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ORIX Leasing Pakistan

Revised Project Report

Access Equipment Rental – Aerial
Working Platforms
______________________________________________

Prepared by
Farooq Irfan
Mir Faraz Tariq
Mahreen Rajan

Table of Contents Acknowledgement 3 Executive summary 4 Introduction to Access Equipment 5 Orix relevant Access Equipment details 6 Industry Analysis 8 Supplier Power 9 Buyer’s Power 11 Financial Feasibility of the Project 13 Assumptions 15 Conclusion 16 Appendix 17 ORIX Leasing Pakistan 2 .

ACKNOWLEDGEMENT First & foremost. Jaffer – Fabricon Pvt. Kashif – Tash International  Mr.  Mr. Mohammed Sarwar. we would like to our contact persons & organizations:  Mr. Hussain & Mir Faraz (who is also a part of this team) for the basic ground work and the solid basis they left for us to pursue further. Naeem Aziz. for their confidence in our abilities. And lastly. Ltd.Global Technologies  Mr.  Dyconix  Focus Humanitarian Assistance. Secondly. Pakistan Sincerely.Mesec  Bilal Engineering Pvt. we would like to thank our fellow MTO’s – Hassan. Ltd. especially Mr. their co-operation and assistance all throughout our rotation period.without which further development on the existing project seemed a daunting task. Faooq Irfan Mahreen Rajan Mir Faraz Tariq ORIX Leasing Pakistan 3 . Zeeshan Hammad. Syed Ali Nasir & Mr. we would like to thank the entire Operating Lease Department.

warehousing etc. The private sector is further branched into the three following categories like Plant maintenance. Our focus remained on the suppliers & manufacturers of hydraulic scissor lifts. Like reaching roofs of big warehouses for repairing purpose or reaching out high end floors of any building for maintenance purpose. Although these manufacturers are still working at a small scale. Access equipment is a category of equipment used to reach high end inaccessible areas where access through normal ways is not possible. The focus of our research lay upon Aerial Working Platforms. we also have the informal sector dealers concentrated in the Sohrab Goth & Mauripur areas in Karachi. for maintenance for bridges. The Potential market of access equipments in Pakistan is basically divided into two sectors. The Access Equipment industry has suppliers both in the organized and the unorganized(informal) sector. There are several distinct types of aerial work platforms. The informal sector usually deals primarily in various types of Cranes & scaffolds. The informal sector does not offer a wide variety of product options as they usually have a parked fleet. The key difference is in the drive mechanism which propels the working platform to the desired location. we see great potential in the sector especially in terms of scissor lifts available for rental purpose. we can further subdivide it into manufacturers. but the fact that they are locally producing such equipment shows the business promise of this sector. Given the financial analysis and the market opinion that was gathered over the duration of our report. high extension wires and a lot others unreachable areas.Executive Summary The main objective of the report was to help Operating Lease identify the suitability of access equipment rental as a prospective diversification segment. There are certain agents in this sector who import equipment through informal channels we also found an informal dealer working with the name of ‘Ali Corporation’ who had provided a ‘Sky lift’ to the Clifton Cantonment Board. ORIX Leasing Pakistan 4 . the private sector and the government sector. airports. Most are powered by either hydraulics or possibly pneumatics. Coming first to the formal sector. On the other hand. registered official dealers & agents. which all have specific features which make them more or less desirable for different applications.scissor lifts specifically. During our research we also came across information on the presence of suppliers (especially of used equipment) on Punjab side (Sialkot) but due to time constraints we were unable to pursue it further. Our job was to build upon the work done by the previous group.

