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- 1 - OFF HIGHWAY DUMP TRUCKS: INDIA MARKET & OPPORTUNITIES

India - Off Highway Dumpers Market 2009

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Page 1: India - Off Highway Dumpers Market 2009

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OFF HIGHWAY DUMP TRUCKS: INDIA

MARKET & OPPORTUNITIES

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CONTENTS

I. INTRODUCTION 3

II. SUMMARY 3

III. EQUIPMENT EDUCATION 4

A. DUMP TRUCKS HIERARCHY 5

B. STD DUMP TRUCK 6

C. RIGID OFF HIGHWAY DUMP TRUCK 7

D. ARTICULATED DUMP TRUCK 8

E. MINING TRUCK 9

IV. ECONOMIC TRENDS

A. MINERAL RESOURCES IN INDIA 10

B. BREAK UP OF SECTOR 11

C. LOCATIONS OF INDUSTRY RELEVANT MINES 11

D. MINERAL PRODUCTION 11

E. MINING CAPEX 12

F. COAL INDIA PROJECTION OF PRODUCTION, DEMAND AND SHORTFALL 14

V. MARKET TRENDS

A. COAL INDIA PROJECTION OF ESTIMATED DUMPER REQUIREMENT 15

B. BEML ESTIMATE – PROJECTED ,MARKET DEMAND FOR DUMPERS 17

VI. SALES 19

VII. PRICING 20

VIII. TECHNOLOGY 20

IX. PRODUCTION 21

X. COMPONENT SOURCING 24

XI. FOREIGN TRADE 24

XII. MARKET SHARES 24

XIII. DISTRIBUTION AND MARKETING 25

XIV. SWOT ANALYSIS 30

XV. ANNEXURE I

A. INDIA: OFF HIGHWAY DUMPER MODELS 33

XVI. ANNEXURE II

A. INDIA: OFF HIGHWAY DUMPERS COMPARISON : 30 TO 35 TONNE PAYLOAD CLASS 34

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INTRODUCTION This report examines the Indian market for Off Highway Dumpers. Although there are a wide range of machines with payload capacities ranging from 25 T (Metric Units) to 362 T, the most popular models currently in India are in the range between 30 T and 50 T. These models traditionally comprise 6 to 12 cylinders, 235 KW to 510 KW Turbocharged Cummins Diesel engines or proprietary engines as in the case of Caterpillar and Komatsu. They also feature either Allison make or Proprietary Transmissions, with 5 to 7 forward gears and 1 reverse gear. Other common features are fully floating axles, a 30% gradeability, and a 3 stage telescopic hoist for dumping. Although this is the most popular category in India currently, the demand for machines with higher Tonnage and AC/DC drives, is steadily growing. SUMMARY

India: Summary of Off Highway Dumpers,*

2009 Number of Suppliers 7 BEML, Caterpillar, L&T Komatsu, Telcon, Voltas, Tatra , Volvo

Number of Joint Ventures 2 L&T Komatsu, Telcon – Hitachi Euclid

Market Leader BEML -----

BEML Market Share 70 - 80 % -----

BEML Sales (Units) ---- To be Sourced

BEML Population (Units) ---- To Be Sourced

Est. Market Size 2008-09 (Units) 825 ----

Demand Forecast 2012-13 (Units) 930 ---- * Source : Unverified Publications and presentations

The history of the off highway truck in India stretches back to 1964, with the setting up of Bharat Earthmovers Ltd. (BEML), a public sector unit of the Ministry of Defence, at Kolar in South India, to manufacture, amongst other equipment, dumpers, under license from Komatsu, Japan. Subsequently, in the private sector, the Hindustan Motors’ Earthmoving Equipment Division, was established in 1969 at Tiruvallur, near Chennai with technical collaboration from Terex, UK for the manufacture of dumpers. This factory has since been taken over by Caterpillar in 2001 for their Indian operations. The market has traditionally been dominated by these two manufacturers, jointly accounting for 90 per cent of sales. There are other players too in this product category, such as TELCON, L&T Komatsu, Tatra, Volvo and Voltas. Telcon has a Joint Venture with Hitachi – Euclid for their range of dumpers, and L&T with Komatsu.

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Applications for Off Highway Dumpers are strictly confined to mines. Government regulations do not permit their usage outside the designated area. This is as opposed to Tippers, also colloquially referred to as dumpers, which are used for load hauling within mines and also outside the designated mining area. A majority of both off highway dumpers and tippers, are deployed at coal mines and the balance at Iron Ore, Bauxite and areas of other ore sources. Demand for Off Highway Dumpers, over the past nine years has grown from a modest 200 units in FY 2000 to a projected demand of 930 units for FY 2012- 13, indicating an over 4 fold growth. The future trend, according to various industry forecasts, is skewed towards machines with higher payload capacities of a minimum of 50 T and above. No doubt, the current regressive economic scenario will suppress demand and the forecast has to be adjusted as deemed necessary. On a positive side, a majority of the demand for Mining Equipment in India originates from Coal India Ltd. at almost 80% according to various sources. Coal India though, has projected a significant increase in production over the next decade. Currently all of Coal India’s production is consumed domestically, and even requiring imports to meet the domestic requirement. Hence irrespective of the dampened economic scenario, Coal India’s projection of increased production is likely to hold good and their demand for equipment will be the barometer for the mining equipment industry. EQUIPMENT EDUCATION Before we progress further, let us understand what a dump truck is and where it is positioned among the myriad models in the industry.

