9/12/2017 Equipment India Magazine | Excavators Excel

EXCAVATORS EXCEL
COVER STORY / JUN 2017

Driven by the infrastructure development activities in the country, hydraulic excavators recorded a sharp growth
in 2016 compared to the previous year. The positive trend is continuing this year also with a 26 per cent growth in
the first four months.

Hydraulic excavators are the widely used heavy equipment, largely used in construction and mining activities.
Excavators are used in various application like roads, irrigation, railways, stone and limestone quarry, real estate,
land development, mining (coal, iron ore and other mineral mining) etc.With various attachments, it can perform
multiple jobs, be it digging, excavation, drilling, or demolition. The basic structure of an excavator comprise a
boom, dipper, and a bucket attached to a rotating platform, which sits on top of an undercarriage either with
tracks or wheels. The excavation process is performed with the help of hydraulic pumps and cylinders.

There has been a significant increase in the demand for hydraulic excavators in 2016 compared to 2015,
primarily driven by large scale infrastructure projects which have been implemented during the period, and the
projects which are in the pipeline. Roads and highways has been a major driver for growth in the earthmoving
and construction equipment industry. Announcement of projects in key sectors such as railways, irrigation, mining
and affordable housing are also creating a demand in the industry.

Buoyant market
Backed by the increased infrastructure development activities, especially roads and highways and urban
infrastructure, construction equipment segment in general and hydraulic excavators in particular, sailed through
the year 2016 with a formidable performance of growth. The growth trend is continuing in 2017 as well. Major
players in the market is bullish about the growth of 40-50 per cent in the excavator market last year. Sharwan
Agnihotri, Head - Marketing & Key Accounts, Hyundai Construction Equipment India, highlights, 'Hydraulic
excavator industry grew by more than 45 per cent in 2016 over 2015. The growth in Q1 of 2017 is around 30 per

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cent over the corresponding period of last year.' According to him, manufacturers with their advance forecasting
techniques and close interaction with various stakeholders geared up their production plans to meet the
enhanced demands and accordingly planned inventory for CKD parts. This sudden surge in demand created a
lot of pressure in supply from domestic suppliers. Since the demand is driven majorly by road sector, component
suppliers are taking cautions call for capacity expansion. 'We are hopeful that visible action of government in
other sectors like railways, irrigation, port and real estate, coupled with this sustained growth would give
confidence to domestic components suppliers to invest in capacity expansion and work closely with OEMs to
reduce shortages. Demand is also skewed towards 20 tonne class machines, as around 60 per cent machines
sold are of 20-24 tonne class. This has created imbalance in inventory planning at suppliers' end,' says Agnihotri.

Vikram Sharma, Advisor - India & South Asia, Kobelco, echoes the same as he says, 'Yes, the market has
shown a positive trend after a gap of several years. The hydraulic excavator market has seen a sharp rise in
demand of nearly 40 per cent in 2016 compared to the previous year. The higher level is sustained this year as
well and is expected to see further growth.'

According to Deepak Garg, Chief Executive Officer, Sany Heavy Industry India, the growth of the excavator
segment has been consistent 2014 onwards, after the contraction in demand from 2011 to 2014. He says, 'In
fact, in 2016 the crawler excavator segment grew at 50 per cent year-on-year in terms of units sold. The mini
excavator segment too grew exponentially. The excavator segment grew by 26 per cent in January-April 2017
compared to January-April 2016. In 2017 too, the segment is expected to have a healthy growth in double digits.'

Jasmeet Singh, Head - Corporate Communications and External Relations, JCB India, observes an
increase in the demand for specialised machinery like tracked excavators since the average size of infrastructure
projects is growing. He adds, 'At JCB, we offer the complete range of excavators starting from 3T mini excavator
to 37T hydraulic excavator. We have also recently introduced world-class excavators in the larger category - the
JCB 220LC Xtra - a 22T tracked excavator, the JCB 305LC - a 30T tracked excavator and the JCB370LC - a 37T
hydraulic excavator. These innovative and revolutionary products are aimed at maximising productivity while
keeping the value-for-money proposition intact.'

Market dynamics
According to Agnihotri, the total demand of excavators for domestic consumption was around 16,000 units in
2016 and is estimated to be around 20,000 units in 2017. 'Since majority of demand is coming from projects in
road sectors, more than 55 per cent machines sold are from 20-24 tonne class. Stone quarry application has
emerged as the largest consumer for excavators in 2016. Mining segment machines actually saw de-growth in
2016 and the situation is similar in 2017 too. Coal and iron ore mining activities are the biggest demand drivers
for large excavators,' he observes.

