A revival of the economy promises to spur the crane-dominated material handling equipment market to a high growth phase. he current economic climate presents a mixed bag of fortunes for variants of cranes and forklifts making up the material handling equipment market. Cranes, which account for the bigger share of this space, have seen varying growth across all categories.
"Pick-and-carry, crawler and tower cranes are all seeing growth," says Suheil Murgai, Associate Director, Ipsos Business Consulting. "But pick-and-carry cranes dominate the market because they lend themselves well to varied applications and customers are familiar with their usage. Escorts' models enjoy 45 per cent share of the pick-and-carry crane market. In the tower crane segment, 5-6 tonne models account for 75-80 per cent of the market. Demand for slew cranes is growing at a slower rate because of the unrestricted imports of second-hand cranes."
Industry voices back this observation. "Seven consecutive quarters of less than 5 per cent GDP growth rate has muted demand for capital goods across sectors. However, the oil and gas sector has attracted higher investment during this period, resulting in greater demand for mobile cranes on rent and for direct acquisition," says Somnath Bhattacharjee, President & CEO, Material Handling Solutions & Equipment and Project Solutions Business, TIL Ltd, which offers indigenously manufactured multinational brands of cranes such as Coles, Grove and Manitowoc.
In FY2013-14, TIL Ltd registered 15 per cent growth in demand for rough terrain cranes (20-75 tonne) while the truck crane segment (20-75 tonne) grew by 27 per cent. Overall, its deliveries of mobile cranes grew by 20 per cent.
Market leader Escorts Construction Equipment Ltd (ECEL) cites infrastructure projects as currently driving the market. "Power, mining and industrial expansion sectors are down. West and South India and Delhi-NCR are contributing to business at this point of time," says Manoj Agarwal, General Manager, Marketing & Head, Mobile Cranes, ECEL. Crawlers are not faring as well.
"Crawler cranes are a strong option for many large-scale infrastructure and energy projects," says Prem Naithani, National Sales Manager, Mobile and Crawler Cranes, Manitowoc India. "But without enough new projects to drive demand for new crawler cranes in India, the market remains a challenge. Until the new government kick-starts fresh infrastructure investments, we expect mobile cranes to see more demand than crawlers."
Going forward, Naithani sees wind energy projects as the major focus for crawler cranes.
Opportunities ahoy Overall, a revival seems underway and this bodes well for the industry. According to Tushar Mehendale, Managing Director, ElectroMech, "We are seeing some demand for the past couple of months. Stalled projects such as the Delhi Tourism and Transport Development Corporation's ambitious signature bridge at Wazirabad are getting back on track. Customers have started to discuss expansion plans that had been shelved for a long time. Our reading is that the economy is slowly turning around, fuelled by hopes of a stable, growth-oriented Central Government." Judging from the clear electoral mandate for change and positive sentiments that have started to rise in the market in the past few months, Agarwal expects movement on the ground to pick up in the next three to six months. "Already, enquiries are rising. We could see more involvement of the hiring segment in the discussion for future requirements."
"Infrastructure projects worth nearly Rs 20 lakh crore are pending finalisation by the Government," observes Shankar N Srivastava, Director, Engineer Pro Consultants. "A large number of these are power projects, which should create major opportunities for the deployment of cranes. Natural energy, especially wind power, and other projects are also likely to materialise. Our PM has indicated that he will probably revive cooperation among SAARC countries. This will also generate opportunities."
Spares and service are expected to perform better in coming years on the back of greater consumer focus on productivity. "Service and spares are a big focus area for us considering the potential," agrees Agarwal. "Customers are now looking for end-to-end solutions and expect the manufacturer to take care of machines through annual maintenance contracts (AMCs) and comprehensive maintenance contracts. Customers are increasingly getting machines serviced from authorised dealers to enhance the life of the equipment."
ElectroMech offers complete after-market services for electric overhead travelling cranes of any make, hoists and related material handling systems. Cranedge, its service arm, has over 1,000 cranes under AMCs. "Cranedge services extend to crane health checkups, repairs, modernisation and relocation," shares Mehendale. "Recently, Cranedge breathed life into an old 25-MT crane of Hindustan Construction Company (HCC), which has since been redeployed for its Delhi Metro Rail project."