but in construction companies they prefer buying it due to usage for longer period of time. Australia and UAE. The labor performing these tasks is not aware of its consequences and even if he is. Some commonly used access equipment includes Cargo lifts Boom lifts Self Propelled Lift Truck and Trailer Mounted Lift Hydraulic Scissor Lift Scaffolds. Orix relevant Access Equipment Details ORIX Leasing Pakistan 5 . these equipments have high usage due to tall building and big infrastructure. Buying or rental decision is based on nature and duration of work.Introduction to Access Equipment It is a category of equipment used to reach high end inaccessible areas where access through normal ways is not possible. high extension wires and a lot others unreachable areas. These equipments are of high importance and have high demand in western and other developed countries. he does not care about it. In our society most of these works are done in an unsafe and in efficient manner. for maintenance for bridges. Hydraulic Platforms Usually usage of these equipments is temporary so some customers usually prefer to get it on rent rather buying it. In markets like USA. UK. Like reaching roofs of big warehouses for repairing purpose or reaching out high end floors of any building for maintenance purpose.

which can be controlled to extend the lift in a number of different directions. Boom Lifts or Aerial devices They were once exclusively operated by hydraulic pistons. Regardless of the task they are used for. where it was designed for use in orchards (though not just cherry orchards). distinguishing them from most types of cranes. This type of AWP is the most likely of the types to be known as a 'cherry picker'. such as carrying frames for window glass. Aerial devices are the closest in appearance to a crane. which all have specific features which make them more or less desirable for different applications.consisting of a number of jointed sections. and in ORIX Leasing Pakistan 6 . They may also be equipped with specialist equipment. owing to its origins.Aerial Work Platform Category Through the course of our research we found out that Aerial Work Platforms are the best suited equipment for Orix to start off its Access Equipment rental business with. Most are powered by either hydraulics or possibly pneumatics. This type of AWP is now widely used for maintenance and construction of all types. The key difference is in the drive mechanism which propels the working platform to the desired location. flexible access purposes such as maintenance and construction work or by firefighters for emergency access. which can often include 'up and over' applications. usually at height. These two distinct types of mechanized access platforms may also be known as a "zoom boom" or "cherry picker" (both regional terms for aerial device). including being equipped with electrical outlets or compressed air connectors for power tools. which distinguishes them from permanent access equipment such as elevators. or "scissor lift" (the universal North American term for elevating work platform). although some have a higher safe working load (SWL). where heavier hydraulic equipment cannot be used. and is commonly used to describe articulated lifts (and more rarely all AWPs). It lets the picker standing in the transport basket pick fruit high in a tree with relative ease (with the jointed design ensuring minimum damage to the tree). They are usually capable of being fully operated (including setup) by a single person. aerial work platforms may provide additional features beyond transport and access. The different techniques also reflect in the pricing and availability of each type. The term 'cherry picker' has become generic. They are generally used for temporary. especially indoors and in isolated courtyards. Lifting Mechanisms: There are several distinct types of aerial work platforms. Lightweight electrically-powered units are gaining popularity for windowcleaning or other maintenance operations. They are designed to lift limited weights (usually less than a ton. including extensively in the power and telecommunications industries to service overhead lines. powered by diesel or gasoline motors on the base unit. An aerial device or elevating work platform is a mechanical device used to provide temporary access for people or equipment to inaccessible areas.

