Trends

Touching New Heights


LT NEWTERMINAL-2007 TC7030B-12It is boom time for lifting equipment manufacturers in India as demand for lifting equipment begins to pick up, fuelled mostly by the infrastructure and real estate sectors. The rental and replacement market is also adding substantially to the demand.

As the new focus on developing infrastructure gathers steam the demand for lifting equipment, ranging from hoists to cranes, of all types and capacities, is going to pick up rapidly. Manufacturers who offer a range of equipment geared to specific applications across construction verticals will thrive. The new mantra is to offer customised equipment for a specific project/application, which is what today customers is are demanding.  “We choose our vendors and suppliers on merit after thorough scrutiny, and we are satisfied with our preference for ZoomlionElectroMech on the back of their professional service. We appreciate that Zoomlion has also provided on-site training to strengthen our capability along with spare stock of consumables to guarantee crane performance,” says M Madhu, Senior Manager (P&E), Nagarjuna Construction Company (NCC). Also, big ticket buyers will prefer a single OEM supplier who can supply equipment across the spectrum and in all capacities. Therefore companies with a product portfolio across the spectrum will thrive if they are present across product verticals.


Vibrant market

The Indian market for lifting equipment is quite mature on both sides, Demand and Supply. As end users demand equipment for niche applications in newer areas manufacturers are offering them customized end-to-end solutions. Also the demand for most capacities will grow since the demand ranges from residential construction sites which need small capacities, to bigger sizes being demanded by infrastructure mega projects like power plants, dams, irrigation, road and rail transport etc. However, the biggest demand driver for lifting equipment -- lifts, hoists, and cranes, is the increasing pace of mechanization in all areas of construction in India, where new speed of construction has become a pressing need to ensure timely project execution.  To meet this growing demand for cranes in India, global major Sany opened a manufacturing plant at Chakan, Pune. “The Chakan plant will act as a substitute for import of cranes all the way from China. Earlier, the crawler cranes were to be imported from SANY China according to customer requirements. However, consequently looking at the constant growth of crane market and products receiving higher appreciation by India customer, SANY has taken step forward to start production of cranes at its manufacturing facility at Chakan, Pune in India,” says Zeng Zhihong, Director of Sales, Sany Heavy Industry India Pvt Ltd.

The other major reason the Indian market has become matured and competitive is that major global crane OEMs like Liebherr, JCB, Terex, Manitowoc, etc are present in the Indian market. And Indian majors like Escorts Construction Equipment, Spartan, ACE, etc, well entrenched in the local market, are also global players in the export market. Electromech is another major player from India present in most global markets. Most of them have design and product development capabilities too. But the key to the Indian market is a well developed marketing and after-sales network and budget prices.  Majority of the market is still price sensitive and opt for low cost products which are affordable. Most product verticals are offered across the price spectrum, ranging from low cost simple models to hi-end models with telematics and other enhanced features focused on niche applications.

There is also a thriving export market from India. Most Indian OEMs of cranes and hoists are cost competitive and therefore major players in emerging markets of Africa and Asia

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The Rental Route

YardAfter reeling under a recession last two years, most small and medium sized contractors are currently facing a cash crunch with little money left to buy costly equipment. Under these circumstances renting equipment is the best recourse to deploy them on ongoing projects.

The construction sector is poised for a turnaround. With infra projects being fast tracked by the government and new projects coming up in the real estate sector on the back of rapid urbanisation, the demand for construction equipment to deploy them on ongoing projects is bound to increase. However, not all construction companies can afford to acquire these costly machines and they have to opt for the rental alternative. Besides, in these uncertain times with few projects in hand, many a times it makes sense to rent the equipment rather than purchase it outright.  In context of the current liquidity and cash crunch among construction companies in India, the rental route to procure equipment is the only option left to contractors.

“With the shortage of capital and liquidity crunch in the market, Renting has evolved as a healthy solution due to its flexible approach,” says Himadri S Bhattacharjya, Managing Director, Quippo, a leading construction equipment rental company in India.


Low penetration

Compared to the global average among developed industrialised nations, and even the BRICS countries, India has an extremely low level of penetration in the equipment rental market. There are several factors inhibiting growth of the rental segment in construction equipment.  The traditional Indian mindset is of owning a piece of equipment, not renting it. This is perhaps the biggest cultural barrier inhibiting growth of equipment rentals in India. "One factor could be the conservative mindset of the India infrastructure industry. However, with the new ray of hope emerging in the infrastructure horizon the rental industry is also expected to see a gradual growth," says Bhattacharjya. Underlining the importance of having a national presence, he adds,"Quippo, being the pioneers in organised renting has always retained a leading position in this sector. Keeping close to customers, responding to their needs and customising their services for delivering utmost benefits from renting, is the key mantra at Quippo. All this on a pan India basis from 40 plus yards and workshops ensures maximum geographical reach. This has undoubtedly established Quippo as the number one choice with all major construction giants in India." In India, equipment renting has made its inroads almost over a decade ago. Yet there are only a few organised corporates operating in the market so far. As such the market share of the rental industry still remains marginal in comparison to the scenario of Europe and USA.

