Terex Finlay: Bullish on India

Mr. Jaideep Shekhar, Terex Finlay
It has been three years since UK based Mobile Crushing, Screening and Washing Plant manufacturer, Terex Finlay—a fully owned subsidiary of the $9.1 Billion Terex Corporation of US, entered India. Buoyed by the growing demand from the Aggregate & Mining Industry, Terex Finlay has been able to make good headway in sales. In an interview with P.P.Basistha, Mr. Jaideep Shekhar - Country Manager, India and South West Asia, Terex Finlay, talks about company’s strategy, New Product launches, Training & Promotional plans to support the offerings and on emerging market trends in the crushing equipment sector in India.

Mention about Terex Finlay and its operational set up in India.

Terex Finlay is a market leader in Mobile Crushing, Screening, Washing and Recycling equipment. Our products are used in industries such as construction, quarrying, mining, landfill, aggregates, iron ore, Asphalt, Rock crushing, demolition, and recycling and has a centralized manufacturing facility measuring approx. 400,000 sq. ft in Omagh, Northern Ireland, UK.

The Company is widely known for its innovative and leading designs, quality products, and extensive dealer network and after sales support. We have invested heavily in our people and equip our staff with state-of-the-art technology. Exporting for nearly 50 years to 80+ countries throughout the world, we at Terex Finlay are committed to continual improvement in accordance with our customer’s requirements.

Though, Terex Finlay has local representation in India, it relies on its dealer network for sales and service support as per Terex Finlay’s global marketing model. Our dealer in India is W.B. Engineers International Pvt. Ltd. and is responsible for the Sales and After Market requirements of the equipment.

Through our India Office, we liaison between the factory at Omagh and the dealers in India and countries of South West Asia. We monitor the performance of the dealers pertaining to sales and service support to the end customers and also take care of the training needs of the dealers enabling them to render efficient service support to the customers.

Is your dealership arrangement with W.B Engineers exclusive in India? How is W.B Engineers positioned in terms of its network access locations to carry out effective marketing of your products? What is the networking capability of the company in providing back up service support?

Presently, W.B Engineers is looking after the Sales in India. Headquartered in Pune, it has its regional offices at Kolkata, Mumbai, and Bangalore which houses the Sales and Service Staff. Their main warehouse is located at Pune. WB Engineers also has local offices at Hospet in Karnataka and Joda in Orissa to cater to the Mining Areas. These local offices have a complete sales and service team and also store spare parts for requisite equipment service support. With the help of these local offices, WB Engineers is in a position to provide quick Sales and Service Support to all our customers in these mining areas. These areas also have high concentration of Terex Finlay’s equipment.

Mobile Crushing, Screening, Washing and Recycling equipment
Our dealer also offers flexible tailor-made solutions for Rental/ Contract Crushing options. Under this arrangement, the dealer mobilizes the site with the machine and manpower and also takes care of the operation and maintenance of the Crushing and Screening Plant. The customer gets the benefit of hassle free supply of Crushed Aggregates/Iron Ore and has to pay on a per ton basis.

To run the contract crushing services, WB has trained operational manpower and service engineers in place. The techno manpower resource also in turn serves the service and maintenance requirement of Terex Finlay machines.

What are your future plans to make the distribution tie-up well forged?

To ensure optimal customer support, we would be laying further emphasis on technical training to WB’s Service Engineers for both existing products and for new products which we will be introducing in the Indian market. At present, Service Engineers from UK have been conducting Technical Training Sessions for our Dealer’s Sales & Service team through various online and classroom coaching session both onsite and in UK. Depending on the customer’s requirement we also include them in these knowledge sharing sessions.

Besides organizing more seminars, we would now be increasing the frequency of these training programs as the demand of equipment grows. We believe that Dealer development and training is a continuous process and Terex Finlay gives due importance to this fact.

With your promotional model to sell products through distribution tie-up, how are you addressing the issue of physical availability, knowledge availability, and performance availability of the equipment. Which are the areas you perceive that fine tuning is required on mutual front?

We have developed a model which studies the market demand and supply situation on a continuous basis. Based on our knowledge about the expected demand, the dealer places the demand to the factory well in advance to ensure our committed delivery timelines are met.

