The Excavator market of India
The Excavator market in India has been consistently growing since elections in the year 2019-20. Despite the pandemic in the last two years, the market grew by 7% each in FY 20-21 and FY 21-22. This growth was driven by the government’s focus on infrastructure investment as a primary way to grow the economy. In line with this, the budgetary capex has seen an upward trajectory with this year’s capex up by 35% @7.5L crores.
Some of the key sectors that have had a big impact on the demand for excavators are as follows:
- Roads & Highways to 2L crs with national highway construction target of 12000km (15%)
- Water resources driven by Jal Jeevan Mission increased by 33%
- PMGSY increased by 36%
- Swachh Bharat Mission increased by 19%
- Railways (including borrowings) increased by 14%.
What’s driving demand for all types and class of excavators
Within excavators, the 20-ton segment constitutes nearly 60% of the market and is widely used in all infrastructure projects. A major part of this segment is driven by demand from first-time buyers and the small hirers who tend to prefer value for money and look for durable machines with low cost of operations. These customers deploy the machines as sub-contractors to large construction companies as well as state level projects.
Premium machines, that come with additional features, are preferred by large contractors/fleet owners and companies whose focus is on productivity. They utilise telematics (available in the machines) to monitor the performance for increased efficiency in operations.
The other segments are the 10-ton and the 7-ton class - machines deployed for smaller works like PMGSY, brick kilns, road construction, real estate, minor irrigation works and small stone quarries.
The Mini Excavators comprise less than 7-ton class and is one of the fastest growing segments with a wide range of applications ranging from real estate, industrial utility, agriculture, plantations, and various maintenance works. Modernisation of solid waste management under Swachh Bharat mission has increasingly led to procurement of these machines by local bodies and panchayats.
The larger, greater than 45-ton class of excavators are predominantly used in mining. This segment has also been consistently growing - driven by increased focus on coal, cement, and iron ore production.
Recent improvements and advancements in Tata Hitachi excavators
Our productivity and efficiency improvement initiatives are centred around our stakeholders, which include owners, operators, site managers, and the environment at large. For owners, our imperative is to enhance machine performance and fuel savings. Backed with cutting-edge technology from Hitachi Construction Machinery (HCM), our range of excavators come with a host of performance enhancement features like work modes, and power modes, coupled with fuel-saving features like auto-idle and auto-deceleration, to name a few.
Operator comfort and ergonomics play a key role in improving productivity. We, at Tata Hitachi, strive to provide superior safety, ergonomics, and comfort for fatigue-free operations. Special emphasis is laid on cabin protection, compliance with international safety standards, seating comfort, ergonomically laid out machine controls, and superior all-around visibility, among other features.
For site managers, the mandate is to reduce the downtime of machines. We ensure on-time, on-site availability of our service personnel through our wide service network, the largest in the country in the excavator segment. We take pride in our pioneering efforts like the introduction of Field Diagnostic Vehicles (FDVs) and Mobile Workshops in the CE industry in India.
Moving to electric-driven machinery: Issues & Considerations
There are various aspects being considered, including the technologies which will be more suitable for different product classes, in terms of usability, mobility, infrastructure requirement, cost impact, how much leeway the platform allows us, etc. Based on these considerations, we have identified various projects to be taken up for the electrification of our different categories of models in our portfolio. Hitachi Construction Machinery, Japan, our parent company has electric drive technology in their mini excavator products and in their large mining machinery.
We anticipate that the resolution of the following issues will be key to moving towards complete electric offerings to the customers: Primarily, for moving to electric-driven machinery, there needs to be a strong business case to make the move. It could be backed by an economic standpoint, or an environmental position taken by the Government or by backing a social cause where the viability gap can be bridged by the appropriate subsidy. Here, there could be various levels of Public-Private-Partnerships where we could harness the CSR spending towards this end or help create a pool to bridge the infrastructure challenges – another big challenge.
The focus on the ecosystem for electrics has already been brought in by the automotive segment, which has shifted heavily to this technology. This shift may help us partially in building the infrastructure and the know-how for the support systems. So, while there are efforts to develop the technology, commercialization is still, in our view, some distance away.
Why the right design is key to machine strength and stability
We believe that larger, or heavier, or thicker doesn’t necessarily mean high in strength or durability. Rather, a better design holds key to strength and durability. Tata Hitachi typically uses advanced design principles and analytical tools to design and validate our structures, where the weight component is minimised using better materials without compromising the stability of the machine. Use of alternative materials other than steel is also in practise wherever the application allows it.
Challenges
There are many challenges that the OEMs are facing. Currently, one of the biggest issues is an unabated increase in input costs driven by commodities like steel, aluminium, plastic, fuel, etc. Further, domestic transportation costs increased by ~20% just in the last one year. International container shipping costs and air freight have more than doubled over the last year, although they have moderated of late.
The other challenges that the industry is facing from a demand perspective are:
- Erratic execution of highway construction; the last year saw a drop from 37km/day to 29km/day
- Land acquisition and clearances from local authorities, state governments, environment, and forest departments
- Covid-19 impacted state government revenues forcing them to borrow more
- Payment delays from state governments
- Regulatory changes: bringing NBFCs NPA classification norms like that of banks, has led to tightening of funding norms and access to finance by customers from NBFCs
- Attracting skilled manpower to the industry.