A. History

The dump truck was first conceived in Saint John, New Brunswick when Robert T. Mawhinney attached a dump box to a flat bed truck in 1920. The lifting device was a winch attached to a cable that fed over a pulley mounted on a mast behind the cab. The cable was connected to the lower front end of the wooden dump box which was attached by a pivot at the back of the truck frame. The operator turned a crank to raise and lower the box. Today, virtually all dump trucks operate by hydraulics and they come in a variety of configurations, and are classified accordingly. Classification of commercial vehicles is is carried out on the basis of Gross Vehicle Weight.

Gross Vehicle Weight ( G.V.W) = Unladen Weight + Payload Unladen Weight : Weight of the empty unit, including Motor oils, fuels etc. Payload : Weight of the Cargo alone

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STANDARD DUMP TRUCK LOAD HAUL TRUCKS

RIGID ARTICULATED (Payload Tonnage)

MINING TRUCKS (Payload Tonnage)

OFF HIGHWAY DUMPERS (Payload Tonnage)

24 T

28 T

33 T

38 T

39 T

DUMP TRUCKS

SINGLE AXLE G.V.W ≤ 16 T

TANDEM & MULTI AXLE G.V.W ≤ 31 T

109 T

136 T

154 – 172 T

172 – 186 T

218 T

236 T

245 T

326 T

362 T

40 T

45 T

55 T

60 T

63.5 T

70 T

85 T

90 T

100 T

25 -35 T

50 T G.V.W = UNLADEN WEIGHT + PAYLOAD

= XXXXXXX RANGE (20, 30, 52 T)

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STANDARD DUMP TRUCK A standard dump truck is a full truck chassis with a dump body mounted to the frame. The dump body is raised by a hydraulic ram mounted behind the the front bulkhead, between the truck cab (traction unit) and the dump body (semi-trailer). The tailgate can be configured to swing on hinges or it can be configured in the "High Lift Tailgate" format wherein pneumatic rams lift the gate open and up above the dump body. A standard dump truck has one front axle, and one or more rear axles which typically have dual wheels on each side. Common configurations for a standard dump truck include the six wheeler which has one rear axle, the ten wheeler with two rear axles, and the tri-axle with three rear axles. The intermediate axles are present to support the weigh over the length of the chassis and sometimes to provide additional braking power. There are various suppliers of these Standard Dump Trucks in India. They are

1. Tata 2. Ashok Leyland 3. Asia Motor Works ( AMW) 4. Tatra Trucks 5. L&T Scania 6. Volvo 7. Mercedes 8. Eicher Motors 9. Man Force

Traditionally, in India, these standard dump trucks are referred to as “Tippers”. Tippers may be classified as follows:

1. Single Axle ( 1 Front + 1 Rear axle) G.V.W ≤ 16 T (~9 T of Payload. Practically upto 22 T) Although the indicated GVW should not exceed 16 T, which implies a payload of approximately 9 T, for all practical purposes, the vehicles are overloaded to carry payload capacities alone of 22 T.

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2. Tandem Axle & Multi Axle ( 1 Front + 2 or More Rear Axles) G.V.W ≤ 25 – 31 T (~ 16t Payload. Practically upto 40 T) Although the indicated GVW should not exceed 31 T, which implies a payload of approximately 16 T, for all practical purposes, the vehicles are overloaded to carry payload capacities alone of 40 T. RIGID OFF- HIGHWAY DUMPTRUCK Off-road dump trucks more closely resemble heavy engineering vehicles than they do highway dump trucks. They are used strictly off-road for mining and heavy dirt hauling jobs. As the payload is unloaded from the rear, they are referred to as “Rear Dump Trucks” . They have payload capacities between 20 T and 360 T. The following are the suppliers of Rigid Off Highway Dump Trucks in India

1. BEML 2. Caterpillar 3. HM ( Still available under “HM” Brand, but produced by CAT) 4. Telcon 5. L&T Komatsu 6. Voltas 7. Tatra Vectra Trucks

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ARTICULATED DUMP TRUCKS An articulated dump truck has a hinge between the cab and the dump box, but is distinct from semi trailer trucks in that the cab is a permanent fixture, not a separable vehicle. Steering is accomplished via hydraulic rams that pivot the entire cab, rather than rack and pinion steering on the front axle. This vehicle is highly adaptable to rough terrain. Only articulated dump trucks can operate in water logged areas. This is usually the case when the mine depth goes below Mean Sea Level. In line with its use in rough terrain longer distances and overly flat surfaces tend to cause driveline troubles, and failures. The following are the suppliers of Articulated Dump Trucks in India

1. Caterpillar 2. Volvo 3. Komatsu

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MINING TRUCK A mining truck is a larger version of the rigid dump truck with payload capacities of 100 to 400 tonnes. As opposed to the rigid dump trucks , mining trucks are powered by diesel engines to drive generator , which in turn power individual AC / DC motors at each wheel. The following are the suppliers of Mining Trucks in India

