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Construction : Equipments | August 2015 | Source : Equipment India

Rental Market for DG Sets

The rental market for DG sets is expected to grow in future as the economy has started recovering.

DG sets play a major role in peak hour saving - production, standby application, and continuous power - construction sites. The major application requirement of DG sets is either as an alternative power (to EB or grid power) or a prime dedicated power (mainly for construction power), critical power back-up. The application areas are construction (including residential, commercial and infrastructure projects; industries (like chemical, cement, mining, marine, textile, equipment manufacturing, steel, etc); commercial (like banks, IT, etc); events (exhibitions, etc); residential (like big townships, societies, etc); mining; ports etc.

Market trends
Rental market for DG sets is fast growing in India. Though dominated by unorganised players, there are many organised rental players in the market and play a vital role in the rentals of DG sets of 500-1,000 kVA. ¨At TIPL we have an approximate fleet of 70 diesel generator sets in various capacities and out of the same, more than 65 per cent falls in 500-1,000 kVA category,¨ says Kaushik Duttagupta, Senior General Manager - Sales & Product Support, Energy & Transport Division, TIPL. Gmmco is another major player in the organised rental market for DG sets. Md. Ali Jeelani, Deputy General Manager, Power Rentals, Gmmco, says, ¨We have a total fleet size of more than 100 DG sets, out of which more than 50 are in the 500- 1,000 kVA range.¨

Operational methods
In the organised rental market, the players follow certain procedures and conditions for renting out the equipment. Duttagupta says, ¨Normally we operate on the basis of security deposit along with a monthly rental charge. Some customers do look for monsoon clause but these are mostly in construction category. At TIPL we arrive at these monsoon clauses on a case to case basis and after much study and evaluation. Our rental options are for the usage of diesel generator set and does not have fuel in its scope.¨

Jeelani says ¨As per terms and conditions, a comprehensive notarised rental contract will be executed between the hirer and Gmmco. Contracts are usually for 240 hr/month and anything extra will be charged on prorate basis. The rental contracts for number of hours/time duration can be customised based on customer requirements. Local VAT will be extra at prevailing rates. The DG set will be dispatched only after site inspection by our engineers. Monsoon clause is there on case to case. Fuel is mostly supplied by customers.¨

¨Sometimes on case to case basis, we rent out gensets without an operator. The customer segments include IT and banking for standby operation. We also impart training to the existing customer operators/maintenance crew,¨ says Jeelani.

Service & manpower support
After market support is the backbone of any successful business. Duttagupta says, ¨When it comes to service, TIPL´s dedicated field service teams are there to guide our customers with best possible solutions to enhance every aspect of their operation. With a wide network of offices, service and workshop facilities and retail outlets, TIPL is always in close proximity to customers´ job site.¨ He further adds, ¨At TIPL our offers can be customised for those who rent for one day, one week or one year. Rental rates from TIPL are competitive and every piece of equipment is rigorously maintained and checked before it goes out to the job site.¨

Elaborating on Gmmco´s service support, Jeelani says, ¨Gmmco will arrange for the necessary spare parts as may be required for carrying out the repairs and maintenance subject to proper operation of the equipment.¨ According to him, long term rental rates are flexible/customised, while short term prices are high with faster delivery/commitment.

Delivery and exit logistics
The delivery and exit logistics may vary depends of the renting company. Says Jeelani, ¨Usually the costs of transportation of equipment from Gmmco site/yard/any other location to the hirer´s site and back borne by the hirer.¨ He adds, ¨Gmmco also arranges for the transportation of the equipment on behalf of the hirer if required at actual to be paid to the transporter directly.¨ Duttagupta says, ¨The delivery and exit logistics form a part of our responsibilities.¨

According to Jeelani, major challenges in rental of DG sets are logistics, competition from unorganised players, receivable management and asset management.

Managing debtors and dearth of skilled operators are other challenges. Duttagupta says, ¨Overcoming debtors remains a constant challenge and we have our internal credit control mechanism in place. Regarding operators, we undertake operator and technician trainings from time to time for capability development. DG set rental is skewed more towards unorganised segment, hence challenges remain for the organised sectors and one of best ways is to create awareness among the customers.¨

Growth prospects
According to Jeelani, the total market size for 500-1,000 kVA DG set rentals is Rs 40-50 crore. Growth drivers will be: construction and infrastructure projects, industrial growth and entry of MNCs. In the next five years, the market is expected to grow as the economy starts recovering.

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