The Indian Infrastructure sector is yet to fully overcome the negative impact of COVID-19 that led to nationwide lockdowns, resulting in the large-scale stalling of construction projects. This has had an adverse effect on cash flows, with the main contractors and plant and machinery owners delaying planned purchases of newer crushing and screening plants, excavators and rigid dump trucks. An extended monsoon in India, coinciding with the third-quarter lifting of the country’s tough lockdown measures, has also contributed to the subdued demand for aggregates plant.
However, given the need to press ahead with the very ambitious national road infrastructure programme, the Indian Government has moved to address liquidity issues. One new major initiative has been a moratorium on the repayment of loans taken out by contractors and plant and machinery owners. This has driven new business, but new plant trading is yet to rise above 2018-19 levels.
Jaswinder Singh Bakshi, senior vice-president-head of Commercial Finance - Construction Equipment & Commercial Vehicle Finance at Tata Capital Financial Services, said: “There has been spurt in cases of financial foreclosures by some major contractors, subcontractors with large equipment fleets. On a positive note, there has also been some traction on offtake of finance as well since June 2020. This is following the first quarter, under Covid lockdown.”
Singh Bakshi, who is also the convenor of the finance panel at the Indian Construction Equipment Manufacturers Association (ICEMA), added: “With some improvements in cashflow, there have been enquiries for excavators, compactors, crushing and screening equipment between 150-300 tonnes per hour, and rigid dump trucks.”
The National Highways Authority of India (NHAI) aims to develop 65,000kms of the government-funded Bharatmala (national road and highways) project. The DPR (detailed project report) for 40,000kms is in process, while the tendering process for 4,500 kms is underway. There are plans to award 20,000kms of projects during fiscal year 2020-21, with 12,000-13,000kms of Bharatmala projects due to be completed in that period. Buoyed by Bharatmala works, some major commercial quarry plant owners are expanding their operations and investing in new plant.
Speaking to Aggregates Business International, Saurabh Agarwal, director, LSC Infratech, one of India’s biggest commercial quarry firms, said: “We are in the process of setting up a new and completely integrated aggregates and silica sand plant at Karauli in Rajasthan, north India. The 200 tonne per hour plant being set up at substantial capital investment will be one of India’s most state-of-the-art crushing and screening and manufactured sand plants.”
Currently at the commissioning stage, the new cutting-edge LSC Infratech plant features a two-stage jaw and cone plant from major Indian crushing and screening and manufactured sand machinery maker Propel, based in southern India. The separator for the plant is being supplied by Australian firm Mineral Technology, while the washing solution has been engineered by allmineral, part of the Germany-based Hazemag group. Aggregates from the new unit will be sold to major road contractors working in north India, while silica sand will be sold by LSC Infratech to major glass manufacturers like Asahi Glass and Saint Gobain.
One of north India’s biggest upcoming road projects is the 296km four-lane access-controlled Bundelkhand Expressway project. The mega-expressway, which has recently been awarded by the Uttar Pradesh State Government, is divided into six packages. It will expand Uttar Pradesh’s expressway network by 1,192kms.
Agarwal said: “While major Indian road contractors like G.R. Infra, Sadbhav Engineering, and DS Infrastructure, who are involved in big ticket, recently-awarded projects, continue as major customers for our aggregates, we are now also seeing aggregates demand from rural infrastructure projects centred on rural housing and roads. The Indian government’s recent ‘Swach Bharat Abhiyan’ (Clean India Drive) to improve cleanliness through the construction of drainage and sanitation systems is also creating demand for crushed aggregates and manufactured sand.”
LSC Infratech sells its products to traders, they in turn sell to small contractors involved in rural infrastructure projects. LSC Infratech has crushing and screening and manufactured silica sand plants spread across Uttarakhand, north India, and in Bharatpur, Rajasthan. To improve productivity in its other plants, it has acquired five LiuGong, three Tata Hitachi wheeled loaders, and two 20-tonne LiuGong excavators. It has also acquired Ashok Leyland rigid dump trucks, made in India.
“We have been receiving some very positive enquiries for 20-tonne class excavators from large-scale commercial quarry owners such as AME and Alliance Mining to handle crushed aggregates from their new mineral processing units.
Besides, we have also received enquiries of excavators from major road contractors like G.R Infra, Apco, PMC and KCC,” said Manoj Kotru, director, Alpha Teknisk - Volvo Construction Equipment dealer for north India.
Gaurav Rughwani, director - Chandra Tech Services, LiuGong India dealer for Maharashtra, western India, covering the Vidarbha region, said: “Renewed activity in road construction led by some improvement in cashflow has been driving demand for excavators among commercial quarry firms with 150-200 tonnes per hour capacity stationary and mobile plants. There is close to a 25% improvement in demand for excavators from major Vidarbha crushing clusters that supply aggregates to road contractors. Demand is also good from crushing clusters in Chhindwara and Seoni, in the states of Madhya Pradesh in central India.”
