Despite the muted demand due to lack of new projects in the power sector, the crawler cranes segment is expected to register good growth once the new projects are taken up after the general elections, writes Sudheer Vathiyath.
India is a huge market for crawler cranes, especially higher capacity crawlers. This is mainly due to increasing demand in thermal power sector, nuclear power sector, steel plants, refinery expansions and wind power sector. However, the market has slowed down in the last two years. This is because of lack of new projects rental rates, which have dipped considerably, impacting the sale of new cranes. Despite the muted growth of the segment, original equipment manufacturers (OEMs) are busy with upgradation and ´value additions´ so as to meet the expected growth after the general elections.
Speaking about the prevailing market trends, Takeshi Miyashita, Director-Sales & Marketing, Kobelco Cranes, says, ´The market for crawler cranes has been flat for over two years. There are no big projects happening - either in power or industrial and manufacturing segments. This has impacted the sales of crawler cranes. However, on a long-term perspective, India is a market with immense potential for construction, and lifting and loading equipment. We expect the market to bounce back from the last quarter of 2014. Recently, the Project Monitoring Group (PMG) has cleared power projects worth Rs 3 lakh crore. This move might provide the much-required boost to the crawlers´ segment.´
Says Mitesh Shethia, Managing Director, Shethia Erectors and Material Handlers, ´The slowdown has affected the industry very badly. All the crawler crane companies and users have enhanced their capacities seeing the growth in the industry. In 2012, we saw the growth coming down due to economic slowdown and currency fluctuations. Everybody bought new asset, which required at least 10 years for a return on investment (RoI). But the slowdown in the last two years [after acquiring the asset] has affected the industry very hard as the players and users have found it difficult to maintain their assets.´
Hiring and rentals
Due to lack of new projects, rental rates have dipped considerably impacting the sales. Speaking on the impact of the slowdown on the hiring and rental segment, Siddharth S Bhoir, Managing Director, Bhoir Group, says, ôThe hiring scenario in India is not good today. It has bottomed out already. Rates are about 40 per cent down. The cash flow is hit because no one is paying on time. The hiring rates are down because of lack of ongoing projects due to which the equipment are idling. Wind power segment, which could have been a major boost for crawler cranes sector, is also down as it was knocked off by the government policies overnight.
All these have had a negative impact on the construction companies. There were no sales for the last couple of years, and I don´t think anyone will be investing in crawlers segment in today´s scenario.´
However, on a positive note, Siddharth adds, ´As far as the future is concerned, the current business crunch of 40 per cent can be recovered in another one-and-a-half years. If the new government coming in retains the facilities of windmill industry and the power sector, then I think we need just a year to bounce back.´
Ajay Kumar Somani, Director-Mobile Crane Division, Liebherr India, throws some light on the structure of the current market. He says, ´Crawler crane of up to 100T capacity are needed for general purpose and the market will never be too poor. There are only local manufacturers in this range, and except few Chinese companies, no foreign manufacturer has a chance. Cranes of 100T to 250T are needed in industries especially for break-down services and metro projects. We still have requirements for these cranes.´
Somani adds, ´The cement and steel plants have been buying cranes to meet their regular maintenance requirements. At the time of setting new plants, the crane is provided by turnkey contractors. For maintenance purpose, the requirement is for 100T to 200T capacity of cranes. So far, all major cement plants have been purchasing cranes for maintenance purpose only.´
Impact of latest power projects
According to Somani, the requirements for crawler cranes of above 400T have gone down drastically as they are required in thermal power plants, refineries, nuclear power plants, wind mill industry, etc. Equipment India tried to find out the positive impact of the recent clearance of Rs 3 lakh crore power projects by PMG. The demand for high capacity crawlers was expected to go up. However, OEMs and project executive firms have a different story to tell.
The clearance of Rs 3 lakh crore power projects is a positive sign, feels Somani. He adds, ´However, the main thing to observe is what size and make of power plants is to be installed as each manufacturer has different component weights. It will also depend on how fast these power projects will take off, and whether sufficient coal is available in case of thermal power plants.´
Bhoir raises a question, ´The projects are cleared, but where is the coal to start these projects?´ He says, all these are thermal power projects, which require coal as fuel. Today, many of the industries are facing acute financial crunch due to non-availability of coal. They have taken debt on the power plants and the plants are not earning for them. Even Shethia is on the same page as Bhoir. According to him, the clearance of projects is a good sign for the industry; however there is no coal to run these plants. He adds, now, with the new government coming in and if there is a change in policy, there is hope.
