How Motor Graders Deliver Better Margin for Your Business?
ructure across the country. Right from creation of basic infrastructure in the rural parts of the country to developing and expanding the urban infrastructure. The businesses involved in construction and construction equipment related industries and work stand to be major beneficiaries of this infrastructure boost. 40 kms of roads per day is the target that the government has set to meet its infrastructure requirements and it a gold mine of opportunities for businesses in the industry.
Roads are the skeletal structures on which the connectivity of a country and the remaining infrastructure is built on. This is a very good time for business with in-depth insights and understanding of the condition of roads on India. the insight and understanding makes it easier for them to attend to the needs of the country’s roads and make their moolah in the process. 90-95% of the roads in India that need to be created or maintained are rural roads which is a very different play ground as compared to what the large companies are used to dealing with.
That being said, motor graders come under the primary set of construction equipments required to make these roads and play a major role in the bottom line of profits that road construction projects create. Lets dive into how important a role they play in the creation of roads and can aid to deliver better margins for businesses involved in construction of infrastructure and or roads.
It is common knowledge that road construction has always been a labour intensive job and adds to the unpredictability of the time line and costs of the project. Not only does human labour require most capital it is also much more time consuming as compared to machines. In a business where time lines can make an impact on the profit margins unpredictability due to involvement if human labour can be a major turn off, especially when it comes to smaller projects in rural areas. Additionally the labour involved with road construction is untrained with very little or no knowledge of road construction. This inadvertently ends up compromising the final quality and finish of the roads and eventually drilling holes in the contractor’s pockets in the long run. Additionally time delays are a norm having to regularly source new labour to replace the ones that left making it a time and money intensive task.
This is where the machines come in, the motor graders in particularly are the most reliable and efficient machines one can have on a road construction site. A single machine can single handedly do the work of 30 people or more at relatively lesser costs and faster pace. Motor graders deliver better quality and finish of jobs, whilst reducing the time and costs involved making it a must have on road construction sites. Completing projects before the scheduled timelines turn into hefty bonuses from the government in addition to generating good will for the business creating more business and eventually profits. Motor graders help companies finish the existing projects and take on many more projects given the smaller timelines and larger profits that they help bring in.
Motor graders being heavy duty construction equipment are used in challenging climatic conditions across drastically different terrains in India. Add to that the fact that these sophisticated machines are usually used by under skilled operators, the machines go through heavier wear and tear. Larger repair and maintenance costs eat away from the profits from the project. This is where the construction equipment manufacturers can come in and help reduce costs by designing and creating equipment that are more resistant to natural and human damage. Good design from manufacturers can play a major role in cutting down cost and improving profit margins for businesses. Picking up machines that are designed keeping in mind the rough Indian terrain and climatic conditions can help reduce the cost.
Manufacturers with an innate understanding of the actual working conditions tend to create more robust machines that have higher resistance to wear and tear caused due to the climate. To attend to the problem of under skilled operators using the machines and damaging them, technology can help bridge this gap. Construction equipments are being designed to be increasingly intelligent and less dependent on human operators. Buying robust smart machines will help reduce the expenses involved at the fundamental levels of the quality of machines.Is a sensible option to use a motor grader that is specifically designed to suit the requirement of road construction in the country instead of the imports that were designed to suit the requirements of the home countries.
Daily wear and tear are a part of the life cycle of the machines being put to use on construction sites, but the quantity and quality of damage can be reduced by taking better care of the machines. Regular maintenance and cleaning of the machines is a basic necessity to ensure longer machine lives despite harsh working conditions. Weeding out problems in the the root and resoling them will go a long way to add to the life of the machines. Costs for repairing damages is directly proportional to the size of the break down and damage. It is better to attend to the problems while they are still small.
Technology is a business’s friend when it comes to improving profit margins in the long run. Investing in smart machines equipped to self adjust to the working conditions, task at hand and have minimal dependence on humans will go a long way to create larger profit margins down the line. Machines that gather data, diagnose problems in the bud can help avert major havoc and damage to the machines if missed by the human eye and experience. Data collection can help formulate more efficient processes to get the task done faster and with lesser wear and tear to the machines.
While most companies prefer owning or leasing construction equipment, rental is a good option and is becoming increasingly available. Using the rental option smartly can help increase the width of the profit margins. Rental services save on costs incurred for regular servicing, logistics, insurance, maintenance, storage. Equipment rental saves on the large sum of money that is invested in owning the machines and can very easily be used for more profitable tasks like renting more machines to complete the task faster and earn early completion bonuses.
