Escorts looks for expansion

The recent upswing in the Indian economy has created growing demand for construction equipment and materials and the crane industry has enjoyed a period of strong demand over the past year. Escorts Construction Equipment Ltd, India’s leading mobile crane manufacturer, is reporting growing orders for pick and carry cranes from the local market and from customers in the Middle East and Southeast Asia, for whom several upgraded export models with air conditioned driver cabs and other features have been specially developed.

Escorts Construction Equipment Ltd is part of Escorts Ltd, a diversified, listed corporation. Specialising in agricultural machinery and boasting an annual group turnover of $750m, Escorts’ interests also include mobile phones and health care services, and it is the largest supplier of shock absorbers and braking systems to Indian Railways. Escorts began making mobile cranes in 1971, starting with a basic 3t capacity pick and carry crane designed as an extension to a tractor. Today it claims to be the world’s largest manufacturer of pick and carry cranes. Its pick and carry cranes range from 5t to 14t, all with telescopic booms. All except one manual model are hydraulic. Two 8t models are offered, one with fixed boom hooks and winch, the other with a travelling 8t hook and a hook compensation system that keeps the hook block level when the boom length changes.

‘Both are the same basic design which is one of our oldest and most successful models, but with articulated steering,’ explains general sales manager Rajesh Sharma. ‘We produce about 300 units of these models combined each year.’

The cranes have an engine at the front and a cab at the rear as the crane was developed from a tractor, which requires the driver to be positioned to see the load in front. However, Sharma points out that these models do not contain tractor components and include joystick steering.

‘We came out with an 8t model to start with, which attracted people,’ Sharma says. ‘In the early 1990s we introduced a 10t model with a fixed hook and later launched a travelling hook and hook compensation in 2002. We see a growing trend to order a travelling hook.’

The travelling hook employs a winch system, not a hoist cylinder, and is used for pipe laying and mining applications. Escorts produced about 150 units of the 10t model in 2003 including 22 units with travelling hooks.

Escorts’ cranes are designed to withstand overloading. ‘The government standard provides a 15% margin but we have to provide for 33%,’ Sharma says. ‘A 10t model costs Rs100,000 [$2,200] more than an 8t model. If we sell an 8t model the customer is thinking of using it for 10t or 11t, and for a 10t model they are thinking of using it with 12t or 13t, so we have to provide bigger tyres at the front, a sturdier neck, a stronger boom and a higher capacity winch.’

In 1998 the company introduced the K10, which is an upgraded 10t pick and carry crane, developed for export markets. The crane has a 5.9m turning radius, compared with 6.5m for its older 10t model. The three-section boom extends to 8.5m on the export model while the boom fitted on the older model is 7m.

‘The export model has more reach and height, but is more compact as the turning room is less. It also has a 10t travelling hook and hook compensation,’ Sharma says. ‘The driver’s cab is on the front and the engine is at the rear, while on the old model it was vice versa. We supply about 100 of these machines a year.’

Locating the cab at the front gives the driver better visibility, he explains. The cab is fitted with a steering wheel and the export version has air conditioning.

Escorts employs 150 staff at its Faridabad plant near Delhi where it has the capacity to manufacture about 700 cranes a year. The company claims to supply 80% of India’s pick and carry crane market and 30% of the slewing crane market.

‘We have a 250 unit backlog of orders,’ Sharma claims. ‘One year ago it was 100 units. Two years ago we had no orders in hand.’

Escorts makes crane transmission systems in its own workshop. Hydraulic equipment is supplied by Rexroth, Vickers and Danfoss, while engines are purchased from Simpson and Kirlosher. Wipro supplies the cylinders.

In financial year ending 31 March 2004, Escorts manufactured about 680 cranes, of which 65 were exported.

‘Our advantage is that we have the transmission workshop. We have built up our production volumes to make the transmission – that is our key advantage. Other crane makers in India do not have their own transmission to put on, so they buy a tractor transmission to fit on their crane. Their performance is not as good as ours because a tractor is designed for hauling, not lifting. Their cranes’ ability to move along with a load is less than ours and their transmission life is shorter.’

Increased demand for cranes has resulted from India’s recent economic upturn. Construction of the Delhi metro rail system has increased the use of pick and carry cranes for above and below ground use, as have the growing number of pipe laying projects for water, gas and sanitation sectors. Increased investment in factory construction and petrochemicals projects have also helped increase pick and carry crane sales.