Piyush Kumar, a Kobelco excavator dealer based in in north-east India, said: “Multiple road projects have created stable demand for excavators from quarry owners from the seven states in north-eastern India. However, poor liquidity is major issue when it comes to getting finance for new machines.”
Ongoing highway widening projects, from single lane to twin- or three-lane highways, in various states are also driving Indian aggregates demand. Among recently tendered, large-scale NHAI and state government road projects is the INR 816.16 crore east India-based Bihar State government-backed 8.86km elevated road along the eastern side of the Patna Gaya Railway Line from Mithapur to Ramgovindsingh Mahuli Halt in Patna. The NHAI will be soon be calling for bids for the widening to four lanes of the Pararia to Mohania section of NH319 in Bihar state. The project has an estimated cost of INR 818.72 crores.
Set to cost around INR 2668 crore, Rail Vikas Nigam (RVN), India’s state-owned railway construction firm, will soon start constructing tunnels, bridges, yards and supporting formation works for a new 125km broad gauge link between Rishikesh and Karnaprayag in Uttarakhand state. RVN also plans to develop high-speed rail corridors linking the four metropolitan cities (Chennai, Delhi, Mumbai and Kolkata). The company also proposes to develop dedicated coal freight corridors for high axle load freight trains. This will be increase demand for aggregates to pack beneath railway sleepers. A major track laying and renewal programme is also underway.
Despite the many eye-catching infrastructure project possibilities, purchase officials from major construction companies who have mainly bid for road projects, such as GR Infra and Sadbhav Engineering, state that major new orders for aggregates to deliver such projects will depend on how soon the proposed works get their funding in place. There is also uncertainty on how long sub-contractors and plant and machinery owners have to benefit from the current finance moratorium offered by banks and other financial institutions. Some financial institutions have laid down strict clauses stipulating that parties will be only eligible for fresh loans once they have repaid their existing loans.
There also remains some apprehension over how much emphasis recently elected state governments will place on infrastructure investment, while other state assembly elections are still to take place.
Tripat Pal Singh, director of Chhattisgarh Minerals, one of the major commercial quarry owner in the central India state of Chhattisgarh, said: “The newly elected government in the state has put on hold some of the vital local infrastructure projects awarded by the previous government. Besides, the new government has put some restrictions in commercial quarrying and overburden removal. Due to the new regulations, even the NHAI projects being delivered in the state have been facing a slowdown.”
Chhattisgarh Minerals owns one Propel 250 tonnes per hour plant, with jaw and cone crusher combination. It also owns one Indian-made Proman 200 tonnes per hour cone crusher. Despite a slowdown in demand of aggregates, the company is working actively to replace its two 8x2 Man and two Asia Motor Works (AMW) rigid dump trucks with a new high-capacity 12x4 advanced Tata rigid dump truck. German firm Man has stopped production at its Pithampur plant in central India. AMW has followed suit.
Production of and demand for aggregates has also reduced in the major eastern India states of West Bengal and Bihar. With state assembly elections in both states scheduled to take place in the next few months, India’s Election Commission will soon bar ruling state governments from announcing new infrastructure projects.
With elections around the corner, it is unlikely that operating licences will be renewed or retendering opportunities available to commercial quarries operating in major clusters like Gaya, Nawada, Sheikhpura, and Sasaram in Bihar. However, production of and demand for aggregates from Rajmahal, Sahibganj and Taljhari areas in the mineral-rich state of Jharkhand, adjoining Bihar, in eastern India have been firm. One of the major demands is for railway ballast for new railway track laying and track renewals in West Bengal and Bihar. Sandvik has recently commissioned one 300 tonnes per hour jaw-cone crusher combination plant in Rajmahal.
Production of and demand for aggregates originating from the major crushing cluster of Panchami in West Bengal has also fallen during the COVID-19 pandemic. Some key local commercial quarry owners including Kohinoor Stone Products, Orbona Mining and KBC Mining have stopped operations of their plants. Dibyendu Khamaru, senior commercial and plant operations manager for KBC Mining, said: “Premium Pachami aggregate output has also been affected by a recent shortage of rigid dump truck operators. There has also been the major ongoing issue of poor access roads connecting the Pachami cluster to main roads. Moreover, West Bengal government regulations on the overloading of trucks have become tougher with higher penalties for breaches. Finally, there is slow demand in real estate construction in West Bengal, previously a major customer for aggregates.”
KBC Mining owns one 200 tonnes per hour jaw-cone crusher Sandvik plant which produces up to 45,000 tonnes of aggregates per month. KBC Mining owns eight 8x2 Tata, two newly purchased 8x2 Bharat Benz and two 8x2 Mahindra rigid dump trucks.