When it comes to India, most motor graders are International brands wanting to crack the growing market and large domestic layers wanting to make their moolah. Make the most of this competition to get the best of technology at better prices by pitching the competitors against each other to get better warranties, maintenance and insurance plans in addition to more services and training. Making smart use of the services being provided by the OEM’s and dealers to reduce the in-house cost of projects will help add to the profit margins as well.
How Motor Graders are Profitable for Your Business?
Due to the versatility of motor graders, they are one of the most important equipment found at any building or road construction or even mining site.
Well, there are various ways in which motor graders can deliver better margins for your business. Here is a look at those reasons which make motor graders profitable for your business…
1. Performs multiple tasks at the building or road construction site: These tasks include…
a) Setting the soil: Motor graders can be used to set native soil foundation pads to finish grade prior to the construction of large buildings.
b) Earthmoving: Motor graders can be used for moving the unearthed soil and debris or raw building materials from one location to another with the help of the front wide blade.
c) Sacrifying: Motor graders can be used for scarifying (complete removal of layer of soil and then spreading a new layer at that particular point) the uneven and inefficient surfaces of the roads, lawns, landscapes etc.
d) Land grading: Graders can perform land grading tasks like creating well-defined slopes and inclinations as well.
e) Levelling of soil or land: Graders can also be used for levelling of the soil so that the next layer of soil, gravel aggregates and asphalt or bitumen can be spread uniformly throughout the surface.
f) Mixing materials: Tasks like mixing of two materials used in construction projects can also be performed well by motor graders with the help of the right attachments.
g) Other tasks: Apart from the above, motor graders can also be used for trenching, digging shallow holes, ditching and laying pipes.
Thus, be it any task at the building or road construction site, motor graders can greatly help in achieving reliability and precision in operations.
2. Increases versatility at the jobsite with various attachments: Motor graders come with various attachments to perform the different tasks. The two most important attachments of motor graders include:
a) Rippers: They are used to cut through challenging ground conditions such as hard, compact or frozen dirt to loosen soil and improve productivity.
b) Dozer: This attachment of motor grader help with spreading.
3. Aids in movement of men and materials at the mining sites: At the mining or industrial sites, motor graders can be easily employed for easy movement of men and material as they can be used to create temporary roads leading up to the site to sustain daily operations and enable ease of transportation.
4. Reduces rework and increases productivity: Equipped with advanced technologies, motor graders can reach the final grade much faster with more accuracy, thus, saving time and cost associated with rework tasks and allowing contractors to move forward easily without looking back.
5. Saves labour costs: As against the manual labour which takes a lot of time in completing various tasks, motor graders can perform the tasks fast and this saves the labour costs as well.
6. Boosts jobsite safety: With advanced technology, telematics, machine control and integrated technology, motor graders greatly help in improving jobsite safety and have a direct positive impact on the business margins or profitability.
A look at the best-in-class motor grader in India which can be extremely profitable for your business
If we talk about the best of motor graders available in India, then Mahindra Construction Equipment’s (MCE) RoadMaster G75 motor grader wins hand down as it offers an un-compromised and mechanised grading solution. The equipment is designed to provide optimal output at affordable cost with its simple yet rugged design. It is an ideal grading machine for spreading, grading of earthwork in different types of roadwork across the nation. This equipment can definitely prove profitable for your business because…
1. RoadMaster G75 is equipped with Mahindra DITEC engine which brings fuel efficiency down to an incredible 4.5 litres per hour and results in 10 per cent more savings. Hence, the motor grader is highly fuel-efficient and leads to increased productivity and profitability for the owners.
2. Offers lowest maintenance in class as with technology and design enhancements, RoadMaster G75 lowers lubricant refilling requirement with extended service intervals, thus, reducing the overall maintenance cost.
3. It is equipped with 3000 mm mouldboard that comes with an option of having its size reduced by 400 mm. Depending on the requirement the blade size can be reduced by 200 mm on both sides. The cutting edge of the blade is in four separate pieces for ease of handling and replacement and has a lasting life of about 600 hrs on standard operation cycle. It is convenient, affordable and any blade part can be easily replaced in case of damage.
