ANNt,UEB$ARYCOVER STORY . INFASTRUCTURE 2.0 mH.ffiffi,ff'!4rtm

ALL SET TO MEET INFRAGROVTTH DEMANDDespite mony pitfalls over the yeors, the infrostructure sector hss shown osteody growth, promising a strong future for the infrostructure equipment market.Raj Shrivastav, Executive In-Charge - Cnrshing, Screening & HMAB ondRnil Bhatia, Vice President - Sales & Marketing, TIL, write more on the emergingopportunities for construction equipment.

ggressive infrastructuraldevelopment is imperativeto the overall economicwelfare of a country. If the

economy is likened to a wheel, itsinfrastructure sector is most certainlythe central hub that supports all theother sectors in the form of spokes andkeeps the wheel spinning smoothlyand efficiently. In other words, a robustinfrastructure is the very foundation ofa thriving economy.

Understandably, todayinfrastructure is at the forefront ofthegovernment's multi-pronged efforts torevive the economy and usher in thenext golden age ofgrowth anddevelopment. However, this is also theone sector that was in troubled watersnot so long ago. Solet us begin by taking a fleeting look atwhat really went wrong with Indianinfrastructure. As recently as in20 14- L5, maj or infrastructureprojects had remained in limbo,

Anil Bhatia,Vice President, Sales & Marketing,

TIL.

led to a decline in road trafficoperational BOT projects and impactedtoll revenues. Uncertainty over landacquisition was a major impediment.The new Land Acquisition Act of 2013caused costs to soar, in some cases, tomanifold the original estimates.Consequently, private sector interestwas at its weakest.

Raj Shrivastav,Executive In-Charge - Crushing,

Screening & HMAR TIL.

pending sovereign clearances. Stalledprojects hurt the liquidity and debtservicing ability of developers, which inturn prompted new investors toshy away from the ailing sector andmade lenders hesitant to disburse freshloans. Roads and highways sector wasperhaps the worst hit. A subsequentslowdown in the automobile industry

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COVER STORY. INFASTRUCTURE 2.0 -InlrIIHlrj{S$IiE9lI

In lhe mqleriql hondling segment, on increosed demond for higher copocity mobilecrones is expecfed.

ffimvernment's fonwurd-tclo[<ing rmes$ures

Against this dismal backdrop, thesector began a gradual but assuredturnaround. Banks and NBFCs wereencouraged by the Reserve Bank ofIndia (RBI) to extend long-term loansto the infrastructure sector withflexible structuring to absorb potentialadverse contingencies. Specialincentives were announced for RealEstate Investment Trusts (REITs) andInfrastructure Investment Trusts(InvITs) to pool the much neededinvestment from both foreign anddomestic sources, with mutualfund linkages.

The National Industrial CorridorAuthority was established tocoordinate the development ofindustrial corridors - a whopping 100Smart Cities to be set up around sevenapproved industrial corridors. Torevive the roads and highways sector,the government even consideredrolling out of a shelf of pre-approvedconstruction-ready projects - to be bidout with an approved set offorests andenvironmental clearances. Thegovernment tried out several modes ofawarding projects - the BOT mode(build, operate, transfer); the BOT(annuity) mode where the governmentshoulders a part ofthe project cost; theEPC mode (engineering, procurement,construction), which is financedalmost in its entirety by thegovernment; and the FIAM (hybrid

annuity model), which is basically a

combination of EPC and BOT(annuity). Slowly, but surely, thesituation began to improve.

Moior proiecls thot chongcequations

In 2016, India jumped 19 places inthe World Banks Logistics PerformanceIndex (LPI) to rank 35m amongst 160countries. ln2017, our country jumped30 places in the World Bank's Ease ofDoing Business Rankings to join thetop 100 nations club (rank 100) interms of business friendliness.

Today, we bear witness to anarsenal of big-ticket infrastructureprojects that promise to transform theIandscape of India. The government'soptimism, especially in the roadssector is evident in the fact that thehighways construction target for2017-18 was doubled to 15,000 km asagainst the previous fiscal. In October2017 , the Cabinet approved an outlayof Rs 6.92 lakh crore for building83,677 km of roadways over the nextfive years, the largest-ever outlay forroad construction undertaken inIndia. The Indian ports andwaterways sector is also up for amajor facelift soon. The IndianRailways have targeted an aggressiveexpansion plan that includes 80 percent track renewal, totalelectrifi cation, railway stationmodernisation and addition ofnew tracks.

