Mining ban to impact tipper demand in Karnataka

The ban on illegal mining in Karnataka is adversely impacting the sales of trucks and tippers. Manufacturers such as Ashok Leyland, India’s second-biggest truck maker and VE Commercial Vehicles, are expecting a hit on retail offtake of trucks if the Supreme Court ban on mining is not lifted.

Already, demand for tippers in the ban-effected mining areas of Bellary, Chitradurga and Tumkur have been on a downtrend for the last few weeks. These trucks, which are utilised by large fleet owners, are used ferry the ore from mines to the ports.

Somnath Bhattacharjee, president Volvo Trucks India and executive vice-president (sales, marketing and aftermarket, VE commercial vehicles) said, “Of course, stoppage of work will have a demand glut. I won’t be able to put a specific number to it now, but would definitely have an impact on the demand for tippers, as this is one of the areas where they are consumed.”

According to industry players, about 9,500-10,000 tippers are sold every year in iron ore producing states like Karnataka and Goa. With such mines increasingly coming under the scanner of authorities, vehicle makers fear demand for tippers in Goa too will come under pressure.

Sesa Goa closed its Chitradurga iron ore mine, which contributed 25 per cent to its total production. The apex court, however, allowed state-owned miner NMDC to mine 1 mt of ore every month and sell it to the local steel makers.

Bellary contributes 80 per cent of Karnataka's iron ore production followed by Chitradurga and Tumkur with production of about 45 million tonnes. Goa collectively produces 45 million tonnes of low grade iron ore which is mainly exported.

Although tippers are also used in construction areas in addition to mining sectors, truck makers are hoping for a sustained revival in the construction segment to maintain demand. Progress on infrastructure building, however, has also been equally slow mainly due to issues relating to land acquisition.

K Sridharan, chief financial officer, Ashok Leyland said, "We would not be able to comment at this moment specifically on the impact of the mining ban on demand for trucks which serve such sectors. But if the ban continues it will certainly have an impact".

Chennai-based Ashok Leyland, signaling a broader slowdown in overall demand for commercial vehicles, marked a dip of 4.6 per cent in sales of medium and heavy commercial vehicles of last month to 4,584 units as against 4,796 units sold in the same month a year ago. The company does not provide classification according to the type of vehicle.

Tata Motors, India's biggest commercial vehicle maker, however posted a growth of 12 per cent in sales of medium and heavy commercial vehicles last month stating that the company has not experienced any impact of the ban on mining in the two reported states.