the diesel/gasoline powered Scissor Lifts are used. the range can be vastly increased. how much it costs and their specific features for specific functions. This is the main reason that these methods of powering the lifts are preferred. Industry Analysis ORIX Leasing Pakistan 7 . to fit through doorways for use inside buildings. as it allows a failsafe option of returning the platform to the ground by release of a manual valve. usually requiring access to high or elevated areas and also providing lift for materials or loads. The powered scissor lifts usually have heavier loading capacity. The market for these machines is known to be marked by especially strong boom and bust cycles. These legs can be manual or hydraulic (usually depending on size and price of the machine). AWPs are often bought by equipment rental companies. These types of platforms often have additional features such as a piped water supply and water cannon to aid firefighters in their task.arboriculture to provide an independent work platform on difficult or dangerous trees. Some AWPS are classified as 'spiders' due to the appearance of these legs. table sizes. and most models have extending legs/struts to help accomplish this. Scissor can also be mobile elevated work platforms which can be a type of working platform that can be moved along the ground while it is extended. positioning and handling heavy loads and can reduce the need of less people to do the lifting and bending. moving. Some large hydraulic platforms mounted on a lorry can reach heights of over 100 metres.Almost every retail or manufacturing concern will eventually be making use of some type of scissor lift equipment.000 kg. For manufacturing & retail industry almost all sorts of scissor lift equipment deal in lifting. Spiders are also available in especially compact form. it may require no power to enter 'descent' mode. The upward motion is achieved by the application of pressure to the outside of the lowest set of supports. A Scissor Lift is a type of platform which can usually only move vertically. A specialist type of the articulated lift is the type of fire apparatus used by firefighters worldwide as a vehicle to provide high level or difficult access. Some articulated lifts are limited to only the distance accessible by the length of each boom arm. but rather a simple release of hydraulic or pneumatic pressure. For starters the scissor lift equipment is initially a form of Aerial Working Platform which is a device that is used to provide temporary access for people or equipment to inaccessible areas. The majority of articulated lifts require a wide supportive base to operate safely. who then rent them out to construction companies or individuals needing these specialized machines. elongating the crossing pattern. The mechanism to achieve this is the use of linked. The Electric battery powered Scissor Lifts are usually used for internal uses and light external uses. Depending on the power system employed on the lift. Certain scissor lifts have the lift function for loading and un-loading. The contraction of the scissor action can be hydraulic. however. The Platform may also have an extending 'bridge' to allow closer access to the work area (because of the inherent limits of vertical only movement). pneumatic or mechanical (via a leadscrew or rack and pinion system). by the use of telescoping sections. For heavy duty external use. Scissor lifts are categorized by the loading capacity. The lift capacity of scissor lifts ranges between 230 kg to more than 50. folding supports in a criss-cross 'X' pattern. and propelling the work platform vertically.

The following is the list of players in our market who we were able to track down during the course of our research. Through the course of our research work we found out that this type of equipment is being manufactured by certain players locally. ORIX Leasing Pakistan 8 . Manufacturers:1  1 Fabricon Pvt. registered official dealers & agents. Coming first to the formal sector.SUPPLIER POWER Supplier Dynamics: The Access Equipment industry has suppliers both in the organized and the unorganized(informal) sector. we can further subdivide it into manufacturers. Ltd (Fablift-Hydraulic Scissor lifts) Refer to the Appendix for details of individual companies and their products.

Bilal(CEO-Bilal Engineering by 12th January 2010. but the fact that they are locally producing such equipment shows the business promise of this sector. lifts.Excluding the base truck cost). ACL group etc.000 to 80. The informal sector usually deals primarily in various types of Cranes & scaffolds. Mr.000. But he said that the ORIX Leasing Pakistan 9 .3 million(13 metre reach . There are certain agents in this sector who import equipment through informal channels we also found an informal dealer working with the name of ‘Ali Corporation’ who had provided a ‘Sky lift’ to the Clifton Cantonment Board. The approximate cost of overhauling is around Rs70.g. Bilal Engineering has provided us with rough price estimates of the equipment which costs aroundRs. Paragon Group.1.) Construction Industry Alliance: The construction giants working in Pakistan e. we also have the informal sector dealers concentrated in the Sohrab Goth & Mauripur areas in Karachi. The informal sector does not offer a wide variety of product options as they usually have a parked fleet. Our focus remained on the suppliers & manufacturers of hydraulic scissor lifts. During our research we also came across information on the presence of suppliers (especially of used equipment) on Punjab side (Sialkot) but due to time constraints we were unable to pursue it further. mobile pumps.Arshad (Project Manager. scaffolds) which is not only utilized at their own ongoing projects(TCL Tower Project by ACL and Sofitel by Paragon) but in fact its also being utilized by smaller construction companies. The minimum life of this equipment is around 10 years. Tash International(AWPs)  Bilal Engineering(Truck mounted Boom Lifts) Dealers/supplier:  Global Technologies – Genie  Abaseen International – variety of brands  Mesec  Ahbab Associates Although these manufacturers are still working at a small scale. The overhauling is done after 4 years on average. have purchased their own construction-related access equipment(tower cranes. The actual figures will be provided to us by Mr. Truck-mounted Boom Lifts: Bilal Engineering is manufacturing power boom lifts which are mounted on base trucks(Hino/Isuzu/Master). On the other hand. Paragon Group) was of the opinion that for big construction groups taking equipment for rent is not feasible due to the extensive use and access to various credit lines and the high rents potentially tend to cover the equipment price within 2-3 years.

