Escorts Construction Equipment
Covid-19 has enhanced the role of connecting digitally the entire ecosystem of an equipment. We have already started to integrate and test a newly developed software and hardware and the results are exciting. Now, by using an app, customers can get all the after-sales services with the click of a button. We are further improvising and adding self-diagnostic and quick-fix procedures for our customers on this App. This will be over and above the machine performance monitoring and location tracking, which is available as a standard across our product range.
The Government needs to front-end infrastructure investments to instigate private investments and attract foreign capital.
The recent announcements by FM and RBI have been very positive and have addressed the challenges related to improvements in liquidity. The land, labour, liquidity and stimulus/reforms announced by the Government are expected to help the Industry, MSMEs and the labourers in both the organized and unorganized sectors. Emphasis on self-reliant India would surely go a long way in building a strong supply chain.
This stimulus will help the supply side and help respond to the current economic challenges. The next stages - recover and grow – will need to stimulate the demand side, and I feel that this can be majorly achieved through investments in infrastructure. The Government needs to front-end infrastructure investments to instigate private investments and attract foreign capital. To become a strong contender and provide an alternative supply chain possibility to the international companies, we need to provide workable infrastructure, besides ease of doing business.
Infrastructure investments will also help in creating employment opportunities for the migrant labourers and will help in propping up the economy.
Globally, economies have grown by leveraging infrastructure sector spending. NHAI has been one of the strongest growth engines for India in the last 5-6 years. To realize our objective of becoming a US$ 5 trillion economy by 2025, India needs to spend about `20 trillion in the next couple of years on Road Projects. Though various studies peg the current infrastructure deficit rate at 1.5 – 2 times the above projected spent of `20 trillion, I am confident that once the Government pushes ahead and starts to seed these projects, the private and foreign capital will follow.
NHAI has recently decided to get majority of the projects executed under EPC contracts, which I feel is a step in the right direction, based on past experience. Also, in the current scenario, where the unemployment rate is rising, this will also help in finding jobs under MNREGA. In the last two months of this fiscal year, about 3.5 million new applicants have registered, which is substantially higher than the number in FY’19, which saw around 1.5 million applicants.
We need to address the ‘demand’ side so as to improve equipment utilisation.
The current installation base of the equipments in India is around 650,000-700,000 units, with >50% being owned by service providers (both in organized and unorganized sectors). These machines need to be actively put to some economic value at the earliest. Covid-19 pandemic has created a novel challenge as regard the availability of operators and technicians due to their migration to their native places. A reverse exodus or an alternative solution would be possible only when the pandemic situation improves, and the current cloud of uncertainty goes away.
Construction companies are under a lot of pressure to trim capital outlay and this will surely benefit the Rental companies as most of the contracting companies would prefer to hire.
I will refrain for commenting on the short-term implications for the Rental Industry as the uncertainty of demand, liquidity availability, labour immigration etc., would remain a challenge in the immediate future. Having said that, during uncertain time, most of the contracting companies would prefer to hire. Construction companies are under a lot of pressure to trim capital outlay and this will surely benefit the Rental companies.
Given that the current rental penetration in India is low (at around 8 to 10%), as compared to the global standards of 50 to 80%, this shows the potential offered by this industry. The versatile and low-cost equipment like pick-n-carry (PNC) cranes, backhoe loaders, mid-size excavators and vibratory compactors are the preferred companions for any construction site. These equipment are relatively inexpensive as compared to specialized equipment, and hence, are an easy pick for smaller rental companies.
The increasing number of infrastructure development projects across India will drive the construction equipment rental industry growth. Contractors and construction companies are shifting their preferences toward equipment rental services to avoid the high initial purchase cost of construction machines. Furthermore, the efficient selection, transportation, and installation services offered by rental providers will propel the market size.
A confluence of OEMs, financial institutions and contractors will help all the stakeholders to sail through this rough weather.
Economic activities need to be kicked started at the earliest to mitigate the economical implication for the country and the resultant massive unemployment. I think that we have passed the first phase of “initial response” and are into the phase of “recovery”. The Government is trying to stimulate demand and has already announced the stimulus package equivalent to 10% of our GDP, amounting to around US$ 300 billion. Given the government’s intent, we are confident that the demand side will be suitably addressed and gradually the infrastructure projects would gain the necessary velocity. This will surely help the industry to get rolling. Escorts is ready for meeting the demand that will rise and so are our partners in business.
India has the highest rate of adoption of digital technology.
Covid-19 and travel restriction have further enhanced the role of connecting digitally the entire ecosystem of an equipment. Now, by using an app, customers can get all the after-sales services with the click of a button. We are further improvising and adding self-diagnostic and quick-fix procedures for our customers on this App. This will be over and above the machine performance monitoring and location tracking, which is available as a standard across our product range.
All our machines are built with the best of technology and are at par with any other contemporary technology available in the respective product segments.
As we move to the new BS-IV emission norms, which are likely to be postponed to April 2021, the ECU would be mandatory, and this gives us the leverage for having a fully connected product. We have already started to integrate and test the newly developed software and hardware and the results are exciting.
NBM&CW July 2020