1. BEML 2. Caterpillar 3. Voltas 4. L&T Komatsu

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ECONOMIC TRENDS The global financial crisis is quite visibly having an impact on India’s industrial sector. Export growth dropped Sharply in November 2008 to -10.42% from 12.2% y-o-y in the preceding month, as Indian exporters faced a sharp decline in demand from overseas buyers. A number of companies have since reined in their production plans as export orders have plunged. However, despite falling commodity prices, India’s mining sector is continuing to post strong Growth, driven by strong domestic demand. Between 2008 - 2013, BMI Market Research forecasts that the sector will grow by a compound annual growth rate of 9.75% reaching a total value of US$47.12bn. This represents 2.6% of GDP, however, the country is still not exploiting its true potential and needs to improve productivity and invest in exploration and infrastructure. MINERAL RESOURCES IN INDIA India is endowed with significant mineral resources and the mineral industry constitutes an important segment of the Indian economy. India produces 89 minerals which include 4 fuel, 11 metallic, 52 non-metallic and 22 minor minerals. Globally, the country is the largest producer of Sheet mica, the third largest producer of coal, the fourth largest producer of iron ore and the fifth largest producer of bauxite. Besides these natural resources, India also hosts significant reserves of copper, zinc, gold and about 26 other metallic and minor minerals.

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BREAK UP OF SECTOR The Indian mineral sector represents a unique blend of small scale and large scale mining operations. In spite of large-scale mining operations, India is essentially a country of small-scale mining, since as much as 87% of the operations can be considered as small scale. India has 2326 private and 292 public sector mines. Over 80 percent of the mining activities in India are in coal.

Table 3 : Locations of Industry relevant mines

Coal Tamil Nadu, Chhatisgarh, Maharashtra, Orissa, West Bengal and Andhra Pradesh

Iron Ore Andhra Pradesh, Bihar, Goa, Karnataka, Madhya Pradesh, Maharashtra, Orissa, Rajasthan

Bauxite Orissa, Andhra Pradesh, Madhya Pradesh, Gujarat, Maharashtra

Chromite Byrapur, Karnataka, Boula, Kathpal, and Orissa Copper Ore Madhya Pradesh, Rajasthan, Bihar and Sikkim

Granite Andhra Pradesh, Bihar, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Meghalaya, Orissa, Rajasthan, Tamil Nadu, Uttar

Lead and Zinc Ore Rajasthan, Andhra Pradesh, Bihar, Gujarat, Maharashtra, Sikkim, Tamil Nadu, Uttar Pradesh

Manganese Ore Madhya Pradesh, Goa, Maharashtra, Andhra Pradesh, Bihar, Gujarat, West Bengal and Karnataka

MINERAL PRODUCTION

Table 4 : Mineral Production in India

Million Tonnes

Mineral 2002 -03 2003 - 04 2004 - 05 2005 - 06 2007 – 07

Coal 341 361 383 407 430

Iron Ore 99 121 146 154 172

Bauxite 9.86 10.95 11.96 12.33 13.07

Chromite 3.06 3.2 3.62 3.42 4.1

Copper 0.152 0.143 0.137 0.124 0.115

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As is evident from the above tables , Coal is the most important and abundant / mined reserve in India, with the country ranking third in worldwide production. Coal accounts for around sixty percent of the country's energy need, with reserves being estimated by the Geological Hard coal deposits, spread over 27 major coalfields, are mainly confined to the eastern and south central parts of India. India has a potential coal-bearing area of about 22,400 sq.kilometers, of which only about 45 percent has been partially explored. MINING CAPEX Large capacity additions planned in Power, Steel, Aluminium and Cement, implies large demand for coal, iron ore and bauxite. Consequently, industry sources believe mining capex is likely to rise sharply – primarily in coal and iron ore. India’s coal consumption was 460MT in FY07, while domestic production was only 432.5MT. Remaining 27.5MT of demand was met through imports. Ministry of Coal has estimated domestic coal demand to touch 731.1MT by FY2012 – implying CAGR of 9.7% in domestic demand. In contrast, CAGR in coal production was 2.53% during the 9th plan (FY1997-2002) and 5.7% during the 10th plan (2002-07). Coal Ministry targets CAGR of 9.47% in coal production during the 11th plan – i.e. from 432.5MT in FY07 to 680MT in FY2012. “The bottleneck in coal production is not availability of coal reserves (which is estimated to be 216 BT), but availability of mining capacity”

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Industry sources believe just the coal mining sector could see capex of more than US$7-9bn over the next five years. In addition to increasing the productivity of existing mines and setting up new mines, new coal blocks are likely to be awarded to private and public sector companies in power, steel and aluminium.