4. The RoadMaster G75 comes with the option of having additional fitments i.e., the ripper and dozer for added versatility.
5. RoadMaster G75 is 180 per cent faster and can single-handedly do the work of 30 labourers.
6. RoadMaster G75 provides a superior finish and saves 50 per cent on the time required to get the job done (provided the material is available on site) and it saves at least 40 per cent of the costs.
7. The RoadMaster G75 comes with GPRS-based remote monitoring system dogosense that keeps a track of your machine with the touch of a finger. Through this, be it business information like daily work reports, fuel level or warnings like low fuel, filter clogging and low engine oil, you can get constant updates on your equipment.
8. RoadMaster G75 also possesses ergonomic layout and seating with all the controls smooth and easy to reach and has spacious canopy, lockable storage and mobile charging. The equipment boosts safety, efficiency and productivity at all times with advanced control joysticks. You can easily shift steer, adjust blade, articulate, control hydraulics and access automated grading systems without taking your hands off the controls.
Thus, overall, MCE’s RoadMaster G75 can definitely be your best bet when looking at buying a motor grader that can drive maximum profitability for your business!
Motor Grader Tips – Deliver Better Margin for Business
The primary beneficiaries of this boom are people involved in the business of construction, road construction and the once involved with any kind of construction equipment. The boom has seem new players take to the construction industry in an attempt to make their moolah while making India. The government’s ambition to connect Bharat to India is giving a lot of new opportunities to business owners across sectors.
Road construction for one is a very lucrative avenue, especially for those that businesses that understand the situation of roads in India. 95 percent of the roads need to be created and maintained in rural parts of the country which make for smaller single and double lane paved roads. Motor graders in particular have a major role to play in the way road construction companies go about doing their business. Lets take a better look at how the motor grader can help deliver better margin for construction and road construction businesses.
Road construction has always been a labour intensive task. Meaning the whole project time and cost intensive given the unpredictability of the human factor. Labourers tend to be relatively slow as compared to the machines and cost more then the machines too. The labourers working at road construction sites are more often than not untrained people with very little to no understanding of road construction. Thing inadvertently ends up compromising the final quality and finish of the roads and eventually drilling holes in the contractor’s pockets in the long run. Additionally time delays are a norm having to regularly source new labour to replace the ones that left making it a time and money intensive task.
This is where the motor graders can help reduce the cost and money involved. A single motor grader can single handedly complete the task of upto 30 people while at the same time reducing the time taken to complete the task at hand. Motor graders make it easier to cut down on labour costs and give the contractor a better chance at early completion of the road which usually comes with bonuses from the government. Less time on individual projects means that the businesses can take up more new projects and earn higher profits. Motor graders create better quality roads that last longer creating a good will for the business while saving on the costs of more regularly required maintenance.
Motor graders are heavy equipments used for road construction and other levelling and paving tasks at construction sites. These heavy equipment are required to work in gruelling climatic and work conditions given the Indian terrain. Add to that the fact that the motor grader operators are generally under skilled means that the machines undergo relatively higher wear and tear due to improper use of the machine. Higher wear and tear means higher expenses for the business that eat away at the profit margins. This is where the heavy equipment manufacturers can help with cutting down expenses in the short and long term prospective.
Pick motor graders that are created to suit the Indian terrain and ensure that the machine is much more suited to harsh working conditions and will automatically lead to lower wear and tear due to the quality and design of the machine to begin with. Addressing the problem of increased wear and tear due to poor operator skills, one can take support of technology that makes the whole grading and paving process a lot less dependent on the human factor and more dependent on software data and programming consoles introduced in the motor graders these days. Additionally, when it comes to India, it is a good option to use a motor grader that is specifically designed to suit the requirement of road construction in the country instead of the imports that were designed to suit the requirements of the home countries.
Regular wear and tear to the machine is a normal outcome of motor graders being put to use at road construction sites. How much damage it will do to the machine, however is in your hands. Regular cleaning and maintenance of the machine will ensure that the machine will last longer despite the harsh conditions of work. Making a note of small problems and getting them resolved while they are still small is a good way to ensure that machine expenses remain on the lower end of expenses. Dealers and OEM’s usually provide for long term service and maintenance plans for the machine at relatively nominal prices as compared to the costs of major break downs and part replacements and repair.
