With renewed emphasis on core sectors such as power, cement, steel, and oil and gas, coupled with the focus on development of road network, the market for mobile cranes is expected to grow significantly.
Come what may - nose diving demand or lack of projects, the OEMs in the mobile crane segment are back to the market with more product offerings. For crawler cranes Escorts has a tie up with IHI of Japan and offers cranes ranging between 50 T to 300 T. According to Rajinder Raina, General Manager, Escorts Construction Equipment, Escorts is working to add new models to the existing range to continue its hold on market leadership position. Action Construction Equipment (ACE) is expected to launch a couple of new products in the lower capacity segment. "Shortly, we will introduce 100-150 T capacity indigenously manufactured crawler crane models. The crane will be the fourth in its series following 2013 when it launched 25 T capacity unit with free fall arrangement targeting piling applications market and 40 T in 2012," informs Navdeep Singh, Head - Mobile Cranes, ACE.
Nilesh Borkar, National Manager - Sales & Marketing, Kobelco Cranes India, says, "Kobelco is planning to launch lower capacity crawlers below 100T (either 55 T or 80 T), mainly for export purpose. Right now Kobelco is exporting to Bangladesh, and the company has chalked out plans to go global markets. Currently the company is focusing on Middle East and South-East Asian countries."
"Zoomlion has plans to set up a facility in India to assemble low capacity truck cranes. The company will source the parts from China, assemble here and mount on chassis of selected Indian brands. Zoomlion also has plan to open workshops to carryout repair and maintenance works of its cranes at various locations," says Tony Lee, Global Key Account Sales Director, Overseas Business Unit, Mobile Crane Branch Company, Zoomlion.
There seems to be a shift from the 30 T to 350 T telescopic market to 500 T to 750 T. Says Ajay Kumar Somani, Director - Mobile Crane Division, Liebherr India, "We are fine with any shift in capacity requirement as we have the widest range to offer in mobile cranes, 35 T to 1,200 T."
There are clearly two segments, low capacity and high capacity. The market for low capacity cranes is not affected much, but high capacity market has taken the major blow. Due to a lot of cranes idling with rental companies, the competition in crane hiring companies have grown and the rates of hiring have come down to almost 50 per cent. Once the cranes in rental markets are available at very low rates, the project buyers prefer to take crane on hire rather than buying new ones.
According to Somani, the market is witnessing a marked improvement in the all terrain crane market due to its excellent manoeuvrability and off-road capabilities. A few cement plants, refineries and steel plants are now buying these cranes for maintenance purpose and are like to keep at least one crane under their ownership. Also, private companies are finding them perfect for short term taxi crane jobs. So far, India was a market mainly for 30 T-300 T telescopic cranes, but the trend is now for 500 T and even 750 T cranes.
The growth of mobile crane market has been quite significant in the last few years; however, the slowdown has greatly impacted the mobile crane segment, especially high capacity cranes. The decline in depreciation allowance for wind energy and slow progress of thermal power projects had also its impact on this sector.
Says Dharak Dedhia, Partner, Navin Heavy Lifters, "The demand-supply gap is very narrow; in fact supply is more compared to demand. But by 2015, we expect the demand to grow much more than the supply level." Highly confident on the growth potential, Dedhia adds, "There are many projects which are expected to come up in the near future. If these projects kick start simultaneously, then there will be a huge gap in demand-supply. More cranes will be required and also the clients are insisting on young cranes. So, we expect a growth of at least 10-15 per cent for new cranes from the next calendar year (2015). And since the demand for new cranes is on the rise, definitely there is an expected growth in the near future."
According to Raina, other than PnCs, there are truck cranes, truck mounted cranes, stiff boom as well as articulated/knuckle boom cranes and crawler cranes. Rough terrain and all terrain slew cranes also come in the material handling cranes category. Telehandlers (rigid and slewable) are upper end cranes.These cranes are front-end material handlers with load carrying profile that gives high reach and load capacity handling. These cranes get deployed in major projects where prefab material is precision handled.
Raina says, "The government is working upon areas like environment clearance and easing out land acquisition process; and is also working towards making coal available for power projects. Couple of metro rail projects have been inaugurated. However, all this is yet to translate into growth as of now. Since not many projects are going on at present, the demand is pretty low compared with the capability/capacity of supply."