As I mentioned earlier, WB Engineers has adequate skilled resources to meet our customer’s requirement with respect to setting up the plants and ensuring smooth operations. WB’s engineers are technically highly skilled and experienced and have been successful in this.

Like most of the companies in this Industry, high level of attrition has been a challenge for us as well. However, we are continuously trying to keep the sales force motivated and ensure better Dealer and Principal partnership so that we all feel part of one family.

Number of units sold till now and future sales target.

We now have approximately 120 equipment in India. Our target is to reach the figure of 200 equipment in India by year end.

Based on your perception, what are the emerging trends in India’s crushing equipment industry. How are you getting attuned to the emerging trends in terms of competitive product positioning?

Indian Crushing industry is multifaceted. As the project size has increased over the years so has the demand for higher capacity machines in the range of 200 TPH-300 TPH. Demand has also grown for Mobile Machines both Wheeled and Tracked. Machines are now becoming much automated and have programmed logic controls, making them less labor intensive to operate. Another important development trend to note is that the Track Mounted Screens are now becoming a commodity product.

Mobile Crushing, Screening, Washing and Recycling equipment
At Terex Finlay, we have high capacity crushers, manufactured on cutting edge technology. We are the market leaders in manufacture of Track Mounted Mobile Equipment and our products are competitive as they are run by their own power units mounted on the mobile chassis, thereby removing the requirement of external power source. These machines can also be moved easily at the site and there is no requirement of any civil foundations.

A little more on competitive product positioning and advanced technical features of the equipment.

At Terex Finlay, we offer a complete solution comprising crushing, screening, washing and recycling solutions making the offering much more competitive to the end–users. On technical features among few, the Terex Finlay C-1540 cone crusher features a number of major benefits including hydrostatic drive, rapid set up time, high reduction ratio, high output capacity and advanced electronic control system.

The unique feature of the C-1540 is the optional integrated pre-screen. By only crushing the products that needs to be crushed, the capacity of the machine is increased and wears costs reduced. This unique feature is very useful in iron ore applications where lesser fines production is required. The metal detector on the hopper with self clearing facility is also another notable feature.

While the Terex Finlay J-1175 Jaw Crusher comes with a unique feature of reversible operation for cleaning blockages. Terex also offers fully hydraulic adjustable closed side option in addition to hydrostatic drive and advanced electronic control system.

What are your future product introduction plans? With rising raw materials costs, how would you be ensuring to keep equipment cost competitive?

We would be shortly launching our J–1160 Jaw crusher in India. It would have a capacity in the range of 150–200 TPH. Some of the prominent features of this crusher are: high output and reduction ratio, rapid set up time, grizzly feeder with integrated prescreen, fully hydraulically adjustable closed side setting, and Pullrod tension ram. Notably, the J-1160 is compact and easily transportable.

Terex Finlay’s Production is centralized at our Factory in Omagh, this huge scale of operation gives us a better bargaining position with all our supplier, coupled with our very long relationship with most of our supplier, we are in a position to keep our cost lower and offer a competitive prices to our customers.

NBMCW May 2008

Cutting Edge Technology Products & Services from Telcon

Cutting Edge Technology Products & Services from Telcon
"Telcon's constant endeavor has been to provide construction solution to the customers. The company has always been at the cutting edge of technology and provides discerning Indian customer the latest and most effective solutions. At Excon 2007, the company intends to display the E-age excavators and launch a series of new products" says Mr. V.R. Raje, Vice President, Sales & Marketing Telcon, in his interview with SKK.

Telcon has important tie-up arrangement with leading overseas manufacturers. How do these tie-ups help Telcon in serving domestic market better?

Telcon is a joint venture between two global giants, Tata Motors, India’s largest Commercial Vehicle manufacturer and Hitachi Construction Machinery Company Ltd., Japan, the world leader in Hydraulic Excavator technology.

Our association with Hitachi goes back to 1984, which is the oldest relationship that exists in the industry. Hitachi, being the world leader in hydraulic technology, has always ensured that they gave the latest technology. So we are on a continuous technology up gradation programme.

We are also in the process of including the Hitachi team into our manufacturing initiatives. In terms of manufacturing, support, design, and quality, they have ensured their presence with us all the time.

