Despite the current slump in demand, the tower crane rental is expected to register a healthy growth in the next 2-5 years time.
Over the past two to three years, tower crane (TC) rental market has witnessed a nonstop down ward slump, most significantly driven by slowdown in realty sector. However, some market analysts and the rental players optimistically foresee a slight recovery mainly attributed to increased demand from commercial and industrial sectors, while others are highly pessimistic.

Market visualisation
Many claim that tower crane rental market is at its lowest ebb. Immediate future also appears gloomy. ?It is currently in a bottomless pit and I do not know when it will get out of the same. Immediate recovery ZILCH! In a window of next 12 months or in this financial year I do not see any great projects getting lined up,? says Anand Singh, Co COO, Gemini Equipments and Rental.

Others are very bullish. Key market trend of high rise buildings coming up even in Tier II cities like Nagpur or Kanpur or Vijayawada are positively generating demand for tower cranes applications and in turn rentals . ?There is a change in work process from conventional plate, and prop to use of tunnel and aluminum formworks. In many places, in-situ construction is giving way to precast structures. Further, owing to labour scarcity, even G+4 or G+6 floor buildings are attracting use of tower cranes.

All these factors are growth drivers for crane rentals,? says Rambabu Cheruvu, Managing Director, ConMech Auto Consultants.

Owing to a very sluggish realty segment including Mumbai and other mega cities, the demand outstrips the supply thereby driving rates downwards. This segment utilises nearly 80 percent of the cranes and many cranes in 5 to 6 tonne capacity range are idle. Some owners are unable to pay their installments. However, the demand in industrial segment is on the rise. ?Basically the tower crane rental market business is good. Due to market conditions some rentals get us good money while others may remain idle. Today the residential segment is not doing well as a result many cranes are idle in the market. In some cases even repayment of loans is difficult. On the other hand commercial and industrial segments are in a good position but they require higher lifting capacity cranes of more than 10 to 12T. Here the risk is less if we follow all safety norms etc,? says K Ilango, Managing Director, Sai Good Earth, a large fleet owner of nearly 50 tower cranes.

Market size
Estimated market size for tower crane rental is 140 to 200 numbers in FY14. 80 percent cranes were deployed in realty sector and balance in commercial or industrial projects. Looking at the range deployed, our survey tells us that 5 to 6T capacity cranes were used predominantly in realty, 8 to 12T capacity cranes were used in commercial, industrial and precast construction applications while 16T and above capacity cranes were exclusively deployed in industrial construction.

Looking forward
?I expect the market to grow at 35 per cent year on year for the next 4 to 5 years. Large hiring houses will be the major buyers and will place the same on rent,? says Rambabu while Anand Singh comments that the feel good factor does not exist today. He says, ?Rental space is very tough segment to be in.?

So far 6T capacity cranes have been most popular. Owing to changed work methodology and process slowly the demand will graduate to 8 and 12T lifting capacity range.

The government?s efforts to accelerate infrastructure development in India, indicates that the industry is at the verge of the next boom. The next 2 to 5 years should register a healthy growth in tower crane rentals. Agreed that we are still in the wait and watch mode but optimistic excitement in the market prevails.

Strengths

• Pan India services by organised hirers
• High quality branded tower cranes
• Strong emphasis on safety
• Alternate to capex

Weaknesses

• High capacity cranes few in number
• Scarcity of trained O&M crew
• Ready finance not available
• Large no. of small cranes idle.

Opportunities

• Hydel, thermal and nuclear power
• Industrial and commercial sector
• Precast gaining momentum
• High rise building going up and up
• Big contractors unable to invest

Threats

• High attrition of quality O&M crew
• Delayed payments
• Government fails to revive infrastructure
• More supply less demand driving rates down

RENTAL RATES

• 20 to 30 percent drop in rates for 5 to 6T segment.
• 5 to 6T cranes at Rs 1.60 lakh
• 8 to 10T up to Rs 4 lakhs
• 16T is Rs 6 lakh or more