The increased pace of highway road construction activities in recent months bodes well for the construction equipment industry, says Sandeep Singh, Managing Director of Tata Hitachi, a leading construction equipment manufacturing company. . He said the new roads were traveling an average of 30 to 32 km a day, up from about 25 km a day earlier. If this momentum continues, India could cover up to 40 km a day in six months, Singh said in an interaction with Professional Coach.

These developments are a positive sign for the Indian road construction industry which has lost some of its momentum over the past financial year. Reasons include the second wave of the pandemic and subsequent shutdowns and curfews. Road construction activities require the movement of men and materials such as cement and steel, and with these slowing down considerably, the road construction activities ran into a roadblock.

Through February 2022, highway road construction is estimated to have hit 8,000 km, well below the 14,600 km target for the entire FY22 period, according to industry data. By contrast, 13,298 km of road construction was completed in FY21, largely due to huge central and state government infrastructure spending. Reasons include cash crunch, transition to new issuance standards, and lockdowns due to Covid 19, among others, which led to the downturn in FY22 but now appear to be on the mend. noted industry stakeholders.

Tata Hitachi’s Sandeep Singh: “With banks insisting on higher deposits or collateral, purchasing construction equipment has become a challenge for first-time buyers.”

According to Singh, the reasons for the resumption of road activity are the improved liquidity situation compared to a few months earlier, when banks and NBFCs were reluctant to lend amid a tightening economic situation. “The only problem, at the moment, is for first-time buyers of equipment, and that too for the lower end. With banks insisting on higher deposits or collateral, buying construction equipment has become a challenge. That’s not the case with high-end buyers,” he says.

Like the automotive sector, the transition to new emission standards has also affected the construction equipment sector. As Singh explains, the initial price shock, which was around 12-15% overall, appears to have subsided. Singh says a marginal improvement in machine availability has helped because it has led to an increase in rentals of around 10-15% over the same period.

Tata Hitachi, one of India’s oldest construction machinery and excavator companies, offers a range of products ranging from 2-120 ton excavators, wheel loaders and backhoe loaders sold under the Shinrai brand. The company manufactures these products at its factories in Kharagpur and Dharwad. Apart from this, Tata Hitachi has also set up a captive remanufacturing facility to provide customized solutions to customers with attachments, reconditioned aggregates and certified used equipment which aims to improve efficiency and cycle machine life.

According to industry leaders at the EXCON road show, the ongoing developments should be seen in the context of the union’s recent budget announcement which earmarked funds for the expansion of the national road network by 25,000 km during the financial year, and of which Rs 20,000 crore is to be mobilized through innovative financing measures.

Recent events will, however, have an impact on growth. Following the war in Ukraine, crude prices skyrocketed. That aside, a myriad of factors will affect the sector’s performance, including commodity price volatility, a surge in ocean freight and currency depreciation.

For example, with crude oil prices continuing to remain at a higher level, the current regime will sooner or later be forced to reduce car fuel taxes, which could then have a ripple effect on its funding of projects related to infrastructure, say industry stakeholders.

Budget support to the National Highways Authority of India in the current financial year is up 106% from Rs 65,100 crore in FY22, according to revised estimates. The government’s decision to fund NHAI is due to the growing debt which currently stands at around Rs 3,50,000 crore. Another area of ​​concern is whether or not the expected contribution from the cess funds can materialize.

The feature was first published in the April 15, 2022 issue of Autocar Professional.






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