The other aspect of course is that Hitachi has global affiliates and partners through which we can access technologies. For instance, there is Hitachi Sumitomo Heavy Industries Construction Crane Co. Ltd, which is a joint venture between Hitachi Constructions and Sumitomo Heavy Industries - So products such as heavy cranes that are widely used in infrastructure building activities such as ports and refineries are sourced through them and supported by the extensive Telcon network.

What segments of construction equipment are set to grow in the wake of current boom in infrastructure?

With the growth outlook in the Indian Economy pegged at a robust 9% as well as the increased investments by the government for better roads, modern ports, airports, railways, the construction equipment industry as a whole is set to grow at a rate of 35-40%. This would include a variety of equipment such as Backhoe Loaders, Excavators, Wheel Loaders and so on.

What is the market share enjoyed by Telcon at present and what are the plans to ramp up the market share in the next 3-4 years?

Telcon is the market leader in Excavators with a share of 53%. In the Cranes market also, we have a dominant share. Telcon has a significant presence in the Wheel Loader and Backhoe Loader markets.

Telcon has been expanding its dealer network to widen reach and serve customers better. Adding new outlets will further reinforce this network.

We have identified new segments and applications where we can use our products and have launched various products to cater to the diverse needs of the customers. Our access to Hitachi’s technology and our strong manufacturing base enables us to quickly respond to the evolving market.

What are the value added services that Telcon offers its Customers?

Telcon’s constant endeavor has been to provide Constructive solutions to the customers, be it the right kind of equipment for their applications, the new age technology or the after sales support. Our focus is also on value added service offerings such as Full Maintenance Contracts, which complete our package to our customers and enable them free up precious resources for their core activities. Specialized reconditioning and refurbishing services are offered to ensure that the utility of the equipment is extended and life cycle costs brought down.

Telcon has been an important participant in the national and international exhibitions showcasing its technical capabilities in the manufacture of stateof- the-art equipment and machines at these events. What are Telcon’s plans to participate in the forthcoming mega event Excon—2007 to be held in Bangalore. What will be the focus of its participation and plans to launch new versions of equipment?

Cutting Edge Technology Products & Services from Telcon
The company has always been at the cutting edge of technology and provides the discerning Indian customers the latest and most cost effective solutions. At Excon, the company intends to display the E-age excavators, of which ZAXIS series is one of the offerings. Telcon is the first company in India to have launched the Hydraulic Excavators and holds over 53 percent market share.

The company has recently launched ZAXIS 50U, India’s first zero tail swing Excavator that will redefine construction work in urban areas and open up endless possibilities for the construction contractor.

Also on the display would be the World-class Hydraulic and Truck Mounted Cranes from Hitachi Sumitomo Heavy Industries Construction Crane Co. Ltd and Tadano Ltd, Japan. The company would also be launching a series of new products during the event, which have been carefully designed keeping the requirements of the Indian customers in mind.

NBMCW November 2007

Versatility is our strength

"Telcon commands a sizeable market share of 55% in the Indian excavator market with a wide range of excavators being manufactured by the company, beginning with a capacity of 2 tonnes and going on to 120 tonnes, to suit the requirements of a wide spectrum of applications." In a recent interview to Partha Pratim Basistha and Mr. Vikram Raje, Vice President and General Manager, Sales & Marketing, Telcon, shared his observations on the country’s construction sector growth, development happenings in construction equipment and altogether in the excavator market and how his company is positioned to take on the development.

What are your observations on the growth of the country’s construction sector? Do you find the buoyancy to pass through certain corrections in due course?

The growth story of India’s construction industry would continue to happen. Large-scale infrastructure deficit in the country, in terms of requirements of airports, ports, roads, power as well as residential and commercial space would make the growth continue exponentially. With the government’s renewed focus on infrastructure creation, to meet the 9 percent GDP growth during the 11th five-year plan period, there is not much room for correction in the growth story happening. Government’s initiative to undertake core construction projects through the Public Private Partnership (PPP) route would provide a necessary shot in the arm to the ongoing positive growth trend for the construction industry. However, the challenge for the government would be to identify a large number of bankable projects. This would enable the PPP initiative gain further ground and have direction.