Although the domestic market is strong, Escorts is keen to maintain its export business. ‘We need exports as the domestic market can go up and down,’ Sharma says. ‘Central Asia has big potential but it is a Russian crane market. Indian contractors working in central Asia are asking for our equipment. But now we are so involved in local market activities we have not been able to do export development.’

Bangladesh, Sri Lanka and Nepal take 40% of Escorts’ combined crane exports. The Middle East, mainly the United Arab Emirates and Oman, take 15% while various African countries take another 10%. The rest go to Southeast Asia, Brazil and Central Asia.

The K10 is Escorts’ most popular model with overseas buyers, with about 30 units exported in the financial year just ended. This accounts for about 30% of the company’s total K10 production and almost half of all crane exports. The 10t capacity Hydra 10 pick and carry crane is the second most popular export model, with 20 units exported.

After the Hydra 10, the 12t capacity Hydra 12 is Escorts third most popular export model. Based on an earlier original design, the Hydra 12 has a 12m three-section boom and a 10.5m maximum height under hook. Escorts produces about 110 units of the Hydra 12 annually, of which about 15 units are exported.

Escorts’ only pick and carry crane designed for driving on the highway is the 14t capacity model F15. Based on Australian Franna designs, it was initially called the Escorts Franna 1214. It has truck axles and transmission, and four-wheel drive. Top travel speed is 40km/h. Maximum boom length is 21m. The first three sections of the four-section boom are hydraulic, while the fourth is extended manually. The model is fitted with a travelling hook and hook compensation.

‘This model was introduced with the K10 in 2002 but was slow to get off the mark because of the cost,’ says Sharma. ‘The Indian market wants a basic machine at a low price. Even though this is not a sophisticated machine compared with cranes worldwide, it is still a sophisticated pick and carry crane. This model is popular with people using slew cranes. Its only limit is that it cannot slew, but it gives 90° articulation and you get this at a fraction of a slew crane price. A slew crane has little pick and carry capability. For this model with 14t capability you would need a 50t slew crane.’

Although the F15 represents a new business opportunity, Escorts will need to increase marketing support for the model to win orders in India. ‘This is a new market we have to develop for people who do not want a slew crane,’ explains Sharma. ‘For example, to lift a 500kg valve a distance of 20m in a petrochemical plant or refinery – this model can do it. Otherwise you need a slew crane at much greater expense.’

A custom-designed variant of the F15, the Mac 1214, has been developed for India’s Ministry of Road Transport & Highways, which uses the crane for accident recovery on highways. The model was developed in 2000 after Escorts won a 29 unit tender for a crane that can right a wrecked vehicle and then tow it to the nearest wreckage centre. ‘We shortened the boom to 10m, added two outriggers to stabilise it and provided a front winch for dragging while lifting the wrecked vehicle,’ Sharma says. A second driver’s cab at the rear of the crane allows the driver to tow a wreck away with the crane being driven in either direction.

‘In a second tender we got an order for 43 units of the Mac 1214 and we recently won a third tender for 60 machines,’ he says. ‘The total value of the three contracts is $5m. The third contract is now under execution.’

While it has most success with its industrial pick and carry models, Escorts does also produce slewing cranes ranging from 8t to 40t capacity, both industrial and rough terrain models. Some technology has been developed in-house, some has come from Faun of Germany, and some from the UK.

Sharma estimates the Indian slew crane market to be between 60 and 80 units a year, with much of that market taken up by 20t models. Just 20% of the market is for models of 50t capacity or bigger.

While building a new factory to expand production is one possibility, Escorts is also looking at other ways of expanding output with its existing facilities. Although the Indian crane market has been very cyclical in the past, the government is forecasting GDP growth of between 7% and 8% annually until 2012, which, if it happens, is likely to support a larger crane manufacturing industry than at present.

Escorts plans to develop a new series of truck cranes after introducing its first models in 2001. Sharma reckons that the government’s ambitious road building programme, which calls for the construction of 14,500km of national highways by 2008, will greatly increase the use of truck cranes.

Escorts currently makes the TC 20 and TC 30 truck cranes, rated at 20t and 30t respectively. A 25t model is planned. There are also plans for low cost truck cranes in the 8t to 12t capacity range for current pick and carry customers who cannot afford larger truck cranes.

‘We have developed 8t, 10t and 12t models but these have to be marketed,’ Sharma says. ‘We have the advantage of a customer base in pick and carry that will graduate to slew cranes and we have the models for them. There is not much price difference when they see the advantages.’