Borkar says, "The demand is still sluggish, but in the last six months, there is a slight improvement because of only one project - RILs Jamnagar refinery. We have already sold 20 cranes to Reliance directly apart from some rental companies purchasing cranes from us which are meant for the Reliance project. So overall, we cannot consider this is a good improvement because with only one project we cannot run the business. But, we hope that from the next fiscal, some projects including a couple of big power projects will start and the market will move positively.
Says Lee, "The demand for mobile cranes has increased gradually as we have sold 80 unit this year. We are the Number One manufacturer in truck-mounted cranes segment with 70 per cent market share in India. We offer cranes ranging from 25 T to 110 T to Indian customers in which 75 T is the fast moving range."
He further adds, "The market is improving. Especially, with the new government at the Centre focusing on project execution and improving economy, the industry is hoping for a positive growth in the coming years. The government is giving thrust on various projects in power, refinery, road, rail etc. Currently, huge refinery projects have driven the demand for our range of mobile cranes. "
Speaking about the growth drivers Lee says, "Demand is mainly from power, refinery, roads/bridges and metro rail projects. In power, cranes of 55 T-150 T are used, while in refineries it is 55 T-130 T and in roads and bridges 25 T-150 T. Metro is an emerging sector for our range of cranes because the existing metro network is very small and there is a huge scope for more metros across the country."
Says Singh, "Sales have been badly impacted due to the ongoing economic slowdown for the overall construction equipment sector. Although the Indian economy has shown lower than expected growth in the last two financial years, the situation is predicted to improve in the future." He further adds, "Greener picture has been predicted by some industry experts and positive feeling is being expressed, especially for the crane rental companies and manufacturers. The market is expected to grow with the announcement of major infrastructure projects and funding for major projects by the present government. The market for construction equipment is forecast to grow by about eight per cent in 2014 and witness a higher 10-14 per cent expansion during 2015-2018. Almost all types of equipment will witness growth, though the market will continue to be dominated by the most popular products: mobile cranes, crawler cranes, tower crane, backhoe loaders, compaction equipment and wheeled loaders."
Currently, there is limited action on ground. However, mining, roads, metros, ports and other infrastructure projects would be the first ones to witness growth. The crane market will see a gradual shift towards higher tonnage and reach. PnCs will continue to play the support role in addition to its role of low and small time material handling crane.
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 Somany, "There is a big emphasis on safety during operation and maintenance of cranes. The SLI system should be such to stop all dangerous operations and also to get optimum capacity. The cranes have remote control so that operator can go close to spots for outrigger placement." He adds, "The crane stops all dangerous operations in case of overloading, shows all major parameters on crane cabin monitor like, load, radius, height, wind speed, outrigger pressure, levelling, winch speed etc." Says Sumit Joshi, Director, Shri Dinesh Cranes, "Safety features in the recent range of cranes have really come up good in terms of SLI and monitoring the movement and activities of the cranes. All the major manufacturers have their own systems. For example, Grove has its own Manitowoc care system, and one can go online and monitor the machine activities. So in the last 7-8 years, there have been remarkable improvements in safety and technology. At the same time, the maintenance and service has become a little expensive because of these new technologies and more electronic parts. The life of the machine depends on how you maintain it." After all, advanced features have made the machine compact, fast and productive. Even if the initial cost is a little higher, the RoI can be achieved in minimum period, provided the machine is maintained properly.
A year back, Kobelco launched Kobelco Cranes Remote Observation Satellite System (KCROSS), which works on satellite and GPS system. Once the unit is installed, the owner or the maintenance crew can monitor the machine performance from their office, on a daily basis, and can have a report of the machine.