Investing in technology that improves the performance of the operators and machines will serve for better profit margins in the long run. These days softwares are available to make machines smarter and ensure that the marine is equipped to properly handle the task at hand with low operator interactions. With operators being required only to keep an eye while the machine under guidance of the self adjusting technology gets the work done. Additionally diagnostic and data gathering consoles help detect problems before they can cause major havoc and have them resolved while they are still small and cheaper to solve.
Big data and IoT are the next big thing and have applications with construction equipment, motor graders included. Smart sense softwares installed in the machines help keep a tab of important factors like fuel levels, fuel usage, engine efficiency, temperatures of the engine,lubricants, pressure in the hydraulics, location etc. These consoles also serve as diagnostic tools to check for any problems and report them at early stages to get them resolved. Some consoles also come with trouble shooting options to solve the problems in the machine without having to call for technical assistance leading to increased up time for the machine and higher profits for the business.
Most motor grader players in India are international brands and other large domestic brands competing to make their moolah in the growing Indian market. Make use of the competition to ensure that you get the bets of machines, services, guarantees and warranties. A good maintenance and service plan can help curb a lot of cost intensive problems even before they arise. A lot of manufacturers are willing to provide training for operation and servicing of the machines for their clients. Use the facilities that the manufactures are providing to reduce expenses and increase profit margins.
Avail options of leasing and renting good equipment. One need not always own the machines. Equipment rental has a host of benefits that help increase the profit margins by reducing the operating cost and investment required to have the machines working at the job sites. Additionally rental services save on costs incurred for regular servicing, logistics, insurance, maintenance, storage. Equipment rental saves on the large sum of money that is invested in owning the machines and can very easily be used for more profitable tasks like renting more machines to complete the task faster and earn early completion bonuses
How Concrete Pumps Drive Profitability for Businesses?
Given the increased need for raising productivity, safety and quality at construction projects including real estate and infrastructural projects, concrete pumps have become absolutely necessary at any construction site. In addition, the increasing labour costs and growing emphasis on minimum construction time has also given a boost to the demand and market share of concrete pumps.
Types of concrete pumps
1. Boom or Truck-mounted Pumps: These are most popular types of concrete pumps and are capable of pumping high volumes of concrete in a very short span of time. These are mounted on a truck and feature an articulating robotic arm called as the boom which is controlled by a remote. They are bigger in size and used on larger sites and for huge road and highway projects. Generally, these pumps have the capacity to pump large volumes of about 150m3/hour at distances of about 50m to 200m.
2. Trailer, Line or Stationary Pumps: These pumps use flexible or steel hoses attached to the outlet of the pump and linked together wherever the concrete needs to go. These pumps are mounted on a trailer and have a comparatively lower pumping rate. Thus, they are used for smaller jobs like preparing ground slabs or sidewalks.
Benefits offered by concrete pumps
1. Improves overall quality of concrete mixing: Using less water while making the concrete mixture, concrete pumps improve the quality of concrete mixing. Less water results in the material not suffering from various deformities including cracks and shrinks and this maintains its strength when the concrete is placed. Thus, concrete pumps can be used for creating high quality and long lasting projects with minimum maintenance required after completion. Generally, concrete pumps result in more stable end-product, which ensures project safety in the long run.
2. Reduces manpower, energy and over-head costs considerably: After the heavy construction equipment cost, it is the costly manpower which digs huge holes in the contractors’ pockets. Also, many times, it might get difficult to find the requisite number of workers at the job site. So, at a time, when the manpower costs are rising steadily, it only makes sense to opt for concrete pumps for concrete mixing and then relocating the mixture to the desired spots as against the manual method employing labour force. Typically, in the ordinary concrete transfer process, a lot of labour and time is involved, however, through concrete pumps, work becomes much easier as less handling is required since concrete can be placed directly at the desired location. Further, pumped concrete is easier to handle because the flow of concrete is directed to the exact spot of placement (where other methods deposit large piles of concrete that must be moved manually). Thus, concrete pumps can save a lot of manpower, energy and over-head costs. It is seen that a job that would take 5 men and 2.5 hours to pour would only take 3 men and 1 hour through concrete pumps. In fact, concrete pumps can result in saving of labour cost by 50 per cent.
3. Results in accuracy and precision: Concrete pumps lead to proper mixing of the concrete batch, thereby, leading to elimination of any waste. Also, the mixture is transferred to the required site professionally and precisely. For complex locations like high-rise buildings or insulated concrete form walls, concrete pumps can increase pouring accuracy. This accurate concrete pumping can effectively result in little or zero material wastage.
