The construction equipment rental business is at a nascent stage and is a mere 2% of the total equipment market. However, this is projected to grow to 25% by 2010, thanks to the rising demand for machinery from the infrastructure sector
Infrastructure is the backbone of any economy and India is no exception.
The country’s construction, housing and real estate sector has been growing at 10% in the last five years, employing more than 30 million people.
The sector, which covers rural and urban infrastructure, roads, airports, sea-ports and commercial and residential establishments, has got a major impetus in the last five years, thanks to a host of government projects, such as Bharat Nirman, Pradhan Mantri Grameen Sadak Yojana and airport modernization. The Eleventh Five Year Plan (2007-12) envisages the total investment in the infrastructure sector to touch 9% of GDP towards the end of the Plan period, from 5% of GDP in 2006-07, according to the Economic Survey 2007-08. Based on this projection, the Survey adds, the investment in physical infrastructure alone from 2007-2012 is estimated to be $500 billion. Massive construction projects would translate into multiple downstream opportunities for several other sectors, such as cement, steel and construction equipment.
The Rental Business
Large construction projects require deployment of heavy equipment such as cranes, bulldozers, loaders and dumpers. Purchasing such equipment only adds to the costs of construction companies, who are already battling soaring commodity prices, particularly those of cement and steel. Many companies thus look around for such equipment on lease. This has helped in the growth of construction equipment banks, which provide machinery on rent and make it easier for developers to contain project costs.
| DARE/quick points |
| - Investments worth $500 billion to flow in infrastructure between 2007-12 |
| - Construction equipment industry to grow fivefold from $2.3 billion to $12-13 billion by 2015 |
| - Construction equipment rental business is a mere 2% of the total equipment market at present; projected to touch 25% by 2010 |
| - Global demand for construction machinery to jump 6% per year to $130 billion in 2011 |
| - Major players in rental business: Quippo and Sanghvi Movers, both entrepreneurial ventures |
| DARE/major manufacturers (global)* | |
| Company | Country |
| Caterpillar | US |
| Komatsu | Japan |
| Volvo | Sweden |
| Hitachi | Japan |
| Liebherr Intl | Switzerland |
| ersumpersre | US |
| Terex | US |
| * in 2006 | |
Two companies dominate India’s equipment rental business—Quippo, promoted by SREI, an infrastructure finance company, and Saghvi Movers. However, there are several smaller players in the unorganized sector. The launch of Quippo, the country’s largest infrastructure equipment bank, in 2002, coincided with the start of the Tenth Five Year Plan period. The company made the most of the big opportunities in renting equipment not only with the construction sector but also with power, mining, ports, telecom and oil and gas. Besides, Quippo also provides value-added services such as trained manpower and maintenance facilities.
Sanghvi Movers is another major player in the business with special focus on cranes. Operating with a fleet of 300 medium to large cranes, the company boasts of an impressive lineup of clients such as Suzlon, Reliance, Enercon, BHEL and L&T.
| DARE/major manufacturers (India) |
| Bharat Earth Movers |
| L&T Case |
| L&T Komatsu |
| Ingersoll-Rand India |
| Tractors India |
| Telco Construction Equipment |
| JCB |
| oyce Mfg |
| Escorts Construction Equipment |
| Action Construction Equipment |
The Market
The earthmoving and construction equipment industry has the potential to grow five-fold from its current size of $2.3 billion to approximately $12-13 billion by 2015, growing at 24% compound annual growth rate, according to ‘ECE Vision 2015: Scaling new heights in the Indian Earth Moving and Construction Equipment Industry’, a study conducted by McKinsey for CII and the Indian Earthmoving, Construction Industry Association (IECIAL).
