India focus: crane exports and rental on the rise
By Euan Youdale08 January 2009
The Indian crane market is becoming more diverse with domestic companies developing their ranges for export and big rental companies showing more interest in locally manufactured machines. Euan Youdale reports
The pick and carry crane is still king in India but the heavy lift rental companies are looking for increasingly large machines to cope with new power-related projects.
ABG Heavy Industries will be deploying its new 1,250 tonne capacity Terex Demag CC 6800 at the Bina oil refinery in India at the beginning of 2009.
Saket Agarwal, ABG managing director, says much more of this type of work will follow because of the high demand for energy, including coal fired and nuclear power plants and wind farms.
ABG has about 175 cranes, says Agarwal, with a Terex Demag CC 8800-1 Twin on order. The giant crawler has a 3,200 tonne lifting capacity and is just one of a large number of cranes which are constantly on order well in advance to ensure the business is not affected by long lead times. Bearing that in mind, Agarwal says crane delivery times are coming down.
"Although the manufacturers will claim there are lead times of 18 months, in actual fact there are a lot of cancellations." As a result he is finding that some models are immediately available. "When you go with cash you can get them - 250 tonne crawler cranes are no problem at all."
With the well documented financial crises gripping the world economies, there are obviously concerns for the future in India. However, Agarwal says that cash rich companies, like ABG, are not likely to be hit so hard and will always be able to invest in new cranes.
Smaller rental companies in India will also fair relatively well, he forecasts, because they generally do not rely on credit to expand their fleets. "The mentality in India is to borrow less. Crane rental companies are dept adverse. They buy cranes from their profits."
Agarwal adds that it is possible that revenues and margins will come down, but the overall result will not be bankruptcy.
A major boost to ABG's fortunes comes with the US-India nuclear deal, signed in October. According to Agarwal, it will see generators, totalling 40,000 MW, built across India. And it is in this area that the CC 8800-1 Twin will find much of its work.
However, even the might of this machine will not be able to lift nuclear reactors of the future, says Agarwal. ABG is in discussion with Terex Demag about developing a 5,000 tonne crane. "We have our own in-house design department considering various options. Terex Demag would provide the manufacturing. But such a large crane would become this company's project."
The sheer size and weight of the machine may rule out crawler tracks, explains Agarwal, but potential designs are, at present, a closely guarded secret.
One of the challenges in India will be decommissioning, Agarwal adds. "There is a lot of work coming from old oil platforms and nuclear power plants. It requires even larger cranes to lift from a greater radius."
Unlike construction projects, which can be co-ordinated to include the placement of a crane, decommissioning work requires cranes to walk onto an existing site and reach over large structures.
The same too goes for upgrading power plants with bigger, modern versions. All this needs to happen quickly to ensure facility down-time is kept to a minimum. A 5,000 tonne capacity crane would be able to accommodate all such projects.
Besides its developments in the rental arena, ABG is making strides into manufacturing by building a crawler crane factory in Mumbai.
The 80 tonne capacity cranes will be aimed directly at the Indian market for general construction work.
"This is the first time hydraulic crawler cranes will be built in India," says Agarwal.
The factory is expected to begin production in December and build up to 40 cranes in 2009, increasing to 200 a year in the future.
"You can never depend on foreign manufacturing. The Indian economy should be self-sustaining," Agarwal adds.
Fellow rental company Sanghvi Movers does not have a single Indian manufactured crane in its fleet. "At the initial stage we had some 20 to 30 tonne Coles Cranes, made by TIL, and 75 tonne Tata cranes which we have disposed off since we decided to concentrate on higher capacity cranes and we prefer to have modern technology cranes," says CP Sanghvi, managing director.
However, he confirms that crawler cranes are becoming more popular in the 150 to 750 tonne capacity range.
Sanghvi singles out three cranes that are proving particularly useful in the Indian market. The 400 tonne Liebherr LR1400/2 crawler is ideal for wind turbine erection with a fixed jib, he says, and for cement and power projects with SWSL combination.
The 750 tonne Liebherr LR1750 suits ceiling girder lifting, while the 250 tonne Kobelco CKE2500 meets mid-range requirements for power projects, refineries and cement plants. The company has 63 units of the three models on order, two of which will be the LR1750.
Speaking about the booming rental and crane service industry in India, Sanghvi says the next four to five years will remain strong. "This is due to the 80,000 MW of power generation that will be installed over the next five years, for which there is a considerable shortage of cranes for lifting high ceiling girders," adds Sanghvi.
"Since our company has all kind of cranes, we enjoy privilege of demand from all sectors. Also many other small service and rental companies in India are emerging and are becoming a threat to our small range cranes. We are going one step ahead of our competitors and concentrating on buying higher capacity cranes which no small competitor can do so easily," continues Sanghvi.
The number of rental companies offering smaller capacity cranes is growing for two reasons, Sanghvi explains. Firstly, there is an increasing need for cranes. Secondly, some companies are buying "low quality" used cranes and offering them at a lower rental price to projects with a limited budget or that are financially weak.