4. Increases speed and eliminate any project delays: By increasing the speed of work at any construction project, concrete pumps makes concrete pouring simple and fast as against the smaller equipment that have to moved around to different spots to finish off one pour and this consumes a lot of time and hampers the speed of the project. In fact, concrete pumps easily transfer concrete vertically and horizontally, thereby, ensuring that less time is wasted in construction sites and the project costs reduce considerably.
5. Lays concrete at inaccessible sites easily: Using concrete pump is more convenient than the old mix and pour methods as the boom arms can actually reach over the top of structures to place the concrete in locations where other types of equipment can’t reach. Thus, concrete pumps ensure that the concrete is placed easily at inaccessible sites. So, whether you want to pour concrete on top of a high rise building or in a foundation slab, concrete pumps can deliver concrete mix to almost any area without leaving spills and lumps on the way.
6. Increased daily production: Concrete pumps increase the daily production considerably as the concrete is placed more efficiently and the unloading time is reduced significantly regardless of the weather, job site condition or time of the day.
7. Makes back-filling easy: Concrete pumps perform the back-filling work also efficiently. With the concrete being poured directly, there is no need for re-handling or for special mixes for improved quality and this keeps the concrete within specifications.
8. Increases revenue: Concrete pumps not only result in savings in manpower by reallocating personnel to other duties but also in equipment and cycle times, resulting in increased productivity. The increased revenue thus earned can be reinvested in the business for buying more equipment and employing more labour as needed.
9. Complete projects in most adverse of terrains: Concrete pumps provide for easy and fast work commencement and conclusion even in the most adverse of terrains and regions. So, this makes it easy for the contractors to bid for any project regardless of the regional complications and terrain adversities that are associated with it.
10. No impact of weather conditions: Last but not the least, with concrete pumps, concrete placing is not at all affected by weather conditions. Concrete pumps allow a contractor to place floor slabs on upper floors before completing the concrete work on lower floors. This provides protection from weather when working on lower floors.
Thus, overall, concrete pumps are one of the most efficient and cost-effective equipment for concrete placement and definitely drive profitability for business. Usage of concrete pumps can increase productivity and reduce cost at any construction site, be it big or small. Particularly, placement of concrete in inaccessible areas on a large construction site calls for concrete pumps which can do the task most effectively. So to say, an uncluttered job site and superior end-results are hallmark of concrete pumps.
To sum up, concrete pumps makes a significant difference in terms of time savings, labour savings, increased profits, improved scheduling, reduced site preparation, employee satisfaction, enhanced quality control and concrete placing versatility, thereby, driving profitability for any business.
Construction Equipment, Infrastructure and GST
ack of backhoe loaders, pick and carry cranes, excavators and earth moving machinery. For FY 2017 the sales figures were expected to by pass the 2011 volumes by a sizeable margin. As a matter of fact the expected sales volumes for 2018 are in the vicinity of a whooping 96,730 units.
These forecasts however were made in the Pre- Demonetisation and Pre GST era. Demonetisation saw the sales of construction equipment slowing down in the last 2 months of 2016. As the effects of demonetisation were finally wearing off, GST took effect on July 1st 2017. Industry experts still expect growth in the construction equipment segment despite the 6 to 8% increase in the cost of construction equipment. Experts are of the opinion that even if a conservative estimate is to be made, the segment can be expected to grow at a rate of 10-15% if not more.
Impact of Infrastructure on Construction equipment: The construction industry in India will be majorly driven by urban infrastructure and roads projects. The government is focused on increase the rate of road construction per day to 40Km from the current 23Km by mid 2018. The NHAI has announced that it will bid out highway projects for 30,000Km in the coming three years. Add to that initiatives like the Smart Cities, Swatch Bharat Abhiyaan and other major sanitation and water supply projects and you will get a good adea of how much growth is expected in the construction sector.
The Swach Bharat Abhiyaan is largely dependent on heavy machines like backhoe loaders
The railways are expanding and new metro lines have already started work with more in the pipeline. Urban infrastructure, creation and development of ports, development of new air ports, creation of transport corridors, increased focus on mining and irrigation projects will mean a growing tidal wave of business for the industry. The infrastructure industry falls under the 18% GST bracket. In addition to that, the raw materials required by the construction industry are also bound to get cheaper, leading to large profit margins.