Explaining the technology trends in crawlers, especially in terms of safety and load control devices, Borkar had this to say, "In Kobelco, we work in a three-stage safety system. In our machines, we have LMI control safety system. First it will give an alert with a particular rating capacity, then it will give the warning with a sound, and third when it goes beyond the limit, it will trip the engine so that the operation will be stopped automatically." He further adds, "Another unique feature in Kobelco crawler cranes is the hydraulic lock system. Whenever the operator is going out of the cabin, he has to remove the hydraulic lock lever, and then only he can go out. He has to again unlock the lever to enter the cabin. It is a simple system, but is very helpful." How receptive is the end-user segment to a variety of advanced on-board technology in cranes, especially in higher capacity cranes? Says Borkar, "Basically the Indian customers are price conservative. For example, if we put in more technology to a smaller crane like 260 T for safety purpose, the machine will become expensive and nobody is able to buy it. So, safety features like camera on the boom top, camera for the winch rope, etc are available in the higher capacity cranes like 400 T, 600 T, etc. So when we install technology in our cranes, we have to be selective on the capacity range."
According to Dedhia, a lot of electronics is coming into these cranes. Remote monitoring and accessing data are some of the features being added to the new range of cranes. From the safety aspects also a lot of features are being added to the new range of cranes.
Says Raina, "The practices at project sites will undergo major change in the coming years. The material handling practices will undergo corresponding changes. This will redefine the usage of cranes at project sites. Safety shall increasingly become a feature where there will be no compromise. It will mean safety of man and material, and will be a non-negotiable attribute. Electronic monitoring system will gain currency as people will find merit in it and pay for it."
According to Lee, the industry standards vary from country to country, so the end-user requirement also varies considerably. Zoomlion as one international corporation has been investing a lot to customise its existing products for the Indian market in the last five years. For example, we have launched right-hand drive mobile cranes (Zoomlion 55 T and 25 T truck cranes - QY55 and QY25).
Lee adds, "Our crane range has world-class safety features. Key hydraulic elements such as pumps and balance valves are from world-renowned brands. The lifting capacity has increased a lot because of U-shaped boom sections. The tipping rate of Zoomlion cranes is 75 per cent, which is safer compared with Indias 85 per cent tipping rate." He further adds, "Since the first Zoomlion truck crane QY8T launched in China in 1972, Zoomlion has always been the benchmark for mobile crane industry, such as the worlds largest truck crane Zoomlion 220T (QY220) and the worlds largest all terrain crane Zoomlion 2000T (AZT2000) were launched in 2012."
Says Singh, "ACX 250, ACX 400, and ACX 750 crawler cranes are equipped with a host of features and fitments, which have been engineered keeping the Indian working conditions and suitability in mind. These cranes are fitted with engines manufactured in India, which provide prompt service and spares availability. Singh says, "Our cranes are fitted with hydraulically extendable tracks and can easily be loaded/unloaded, along with savings in transportation cost as the numbers of trailers required are less as compared to other cranes. There is no need to dismantle the track assembly of our cranes for transportation. All our models can be supplied with suitable fly jibs, which can be offset at different angles or a runner as required for various applications. These models come with booms of up to 57 m and fly jib of up to 18 m."
Singh further adds, "To make the cranes rugged, counter weights supplied with our cranes are not casted but are fabricated out of heavy plates with cast iron/steel ball filling and are not prone to any damage during handling/transportation." ACEs crawler cranes are fitted with standard safe load indicators with overload cutoff, hoisting limiters, counter balance valves, level sensors, hoist drum locking system, safety brakes on hoists, audio slew alarm, and tri-colour audio visual external safe load indicator."
Shift to high capacity cranes
According to Raina, as the trend in projects moves from in-situ casting/fabrication to prefab (assemble at site) the requirement for higher tonnage cranes will witness much higher growth compared to low technology, lower tonnage cranes. The entire major projects will throw up added demand for top end cranes. On the growth pattern, the bias will definitely be towards higher tonnage. Lee is on the same page. "There is a shift happening gradually from investing in small capacity to higher capacity cranes. In rental market, companies are looking at investing in higher capacity cranes, because rental rate is very low in lower capacity cranes. Also, the level of competition is less in high capacity cranes. In the past, most of the companies wanted to buy 55 T cranes which have gradually moved through 75 T, 100 T, 130 T up to 150 T. Recently, we have also received enquiry from a rental company for a 400 T all terrain crane. In the coming years, we will definitely introduce higher capacity cranes in Indian market depending on the demand." According to Singh, the demand for high capacity crawlers was expected to be driven by power, steel and infrastructure sectors.
