Vivek Hajela, VP & Head- CE Business, Larsen & Toubro, shares information on the current market size of compactors in India, and the upcoming digital technologies in compactors. What is the current market size of compactors in India? The market size of compactors is estimated at 4,200 to 4,300 machines in the current financial year. This is still significantly lower than the market size during the pre-pandemic levels when the demand touched a high of 5,800 numbers. From April 2021 onwards, the compactors have undergone an emission norm upgrade to achieve CEV-IV compliance. There has been a substantial increase in the cost structure following this change in the emission norms and with the steep increase in steel prices, manufacturers had no option but to pass on the price increase to end customers. This has certainly dampened the demand. Further, the pace of road construction has also slowed down this year compared to a similar corresponding period last FY. We were hoping that Q4 will be better, but the Covid-wave 3 has further impacted sales adversely. However, in the medium term, the demand for compactors will continue to remain robust in view of the large spend envisaged in the road sector pan-India encompassing national highways, arterial, strategic, border, and rural roads. What is the level of indigenisation, and what is the dependence on China? L&T Compactors are a testimony of the AtmanirBharat efforts by our design engineers. The entire range of L&T compactors has been fully designed, developed, and manufactured in-house with above 90 per cent indigenous content. Even the precision components like hydraulic motors fitted on the machines are made in-house. Overall, most suppliers of major assemblies make the components in India, and dependence on China is relatively low. However, supply chains are intricately linked. How do you assess the growth potential for compactors in India? The potential for compactors is high in India, with a large demand for the actual execution of the road construction works underway in Bharatmala and other state and central Projects envisaged in NIP. The compactors are also deployed extensively in railway embankment construction, besides new railway projects which are on the anvil and will spur the demand for compactors. ICEMA (Indian Construction Equipment Manufacturers Association) in its Vision 2030 report envisaged that the compactor market by 2030 would more than double from the current levels. This demand would further get fuelled as the contracts would be required to be completed within specified time-frames. India being a tropical country with heavy rainfall, the blacktop on the road deteriorates fast, this needs re-carpeting periodically which in turn fuels the demand for the machines. The demand for compactors for handling solid waste management is also likely to go up in the market. What are the latest offerings in your product range? L&T had pioneered the concept of vibratory compactors in India with the introduction of Albaret products way back in 1978. Later in 2015, L&T once again forayed into the Compactor market with its 100 per cent indigenous effort. The Soil Compactor, L&T 1190 was introduced first in Oct 2015, followed by Tandem Compactor, L&T 990 a few months later. The L&T 491 Mini Compactor was introduced during 2017. In order to further expand the range the pneumatic tyred roller, L&T 2490 was introduced in 2018. All these machines have worked in a variety of applications and around 3000 L&T compactors have been supplied till date. What are the upcoming digital technologies in compactors? How interested are contractors towards these technologies? We are offering L&T DigiEye as an optional fitment on the L&T Compactors. This digital technology helps in tracking the equipment performance, fuel consumed and machine location. The use of telematics by end-users is slowly catching up, but still, actual utilisation is low. Many fleet owners feel the need to monitor the machines remotely. In the CEV-IV compliant machines, this option of L&T DigiEye is offered. Compaction meters are another concept, which is offered on L&T Soil compactors and this helps the operator in knowing if the desired levels of compaction have been achieved. What are the challenges faced by the compactor market? The steep increase in manufacturing cost due to high steel prices and additional cost to meet CEV-IV emission requirements has had a significant impact that has hurt all the manufacturers. The increase in manufacturing has been passed on to the end customer, resulting in 25-30 per cent price increase of CEV-IV compliant machines. The market has to factor in the price increase. The rental rates have not yet moved up in line with CEV-IV price increase, which has subdued the demand from small hirers and rental companies impacting overall demand for Compactors significantly. Further, there has been a major supply-chain disruption with many MSME suppliers facing uncertainty due to local lockdowns. This led to labour disruption and as a consequence supplies were hit. The industry is extremely competitive and this puts pressure on margins for all the manufacturers. The manpower costs are also increasing steeply and upgrading the skills of the people is a major challenge. L&T has its own training facility at Kanchipuram with modernised classrooms and cut-sections of models to help understand the actual working of the components. How do you look at the future of compactors in India? India has a great potential to be an export hub for the Compactors. Many large multinationals already use India as a base for the export market. The ICEMA report envisages that at least 15-20 per cent of the production could be targeted for export by the year 2030. The rental markets for Compactors will also grow significantly in the years to come and is a trend that will continue to grow in the Indian market.