The other major barrier to rentals is taxation issue. There are no standardised tax laws across states in India, which inhibit interstate rentals.  A national registry of construction equipment could eliminate the need to pay multiple lifetime RTO taxes. And classifying rental equipment as either a good or a service could rationalise the imposition of VAT or a service tax and prevent dual taxation. In addition, the depreciation rate can be increased from 15 to 25- 30 per cent, similar to commercial vehicles, something proposed by the CII for all plants and machinery.

But the lack of a developed rental ecology is the biggest cause for low penetration of rental equipment in India. To develop the required ecology there is a need for equipment safety and environmental regulations on par with global standards. Lack of skilled manpower for operating construction equipment is another cause for low penetration.  Therefore organised rental players are unable to offer an attractive value proposition to the client. In mature markets like the EU, United States, and Japan, big rental companies offer latest equipment with an average fleet age of only two to four years, and they also provide lower maintenance costs and offer qualified operators. If organised rental players and the government can put in place a rental ecosystem that allows easy purchasing or renting based on flexible payments, the demand for construction equipment rentals will rise dramatically.

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Smart Cities – A Futuristic Vision

smartcityA ‘smart city’ is highly advanced in terms of overall infrastructure, sustainable real estate, communications and market viability. Though this may sound futuristic, it is now likely to become a reality as the ‘smart cities’ movement unfolds in India, says Anuj Puri, Chairman & Country Head, JLL India.

Across the world, the stride of migration from rural urban areas is increasing. By 2050, about 70 per cent of the population will be living in cities, and India is no exception. India will need about 500 new cities to accommodate the rapid influx of population into its urban regions.

Interestingly, urbanisation in India has for the longest time been viewed as a by-product of failed regional planning. Though this is inevitable, and will only change when the benefits of urbanisation overtake the costs involved, it is an opportunity for achieving faster growth.

With increasing urbanization and the load on the land in rural areas, the Indian government has now realised the need for cities that can cope with the inherent challenges of urban living and also be magnets for investment to catalyse the local economies. The announcement of ‘100 smart cities’ falls in line with this vision.

A 'smart city' is an urban region that is highly advanced in terms of overall infrastructure, sustainable real estate, communications and market viability. It is a city with information technology as its principal infrastructure and the very basis for providing essential services to its residents. There are many technological platforms involved, including but not limited to automated sensor networks and data centres. Though this may sound futuristic, it is now likely to become a reality as the ‘smart cities’ movement unfolds in India.

A smart city offers a superior way of life to its denizens, and one wherein economic development and activity is sustainable and rationally incremental by virtue of being based on success-oriented market drivers such as supply and demand. They literally benefit everybody, including denizens, businesses, the government and moreover the environment.

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Scoop-Load-n-Tip!

EarthmovingSoon this product segment will be scooping away the recession rubble, as the new government fast tracks mega projects in the infra sector. The focus on modernising India's creaking infrastructure with a trillion dollar budget will generate huge demand for earthmoving equipment.

Since the turn of the century the Indian construction equipment market had turned lucrative till the global recession depressed the Indian market a few years ago. A policy paralysis and the resultant delay in clearing EPC mega projects in the infrastructure sector were also responsible for this recession. Now the new government is expected to clear pending infra projects on a fast track and also launch several new greenfield projects in verticals like roads, railways, power, ports, airports etc. Projects like the Delhi-Mumbai Industrial Corridor are going to generate substantial demand for earthmoving equipment. According to 'Vision 2020 : Commanding New Heights’, a study on the construction equipment (CE) industry commissioned by the Confederation of Indian Industry (CII) and the Indian Earthmoving and Construction Industry Association Ltd (IECIAL), “The Indian construction equipment industry has the potential to grow at 19-22 per cent  CAGR to reach $ 20-25 billion by 2020, from the market size of $3.3 billion (2010). The volume of equipment sales is expected to increase from over 60,000 units in 2010 to 3,30,000 units in 2020.”  Value wise, within the construction equipment group the single biggest share is of earthmoving equipment. These include excavators, backhoe loaders, wheeled loaders, skid steer loaders, dumpers-tippers, etc. According to research consultancy Off-Highway Research, “Within the Indian construction equipment industry, the crawler excavator segment is the largest by value and the second largest in terms of number of units sold after the backhoe loaders.”  It is also projected to be the fastest growing equipment type in the future. There is a continuous shift amongst buyers from backhoe loaders to excavators, on the other hand, there is also a large inflow of first time buyers/users and small operators for purchase of backhoe loaders. Therefore, backhoe loader will continue to remain the highest selling equipment in the country in the medium term, the report says.