Some of the biggest infrastructureprojects underway include - the

Sagarmala Project, aimed atrevolutionising the 7,500 km longcoastline of India, estimated at aroundRs 8 lakh crore over 20 years; theBharatmala Project, a five-year projectworth around Rs 5.35 lakh crore thatwill crisscross India from west to east,with economic corridors, feederroutes, border connectivity roads,coastal connectivity roads, expresswaysand NHDP roads for a total length ofaround 34,800 km; the ChardhamHighway Project, around 900 km ofnational highways at an approximatecost of Rs 12,000 crore to improveconnectivity between the Char Dhampilgrimage centres in Uttarakhand; theInland Waterways DevelopmentProject, aimed at providing logisticsproviders in India with an efficientalternative to rail and roadtransportation; the Setu BharatamProject, worth Rs 50,800 crore, toensure highways without railwaycrossings by 2019; the Mumbai TransHarbour Link to connect Mumbai'seastern suburbs with the mainland.at a cost ofaround Rs 18,000 crore;and finally the expansion plans ofthe Indian Railways with a proposedplan outlay of Rs 1.46 lakh crorefor 2018-19.

Meeting lhe consfrucliondemands

With projects like these underwayand more on the anvil, it is evidentthat the demand for infrastructureequipment/construction equipment(CE) will pick up substantially in thedays to come. About 35 to 40 per centofthe outlay on a typical infrastructureproject is on account of the equipmentemployed. Going forward, employingthe right equipment for the rightapplication will be paramount forproductive asset utilisation and timelycompletion of projects. Therefore,productivity and efficiency parametersof an equipment will be crucial in theselection of an equipment. There willbe a clear preference for mobile,modular and compact with highuptime and performance. In the road

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COVER STORY . INFASTRUCTURE 2.0

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Employing fhe right equipmenf for the right opplicofion is poromounf lor producfive qsset utilisofion.

construction sector, with respect tocrushing and screening equipment, weare seeing a shift in contractorpreference from stationary unitequipment to mobile crushing andscreening plants, which have fasterdeployment, greater inter-site mobilirysuperior productivity and betterqualrty of output. In the materialhandling segment, we are likely towitness increased demand for highercapacity mobile cranes - 100 tonneand above.

Equally important as theequipment selection is themaintenance of these machines. Anyinfrastructure equipment presents asizable investment to the developerwith regards to its share in the overallproject outlay. Therefore, ensuring themaximum machine uptime and

optimum productivity by way ofprompt complaint response and quickproblem resolution is of utmostimportance. Going forward, theemphasis will be on preventive andpredictive maintenance, which aretailored to the needs of the customer,

regardless of the machine, its ageor application.

In effect, merely providing theoptimum equipment solution to thecustomer will not be enough. It will beequally critical to prevent machinebreakdowns and increase machineefficiency in order to help thecustomer achieve the lowest cost Perunit ofproduction.

New chollengesSluggish activity in the

infrastructure space and subdueddemand for equipment have been theprimary challenges over the last fewyears. Now with the improvement inthe growth enablers, a positivecorrection has begun, However,what must be borne in mind is thatall of this optimism is contingenton the clear availability of capital.Global institutional investors,construction companies, developersand fund managers must investequally to reduce the burden on theNational Exchequer.

In the Union Budget 2017-18, the

government had allocated almostRs 4 lakh crore to the infrastructuresector. International investors too haveevinced significant interest in theIndian infrastructure space in recentyears. FDI received in the constructiondevelopment sector from April 2000 toSeptember 2017 stood at Rs 1.66 lakhcrore, and in infrastructure activities atRs 70,000 crore, as per DIPP. However,while public expenditure and foreigninvestment are kicking in, privateinvestment is yet to pool in with thesame degree of enthusiasm. Increasedpublic spending may partially plug theinfrastructure deficit in India. But inorder to realise the full growth potentialofthe sector, an increase in PublicPrivate Partnerships (PPP) isindispensable. While PPPs have existedfor a long time, they are yet to take offin a significant way. The governmentneeds to quickly revive PPPs byspeeding up dispute resolution,releasing funds locked in arbitration,fast-tracking sovereign clearances and,most importantly, by setting up a level_playing field forprivate investors. €

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