ICRA expects a marginal uptick of 2-4% for Indian MCE Industry in 2014-15 • No major revival for the sector in next 9months period In view of current investment environment and sharp de-growth in demand in Mining and Construction Equipment Industry, ICRA expects a marginal uptick of 2-4% for the full year in 2014-15 without any major revival in the sector during the first nine months period of 2014-15. The Indian Construction Equipment (CE) industry is witnessing its second consecutive year of volume de-growth during 2013-14 with volume demand estimated to fall by around 15-17% to ~55-56,000 units, it said in the report. This decline comes close on the heels of 8-10% de-growth witnessed during 2012-13, when industry volumes fell to ~66,000. Prior to this, the domestic CE industry witnessed two years of healthy growth of 21% and 45% pa. Demand for mining equipment (ME) is estimated to have fallen more severely by over 30-40% in the private sector with mining in the country continuing to suffer due to regulatory roadblocks. Over the past six years, ICRA has have typically been witnessing two year cycles of contraction and expansion in the domestic CE industry, correlating with the economic growth and construction activity in the country, says the report. To gain better understanding of the current performance and outlook for the domestic mining and construction equipment industry, ICRA interacted with several dealers of key OEMs across regions. ICRA survey reveals that the de-growth in Mining and Construction Equipment (MCE) volumes is a nation-wide phenomenon. However, some pockets such as Tamil Nadu and Kerala appear to be more severely affected than the others. However, most dealers pin their recovery hopes on expected revival in investment cycle post general elections this year. The customer mix also appears to have undergone a change with subdued volumes from the hirer segment which seems to be weighed down by the idle inventory. While the first time buyer segment has remained relatively resilient, the volumes / ticket size from this segment is generally small thereby having marginal impact. In our dealer and financier interaction, we have so far not witnessed any discernible improvement in confidence in the buyer segment. Nevertheless, over a longer horizon, ICRA expects the Indian MCE industry to have a healthy growth potential in view of the current low levels of quality infrastructure and the limited penetration of equipment.
Posted on: Fri, 14 Mar 2014 05:47:52 +0000