With growth drying up in other major markets like Europe and the US, global OEMs drove into India looking for new business. Most of them are market leaders in their product verticals. A major dividend of their presence here is that the market for these products in India is well developed with a wide variety of machines in different sizes, capacities, and configurations available in India. These global majors are also expanding their production facility here to supply their global market. JCB, which dominates the market for backhoe loaders is building two new plants in Jaipur, Rajasthan, with a combined floorspace of over 700,000 sq ft, they will be at the heart of the single largest JCB production facility anywhere in the world. On a recent visit to the site, JCB Chairman Lord Bamford says, “JCB’s fifth factory in India gives an assurance that JCB will continue to invest in India because the opportunities here are immense. India is an important market for JCB and our investment in Jaipur is a vital step in growing our business here.”

Another global major Case Construction is also in the expansion mode. Fabrizio Cepollina, CNH Industrial Construction Equipment APAC Vice President, comments, “The construction equipment market in the Asia Pacific region has been growing steadily and this trend is expected to continue. With the aim of improving CNH Industrial’s presence in these strategic markets, we are investing in our product development and manufacturing facilities in India to support the growing demands of our customers in the region. The introduction of the EX Series backhoe loaders is proof of our commitment for serving customers in the region with  the best products and services that meet the requirements of their businesses.”  Global leader Caterpillar has turned India into a low cost manufacturing base for its global operations.  Ramesh Tipirneni, Country Manager, Caterpillar India, says, “We are the global leader in the construction equipment and mining products and have developed world class R&D and product development center and factory operations here in India. We have been actively leveraging our capability in India to support our global business.”

India is already well established as a manufacturing hub for global majors. The manufacturing ecology well developed for all product segments.  India can replicate the success it has had in the global automotive value chain in this sector too. Homegrown companies like ACE and Escorts are rubbing shoulders with global majors and competing successfully. Especially in the loader segments they have cornered significant market share. Also the equipment rental market is poised to grow substantially on the back of fast track clearance of EPC mega projects. Market share of rentals is projected at 16 per cent by 2015.

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A Vital Growth Enabler

Rana KapoorSeveral decisive steps like industrial corridor development, 8,500 km road construction, 16 new ports, broadened financing base, etc, aim to not only accelerate the pace of infrastructure growth but also restore investor’s confidence in the sector, says Rana Kapoor, Managing Director and CEO, YES Bank.

The new government came to power with long wish list from Indian Inc., as also from the common man, and the Union Budget 2014, the first major policy statement of BJP led National Democratic Alliance’s government, announced slew of measures for reviving growth in infrastructure and manufacturing sector.

Several decisive steps taken in the Union Budget 2014, like industrial corridor development, 8,500 km road construction, 16 new ports, broadened financing base, etc., aim to not only accelerate the pace of infrastructure growth but also restore investor’s confidence in the sector.


Driving the manufacturing renaissance

Industrial Corridors are likely to be the primary drivers of India’s growth in manufacturing and urbanization. This budget provides a framework for development of Industrial Corridors which will act as catalysts of rapid industrialization once trunk infrastructure is constructed. This, coupled with allowing 49 per cent FDI in the Defense sector, allowances for investments above Rs 25 Cr and other such incentives provided in this Budget shall definitely provide a fillip to the manufacturing sector.

The setting-up of National Industrial Corridor Authority, to coordinate the development of the industrial corridors, will bring in uniformity in the development of industrial corridors. It is expected that Master Plan for Amritsar - Kolkata corridor will be completed expeditiously as also the perspective plans for the Bengaluru - Mumbai and Vizag - Chennai corridors. These corridors together with the Delhi Mumbai Industrial Corridor (DMIC) are expected to be important drivers of GDP growth over the medium to long term primarily driven by growth of manufacturing sector.


POWERing India

The Union Budget announced host of measures to resolve the hurdles being faced by the power industry like assuring assured coal linkage to the power projects which have achieved commissioning or are scheduled to achieve commissioning by March 31, 2015, rationalisation of coal linkages etc. The equal focus has been on improving efficiency by introducing requirement of crushed and washed coal and by allotting Rs 100 crore for preparatory work for Ultra Modern Super Critical Technology.

The government has also set aside towards Rs 500 crore towards development large size Ultra Mega Solar Projects at Rajasthan, Tamil Nadu, Ladakh and Gujarat and incentivized local solar equipment manufacturers by rationalizing customs duty on import of raw materials and excise duty on domestic manufacturing of solar panels and wind turbines.

