India's largest coal handling agency - Mjunction

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INDUSTRIAL GROWTH INDICATORS - Sectoral
Growth Rates based on IIP
(Growth Rate in percent)
Item
Weight
(%)
2007-08 2008-09
Apr-Nov
08-09
Apr-Nov
09-10
Overall 100 8.5 2.8 4.1 7.6
Mining and Quarrying 10.5 5.1 2.6 3.4 8.3
Manufacturing 79.4 9 2.8 4.2 7.7
Electricity 10.2 6.4 2.8 2.8 6.1
Source: Ministry of Heavy Industries and Public Enterprises &
Insights Research
Sales of equipments in India in units sold
Year International players in India Indian Players
2008-09 4200 500
2009-10 5500 600
2010-11 (Upto Sept) 2700 200
Source: Komatsu & Insights Research
of 8.3 percent during the same period compared to 3.4 percent
registered in the corresponding period of last year. Keeping
this in mind, Coal Insights took a close look at the equipment
manufacturing sector, which is poised to play a crucial role in
the mining growth that is just waiting to happen.
“The equipment industry is in good shape and there is
huge demand for mining equipment. Moreover with massive
expansion plans mapped by SAIL and CIL, mining activities
would considerably rise, the demand for mechanisation and
highly productive, safe, efficient and cost effective machinery
will increase, and thus the growth in demand is inevitable,”
said an industry expert.
The new mining policy of the government of India is also
expected to give a further boost to the mining sector. As per
industry experts, the mining sector now accounts for 2.8
percent of the GDP, and the figure is slated to go up.
“Currently, the market size of mining equipment in the
country is estimated to be over Euro 1 billion. Being a highly
competitive industry, it comprises public as well as private
sector companies including joint ventures and closely held
companies,” said Nath.
However, the Indian local equipment market is still at a
nascent stage, except for some companies like who supply to
the Indian requirements, rest is imported or purchased from
the foreign companies with units in India,” said an official of
Komatsu, an international equipment manufacturer.
Due to the present demand-supply gap, a lot of the current
demand is met by imports. “Around 70 to 80 percent of the
domestic requirement is catered by the domestic production
which is inclusive of the international players who have set
up units in India, while the rest is imported,” a market expert
said. India imports largely from Russia, Germany, China
and also North America. In addition to this, there are many
international companies in the Indian market who import on
behalf of the miners. Some of these companies do not have
manufacturing base but have technology. Thus the designing
is done by them as per market conditions and then it is
manufactured in their base units which is then imported to
India.
“India imports around Euro 600 to 650 million of mining
equipment,” noted Nath. The rationale behind increasing
imports is the perceptible shift in trend towards using larger
size, cost effective and technologically upgraded equipment to
meet the exponentially growing demand for minerals.
“With increasing activity, Indian miners are now looking
for more efficient and technologically sound machines for good
production. Thus, despite the fact that the machineries made
by the foreign companies are expensive, they are gradually
getting accepted in the Indian market. The advantage is that
although there is a high initial investment, the long term
maintenance cost is much lower. Thus, after some resistance
amidst the Indian buyers, it is slowly picking up now,” the
official of Komatsu informed.
In addition to this, most of these products are not
manufactured in India or Indian companies and thus
have to be imported, Coal Insights gathered. Around 80 to
85 percent of the equipment for underground mining are
imported while around 20 to 25 percent are imported for
opencast mining.
“Basically the earlier methods were not efficient, and
machines used to break down. Now with increasing
production, more reliable equipment is required, which will
help in better production,” said an industry expert.
Vis-à-vis the global market, India fares well in terms of price
and quality. However, Indian equipment manufacturers lag
behind their international counterparts in terms of technology,
market experts feel. “Indian equipment is cheaper but there
are limitations in capacity. High capacity equipment is not
yet available in India,” pointed out Nath. “Indian products
are competitive in terms of prices and also in terms of quality
but technological upgradation is required,” said an official of
HEC, one of the leading domestic equipment supplier and
manufacturer.
Thus, the Indian equipment manufacturers are upgrading
themselves both in terms of quality as well as capacity in
order to make themselves globally competitive. “India is
campaigning abroad to take up international mining projects,”
said an official of BEML, the public sector equipment
manufacturing biggie.
Indian equipment has found markets in the Middle East
and Africa, where cost-competitiveness is a bigger factor than
technology. It is also supplying some spares to Europe and
the US.
The sourcing
Indian mine owners generally acquire the equipment by two
routes. They either purchase it or take it on rent or lease. It will
COAL INSIGHTS 8 October 2010