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Charting a New
Course
Propelled by the emphasis given to the development of infrastructure,
the construction equipment industry is charting a new course.
While suggesting some path-breaking initiatives that will
help the industry to meet the ever-increasing demands of the
market, the McKinsey report (study done on behalf of the Conferderation
of Indian Industry, and the Indian Earthmoving and Construction
Equipment Industry), lays special emphasis on ‘equipment
rentals’ as one of the four growth enabling initiatives.
The equipment rental business is currently pegged at around
7-8 percent of the total construction equipment industry;
which is estimated at around $ 3.5 billion and is expected
to grow to more that $ 7-7.5 billion by 2010. Going by the
European Experience, equipment purchase for the rental industry
constitutes 30-40 per cent of the entire purchase. Taking
a conservative estimate, even a 15 to 20 per cent share of
the purchases would result in the rental industry growing
to Rs 6,000 crore by 2010.
What is interesting is that, though the equipment rental
industry is in its formative years, it shows many similar
characteristics to the European rental industry, which is
estimated at Euro 22 billion. Both the markets are fragmented,
move towards consolidation, and have started to depend more
on outsourcing. At the same time, unlike the Indian market,
the developed markets are keener on safety aspects, documentation,
and collecting and collating vital statistics that help the
industry grow. There is also a growing trend towards specialised
service providers. Associations play a major role in benchmarking
the quality standards, service, and creating conducive business
environments, which we lack.
Our ‘Interaction’ and ‘Technology’
columns focus on futuristic technologies such as integration
of driveline subsystems, use of alternative fuels, and hybrid
drive systems which will play a pivotal role not only in reducing
emissions, but also enhance the productivity of machines thereby
bringing better economy.
It may take time for the markets to evolve to a sound level.
The need of the hour is to create a need-based interface between
the OEMs, rental companies, and most importantly the end-users,
which could probably help the rental industry to overcome
the daunting task that lies ahead:
To focus on technologies that are both environment friendly
and super efficient.
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