Knowledge and skill upgradation is very important in the rental segment.
The equipment rental business in India is yet to evolve from its nascent stage. Though the mode and pace of business has gone through a severe sluggish phase, the renewed focus on infrastructure development expected to fuel the demand for new equipment and equipment rental business. The equipment rental industry is likely to draw advantage from few factors like the prevailing high financial rates, pressure to optimise costs and the upcoming EPC projects.
Says Ashwin Gandhi, Director, Express Equipment Rental & Logistics, ¨Since 1st quarter of 2015, demand has started in hiring and rental industries.¨ According to him growth for next two years seems good. Speaking about the demand, he says, ¨Both mobile and crawler cranes of 75T and above up to 400T capacity is in demand. Especially cranes of 2000 and above (Year of Mfg) are preferred.
Express Equipment Rental and Logistics has 60 mobile and crawler cranes of different capacities and over 35 forklifts, manlifts, etc for rental purpose. The company recently imported 75T mobile cranes and provided for RIL refinery jobs. ¨We always stick to our standard terms and conditions when offers for hiring of cranes are given to customers. We provide services of our cranes - 40T to 450T capacity - mobile and crawler cranes, says Gandhi.
Knowledge and skill upgradation is very important in the rental segment. Training is a continuous activity which will give very good results as far as improved productivity and machine management.
Gandhi says, ¨We retain old staff, especially crane operators, helpers and mechanics. Outsource only special services, like maintenance of SLI and electronic equipment fitted on cranes. We also standardise our purchase policy.¨ Speaking about the USP he avers, ¨Providing our services to the satisfaction of customers at reasonable cost is our motto. We assist our clients in selecting right type of crane for the specific job as per requirement, which helps to reduce their cost. Many cement plants, refinery shutdowns, petrochemicals and fertiliser projects are utilising our cranes with specialised/experienced operators and field staff.¨
There is huge opportunity of growth for rental companies. However, currently the rental industry is facing enormous challenge due to poor payment flow from their organisation, post contract negotiation for closing of long standing overdue. Unless transparency is established between the rental companies and their customer, the growth will not be sustainable at either end.
According to Gandhi the biggest challenge is recovery of old dues from customers (who become major defaulters). He says, ¨Sometimes many customers take advantage of our legal system, which is very slow and takes long time to settle.¨ Another major challenge is the existing multiple tax structure. He adds, ¨RTO tax and entry tax applicability in all states are different and not uniform. So uncertainty prevails in delivery of equipment (cranes) in time at job site and results in loss of hire charges to the crane owners.
Speaking about the steps initiated by Crane Owners Association of India, Gandhi, who is the President of the association had this to say, ¨For the healthy growth of the rental industry we are trying to prepare standard contract terms for hiring of cranes/equipment; we circulate information about defaulters/ contractors; and we regularly organise seminars and workshops to discuss/ educate members on various issues.
Is financing an issue in the hiring and rental segment? Says Gandhi, ¨Banks and financial institutions not ready to give term loans at a rate lower than 12.5 per cent - 13.5 per cent per annum, due to past experience of defaulters.
The rental industry needs to make a united approach to the government for support in this arena or else the tax structure will impact the rental proposition adversely. Steps like introduction of GST will facilitate rental sector to a large extent.
For the healthy growth of the rental industry we are trying to prepare standard contract terms for hiring of cranes/equipment.