Capital Goods are nothing but machinery or sophisticated equipment used by large plants, small size workshops and specialist doctors. This includes computers, servers and related equipment used by the Information Technology Industry. The average life of capital goods can be around 5 to 10 years.
Large process plants are excluded here in this article as they are sold with technology and design. Most of the times they are tailor-made for the clients.
The client may specify some major equipment of the plant to be made by a certain manufacturer or he may give the entire order to a single supplier on turnkey basis. The Guarantee is also specified by the supplier of the plant. The after sales service in some cases is part of an agreement and valid for 10 years.
In this article, I will focus only on different types of capital goods and not on process plants, cars and equipment related to Information Technology. The machinery can be briefly categorized into Household Goods (white goods), Workshop Equipment, Construction Machinery, Medical (Doctor’s) Equipment and Hospital Equipment.
In case of the construction equipment, sometimes it is made to suit the requirements of the company who might have undertaken the construction project. I have categorised household goods as Capital goods but in fact they are consumer durables. Their usage being up to 10 years I have taken them under capital goods.
In this article I am not considering Plants and large sized machinery (also tailor-made, used to construct large bridges and towers). In this article, I shall discuss the common equipment used.
Workshop equipment includes CNC, NC. Automatic, Semi-automatic and Manual Lathes, Shaping, Grinding, Milling machines, all types of Presses Forging and small casting machines. Each type of machine has a few reputed manufacturers and the price along with the terms and conditions are negotiated by the representatives of the Buyer and the Seller. Apart from price, the terms and conditions negotiated are commissioning, warranty, free supply of parts and their tenure, free after sale service for …number of years and there after concessional service charges for…. years.
In White Goods, I am including TVs, Refrigerators, Air Conditioners, Washing Machines. There is a keen competition between well-known brands and they give discounts, additional service, special schemes which will benefit consumers from time to time. The well known brands are Voltas, LG, Videocon, Sony, Panasonic, Daikin, Akai, Samsung, Hitachi. They are sold mostly through dealer network. In this category prices, schemes, discounts, services provided are announced in the print and electronic media through advertisements as and when the marketer decides to implement the same. It leaves some scope with the dealer to offer a minute reduction to the customer, if he is a regular one.
Construction machinery is made by specialists manufacturers and the buyer contacts them depending upon their deeds. For example, a buyer may contact road roller manufacturers but if dumpers are required, then the buyers may contact a different set of manufacturers. Likewise from mobile cranes to hoists, buyers may have to contact separate groups of manufacturers. The terms and conditions regarding commissioning, performance, warranty, after sales service, spare parts, etc. are negotiated mutually between the buyers and marketer depending upon the quantity, capacity, location of supply, etc. In this category also there can be some reputed brands whose price is quoted at a premium. For example, construction machinery of “Demag” from Germany commands a premium price.. The terms and conditions of common items negotiated by the Buyer and the Marketer apart from price are: commissioning, warranty, free supply of parts and their tenure, free after sale service for …number of years and there after concessional service charges for…. years. After the concessional period, the service and replacements through their regular service centres in the country is also negotiated.
Medical equipment used by specialist doctors is mostly imported. Either they are from Germany, UK, USA or Japan. The equipment is small but costly. They are used by pathologists, Cardiac Consultants, Eye surgeons, ENT Specialists, Nephrologists, and other specialists. Some of the equipment is for MRI, CT Scan, X-ray, sonography, ECG, EEG, and equipments of similar nature. Specialist doctors who want to buy the equipment and install them in their clinics know the prices and performance as the marketer would have given a presentation about them in a medical conference. The specialist doctor makes up his mind based on the data he has. Any special discount by the marketer is negotiated later on before the delivery and payment of the equipment.
Hospital equipment may include operation theatre lights, and equipment including oxygen supply systems, Heart and lung machine etc. Hospital equipment also includes hospital beds, Stretchers, trolley for patients, wheel chairs, etc. The procurement for these is done by an enquiry placed to any approved vendor or by Tender.
The terms and conditions for the above vary from item to item. They are well known by the users including prices and services required by them. For each equipment authorized service centres must be there at important locations in Major cities, so that the equipment can be attended to and repaired with due care.