Propel Industries is exporting to 14 countries and I am sure we will expand our base to many other countries, in the coming years, says Mr. V. Senthilkumar, Managing Director, Propel Industries in an interview with the Construction and Architecture (C&A) magazine team.
1. According to you what are the key market trends likely to be seen in these times, the impact it will have for the overall construction equipment industry, specifically your area of business in this sector?
The construction equipment industry in India is worth $6.5billion and the new BS4 emission standards are leading to opportunities abroad. Reports suggest that a number of developed markets are opening up and that is a good sign. Export opportunities are sure to help the industry wade through these challenging times. I think construction equipment companies will now focus more on export.
Crushing and screening industry will also be benefitted by this trend. Propel Industries is exporting to 14 countries and I am sure we will expand our base to many other countries, in the coming years.
2. What are the current market drivers and what kind of demand do you foresee?
The need to revive our economy is being felt across sectors and that, I think is the greatest push. The government policies are also providing the much-needed impetus.
On the whole, the infrastructure industry is buzzing with activity and the effect is felt on all other allied sectors.
The Indian aggregates industry is the biggest in the world because of its huge investment. India is one the largest global consumers of aggregates. There is widespread demand for all our products and it is increasing significantly.
The demand for crushers and screens are rising consistently due to the construction and infrastructure development projects such as roads, dams, and railways which are lined up. The retail market for construction also plays a vital part. The ban on the usage of river sand is also promoting the demand.
3. Which industry segment is likely to be the biggest consumer of construction equipment?
I notice that major players in the construction equipment industry are investing in research and development activities. The results are sure to benefit the end-users which include mining, agriculture, forestry, material handling and waste management sectors.
I also think the shift from traditional equipment to automated equipment is happening. In a bid to increase productivity, players are also ensuring an effective supply chain to achieve higher efficiency.
4. What is the current market size for construction equipment on lease? Is the industry likely to see consolidation in coming years? Your views.
In India, the construction equipment leasing market is around 8% of the overall market. The global average is much higher and there is potential for growth in this market in the coming years
5. Which equipment demand is likely to be resilient in the days to come and why? Your take?
There is currently a larger demand for bigger capacity equipment. In the crushing industry, more than 350TPH capacity machines are witnessing a surge. Demand for equipment with versatile applications like track plants is likely to remain resilient.
6. What has been the impact of COVID-19 on Construction Equipment Industry? Your area of business to be specific? Roadmap ahead
The pandemic has forced us to turn to technological means to stay connected with our customers. Doing our best to break the chain and stop the spread of the virus remains the big challenge. Ensuring the safety of staff members is the priority. We have got accustomed to the ‘new normal’.
We have learnt to make the best use of technology for the benefit of our employees and customers.
As all the industries are in the reviving mode, I am hopeful of a bright road ahead for the engineering and construction sectors, both in the domestic and international markets.
7. How is the equipment rental market going to fare? Which are the important factors that could attract demand for the industry? Business model that can work in challenging conditions?
Usually when the infrastructure markets see a sudden uprise, the equipment rental market also fares very well. Seeing the current uptrend in infrastructure the rental market will see a surge in demand.
8. Looking at the current construction equipment usage norms for different industries, how do you view the current budget?
The spending plan which has great focus on infrastructure is a welcome move. Outley of Rs 1.18 lakh crore for the Ministry of road transport and Highways is sure to give the required impetus to the crushing industry. However, there is no benefit for investment in R & D done by private companies that are DSIR approved scientific research centres.
Current section 35 (2AB) allows only 100% deduction of revenue and capital expenditure for the FY 20-21 and there is no mention of extension thereafter. Originally, the deduction was at 200%. In the alternative tax regime under section 115 BAA, if domestic companies opt for 22 % tax rate, then the above R&D benefit is not eligible for deduction.
The government should incentivize spending on R&D by private Indian companies to propel Make in India initiative further.
9. Infrastructure projects will drive demand for construction equipment industry! What do you think?
Undoubtedly, there is huge investment happening in the construction equipment industry. Recently, the government has extended its Rs 111 lakh-crore ($1.5 trillion) National Infrastructure Pipeline to cover more projects by 2025. This has been done in an effort to help economic growth just as the entire nation is slowly recovering from the pandemic-induced recession.
The National Infrastructure Pipeline has now been expanded to 7400 projects which means there will be more demand for construction equipment. The CE industry is sure to see phenomenal growth.
10. While the industry experienced significant drop in demand volume in the past year. How does the construction equipment industry, your area of business looks like in the year 2021? How much business and growth volume is expected in the year 2021 and way forward?
We have already rolled up our sleeves and working our way up. It looks bright and we look to register significant growth in 2021. We have set a target this year which would surpass our previous achievements. With the support of my wonderful team, I am very optimistic about this.
This interview was first published in the Construction and Architecture magazine (C&A) magazine, April 2021 issue.