We, at Crown Lifters, believe in continuously innovating and looking at new opportunities to drive efficiency, growth, profitability and enhance stakeholder value. One such avenue being explored and executed shortly is our foray into overseas markets of Gulf and Africa.
Currently, the African markets are being studied and we are in advanced stages of discussion in the Gulf markets where we are expecting orders to flow in by the next couple of months. Gulf market survey and extensive ground work was being done since the last couple of quarters, and we are well placed now being L1 in the quotes so far. We are expecting 12 to 15 numbers of crane orders from the Gulf markets immediately before the end of this quarter. The concerned overseas parties are also expected to come down to India and inspect our cranes and complete required modalities with us. Meanwhile, our Cranes are undergoing major overhauling and maintenance as we look to quote for 3 to 5 year jobs in Gulf countries at a stretch.
With our entry into the Gulf market, we expect margins to improve from here as the rental rates there are at least 1.5X the rates in India. This will improve EBIDTA margins by minimum 10 percentage points as the cost will not go up proportionately there. In terms of logistics, there is cost of transportation and shipping and the margin improvements mentioned above are after factoring in all these parameters. We will be having a tie up with a local partner at Gulf with our own set up, comprising of an administrative office, equipment yard, supervisors and mechanics to take care of the operations. We are eventually expecting 40% to 50% of the fleet moving there in the next 6 months. In view of the same, one of our directors will be based there or will keep shuttling from India to closely monitor the operations there and establish ourselves as a preferred professional service provider.
The study and home work on the fleet export formalities is almost completed and we have shortlisted some partners and are also looking at drafting agreements. We have also appointed a consultant to prepare the required documents for us in facilitating this entire procedure.
In terms of Indian outlook and capacity additions here, this will happen gradually as we see a temporary lag in Indian markets with new orders expected to flow in after October 2017, in view of lot of projects being announced like refineries, airports, metros, etc. With this expected spurt in demand, we will be adding more equipment to meet the requirements of our existing customers and keep them engaged with us. Traditionally, we have always been more focussed on Crawler cranes, but this time around we will be looking to add more of Rough Terrain cranes, All Terrain cranes and Aerial Platforms. With more business coming in from our existing domestic clients, it will be a good opportunity to diversify our fleet into other categories also. Our fleet mix will undergo some transition as we have a larger concentration of crawler cranes in India and we will move half of these cranes to the Gulf market as mentioned earlier. The capacity gap in the domestic fleet will be offset by diversifying into Rough Terrain cranes, All Terrain cranes and Aerial Platforms.
Going forward, our planned foray into African markets will help us to get a better fleet mix, with the older generation fleet from India slowly moving into these markets where it is easily acceptable for 20 to 25 years. As a policy, we do not want to keep more than 20 year old cranes in India, so we will be moving such cranes to these markets.
Further, as part of our fleet modernising strategy, we will also try to dispose the older fleet, but if we are unable to sell it in time, these cranes will be deployed in developing countries where we can still get business for such cranes. This ensures that we don’t end up with older fleet lying in our capacity and not getting fully utilized and generating revenue for us. Basically, our Plan A will be to dispose our older fleet through our trading division, and Plan B will be to deploy them in African markets and subcontinents where we can still get business for these cranes. Some of our equipments are getting into the age group of 15 years plus and there may be a surplus of such used equipments in world market. Hence, we may not be able to sell the older cranes at a high premium, but we can still occupy these equipments for another 10 to 15 good years in the African markets and subcontinent by executing our Plan B strategy.
With regards to growth metrics, even without any additional investments for FY 17-18, and keeping only existing investments live, we are looking at a growth of 20% on topline with the same number of fleet due to improvement in margins by 50% in the fleet deployed at the Gulf market. Secondly, the fleet occupancy in number of months will increase with deployment in overseas markets by at least a month or two. Currently, our fleet occupancy in India is about 8 to 9 months a year and with the overseas market it could go up to 9 to 11 months, which in itself will add 10% more to the financial numbers vis-á-vis the current contribution from the domestic market.
In essence, we feel the domestic India growth story remains completely intact beyond any doubt, but we will keep exploring opportunities to expand geographically and keep looking for better margin business avenues in the overseas market as part of our overall business expansion plans.