Construction equipment rental is one of the emerging growth areas of the Indian construction equipment industry, besides exports, and refurbishing of used equipment and services. “The services segment in the construction equipment business is still nascent and presents good opportunities for growth,” says a study carried out by the India Brand Equity Foundation (IBEF) and KPMG. Currently, equipment rentals contribute just about 2% of the market. This is expected to grow to about 25% by 2010, the study says. In the US, the rental market is 65% of the total construction equipment market.
| DARE/construction equipment product range | ||||||
| Earthmoving Equipment | Concrete Equipment | Material Handling Equipment | Material Preparation | Road Construction Equipment | Construction Vehicles | Tunnelling and Drilling |
| Backhoe Loaders | Concrete Breaker | Telescopic Handlers | Crushing Plants | Construction Equip | Dumpers | Rotary / DTH Drilling |
| Excavaters | Paver Finisher | Crawler Cranes | Jaw Crushers | Vibratory Rollers | Articulated Haulers | Hammer Track Drill |
| Loaders | Concrete Batching Plants | Mobile Cranes | Pavers | Boring Equipment | ||
| Bulldozers | Concrete Pumps | Truck Cranes | Demolition Equipment | |||
| Skid-steer Loaders | Concrete Mixers | Forklifts | ||||
| Wheeled Loading | Hot Mix Plants | Pick & Carry Cranes | ||||
| Shovels | Slew Cranes | |||||
| Wheel Loaders | Tower Cranes | |||||
| Motor Graders | Conveyors | |||||
| Motor Scrappers | ||||||
| Dump Trucks | ||||||
| Wheel Dozers | ||||||
| Draglines | ||||||
Globally, the demand for construction machinery will jump 6% per year to $130 billion in 2011, says a new study from The Freedonia Group, the US-based industrial market research firm. In 2006, the demand stood at $97.7 billion. The study says that China, India, Mexico and Russia will register some of the largest sales increases, with China alone accounting for 31% of all additional construction machinery demand through 2011. The demand will be fuelled by healthy economic growth, ongoing industrialization efforts, rising population and higher standards of living in a developing world leading to increase in spending on construction.
While India and China are on an upswing, the US, however, could see a slump in its construction equipment rental business. This is because of the fears of recession looming large over the world’s largest economy and the ongoing trouble in its housing market. Less construction of houses translates into lesser demand for cranes and dumper trucks among other earthmoving machinery.
Subscribe to this comment's feed
written by Gurmeet Singh, June 09, 2011
written by Mr Mathew, February 01, 2011
The theme being, “Gearing up for Global Standards”, is an initiative to create a platform for Industry leaders and decision makers representing the Government as well as private sector organizations, Industry experts and Equipment leaders who will share their Knowledge and experience through keynote presentations, panel discussions and exclusive business networking sessions. It will include discussions on the requisite measures that can be implemented to accelerate the development of this sector and aims at chalking out effective strategies to overcome various challenges faced by professionals in this sector.
This conference will address diverse including issues like Focus on technology, Safety Practices across various equipments, Need for training for Higher productivity, Maintenance, Finance – Rental / Lease / Hire Purchase , Alternate Procurement Mechanism.
The "2nd Annual Conference on "Equipment India Conference, 2011" is organized by ASAPP Media Information Group, the publishers of CONSTRUCTION WORLD / INFRASTRUCTURE TODAY magazines, India's Premier Magazine for Nation Builders. The conference is an initiative to create a platform for Industry leaders, institutes, researchers, decision makers representing the government & Industry players to come and interact, share their experiences deliberate and share their knowledge.
To register, do call +91-900 494 1110 or mail Prinu@asappmedia.com
written by Mr Mathew, January 25, 2011
written by Rockon, October 11, 2010
written by Construction Mahinery, September 29, 2010
written by Rockon Raghav, September 23, 2010
written by Rumana Akter, August 24, 2010
Commercial Real Estate Rentals
http://commercialrealestate.cc/
written by Sandeep Sawant, August 20, 2010
written by Construction Machinery, July 23, 2010
written by Rajeev Goyal, May 25, 2010
written by sonam, May 15, 2010
written by forestry trucks, September 29, 2009
digger derrick trucks
written by sunil , September 07, 2009
written by biplob deb, April 17, 2009
I would like to request you to kindly advise me how you have calculated the market size and then the percentage of rental business in it? I'll be gratefull if you can help me with a segment/product wise market size in india.
Regards,
Biplob Deb
written by Amandeep Singh, April 05, 2009
I was wondering how you have calculated the market size and then the percentage of rental business in it?
I'll be gratefull if you can help me with a segment/product wise market size.
| < Prev | Next > |
|---|
