Leaders speak

In view of the tremendous growth opportunities that remain to be tapped in the country, here's a snapshot of the views and vision of some of the leading construction equipment and allied players based in southern India. While on the one hand there is a substantial rise in the size and complexity of projects, on the other, issues related to project implementation, monitoring and dispute resolution continue to plague infrastructure developers. However, recent positive steps taken by the Government in terms of policy and regulatory reforms are reassuring and expected to revive investments in the Indian infrastructure and construction sector as well as fast-track the implementation of projects. Captains of the industry share with MANAS R BASTIA their business outlook, strategic initiatives and action plan for the coming days... "For sustainable development, the industry needs to be equipped with the latest technology." - Ajay Shankar, Country Manager, Caterpillar India Current industry scenario: Recent reports suggest that construction work has started on 4,690 km of highway, work on another 7,994 km has been awarded, and contracts for a further 17,103 km have been awarded for 2013-14 and beyond. Significant investments will also go into developing ports, airports, roads, railways and real estate. Business focus areas for 2014-15: While we anticipate that better economic growth will result in an improvement in sales in both power systems and construction industries, sales and revenues in 2014 are likely to be similar to 2013 - about $56 billion, plus or minus 5 per cent. Over the long-term (from the next three to ten years), the Asia-Pacific region is a long-term play for Caterpillar in anticipation of the tremendous growth opportunities primarily driven by infrastructure needs. In line with our continued focus on India for the long term, we are investing in our operations to support the ever-increasing customer base here. Besides, India is already one of our primary sourcing hubs with about 80-90 per cent of the off-highway trucks we manufacture here being exported. More from policymakers: The road construction and mining sectors do pose a unique set of challenges. This includes the issue of environmental clearances, renewed focus on infrastructural development and the continued use of conventional and obsolete equipment. If India is to meet its ambitious targets for sustainable development, the industry will have to be equipped with the latest available technology. Successful infrastructure models developed by one state are being adopted by other states in the country. This calls for greater synergy in knowledge-sharing between state governments and action from the Central Government to successfully facilitate this activity. Timely and fair settlement of issues related to land acquisition and clearance-related delays is essential to maintain progress. "Our focus area will be the infrastructure segment." - Debasis Bhattacharya, Head-Sales and Marketing, Ajax Fiori Engineering (India) Outlook for 2014-15: The infrastructure industry has matured a lot over the past couple of decades and by now we are aware about downturns in an economy. We have been witnessing a dull phase for the most part of 2013-14 owing to a combination of factors like rise in project costs because of delays, increase in interest rates, early advent of monsoons and the tight money position in the market. However, in the past few months, the Government of India has initiated several steps to speed up clearances and major projects have been put on a fast track. This will be a big boost for the construction industry in 2014-15. Business focus areas for 2014-15: Our focus area will be the infrastructure segment with particular emphasis on irrigation projects, power transmission and housing. Investment plans: As part of the expansion plan, Ajax Fiori has opened a 'parts logistics centre' and a corporate office of 30,000 sq ft in Peenya, Bengaluru. This facility will focus on ensuring faster fulfillment of requirement for parts. The new facility is expected to be fully operational shortly. Apart from three facilities for manufacturing concrete equipment, the company is setting up a new facility at Gauribidanur (in Kolar district of Karnataka), which is expected to be operational by mid-2014. The facility will have the capacity to roll out 300 batching plants a year that can be rapidly scaled up to 600 plants a year. Challenges ahead: The major challenge the Indian construction sector faces today is the fall in the rupee. The cost of production is increasing day by day and, eventually, the burden has to be passed on to the end user. This will have an adverse effect on the purchasing mood of the buyer and will result in slowdown in business. "We foresee a positive trend in equipment purchase." -AM Muralidharan, President, Volvo India Focus areas: We have been a major supplier for state highways as well as metro development and recently we have been successful in supplying machines for irrigation. Our business focus areas include improving efficiency, reducing cost and ensuring customer satisfaction. Opportunities in 2014-15: The construction and infrastructure industry is likely to grow between 5 per cent and 7 per cent. We expect to see much more growth in national highways and industrial corridors in 2014-15. With the construction industry on the rise, we foresee a positive trend in equipment purchase and more players entering the aggregate industry. By 2020, we expect the market to be about $22.7 billion. Challenges before the industry: The concerns include delay in infrastructure projects owing to time and cost overruns, shortage of funds, environmental concerns and delay in government clearances. This will lead to challenges for the construction equipment industry, for example, flow of funds, liquidity crunch and delay in cash flow. Unlike other countries, we take double the time to complete projects. This is where equipment comes into the picture in order to speed up projects. Other reasons why projects do not get completed on time are delay in getting land and manpower. It is getting increasingly challenging to manage the skill level of people and attract more talent into this industry. Policy support: The Government should ease policies for investment and land acquisition for infrastructure projects. The industry is also looking at an increment of Goods and Services Tax (GST) and hopes to see a practical road map for GST in the next two years. Besides, we expect the Government or RBI to reduce interest rates and put supportive policies in place for speed of execution. To share your views on the construction equipment sector in South India, write in at feedback@ASAPPmedia.com