Tata Hitachi has a plan to ride the boom in India’s infrastructure and construction sector with special focus on roads and mining.
20 Feb 2025 | 3259 Views | By Shahkar Abidi
Tata Hitachi Construction Machinery, a major player in India's construction equipment industry, is navigating a dynamic market amid significant industry growth. While the sector witnessed a robust 26% expansion last year with 135,000 machines sold, the company is strategically positioning itself in the excavator and wheeled equipment segment, which constitutes ...
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Tata Hitachi Construction Machinery, a major player in India's construction equipment industry, is navigating a dynamic market amid significant industry growth. While the sector witnessed a robust 26% expansion last year with 135,000 machines sold, the company is strategically positioning itself in the excavator and wheeled equipment segment, which constitutes 80% of the market.
Under the leadership of Managing Director Sandeep Singh, the company has capitalised on India's infrastructure boom, particularly in road construction, which drives 70% of its sales. Though current growth projections are modest at 0-5%, Tata Hitachi is diversifying its focus towards the mining sector, where it maintains a 25-30% market share in mining excavators.
The company is also expanding its international presence, exploring new markets in Southeast Asia and Western Africa, while simultaneously developing its service and aftermarket business. The company’s operations now encompass spare parts, refurbished equipment, rental fleets, and pre-owned machinery, in addition to new machine sales.
Data sourced from the Ministry of Corporate Affairs suggests that Tata Hitachi reported a net profit of Rs 240.03 crore on revenue of Rs 4,875.17 crore for the fiscal year ending March 2024, a sharp increase from the previous year’s Rs 49.09 crore profit on Rs 4,401.20 crore in revenue.
This upward trajectory marks a significant improvement from FY22, when the company posted a net profit of Rs 6.16 crore on revenues of Rs 3,943.18 crore. Tata Hitachi's growth strategy should be seen in the context of India's construction equipment industry, which recorded 26% growth in the past year, with approximately 135,000 machines sold. Of these, 124,000 units were for the domestic market, while the remainder were exported.
Tata Hitachi on its part, focuses on the segment that comprises 80% of the market—excavators and wheeled equipment. Excavators, typically track-mounted, are used for digging and excavation, offering stability and maneuverability on uneven terrain. Wheeled equipment, on the other hand, is used for material handling and transportation.
Singh credited much of the demand to road construction, which accounted for nearly 70% of its total sales. The government is heavily investing in national highways, state highways, and expressways. There's also a significant push towards multimodal connectivity— linking ports, waterways, and transportation networks— to enhance the speed of goods movement and reduce logistics costs, which currently stand at about 13-14%. The company’s aim is to bring this down to 8-9%, making infrastructure development a vital contributor to economic efficiency.
Beyond roads, the railway sector has also fuelled demand for construction equipment, particularly specialised machinery. Singh highlighted the increasing use of tunnelling as an alternative to traditional road construction, helping minimise surface-level disruptions, while addressing challenges related to clearance.
Additionally, there is also continued demand from infrastructure and industrial projects—including new manufacturing plants from Mahindra, Tata, and Suzuki—Singh acknowledged a slowdown in road project awards over the past year. Last year, the industry grew at 26%, but this year he expects flat growth, possibly between 0-5%.
Mining Focus
Tata Hitachi is putting in aggressive efforts to tap the mining industry as a key driver of future expansion. "Mining customers prioritise quality, and Japanese manufacturers, including us, never compromise on that. This gives us an edge over competitors, even though our costs are slightly higher," continued Singh.
As one of the largest contributors to the country’s economy, mining fuels infrastructure development, energy production, and industrial growth. The extraction of coal, iron ore, limestone, and other minerals requires specialised machinery, including excavators, bulldozers, dump trucks, and drilling equipment. As mining operations expand, construction equipment manufacturers benefit from increased sales and long-term service contracts.
India’s growing focus on domestic mineral production, driven by government initiatives such as the National Mineral Policy and commercial coal mining auctions, has led to a surge in equipment procurement. The development of large-scale mining projects also stimulates demand for earthmoving and material handling machinery, which is essential for transporting extracted resources.
Additionally, technological advancements in equipment, such as automation and fuel efficiency, have made mining operations more productive, further increasing equipment adoption. Chinese manufacturers have gained traction in private mining projects due to lower prices. Tata Hitachi, for its part, claims to have maintained a 25-30% market share in mining excavators. "We are expanding our offerings in this segment—our 47-tonne excavator has been upgraded to 49 tonnes and the 65-tonne model to 67 tonnes, among other upgrades," Singh said.
Export Challenges While Tata Hitachi exports to several regions, entering mature markets like the US and Europe presents regulatory challenges. "Excavators in India currently do not have emission regulations like Bharat Stage (BS) standards for vehicles. We have been working with the government to establish clear norms for non-highway machinery," Singh explained.
One of the reasons for the delay has been the lack of a dedicated ministry overseeing construction equipment regulations. "Since these machines are off-road and do not fall under the Motor Vehicles Act, no single authority is responsible for emission standards. However, the government is now planning to introduce BS4 and BS5 regulations, and we expect a formal notification," he said.
The timeline for implementation is expected to extend to 2027, giving manufacturers 2-3 years to comply. "Until then, exporting to the US and Europe remains challenging due to stringent safety and emission requirements. However, once BS4 or BS5 is implemented, we will actively explore these markets," he noted. Currently, Tata Hitachi’s exports are focused on the Middle East, Africa, and South America, where emission standards are less restrictive.
He also noted that exports to SAARC countries—Nepal, Bangladesh, Sri Lanka, and Bhutan—had significantly declined. "We used to sell 200-300 machines in these regions, but now it's down to single digits. Bangladesh, in particular, has nearly zero demand." To counter this, the company is exploring new markets. "We’ve recently begun pilot exports to Southeast Asia—Thailand, Indonesia, Vietnam. By March, we’ll assess the response and decide on further expansion. We’re also seeing potential in western Africa. While volumes may not be very high initially, we expect to increase exports from 350 to around 500-600 machines next year."
Non-Machine Revenue
Tata Hitachi’s service and aftermarket business has grown substantially, but there is still significant untapped potential. "We have increased service and parts revenue from 17% to 21%, and our goal is to reach 25% in the next five years," Singh stated.
One challenge remains: the higher cost of genuine parts. "Indian customers in the construction equipment sector are still adapting to the idea of using authorised service centres. What happened in the automobile industry 20 years ago—when people preferred local garages but later shifted to dealerships—is now happening in construction equipment," he explained.
However, in the mining industry, Tata Hitachi has successfully built long-term service relationships. "Today, 60% of our mining machines are under full maintenance contracts (FMC), up from 45-50% earlier. We also offer annual maintenance contracts (AMC) and customised service agreements to meet diverse customer needs," he said.
The company has also ventured into the circular economy by refurbishing used machines. "We have started buying back old Tata Hitachi excavators and refurbishing them at our Dharwad facility. Currently, we refurbish 5-7 machines per month, with plans to scale up to 10 units. This process extends the life of these machines, and we provide a warranty, selling them at around 70% of the price of a new machine," he continued.
R&D Focus
Meanwhile Hitachi Construction Machinery has moved to increase its presence in India with a new developmental centre in Dharwad, Karnataka. India has traditionally contributed around 6% of the Japanese company’s global revenue, but Hitachi now sees the country as a key hub for global research and development (R&D). The new facility will focus on refining hydraulic excavators and wheel loaders, critical to the construction sector. To facilitate this, approximately 200 engineers will undergo specialised training in Japan before returning to India to lead development efforts.