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Table 5 : COAL INDIA LTD PROJECTION OF PRODUCTION, DEMAND, SHORTFALL

PARTICULARS YEAR

2011 - 12 2016 - 17

PRODUCTION COKING 27.65 35.00

NON COKING 652.35 1020.00

TOTAL 680.00 1055.00

DEMAND COKING 68.50 105.00

NON COKING 662.60 1020.00

TOTAL 731.10 1125.00

SHORT FALL COKING 40.85 70.00

NON COKING 10.25 ---

TOTAL 51.10 70.00

GRAPHICAL REPRESENTATION OF PRODUCTION ESTIMATE

0.00

200.00

400.00

600.00

800.00

1000.00

1200.00

2011 - 12 2016 - 17

PRO

DUCT

ION

YEAR

ESTIMATED COAL PRODUCTION (Mill Tonnes)

COKING

NON COKING

TOTAL

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MARKET TRENDS The Indian market for mining and mineral processing equipment is estimated at $ 2.2 billion. Around 80 percent of this is estimated to be in the coal mining sector. CIL is the biggest buyer of mining equipment in the country and has had a dominant influence on the development of the mining equipment industry. It has spearheaded adoption of innovative procurement and maintenance practices in the country. Increased mining activity at Coal India coupled with replacement demand for aged heavy engineering and mining machinery is expected to boost demand for mining equipment. The $60 billion anticipated investment in power generation between 2007-2012 is expected to create significant market opportunity for mining and material handling equipment providers. Ten per cent of the cost of setting up of new thermal power plant is material handling equipment. The Coal Ministry estimates that an investment of $21 billion in opencast mining and $5 billion in underground mining will be required to attain the target production level by 2025.

COAL INDIA LTD. PROJECTION OF ESTIMATED DUMPER REQUIREMENT

PAYLOAD YEAR % INCREASE

2007 - 08 (Existing) 2011 - 12 2016 - 17 2011 - 12 2016 – 17

240 T 0 55 95 55 73

170 T 35 125 250 257 100

120/110 T 260 400 600 54 50

< 110 T 2945 2975 2975 1 0

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As is evident from Coal India’s projected Off Highway Dumper population, it is worthwhile to note that, although a majority of Coal India’s Dumpers lie in the below 110 T category, they intend to gradually phase out further purchases of dumpers in this category. Purchases of Dumpers in all categories above 110 T, though significantly increase year on year. This can be visually represented as below.

PAYLOAD COMPOSITION Vs. YEAR – COAL INDIA LTD ESTIMATE

`

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 - 08 (Existing) 2011 - 12 2016 - 17

< 110 T

120/110 T

170 T

240 T

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BEML’s market research data though indicates that segment in the 50 T to 60 T category will witness the most growth. Contrary to Coal india’s estimate, BEML’s estimate indicates that the although the category in the 35 T – 40 T segment is not likely to grow, the demand for similar nos. of units is expected to remain over the years.

PROJECTED MARKET DEMAND FOR DUMPERS – BEML ESTIMATE

EQUIPMENT 2008 - 09 2009 – 10 2010 – 11

COAL NON COAL TOTAL COAL NON

COAL TOTAL COAL NON COAL TOTAL

PAYLOAD 35 - 40 TON 175 150 325 150 150 300 150.0 150 300 50 - 60 TON 150 75 225 175 100 275 200.0 100 300 85 - 100 TON 120 30 150 120 40 160 150.0 50 200 170 - 240 TON 30 0 30 25 10 35 30 10 40 TOTAL 475 255 730 470 300 770 530 310 840

EQUIPMENT 2011 - 12 2012 – 13

Grand Total Average / Yr COAL NON

COAL TOTAL COAL NON COAL TOTAL

DUMPERS 35 - 40 TON 150.0 150 300 175 150 325 1550 310 50 - 60 TON 200.0 125 325 225 150 375 1500 300 85 - 100 TON 150 50 200 150 50 200 910 182 170 - 240 TON 30 5 35 30 0 30 170 34 TOTAL 530 330 860 580 350 930 4130 826

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CONSOLIDATED PROJECTED MARKET DEMAND – BEML ESTIMATE

PAYLOAD YEAR % CHANGE

2008-09 2009-10 2010-11 2011-12 2012-13 2009-10 2010-11 2011-12 2012-13 35-40 T 325 300 300.0 300 325 -8 0 0 8 50-60 T 225 275 300.0 325 375 22 9 8 15 85-100 T 150 160 200.0 200 200 7 25 0 0 170-240 T 30 35 40.0 35 30 17 14 -13 -14

DUMPER MARKET REQUIREMENT TREND – BEML FORECAST

In recent years, mining companies have been off-loading excavation work to private contractors leading to the development of a new segment in mining. The Government of India is actively considering privatisation of coal mining to give a boost to power generation. This development is expected to stimulate demand for mining machinery. Mining in India has been kept as a government undertaking since 1950s. In the last few years, however, the economy has been liberalized, tariffs lowered, state enterprises privatized and the country opened to investment in mineral exploration. There is a need for upgraded equipment and technology in many of India's mines and modernization is underway, particularly in the coal sector.

