Tower crane manufacturers and distributors are sharing an uplifted business mood followed by prolonged lull phase. Manufacturers are reporting growing product off-take during recent months. Orders are being placed from the existing customers who have put their earlier purchase decisions on hold. There are reports on new business queries from the first time buyers as well. The manufacturers and the distributors expect the demand would continue but not sure for how long.
Enquiries by NBM&CW, with the manufacturers revealed that bulk of the product demand are from commercial and residential real estate projects. The demands are mainly from the projects which have been revived once again following debt restructuring by the project developers and certain renewed presence by private equity funds in real estate. The projects were stalled due to dearth of funds or costly funds on account of prevailing higher borrowing rates from banking and financial institutions. Nonetheless, though demand is expected to escalate in 2013 resulting in growth of market volumes but there is unlikely to be significant disparity in demand supply gap at least in the mid-term. This is likely to retain stiff competition at the present levels making it ever challenging for manufacturers and distributors to expand market share.
"Our launch of 2.5 tons MC 148 during bC 2013 in Mumbai is intended for smaller segment of contractors. We are quite hopeful that the crane will be successful in capturing market from the well entrenched local players selling their own manufactured and distributed products," says Mr. Mattoo. He adds, "MC 148 does not have much pricing difference from the other products in the similar segment, yet carries the Potain brand and product quality supported by our well known 'Crane Care' service."
Mr. Mudgil mentions, "We are emphasizing on developing longer longer Jib Length and higher capacity models in India to provide world class solutions to Indian customers. We work very closely with our customers and organize training for their operators to ensure full utilization of our machine capabilities. ACE believes in offering customers with complete solutions and our engineers interact with customers right from initial stage to help they choose the right product to cover the site properly. We believe in providing the right product, with good service support, at a reasonable cost to ensure repeat business from various customers.
Eroding Price Disparity
It has been learnt by NBM&CW that the buyers of the 5-10 tons class equipment both in premium and non-premium brands are presently being sold without significant price difference in the market. It is expected that the trend will continue further, with buyers having stronger bargaining power at their disposal to buy products at economical rates with supply continuing to exceed than demand.
Mr. Malve expects to sell 80 units in 2013 as compared to 37 units in 2012.Anupam sells 5-6 tons hammer head tower cranes from Alfa of Italy co branded as Anupam-Alfa. 5-6 Maximum lifting capacity of 5 tons @ 15 metres working radius at 1.25 tons at 54 metres jib length and 6 tons @ 16 metres working radius and minimum of 1.4 ton at 60 metres jib length.
Universal also makes available vertical man and material handling solutions from 200 kg capacity to 3000 kg capacity and from 3 meter height to 300 meter height which includes rack and pinion elevators, mast climbing platforms, see saw lift, multi go, mini lift, suspended platforms. According to Mr. Bhosale, "the material handling products are designed considering the site requirement and made affordable with utilization for maximum efficiency."
The joint venture tie up makes available, hammer head cranes from 4t to 240t, flat top cranes from 4t to 50 t and luffing jib tower cranes from 12t to 63 t for the Indian construction market. Zoomlion has tower cranes with lifting capacities ranging from 4 tonnes to 240 tonnes.
Larger portion of sales of tower cranes for the joint venture entity is expected to be driven by demand from real estate sector. According to Mr. Mehendale, "real estate sector will probably be driving 85-90% demand for tower cranes in the years to come with growth continuing at 15-20% per year. An emerging trend within the real estate construction sector to opt for pre cast concrete or pre engineered steel segments for building construction. This will drive the demand for tower cranes from this segment to higher capacities, namely 6 – 12 tons."
To shield its sales from pricing competition, amidst the growing demand from the real estate sector, Electromech will focus on localisation. "During the first phase will start manufacturing the 5 and 6 ton models, which make up over 80% of the total demand. We will expand the range of models being manufactured in India gradually," says Mr. Mehendale. He adds, "we are positioned to address the requirements of power, steel and cement industries. Currently, these sectors account for only 25 – 30 cranes per year. Under our jv entity, we would be able to make available range of products for industrial construction." Larger percentage of sales of Zoomlion tower cranes are from institutional buyers.