Made for India
Both Indian and overseas players populate the Indian crane market.Most foreign brands have entered into partnerships with domestic companies some only for sales and service, others for local manufacturing. ABUS Crane Systems of Germany has entered into an exclusive representative arrangement with ElectroMech for its overhead travelling cranes up to 120 MT SWL, compact chain hoists and a wide range of crane accessories and hi-tech crane components. Within the construction and infrastructure space, these find use in concrete product manufacturing, power plants and wastewater treatment facilities. Manitowoc is manufacturing Grove rough-terrain cranes (of capacity 12-75 tonne) in Kolkata with partner Tractors India Ltd. Indian construction site conditions can be pretty gruelling, more so than in developed countries. Seeing this hardship as a challenge, some companies are developing specific æmade for India' models. According to Naithani, "Manitowoc cranes are made to be well prepared for the rigours and demands of rugged conditions and long hours found on many jobsites in India."
Manitowoc also builds seven models of Potain tower cranes in India, at its factory in Pune. Of these, the MCi 48C, MCi 85A, and MC 125 are members of its æAsia range' of tower cranes that are made specifically to suit projects in India and surrounding markets. "The key to these cranes are their versatile configurations, fast assembly and ease-of-use," adds Naithani. "Indian customers demand such value-for-money models."
Zoomlion has associated with ElectroMech to offer the Indian market its superior range of tower cranes including several æmade for India' models, such as the TC 5013û5 and TC 5013-5G. "Indian customers are opting for these cranes for path-breaking projects," says Mehendale. "We have recently supplied two TCT7527-20 flat top tower cranes to Nagarjuna Construction Company for building India's tallest cooling towers in a power plant."
Despite the influx of overseas brands and expansion of Indian brands, there are still gaps in the market. According to BV Raisinghani, President (Purchase), Jaiprakash Associates Ltd, "Off-highway trucks of less than 35-tonne capacity, pick and carry crane of capacity over 16 tonne and rough terrain cranes beyond 100-tonne capacity are some of the lacunae that need to be filled."
Another lacuna pertains to the skills of marketing professionals. "There is a need for marketing representatives of companies to be better aware of the technical specifications of equipment," says Gajanan K Kulkarni, Head, Plant & Machinery, Pratibha Industries. "It would be helpful if such personnel could be familiarised with the technicalities and their applications or else be accompanied by service staff prior to closing deals to ensure no misrepresentation of the machine's technical capabilities."
Crane rental companies and operators form a significant part of the total crane demand in the Indian market. So even big vendors such as TIL Ltd and ECEL that do not offer machines on rent maintain close ties with rental companies.
ECEL arranges equipment rentals through its huge network of customers, fleet owners and network partners. According to Agarwal, "Big construction companies are availing this facility."
Raisinghani adds, "Crane rentals make sense when the equipment is needed for a limited period of time, funds are scarce and the delivery time of new models is too long vis-a-vis the current need." This decision is best made scientifically. Raisinghani recommends that the return on investment in the cost of works to be attended by the crane should not be less than 16 per cent during the expected techno-commercial life of the crane, which is usually seven years.
"Buying equipment makes sense if the project duration is over 10 to 12 months," adds Kulkarni. "It gives construction companies the option to amortise the cost of the equipment over the project lifecycle and thereafter."
"When calculating the cost or hour of equipment to buy or rent, remember that the cost of maintenance, operator, fuel, other consumables, depreciation, finance, administration, transportation, etc, will not be identical for purchased and rental equipment," cautions Srivastava.
Rental revenue cutting across segments is expected to head north in the coming years. "India's tower cranes rental market is in a nascent stage," avers Mehendale. "However, rentals offer a viable option for developers and contractors to use tower cranes without the complexity of managing a fleet. Long-term rentals are likely to gain momentum in the next few years. We estimate that revenue from tower crane rentals will account for 15 per cent of the total revenue generated by the tower crane industry in the next three to four years." Just the kind of æpositive' the industry is waiting for.
Buying a crane?
Cranes of different types and configurations are supplied in a very large range of operating parameters. The key basic types of cranes are pick-and-carry cranes, mounted cranes (on tyre, crawler, truck, gantry or tower) and boom cranes (lattice boom or hydraulically extendable boom, fixed boom, luffing boom or 360¦ slewing boom). According to Shankar N Srivastava, Director, Engineer Pro Consultants, "Within these categories, some basic parameters to consider are the rated maximum load lifting capacity at minimum radius, boom length (minimum and maximum) and lifting height under hook."
As a thumb rule, tower cranes sourced from China can be 30 per cent cheaper than European models with similar specifications.