0

50

100

150

200

250

300

350

400

2008-09 2009-10 2010-11 2011-12 2012-13

UN

ITS

35-40 T

50-60 T

85-100 T

170-240 T

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SALES Off highway research indicates the following projections for equipment demand by end 2009. In view of the slackening demand world over the forecasts for 2999, are based on a reduced growth rate of 12 % in the

construction equipments industry. , Year wise sales

India Sales of Construction Equipment, 2007-2009 (Units)

2007 2008* 2009*

% Change 2007 - 2008* 2008*-2009*

ASPHALT FINISHERS 954 1040 1150 9 11

BACKHOE LOADERS 21761 16500 18000 -24 9

COMPACTION EQUIPMENT 3219 3225 3600 0 12

CRAWLER DOZERS 627 700 775 12 11

CRAWLER EXCAVATORS 9606 9700 11500 1 19

MOBILE COMPRESSORS 2670 3150 3400 18 8

MOBILE CRANES 8115 8400 9200 4 10

MOTORGRADERS 544 500 550 -8 10

RIGID DUMP TRUCKS 594 825 975 39 18

SKID STEER LOADERS 215 400 450 86 13

WHEELED LOADERS 2386 2700 3200 13 19

OTHERS 57 60 80 5 33 Total Construction Equipment 50748 47200 52880 -7 12

* Forecast ** Articulated Dump Trucks; Crawler Loaders; Mini Excavators; Rough Terrain Lift Trucks; Wheeled Excavators

Source: Off Highway Research Individual sales of Off Highway Dumpers by the various suppliers is to be sourced.

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PRICING The pricing provided below is only for reference and is not based on verifiable sources. Efforts are in progress to obtain the data

Off Highway Dumper Model Payload Price (Ex Works)

Excise Duty CST / VAT

RIGID

BEML

BH 35 -2 31.5 Mt 84 Lakhs 8.24% CST @ 2 % with Form C, Else VAT @ 4 %

BH 50 M 54.5 Mt 165 Lakhs 8.24% CST @ 2 % with Form C, Else VAT @ 4 %

HM HM 1035 33 Mt 75 Lakhs 8.24% CST @ 2 % with Form C, Else VAT @ 4 %

CAT 773 58 Mt 180 Lakhs CST @ 2 % with Form C, Else VAT @ 4 %

KOMATSU TELCON

ARTICULATED CAT VOLVO A35 E 200 Lakhs*

KOMATSU 100 - 130 lakhs*

*Unverified

TECHNOLOGY Off highway dumper technology has progressed rapidly since the first models introduced by BEML in the early 1960’s. High payload capacity machines though, did not find a large market requirement as their demand is directly proportional to the GDP of the country. Since then, India’s Industrial output has grown in leaps and

bounds post the economic liberalization regime of the 1990’s. An Increased demand from the Indian consumer for Power, Cement, and Steel has forced the country’s mining behemoths to augment output substantially. This set in motion, a flurry of activity amongst mining equipment solution providers to satiate the demand for larger, and technologically advanced Mining equipment. Amongst the various suppliers of Off Highway Dumpers in the Indian market, BEML alone has been charged with the task of indigenous technology development. Other manufacturers in India such as Caterpillar India, Komatsu India & Tatra Udyog, have access to in house technology developed at their parent companies. Voltas imports the completely built Unit Rig from Terex. Telcon has access to technology through it’s joint venture partner, Hitachi – Euclid.

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BEML BEML, is the second largest manufacturer of earthmoving equipment in Asia. The PSU had initially begun producing Dumpers under an agreement with Komatsu, Japan. Following Komatsu’s withdrawal from the same at a later period, BEML signed a memorandum of understanding with Terex Corporation during April 2008 for technical assistance to manufacture the heavy duty dumpers, which will cater to the mining sector in the country and abroad. This alliance brings AC Drive technology for haulage trucks BEML has already invested around Rs. 10 crore to establish the unit in its Mysore complex which is set for expansion with an additional investment of Rs. 35 crore. The Mysore complex already manufactures dumpers of 35 tonnes to 120 tonnes capacity. The Terex agreement will enable BEML to manufacture Dumpers upto 360 Tonnes. BEML claims that this is the first time that any manufacturing unit in Asia will produce a 360-tonne capacity dumper. With this technology transfer BEML will also manufacture critical components for the heavy-duty dumpers. As preferred supplier to heavy users of its equipment to CIL and other customers, the firm will aim to leverage its expertise in manufacturing a whole range of high-end mining and construction equipment for public and private sector firms.

PRODUCTION BEML BEML is expanding its current production capacity by investing Rs.418 Crores during 2008-09 & 2009-10. BEML will have an installed capacity to manufacture 1400 Mining Equipment and around 2000 Nos. construction equipment by year 2010-11. KOMATSU Paid-in capital : INR745 million (Approx. JPY2 billion) Equity : 100% by Komatsu Ltd. Location : Oragadam SIPCOT Industrial park, near Chennai (formerly Madras), India Land area : Approx. 240,000 square meters Building area : Approx. 10,000 square meters

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No. of employees : 63 (as of March 28, 2007), Over 100 (planned for March 31, 2008) Investment : Approx. INR 70 Cr for the initial phase (incl. land, buildings and machinery) Products : Off-highway dump trucks Production capacity : 200 units per year In addition to Komatsu’s alliance with L&T, for the manufacturing and distribution of excavators and other Heavy earth moving equipment, Komatsu has established a Plant at Chennai in January 2007, solely for the production of Off Highway Dumpers. It is located at Oragadam SIPCOT Industrial park, near Chennai The facility occupies a building area of approximately 10,000 square meters on approximately 240,000 square meters of land area, involving a Rs 50 crore investment. It has a production capacity of 200 units per year. Most of the components will come from its 100 per cent owner, Komatsu of Japan Komatsu India's plant shares the basic design concepts with the Ibaraki Plant in Japan, which also opened in January this year, featuring a simple assembly line configuration and assembly instruction display system, among others. By making the production processes "visible" at the plants, Komatsu has established a solid quality assurance system.