Further, launch of Deen Dayal Upadhyay Gram Jyoti Yojana, with initial corpus of Rs 500 crore, aims to augment power supply for improving rural life is a right step towards achieving the dream of 24x7 power at an affordable rate to all Indians in the next 5 years.

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It’s a Super Take-Off!

Bangalore International AirportThe Indian aviation sector is likely to see investments totalling $12.1 billion during the Twelfth Five Year Plan. Also the MRO, which is currently worth $500 million will get a boost, and is estimated to grow over $1.5 billion by 2020.

The need for airport infrastructure in India has increased considerably. In order to ramp up airport infrastructure, the government has unveiled reforms to facilitate investment in this segment. It has been indicated that the long-term prospects for both private participants and the country are attractive. The investment in Indian airport infrastructure market, especially in the greenfield projects is expected to increase.

According to an RNCOS report, rise in per capita income is making air travel more affordable for Indian travelers. It is anticipated that by FY 2015, Indian airports (including domestic and international) will handle close to 256 Million passengers. Country’s fast growing tourism industry will also add fuel to the market and improvise airport industry’s positive future outlook. The need for internationally benchmarked airports is increasing in nation. Therefore, non-metro cities are getting authority’s attention so as to develop Greenfield projects under Public private partnership in various parts of country so as to boost tourism and trade in the region.

IBEF report says that India is the ninth largest civil aviation market in the world and fourth in terms of domestic passenger volumes (116.3). The country’s civil aviation market is also set to become the world’s third largest by 2020. Total freight traffic registered a compound annual growth rate (CAGR) of 6.6 per cent over FY 06-13; it stood at 2.19 million tonne in FY 13. Domestic freight traffic also increased at a CAGR of 7.1 per cent over FY 06-13 while international freight traffic rose 6.2 per cent over the same period. In FY13, domestic freight traffic was 0.78 million tonne, while international freight traffic was at 1.41 million tonne.

The Indian aviation sector is likely to see investments totalling US$ 12.1 billion during the Twelfth Five Year Plan. It aims to boost MRO business in India, which is currently worth US$ 500 million and is estimated to grow over US$ 1.5 billion by 2020.

Third-largest market

India is one the fastest growing aviation markets and currently the ninth largest civil aviation market in the world, as per reports. The sector is projected to be the third largest aviation market globally by 2020. Currently, India’s aviation market caters to 117 million domestic and 43 million international passengers. Over the next decade that market could reach 337 million domestic and 84 million international passengers.

Air transport (including air freight) in the country attracted foreign direct investment (FDI) worth US$ 456.84 million in the period April 2000–July 2013, according to data released by Department of Industrial Policy and Promotion (DIPP).

Major investments

Singapore-based Tigerair has entered into an interline agreement with Spicejet, India’s second largest low-cost carrier. Tigerair is a low-cost airline in which Singapore Airlines has a 33 per cent stake. Under this agreement, customers commuting on Spicejet’s domestic network from 14 Indian cities can connect to Tigerair’s Singapore-bound flights through the Hyderabad airport, from January 6, 2014.

InterGlobe Enterprises and CAE, a Canadian civil and military aviation simulation training firm, have jointly launched India’s largest pilot simulation training facility in Greater Noida, Uttar Pradesh. The move will cater to India’s demand for aviation training facilities. The 50–50 joint venture will set up the centre with an investment of US$ 25 million.

India’s aviation ministry is looking at small and medium airports to set up centres for maintenance, repair and overhaul (MRO) of aircrafts. Some officials see the airport at Surat as a viable option in this regard. The airport as of now has just three scheduled landing and take offs in a day, by Air India and SpiceJet. Various tests can be carried out in the day within a 1,000 feet and 5 nautical mile area. Currently, India’s MRO market is worth US$ 800 million with the likelihood of touching US$ 1.5 billion by 2020, adds IBEF report.

US companies, encouraged by the growth of the India aviation sector, are keen to invest in the various fields associated with the industry, such as building new airports or security, according to American officials.

Looking forward

The Cabinet Committee on Economic Affairs (CCEA) has given the approval to Abu Dhabi-based Etihad Airways for buying a stake in Jet Airways. The Rs 2,058-crore (US$ 332.77 million) deal is the largest FDI in Indian aviation. Etihad will hold 24 per cent equity in Jet Airways, Jet Airways will own 51 per cent, and the rest will be floating shares.

Tata Group's proposal to set up a full service airline in collaboration with Singapore Airlines has been given the green signal by the Foreign Investment Promotion Board (FIPB). The US$ 100 million venture will see Tata Group hold a 51 per cent stake in the Tata SIA Airlines with an investment of US$ 51 million; Singapore Airlines will have a stake of 49 per cent with an initial investment of US$ 49 million.

