From Making cars Mahindra and Mahindra moves on to building roads; see what is on agenda

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Pune | Published: October 4, 2017 5:30:51 AM

With global giants dominating the road-construction equipment industry, especially in the multi-lane expressway and national/state highways segment, Mahindra & Mahindra (M&M) has, in its foray into the road construction industry segment, decided to focus on a niche but large business segment, where these companies do not play in.

M&M will not compete against the likes of Case and Caterpillar and instead focus on rural and urban roads with its indigenously developed motor graders, to build roads. (REuters)

With global giants dominating the road-construction equipment industry, especially in the multi-lane expressway and national/state highways segment, Mahindra & Mahindra (M&M) has, in its foray into the road construction industry segment, decided to focus on a niche but large business segment, where these companies do not play in. M&M will not compete against the likes of Case and Caterpillar and instead focus on rural and urban roads with its indigenously developed motor graders, to build roads. As against 30 km of national highways and state highways built or upgraded every day, the country’s rural roads are adding 190 km every day and M&M will be looking at mechanisation of this segment.

The equipment supplied by MNCs for road construction are not of any use here as they are too large or expensive, hence non-viable for these kinds of road projects, which are either single-lane or sometimes double-lane. Road construction in this segment still uses labour intensively as it does not have the equipment that matches their requirement, resulting in slow road making and poor quality of roads and now they also do not find labour for carrying our these road construction, Rajan Wadhera, president, automotive sector, M & M, said.

M&M launched the Mahindra RoadMaster G75 motor grader from its Chakan plant in Pune on Tuesday at Rs 34.99 lakh. It offers 50% of the productivity of the bigger machines at one-third the cost and with double the fuel efficiency. M&M will be using its reach and existing network to expand this business. The company’s customers co-creating the product right from the product development stage.

The company has already got 50 bookings for the motor graders and will make 50 units a month in three to four months, Wadhera said. He said this foray into the construction segment was a way to de-risk the auto business. Earlier, the company had forayed into the power business which has now grown to Rs 1,400 crore.

M&M had got into the backhoe loader segment but found it hard to take on the dominance of the JCB machines in this space, and has now worked on a new strategy that gives the company the first-mover advantage.

Wadhera said they are making an entry into this segment at the right time, when there is an infrastructure investment boost happening. This was their first product in this segment and more products would be coming. He expects growth in the construction equipment industry in the next 20 to 25 years. The company has so far invested Rs 150 crore and further investments will not be a constraint and will depend on the business growth, he said.

The company is not just looking at products in this segment but is also piloting services and solutions business with these machines and all other related equipment that a road contractor would need being made available on demand. They already have their Boleros, tractors, tippers, generators in this space and will add more products, he said. The company is already running a pilot called ‘Hello Machine’ as part of renting out a variety of equipment on demand business in this segment.

Construction equipment was a `21,000-crore turnover business in India, with earth-moving equipment accounting for 60% of the industry; around 25% was road construction. In the roads segment, the graders currently available in the market are not capable of doing work beyond four lanes and costs around Rs 1 crore, Vinod Sahay, CEO, truck, bus and construction equipment business, said. “India sells 32,000 backhoe loaders, 18,500 excavators and only 550 to 600 graders as they can service only 5% of the road segment,” Sahay said. So they worked on an affordable mechanisation for this industry, relevant to the requirements of these roads.

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