Jaffer at fabricon Pvt. In the case of dealers. claims not to want to opt for the rental market. Buyers Dynamics The Potential market of access equipments in Pakistan is basically divided into two sectors. a few years back the players who could be Orix’s partners in the Access Equipment venture might prove to be fierce competitors now. the more volume they achieve. His opinion on the high margins on rentals was also shared by Mr. Access equipment’s cost also depends on its country of origin. fabricon has already ventured into rentals whereas Tash. manufacturers usually are very flexible in providing equipment to any credible agent that contacts them. In fact. Threat of Forward Linkage: There was a time when official dealers like Ahbab Associates and Global Technologies were only into the selling of Access Equipment. Importance of Volume to Supplier: The importance of volume is quite substantial for suppliers in differing ways. Secondly. equipment is being manufactured in various countries but the best brands in terms of quality are the German brands. the more quickly they recover the asset cost & minimize the relevant risks. But in the current market state. But the local brands have still not earned a sound reputation in terms of quality. and hence the equipment ‘demand’ is on the higher side. there is another threat of local manufacturers. So. The official dealers obviously enjoy a slight price advantage over the other agents. hence this slight cost advantage of official dealers tends to be insignificant. Impact of Inputs on Cost: The cost currently depends on the channel of purchase utilized. The larger construction giants like Paragon Group & ACL who own their own construction-related access equipment have already started renting their equipment to smaller construction players in their off-periods. but due to the changing market dynamics and recessionary pressures. On the other hand.small construction companies do prefer to take this equipment on rent due to capital constraints. The private sector is further branched into the three following categories: ORIX Leasing Pakistan 10 . the private sector and the government sector. The element that stimulated local production is the saving of the elaborate shipping costs which then can be reflected in lower prices. But globally. more and more dealers are moving towards the concept of renting out equipment. like Fabricon and Tash International to start off with their own renting agency offering some installment packages/rental package. Chinese brands offer the cheapest prices. Ltd. eventually the local manufacturers can achieve economies of scale. If more equipment is rented out. the volumes are on the lower side as this market still needs to be aggressively tapped. right now.

