Foundation equipment 2014 market demand in Indian construction sector

Foundation Equipment Manufacturers Expect Newer Demand in Mid 2014

Trench Cutter at Chennai Metro
The entry of new entrants indicates that market volumes for foundation and piling equipment may expand in 2014. However, competition is expected to remain rife as optimum equipment offtake would take time to materialize, P.P. Basistha finds out the details.

After prolonged bearish demand phase across 2012 and 2013, foundation and piling equipment manufacturers are strongly pinning their hopes on 2014 for equipment demand to pick up. The manufacturers expect that Union government's renewed attention on core infrastructure development, precisely with recent set of greenfield project clearances amounting to Rs.1,51,000 crores, good number of which involves super critical thermal power projects and hydro projects which would cater to the demand of units in a major way (a typical sub and super critical power project requires 15-20 rigs for ground preparation). Demand is expected to come from upcoming Indian Oil Corporation's mega 5 million tones Ennore liquefied natural gas terminal, awaiting environmental clearance soon. Recently, cleared industrial projects at various states are also expected to create demand. However, manufacturers do not foresee demand to be substantial from upcoming metro railway projects as the construction methodology is likely to be different based on the soil and site conditions in many locations that may not require extensive usage of foundation equipment.

Nonetheless, also on the flip side, the forecasted demand of newer units would fully materialize only after the present population of existing units with the construction sector, estimated to be 1200+ gets absorbed at the upcoming projects. The units are both with construction companies and rental services providers. This perhaps explained the fact that even major projects in the core sector including mega expansion of Kochi refinery by Bharat Petroleum Corporation or third phase expansion of Delhi Metro Railway Corporation involving substantial foundation components did not help in major absorption of newer units or raising up of rental rates for the equipment.

Newer acquisition by construction companies or hiring of units would only begin after the existing units find sufficient jobs. Tunneling and piling constructing major ITD-Chem is estimated to have 12-15 captive foundation equipment. Further, hiring is only expected to pick up following improvements in cash flow of the construction companies from project developers and the main EPC contractor. Although enquiries revealed that there have been improvements in release of payments from 2013 end onwards however, they are not substantial.

According to Mr. Vishal Thakkar, Senior Director, D. Thakkar Constructions, foundation and crane rental services major, "Acquisition of newer units would be considered only after indications of hiring rates appreciation surfaces and that will materialize only after the rental companies enter into long-term contracts with the EPC contractors, a possibility that seems distant at present." Hiring rates are hovering in Delhi NCR, Maharashtra and some other parts of the country at Rs.7-7.5 lakhs as compared to between Rs.11-10 lakhs eight months back. Rates are lesser in regions with presence of larger equipment populations.

Foundation Equipmnent

The presence of large number of existing units and dearth of long-term contracts continues to make the market highly competitive for foundation equipment manufacturers. The situation makes business expansion and retention of market presence equally challenging. Bauer India will be looking to build up market presence by targeting specialized foundation applications. Mr. Jagpal Singh Lotay, MD, Bauer India says, "We will be looking at expanding our business by promoting our products to specialized contractors involved in foundation and piling jobs. We always look forward for having long term association with our customers, as we do not believe only in selling equipment, but also get involved with them by advising on safety, methods & processes, manpower, equipment etc."

Bauer India will be looking to promote its foundation and piling rigs for deeper and bigger diameters job works. Mr. Lotay informs, "The advantage of single bigger diameter pile is that it can replace four piles in bridge construction, as used conventionally while building the pier, ensuring the work is completed safely and at a faster pace." Bauer's clients include, L&T Geo, Navayuga, Afcons, ITD-Cem.

Mr. Lotay adds, "Our piling rigs have been well-known for their productivity, reliability and higher uptime. Scoring above others, our rigs have been accepted by everybody in toughest ground conditions."

"Bauer's Trench Cutters are re-knowned for the construction of the diaphragm walls. Our trench cutters have been used to penetrate the hard rocks in the Himalayan region for Dam Projects as well as for hard strata in Metro Projects. Bauer's Trench Cutters have successfully worked in Dhauli-Ganga Dam project in Uttarakhand, Teesta dam project in Arunachal Pradesh and for Underground Stations in Chennai Metro."

Piling Rig
Bauer India has set up its main warehouse & workshop in Navi Mumbai for rendering product support to its equipment in India. Bauer India also has offices in Chennai & Gurgaon to support cutomers in terms of sales, service & parts. In addition, customers' support is provided through buyback options to existing customers, and offering reconditioned equipment (with Warranty) to customers which are available across the globe. The company has a fleet of 90+ piling rigs working in India.

Mait India has maintained its presence during the phase of delayed expansion until the newly cleared projects pick up through renewed focus on product support. Mr. D.V. Brahme, Regional Manager, Mait India says, "We have strengthened our complete back up service support to our population of more than 550 rigs through our engineers stationed across the country. Customers training will continue to be high on the agenda." Mait India is supporting equipment in the field through its new Navi Mumbai warehouse facility stocking parts.

