Material Handling Industry in India
The Government of India’s initiatives in rapid expansion of railway tracks, development of Delhi-Mumbai Industrial Corridor, investment in port developments, emphasis in petrochemical sectors, Jawaharlal Nehru National Urban Renewal Mission (JNNURM) focused on urban infrastructure developments should take the MHE industry to a greater height. For sure, days are not very far when China market will saturate in terms of demand for material handling systems and Indian industry will surpass China. Subhajit Roy interacted with the industry leaders and writes.
Keeping pace with the rapid urbanization and infrastructural development, the Material Handling Equipments (MHE) and cranes industry in India has become matured enough. MHE and cranes are of immense importance and plays very crucial role in timely execution of any projects. Today, there has been a increasing demand for industrial MHE and cranes almost every industries which include real estate, shipping, mining, retail, steel, pharmaceuticals, automobile, food processing etc. to facilitate handling of bulk materials in a more efficient way. With the growing adoption of robotic and automation technology in every segments of industry, the needs for high precision MHE and cranes have been increased. So, reliable, customary designed and cost-effective MHE and cranes are dominating the Indian market.
Recent trend in the MHE industry in india
Reviving from Economic Recession:
The MHE and cranes industry in India was not spared by the global economic recession. There was a drastic slowdown within the industry due to recessionary affects in other related industries.
M M Shahane, Dy. COO, Voltas MHE Division commented, “The MHE industry went through a recessionary phase for the past two years from 2008 onwards. This was due to the global recession caused by the financial crisis in the US and the economy which affected investments in new manufacturing capacity in India. There was a reduction in demand for equipment by over 20% during this period.” As the Indian economy has shown some kind of revival sign, the MHE industry is revving up. “During the past few months, there has been revival in the investment for MHE, as many companies have increased capacity utilization and are looking for enhancing production and manufacturing. This was also seen in the other sectors like Warehousing, Logistics and Retail which contribute to the sale of MHE in India,” he added.
Growing demand for pre-owned MHEs:
H N Khumbatta, Vice President & Business Head, Godrej Material Handling discusses about the changing trend in the MHE industry that focuses the increasing demand for pre-owned MHEs. He said, “Until now, customers would buy a material handling system and create an asset. But increasing competition and the dynamic economic scenario calls for a financially prudent way of using material handling systems. Hence the global trend of customers wanting to avail of pre-owned or hiring services has started to gain ground in India.”
He added, “Today, the customers ask for hiring contracts where they get the requisite number of equipments with a certain uptime guarantee in return for a monthly 'rental'. This ensures that the customer gets the equipment without incurring the prohibitive capital costs. The vendor too maintains the owner ship of the equipment.”
Mr. Khumbatta continued, “Many times in hiring contracts, the customer has the option to acquire ownership of the equipment at the end of the rental period. The pre-owned equipment market is also catching up due to the latest economic recession. Customers who wanted to buy material handling systems but couldn't afford to do so due to the recession chose to go for pre-owned equipment. This equipments are as good as new but a lot cheaper. Hence preowned equipments and long term hiring are latest trends in the material handling industry.”
Transition from manual to mechanized MHE:
JCB India endlessly endeavors to bring the latest technology in MHE to India. Amit Gossain, Associate Vice President (Marketing), JCB India Ltd. said, “The industry is in process of maturing. Many unsafe manual MHEs are being replaced by mechanized MHEs, which will result in effectively increasing the productivity of projects. The importance of specialized MHEs increases with bigger projects and tighter timelines.”
Changing Perception & Increasing Acceptance:
Jenmon International, incorporated in Singapore as a specialist in the lifting industry. Jenmon’s core business activities are in design, supply, installation, testing, commissioning of lifting equipments and other related services. The Company has set-up its regional office in India last year. Mark Ong, Managing Director of Jenmon International commented, “In the past, many considered MHE as an inconvenient necessity; costly equipment that simply moves objects from one place to another. In addition, they were not treated as a competitive opportunity. These perceptions start to change when newer and quicker technology reduces costs and increases profit. Today, MHE plays a crucial role in contributing to the success of businesses in the various industries, especially in India, where more areas are opened for industrial developments.”
“Due to globalization and internationalization, there are many products available in India today. It is important to get the right solution to address needs, thereby enabling one to yield a higher ROI (Return Of Investment) in the process”, he added.
Hurdles and Road Ahead
MH Systems Incur substantial CAPEX and Face the axe first:
MHE industry works on a slightly different principle as compared to other industries. Mr. Khumbatta expressed, “These equipments incur a substantial capital expenditure. In times of plenty, the demand for these equipments is the last to pick up since it takes some time for production to reach previous levels and hence the need for material handling is not felt immediately. But in times of bust, the demand for these equipments is the first to face an axe in company procurement plans since as demand for products dries up, the need for MHE is also reduced. Hence material handling industry is the first to face the consequences of recession and the last to benefit from the boom. This anomaly leaves only the serious players to compete in the field.”
Abundance of manual labour & lack of awareness:
Mr. Khumbatta has also added, “In India, manual labour is available cheap and plenty and it offers a viable alternative to material handling systems. And lack of awareness of benefits of using material handling systems also plays a role.”
However, Mr. Khumbatta has expressed his optimism by adding, “As developed markets saturate in terms of demand for material handling systems, countries like India and China which still have developing markets present an opportunity to sell such equipments. Hence competition from foreign players is steadily increasing.”