GST as it applies to the construction equipment industry: Construction equipment come under the 28% tax bracket under GST and have traditionally fallen in the luxury items category. Despite the fact that the construction equipment industry caters to the infrastructure sector, the fact remains that the input tax is 28% while the output tax is a merger 12%. The construction equipment industry will have to absorb the difference balance of the taxes. The immediate impact of the anticipated price hike, is expected to be 15-20% drop in sales, which is obviously huge for an industry still coming out of a slump and recovering from the effects of demonetisation.
While the GST has its drawbacks, it has its benefits too. Traditionally leasing activity was plagued by double taxation of service tax and sales tax. Under GST, the dilemma is solved with only a single tax in picture. This single tax system will boost leasing activity in the infrastructure sector eventually translating to benefits for the construction equipment sector. Similarly, the industry is also set to benefit from efficiency in the supply chain, warehousing and logistics that will be a result of the single tax system.
The heavy 28% tax will in part be offset by the capital saved from the supply chain and relatively reduced raw material costs under the new regime. 5-8% costs can be saved in transportation, 10-12% costs saved in warehousing and upto 25% cost savings inventory holding costs, eventually leading to 10-12% overall savings on the supply chain costs. Introduction of input tax credits in the construction and mining industry would help lessen the burden tax.
Despite the recent roadblocks, the construction equipment industry is all set and expected to grow at 10-15% if not more. Most of this growth is coming form asset creation by infrastructure companies that are seeing an upswing in activities due to the government’s heavy focus on creation and development of infrastructure across the country. In addition to the infrastructure and mining sectors, government initiatives like the swach bharat abhiyaan too, rely heavily on the construction equipment industry. Especially on the backhoe loaders and excavators to pick and transport the waste form one place to another.
All in all, GST is expected to have neutral to minimal side effect on the construction equipment industry despite the expected marginal rise in the cost of these heavy machines. All said and done, prospects of growth for the industry are still bright and on a growing curve.
Construction Equipment Growth Projections 2017 Pre vs post GST
6 figures by a good margin. By 2017 the overall growth rate in the industry is expected to be at CAGR 21% if not more.
Despite the Demonetisation in late 2016, experts across the industry are of the opinion that a healthy 30-40% growth is still expected despite the speed bumps that might come in the form of changes in various government policies.
As of 1st July 2017, GST became of law of the land across the Country, bringing all goods and service on the same platform of the single tax structure. Under GST regime almost 80% of the construction and heavy equipment machinery fall under the 28% tax bracket which is slightly higher than the previous taxes that were applicable to the sector. The list of such equipment majorly include wheeled loaders, soil compactors, concrete mixers, road equipment, crushers and excavators. Even off-road equipment such as mining tippers, excavators, dozers, graders, shovels and road rollers; on-road equipment including trucks, commercial vehicles, low-bed trailers, semi-bed trailers, trailers and lifting equipment such as cranes, forklifts, self loading and unloading equipment, lifts, escalators and conveyors will have 28 per cent GST levied on them.
While the increased tax rate might cause reluctance in buyers, it will be over come by the long term benefits and money making opportunities to the robust activity going on in the infrastructure sector. The government’s increased spending for the infrastructure will fuel the growth of the heavy machinery industry especially the market for earthmoving equipment which hold a larger market share even in the construction equipment industry. The plan to increase the length of new roads created per day to 40km/ day will also have beneficial effects on the industry once the market has absorbed the initial shock of the announcement of GST.
GST also means that the equipment rental and leasing industry is now free of dual taxation of sales and service taxes which will eventually lead to the growth of the industry which is in a very nascent stage as of date. The standard GST rates will mean more players being interest in investing money across the infrastructure and eventually the construction equipment sector and even attract foreign investment in addition to local investment across various scales of projects.
Logistics and raw materials are areas where the OEM’s are set to benefit from GST. A standard tax structure means that the companies wont have to bear the brunt of varied taxes and tax rates that were previously the norm and the cause of added expenses across the sector.
A standard GST system will ensure smooth flow of credit across the sector which will eventually lead to improved flow of funds and directly impact the growth of the industry on a positive note. Reduction in the cost of construction material by upto 5% would mean that more credit is available for investment in equipment and work expansion leading to increased sales.
