Rural markets continue to be a strong driver for the construction equipment sector. H2 of FY25 (October - March) is expected to be better in terms of infra projects driving demand, says Deepak Shetty, CEO and MD, JCB India Ltd.
JCB’s rural play include an entire range of offerings across excavators, shovels and so on that find usage in categories like rural road projects, desilting activities, agriculture, among others.
Shetty is also the Chairman, CII Council on Manufacturing Excellence.
According to him, Trump’s ascent to the White House looks beneficial for trade, while the European economies are expected to see recoveries next calendar year onwards. However, Chinese dumping – even in the construction equipment segment – remains a concern.
On the sidelines of a CII event, Shetty speaks to businessline about H2FY25 outlook, rural and urban markets, impact of geopolitical tensions on exports, among others.
Edited excerpts:
How was H1 FY25 (April – September) for JCB India?
As far as construction equipment are concerned, we have grown 8 - 9 per cent, while JCB India has seen a double digit-growth. Despite talks about stress in the urban sector, we have seen growth in the rural market. More than 65 per cent of our machines are sold in rural areas.
And what is the outlook for H2?
We anticipate similar double-digit growth in H2FY25. In H1, the (General) elections had posed as a challenge with the model code of conduct, etc, resulting in a slowdown. But I have to mention, compared to market anticipation, (slowdown) was not that (pronounced). And we believe that H2 (will be better) with focus on the Pradhan Mantri Gram Sadak Yojana, Nal Se Jal and so on. The sector should certainly grow; and I would say faster.
Are there clear trends to indicate that H2 will be better?
The anticipation is between now and year-end, (when) more funds will be released to complete the financial cycle. This will certainly help in sprucing up demand. Right now, we are seeing more announcements on road projects; more capex is being invested, and all of this will help in increasing the demand during H2.
And is there any outlook on sales?
There is a strong uptake of machines in rural India. There are various projects of the Centre. We are also seeing State governments investing in rural road projects. On top of it, we have change in emission norms (from BS IV to BS Stage V) from January 1. So, some element of pre-buy take place in the third quarter.
65% of your sales is in rural areas. Any particular trend you notice?
We have 2,30,000 machines across India which communicate with us on the internet-of-things. They help us get data from rural markers and from across the country. We also apply data analytics.
There is growth in the rural sector and the urban markets. This is a balanced growth.
Obviously, the rural market looks stronger today. With good monsoon, there should be further improvement.
Urban slowdown may be true for FMCG and other sectors, but we’ve not seen a big slowdown in urban parts. Now this could be for our sector. But, it (slowdown in urban markets) is not happening (for construction equipment sector). We see the real estate sector growing. Every building that has to come up needs to have a foundation. And that is a positive for us.
Have geopolitical tensions impacted exports?
We export to more than 130 countries. And there have been challenges in the European market, particularly in Germany and France.
But overall, we have grown by almost 300 per cent in the last three - four years. But yes, exports could have been better. With the changing geopolitical situation and if the wars come to an end, (it) will certainly be a great opportunity for us to export more.
We are also expecting some recoveries in the European markets next year (calendar year 2025) onwards. I think, Europe has hit the bottom. And as the economy revives, (there will be) focus on rebuilding. A lot of their resources were sucked away by the war, and a thaw would certainly be an opportunity (to tap Europe).
Will Donald Trump’s ascent to White House impact exports?
We are also equally bullish about the American market. Even last year, our largest exports were to the US.
His (Trump’s) focus as you know, is on capex and investment. As the American economy grows, they focus more on infrastructure, it will certainly give us an opportunity. Whether there will be restrictions or not, it’s too early to talk about it. But, I think as an industry we have always benefited (from Trump coming to power).
The Chinese economy has not picked up. Is it concerning, specially when dumping is a reality?
This is certainly a concern. We have to be careful that people don’t use this opportunity to dump equipment into India. Last year, we filed a case on wheel-loading shovels. The DGTR saw merit in our application and appropriate duty corrections have been done. We hope that similar actions are taken, even in the excavator sector.