The potential of the Indian aviation industry is huge. The market already has about 150 million travelers passing through its airports, with the capacity to grow further. By 2020, traffic at Indian airports is projected to touch 450 million. Furthermore, India’s aviation industry supports about 0.5 per cent of the Indian GDP and close to 1.7 million high-productivity jobs.

 

Operating in a Regulatory Minefield

Regulatory MinefieldA policy hiatus is constricting growth of India's mining sector, it is registering negative growth. This is aggravated by mining bans, kickback scandals, and illegal mining. Policy reforms are needed urgently to reverse sinking fortunes of India's mining sector.

India's mining industry is mired neck deep in policy paralysis, kickback scandals, and mining bans due to environmental and social imperatives. As a result, its growth has been shrinking over the past few years, registering negative growth during last two years. Having clocked a growth rate of 4.8 per cent for 5 years - between 2006-07 and 2010-11, the mining sector has been clocking negative growth, shrinking 0.6 per cent for two consecutive years between 2011-12 and 2012-13. During these two years the mining sector has been plagued by a policy paralysis at both levels, the Centre and States. Consequently mining projects across the country have been stalled pending court cases, environmental, regulatory and land acquisition issues. The situation has been further aggravated by high borrowing costs due to the capital intensive nature of mining.

Considering the volume of mineral and metal reserves India possesses, the mining sector needs to be freed from all these constricting grips if its full potential is to be realised. “It is anticipated that the mining industry will contribute up to Rs 11.25 lakh crore ($182 billion) to the country’s GDP by 2025. The industry is at its rock bottom state and hence has only one way to go which is up. With a new government expected to be in place by 2014 - it is expected that the Industry will have the much needed proper policy direction,” says G N Raju, Managing Director, Nawa Engineers. The mining sector contributed 3.4 per cent of India’s GDP in 1992-93. However this contribution has declined progressively over the last few years, to 3 per cent in 1999-2000, and further to 2.3 per cent in 2009-10. With the sector contracting in absolute terms in the last couple of years, the contribution of the mining sector to India’s GDP has come down to 2 per cent in 2012-13.


Mining potential

In the global league, India is ranked 4th amongst mineral producing countries, behind China, United States, and Russia, on basis of volume of production, according to the 'Report on Mineral Production,' published by the International Organizing Committee for the World Mining Congress. However, that same report ranked India 8th on the basis of value of mineral production during 2009. This reveals a huge latent market of reserves just waiting to be tapped. This augurs well for the manufacturing sector, whose growth will fuel demand for all kinds of minerals and metals. India's per capita mineral consumption is quite low compared to other developing countries, even in the BRICS group. Typically in a developing economy like India, the per capita consumption of minerals will always be rising. Projections of mineral consumption will increase at a much faster pace than the overall growth rate of the economy. Agnivesh Agarwal, Chairman, Hindustan Zinc Ltd, says “The emerging global demand-supply dynamics is leading to a consistent deficit scenario as anticipated. We remain focused on driving growth while maintaining our cost leadership.”

Most important is the fact that in addition to the proven reserves, India possesses unproven reserves which are believed to be more than twice as much!   These probable ‘reserves,’ are still under various stages of exploration. Appropriate investments in mining infrastructure and modern exploration technology will open up latent potential to increase India's realizable mineral wealth.

The Geological Survey of India (GSI) has identified an area of 5.71 lakh square km as Obvious Geological Potential (OGP) area in the country. However there is hardly any focused exploration activity in the absence of timely follow-up actions of the GSI’s recommendations. Almost half of India’s total mineral production (including oil and gas) in value terms is contributed by seven key mining states; Odisha (9.6 per cent), Andhra Pradesh (9.0 per cent), Rajasthan (7.9 per cent), Chhattisgarh (7.8 per cent), Jharkhand (6.5 per cent), Madhya Pradesh (4.8 per cent) and Karnataka (3.6 per cent).
 

Industry structure

Already India is a major global producer of many important minerals. It has close to 3000 operational mines. The number of reporting mines during the last decade is approximately 3,000 to 3,200, and during 2010-11 this number was 2,928. Of these, 573 were fuel mines, 687 were metals, and 1,668 mines extracted non-metallic minerals. A total of about 90 minerals were extracted, including three key minerals - coal, limestone, and iron ore. Of these, 560 were coal mines, 553 limestone mines, and 316 iron ore mines. These account for about half of the total number of reporting mines. Mines engaged in extraction of other minerals was also significant; bauxite (189), manganese (141), dolomite (116) and Steatite (113). Significantly, globally India ranks 3rd in coal production, 3rd in limestone production, and 4th in iron ore production, as of 2010.