Low level of mechanization:
Mr. Shahane has expressed different kind of views. He opined, “The MHE industry in India is quite small at present and has not seen much expansion over the past many years. The major hurdles in the expansion relate to the low level of mechanization by Indian companies for their Material Handling needs. Most of the components, raw materials and finished goods are handled through the use of manual labour rather than using the machines. This reduces the demand for MHE in India.” He continued, “Other problems faced by the industry relate to high input cost due to high local taxes like Excise, Sales Tax, Octroi, Entry Tax, etc., delays in transportation due to poor infrastructure conditions, administrative delays for customs clearance, lack of infrastructure with suppliers, leading to uncompetitive products etc. These factors affect the manufacturing cost for Indian made MHE as compared to machines imported from China and other countries.” Mr. Shahane suggested, “The Government needs to play an important role in these areas to reduce input and transition costs for Indian companies and make them more competitive.”
Acute shortage of skilled operators:
Though there are many things to cheer for the industry, the list of barriers is not very short. “The sector is expanding at a good rate on account of the infrastructure development activities all across the country. However this expansion of MHE industry has brought with it an acute shortage of skilled operators. Also linked is the issue of safety in material handling,” Amit Gossain said. To cope up with, JCB runs operator training centres across the country for training operators on Backhoes and Excavators. The Company also has a plan to introduce its latest entrant Liftall in training facilities.
Voltas' Material Handling Business Division (MHBD) has been supplying various MHE like forklifts, cranes, warehousing equipment, material handling systems, etc. to the Indian customers in the manufacturing sectors like Automobiles, Engineering, Metal, Process, Chemicals etc. According to Mr. Shahane, “Voltas Material Handling Business Division is a leading player in India and has been successful in providing high quality productive, reliable and cost effective machines for a wide array of applications.” Voltas also supplies MHE to other sectors like Infrastructure, Construction, Logistics, Warehousing and Retail. “The Company has been successful in getting orders for forklifts and cranes in the recent past and expects to grow at over 10% in the next few years,” Mr. Shahane added.
JCB India, a name to reckon in MHE industry has introduced latest technology in the Indian market. Its Loadalls and Skid Steer Robots are extensively used for material handling applications. The Company has also launched new models of Liftall. According to Amit Gossain, “New Liftall-1253 is 12T crane with an advantage of 3 part Non-Slotted boom provides best in class lift height (12.5m), travel speed (30 KMPH), automatic leveling of load on snatch block hook, unmatched operator cab & visibility and superior components. Liftall-1202, the 12T crane with 2 part non slotted boom has been designed specifically to handle blocks in the tough mining sector.” Both these models have superior features like bigger foot print (4” wider), superior power train and superior operator cab with best in class visibility and specifically designed by JCB to suit Indian customers needs.
Mr. Khumbatta said, “Godrej Material Handling (GMH) has always believed in providing its customers the best and the latest technology available. When GMH started in 1963, the Company offered the latest technology at the time in the form of automatic transmission as standard on Godrej forklifts. Over the years GMH has been at the forefront of adopting and offering the latest technologies. A few years back, GMH has launched a game changing product in the form of articulated forklift which allows one machine to perform the work of a traditional forklift and a reach truck. This tradition has been continued in electric forklifts where AC technology is used.”
According to Mr. Khumbatta, “GMH is the first Indian manufacturer to produce electric forklifts based on AC technology. GMH has always benchmarked its offerings to the best in the business. This has ensured that over the years, GMH products match the quality of those manufactured abroad. This is evident from the fact that GMH is the only Indian manufacturer to figure in the world ranking of lift truck manufacturers.”
Commenting on the products and services offered by Jenmon, Mark Ong said, “Absolute reliability is one of Jenmon hoist’s key features. Latest technology like infinitely variable speed control, braking energy feedback system, safety monitor unit, are built into the control system. These innovations make Jenmon wire rope hoist very competitive in the market and benefit our customers in achieving higher productivity.” Jenmon is looking forward to grab the best opportunities from ACMEE 2010. Mr. Mark said, “ACMEE serves as an excellent platform to create awareness for Jenmon. It provides us the chance to network with industry players and government officials for business opportunities in the region. “
Demand for equipments required in refineries and other such hazardous areas have been increased manifold with the discovery of natural gas reservoirs.
To cater to the requirements of safe hoisting and moving in such areas, demand for appropriately designed and certified cranes have also been increased. ElectroMech, powered by its collaboration with Germany based Stahl CraneSystems all set to provide Explosion Protected range of STAHL products in the Indian market.
Like any other industries, post-sale service is an important segment for MHE industry and it is one of the prime criteria in procuring the equipments. Mantha Srinivas, Purchase Manager of Nagarjuna Construction Company Ltd. said, “Post-sale service is the most important area for any kind of projects as we generally work in remote parts of the Country. In case of any kind of operational problems with the MHEs, the availability of service person is needed without delay.” He has also added that, “The manufacturers are also to ensure the availability of spare parts.”
Though, China leads the Material Handling Industry of Asia today due to Country’s major focus on infrastructural development, India has got all the potential required for overall growth. The industry needs to ensure availability of cost effective, efficient and reliable material handling equipments to increase its reach. Provision of 24X7 customer support service is mandatory to serve customers in a better way which would enhance sustainability. Dedicated training to be given to the operators in tackling with shortage of skilled operators. The Government needs to address the issues related to high input cost due to high local taxes like Excise, Sales Tax, Octroi, Entry Tax etc. The Government of India’s initiatives in rapid expansion of railway tracks, development of Delhi-Mumbai Industrial Corridor, investment in port developments, emphasis in petrochemical sectors, Jawaharlal Nehru National Urban Renewal Mission (JNNURM) focused on urban infrastructure developments should take the MHE industry to a greater height. For sure, days are not very far when China market will saturate in terms of demand for material handling systems and Indian industry will surpass China.