Heavy equipment · Manufacturing
See the exposure on every heavy-equipment order before it reaches the balance sheet
Heavy equipment is sold in a few large orders, each carrying its own guarantees, penalties and payment terms. We track that exposure order by order. The margin quoted at tender is then still visible when the final payment arrives.
In one paragraph
A heavy-equipment maker may book its whole year on a handful of orders. These firms build cranes, material-handling systems, mining and earthmoving equipment, bulk-handling plant and large fabricated assemblies. Most turn over ₹50–1,000 crore. Customers are public sector undertakings, infrastructure contractors and large industrial buyers. Each order carries contractual exposure that can outweigh its margin, and the managing director or chief financial officer usually owns it.
Managing director or chief financial officer
The economics
How the money moves in this trade
A heavy-equipment order is often won through a tender. It carries a fixed price, a delivery schedule backed by liquidated damages, and performance and advance bank guarantees. Payment is released in stages against inspection, delivery and acceptance. Material is a large share of cost and is bought months after the price was fixed. Steel and bought-out component prices move against the order while it is being built.
Institutional buyers pay on their own cycle. The final tranche often waits for a performance certificate that depends on site conditions outside the manufacturer's control. Guarantee limits, margin money and slow receivables tie up bank lines. A company with a full order book can find it has no headroom to bid for the next one.
The problem
Where the numbers usually break down
Guarantees are tracked by the bank, not by the business
Advance, performance and retention guarantees are renewed when the bank asks, with no order-wise register showing which can be released and why.
Liquidated damages are discovered at payment
Delay penalties are deducted by the customer at final settlement, after the order's margin has already been reported.
Material escalation is absorbed silently
Price-variation clauses exist in some contracts, but the claim is never computed or raised because nobody owns it.
Demonstration and rental units are untracked assets
Machines used for trials, demonstration or rental sit between inventory and fixed assets, with depreciation and recovery unclear.
Aftermarket spares are not reported separately
High-margin spare parts and service income are mixed with equipment sales, so the most profitable part of the business is invisible.
What we do
The work, and the result each part produces
Order-level cost and margin
Each order costed from tender estimate through material, fabrication, bought-out items, inspection and delivery, with the margin restated monthly.
A margin problem is seen while the order can still be managed.
Bank guarantee and margin-money register
Every guarantee linked to its order, its release condition and its expiry, with the release documents chased in advance.
Bank limits are freed for new bids.
Liquidated-damage and delay tracking
Contractual delivery dates compared with the build schedule, with customer-caused delays documented as they occur.
Penalties are contested with evidence rather than accepted at settlement.
Price-variation claims
Escalation clauses read, the formula applied to the indices or costs the contract names, and the claim prepared on time.
Contractual escalation is actually recovered.
Receivables by stage and customer
Amounts due split into billed, awaiting inspection, awaiting acceptance and retention, with the document each needs.
Collection effort goes to the paperwork that releases cash.
Aftermarket as its own segment
Spares, service and rental income reported with their own cost and margin.
The installed base is priced and staffed as a business.
Where we start
The first steps of an engagement
Contracts, guarantees and bank statements
We ask for the live order contracts, the bank's guarantee and limit statements, the build schedule for each order and the customer-wise receivables ledger.
Guarantees matched to orders
Every guarantee the bank shows is matched to its order, release condition and expiry, and contractual delivery dates are compared with the build schedule.
Release papers and delay records
A routine starts for preparing release documents before each condition is met, and customer-caused delays are logged as they happen.
An order exposure report
The first report shows, order by order, guarantees outstanding, liquidated-damage exposure, escalation claimable and receivables by stage.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Tender versus actual margin, by order
- Bank guarantees outstanding, by release condition
- Liquidated damages levied and contested
- Escalation claimed and recovered
- Receivables by stage and age
- Aftermarket revenue and margin
Who it suits
Written for, and not the right fit for
- You need tender documents drafted or contract terms negotiated legally — that work sits with your legal advisers.
- You need equipment inspected or a performance certificate issued — that comes from the customer's engineer or an approved third-party inspector.
- Makers of cranes, material-handling, mining, earthmoving and bulk-handling equipment.
- Companies with a large share of public-sector or infrastructure customers.
- Businesses whose bank limits, not their order book, are constraining growth.
Services
Services this work draws on
Costing and profitability
What each product, line and customer really contributes.
Explore service ↗Banking, funding and due diligence
Information a lender or investor can verify without a reconstruction.
Explore service ↗MIS and financial planning
Reporting built around the questions you actually need answered.
Explore service ↗Internal controls and risk
Controls sized to your business, documented and actually tested.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
How do we get bank guarantees released faster?
We can make sure every release condition is documented and the request goes in as soon as it's met. The bank and the customer still set the pace, but most delay comes from missing paperwork on our side of the table.
Should liquidated damages be provided for in the accounts?
Where a delay has occurred and a deduction is probable, it usually should be considered. We prepare the order-wise assessment; the accounting conclusion is agreed with your statutory auditor.
What should a heavy-equipment tender price include?
Material, conversion, guarantees, financing cost and risk. We build the cost basis a tender price should rest on; the pricing decision itself stays with you.
Explore further