However, Dedhia begs to differ. According to him, there is no shift towards higher capacity cranes as such. He says, "I would say there would be a shift towards younger cranes or new cranes in future. Any project when starts, the requirement is for low to medium range of 50-100 T in the first half. Later when there is a requirement for handling bigger plant and machinery at the project site, demand for higher capacity cranes arise. So, the demand for 50-100 T cranes will always be there for any project.
According Rajeev Kumar, CEO, Friends Equipment, there used to be huge number of imported used cranes in India. But now it has come down drastically due to policy change among the big corporate construction companies not to use used machinery. There is some challenge from used machines for new machines as far as rental segment is concerned. Since the rental rates have come down sharply, the payback period of investing in new equipment has gone up."
Dedhia says "Imported used cranes are always there in Indian market. In the hiring segment, 80-85 per cent of cranes are imported used machines. New cranes are making headway in the hiring market now. Earlier, the rental market was dominated by imported used cranes. The number of used cranes imported went down drastically in the recent past due to the economic slowdown. It is now almost 10 per cent of what was imported in 2010-11. He adds, "Maintenance and service is not a major issue for used equipment. We have our own engineers and mechanics to maintain these cranes. It is easier to maintain a used crane compared to a new one as the technology is not very high. In the newer cranes, there is more technology, sophisticated parts, electronics, etc so that it is expensive to maintain these machines and also need to depend a lot on the manufacturers for maintenance. " According to Raina, the import of used cranes has always been a challenge given the fact that these get imported at an abnormally low price. The machines being very old are prone to accidents as was witnessed at Delhi Metro site. He says, "The government needs to fix the age of perused cranes to within four years with a defined price evaluation matrix rather than the declared import (CIF) price which is often very low which, besides other things, causes duty loss to the state exchequer. Engine homologation and road worthiness certificate (third-party) should be mandatory."
Says Somany, "In todays context, there is not much of an impact due to import of used cranes. End-users have to understand the risk of using such cranes. This problem exists in all countries but they have some rigid rules of certifying crane health every year, which restricts use of old cranes."
Kobelco manufactures crawler cranes ranging from 60 T to 1,200 T globally. In India, the company manufactures cranes of 100 T, 150 T and 260 T. Beyond 260 T up to 1,200 T cranes are manufactured in Japan. Says Borkar, "Among the ranges, the 260 T (CKL2600i) is most popular in the global market on its capacity and specifications. Customers are mainly looking for luffing boom combination and this crane has 61 m luffing boom combination with a very good lifting capacity in this range. There are over 1,000 units of this crane globally, and out of this, more than 100 units are in India. This model can be termed as a taxi crane because it fits into any type of project, be it power plant, refinery, cement, etc."
Escorts offers slew cranes from 20 T to 40 T and is working on over 40 T range. For truck cranes, Escorts has a tie up with FASSI of Italy. For articulated boom cranes, it offers cranes in the range 0.8 Tm to 195 Tm. These can be mounted on trucks and other pedestals as well. For crawler cranes, Escorts has a tie-up with IHI of Japan and offers cranes ranging between 50 T to 300 T. Besides these cranes, Escorts is working to add to the range of these cranes to continue its hold on market leadership position.
Zoomlion offers a wide range of capacity in truck cranes and rough-terrain cranes. In truck cranes, Zoomlion offers ranges varying 55 T, 75 T, 100 T, 110 T and 130 T. In rough terrain cranes, the company is planning to introduce 25 T, 35 T, 55 T, 60 T and 75 T ranges in Indian market in the next 6-8 months. In India, the 25 T-55 T is the most popular rough terrain crane range. Lee says, "In the higher ranges of rough terrain cranes, the demand is very less, may be 2-4 cranes in a year. Our cranes are mainly used in refineries, power plants, railways, metros, roads and bridges." In crawler cranes, Liebherr offers from 100 T to 3,000T, of which 100 T to 300 T comes from its plant at Nenzing, Austria and 350 T to 3,000 T comes from its plant at Ehingen, Germany. In all-terrain cranes, Liebherr offers from 35 T to 1,200 T, which comes from plant at Ehingen in Germany. Speaking about the unique features, Somany says, "The unique features of our cranes are the superior safety system and load charts at various combinations."