There's also a sizeable population of small mines contributing to overall output in India. This is because minor mineral concessions largely involve small mining activity for construction materials. But small mines also contribute substantially in production of metallic and non-metallic minerals. Out of the total working mines of around 3,000 in number of major minerals (excluding atomic, minor and fuel minerals), 84 per cent of the mines are small mines which fall in category “B’ mines. However, there are a large number of small mines leases of less than 5 hectare in existence but in the interest of sustainable development of such small mines, “cluster mining” approach will be necessary. Also the minimum mining lease area for major minerals in small mine sector need to be considered to be 10 hectare (instead of 5 hectare) which can accommodate existing mining leases subject to its population on spatial and geological considerations for a single mining lease.
 

Mining smartly

However, India's mining sector is plagued by low productivity. It needs to modernise its equipment and mining technology to scale up to global operational norms. Indian mining industry is now shifting increasingly towards mechanising its operations, from cutting-drilling to tunneling, to material handling systems and refining and processing operations on the site. It is now graduating to the next level of optimising operations by integrating and automating systems.  Now real-time computer-based mine management solutions for surface and underground mining operations are the latest trend. These smart solutions ensure optimisation of resources in the overall mining operation.

Plenty of Indian and foreign vendors are launching smart products in the Indian market. Deepak Mining Services Pvt Ltd (DMSPL), recently announced a joint venture with Australia-based RungePincockMinarco Ltd (RPM). The JV Complete Mining Services Pvt Ltd, will provide advisory technology and professional training services to the mineral resources sectors in India.  “Given the continually increasing demand for raw material to boost India’s industrial and infrastructure growth, growing Indian global economic recognition and a changing mindset towards international business practices presents a need for world-class mining services. These can easily be met by the application of best practices advisory and technology products for which RPM is respected globally. The new joint venture company will be well positioned to take advantage of these demands,” says Vivek Kelkar, Executive Vice President (Strategic Communication & Investor Relations), at parent company Deepak Fertilisers and Petrochemicals Corporation Ltd.

Global major Schneider Electric, also announced an energy management software  StruxureWare for mining, minerals and metals, a comprehensive suite of applications that optimises production operations to reduce costs and improve sustainability within the mining, minerals and metals operation. “Mining, minerals and metals are some of the most energy-intensive industrial processes, making energy efficiency a crucial part of the operation, from both a financial and sustainability standpoint,” says Diego Areces, Vice President, Mining, Minerals and Metals Segment, Schneider Electric. “The StruxureWare for Mining, Minerals and Metals suite is a huge step forward in how we’ve typically managed operations – making it more efficient from the resource to market,” he adds.

This trend of modernisation is also generating substantial demand for world class mining equipment. “The Indian mining industry is huge, and China will be a big marketplace for all international equipment manufacturing majors,” agrees Raju of Nawa. Most global OEMs across verticals of mining equipment are present in India, like Caterpillar, Kobelco, Komatsu, Terex, Atlas Copco, Sandvik etc, who are entrenched players in the Indian market. Major Indian players include BEML, Telcon, Nawa, Gujarat Apollo, etc. In some of the verticals like mining vehicles, material handling equipment, and crushing and screening, India has the potential to emerge as a low cost manufacturing hub.
 

Major challenges

Currently the biggest challenges facing India's mining sector are regulatory and environmental. While the former are basically policy issues, the environmental issues are more difficult to resolve. By its inherent nature mining always degrades the environment and ecology. The other major challenge is to stop illegal mining.

The Central Bureau of Investigation recently conducted search operations at 24 places in five States in an ongoing investigation relating to illegal export of iron ore. The Supreme Court had ordered registration of 22 cases against the exporters of iron ore who had allegedly exported over 50,000 MT without valid permits, from Belekari Port in the Karwar District of Karnataka. Searches across 18 premises in Karnataka, two in Tamil Nadu and one each in Maharashtra, Goa, Haryana and West Bengal, yielded 270 documents; three hard disks indicating the suppliers, transporters and stockists of the illegally mined iron ore, and statements of bank accounts of accused persons and FDRs valued at Rs 1.64 crore approximately. If India’s mining sector is to develop and thrive, these mining mafias need to be liquidated immediately.

Sustainability is the most difficult challenge faced by the mining sector. This has become all the more critical with new Green imperatives emerging regularly. Any mining activity will necessarily degrade the local environment and impact adversely the life of the local community, that’s the project-affected-people (PAP). Therefore land acquisition and environmental clearances for mining projects have become a major challenge. Of the 2,842 mining projects proposed for forest clearances in the last 17 years, the Ministry of Environment and Forests has cleared only 1,723 projects, which constitute about 60 per cent of the total. The remaining 40 per cent projects are either still pending or rejected/closed on grounds of sustainability.

