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Construction : Interaction | March 2016 | Source : Equipment India

We need policy for smooth movement of cranes across state borders

In India it is becoming a trend to opt for newer cranes because the selection parameters are stringent and green initiative consciousness with multi nationals and even some government organisations have started according priority to newer cranes, says Sunil Makad, Director, Steel Carriers Infrastructure. Excerpts from the interview...

How do you organise trained personnel for operation and maintenance of your cranes?
We insist the OEMs to train our people and also provide regular updates. We also send them for training at various times depending on the requirement. When our personnel are deployed at the MNC sites the customers themselves provide detailed training and updates on safety. Additionally, to safeguard our interests we as owners are also fully trained on our cranes. It comes in handy during challenging times.

What are your suggestions to revive the crane rental segment?
I recommend that the government should come out with regulations to make the movement of cranes seamless across the state borders as well as international borders with our neighboring countries like Nepal, Bangladesh, Myanmar etc. In this connection we have approached the state governments of Rajasthan, Andhra Pradesh and Karnataka to either provide us with relief by enacting legislations in their respective states. For example in Rajasthan we have approached the Chief Minister Mrs. Vasundhara Raje through The Crane Owners Association of India stating that the entry tax and RTO tax in the state is Rs.1000 per tonne weight of the crane per month quoting the example of crane weight of 200 tonnes wherein the tax constituent works out to be Rs.200,000 per month which is 25 percent of the monthly hire charges. While in Gujarat, Maharashtra and Madhya Pradesh the tax is only Rs 60,000 per year or Rs 5000 per month, for the same crane. In case there is uniform and reasonable tax rate in all the states it will help our business to ensure that we are able to our service at all locations without bearing arbitrary and exorbitant taxes levied by individual states.

Brief us on the market dynamics?
Most heavy cranes are concentrated in and around Mumbai. Few are in NCR region while some suppliers are now available in Bengaluru. Since the major concentration is in Mumbai region we have to travel criss cross in the country to serve our customers, most of the time is wasted in transit including tackling the border issues. So even if the job requirement is only for one day the actual time taken is ten days. This is also adds to the cost of the project.

The market situation depends on the market reach
Even though the demand-supply is not in balance and rental rates have dipped, I am hopeful that market will open up and new cranes will be more in demand as against old cranes, says Hitesh Obhan, Proprietor, Ishardas & Sons. Excerpts...

What is the current status of hiring and rental industry?
At present, the market has improved tremendously. However, the problem of demand and supply still prevails. Rates are not good. I am hopeful that market will open up in future. Newer range of cranes will be more in demand as compared to older ones.

How much is the industry size for heavy crane rental in India?
In India, the estimated market size for heavy crane would be around Rs 2,000 to Rs 5,000 crore per year.

Do you expect this market to grow?
Yes, I [certainly] expect this market to grow provided more corporates enter this market. However, they need to provide better services and should have control over the entire operation as against the present loose manner in which small companies operate.

What are the major challenges?
The major challenges faced in the industry are taxation, delayed payment realisation over 180 days from the date of billing, and many more. In the meantime, we also have to pay salaries, EMIs, etc. from our funds. We are accorded the last priority for release of payment by our customers but they expect our services to be of the highest standard.

Many people say that the market situation for rental industry is very bad on the ground. Is it true?
It largely depends on the market reach of a rental company. If the reach exists the business is available. Today even in tier-II cities there are heavy crane suppliers-+¦catering to the local customers-+¦who for obvious reasons choose to take their services. This adversely effects the business of the many Mumbai-based hiring companies.

Could you specify three areas which can help to revive the market?
The three areas would be: recognition by financing sector, standardisation of taxes and prompt payments by our customers.

Which industry sectors drive the growth of your business?
Looking at the current market conditions, metrorail, steel, power, wind mills and cement sectors will drive the growth of our business.

Who are your major customers?
Our major customers are Larsen & Toubro and BGR Energy.

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