Garg also provides similar trend as he says, 'The overall market size for excavators in 2016 was 16,914 units. It
is expected to increase to about 22,000 units in 2017. In the excavator segment, 20 tonne demand remains
healthy and constitutes over 55 per cent of the total demand. Simultaneously,, the demand for 8 tonne for
construction and 40 tonne for mining has been increasing continuously. The biggest growth, on the back of
strong demand, can be seen in the 8 tonne to 25 tonne categories.'

According to Sharma, the 2016 market size was around 16,500 units. The 20 tonne segment continues to be the
largest segment with the 7-10 tonne and 11-14 tonne segments showing good improvement.

Singh is of the view that the demand for excavators varies depending upon the application. He states, 'At
present, we are seeing a lot of traction in the 22T segment. The 30T and 37T excavators are also gaining
momentum as they are primarily targeted towards large scale infrastructure and quarrying projects.'

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He further adds, 'JCB is present in all these categories through its world-class range of excavators which are
known to offer best-in-class performance, safety, efficiency, and reliability, and are backed by best product
support network.'

JCB has recently introduced 'Premier Line Solutions' designed to give maximum value to its customers. It is a
comprehensive range of customised support packages, innovatively designed to offer real time and proactive
product support solutions.

Demand drivers
The growth in demand for excavators can be largely attributed to the government's proactive steps towards
infrastructure development. Also there is a shift in focus towards using excavators from the traditional equipment
of backhoe loaders. This is due to the project size is increasing and the awareness among the contractors that
excavators can be a more productive option when the project size is getting bigger.

Dimitrov Krishnan, Vice President and Head, Volvo CE India, points out, 'There are two interesting trends to
note. First, the government's ambitious infrastructure plans give a strong push to industry growth as the sector
requires more productive machines that will speed up construction projects. Secondly, Indian contractors have
traditionally favoured backhoe loaders as the primary machine of choice for many tasks, including earthmoving.
But as the market matures, and projects get bigger, customers are favouring the improved productivity and
efficiency that excavators can deliver in earthmoving applications.'

Agnihotri says, 'The recent growth of excavators is driven by fresh announcement and execution of stalled
projects in road sectors. Other departments should take some key learning from road sectors and create
favourable environment in sectors like railways, irrigation, ports and real estate, which would give confidence to
contractors and equipment manufacturers for sustainable growth in infrastructure sector. Sharma also sees
road projects as the main driver for the recent growth demand for excavators. Other infrastructure projects will
have a growing impact in the coming years with mining and irrigation also contributing.

According to Garg, one of the main demand drivers is the emphasis on infrastructure development by the present
government. He observes, 'Infrastructure sector is under intense focus through development of roads and ports,
enhancement and modernising railway network, building new airports in tier II and III cities, expansion of
irrigation projects in select states, water supply projects, Swachh Bharat and river cleaning projects. This has led
to a huge demand being created for machines that are efficient as well as cost effective, as the expectations from
the project participants are extremely high. This momentum is likely to be maintained at least till 2024 and we are
optimistic about the prospects for the construction equipment sector.'

Product innovations
Excavators of medium capacity range have been witnessing more demand in the recent past which has
prompted most of the companies to focus on this range. Says Krishnan, 'We have enjoyed huge success in India
with our D-Series models. Our latest excavators include the EC210D, EC250D, EC350D and EC950EL.'

He adds, 'Last year, we introduced two of the smaller models in the range, the EC210D and EC250D at bC India.
The EC210D features a robust frame combined with optimal engine power and hydraulic pressure to provide
superior digging forces. It also has increased hydraulic flow for responsive and accurate control in grading and
combined operations. Similarly, the EC250D delivers increased power and digging force as well as faster cycle
times for greater productivity.'

The EC350D has an operating weight of between 34,300 kg and 38,700 kg and its maximum bucket capacity is 2
cu m. Equipped with a 210 kW-rated engine, the excavator delivers fast cycle times, high digging power, and low

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fuel consumption. It also features Volvo's ECO mode, which automatically switches the engine off during idle
times, to further reduce fuel consumption. The EC950E is the largest excavator ever built by Volvo and has an
operating weight of 89,960-91,840 kg. Its durable wear-resistant components guarantee maximum uptime and
profitability.

Sharma elaborates on Kobelco's new range introduced recently, 'We have recently introduced our new
Generation 10 excavator model SK220XDLC in the 20-24 tonne segment with key customer benefits such as: up
to 19 per cent higher productivity; stronger boom, arm and undercarriage with new under cover for Extreme Duty
(XD) durability; stronger and bigger buckets for increased productivity and service life; more effective air-
conditioning and air compression for dust-free cabin environment; new multifunctional colour display with
advanced features; super-airtight cab for dust-free environment.