The Forest (Conservation) Act 1980 prohibits collecting surface samples through trenching/ pitting, in the exploration stage. The Act needs to be amended in the interest of detailed prospecting and exploration, where no degradation of forest is involved. Entry to forest land remains a big issue to prospectors since most of the mineral bearing lands overlap forest lands.

Also, in so far as sustainability of local communities affected by mining, the sector has a long tradition of community service projects pertaining to infrastructure, water, power, education, and training and employment of the local work force. This especially bodes well with the new law of mandatory spending 2 per cent profits on CSR (Corporate Social Responsibility) activity.

Policy issue is the other major challenge facing the mining sector. The procedures for granting mining licenses, leasing and land acquisition issues, need to be resolved by the government to attract FDI and private capital in this sector, which is capital intensive with long gestation periods. The National Mineral policy, 2008, was drafted with an eye on attracting private companies into mineral production. But its failure is evident in the fact that the public sector still continues to play a dominant role, accounting for 68 per cent of mineral production during 2011-12. There's an urgent need to make mining a lucrative activity.

Taxation and royalties need to be reviewed and rationalised. Already, the Indian mining sector is amongst the highest taxed in the world with effective tax of about 45 per cent compared to between 35 per cent and 40 per cent in other countries. The Draft MMDR Bill 2011 is going to aggravate the situation further! It proposes additional taxes and levies jacking up the effective taxation to more than 60 per cent. Add to these the huge burden from revision of royalty rate and stamp duty. Taxes and cess etc, ought to be kept low to help the industry to survive, sustain and grow.
 

Conclusion

It is ironic that at a time when India's manufacturing sector has developed and matured enough to play in the global market across several product verticals ranging from automotives to pharmaceuticals, the supplier of its raw materials, the mining sector remains underdeveloped, despite huge potential due to the sheer volume and breadth of its natural resources. Instead, regrettably, it has become a lucrative source of corruption and kickbacks, where mining mafia’s rule with the connivance of corrupt politicians. All these issues are political and regulatory. Until these are resolved, India's mining sector will be operating in a lethal minefield fraught with policy hazards.


Crushing Recessionary Fears

PremiertrakThe new focus on developing India's infrastructure to global norms is fuelling demand for crushing and screening equipment. From mining to transport, and EPC to real estate projects, all construction verticals using aggregates are fuelling demand for these machines.


Aggregates are necessarily required in all construction verticals. Therefore their use is keeping the demand for crushing and screening equipment (CSE) buoyant. To modernise India's archaic infrastructure, the Indian government has earmarked an unprecedented investment of US $1 trillion, the highest ever for any Five Year Plan. Consequently, construction activity in the infrastructure sector is growing rapidly with the launch of new projects in various segments like roads, airports, bridges, power plants and highway projects. Therefore the crushing and screening equipment market, which survives on these infrastructure projects, has seen a rapid growth in India in recent years.


Matured market

The CSE industry is now evolving towards maturity. With plenty of Indian OEMs and global companies setting shop here, the Indian market for CSE has become very competitive, in terms of both – cost and product quality. End users of CSE are now demanding ‘Total Solutions,’ which are customised and client specific, and comprise of equipment+training+aftermarket service.  Only companies who can deliver total CSE solutions to customer specifications will survive. The market is robust and will continue to grow in the next couple of years. With massive infrastructure construction activity underway in India since last few years, the CSE segment is now detached exclusively from being a mining sector domain, it now spans verticals across the core construction sector.

The very need for millions of tonnes of road base materials, concrete mixes and asphalt mixes has ensured that demand for CSE is the highest across all product verticals of construction equipment industry. “As per CPCB forecast the CSE Industry is expected to churn out nearly 45 billion tonne of raw material aggregate needed for the core construction and infrastructure industry to supply the various projected roads, dams, ports, industrial corridors, high speed rail corridors projects. This demand is expected to increase to nearly triple to 135 billion tonnes of aggregates by the end of the Twelfth Five Year Plan. This translates to a requirement of over 26,500 CSE plants by 2017 end,” says G N Raju, Managing Director, Nawa Engineers.

India is the third biggest producer of aggregates in the Asia-Pacific region and fourth largest in the world. Sales have increased annually by nearly 8 per cent over the past decade. India’s requirement of construction aggregates is projected to increase by nearly 10 per cent during 2014. In value terms the market for aggregates is pegged at around US$ 5 billion in 2014. Along with China, India has emerged an important market for CSE. “Despite the concerns in the Indian market, Powerscreen still sees India as an important strategic market with potential and this is supported by the continued year on year growth in output from the Hosur facility. The main growth drivers in my opinion are road sector, real estate, and the mining sector (other than iron ore),” says Rajen Khoda, Director Sales (South Asia &Middle East), Powerscreen. According to industry estimates the CSE market in India is projected to grow at the rate of 13 per cent per annum by 2017. And the new trend of using artificial sand will fuel this growth further.


