‘Construction boom here to stay’ ......

Friends ,
I am again pasting an article which I read today in ET......

ET I N T E R A CT I V E V M TREHAN

‘Construction boom here to stay’

HAVING supplied construction equipment to big-ticket projects like Reliance’s Jamnagar refinery, Adani Group’s power project at Mundra and several airports across the country, the Mekaster Group is riding the ongoing construction boom to expand its business. Despite apprehensions about slowdown and sky-rocketing prices of key items like steel and cement, buoyancy in construction would not peter out at least till 2020, the group’s chairman V M Trehan told G Ganapathy Subramaniam. Excerpts from the interview:
When there are concerns over an impending slowdown and increasing input costs, what makes you confident of the construction industry’s growth?

Considering the country’s huge population and the strong potential for industrialisation, there is tremendous scope for further growth in construction. Indian economy needs huge infrastructure development to sustain its growth and Indian companies are working on hundreds of huge projects like special economic zones (SEZs), ports, power plants, airports, railway corridors, highways and bridges. Massive investments are expected over the next decades and I feel the India growth story is just taking off. There is no way construction industry is going to slow down, at least till 2020. I can tell you from the kind of orders we are getting for our equipment that slowdown is nowhere in the picture.

Has the construction industry made any progress in terms of quality due to the ongoing boom?

Earlier, it took five years to construct a 250-room hotel of top quality. Now the industry wants it built in nine months. Everybody is moving at a hectic pace. As a result, labour-intensive systems deployed in the previous decades have given way to mechanised operations. Projects like the Delhi Metro are a good example of how things are changing. Heavy equipment is being used increasingly and customers do not mind spending more if they can save on time. We are also seeing taller highrises and industrial projects of larger capacity.

What are the types of equipment that are in high demand?

We find tunnelling equipment, rack & pinion elevators, concrete-paving equipment and mining equipment are in demand. Construction equipment supplied by Mekaster is now being used at 400 sites across the country. We estimate that we would add 300 more sites in a year from now. Big players like L&T, Gammon India and NBCC use our equipment. We have supplied lifts, platforms, pavers, bridge pylon and cranes of various types, besides building boilers and chimneys for various major projects. We have also provided equipment for a number of runway projects.

Does the construction boom mean that the Group is focusing only on supply of equipment for this segment?

We at Mekaster have always believed in the power of technology. We were the first to bring digital switching technology to the telecom sector. Of course, we have exited that business, but people do remember that we were instrumental in creation of the National Telematics Forum. Recently, the Centre for Science & Technology of the non-aligned and other developing countries (NAM S&T Centre) selected our Group as member, making us the first private sector player to bag this recognition. As many as 41 government organisations are members of the Centre which looks after transfer of technology, technical assistance and human resources development to benefit poor nations. We will help in capacity building by dissemination of technology in developing countries. We are also focusing on our machine tools business which is another area witnessing buoyancy.

On the infrastructure front, what is your view on the emergence of new players like GMR and GVK?

Interestingly, companies originating in Andhra Pradesh are handling bulk of the infrastructure projects in the country. Full credit should go to the Andhra government which has given them a strong footing at home to develop and grow this booming business.

Does Mekaster consider leasing of equipment since most industries favour outsourcing?

Some companies are already engaged in leasing of construction equipment. Most of our customers prefer to buy the equipment and avail our services to maintain them to ensure performance and safety. We are open to the idea of considering this segment of business too once the trend catches up.