ICRA: Strong demand growth for MCE industry during CY2018
COAL & MINING

ICRA: Strong demand growth for MCE industry during CY2018

The Indian mining and construction equipment (MCE) industry is likely to see moderation in demand growth, which is expected to fall to 4-6 per cent in the medium term, particularly during CY2019. According to an ICRA report on the industry, demand for MCE after the elections will be a function of a stable government and continued focus on infrastructure investments. This apart, the impact of emission norm changes in off-road equipment during October 2020 on prices of construction equipment is another headwind for CY2020 that may affect demand growth.

Elaborating further on the trend, Pavethra Ponniah, Vice-President and Sector Head, ICRA, says, “Demand growth was a robust 24-27 per cent during CY2018, supported by roadwork throughout India. Growth stayed strong through the initial nine months of CY2018, barring seasonal lows. However, growth started tapering off in Q4 CY2018 and has been relatively muted in January-February 2019, partly affected by the NBFC liquidity crisis, and the consequent impact on loan-to-value ratio and interest rates during Q4CY2018. Further, the ensuing general elections will have a bearing on growth and the stability of the subsequent government will determine growth trends in the medium term.”

Within the MCE industry, the construction equipment segment has been growing at a rapid pace over the past three years, while mining equipment (ME) growth has been relatively muted, from 5-10 per cent. The outlook for ME from late CY19 onward is expected to be positive but will be largely contingent on Coal India’s massive equipment ordering plans. Coal India has already floated tenders; factoring in a nine to 12-month period for delivery of this large-capacity equipment, demand for mining equipment should increase in CY2020. 

As for CE demand, for a large part of the current up-cycle, which started in CY2016, roadwork has largely been a single-legged demand driver, followed by railways, which also supported growth briefly during CY2017. Notwithstanding the general slowdown in public and private infrastructure work during the election period, the roads sector has an adequate pipeline of projects for development and upgradation in national highways and state highways, which can keep execution high during CY2019. Nevertheless, ICRA expects a brief period of decline in execution and demand for new equipment during mid CY2019. Recovery after the elections will be contingent on the stability of the elected government.


The Indian mining and construction equipment (MCE) industry is likely to see moderation in demand growth, which is expected to fall to 4-6 per cent in the medium term, particularly during CY2019. According to an ICRA report on the industry, demand for MCE after the elections will be a function of a stable government and continued focus on infrastructure investments. This apart, the impact of emission norm changes in off-road equipment during October 2020 on prices of construction equipment is another headwind for CY2020 that may affect demand growth.Elaborating further on the trend, Pavethra Ponniah, Vice-President and Sector Head, ICRA, says, “Demand growth was a robust 24-27 per cent during CY2018, supported by roadwork throughout India. Growth stayed strong through the initial nine months of CY2018, barring seasonal lows. However, growth started tapering off in Q4 CY2018 and has been relatively muted in January-February 2019, partly affected by the NBFC liquidity crisis, and the consequent impact on loan-to-value ratio and interest rates during Q4CY2018. Further, the ensuing general elections will have a bearing on growth and the stability of the subsequent government will determine growth trends in the medium term.”Within the MCE industry, the construction equipment segment has been growing at a rapid pace over the past three years, while mining equipment (ME) growth has been relatively muted, from 5-10 per cent. The outlook for ME from late CY19 onward is expected to be positive but will be largely contingent on Coal India’s massive equipment ordering plans. Coal India has already floated tenders; factoring in a nine to 12-month period for delivery of this large-capacity equipment, demand for mining equipment should increase in CY2020. As for CE demand, for a large part of the current up-cycle, which started in CY2016, roadwork has largely been a single-legged demand driver, followed by railways, which also supported growth briefly during CY2017. Notwithstanding the general slowdown in public and private infrastructure work during the election period, the roads sector has an adequate pipeline of projects for development and upgradation in national highways and state highways, which can keep execution high during CY2019. Nevertheless, ICRA expects a brief period of decline in execution and demand for new equipment during mid CY2019. Recovery after the elections will be contingent on the stability of the elected government.

Next Story
Infrastructure Urban

Choice Consultancy Wins Rs 634.7 Million Public Sector Projects

Choice Consultancy Services Pvt Ltd, the public sector advisory arm of Choice International Ltd, has secured two major project developments totalling approximately Rs 634.7 million (inclusive of GST), further solidifying its role in public sector transformation and infrastructure planning across India.The company has received a work order worth Rs 528 million from the Maharashtra Institution for Transformation (MITRA), under the Government of Maharashtra. This assignment, part of the World Bank-backed MahaSTRIDE Programme, involves setting up District Strategic Units (DSUs) across the Chhatrap..

Next Story
Infrastructure Urban

Shalibhadra Finance FY25 Profit Jumps 34% Year-on-Year

Shalibhadra Finance Limited, a leading two-wheeler financing company with a deep presence in Gujarat, Maharashtra, and Madhya Pradesh, has reported a 34 per cent year-on-year rise in net profit for FY25, reaching Rs 160 million. The company’s performance was supported by disciplined lending, cost efficiency, and robust asset quality.Financial Highlights – FY25:Net Profit: Rose 34 per cent year-on-year to Rs 160 million. Q4 FY25 profit also increased by 34 per cent to Rs 44 million.Net Interest Income (NII): Up 13 per cent YoY to Rs 295.8 million for the full year and 16 per cent to Rs 84.3..

Next Story
Infrastructure Transport

Court Orders Uttarakhand PWD to Pay Rs 172 Million to MBL

The Commercial Court in Dehradun, Uttarakhand, has directed the Public Works Department (PWD), Government of Uttarakhand, to pay Rs 172.4 million to MBL Infrastructure Ltd. in accordance with an arbitration award dated 23 March 2024. The case pertains to a completed road project under Package No. 5 for the improvement and strengthening of state roads in Nainital and Udham Singh Nagar districts.The arbitration tribunal had issued a unanimous award in favour of MBL Infrastructure Ltd., granting a payment of Rs 172.4 million, which includes interest accrued up to the date of the award. Additional..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?