Pick and Carry production
Action Construction Equipment (ACE) manufactures 3,600 hydraulic pick and carry cranes annually with capacities ranging from 3 to 18 tonnes capacity. The company also has 20 and 25 tonne versions in development, which are set for launch in the next five months.
ACE also annually manufactures about 35 20 to 30 tonne capacity rough terrains and 16 to 23 tonne truck mounted cranes, as well as 250 self-erecting tower cranes. They complement the company's range of backhoe loaders, loaders and forklifts.
The company calculates that about 7,000 pick and carry cranes are produced in the country each year, along with 280 self-erecting tower cranes, 70 to 80 rough terrains and 150 to 200 truck-mounted cranes.
ACE claims to be the largest producer of hydraulic mobile cranes in India which are used in applications including infrastructure, power projects, mining and engineering."In India these cranes are used in place of telehandlers, which are comparatively lower capacities and are quite expensive. These pick and carry type cranes are very popular due to low cost, easy operations and maintenance," says Sorab Agarwal, ACE director.
Demand for cranes has been increasing at a steady rate for five to six years, Agarwal adds, thanks to the government's focus on infrastructure development, such as airports, roads and power generators.
"We are quite confident that even though this current economic scenario throughout the world is very bleak, the demand for cranes will still be upward. If the same question was put five to six months back, we would have said that the crane market should continue to grow at a rate of 30% to 35% on a year-on-year basis, at least for the next five years.
"Considering the current economic turmoil the fate of the growth of the Indian economy will be more transparent in the next three to four months. But we still feel that the market for cranes will definitely expand in our country owing to the continued focus of government on infrastructure development and increasing mechanization in our country," commented Agarwal
On the road
This confidence is, perhaps, demonstrated by the company's decision to upgrade all its models and improve safety by fitting load indicators, among other devices. Apart from this, it is developing two front-mounted cabin pick and carry models with 20 and 25 tonne capacities to satisfy the demand for bigger cranes. The advantage of the front mounted cabin is better visibility and faster road travel, says the company.
A 40 tonne capacity truck crane, placed on an Indian-manufactured truck chassis, is also set to be launched in December 2008.
ACE has also started to focus on exports in the last couple of years and has set up dealers in countries including South Africa, UAE, Qatar, Iran and Bangladesh.
Fellow manufacturer Escorts Construction Equipment Limited (ECEL) is also looking into the potential of the export market. The company produces pick and carry cranes with 5 to 23 tonne capacities, along with rough terrain cranes and yard cranes, up to 40 tonnes capacity.
"So far, cranes developed in India have been very specific to Indian applications and market. The technology and features of these machines are suitable for local use. But there are companies which have the product ideas and capabilities to develop cranes for the global market too," says Rajesh Sharma, ECEL vice-president and head of sales and marketing.
Bearing this in mind, the company has developed a new range of "next generation" pick and carry cranes: the TRX series. They offer unrestricted visibility, fast operations and maneuverability, longer distance runs, high lift duties, higher reaches and advanced safety features, says ECEL.
One of them, a 14 tonne crane, has already been launched and widely accepted in the Indian market. This month the company is launching a 23 tonne version with hydrostatic transmission. More models will be added in coming months.
The demand for cranes is increasing rapidly in India, Sharma adds, with the compound annual growth rate (CAGR), for the last five years, standing close to 40%. In the next five years CAGR is forecast at 20 to 25%, he adds.
"Investment in infrastructure projects such as urban utility, modernization of airports, MRTS, power and industry have fueled the demand for the material handling industry. The growth in steel and manufacturing sectors has helped as well."
Such growth has resulted in demand for increased lifting capacities. "The market has seen a perceptible shift, both qualitatively and quantitatively over the last few years in the wake of the unprecedented activity levels. The shrinking timelines to complete a greater quantum of construction and erection work has not only resulted in a higher level mechanization but also required higher capacities of equipment with greater emphasis on the safety and uptime," says Sharma
Above and beyond
Speaking about imports Agarwal comments that India brings in large numbers of larger capacity used machines from all parts of the world. "And, of late, a couple of Chinese brands have also made good headway into the Indian market because of decent quality and competitive prices. As a matter of fact, in times to come, India will be one of the bigger crane markets in the world. Bearing this in mind, we have already increased our capacities and are now moving towards high tonnage cranes."
Machines with 50 tonne capacities and above are proving to be the most popular Chinese imports, along with tower cranes. "We are also tied up with Zoomlion China and are selling good numbers of tower cranes and crawler cranes in the Indian market," adds Agarwal.
More foreign manufacturers are also likely to see the benefits of seeting up production facilities in India, says Sharma. Factors like the low cost of manufacturing, availability of skilled manpower and a credible legal system make India a favoured destination, he adds.
But, Sharma explains, most European and US manufacturers have made little headway into Indian so far because its customers are price sensitive."Currently there are not many foreign companies manufacturing cranes in India. But all the local companies have some relationship with them, be it in the form of a technology partnership or an outright distributorship. Almost all big manufacturers have some sort of representation in the country for crawler cranes, truck cranes and rough terrain and all terrain cranes."