+
ICRA predicts construction equipment volume growth in CY2021
Equipment

ICRA predicts construction equipment volume growth in CY2021

The domestic mining and construction equipment (MCE) industry is expected to post a volume growth of more than 20 per cent in the calendar year 2021, according to the finding of the ratings agency ICRA. According to the agency, the MCE industry has staged a smart recovery since late June 2020, posting a year-on-year (YoY) growth of 20-22 per cent in Q3 CY2020. Though the growth is still lower by 14 per cent compared to Q3 CY2018 levels, it is significant considering the deep demand contraction of ~40 per cent in H1 CY2020. As per ICRA’s update, demand for the all-purpose backhoes recovered much faster than demand for other equipment like excavators. Supporting factors like strong project awards in the road sector, timely release of payments to contractors for all Central Government projects and a few state projects (in North India); and a strong rural demand (for agriculture and housing) aided the recovery. The ratings agency in May 2020 had estimated a sharp 15-20 per cent decline in industry volumes during CY2020 but considering the demand revival since July 2020 and the continued market momentum in November 2020, substantiated by dealer check-ins, the decline now is estimated (revised) to be lower at 12-14 per cent.

The key MCE demand drivers in the current market are Central Government projects, particularly roads and rural demand. Healthy awards and execution rates of road projects by the NHAI has boosted volumes of backhoes and excavators, more recently. Pick-up in regular funds flow from the Central Government continues to support volumes. However, new state projects have not taken off as most states are struggling with fiscal bandwidth. On the other hand, healthy volumes in the agri-segment besides heightened activity under the PMAY and the PMGSY are the primary cause for rural demand.

Despite the volume uptick since late June-July 2020, ICRA has maintained a negative outlook on the sector as demand sustainability is uncertain. A prolonged economic slowdown triggered by the pandemic, the government’s limited fiscal bandwidth for investments and the risk of Covid resurgence leading to further lockdown and construction disruptions are not ruled out.

Source: Equipment India

The domestic mining and construction equipment (MCE) industry is expected to post a volume growth of more than 20 per cent in the calendar year 2021, according to the finding of the ratings agency ICRA. According to the agency, the MCE industry has staged a smart recovery since late June 2020, posting a year-on-year (YoY) growth of 20-22 per cent in Q3 CY2020. Though the growth is still lower by 14 per cent compared to Q3 CY2018 levels, it is significant considering the deep demand contraction of ~40 per cent in H1 CY2020. As per ICRA’s update, demand for the all-purpose backhoes recovered much faster than demand for other equipment like excavators. Supporting factors like strong project awards in the road sector, timely release of payments to contractors for all Central Government projects and a few state projects (in North India); and a strong rural demand (for agriculture and housing) aided the recovery. The ratings agency in May 2020 had estimated a sharp 15-20 per cent decline in industry volumes during CY2020 but considering the demand revival since July 2020 and the continued market momentum in November 2020, substantiated by dealer check-ins, the decline now is estimated (revised) to be lower at 12-14 per cent.The key MCE demand drivers in the current market are Central Government projects, particularly roads and rural demand. Healthy awards and execution rates of road projects by the NHAI has boosted volumes of backhoes and excavators, more recently. Pick-up in regular funds flow from the Central Government continues to support volumes. However, new state projects have not taken off as most states are struggling with fiscal bandwidth. On the other hand, healthy volumes in the agri-segment besides heightened activity under the PMAY and the PMGSY are the primary cause for rural demand.Despite the volume uptick since late June-July 2020, ICRA has maintained a negative outlook on the sector as demand sustainability is uncertain. A prolonged economic slowdown triggered by the pandemic, the government’s limited fiscal bandwidth for investments and the risk of Covid resurgence leading to further lockdown and construction disruptions are not ruled out.Source: Equipment India

Next Story
Infrastructure Energy

Nayara Energy Confirms Rs 700 Bn Investment, Slams EU Sanctions

Nayara Energy, backed by Russian oil major Rosneft, reaffirmed its plan to invest Rs 700 billion in downstream projects while criticising the European Union’s sanctions against it as unjust and contrary to India’s interests.The company operates a 20 MTPA refinery in Vadinar and manages over 6,750 fuel stations. In its statement, Nayara accused the EU of double standards, citing continued Russian energy imports by European nations.“The EU’s sanctions jeopardise India’s energy security and disrupt supply to 1.4 billion citizens,” the company said. “We are pursuing all legal means t..

Next Story
Infrastructure Urban

ADB Approves Rs 9.75 Bn Loan for Tripura’s Industrial Zones

The Asian Development Bank (ADB) has sanctioned a Rs 9.75 billion loan for infrastructure development in nine industrial zones in Tripura, announced TIDC Chairman Nabadal Banik.Projects include industrial sheds, power substations, fire stations, and 34 roads. New zones at Santirbazar and Fatikroy are being developed, with demarcation already underway.TIDC has reclaimed 28 acres from dormant units to encourage active entrepreneurship. Banik added that the corporation is promoting rubber wood-based plywood manufacturing, with seven new units in the pipeline.Tripura has over 1.1 lakh hectares of ..

Next Story
Infrastructure Energy

MSRDC Plans Dam Project to Support 71 Villages Near Expressway

The Maharashtra State Road Development Corporation (MSRDC) is preparing a detailed project report (DPR) for constructing a new dam near Khandala to support 71 villages along the Mumbai-Pune Expressway.The 186 sq km zone was previously under the Navi Mumbai Airport Influence Notified Area (NAINA). Now, under MSRDC's Special Planning Authority, the region is undergoing rapid infrastructure planning.Given the unreliable water supply from nearby sources like Morbe Dam and the Patalganga River, the new reservoir is intended to support future residential and industrial development.The project area f..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?