2 Chinese firms tap building equipment biz

Two prominent Chinese construction equipment companies, Sany and Liugong, have ventured out of China for the first time, to set up facilities in India, to capitalise on the infrastructure boom here.

Several other foreign and domestic companies are also planning new initiatives to meet the surge in demand. It is estimated that the construction equipment market in India will be in the region of $4 billion by 2010, more than double the current $1.95 billion.

According to Indian Earth-moving and Construction Industry Association (IECIAL), which represents the construction equipment industry, a staggering investment of $320 billion is expected in infrastructure development in the next five years.

On account of the demand for equipment, a number of international players are expected to come to India. Some of these companies are from such developed countries as Germany, United Kingdom, South Korea, Italy and China.

Sany and Liugong are setting up business here through a manufacturing centre. Both companies will manufacture and distribute construction equipment which is used in road building, mining and earth-moving.

The $1 billion Sany group will invest $70 million for its manufacturing facility in Pune. The plant will have a capacity of 15,000 units per annum.

Liugong will set up a facility in New Delhi for wheel-loaders, rollers, and such equipment. It will also carry out research and development activities here.

Hyundai Heavy Industries (HHI), a division of the Hyundai group, has made an initial investment of Rs 260 crore for a construction equipment plant in Chakan, Pune.

Initially, the plant will make hydraulic excavators, then add production lines for other construction equipment. The new plant, with a capacity of 3,500 units annually, will serve the core activity of the global business of Hyundai Construction Equipment Division.

Joseph Cyril Bamford, or JCB as it is popularly known, is India's largest construction equipment maker. The company, which has a market share of about 55 per cent, is investing Rs 300 crore to double its capacity at its Ballabgarh plant.

It will also localise its products like excavators, road-rollers and wheel-loaders at its newly commissioned plant in Pune. Earlier, this equipment was imported. Vipin Sondhi, managing director and CEO, JCB India, said, "We are looking to maintain a 25 per cent growth for the next few years. We will be spending $50 million additionally to set up an export oriented plant in Pune and a parts sourcing facility for our international operations."