Led by the growth of the construction sector—do you also find the construction equipment industry getting commensurately matured? Kindly highlight, what are the factors behind the development process?

There is a definite maturation process happening in the Indian construction equipment industry. On a macro level, the overall growth of the construction industry is making equipment manufacturers put in business process models to meet the burgeoning demand of the construction industry. This is one part of the maturity being exhibited on the part of the equipment manufacturers. But in an even more significant way, there is an increasing trend to mechanise, shift from usage of smaller capacity equipment to bigger capacities in order to gain efficiency of scale as also a shift to equipment having more technologically advanced features. This has brought in wider product ranges as well as more advanced equipment.

The change in demand is being driven by the large size projects and rigid project completion schedules. Large size equipment with advanced features are enabling construction companies to have proportionate quality output and also to complete the projects within the scheduled time frame. But I would like to say that today customers are more aware and exacting as compared to five or seven years ago and are keen on getting maximum utilization of the equipment. This, as a consequence is making the equipment industry manufacture advanced products.

Do you find similar level changes happening in the excavators market as well?

Very much so. The excavator market is equally getting developed with demand for equipment in every category. To meet the demand, equipment companies are manufacturing and positioning their products in these segments. There exists a huge market catering to the demand for low and medium range excavators possessing a capacity of 10-40 tonnes.

The assorted market demand is being led by the construction of infrastructure requiring higher capacity equipment as well as from urban infrastructure which have a different set of equipment capacity needs. Excavators being an integral part of any construction activity are required in ever increasing numbers. Today, the demand is shifting in every segment to the next higher model category for better outputs to accelerate work and meet tighter deadlines.

How is Telcon positioned to meet this assorted demand with its product line. Besides, how are the excavators manufactured by Telcon placed in terms of its capacity and features?

Telcon has been serving the demands of the Indian construction industry for over four decades now with a wide and versatile range of excavators. Our range consists of capacities from 2 tonnes to 120 tonnes of capacity and even beyond through direct imports from our Principals.The wide range of excavators manufactured by us caters to the different segments of the market. This ability to address every diverse application through customized solutions with an eye on operating costs of the customer is the strength of the Telcon brand, which is unique. With the range of excavators on offer, Telcon enjoys a market share of 55% in the Indian excavator market. The machines have technologically advanced features. Rugged under carriage design and heavy-duty structures make for robustness of performance. Telcon excavators also offer electronic diagnostic and data logging systems for tracking equipment usage and performance. Besides, the machines are fuel-efficient and can also be offered with compliance to Euro-3 pollution norms. This in turn makes the machines environment friendly.

With burgeoning ongoing demand in place and keeping the high forecast future demand, what are your initiatives to ramp up your production facilities—in view?

We are undertaking a systematic initiative in expanding our production operations. Telcon would be coming up with its third plant at Kharagpur, near Kolkata in West Bengal during the year 2008. Telcon has presently one plant each at Jamshedpur and Dharwad, which are utilizing 60- 70 percent of their production capacity. With the green field plant coming up, Telcon would have a comfortable production capacity both to meet the ongoing demand effectively and the large scale demand as projected.

With cost of production going up, what have been your initiatives to make the products price competitive?

To make our products price competitive, Telcon on a sustainable basis is rationalizing its production and operational costs within the organization. This apart, the company is laying emphasis in cutting down its raw material and component procurement costs. The two initiatives have significantly enabled the company to check its production costs from escalating.

What about Telcon’s after–sales support system?

Telcon’s after–sales support system has a wider connotation. It is not merely restricted in providing spares and components to the machines, post sales, in the event of any break down, but lay emphasis in showing the customers how to extract the full benefits of all the features built in. It is a critical paradox that in India, excavators whether in mining or construction are not utilized to their full capacity as compared to markets in Australia, U.S or even Indonesia. Many of the Indian customers take pride in deploying a number of machines at the site rather than undertaking the work through an optimized fleet. This escalates the cost of the project at times.

To correct the tendency, we lay great emphasis on training and making the customer well acquainted with the operational features of the machines so as to enable him to utilize the machines fully. In addition to this, we offer customized support solutions and maintenance packages where at a mutually agreed cost, we maintain the equipment for the customer over its lifetime. We have entered into such agreements with a number of corporates and contractors.