ACE manufactures ACX 250 (25 T), ACX 400 (40 T) and ACX 750 (75 T) crawler cranes. Says Singh, "ACEs focus is to offer more stable, safer and fast moving cranes to operators which have higher productivity and lower down time. Also, the crane kinematics have been designed in such a way that the operating pressures are lower and hence fuel consumption of crane is minimum, ie, value for money to the operator. The engine, drive line and other parts used are of standard truck resulting easy availability of spare parts and minimum down time. ACE has provided a better technology at affordable prices to the customer. At the same time, ACE also has better margins as compared to old generation cranes." He adds, "ACE has also mounted rear view camera as standard feature in these cranes which helps in better operator visibility. There is also a provision of mounting proximity sensors which warns operator of any foreign object coming in close proximity of crane."
According to Somany, availability of finance for purchase of new cranes is still an issue. He says, "Finance is still an issue. Somehow, we have not promoted sale financing. This is a specialised area, which we want to leave for lease and finance companies." Says Raina, "Financing of the cranes is not an issue per se. However, NBFC and other financing institutions are playing it that much more cautiously these days for all products. Escorts cranes enjoy a very good second-hand market; financing is that much easier/preferred for customers buying Escorts cranes. However, Lee has a different take on it. According to him, "Financing is not a major issue now, as most of the banks and financial institutions are providing finance to our machines. Earlier, banks were hesitant to give finance especially to the first-time users (FTUs)."
Borkar says, "Taxation is the biggest issue we are facing today as an OEM. In our country, every state has different taxes and varies from state to state. For instance, our factory is in Andhra Pradesh, where the sales tax is 14.5 per cent, while in Maharashtra it is 12.5 per cent. So there is a difference in tax of two per cent. As a manufacturer, we need the GST to be implemented as soon as possible. We hope a positive step will be taken by the Central Government in the next fiscal. Our Prime Minister is now focusing on Make in India products. So these issues can be sorted out accordingly. GST is the best possible solution for the taxation issues facing today."
As is true of any market leader, Escorts needs to keep its nose ahead of the competition in the market that is so dynamic. It has to move the market on the technology front by selling the basic concepts and the tangible benefits accruing to the user there from. The equipment needs to be made more versatility to increase its business viability at a higher price.
As the negative growth, year-on-year, has just about got arrested, the market is expected to grow by about 15 percentage points in the coming months. The market is moving up and away from the low it hit in the past 18 months. Says Dedhia, "Currently, refinery projects drive the demand for mobile cranes. Reliances Jamnagar refinery project is taking maximum number of cranes. Bigger projects in power, steel, cement, etc drive demand for especially crawler cranes. Power sector is not in a good shape as of now. Major projects in power sector are yet to start, though clearances have given to a couple of projects. In metro projects, since the rainy season is almost over, there can be some movement in demand as construction activities are going to pick up. However, the requirement of these cranes will be in minimum numbers only. Bridges are also not a major area where big consumption of cranes are expected, hardly 2-3 cranes are required for a bridge project."
About the future, Borkar says, "It looks promising. Crawler cranes are required mainly for refinery and power projects. And we are in need of more power plants and refinery projects. Ultimately when infrastructure growth is on, these equipment will be required. So hopefully by 2016, the market would bounce back to the level of 2008-09 which is about 300 cranes a year. After all, the bottom line is the tax structure issues should be resolved by the next year and on behalf of Kobelco I appeal that customers should go for a good quality machine and rather going for import, own a Made in India machine.
According to Lee, the growth rate depends a lot on the rental market. In the last couple of years, the rental rates have been very low which has affected the rental companies leading to decrease in cash flow. Says Rajeev Kumar, "Rental has come down by almost 50 per cent over the last few years, so that for higher capacity cranes, the rental rates are not viable. Earlier, if one invests on a crane, the payback period was four years, which has currently gone up to 7-8 years."
Somany sums up on a high note, "Future is very bright. Ups and down will keep on coming each year but in general, overall market will be growing as India has no option than to grow. In global market, overall market is growing at 8-9 per cent."
KOBELCO TO LAUNCH LOWER CAPACITY CRANES
Kobelco is planning to launch lower capacity crawlers below 100T, either 55T or 80T, mainly for export purpose. Right now Kobelco is exporting to Bangladesh, and the company has chalked out plans to go global markets. Currently the company is focusing on Middle East and South-East Asian countries.
