The world comes to India

10 March 2011

A new show from the organisers of Bauma and ConExpo, BC lndia, brings international lifting manufacturers and users to one of the worId's fastest growing economies. Partha Pratim Basistha reports.

The first BC india was held in Mumbai from 8-1 1 February 2011. Spread across 88,000 sq m, the event was jointly organised by BC Expo India Private Limited, the US Association of Equipment Manufacturers (organisers of ConExpo), Messe Muenchen International (organisers of Bauma), and the Builders Association of India. 508 exhibitors from 30 countries participated in the exhibition. Participants were from India, US, Australia, China, Finland, France, Germany, Italy, Korea, Japan, Spain, Sweden and the UK. Exhibitors displayed crawler, mobile and tower cranes.

The mood among crane companies at the show was quite upbeat. Firms reported positive business confidence, based on robust demand fundamentals and sound future demand projections from the Indian construction sector. Business confidence was based on a good deal of private participation in infrastructure development programmes, especially in the port, airports and power sectors, led by long term commitment from the government to develop infrastructure.

There has been a drop in demand for cranes from mid 2008, led by delay in awarding of projects by the government. Demand firmed up during the third quarter of 2009 for crawler and mobile cranes, but is yet to return the high levels witnessed during 2007. Demand for tower cranes has continued to remain sluggish, led by slowdown in real estate projects.

S B Kulkarni, head of marketing and tendering, for bridges, flyovers, metro and railways, Gammon India Limited, says, “There has been a delay of six to ten months in awarding the projects by the government, both at the central and state level, during 2008-09 and 2009-10 as compared to 2007-08. There has been a delay in awarding projects for bridges, flyovers and railway projects. However, metro railway projects fared better.” A number of states in India have lined up greenfield projects for metro railway construction. The projects involve a mix of elevated and underground construction components. This is expected to drive demand of crawler and mobile cranes.

Mid-term and long-term demand is also expected from upcoming industrial projects. Mythili Balasubramanian, head of syndication and advisory, Industrial Development Bank of India, says, "Loan off take by industrial project developers with infrastructure space was fair during 2009-10. However, it was not outstanding as compared to 2007-08.”

The 2010-11 fiscal year maintained the same level of consistency. A similar trend is expected for 2011-12 as well. Sizeable loan off take is expected for setting up of captive power units by industrial project developers in steel and manufacturing sectors.”

The power sector will drive mid- and long-term demand for cranes in India. Public development of the power sector in India by the government at the central and state levels is a major focus area. lt accounts for almost 40% of the $500bn budgeted for investment in infrastructure for the country’s 11th plan period running from 2007-12. India has a peak power shortage of 13%. The government plans to add 70,000MW power capacity during the 11th plan and l00,000MW during the 12th plan period. A major part of capacity addition would be contributed by ultra mega power projects (UMPP) each having a capacity of 4,000MW. The Indian government proposes to develop nine UMPP projects. Four of the projects have been successfully awarded to date.

A K Somani, Liebherr India, says, “Upcoming power projects are expected to lead to a positive correction in demand of crawler and mobile cranes during 2011.” Sanjay Vasudeo, director, Fushun Cranes & Equipment India adds, “There are good numbers of 500MW power projects ready for financial closure both in private and government sectors. The projects would put in demand for crawler cranes with capacities varying from 80-350t. UMPP would put demand for crawler crane with a capacity range from 400-1000t.” According to Somani, “Liebherr has supplied a 1,350t crawler crane to Nuclear Power Corporation of India. We are optimistic even on demand of 2,500t crawler cranes for the thermal power sector. However, demand from the wind power sector, compared to China, is expected to remain modest.”

There is likely to be demand for seven or eight 360t–600t crawlers, and two or three 1,000t crawlers in India this year.

Demand for crawler and mobile cranes will be driven by new buyers, from both the end user and rental sectors. Nilesh Bhorkar, product sales and marketing manager, Kobelco Cranes India, says “As the upcoming power and other infrastructure projects are being carried by EPC contractors, there is an emerging trend of equipment being purchased by new buyers. There is emerging demand for crawler cranes with higher lifting capacities and reach supported through iuffing and fixed jib arrangements in India.”

Kobelco handed over a 250t CKE 2500 to hire firm Samarth Lifters during the event. According to Prakash Shah, director at Samarth Lifters, the company will rent out the crane for liquefied natural gas projects and power projects.

Strong demand fundamentals for new equipments may bring cheer for crane manufacturers, but pricing margins are expected to remain low. This is because there is an increased supply of used cranes from around the world. With the end of big local projects like the Delhi Metro, Reliance Jamnagar, Indian Oil Corporation’s Panipat Refinery and sugar plants from Uttar Pradesh, even more recent model used cranes are available.

Nilesh Bhorkar says, “To take on pricing, Kobelco will initially be manufacturing hydraulic cranes with capacities of 100t at its upcoming plant at Sri City in Andhra Pradesh, near Chennai; 150t and 250t cranes will be taken up a later stage. Approximately 50%-60% of the components would be of local origin, including crawlers and fabrication parts, while engines and booms will continue to be imported. We will also strengthen customer support for our cranes through our distributor Voltas.”

Localisation and customer support is also strongly planned by Terex Cranes. Newly appointed president Kevin Bradley explained that Terex is looking to make long-term investments in India. The investments will focus on increased localization of some key products. The company will be starting the process for local vendor development for procuring components of it cranes. Terex has set up a plant at Hosur near Bangalore, focusing on mobile crushing and screening plants. The company has also set up an engineering centre at Bangalore.

Christoph Kleiner, Liebherr-Werk Ehingen says, “We do not intend to cut down the prices of our products. Rather, we would continue to focus on offering a complete value package to our customers in India by providing top quality product, customer service, timely spares availability and high equipment resale value. Liebherr constantly increases its service force in India. The sale of new cranes in India is increasing every year and customers are showing high appreciation for Liebherr technology and the aftersales support available from its Indian Office. Apart from selling new cranes, we are extending our marketing activities for used cranes in India.”