To make our after sales support system run smoothly through ensuring component support, we have one mother warehouse at Nagpur and four feeder warehouses. Besides, we have 35 dealers operating throughout the country and 70 outlets for providing after–sales service support. All this infrastructure is supported strongly through sound and reliable delivery systems and processes.

NBMCW May 2007

"Working Against Delivery Factor"

Mr. S.Anantharaman, Sennebogen
German crane major Sennebogen, has been facing good lot of serious trade enquiries for its cranes from the Indian construction market. However, with its order book full till the period of 2009 the company has fallen short to make the queries materialized. In an interview to P.P Basistha, Mr. S.Anantharaman, Business-coordinator India for Sennebogen spelt out the strategy taken to counter the delivery factor working against the company for the Indian market.

With order books full, how is the company looking to meet the demand requirement of the Indian market?

To counter the demand factor working against us we are laying total emphasis on the dissemination of knowledge on the refined technical features of our cranes, for use in construction application. Although, Sennebogen brand and the features of its cranes is well acclaimed in the Indian construction market, increased knowledge spread would strengthen the brand image of the company and its products.

But critically, how are you trying to address the supply side constraints?

We are coming up with a new plant in Germany at Straubing, close to Sennebogen's crane line division. The new plant in the long run would go on to check the supply side constraints.

Sennebogen's crane line division
We are looking for selling the knowledge concept of crawler telescopic cranes in India. Sennebogen is globally acclaimed as a manufacturer of crawler telescopic cranes. The company has its name in crawler telescopic cranes much owing to the refined features as compared to other manufacturers.

Crawler telescopic cranes are much competitive in their application as compare to crawler lattice boom cranes or rough terrain cranes. The crane even scores over all terrain cranes owing to its pricing component.

Our crawler telescopic cranes have better grip. This enables the cranes to provide the operational advantage of a rough terrain crane. The unique feature of the crane is its low cycle time. The crane has pick-n-carry advantages. It can locate and place the load at a quicker time. Overall, to run the cranes additional stabilizers are not required. And given the features the cranes can be used for all kind of construction lifting applications.

More on technical features, what makes Sennebogen products competitive?

In tune with German technology, Sennebogen’s cranes have better operating features. The in–built features of the machines ensures its longevity, consistent performance and reliability. To provide longevity and consistent output, the machines are manufactured with special grade materials to provide ruggedness.

Every component used in the machine is sized to provide higher output then the desired levels. This goes on to make the machines much ideal for Indian construction applications. The machines are equipped with added safety features and have minimum electronic, yet refined control systems for easy operation.

Being equipped with rugged features along with superior technical features to ensure consistent performance, provides the ideal resell value for the products making them competitive and reliable in their entirety.

Role of Ve Spec Consultants and business coordinator?

Our role is to act as a coordinating agent in between the dealers and principals. We provide necessary information on the company’s products to the dealers. This is so as to enable them to provide appropriate briefing to the customers about the products. On the other hand, our role is also to provide market information to the parents on its requirements etc.

Overall, we also take care of identifying at the right platforms for spreading information on Sennebogen's products and its applications.

Number of dealers engaged by Sennebogen in the country?

Presently, we have two dealers, one in Delhi, Alpha Technical Services and other is Maco Corporation in Kolkata.

We are providing extensive training to the dealer on the machine, so as to enable him to provide complete training to the end users operator. Moreover, a continuous service training is provided by us to the dealers to the operator of the machine during its course of operation at the site project.

To make dealers better equipped for providing efficient training to the customers, we engage dealers having experience in selling and providing service support to mobile hydraulic construction equipment as a prerequisite.

NBMCW April 2008

Quippo Energizing Energy Rental Business in India

Mr. Hemant Pincha, CEO, Quippo Energy
After scripting a success story in construction equipment rental business, Quippo now offers unique business proposition in Indian energy rental market, offering solution in excess of 70% thermal efficiencies vis-a-vis conventional solutions. With success at hand in the new venture, Quippo Energy Rental plans to take business from 20 MWe–500 MWe in next 2-3 years over a rental platform, says Mr. Hemant Pincha, CEO, Quippo Energy & Equipment Rental, in his interview with SKK.