ACE TO LAUNCH NEW MODELS
Action Construction Equipment (ACE) is expected to launch couple of new products in the lower category segment. "Shortly, we will introduce 100 - 150T capacity indigenous manufactured crawler crane models. The crane will be the forth in its series following 2013 when it launched 25T capacity unit with free fall arrangement targeting piling applications market and 40T in 2012.
ZOOMLION TO SET UP NEW FACILITY
Zoomlion has plans to set up a facility in India to assemble low capacity truck cranes. The company will source the parts from China, assemble here and mount on chassis of selected Indian brands. Zoomlion also has plan to open workshops to carryout repair and maintenance works of its cranes at various locations.
"Demand for 50-100T cranes will always be there."
We expect a growth of at least 10-15 per cent for mobile cranes starting from 2015, says Dharak Dedhia, Partner, Navin Heavy Lifters. Excerpts from the interview...
As a crane rental company what are the major challenges you face?
Cash flow has always been an issue in this industry. Now, the payment cycle is almost 4-5 months. But the main concern in rental industry is transporting the machine from one state to the other. Every state has its own set of rules, regulations, and forms and documents required for moving cranes from one state to another. This is a major issue as there is no clarity as in what kind of documents and forms required.
What is the range of products and solutions offered by your company?
We have tyre-mounted hydraulic cranes and crawler cranes with capacity ranging from 25-250T. These cranes from leading players like P&H, Demag, Grove and Liebherr. As of today, the 50-100T range is fast moving in the Indian market.
How old are the cranes in your fleet?
We have a mix of cranes that are brand new and old ones. We have to set a balance economically because new cranes wont give good rental to return on the capital, but older cranes can give better rentals. At Navin Heavy Lifters, we dont go for very old cranes. We import used machines of maximum five year old which are sparingly used. There is a huge difference in the price of a used crane and new one. The cost of a used crane is almost one-third of that of a new one. But the rental has hardly 10 per cent difference.
What is the price range for different class of mobile cranes?
In the rentals for example, for a 250T crane, the rental rate is Rs 10-10.5 lakh per month for one year. But if the requirement is for 1-3 months, then the rental rate can go up to Rs 14-15 lakh per month.
Who are your major customers?
Our major customers are from refinery, power, and general construction industries. Reliance Industries in refineries, Essar in power, L&T and Gannon Dunkerley & Co in general construction are our major clients whom we supply our cranes.
How do you look at the future?
We are very much positive on the future. Especially from next year it will become a stable business with steady growth and steady work.
100 T cranes - Rs 5 cr
200 T cranes - Rs 9.5 cr
250 T cranes - Rs 12 cr
300 T cranes - Rs 13 cr
"Advanced features have made cranes productive."
In the last seven to eight years, there have been remarkable improvements in safety and technology, says Sumit Joshi, Director, Shri Dinesh Cranes. Excerpts from the interviewà
What is the current demand-supply scenario for mobile cranes?
In all-terrain cranes, the demand-supply is almost balanced as there is enough supply to meet the current demand level. However, the demand is currently less due to slowdown. But it is going to pick up soon with the new Governments various initiatives.
What is the range of products and solutions offered by Shri Dinesh?
We have mobile cranes ranging from 15T to 300T and the 200T and 250T are the fast moving. We own cranes mainly from Terex and Manitowoc (Grove).
Which are the verticals that drive the demand for mobile cranes?
Demand comes from tower crane erection and shutdown projects. Other segments include metro and bridges.
How do you view the challenge of imported used cranes?
We dont import any used cranes and some companies insist on new cranes, so there we dont face any competition. But some companies who focus on just completing the job may go for used machines and here we may face some competition. However, as of now, there are many corporate companies who prefer new cranes for their projects, and we work for those companies.
What is the rental scenario in mobile cranes?
Rentals depend on the demand for the cranes and the number of jobs: if the demand goes up, then the rental goes up.
What are the growth prospects of mobile cranes market?
This industry definitely has a great future. There are a lot of projects announced. If all these projects take off soon there will be demand for mobile cranes. A lot of buying and importing activities will happen and growth will pick up.