However, at present volatility in dollar rates is a source of concern for Electromech. Endorsing the worries, Mr. Mehandale mentions "exchange rate fluctuation is certainly a concern for importers. However, the Zoomlion ElectroMech joint venture has been set up to ensure that Indian customers have access to the best products available globally in India at competitive pricing. Our aim over the long run is to reduce dependency on imported components for high volume items which will keep pricing stable and competitive."
Cranedge the fully owned subsidiary of Electromech for crane maintenance is service partner for Zoomlion's complete range of tower cranes promoted by the joint venture entity. The service package comprises supply of genuine spares, trouble shooting, repairs or breakdown services, annual maintenance contracts, one time health checks, electrical upgrades, operator training courses and other technical support and consultancy on the selection, operation & maintenance of tower cranes. subsidiary Cranedge has recently conducted a 2 week service course, meeting 16 customers across Pune, Mumbai, Hyderabad, Cochin, Chennai and Delhi.
Margings on Heavier Capacity Offerings
According to Mr. Kumar, "The market of high end cranes is showing a gradual increase, due to newer trends in construction involving prefabricated techniques in commercial and residential real estate projects in India." However, the Hyderabad based company does not ignore the mass lighter segment. DCS distributes 5-32 tons KRHI Chinese tower cranes for real estate construction. He mentions, "the cranes are of easy design with simple electrical panel, making them suitable for Indian operating conditions. Recent redesigning has been carried out in the masts to make the products economical to own."
However, all that does not make the task easier for the company to promote the products as the market continues to remain highly competitive.
DCS is also distributor of premium European, FM Gru 5-42 tons tower cranes for the Indian market. The cranes are available for commercial and industrial projects.
Escorts Construction equipment (ECE) a division of Escorts Ltd aims to sell 15 units of Linden Comansa tower cranes in 2013, almost the same numbers it sold in 2012. ECEL is the exclusive distributor of Linden Comansa flat top and Luffing tower cranes in India.
He says, "being one of the best players in the premium high capacity segment, we are isolated from the volatility of mass market. The advanced product positioning of our Comansa cranes is well likely to expand and retain its market presence, when EPC contractors are looking to economize cost of construction, amidst compressed work schedules."
"The unique selling proposition of our cranes is completely based on its range competitive features. Notable among which is removable jacking cage provision. With single jacking cage, heights of other Comansa cranes working at the same sites can be increased or decreased, thereby leading to cost savings," says Mr. Malik. Comansa range of tower cranes marketed in India are sourced from Comansa Jie facility in China and flagship facility in Spain depending upon the requirements of the customers.
Despite advanced product positioning, appreciation of dollar and euro against INR is well likely to put some temporary brakes to promote such cranes. But as such higher capacity range of tower cranes are mainly required for industrial projects like thermal / nuclear power projects there will be huge surge in the demand once such projects are back into the track . Also as more and more building contractors are adopting pre cast technology there will be increase in a demand for high end higher capacity Tower cranes as in such projects tower cranes are utilized like any other production machine and contractors prefer to opt for a reliable product. Although there is a temporary slowdown in the market but we are strengthening our existing position through better product support by hiring more technical hands," mentions Mr. Malik. According to industry estimates, the size of the niche high capacity premium tower crane market is between 40-50 units per annum and this will grow at a CAGR of around 20% once Indian economy in back in the track in the near future.
Mr.Kulkarni says, "to make our tower cranes affordable, we are looking at fabricating the product locally as dollar fluctuation has become unpredictable and no strategy will work to keep fixed price. We propose to expand and retain our market by increasing our reach through dealer network and localizing the part of production process."
Improved product procurement of tower cranes could be an indication of market revival, though it is difficult to predict how long the demand will sustain. Demand sustainability can be well worked out by project developing agencies. However, not to be ignored the competition is there to stay and even getting stiffer, far cry from the days of nascent mechanization putting further pressure on pricing. It will be the onus of the crane companies to take on the challenge and set sail.