Demand for road machinery back in second quarter

The construction equipment sales have gained momentum as awarding of 22 expressway projects under the Bharatmala project by the government drove the industry towards recovery from Covid-19.

Three top manufacturers JCB, Tata Hitachi and Volvo that supply equipment for large infrastructure projects, road construction, mining, and agriculture sectors witnessed demand for machines from August and September onwards.

According to data sourced from the Indian Construction Equipment Manufacturers Association (ICEMA), the sales have increased nearly three times during the second quarter compared to the first quarter this year.

“The industry started the current fiscal with a decline of 25% in sales in FY20 and the first quarter was very bad. The momentum started in July and the green shoots were visible in August and September. While the first half sales are down by about 30% over the same period last year, we expect a strong comeback in the second half,” Sandeep Singh, President of ICEMA and Managing Director, Tata Hitachi Construction Machinery Company Private Limited told DH.

He said the industry is banking on 22 expressway projects announced by the government earlier this year and rural infrastructure projects under the MGNREGA to revive its fortunes in the second half of the fiscal.

The industry recorded total sales of 15,901 units during the September quarter compared to 5,510 units in the June quarter this year, showing a growth of 2.8 times quarter-on-quarter.

The sales during June quarter stood at 6,560 units, a year-on-year decline of 63%. In the same quarter last year, the industry had sold 17,728 units. However, the demand in the September quarter this year was much stronger compared to a year ago quarter. The industry witnessed sales of 19,005 units this year against 15,848 units in September quarter last year, the ICEMA data reveals.

Singh said there has been a strong demand for backhoe loaders, compactors and excavators. The demand for backhoe loaders is also coming from the agriculture sector following the bountiful rains for the second consecutive year.

“The green shoots have emerged from August onwards. The sales were positive in September and October. The government’s focus on rural infrastructure and MGNREGA and PM’s Gram Sadak Yojana have given boost to the construction equipment sales,” Deepak Shetty, Deputy CEO and MD, JCB India said.

He said JCB, which has presence in almost every district in the country with 705 outlets, is witnessing same level of utilisation of machines seen last year already. There has been a good pick up in demand for machines in Tamil Nadu, Karnataka and Rajasthan, he said. The demand is coming mainly for backhoe loaders, excavators and compactors, he said.

Kamal Bali, Managing Director, Volvo India said the construction equipment makers have seen strong demand in August and September compared to the same months last year. “The recovery is happening very fast. I think, we are witnessing a V-shaped recovery. The National Infrastructure Pipeline announced by the government will result in a strong demand for backhoe loaders and compactors. In the next six months, we are expecting a double-digit growth and a strong single-digit growth on a full year basis,” he said.

However, the supply chain network is not fully prepared to meet the growing demand for machines. There is a huge demand for engine parts, hydraulics components from all the segments. The demand is real as far as mining is concerned. “We hope the privatisation of coal mining will bring good demand for machines used in mining,” Bali added.