While the excavators are built to be versatile in their operations, there are a few applications that require special
features. 'Sany's SY210 long reach excavator is in high demand for certain irrigation applications, well digging
and river cleaning applications,' says Garg.

Customer in focus
When projects get bigger, excavators are more productive option than the other equipment such as backhoe
loaders. Contractors look for productivity, reliability, safety, operator comfort, and easy to maintain. Krishnan
elaborates on the advantages of Volvo machines. 'Both the EC210D and EC250D are equipped with intelligent
work modes, including the new G4 work mode. Operators can choose a mode that best suits the task at hand,
selecting from I (Idle), F (Fine), G (General), H (Heavy) and P (Power max) mode. Choosing the correct mode for
the working conditions ensures added versatility and increased productivity.'

He further adds, 'Our customers appreciate the cost savings and operational efficiencies that Volvo technologies
bring them. Particularly in the current work environment, where projects are getting bigger and timescales are
getting tighter, contractors are looking to equipment and technology to bring them some advantage.'

Hyundai has recently launched SMART series of excavators in the market. SMART is acronym for Superior
Performance, Low Maintenance, Analytical Capabilities and Advanced Technology. 'We incorporated value-
added features in the machines based on our interaction with customers, dealers and other stakeholders. We
articulated our learning to enhance operators' comfort and convenience by offering powerful air-conditioner in
cabin with improved airflow ducting, height adjustable operator seat and fuel filling pump to reduce unproductive
time spent by the operator. We have also worked on improving the performance of machine by adding features
like fuel saving kit and air pre-cleaner on the machines. The machine reliability is improved by adding
reinforcement to high stress areas and optimising the linkage design for effective transfer of forces,' says
Agnihotri.

He adds, 'Analytical capabilities of Hyundai machines for sensing, diagnosing, communicating and storing the
problem records differentiates Hyundai machines from many other available options and truly make Hyundai
machines Smarter. According to Singh, customers are looking for machines which are productive, efficient,
reliable and most importantly, safe to operate. Another important aspect is low machine maintenance as the
operational cost of an excavator forms a significant part of the ownership cost.

He adds, 'JCB machines are known for setting new benchmarks in the industry, whether in design or technology,
our machines always stand out. At JCB, all our products are designed, engineered and manufactured after
carefully studying the customer requirements.'

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Singh further elaborates on the technology front, 'On the technology front, one of the noteworthy features in our
range of excavators is the JCB Livelink, an advanced Telematics technology that helps our customers to
remotely manage their fleets. This state-of-the-art technology enables users to get SMS alerts on their mobile
phones or smart devices regarding service alerts, operations and security of their machines. The information is
available in real time regarding the health of the machine including engines and gives vital information to the
customer in terms of number of hours the machine has been operational, service intervals, fuel levels,
malfunctions if any, etc. On the design aspect, Singh adds, 'JCB has made some significant advancement to
suit the customer requirement such as robust structures, comfortable operator cabin, and easy access for
maintenance etc. JCB provides low effort joystick levers in its range of excavators and fully adjustable operator
seat helps in long fatigue-free operation. The cabin is spacious with large internal space and is mounted on
viscous mounts to absorb vibrations. Ergonomically placed, low-effort operator controls minimise operator
fatigue. In-cab ventilation is provided via a roof hatch and rear sliding window providing the operator with a cool
working environment. JCB's recently introduced 22T excavator - the JCB 220LC Xtra has air conditioner as a
standard.'

On JCB's 37T excavator, he explains, 'The JCB 370LC comes with high capacity multi-stage fuel filtration to
further guarantee durability and provides up to 25 per cent fuel savings than its predecessors. A rigid, fully-
welded X-frame undercarriage provides excellent durability through robust design. Additional heavy-duty wear
strips are provided in the dipper for additional strength and protection from any external damage. The machine
features a solid, stable work platform for fast cycle times.'

According to Sharma, customer expectations are always developing with the need for them to be more efficient
and cost-effective in their operations. 'Kobelco values the field feedbacks from various sites which help us to
make it possible for us to fulfill their requirements. Common specific requirements are long reach, faster and
stronger travel option over stones and rough terrain, lower emission levels, lower ground bearing pressure, etc,'
he says.

'At Sany, we ensure that our customers always get an extra value through technology and innovation. For
example, Sany excavators incorporate technology, offering the best-in-class fuel efficiency and productivity. Also,
Sany offers GPS tracking and monitoring system that shows the real time data of the machine's operation, right
from the precise location and operating hours to critical operating parameters. This ensures that the customers
can get the best operating efficiency out of their machines,' Garg claims.

