How has the Rental equipment market in India grown over the past few years and how can it ensure financial feasibility and sustainability in the long-term?
The Indian Equipment Rental Industry has grown steadily over the past decade and has carved a significant space in the Construction Equipment market. According to ‘Off Highway Research’, two-thirds of the construction equipment sales is by rental companies. Sales have risen from 47% in 2010 to 67% in 2020-2021 and the industry is growing noticeably.
The Rental business is both organized and unorganized, but to exploit the opportunities for growth, rental companies must become more organized. Sustainability and economic feasibility will remain major challenges for both the unorganized and the owner-driven companies, since they may often find it difficult to leverage the opportunities in the infrastructure sector, especially in the longer run.
Rental companies should adopt the best business practices from international rental companies, particularly in Europe and USA, plus, leaders in this industry will have to push for modernization of the rental business.
How is the entry of OEMs in the rental business impacting rental companies?
OEMs have begun entering the rental business, which is posing a challenge to the rental companies. Since the rental industry is the biggest customer of construction equipment, this move of the OEMs is detrimental to their business. Moreover, finding a profitable balance where all stakeholders can support each other for mutual growth is needed and they must all work in synergy.
Since renting equipment is perceived to be more profitable for construction companies compared to buying equipment, it is important that OEMs and equipment rental companies complement each other in catering to the needs of the infrastructure sector; they should work in tandem, and not be competitive.
If construction companies/contractors want to purchase equipment, OEMs should sell but when they want it on rent, OEMs should not supply them; instead, they should coordinate with the rental companies in providing the equipment.
What needs to be done to make the Rental industry more organized?
Imbalance between demand and supply of infrastructure equipment in the market owing to the buying of large number of machines by rental companies is another problem. This may show growth of the CE Industry, but rental companies need to maintain a profitable balance in the size of their fleet for economic viability and sustainability. Focus should be on maintaining a conducive business environment for which some transformative measures and policies are needed so that the industry can make good progress.
The Rental Industry is largely unorganized – a factor which has been detrimental to its image. It should not be seen as a mere equipment buyer but as an important stakeholder in the infra sector.
Rental leaders and Rental association CERA are in discussion with stakeholders on several issues that the rental companies are facing. We intend to organize formal deliberations wherein all the stakeholders can put forth their views and find a solution collectively. Equipment Rental Industry leaders will have to come together to frame policies and create a more conducive environment for the growth of the industry.
How can India’s Rental Industry contribute towards the CE Industry’s economic, social, and environmental goals?
As per research by ERA - European Rental Association, renting can lead to significant reductions in carbon emissions, in the range of 30% and sometimes over 50%. Therefore, as an important and profitable option for construction companies and contractors, the government should incentivize renting for them so that they opt for renting. For the industry to achieve its sustainability goals, all the stakeholders in the infra sector (construction companies, construction equipment industry, rental companies, OEMs, and financers) should join forces to find the right solutions.
G20 theme ‘One Earth, One Family, One Future’ reflects the priority of Green Development and Climate Finance. LiFE reflects the vision of Prime Minister Narendra Modi that aims to accelerate resilient and inclusive growth for sustainable development. Technological advancements to reduce carbon footprints must be embraced by the CE industry.
India’s Rental Industry should therefore focus on sustainability and on the economic, social, and environmental aspects, in line with the goals of the Global Rental Alliance (GRA). The Union Minister for Road Transport and Highways Nitin Gadkari has also underlined the significance of shifting from diesel variants to electric and ethanol-based equipment.
How is the concept of renting equipment becoming a more viable option for the end-users?
Rising cost of equipment and operations and maintenance, space constraints, and utilizing capital for core construction business, has shifted customers’ attention from direct purchase to renting equipment, making the renting business a profitable option.
Demand for renting is increasing as it helps medium and small contractors to focus on their core construction business, which is making the rental industry more competitive. The challenge is to maintain the demand and supply ratio so that the entire CE industry benefits.
The equipment rental industry is not merely a buyer of construction equipment, in fact, India’s rental industry is one of the biggest customers of OEMs. Many rental companies have flagged complaints on poor after-market services, unavailability of spare parts leading to machine downtime, which affect business profitability due to the prolonged breakdowns. OEMs and the Rental business owners should work together and support the CE industry.
What is the current product portfolio and fleet size of AGGCON Equipments?
AGGCON is one of the leading and fast-growing infrastructure and mining equipment rental companies in India with an integrated operations network across the country.
We see ourselves as a rental partner and follow modern trends and practices that help construction companies build more sustainably. We think and act proactively and with flexibility to bring the best rental solutions for infrastructure companies.
AGGCON has a large fleet comprising of machines for road construction, foundation building, lifting, and concrete equipment, supported by a team of experts, skilled operators, and maintenance staff. We provide all equipment, including specialized products on a rental basis for projects of various sizes across the country.
We are serving the infrastructure sector as a rental partner in a number of prestigious projects in various sectors across India. We follow global standards, the latest trends, and the best practices to cater to the needs of the infrastructure sector. We have experts for project management and for managing key accounts. Our focus is to provide innovative solutions, and an advanced rental fleet with the technology to help customers meet their project completion goals in the stipulated timelines.
What do AGGCON’s skill development and training programs entail?
We have trained operators to deliver efficient and safe operations. In fact, operators are the brand ambassadors of a rental company and hence important for its image building. The operators are trained on the equipment and to do preliminary preventive inspection of the equipment, and to keep it running smoothly.
A company can be confident of adding new technology to its equipment if it has skilled operators to run it. So, skill development of operators and other technical personnel is important for us. We also hire and train female operators.
We also mooted the idea of organising exchange programmes and have written to the Global Rental Alliance (GRA) as exchange programmes will bring standardization and uniformity in the rental market of India and transform the industry into an organized industry. GRA has suggested that member associations could organize delegations from their country to visit other GRA member events and the hosting association could organise rental company visits during the event.
How is your company strengthening its brand value?
Brand value is not built in a day; it is a dynamic process. AGGCON was established in 2003. Our clients include all the major infrastructure companies - both in the public and private sectors – with whom we have worked in various prestigious projects across India.
We organize training programs and participate in various exhibitions and conferences to showcase our company’s capabilities and services, and network with the stakeholders. We also support industry events through sponsorship. We are looking forward to our participation at bauma Conexpo India and are also in discussions with the organizers of Excon 2023.
What are AGGCON’s CSR activities and what recognitions has the company earned in the recent past?
Our corporate social responsibility policy is guided by the principle that with every business comes the responsibility to give back to the society and to the nation. In 2022, we contributed Rs. 75 lakhs towards PM Cares Fund, Swachh Bharat Kosh, and the National Defence Fund. We also run a special programme to promote and sponsor education of the girl child of our employees.
In 2022, AGGCON was recognized for its contribution to infrastructure development of India, and were honored for our distinguished services in the infrastructure equipment rental industry by Shri Nitin Gadkari, Union Minister of Road Transport and Highways. We were also adjudged the “Best Emerging Company of the Year” by Builders’ Association of India (BAI).
We bagged ASSOCHAM’s MSME Excellence Recognition of Haryana Awards for “Most Socially Responsible Company of the Year 2021-22” and for “Fair Business Practices Company of the year 2021-22”. We received the awards from Deputy Chief Minister Dushyant Chautala, Government of Haryana, at an ASSOCHAM Meet.
