An equipment commonly seen at the construction project site consisting of a rotating platform which is either fixed on tracks or wheels, a boom, a dipper and a bucket attached is an Excavator. This is one of the most important technological advancement in the field of construction equipments. Excavators are based on hydraulics and are heavy earth-moving equipments used widely in different kinds of infrastructure projects irrespective of terrains but depending on construction site usage. Usage of excavators could be for digging, excavating, drilling, rock breaking and demolition. At the initial stage, excavators were used just with buckets, but moving forward attachments like rock breaker, auger, etc. are used with excavators for meeting specific job requirements.
Having described usage of excavators, it is even more vital to know that demand of excavators is met either by the purchase of a new hydraulic excavator or by the purchase of a used hydraulic excavator or simply by way of renting a hydraulic excavator.
There are various manufacturers who sell new and used excavators in the Indian construction equipment market. The major manufacturers include – Caterpillar, Komatsu, L&T, Volvo, Kobelco, Tata Hitachi, Hyundai, Sany,etc. These excavators are available in various tonnage capacities starting from 8 tons and used or bought as per requirement of projects. The excavators are tracked type or wheeled type and usage of the same is dependent on terrain of the project. The equipment rental companies keep a fleet of all types of excavators depending on demand of contractors and rental charges they would want to earn.
The demand of excavators has increased manifold in India and statistics suggest a growth rate of upto 40% in recent few years owing to infrastructure development and launch of new projects. Major increase in demand is in hydraulic excavators ranging between 20-24 tons capacity because of its prominent usage in road projects which has seen growth to a large extent. Mining segment contributes to demand of large hydraulic excavators and specifically coal and iron ore mining activities involve usage of high tonnage capacity excavators. In the last two years, there has been a makeshift in demand pattern of earth-moving construction equipments from backhoe loaders to excavators and contractors or hirers are finding hydraulic excavators a better equipment to own or rent as compared to backhoe loaders due to its productivity and application in earth-moving activities.
Key demand drivers of Excavators in India:
- Development of roads and infrastructure in Tier-II and Tier –III cities
- Expansion of Irrigation Projects
- Water Supply Projects
- River Cleaning Projects
- Swachh Bharat Project
- Development of railway network
- Innovation in technology of excavator manufacturing
- Enhanced productivity as compared to Backhoe Loaders
Business of renting excavators in India
There are various factors that have led to the development of excavator rental market in India. Even a few of the main manufacturers have come up with their equipment rental divisions apart from new equipment sales division. The hirers of excavators provide skilled technicians and drivers along with excavator who work normally for 28 days in a month, in a single shift of working hours or double shift of working hours, fuel is generally provided by a company who takes excavators on hire basis and even loading, unloading and transportation charges of excavators from base location to project site is taken care of by contractor depending on the duration for which excavator is hired. Maintenance and efficient working of excavators at the project site is the complete responsibility of the hirer who has provided machine to the contractor. The service of the undercarriage, attachments, cooling system, etc. all needs to be taken care by the hirer.
The following factors are responsible for visible growth in renting of excavators:
- Cost effective option with lesser hassles
- Reduced capital expenditure of contractor
- Economies of scale of operations
- Drift of hiring segment from Unorganized to Organized sector
- Short term project duration
- Expansion of fleet of machinery without any initial investment
- Back up for pre-owned machinery
Apart from the driving factors mentioned above, there has been various instances in the past in excavator hiring segment, which has led to uncertainty for rental firms and they had to face a lot of challenges for survival. There has been dip in rental rates from Rs. 1.50-2 lac per month (approx. monthly hiring charges of a 20-22 ton capacity excavator) to Rs. 90K – 1 lac per month owing to decreased demand and recession. The replacement of an entire fleet of excavators requires a big financial investment and with sudden technological advancement in machines, replacement of an existing fleet of excavator with new ones and then, demand for latest technology machines by contractors at project site had affected rental companies quite a few times.
The contractor executes a project which is always a time-bound task and hence, apart from the people involved in the working, even machinery used plays a vital role and affects profitability as well as the reputation of a contractor. So, in order to ensure that renting of excavator is the right decision, there are multiple questions you should raise as a contractor and you should keep in mind as an equipment provider.
Few of the questions that are relevant for both- equipment provider, i.e. hiring company and contractors or hirers are as follows:
- What is the time duration for which equipment is required on hire basis?
- Which manufacturer’s machines are preferable at the project site and excavator of what tonnage capacity is required?
- What are key elements accompanying the excavator such as driver, operator, helper, etc.?
- What will be the shift timings for which excavator is required to rent?
- Who will bear the cost of transportation, loading and unloading of excavator?
- Who will be responsible for any breakdown and maintenance of excavator at the project site?
- What is the best possible rental rate available for excavators and what are discounts available on assured long term contract with equipment provider?
- What is the cycle followed from billing to payment by the contractor?
- What are the facilities given to operator crew at the project site – with respect to their food, dwelling, etc.?
- What about mishappenings at project site, insurance related queries and first-aid facility at project site?
So, with answers available for above-listed question, keep renting and keep earning!