ICRA - Strong demand growth for Mining & Construction Equipment Industry
The Indian Mining & Construction Equipment (MCE) industry is likely to see a moderation in demand growth, which is expected to fall to 4-6% in the medium term, more particularly during CY2019. The basic reason are the policy paralysis and diversion of liquidity during Central elections, which generally leads to slow progress on projects. As per ICRA report on the industry, demand for MCE post-elections will be a function of a stable government and continued focus on infrastructure investments. This apart, the likely impact of the emission norm changes in off-road equipment during October 2020 on prices of CE is another headwind for CY2020 that may affect demand growth.
Elaborated Pavethra Ponniah, Vice President and Sector Head, ICRA: "Demand growth was a robust 24-27% during CY2018 (as against ICRA’s July 2018 expectation of ~20% growth), supported by road work throughout the country. Growth stayed strong through the initial 9M of CY2018, barring seasonal lows. However, growth started tapering off in Q4 CY2018 and has been relatively muted in Jan-Feb’19, impacted partly by the NBFC liquidity crisis, and the consequent impact on loan-to-value (LTV) ratio and interest rates during Q4CY2018. Further, the ensuing general elections will have a bearing on the growth and the stability in the MCE industry and the subsequent government thereof will determine growth trends in the medium term."
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Published on:
03 May 2019
Published in: NBM&CW May 2019
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