The Italian foundation equipment manufacturing entity has increased its inventories to Rs.12-15 crores from Rs.8-10 crores earlier. The company has reduced the delivery period of its rigs by importing them through free trade zones. It has made a target to sell atleast 20 units during 2014. According to Mr. Brahme, the company has a plan to sell the new units to its existing as well as new customers.

MAIT India has also expanded it's presence in neighboring countries by supplying several rigs in the last few months.

Soilmec Foundation Equipmnent
Soilmec India is looking forward to strengthen product support in the shrinking market to retain its business presence. According to Mr. Sanjoy Chakravarti, MD, Soilmec India, "our emphasis continues to make our equipments cost competitive to own and operate." He explains, "we are undertaking internal cost cutting, besides our emphasis towards shedding 'extra' costs on equipments sales. However, this does not mean that we will downsize our skilled service personnel, Soilmec India will continue to retain and invest on them. The initiative is well likely to insulate our brand from being substituted." Soilmec has a fleet of 400 equipments in India.

Mr. Chakravarty told that Soilmec is getting active in neighbouring country Bangladesh, with foundation equipments being required for basic infrastructure and gas based power plants.

Soilmec India has recently begun component localization at its warehouse at Vasai near Mumbai. Apart from making accessories for its own equipments, the Italian foundation equipment major is also making components for other brand of foundation equipments. Mr. Chakravarty said, "we have largest share of inventory in our warehouse as compared to our competitors." He mentioned, "we do not look buyback as an attractive option in India as the mortgage levels are high on the equipments, besides the equipments are not generally maintained in accordance to the set operations manual. This eventually makes the job of buying back the equipments, making investments on reconditioning and further selling it a less commercially lucrative exercise for us."

XCMG Piling Rigs
Market presence is expected to be built up by XCMG India as well. Relatively a new entrant, the Chinese construction equipment entity is looking to have a presence in Indian foundation market. According to Mr. Hrishikesh Kulkarni, Director Marketing, "Curently, we are researching the Indian market and would be entering into the market at an opportune moment." XCMG India will be looking to promote its piling rigs to corporate buyers and rental service providers through appropriate sales network in India." Mr. Kulkarni informed, "Our piling rigs are known for their high reliability and were employed in constructing the largest sea link project in China."

Sany Heavy Industries India also plans to build up its market share in Indian piling and foundation market in the backdrop of firm demand fundamentals. The company launched its new SR 280R 2 rotary piling rig at Excon 2013 for the Indian market. Mentioning about the product, Mr Alex Wu, Managing Director, Sany said, "The highly efficient and energy saving piling rig can perform in all kinds of geological terrain." Powered by Caterpillar engine, SR, 280-R2 has an engine power of 261 (350) kw hp @ 1800 rpm. The rotary piling rig has a maximum drilling diameter of 2.3m and maximum drilling depth of 84 metre.

Rotary Piling Rigs

Mr. Chavan said, "We have our strong strategy to strengthen our sales of piling rigs through expansion of our network in India apart from making our parts support through our warehouses strong." Sany has its mother warehouse in Pune which supports its warehouses in Hyderabad, Kolkata, Chennai, and Delhi.

According to Mr. Ghananeel Molankar, Liebherr India, "we posses an elaborate portfolio of foundation equipments to cater different piling requirements of the customers. Foundation Equipment – "LB series" manufactured at Liebherr Werk Nenzing includes, LB 16-180, LB 20-230, LB 24-270, LB 28-320, LB 36-410, LB 44-510. We offer six models in drilling rigs with LB 16-180 being the smallest and LB 44-510 being the biggest drilling rig. Liebherr drill rigs "LB series" can drill diameters up to 3m and depths up to 92m. However in special conditions and with necessary modifications we can cater to bigger diameters and depths. Apart from "LB series" Liebherr also manufactures piling and drilling rigs named as "LRB series." This series can perform piling as well as drilling applications. Applications like – sheet piling, using high frequency vibrators, using hammers for driven piles, and others can be performed by "LRB series."

Drilling Rigs
Mr. Molankar explains, "Our Equipments are versatile in their applications. One of the major feature is that, the "LB series" machines are based on a platform system. The LB 20-230 and LB 24-270 are on a same platform, similarly LB 28-320 and LB 36-410 are on a same platform. This means that the machines on the same platform have identical superstructure, leader and kinematics. Hence the rotaries can be exchanged for the desired torque as per the soil conditions. This facilitates the piling contractor to curtail additional capital costs that the contractor may have incurred for procuring individual machines for individual jobs."

The company provides, an array of drives and methods with its "LB series" machines like CFA (Continuous Flight Auger), Soil mixing, Double Rotary, Full displacement drilling.

To make the foundation equipments cost competitive in India, as being presently imported from Austria, Liebherr India is working with finance institutions which provide equipment finance at cheaper rates. Liebherr India is positive to build up presence of its Foundation Equipments, once demand picks up. Liebherr India believes in providing strong product support capability through its service engineers in India being trained in Austria.

Immediate Benefits

Though it may take some time for the existing foundation equipment to get fully assimilated in the upcoming projects paving demand for newer equipment, the manufacturers can expect to get benefitted by rendering support to their existing fleet of equipment through timely parts and services support. However, it will be pertinent to expand and strengthen market network to enhance brand recognition.

NBMCW February 2014

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