However, a single tax system across states also means that the same standard tax rate will be applicable across the country in the various states leading to easier and faster movement of goods across the country. The GST regime also means that equipment manufacturers will benefit from reduced taxes on raw materials and savings in logistics if not more. All in all, the overall increase in the tax on the equipment is set off by the savings in the manufacturing and logistics legs of the process.
The implementation of GST is expected to have a snow ball effect in the positive direction wherein the eventual out come will be increased transparency of transactions, increased number of transactions across sectors and the whole industry eventually being incorporated in the main stream economy which will in turn lead to better reforms and ease of business.
The actual impact on the bottom line is expected to be marginal across the industry and the Pre GST forecast is expected to hold despite the temporary speed bump of the knee jerk reaction to GST being rolled out. It is just a matter of time,once the industry has absorbed the initial shock of the new changes in the tax structure, it will again be on its way up to reach newer higher heights of success.
Impact of GST on Construction Equipment Segment
It has clearly affected various sectors of the economy and the earthmoving and construction equipment sector is not an odd one out.
If we go by the numbers, then the GST rate for earthmoving and construction equipment sector is slated to be 28 per cent. In fact, more than 80 per cent of the equipment now fall in the 28 per cent tax bracket. The list of such equipment majorly include wheeled loaders, soil compactors, concrete mixers, road equipment, crushers and excavators. Even off-road equipment such as mining tippers, excavators, dozers, graders, shovels and road roalers; on-road equipment including trucks, commercial vehicles, low-bed trailers, semi-bed trailers, trailers and lifting equipment such as cranes, forklifts, self loading and unloading equipment, lifts, escalators and conveyors will have 28 per cent GST levied on them.
Particularly, the majority of equipment that are responsible to contribute to the overall sales of construction equipment in India such as backhoe loaders and excavators are supposed to be taxed at 28 per cent. Well, though, the tax rate has increased, yet GST can help the sector greatly by improving its efficiency and reducing the overall logistics cost.
Positive impact of GST on construction equipment sector
One may think that the tax burden has increased with the GST but it has essentially brought several positive changes and consequences for the sector. Here is the list of advantages that GST will offer to the segment…
1. Untill GST was introduced, all heavy equipment used to have a different tax structure in different states. While some states used to levy entry taxes,Octroi etc., some demanded entry forms and some didn’t. This always led to huge confusion in equipment selling and moving it from state to the other. GST will put an end to this.
2. Several equipment manufacturing companies will be able to save a lot of logistics and distribution cost as the multiple sales depot costs will be eliminated. The supplier E-way bills will result in removal of inter-state check posts.
3. Earlier, when the equipment manufacturers used to sell the machines across the state borders, they always had to collect the C-Form and submit it to the government. In cases, they were not able to collect the form, they had to suffer loss of capital and ended up paying the differential taxes. With the impletmentation of GST, such practices will cease to exist, thus, bringing more efficiency in operations.
4. Previously, those equipment manufacturers who were engaged in domestic trade generally did not benefit from VAT. Now, they will definitely benefit from this new tax reform.
5. Availability of input tax credit with benefit the sector.
6. Equipment leasing activities which were previously plagued by both sales tax and service tax being imposed on the same transaction will also get a boost.
7. The ease of doing construction business will increase gradually.
Thus, overall, a better taxation system with a single tax reform can definitely bring in more transparency and efficieny in the segment. It can greatly help in unifying the segment. Thus the impact of GST on construction equipment sector will be a positive one in the long run.
Primarily, the equipment manufacturers would be able to save on their logistics cost. Further, earlier, they had to pay several taxes like excise duty, customs duty etc. GST will replace all these taxes with a single tax and will ensure smooth flow of credit. Since, the flow of funds will be improved, it will directly boost the growth of the construction equipment industry. GST is also expected to decrease the cost of construction materials by approximately 5 per cent.
Further, the practice of sourcing of material from unregistered dealers (those not registered for Central Sales Tax) will also be eradicated.
Well, definitely the equipment manufacturers are set to benefit from GST but is it the right time for the buyers to make investments in construction equipment? Well, yes! With the implementation of GST, consumers can make a sure investment by keeping aside all the worries for several hidden layers of taxes. GST will surely lead to avoidance of the multiple taxation system which was earlier levied on the equipment.
Thus, GST is bound to represent a win-win situation for the both the construction equipment sellers as well as the buyers.