Tata Hitachi strengthens product portfolio as govt's aggressive road construction target boosts heavy construction equipment industry

Buoyant by growing mining and infrastructure sectors, construction equipment major Tata Hitachi is strengthening its product portfolio to achieve a topline of Rs 4,800-5,000 crore by the 2023-24 fiscal (FY24), a top company official said on Tuesday.

The company, which has a major manufacturing plant and R&D centres in West Bengal's Kharagpur, clocked a revenue of around Rs 4,000 crore in the financial year 2021-22, despite subdued demand due to COVID-induced headwinds.

"Now, demand has started picking up for construction equipment. Mining is performing better than the infrastructure segment. Targets for coal mining are very high in the wake of a shortage of the dry fuel in the country. The government's aggressive road construction target of around 25,000 km in two years and about 22 green express highways will boost the heavy construction equipment industry," Tata Hitachi Construction Machinery Company Managing Director Sandeep Singh told PTI in an interview.

He expects that the construction equipment industry will grow by at least 10-15 per cent in the current fiscal despite commodity-induced inflationary pressures, he said.

"The steep rise in commodity prices, especially steel, has put enormous pressure on the construction equipment manufacturers, who have been forced to pass on some of it to the customers and increase cost in the entire construction value chain. This has brought pressure on margins," Singh said.

"However amid these headwinds, we remain optimistic about the demand for equipment from both the government and private sector. We are aiming at Rs 4,800-5,000 crore topline by FY'24," Singh told said.

Contracts from the private sector now contribute about 10 per cent of its revenue but that will go up to 15 per cent in the next two years with a greater privatisation push in mining, he said.

Coal India is also aiming at one billion tonne production target in the next few years, the official said.

The equipment maker continues to introduce products to meet the demand. After the launch of the five-tonne wheel loader used in the mining industry, Tata Hitachi's boutique of products in this segment is complete, he said.

The three-and five-tonne wheel loaders account for 80 per cent of the market.

The annual market size of such equipment is 3,000 units, another official said.

Tata-Hitachi manufactures 2-120 tonne excavators at its plants in Dharwad and Kharagpur and employs around 4,000 people.

The size of the Indian excavator industry is 25,000 units per annum.

The company has been continuously working towards "greater localisation", he said, adding that it has already achieved 70 per cent of the target for the same and planned to increase it to 80 per cent in two years.

Speaking about the Kharagpur plant, he said the company has pumped in Rs 1,200 crore in the facility till now and will review the investment plan for further capacity expansion after two years. According to a Boston Consulting Group Report, India will be the second-largest producer of construction equipment by 2030, with revenues growing to USD 25 billion and volume of sales touching three lakh units, leading to the generation of 30 lakh new jobs.