Equipment rental segment is still at a nascent stage in India
How do you view the immediate and longer-term growth prospects for the Indian cement industry? How important is the cement/limestone market for your organisation?
India is the world's second largest region for cement - both in terms of production and consumption. Growth in the cement industry is driven by investments in infrastructure, housing and urban development. Given the government's emphasis on infrastructure, housing for all and development of 500 cities under the urban development mission, industry growth is expected to be sustained for the next two to three years. According to the rating agency ICRA, the demand is expected to grow around 4.5 per cent for 2018-19.
India is an important region for us, as these developments in the limestone/cement industries should result in higher demand for mining equipment.
Given that the cost of energy and fuel are escalating, have you seen a shift to Life-cycle cost as against initial capital cost as the major procurement decision criterion? How does your machinery/ equipment design for the cement sector, fare in this respect? What competitive advantages do your customers gain when they choose your products over your competitors?
Caterpillar has consistently worked toward reducing the life cycle costs of our products with research and innovation. We have incorporated technologies to enhance fuel efficiency and productivity in our surface mining solutions. For instance, the recently launched next Generation 20-ton size class excavators, Cat 320D3 and Cat 323D3 offer up to 7 per cent more hydraulic power, 15 per cent increased productivity, 15 per cent lower fuel consumption and 5 per cent lower maintenance costs.
Cat mining provides a broad line of surface and underground equipment to the industry. Our products are designed to lower cost per ton by providing productive and reliable performance and are backed by well-trained people to serve every mining region in the world. Our product line is unmatched, with equipment for drilling, digging and cutting; moving and hauling material; and maintaining efficient mine sites. In addition, our machines are designed with durability that ensure maximum availability through multiple lifecycles thus reducing the maintenance costs. The optimised performance and serviceability of our machines allow our customers to work efficiently and safely lowering owning and operating costs.
We have today a heightened sensitivity towards environmental issues, and mining activities in particular have attracted some amount of negative attention. How do your designs build in environment-friendly features into your machines? Kindly share some details with our readers.
As a company, our goal is to meet the challenges of today without compromising the needs of tomorrow. We consistently work on this goal by innovating and enhancing our product line. Examples of how we design in efficiency to our products include:
- Cat draglines consume less power per cubic metre of earth moved compared to other overburden methods.
- Cat hydraulic mining shovels are designed for reduced emissions and have improved fuel efficiency with various features like electric drive options and closed loop swing system.
- Cat excavators' enhanced circuit design features and hydraulic pumps make them one of the most fuel-efficient machines in the industry.
- Cat wheel loaders have applied proven technologies systematically and strategically to set the standard in terms of efficiency.
There has been a trend of lease-financing of the mining assets, by some customers, instead of outright purchases, which one may even call "hire-purchases". Have you encountered such choices being made by some owners, and if so, how have you been able to service such financing needs?
Financing of equipment has been prevalent in India for a long time. This has primarily been in the contractor segment rather than with the owner miners. Various financing options have been available by the NBFCs, banks, etc. The equipment rental segment is still in a nascent stage in India and is expected to grow in the coming years.
Caterpillar has the capabilities to serve the varied financing needs of our customers. We follow the strategy of focussing on partnering with the customer through our dealers. The dealers help customers understand the options available and the capability of the machines. We offer an integrated solution by considering the kind of purchase that is possible (outright buy, finance option or rental) to the support services needed for those preferred methods.
Our country has been witness to sharp changes in the mining regulatory framework in the last few years, around prospecting schemes, award of leases, auction of concessions, as well as compliances. There has also been quite a judicial intervention. What has been the impact of all these changes on the mining sector overall, and per se, on the limestone mining sub-sector? How have these shifts influenced your business?
The mining industry has been evolving and is adapting to the economic requirements and growth challenges. There have been policy changes in the industry which generate optimism about the Indian economy's growth in the short- and long-term. Caterpillar has been active in India since 1930 and has been partnering with both public and private sectors to deliver in all businesses we operate in India.
Of late, we have seen a tendency of outsourcing of mining activities to specialised service providers, by cement manufacturers. What are the statutory implications of such outsourcing, in the context of our evolving regulatory requirements? Is this strategy ultimately good for your business?
Miners have adopted outsourcing strategies when they shift to focus on their core competencies and select experts in their non-core functions. Caterpillar has supported miners globally in their efforts to lower the cost per ton of the material mined, and we work equally well with the direct mining companies and with selected outsourcing partners.
What are the latest introductions by you into the mining machinery market? Are these superior product offerings from technology, environment, energy or productivity perspectives? How has the market accepted such new products? Are there newer products on the drawing board? Please share with our readers.
As mentioned before, we have recently launched our next generation 20-ton size class excavators, Cat 320D3 and Cat 323D3. These machines are manufactured in Thiruvallur, India and offer up to 7 per cent more hydraulic power, 15 per cent increased productivity, 15 per cent lower fuel consumption, and 5 per cent lower maintenance costs. New tandem hydraulic pumps provide 7 per cent more hydraulic power with increased overall efficiency due to friction reduction. The Cat 323D3 has an automatic engine speed control during light load conditions which helps minimise fuel consumption. The excavators have a standard one-touch idle that saves fuel by instantly reducing the engine speed.
Cat 323D3 has an open centre negative flow control hydraulic systems that helps balance power with efficiency. The excavators provide a safe platform to work by adding features like anti-skid plating, battery disconnect switch, and a full-length firewall to separate the engine from the hydraulic pump. Additionally, the presence of features like enhanced visibility, joystick consoles and automatic climate control help in improving operator comfort.
Quite a few of your machines cater both to the mining sector as well as the construction sector. So, with your wide-angle view of both these industries, how do you assess their current growth performance, relative to each other? Which of these two sectors are doing better, and why?
The government's emphasis on infrastructure will be beneficial for both the mining and construction equipment industries.
According to India Construction Equipment Market 2012-2018 forecast to 2024 by Segment, Product Type, Competition Forecast, and Opportunities Report, the construction equipment market is set to grow at a 6.8 per cent rate during FY18-FY24. The Indian Construction Equipment Manufacturers Association (ICEMA) expects the construction equipment industry to reach $5 billion by 2020. On the other hand, according to rating agency ICRA, the domestic mining and construction equipment industry is estimated to grow by up to 20 per cent in 2018, supported largely by government-backed projects.
Caterpillar offers a varied range of equipment to effectively meet the needs of the both construction sector and mining sector in India.
BS SRINIVASALU REDDY