Industry

Construction equipment seeing green shoots

The sector has been facing uncertainty due to new technologies and changing regulations, says JCB India chief.

The sector has been facing uncertainty due to new technologies and changing regulations, says JCB India chief.   | Photo Credit: Special arrangement

IBC will streamline financing in the sector, says JCB India’s Subir Chowdhury

India’s construction equipment (CE) industry has started seeing green shoots and some amount of recovery is expected in the next 6 to 8 months, according to JCB India.

India MD & CEO of the U.K.-based CE major Subir Chowdhury said, the CE sector had been facing market uncertainty and disruptions mostly due to emergence of newer technologies and changing regulations. However, signs of recovery were already evident in the market.

Transient challenges

“I see the current challenges as something transient. It’s also because of the changing way in which things are getting redefined. Contractors say payment cycle has started again. We anticipate a positive turnaround in the industry in April-June 2020 quarter.’’

As per JCB, apart from the traditional roads and highways, most State governments are now focused on irrigation and affordable housing projects. Electricity and gas connection infrastructure development is expected to come up in the next couple of years. “We are a large economy and our need is massive. Things are happening and there’s tremendous amount of optimism,’’ said Mr. Chowdhury.

Commenting on the funding availability in the country, he said, banks have been able to bring their NPAs significantly down, thereby creating a better liquidity scenario for themselves. NBFCs may still be very cautious, but they were reinventing themselves to find ways to increase accountability in the system.

“Finance is extremely critical for the construction equipment industry. A good amount of slowdown can be attributed to IL&FS.

“However, thanks to the introduction of The Insolvency and Bankruptcy Code (IBC), the industry is going through a some kind of transition. So, what you will see at the end will be a system that is robust.’’

According to Mr. Chowdhury, JCB itself has witnessed significant slowdown over four cycles in the last fourteen years, but we remain upbeat.“We have been focusing on productivity enhancement, investing in product innovation and technology.’’

India currently is the single largest market for JCB. In 2018, the country accounted for 47% of the company’s global sales volumes. The country also tops in terms of annual usage of the machines. While JCB equipment are, on an average, used for 1,000 to 1,200 hours per annum across U.S. and U.K., they are operated for 3,500 to 4,000 hours in India.

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Printable version | Feb 22, 2020 1:34:54 AM | https://www.thehindu.com/business/Industry/construction-equipment-seeing-green-shoots/article30332318.ece

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