Customers' demand

As competition increases in the CSE market, manufacturers are developing innovative products, ranging from high capacity primary jaw crushers, secondary and tertiary hydraulic cone crushers, horizontal shaft impact crushers, vibrating screening equipment and complete onsite plant installations to meet ever increasing demand for aggregates, fuelled by highways projects, dam construction, airports, sea ports, urban infrastructure development, power projects and commercial RMC plants. Today’s customers are demanding maximum uptime, along with parts support, annual operation and maintenance contracts, and a complete product lifecycle support along with regular refurbishment. The most common capacity in demand today is 200 TPH and the trend is for bigger size 250 TPH.

The new trend in customer demand is for equipment mounted on mobile stations, both on wheels and track, which have higher acceptance due to the ease of setting up and dismantling a CSE plant in a short time. This is because crushing plants set up for infrastructure projects like roads, dams, ports, etc., will work in their respective locations only till completion of the project say 2 or 3 years, after which they have to be moved to the next project location. Therefore most construction companies prefer only mobile plants. Also, with most cities expanding, the quarrying zones are also being shifted. And most quarry owners who expand their capacities to meet the aggregate demands also prefer to buy mobile plants rather than fixed plants.

An important emerging trend among Indian customers is the rising awareness of the concept of Total Cost of Ownership (TCO) in the long run. Most Indian buyers select their CSE on this basis, along with after sales service and machine mobility to ensure maximum uptime and high productivity.


Emerging trends

As the competition gets stiffer, companies are getting more innovative and offering the latest technology. For them research and development is a continuous ongoing process so as to keep improving/innovating their product mix. Puzzolana’s product range of a  track mounted mobile plant with primary jaw crusher, secondary cone crusher and crawler screens are a good example of this. It offers dry classifiers for reducing <150 micron particles in manufactured sand to bring it under the limits of IS:383. Its feeder breakers successfully handle crushing of friable ores like lignite/coal etc up to 600 TPH. The machine is powered by diesel generator for its entire functional electrical requirements with PLC control system and can also run on electric main supply like any other equipment.

Another innovative example is Powerscreen's fully Integrated control systems which drive more intuitive operator interfaces, to implementing control system based fuel saving innovations and energy efficient direct drive transmission. This technology allows their crusher range to complete interplant linking, ensuring more effective material flow through the entire process. “The instinctive operator systems in our latest machine ensure that operator training can be carried out in a shorter period of time. This improves the ability of the operator to understand the process control and to manipulate the operating characteristics of the plant for differing applications and machine throughput. When this is combined with innovative diagnostics and operator information, it ensures plant productivity is maximized,” says Khoda. He adds, “The importance of fuel efficiency is factored in at the initial machine design stages. Emphasis is placed upon designing machines that give the greatest level of fuel efficiency while at the same time providing the greatest level of output. In terms of specific features the Premiertrak 400 jaw crushers are fitted with a direct drive system to the chamber, which ensures greater fuel efficiency when compared to hydraulically driven systems.”

Nawa’s partnership with US based mineral processing equipment manufacturer McLanahan Corporation is another example of companies signing joint ventures to bring in the latest technology. The new joint venture – McLanahan Nawa Engineers (P) Ltd, offers an extensive range of mineral processing, aggregate and washing solutions for crushing and screening applications in various sectors like power, steel, coal, cement, and allied sectors. Nawa has also invested heavily in new manufacturing plants in Hyderabad including machine tools to manufacture products plus cater to their heavy fabrication works. Their workshops are spread across 15 acres in Hyderabad. “Nawa’s acquisition of technical knowhow and global manufacturing right to the DURACONE range of crushers gives it the crucial presence in the crushing range from 300TPH to 700TPH in India and abroad as well. DURACONE SRM cone crushers can handle the hardest of crushing applications. These crushers will be pushed hard by Nawa as they can give the required aggregates yield in different sizes at the lowest power consumption rates for any competitive product. “Nawa expects the market to accept these crushers in huge numbers,” says Raju.

Amidst such stiff competition buyers of CSE can expect more innovative products, sophisticated cutting edge technology, and an increasing range of capacities and applications. But the ultimate benefit for the market is on the price front. With so much competition manufacturers will be reluctant to increase their prices.


Global players

India has immense potential to become a low cost CSE manufacturing base for emerging markets in Africa and Asia. These are markets where Indian companies will enjoy a price advantage vis-à-vis US or European brands, which are too costly in a price sensitive market. However, the real competitors in these markets are the Chinese, who rely heavily on keeping their prices very low. A cogent policy drafted together by the government and industry would foster growth of India as a low cost manufacturing base.

 

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