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CATERPILLAR

CATERPILLAR : Manufacturing Plants in India 2008 *

Location Employees Area (000 m2) Products

2007 Production (Units)

Thiruvallur, Tamil Nadu 998 740 Backhoe Loaders 700 Wheeled Loaders 846 Rigid Dump Trucks 270

Hosur, Tamil Nadu 330 130 Bare Engines 1303 Diesel Generator Sets 456

*Source : Off-Highway Research Caterpillar currently has two manufacturing plants in the country. The large Thiruvallur plant is located 45 kilometres west of Chennai, in Tamil Nadu province, where it produces construction equipment and components. It also houses the administration and training centres as well as a large warehouse, storage facilities and demonstration areas. The Hosur plant is located 45 kilometres south of Bangalore in Tamil Nadu, and is engaged in the assembly of diesel engines and generator sets. Caterpillar has announced in Aug 2008, a four-year, US$200 million investment to increase manufacturing capacity in India for machines and engines. Caterpillar plans to significantly increase production of off-highway trucks being manufactured at its Thiruvallur facility, which is already a global source for rigid dump trucks for the company, the only one outside the USA. It also plans to expand engine production at Hosur by adding production of the 3508 engine, which will be primarily used in trucks being manufactured by the company locally.

TATRA VECTRA MOTORS LIMITED(TVML)

Tatra Vectra Motors Limited (TVML), formerly known as Tatra Trucks India Limited, is a joint venture between Tatra a.s. of Czech Republic (a part of Terex corporation, USA) and the Vectra group, a UK based NRI company, having substantial business interests in UK, the Czech Republic, Slovakia, CIS, Singapore and India. The Joint Venture was established in July 1997 and the first dumper rolled out in June 1998.

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The manufacturing plant is located in Hosur, Tamil Nadu, around 35 kms from Bangalore. The fully integrated manufacturing facility includes an engine assembly and testing plant, a cabin welding shop, a frame fabrication shop and a test track.

COMPONENT SOURCING ( TO ADD HM) PARTICULARS BEML CAT/HM KOMATSU TELCON TATRA VOLTAS VOLVO ENGINES Cummins CAT Komatsu Cummins Tatra

Completely Built Unit Imported

Completely Built Unit Imported

TRANSMISSION Avtec / BEML CAT Komatsu Allison HYDRAULIC PUMPS In House CAT Komatsu AXLES In House CAT STEEL WORK In House CAT CABS In House TYRES Various Various Various Various Various

FOREIGN TRADE / EXPORTS BEML has established its presence in more than 52 countries and has been consistently focusing on the international business activities with major thrust on Asia Pacific, Middle East and African markets. To increase its overseas market penetration, the company has set up its offices in China, Malaysia and Brazil. Further, BEML plans to establish a Sales Office cum Repair Facility and Spares Depot at Balikpapan in Indonesia within the next three months.

MARKET SHARES BEML and CAT combined have a total market share of 90 % in the Rigid Dump Trucks segment. Volvo appears to be the leader in the Articulated segment. Individual sales figures are yet to be sourced for an accurate market share analysis.

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DISTRIBUTION & MARKETING

SUPPLIER OFFICES / BRANCHES DEALERS OUTLETS

BEML 30 22 - Caterpillar 1 2 80 L&T Komatsu 20 45 100 Telcon 32 38 125 Tatra Vectra 4 8 10 (Warehouse) Volvo Voltas

BEML

BEML has a national network of 10 regional offices controlled from Bangalore and Chennai

Regional Offices

NORTH & CENTRAL SOUTH EAST WEST

New Delhi Chennai Sambalpur Mumbai Bilaspur Hyderabad Ranchi Nagpur Singrauli Kolkata

These are supported by a network of 16 smaller district offices – some located at customer premises which provide sales, training and support:

District Offices

NORTH & CENTRAL SOUTH EAST WEST

Bhilai Hubli Dhanbad Panjim(Goa) Jammu Madurai Bhubaneswar Ahmedabad Udaipur Ramagundam Asansol Chandrapur Neyveli Guwahati Kothagudem Hospet

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In addition, Beml has established a national network of 22 dealers covering the whole of India as well as four large service and machine activity centres:

Ongole (AP) Katni(MP) Bangalore Hospet

CATERPILLAR Caterpillar has two dealers in India, namely GMMCO Ltd, covering southern and western India, and TIL Ltd, covering northern and eastern India. GMMCO distributes its products through a network of eight regional offices with each responsible for the operation of branches, site offices and repair and service centres located within its area. These offices are located in:

New Delhi Chennai Kolkata Nagpur Hyderabad Ranchi Mumbai

Ahmedabad In all there are 57 site offices and parts and repair centres supported by sales staff and service personnel located at 26 branches:

Ahmedabad Gandhidham Pondicherry Bailadila Goa Pune Bangalore Hospet Ranchi Bhilai Jabalpur Sambalpur Chandrapur Korba Secunderabad Chennai Madurai Singrauli Cochin Mumbai Surat Coimbatore Nagpur Visakhapatnam

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In addition GMMCO supports the needs of major coal producers throughout India and has service personnel located at:

Ranchi – Central Coalfields Ltd Singrauli – Northern Coalfields Ltd Bilaspur – South-eastern Coalfields Nagpur – Western Coalfields Ltd Sambalpur – Mahanadi Coalfields Ltd

TIL’s main office for the eastern region is in Kolkata, where there is also a large parts warehouse. In addition there are 13 sales and customer support centers in:

Asansol Jamshedpur Siliguri Barbil Jharsuguda Talcher Bhubaneswar Noamundi Tisukia Dhanbad Ramgarh West Bokaro Guwahati

For the northern region the main office is in Sahibabad near New Delhi which also has a large parts depot. The main sales and customer support centres are at:

Amritsar Jaipur Ludhiana Baglihar Karnal New Delhi Chandigarh Lucknow Udaipur

In addition there are a number of service workshops in both the Northern and Eastern regions. Both the dealers of Caterpillar have Cat rental stores that deploy a large number of backhoe loaders in their fleet. Currently there are 11 rental stores in India, a number that is expected to more than double in 2008. This is a captive market for Caterpillar backhoe loaders and an integral part of its strategy.

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L&T KOMATSU

L&T is the sole distributor for L&T-Komatsu and Komatsu machines in India which it sells through its network of 31 offices as detailed below: NORTH & CENTRAL

SOUTH EAST WEST

Delhi Hyderabad Kolkata Pune Kota Vishakhapatnam Dhanbad Nagpur Bhopal Madurai Guwahati Mumbai Jaipur Kochi Ranchi Goa Chandigarh Coimbatore Bhubaneswar Ahmedabad Rajkot Bangalore Jamshedpur Vadodara Udaipur Vijayawada Rourkela Lucknow Chennai

Durg TATRA VECTRA MOTORS LTD. Regional Offices Tatra Vectra Motors has four regional offices for sales as well as territory management.

Greater Noida Hyderabad Kolkata Nagpur

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Service Dealers Tatra Vectra has a total of eight service dealers located along the mining belts

Kota Kothagudem Guwahati Chandrapur Hospet Asansol Ahmedabad

Bhubaneshwar

Parts Warehouse

Amhedabad Chattisgarh Kothagudem Asansol Guwahati Sikkim Bhubaneshwar Hospet Tehri Chandrapur

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XXXXXXX OFF HIGHWAY DUMPERS : SWOT ANALYSIS STRENGTHS

1. Pricing XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

2. Aggregates from internationally re-known suppliers

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

3. XXXXXXX Brand Name

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX WEAKNESSES XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX OPPORTUNITIES

1. Non PSU mine owners / Subcontractors

As discussed earlier in the sector breakup, as much as 87% of the operations can be considered as small scale. India has 2326 private and 292 public sector mines. In addition, Coal India’s reforms aimed at allowing private interests in coal mining operations, would essentially mean that operational costs would be more prudently managed by the private sector participants, as opposed to Public Sector Units. Thus XXXXXXX’ possible cost advantage would be a bonus. THREATS

1. Existing 2. Standard Dump Trucks (“Tippers”)

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Standard multi axle Dump trucks or “Tippers” would definitely be a threat to XXXXXXX Off Highway Dumpers. As industry practices of overloading the trucks, to validate costs of operations is an immutable practice, the XXXXXXX range will collide with the likes of Volvo, MAN, Mercedes, AMW and more recently TATA World Trucks too. The primary advantage that these “Tippers” offer, is the comfort of operation and thereby an increased efficiency. The fact that they are road worthy too as opposed to an Off Highway Dump truck, would probably not be significant, as the vehicles GVW when overloaded to the extent that they are, would not be permitted on Indian roads.

3. Chinese Image

As with any manufactured product from China, inspite of a reasonably proven product quality, the ”Chinese Trash” image will take a greater effort to overcome. Over the course of discussions with several mine owners, one user of XCMG Wheel Loader actually said: “ We broke it in one week. “. This is not to say that such views enforced by all personnel in the mining industry, in fact one mine operator conceded that “ Liugong Wheel Loaders, are performing satisfactorily for the price.” But the fact still remains that the Chinese Image will be detrimental.

4. Consistency of Parts Supply / Service expertise

Mining operations are very cost centric and any avoidable delays are not entertained. With this background, the importance of consistent spare parts supply and service expertise cannot be overstated as a factor critical to success. Industry stalwarts such as Caterpillar, are facing the ire of the consumer, for failure to provide spare parts on time and for non experienced service personnel deployed at mining sites. VOLVO is currently taking advantage of Caterpillars deficiency and is provides spare parts at a moments notice, albeit at exorbitant prices. Slack operations from a new entrant will not be entertained a second time.

