Even as the world economy shows strains, India’s construction equipment industry is looking at signs of revival in its roadbuilding segment. As an indication that foreign investment is returning to the subcontinent, Swiss buildings equipment company, Ammann Group is planning to acquire a 70% share in Gujarat Apollo Industries Ltd., a leading Indian manufacturer of road construction equipment and materials plants.
Ammann Group will invest $51 million in Apollo's core business of asphalt mixing plants, road pavers, bitumen sprayers and compaction machines. The transaction will create a new company, Ammann Apollo India Private Ltd., responsible for the sale of the Ammann product range in the region.
As part of Ammann Group's planned global expansion, the investment is set to take effect in April once necessary regulatory approvals have been concluded.
"The proposed investment marks the entry of a prominent global player into the Indian road construction equipment market, which is expected to grow in view of the policy thrust of the government on increasing the road network across the country," Gujarat Apollo said in a statement to stock exchanges in late December.
KPMG India Executive Director Arvind Mahajan said the deal is a strong indication of the potential of India's infrastructure sector.
More global equipment manufacturers are set to strengthen their presidence in the Indian construction market through joint ventures and collaborations with domestic companies, according to a report from Delhi-based market consultant RNCOS. It predidcts As a result, the industry is expected to witness a Delhi-based consultancy RNCOS report says.
The market value of equipment is estimated to be more than $6.5 billion by 2014, with the earthmoving sector alone valued at $3.7 billion, says the firm. It predicts compound annual growth rate of 20% from 2011-2015.
Construction equipment demand could rise to around 100,000 units during 2014 to include backhoe loaders, crawler excavators and dozers, wheel loaders, asphalt pavers, motor graders, air compressors, dump trucks, concrete and asphalt batching plants, concrete pumps, piling rigs, compactors, and mobile cranes.
The family-owned Swiss firm also announced that, as of Jan. 1, Deputy CEO Hans-Christian Schneider has assumed the CEO role. He is the sixth generation of family members to run the 143 year-old company with 2,900 global employees.
Schneider takes over from Ulrich Meyer, who has been in charge of the Ammann Group since 2010, and now joins its board of directors.