Congratulations on the success of newly constituted business unit, Energy Rental, under your stewardship, achieving an asset base for 22 MWe of power generation in a short span. What have been the important initiatives?

Quippo offers unique business proposition in Indian energy market comprising gas based complete Power, Heating and Cooling (CHPC) solutions over a rental platform. We are offering this in order to capture part of growing power demand while offering customers with a unique service–an alternative to “buy.”

We derive competitive advantage from this fact that Quippo plant works in excess of 70% thermal efficiencies when compared with traditional coal based plant levels of 40-48%. On account of being localized captive units, there is minor T & D loses again when compared with grid T & D loses of 15–25%. This at the back of reliable services of plant uptime of 98%, we are operating like a reliable grid with consistent quality of power and added advantage of flexible contract terms. Our solution has been designed to provide quick fix solutions which are containerized for easy mobility and fast operations. These Power Packs are padlocked containers with the complete control in our hands. We give the client the scope of expanding. While customer concentrates on his core competencies, we take all his risks of CAPEX, technology, O&M and complete project management.

The motive behind such solutions is the benefit of masses as our solutions are quicker and easier on expenditure along with providing lot of scope for energy conservation and clean energy. The only limitation of our solution is that it is based on natural gas which is not available everywhere. We are at the moment catering power needs from 500kWe to 20MWe of power.

What prompted Quippo to constitute this new business area, what is the market like for this segment, and your plans to garner a greater share in this new business area?

India will have stable natural gas market on a long term. In developed economies like the USA, UK and Japan, the rental penetration is as high as 60-80%. I had happened to attend a conference in Las Vegas where rental revenues were stated to be in excess of $ 37b in 2007. India offers a trend in reverse with penetration of lower than 5% and hence offers an opportunity in this space.

We are now approaching the medium scale industries with revenues upto Rs.150 crores in areas like paper, engineering, chemical, pharmaceuticals, and textiles. We have been successful in convincing corporate like Raymond and Philips for their new expansion plans to go in for a concept of power rental.

The focus will remain in Gujarat for this year as the gas availability is the highest here. For next couple of years, we plan to explore:
  • Delhi and NCR Region
  • Andhra Pradesh & Tamilnadu
  • Area covered by Reliance Pipeline which will be ready by then and will pass through states like Andhra Pradesh, Madhya Pradesh, and Maharashtra.
We as a company have plans to take our business from 20MWe to 500 MWe in next 2-3 years by entering foreign markets as well. India itself can generate around 400 MWe in 4 years time so a CAPEX of 1000 crores will be required.

Tell us something about your existing installations in Energy Rental sector.

Quippo Energy Rental Solutions are offered throughout India with efficient products and ever growing team of skilled technicians, highly knowlegable energy experts exclusively committed to deliver the right solution to the client. Quippo Power Packs are remotely monitored around the clock via web-base connectivity from its fulfledged Ahmedabad based Centre of Excellence.

High-value continuous manufacturing processes depend on reliable electricity to maintain throughput and protect product integrity. On-site electric power systems help manufacturers maintain production efficiency, meet competitive challenges by driving down energy costs by co-generation to achieve financial objectives. Quippo Power Packs are at work in manufacturing-related applications such as:

Industries powered up by Quippo Energy Rental include, Paper, Chemicals, Textile, Electronics, Steel, and Packaging etc.

Quippo construction equipment rental model has been a success story serving the needs of construction sector. What further fine-tuning is at hand in view of chronic shortage of new generation equipment of higher tonnage at one hand and heterogeneous nature of construction equipment required for complex on going and new infrastructure projects at the other hand, requiring long term financing and technical services?

Equipment rental business has been a relatively new area in the Indian scenario. Quippo has indeed woven a success story. Although market is completely fragmented, we believe that market needs professional and national level renting company which has right infrastructure to support this massive construction work. Thrust is changing to higher productivity, mechanization, safe working practices and quality of work.

This business is asset centric and hence financial and technical asset competencies are important elements to be successful. Quippo offers a wholesome product range to offer one stop solution to customers while focusing on big ticket, high productivity and state of- art-machines.

