S.K. Sharan, General Manager - Operations, Material Handling Business Division, Voltas Ltd
What are the recent trends in
the Indian material handling
equipment market?
The industry was growing very
rapidly until 2008 with growth
rates of nearly 25 to 30 per cent
per annum because a lot of
equipment was needed by the
industry to handle larger
orders; for exporters and
importers to stuff containers, for
ports and container freight stations
to handle larger volumes,
and for hirers as their customers
demanded urgent and voluminous
services.
Now it is growing at a much
slower pace. In fact, in FY09-
10, we saw a dip of about 25 per
cent. But since India will see a
lot of growth in future, we
expect FY10-11 to be better for
material handling. India may
see a growth of nearly 10 per
cent in MHE sales. We can
safely predict a future growth
of around 8 to 10 per cent in
long term (two to three years).
If recession ends completely
and the market picks up again,
the industry rate can go up to
10-15 per cent.
Do you foresee the demand for
material handling equipment
picking up globally?
Demand for MHE globally may
not grow at the pace at which it
will grow in India. Even today,
the major economies viz. USA,
Europe and Japan, are not out of
the problem of slowdown,
whereas India had a GDP
growth of nearly 6.7 per cent in
2009-10 and we expect close to 8
per cent growth in GDP in 2010-
11. Since many countries are
coming out of (recession), albeit
slowly, the MHE industry may
see a rise in sales globally,
maybe of the order of 3 to 4 per
cent maximum.
How can Indian manufacturers
play a larger role in the global
MHE arena?
Indian manufacturers can play
a limited role in such a scenario.
Indian manufacturers are aware
that the global markets are
extremely competitive. Currently,
we export mostly to the
Middle East and Africa because
regulations in other developed
countries is very strong in terms
of safety, emission norms etc.
For instance, US and European
regulations mandate that
engines should be Euro IV compliant
but in India we are still at
Euro II level. We can still export
to countries that have similar
regulations like India, such as
countries in the Middle East
and Africa.
Also, the volumes of Indian
companies need to grow so that
products become competitive.
China has 20 to 25 times more
volumes in its local market than
India. So if our volumes grow,
our products will become more
competitive and we can export
more quantity.
What will be the main demand
drivers for material handling
equipment in India?
Main factors that will drive
demand for material handling
equipment in India would be:
scale-up operations in both
warehousing and manufacturing;
degree of palletisation in
India; growth of organised retail
business; high cost of manual
labour; and high rentals for
warehousing land in most parts
of the country.
Many of these parameters
have already come into play; for
example, cost of labour and land
both are going high day by day.
Labour may also become scarce,
if NAREGA becomes operative
and successful in most parts of
India (this may, however, take
many years as government does
not have money and the Unique
ID system is still a few years
away). India has also been getting
attention for its skilled and
intelligent labour, and hence
more manufacturing shops may
be set up in India and scale-up
operations will also happen. It is
a matter of time.
However, there is no single silver
bullet which will drive the
demand. It will be a combination
of factors.
What are the main challenges
faced by MHE manufacturers?
The challenges faced by MHE
manufacturers are varied.
Chiefly, they are:
- Growth perspective is low for
varied reasons like low
demand and low scale of operations
etc. Due to this we are
not able to get critical components
(smaller quantity) at
competitive prices.
- Not very talented people stick
to this industry for long (due to
more attractive offers in other
adjacent industry).
- No stringent labour laws for carrying
load manually. Even if the
law comes, enforcement may be
an issue. Also, it may affect
employment of so many people
and hence would be a politically
sensitive issue to bring in
such a measure. Hence, labour
would continue to compete with
MH machines for a long time.
Thus, the growth of this industry
will be an issue.
What will be your company's
future strategy?
Our business strategy has
always been to listen to the customer
and satisfy his needs.
Offer him a large basket of products
and customisations at reasonable
prices, satisfy his delivery
needs, and be available
whenever he needs us.
We have created a network of
dealers and that is going to be our
great strength. We will be closer
to our customers. And we hope
that we will be able to engage our
customers in a better way.
Does Voltas intend to increase
its focus on any existing segments?
Our division's major business
currently comes out of MH
equipment and solutions. We
will be focusing more on warehousing
equipment, pick &
carry cranes, and other crane
equipment, MH systems and
solutions, and offering varied
service products to customers.
We will also be upgrading our
products to meet international
standards and try to fill product
gaps with certain models that we
don't have currently.