Bhoir explains further. ´I am not sure about the future of power sector because of the uncertainty of coal supply. After the new government comes in, it will take at least a year for the coal industry to come on the right track. First of all, the existing power projects need to get ample coal supply. Only then the new power plants will be coming in.´ He adds, ´Steel projects are also not at its best. Most of the steel plants are functioning at 50 per cent of their capacity.´
On a positive note, Bhoir says, ´Meanwhile, the cement sector is doing good as infrastructure projects like roads, bridges, dams, etc., are picking up. Ports, refinery and petrochemicals sectors are also looking very positive.´
According to Bhoir, in the smaller cranes (up to 75-80T) category, about 50 per cent of equipment are outdated in terms of technology. He says, ´If the current safety norms or insurance clauses are taken seriously, this 50 per cent need to be scrapped. Safety standards have improved a lot in India, especially when it comes to higher capacity machines. The new machines have much more safety measures than earlier. Machine control technologies were there earlier, from 1990 onwards. But today, the features are very interactive and user-friendly. All these machines are nowadays monitored by the manufacturers through GPS.´
Says Somani, ´The safety issue is becoming very vital. We have come out with a safety system called ´Working at Heights´. In this new system, all higher structure in basic crane has railings. Each high point has latching system so that workers can latch themselves to avoid falling during assembly or repair. At Kobelco, safety is a major focus not only in the design stage but throughout the life cycle of cranes. We take complete responsibility of the machine.´
Bhoir says, ´As far as the future is concerned, the current business crunch of 40 per cent can be recovered in another one-and-a-half years. If the new government coming in retains the facilities of windmill industry and the power sector, then I think we need just a year to bounce back.´
Shethia sums up with a positive note. If everything goes fine and the economic condition is good in the coming years, then it will help us to grow. There is a tremendous potential in our country as we need infrastructure, and for creating infrastructure, we need cranes. Let us hope the new government-with some changes in policy initiative-brings back the growth trend.
´We have a total of over 70 cranes.´
There is a tremendous potential in our country as we need infrastructure and for creating infrastructure we need cranes, says Mitesh Shethia, Managing Director, Shethia Erectors and Material Handlers. Excerpts of the interview.
From a 10T handling capacity, over the years, Shethia has successfully graduated to over 8,000T capacity. How do you evaluate your success?
We started in a small way as clearing and forwarding of rail-bound cargo in Thane-Belapur Region in Navi Mumbai. We bought first crane for Thane area and started the journey of success from there. I joined business in 1985 when we had almost 15 cranes of up to 100T crawler. All these cranes were old of 1965 and 70 make. In 1995 when the government has changed the policy, we could easily import cranes. Then we sold our existing old fleet of cranes and revamped our fleet with new cranes with updgraded technology. In anticipation that in future everybody will start looking for new cranes, we started acquiring brand new cranes. In 2006 we bought first brand new crane of Liebherr LR1350 which is 350T crawler crane. In 2007 we again bought two more 350T cranes and one 400T crane.
Brief us about some of your projects.
We have worked in all prestigious projects, like the first phase of Reliance´s Patalganga project, the construction of Jawaharlal Nehru Port in Nhava Sheva, Essar´s Hazira steel plant, L&T´s biggest fabrication and heavy engineering facility in Hazira, and Reliance´s petrochemical plant in Hazira. We were also involved in the Hazira-Vijaipur-Jagdishpur pipeline project. So, our company has contributed to almost all major projects. Apart from construction, we have also involved in shutdown projects. In power projects we have worked with Reliance Infra´s three projects, Shajapur in UP, Rosa project in Shahjahanpur and Koradi project near Nagpur in Maharashtra.
What is your current asset base?
We have major crawler cranes of Leibherr, all the crawler cranes of above 300T are from Liebherr. In 250T range we have cranes from Chinese company Fushun and Kobelco, Japan. We have a total of over 70 cranes, in which 15 are crawler cranes in capacity range of 70-600T.
Are you still dependent on import for higher capacity cranes?
Yes, currently in India no one manufactures high capacity crawler cranes. Tata was manufacturing TFC range of crawler cranes in 75T capacity which is stopped now due to less demand.
Any rental supplier or end user will be looking at a crane with minimum downtime; and when there is a breakdown, how efficient will be the service support from the OEM and easy availability of spares, apart from technology and safety features, says Mitesh Shethia. ôIt is our observation that in all the Chinese manufacturers, Fushun gives services but the price competitiveness is not there, especially they charge extra for parts; whereas with Liebherr we get support for both service and parts. European brands also provide better technology compared to Chinese brands. Similarly, Kobelco is also very professional in its services and their parts are available at reasonable price,ö he adds.
´Crawlers´ market can bounce back.´
If the new government coming in retains the facilities of windmill industry and the power sector, then I think we need just an year to bounce back, says Siddharth S Bhoir, Managing Director, Bhoir Group. Excerpts of the interview.
Which are the projects where your equipment are being used?
We are involved in all kinds of projects including refinery and petrochemical, power plants, ports, etc. Our equipment is used in all these projects across the country.
What is the current market trend for crawler cranes in India?
In the smaller cranes (up to 75-80T) category, 50 per cent of equipment are outdated in terms of technology. If the current safety norms or insurance clauses are taken seriously, this 50 per cent need to be scrapped. The maximum number of new machines and old machines are in this category. There was a lot of momentum in the medium (100-250T) segment.
How many crawler cranes do you have in your fleet?
We have a fleet of about 35 machines with capacities ranging 75-500T. In the 150T category, the Chinese machines are good. Up to 250T category, economy wise and business wise, the Japanese equipment are good to invest. For 300 T and above category, we prefer American and European brands. Sany and Fuwa are promising among the Chinese brands; Kobelco is the preferred option from Japan, while Manitowoc from America, and Demag and Liebherr from Europe are sought after.
How do you view the safety standards of the cranes used in Indian projects?
Safety standards have improved a lot in India, especially when it comes to higher capacity machines. The new machines have much more safety measures than earlier. The features are very interactive and user-friendly.