

6,500

5,000

5,000

1,400

900

1,050

1,000

1,000

5,907

33,595

11,306

14,940

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

Backhoe Loaders

Crawler Excavators

Mobile Cranes

Mobile Compressors


Wheeled Loaders

Asphalt Finishers

Rigid Dump Trucks

Motor Graders

Skid-Steer Loaders

Crawler Dozers

2016*

2011

2006

* Forecast


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India: Review of 2011 Sales

Market gaining momentum despite sluggish policy environment

Over 72,000 units in 2011

It continues to be dominated by six major products

Backhoe Loaders 47% (33% growth)

Crawler Excavators 21% (30% growth)

Mobile Cranes 16% (22% growth)

Mobile Compressors 6% (1% decline)

Compaction Equipment 3% (7% decline) Wheeled Loaders 3% (8% decline)

Growth momentum sustained by growth in high volume equipment

Roads and mining equipment witnessed decline

Remarkable growth in sales of mini excavators although sales volume is still very low

Market forecast to grow by 13% in 2012 to nearly 82,000 units

All equipment types expected to grow

83%

13%


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20,000

2,446

504

575

528

11,306

4,299

14,940

468

2,494

33,595

738

9,291

11,453

25,296

3,000

600

700

650

3,000

600

12,500

4,500

875

35,000

865

2,660

540

582

529

688

4,337

2,687

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000

2009-2010

2010-2011

2011-2012*

India: Forecast Sales, 2010-2012*

(Units)

Asphalt Finishers

Backhoe Loaders


Crawler Dozers

Crawler Excavators

Mobile Compressors

Mobile Cranes

Motor Graders

Rigid Dump Trucks

Skid-Steer Loaders

Wheeled Loaders

* Forecast


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23

19

22

23

11

5

16

34

28

20

4

19

-8

-7

-1

0

22

-1

142

30

-32

-7

33

-15

39

86

-28

55

43

45

22

44

22

-3

61

-4

-50 0 50 100 150 200

2009-2010

2010-2011

2011-2012*

India: Forecast Sales, 2010-2012*

(% Units Change)Asphalt Finishers

Backhoe Loaders


Crawler Dozers

Crawler Excavators

Mini Excavators

Mobile Compressors

Mobile Cranes

Motor Graders

Rigid Dump Trucks

Skid-Steer Loaders

Wheeled Loaders

* Forecast


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India: The Future Growth Market

Huge volumes of work to be done

Infrastructure spending 12th plan: $1,025 billion Power generation

Roads Railway Airports Urban and rural infrastructure Mining

Governments total commitment to becoming regional powerbase slow, but definite growth

Will generate huge expansion in demand for Construction equipment, of all kinds Components

Support services

Indias growth is assured for the foreseeable future

Indian equipment demand will be 118,000 units by 2016


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India: Challenges

Regulatory and administrative structure reforms

Gap between planning and execution

Corruption

Implementation of GST

Procedural and approval delays

Land acquisition

Environmental and forest clearance

Slow decision making Policy paralysis

Widening current account and fiscal deficits

High rate of inflation

Tightening of monetary policies

Increasing interest rates

Declining growth rate

Spiralling crude oil prices

Increasing trade deficit and depreciating value of Indian Rupee

Public Private Partnership (PPP) 50% of infrastructure investment in 12th plan

Money availability and credit growth

Long term financing options


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India: Future Structure of Demand End-users becoming more sophisticated, and demanding

Move towards more specialised, productive equipment

Hydraulic excavators

Wheeled loaders Mini excavators, longer term? Telescopic handlers, longer term?

crawler dozers, motor graders, compaction equipment, mobile cranes

Move away from cheap machines at lowest price

Move towards most cost effective option, over full machine life

Increased emphasis on:

- Customer support - Productivity- Residual values PROFITABILITY- Financing options


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India: The Future of the IndustryKey Features

Domestic sales 2011 72,000 units

2016 118,000 units

Annual equipment sales CAGR will exceed 10.3% over the next 5 years

Strong penetration by Chinese OEMs

Wheeled loaders, mobile cranes, graders, excavators

Strong growth in production output

More inward investment Many new manufacturing facilities by OEMs

Strong growth in component industry

India to become regional export hub


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Please do not hesitate to contact the team for help at:

www.offhighway.co.uk

THANK YOU!

[email protected]

Telephone: +91 11 4652 5671-73

New Delhi Office

SAMIR BANSAL

General Manager, India

Offhighway - IECIAL Presentation - April 2012

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