There are internal challenges that Quippo has identified and working head on in order to improve service delivery and customer satisfaction. We are working on following initiatives.
  • Create spokes and hubs across India in a meaningful manner so that they work as easy access centres for our customers while making available spare parts, workshop facilities, washing and other support to our assets on rent. Spokes will be empowered.
  • To bring operators on our payrolls as key Quippo resource with clear focus on asset management with constant training and orientation. Crew base is going to swell to in excess of 4000 in next 3 years.
  • We will be strategic buyers of machines with clear eye over its deployment at other overseas market as we move on. We will develop an internal cell which will identify and study applications to benefit our customers towards more of a solution driven approach.
  • Processes are being revisited to be able to manage business effectively. ISO 9000 is next thing. We are also going to take a view over software, tracking system and IT back bone to be able to integrate our business keeping men and machine in optimum usage.
Despite pioneering efforts by Srei and Quipo, construction equipment rental business is at very infant stage and it should set to grow commensurate with total equipment market in the country. What policy provisions are needed to give it a boost? Also, your suggestions for hassle free inter-state movement of equipment, rationalization of import and tax regime, enabling measures for infrastructure financing and related aspects?

With the booming Indian Infrastructure sector, the infrastructure equipment market is expected to reach US$ 7–7.5 billion by 2009–10. This is a very good indication for the successful growth of companies like Quippo as this boom will definitely lead to a growth of the demand of rental equipment. However, there are certain regulatory issues for the equipment rental companies which need to be addressed.
  • Logistics: There is no uniformity in the RTO, Octroi and entry tax regulations in various states of India. There are different interpretations with respect to classification of vehicles. Some of the rules are almost ancient. Smooth operation of pan-Indian equipment rental is possible only when the rules are uniform, clear and there is no roadblock for inter state movement of equipment.
  • Custom Duty: As part of equipment rental industry, we do not get any custom duty benefits while importing equipment although we play an important role in development of infrastructure of the nation. Some of these exemptions are available to other categories of business for similar applications.
We are working with many state governments over development of “Equipment Banks” to push especially rural road works. Quippo on its part is working hard to fill up the much needed void by making state-of-art equipment available with operators. Financing will be a challenge especially in a growth led asset build up mode where your revenues do not catch up with assets. It must be kept in mind that this is relatively a new area of business and will take some years before it matures up.

What is your assessment on the growth of rental equipment business in the next 4-5 years and Quippo’s projected share?

Infrastructure is the buzzword in India these days. The major focus is on construction of roads, highways, bridges, airports, power plants and mining along with commercial and residential establishments.

Over the next five years, investment in the infrastructure sector is likely to touch US $ 350 billion. This will open floodgates. Equipment rental market is small, a mere 7 per cent or just US $ 250 million. This is at the bottom of product life cycle.

As we globalize and pressure of quality work, safety and deadlines increases, concept of Rental Equipment will begin to show its benefits. Companies will move from the Owning mindset to Rental Mindset.

In next five years, a market penetration of 15%–18% is expected in India. Internally, we are also preparing ourselves to match Global Service Standards in the coming years. We have earmarked closer to Rs 1500 crores Capex in next 3 years in this business.

NBMCW March 2008

Quipo: Providing Impetus to Construction Rental Equipment Business

Mr. Sunil Kanoria, Quipo Infrastructure Equipment Limited
"Construction equipment rental business is presently at very nascent stage and is set to grow faster. Quipo, the leader in the business is providing it the desired impetus," says Mr. Sunil Kanoria, Vice Chairman and Managing Director, Quipo Infrastructure Equipment Limited, in an Interview with P.P.Basistha.

What is the total renting construction equipment market in India and percentage of market share Quipo commands? Do you have plans to enter into equipment auction business, if so, what are the plans?

As of now, however, the equipment rental market size is small, a mere 7% of total equipment market or just $245 million. But with the increasing pressure to meet deadlines of project completion, this market is expected to increase faster. By 2009-10 the equipment rental market should triple to 21 percent of the total equipment market.

The growth prospect is more significant because the rental market in India is still at a very nascent stage. The rental market in USA is 65 percent and in Japan 80 percent of the total equipment market.