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I

ANNEXURE I INDIA : OFF HIGHWAY DUMPER MODELS

Payload in Tonnes

OFF HIGHWAY DUMPERS

BEML CAT KOMATSU TELCON VOLTAS VOLVO TATRA

Model Payload Model Payload Model Payload Model Payload Model Payload Model Payload Model Payload

RIGID

20 T - 30 T HD255-5 25 EH 600 33

T 815 20

Hemang 28

31-40 T BH 35 35

HM 1035 35

HD325-6 36.5 770 D 36 41-50 T BH 40 40 772 45 HD405-6 41

51-60 T BH 50 50

773 D 54 HD465-7 55 BH 60 60

61-100 T BH 70 70 775 F 63.5 HD605-7 63

BH 85-1 85 785 D 85

HD785-5 91 BH 90 90 777 D 90

101-150 T BH 100 100

785 C 136

HD985-5 105

MT 3300 136

MT3000 109

HD1500-7 136 MT 3300 136

151-200 T MT 3600B 154-172

789 C 177 730E 186

MT 3600B 154-172

MT 3700 B 172-186 MT 3700B 172-186 201-250 T MT4400 236 793 D 218 830E-AC 228

251-360 T 360

930E-4 291

960E 327

ARTICULATED

23-30 T 725 23.6 HM300-2R 27.3 A25E/A30E 24-28

31-39 T

730 31 HM350-2R 32.3

A35E/A40E 33.5-39

735 32.7

HM400-2R 36.5 740 38

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ANNEXURE II INDIA : OFF HIGHWAY DUMPERS : 30 – 35 T PAYLOAD CLASS ` Parameters XXXXX

XX Komatsu CAT BEML Telcon

Model Model HD325-7R 770 D BH 35 EH 600

Weight Empty Weight 31.6 34.2 21.88 26.49

Payload (T) 32 36.3 32 33

Engine

Make Komatsu CAT Cummins Cummins

Type Diesel Water Cooled Turbocharged

Diesel Water Cooled Turbocharged

Diesel Water Cooled Turbocharged

Diesel Water Cooled Turbocharged

Power 386KW 381 KW 272 KW 283 KW Torque 2167Nm 2320 Nm 1450 Nm 1857 Nm

Special Features

Power /Economy Mode selection, Automatic Idling Setting System

Electronic Control Module, Modular Radiator,Hydraulic Demand Fan

Transmission

Make Komatsu CAT Avtec Allison

Type

Fully Automatic Planetary Type With Lock up Clutch

Mechanical Drive Powershift Type with lock up clutch and lock up torque convertor

Poweshift with Lock up Clutch

Fully Automatic Planetary Type With Lock up Clutch

Torque Convertor 3 Elements,1

Stage, 2 Phase tc 497 Allison

Range 7F +1R 7 F + 1 R 5 F + 1 R Shift Control Electronic Shift

Control Transmission Chassis Control

Max Travel 70 Km/h 74.8 Km/h 40 Km/h 60 Km/h

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Speed Drive left left left left

Special Features Skip Shift

Function Throttle Lock

Axles

Rear Axle Fully Floating Fully Floating Fully Floating Fully Floating

Special Features

Steering

Type Fully Hydraulic PS

Fully Hydraulic PS

Fully Hydraulic PS

Fully Hydraulic PS

Make

Supplementary Steering Manual Battery

powered

Electrically Driven Hydraulic Pump & motor

Supplementary Steering Pump

Turning Radius 7.2 m 18.1 m 14.32 m Special Features

Body

Body Capacity Struck

18 cu.m 18 cu.m 18.12 cu.m 14.6 cu.m

Body Capacity Heaped

24 cu.m 26 cu.m 22.5 cu.m 21 cu.m

Dumping Angle 48 deg

Heating Exhaust Exhaust with 3 Routing Options

Structure V shape body Dual Slope and Flatbed

Special Features Castings at High

stress Areas

Castings at High stress Areas

Suspension

Front Ind Hydropneumatic Suspension

Ind Hydropneumatic Suspension

Rear Ind Hydropneumatic Suspension

Axle Mounted hydropneumatic

Special Features

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Cab ROPS &FOPS ROPS &FOPS Special Features Viscous Cab

Mounts

Brake

Service Brake Fully Hydraulic

oil Cooled Fully Hydraulic oil Cooled

Dual Shoe type

Air over oil

Front Caliper Disc Air over Hydraulic Caliper Disc

Rear Multiple disc Multiple disc Wedge Actuated

Oil cooled wet disc

Parking Brake Caliper Disc

Internal Expanding Shoe Type

Drum brake on transmission output flange

Retarder Oil cooled multiple Disc

Secondary Brake Manual Pedal

2 Independent circuits within service brake manually applied

Special Features

Fully Hydraulic Controlled Wet Multiple Disc Brakes and Retarder

Hydraulic System

Make Komatsu Hoist Cylinder Twin, 2 Stage

Telescopic Electronic Hoist control

Twin, 3 Stage Telescopic

one 3 stage telescopic hoist

Hoist Time 10 sec 8.1 Sec 12 sec

Special Features Flat Face to Face

O-Ring Seals

Steering priority over Dump

Service Refill

Fuel Tank 484 Lt 530 Lt 397 550

Extended Oil Change Intervals,Centralized Filter Arrangements

Dimensions LxWxH 8465X3660X4000

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Productivity Features

Gradeability(%) 35 35

Author: SRINI P TEL : 9740528425 For XXXXXXX June ‘09