The Navi Mumbai airport project, once takes off, will create a lot of work in the region which will drive the demand for various construction and earthmoving equipment, says Sanjay M Desai, Director, MSD Engineers. Excerpts from the interview...

Could you brief us on your company and the services provided?
We are the authorised dealers for Terex Equipment in Mumbai, Thane and Raigad districts of Maharashtra. Terex in India operates in four different verticals: cranes, mining equipment (crushers and screens), earthmoving equipment, and aerial work platforms. We are dealers for Terex backhoe loaders and skid steer loaders. We also provide after-sales service, warranty service, beyond warranty service and supply of spare parts.

What is the current demand for BHL and skid steers from these markets?
By and large, all segments in the region find demand for these equipment. Major opportunities are in roads, quarrying, and real estate. But, currently, the infrastructure projects are slow and there are environmental issues going on with quarries. So, overall demand is low. One of the major demand drivers for backhoe loaders is the rental segment.

What is your client base? And what are the trends in buying patterns?
We have divided the user segment into five categories: Rental, mining and quarrying, government and institutions, contractors attached to the municipal projects, and corporate contractors who have presence in national level.

Rental market also is a major demand puller. A first-time user takes the machine on rent to see the advantages and benefits of the machine and then he decides to purchase for himself; whereas corporate companies will have a steady flow of purchase throughout the year.

What is the price range for backhoes?
Price for backhoe loader is in the range of Rs 23 lakh to Rs 25 lakh, depending on attachments with the standard equipment.

What is the approach from customers on advanced features in equipment vis-a-vis cost?
Customers are highly price-conscious. As long as advanced features come as standard fitment in equipment, it is alright. However, customers will be hesitant to shell out extra cost for any additional features. Especially hirers, who buy these machines to rent out, are not really concerned with advanced features.

Which is the fast moving model?
In backhoe market, there are two popular models, 76 HP with lower operational cost / lower fuel consumption and lower productivity as compared to the 90 HP which has higher productivity with a slightly higher operational cost due to higher fuel consumption. Here, an end-user who buys the machine for himself will go for the 90 HP whereas the rental segment prefers the 76 HP machines. The ratio of yearly sale of backhoe loaders (all brands) in India is about 80 per cent for 76 HP category against 20 per cent for 90 HP category.

How do you look at the demand from various infrastructure segments?
Demand comes from all infrastructure segments because backhoe loader is a versatile machine which can be used for almost all kind of works. So, any of these segments grow, backhoe loaders have their share of growth in it. This is one of the reasons for high volume of backhoes among the various earthmoving and construction equipment.

Is there any innovative use backhoe put into?
A backhoe can be seen in the remotest of the region. In the agriculture sector also, backhoes have now been used with special attachments. A few players are planning to come out with smaller versions of backhoes dedicated to agricultural applications.

What are the financing options that you provide for your customers?
About 90 per cent of our sales take place through financing from NBFCs. We have tie-up with all major financial institutions. Depending on the requirement and profile of a client, we recommend the financial institutions to get in touch with our clients and workout suitable financing options. In fact, the principals themselves have tie-up with all major financial institutions at a national level.

How do you assess the future potential/opportunities?
The industry feels that 2015 cannot be the same as 2014, there should be growth. A few mega projects are set to take off soon. The Navi Mumbai airport project once take off, will give a lot of scope to the surrounding areas. A lot of work will come in and demand for equipment will go up.