Quipo is already in the used equipment auction business. Infact, this is the first Indian company to enter into this field. Henry Butcher International Valuers and Auctioneers Pvt. Limited (HBIVAPL) was incorporated in 2005 as a 50:50 Joint Venture between QIEL and Henry Butcher International Ltd., UK which is one of the largest specialist plants and machinery valuation and disposal companies in the world.

This JV offers 3 main services viz. Auctions of Commercial Equipment, Commercial Vehicles, & Cars, Auctions of Industrial equipment and Valuation of Assets.

The company’s unique format of asset disposal in India is very attractive for financial institutions, government bodies and companies in the private and public sectors whose primary objective is to obtain the highest net possible return for their assets, to turn their surplus assets into cash in the quickest and most cost effective manner.

How is renting or hiring of construction equipment a more viable option than owning it by construction companies, precisely in the present scenario when order book of construction companies are laden with large volume of projects?

The rental option has filled the much needed vacuum in the construction business. Globally, the organized equipment rental business has played a substantive role in the growth of the construction industry.

The advantages of equipment rental are many. In many cases the builder does not require all the specialized and costly equipment for long. It is therefore cost effective. If they are able to hire these on a short notice for the duration of the work. Their capital investment reduces considerably and the cost benefit can thus be shared with their customers making the service offering financially more attractive.

Even for large construction companies who normally procure such equipment, additional work pressure necessitates use of additional equipment.

They prefer rented equipment especially if they come along with trained manpower to manage that equipment. It also helps them concentrate on their service offering rather than maintaining inventory.

Also, renting the equipment gives the construction companies an opportunity to use newer equipment. This way these companies need not bother about upgrading their own equipment base from time to time to suit the dynamic needs of construction industry.

How far are Quipo’s service price competitive? How does this eventually help construction companies in hiring the equipment rather than owing it in the long run?

Our pricing is competitive and it’s really helpful for the construction companies that need equipment for a short period of time.

Services positioned by Quipo seems to be much similar as compared to the services provided by the construction equipment companies to its customers.

We intend to improvise on our quality of service to our customers. Hence, we are expanding to more locations to be at the doorstep of the customers. This would enhance efficiency and our quality of service to our esteemed customers.

How far is Quipo’s equipment bank positioned, so as to meet the heterogeneous and high capacity equipment demand requirement of the Indian construction market?

In the absence of an organized market for used infrastructure equipment and the industry organization being weak, the sector faces challenges to its growth. However, Quipo being the first equipment rental company in India offers customized solutions that cater to specific needs of customers. By expanding and strengthening its operations in the construction equipment rental business, Quipo on its part provides greater value addition to its customers.

Quipo is servicing the high growth verticals of construction, mining, oil & gas, telecom and Energy. In addition of having a state-of-the-art equipment/asset bank for construction and other infrastructure sectors, Quipo has a large pool of fully trained operations and maintenance personnel spread across various sites in India.

The joint ventures with some significant partners, global and local, as well as strategic investments act as propellants to our growth and also underline Quipo’s understanding of the infrastructure equipment rental industry.

How are Quipo’s stock yard and service network positioned? What are the plans to expand the same?

In terms of geographical presence, Quipo has state-of-the-art yards at Ahmedabad, Neemrana, Hyderabad, Mumbai, Kolkata, Bangalore, Chennai, Guwahati, and Gurgaon. These yards provide wide range of latest technology and equipment to other companies. Being strategically located across the length and breadth of the country makes equipment easily accessible to the companies and can be transported to sites at much lesser time. This leads to considerable saving for its customers.

To meet the growing demand, Quipo plans to set up 9 more yards across the country. These yards will be strategically positioned to provide equipment at locations which are witnessing high infrastructure growth and would include cities like Cochin, Nagpur, Bhopal, Bhubhaneswar, Raipur, Jhansi, Lucknow, Patna, and Chandigarh.

This is a continuous process of building the service network and various operational and logistic challenges would emerge and would have to be dealt with. It is a learning exercise for Quipo and there is continuous scope of improvement. With this metamorphosis, we would be able to deliver better and world-class services to the customers.

NBMCW November 2007

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