Hybrid technology
Fuel efficiency is one of the important features of an equipment customers always look for. All manufacturers
have given utmost importance to fuel efficiency by way of using better engine and transmission technology.
Hybrid technology is a new concept which is becoming a new means of fuel efficiency. The central driver in the
development of hybrid technology is fuel efficiency. Kobelco is a pioneer in developing hybrid technology in
excavators, with the first machine being displayed at Intermat 2006 in Paris. Recently, Volvo CE has introduced
the prototype of a compact excavator with hybrid technology. However, considering the cost factor and the less
focus on emission, the concept is yet to get attention in Indian market.

Says Garg, 'Hybrid technology in excavators is still a distant reality when we look at the Indian market. This is
due to the prohibitive cost associated with these excavators. Indian excavator market is very cost sensitive and
hybrid excavators will find it very difficult to penetrate the market in the current situation. However, as the market
grows, awareness and regulations regarding carbon emissions become more stringent and the technology
becomes affordable, we may see acceptance for the hybrid excavators in the Indian market increasing.'

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Krishnan explains, 'As a company, we are constantly researching new technologies for all areas of machine
operations. Not only hybrid technology, but also electrification and more. India remains a market where new
technology is generally absorbed over time, rather than being an early adopter. Customers in India love Volvo
machines so much because they can deliver the fuel savings they want but without the need to take on newer
hybrid systems, instead utilising proven designs.'

According to Sharma, the need to conserve hydrocarbon-based fuels is ever increasing. He comments, 'Hybrid
models contribute by saving diesel. In India, cost considerations prevail over environmental care. Government
regulations can help in adoption of hybrid technology in India.' He further adds, 'With the government promoting
the Make In India concept, there is a need to upgrade the relevant regulations and norms to encourage the
upgradation of technology and to bring India to the international level.

Rentals a major contributor

As one of the popular equipment in the infrastructure and mining segment, excavators contribute to the major
part of income to the rental players. However, the rental market is highly unorganised in India with no proper
system and practice in place. According to Singh, the rental market is an extremely important segment, which
supports the growth of excavators and also contributes to machine availability. 'This particular segment is
growing for machines in the 22T range. However, the rental market in India is largely fragmented with many
individual players thus, presenting an opportunity to consolidate,' he adds.

Says Krishnan, 'We expect the rental market continue to grow in India for some time as the country's economy
matures. Excavators will likely be a key product line in the development of the rental business here.'

The rental market continues to be predominantly unorganised, according to Sharma. He explains further, 'There
are a large number of small players. The rental rates do not differentiate much on the basis of machine features
like fuel efficiency, productivity, machine uptime, etc. Low-cost machines are usually popular as they get almost
the same rental as premium machines.'

Garg sees rental market in two ways. 'If we look at the share of rentals in the overall segment, that is the trade
demand. It is a huge segment of the market and still contributes over 50 per cent of the total excavator demand.
However, if you look at the OEMs' direct rental business, it is minuscule and only one or two OEMs cater to that
sector in India, due to lack of economies of scale.'

What lies ahead

Considering the prevailing and future industry trends, the outlook is bright for hydraulic excavators. Says
Krishnan, 'In the short to medium term, we see a very bright outlook for the market. India has a lot of potential
thanks to the government's strong push for infrastructure development. This will almost certainly lead to stronger
growth in the economy and the construction equipment industry. We also expect that more equipment will be
required in coal mining, particularly large excavators. As a market leader, Volvo CE is excited to play a part in
facilitating India's development.

Singh is positive on the future as he comments, 'Looking at the investments that have been committed by the
government for the infrastructure sector, we are hopeful of a positive growth trend in the excavator segment.
Large scale projects in sectors such as roads and highways, railways, ports, irrigation etc, will be the prime
drivers of demand for all earthmoving and construction equipment including excavators.

Garg estimates, 'The momentum created in the CE space due to the infrastructure focus is expected to keep the
industry buoyant in the short and medium term and healthy in the long term. In our estimates, the crawler

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excavator segment will show a strong growth on the backdrop of improvement in the mining and construction
sectors.'

'Barring any unexpected development, the market should see a period of growth over the next 5-7 years, states
Sharma.

Considering the confidence of the equipment industry and the government's proactive approach towards
inclusive growth of the country, it is for sure the infrastructure development will be the key in the coming years
and being the major equipment class in these development activities, hydraulic excavators will definitely excel in
its demand growth in the coming years.

'The rental market is an extremely important segment, which supports the growth of excavators.'

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