Disaster Recovery and Rescue: Fire brigade in Pakistan is poorly equipped and can hardly cater to the needs of the nation. the business potential is quite promising. following strict quality certifications( e. Engro. hence they can be one of our potential clients. MCB has already taken the ‘fablift’(hydraulic scissor) on rent from Fabricon Ltd.Plant & Building Maintenance: Recently we have witnessed tall building mushrooming in Karachi and they require building maintenance services. Through these players we got to know that usually large manufacturing concerns e. these forces can provide a very limited help. The initial assumption that airport-related services fall totally under the ‘Government’ was exactly not true. The basic operations expenditure heads for AWPs is the ‘Engine Oil’ which usually costs around Rs. Dyconix Plant Maintenance. SUPARCO – Pakistan Space and upper Atmosphere Research Commission: Recently SUPARCO released a tender stating a need for a hydraulic scissor. FFBL. Jaguar Pakistan. the average max.g. Hence that makes it to around 700-900 hours per year. During the meeting with Mr.Kashif(Marketing Manager)-Tash International. Unfortunately most of these buildings use traditional ways of accessing in-accessible areas like ‘Jhola’. Coming to the Plant maintenance segment. We also came across a tender by OGDC for the order of 3 hydraulic scissor lifts intended to be used in the Indoor/Outdoor Maintenance Works at its Oil & Gas Processing Plants. Institutions usually buy equipment rather then going for rentals).(Hence we assume that being a Gevernment firm. as mentioned by Syed Ali Nasir-Director Sales that PSO has already purchased a hydraulic scissor for the Maintenance of PSO House( govt. Unfortunately there is no concept or capacity of rescue in Pakistan. Airports: There is always need of access equipment at the ports for maintenance purposes and for handling transfer of goods. But this trend is changing . ISO 9001) usually have annual inspections of their facilities to ensure compliance with the given standards.125 ORIX Leasing Pakistan 11 . GSK etc. AMS Engineering. OGDC is inclined towards buying this equipment but in the case of the ‘Private Sector’ in the ‘Oil Exploration/Refining Segment many players will be intended towards renting AWPs) As Karachi has several such Plants. Often inaccessible places like high roofs or low areas require such equipment to facilitate the skilled personal to perform the specialized jobs. A copy of the tender is attached in the annexes of the report. the overall performance can be enhanced. With introduction of various access equipments to their fleet. They also use access equipments for their day to day operations. These inspections usually require ‘Aerial Working Platforms’. Hence we can tap the opportunities in the private sector dealing in airport-related services. USAGE OF THE ACCESS EQUIPMENT: As the nature of usage of access equipment is temporary. Giant stores like Macro and Metro also require a smaller range of access equipment to store their inventory on shelves and transfer goods from one part of the store to another. we got to know that airport services companies like ‘Shaheen Airport Services’ does use access equipment for providing their services. Hence the building maintenance segment does offer a promise. Ware housing and freight handling: There are a number of warehouses which require various sorts of access equipment that can make their work much faster and more efficient. In case of fire or other national calamities. working hours for an equipment like ‘hydraulic scissors’ & ‘boom lifts’ is around 2-3 hours daily. we contacted players providing ‘Plant Maintenance Services’ like Pak-Arab Engineering.

5 ton Hydraulic Scissor). taking this equipment on rent is a pretty feasible option. Due to the nature of the usage.per litre(20 litre usage for every 400 hours of usuage for a 40ft/0. Financial feasibility of the Project ORIX Leasing Pakistan 12 . and the replacement of hydraulic filters after every 800 hours usage which costs around Rs.800-1000. where equipment is required for limited time periods.

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5. O & M is calculated as per the share of the asset manager. The profit sharing will be carried out on a 60:40 basis.Assumptions 1. The cost figure is based on the per unit cost provided by Fabricon Pvt. 2. 4. Ltd. Depreciation is calculated based on the formula: Cost of the fixed asset – Residual value * actual number of hours Estimated total number of hours 3. ORIX Leasing Pakistan 15 . with 60% being Orix’s share in the venture. The scissor lift will be rented out all year round. Ltd. The revenue figure is based on the Rental figure – PKR 100000/month provided by Fabricon Pvt. 6.

35% in the first year that increases sequentially in the following years.CONCLUSION In view of the extensive untapped potential of the Aerial Working Platform(AWP) Equipment consisting of the Scissor Lifts & Boom Lifts.74% throughout the span of the machines’ life. At the same time. the ‘temporary nature’ of the usage of this asset which makes it ideal for rental purposes. secondly. firstly considering the financial feasibility. we recommend that this access equipment type best suits to the local ‘Access Equipment Rental Market’. This inference is made on a twopronged basis. the unit gives a ROA of 50. Given the financials. the project gives an IRR of 134. We hope to see the project come to life!!!! ORIX Leasing Pakistan 16 . the extensive usage potential of AWPs & thirdly.

Appendix ORIX Leasing Pakistan 17 .