The up-scaling of projects and shrinking timelines, has resulted in higher levels of mechanisation, up-gradation and development of the talent pool. Writes Projects Info...
The growth of the lifting sector is largely dependent on the growth of several industries, such as power generation, heavy engineering, automobiles and infrastructure. India, as a country still has a lot of demand that hasn't been met, particularly for infrastructure development and power generation.
Projects in these sectors also increase demand on other industries such as construction, construction equipment, manufacturing, cement etc. ultimately, all these sectors will drive demand for lifting equipment - which paints a hopeful picture for the lifting equipments sector.
Infrastructure for manufacture
Fabrication of structural work and manufacture of equipment for cranes needs a versatile base. Most of these facilities are available in Indian Industries. The manufacturing techniques and equipment are mostly labour intensive and dated upgradation has not kept pace with the changes occurring at international level resulting in poor productivity, higher costs and poor finish.
Today a lot of multinationals have entered the Indian market in construction and material handling equipment sphere. This has led to enhancement of features in equipment. However, the penetration of equipment still has miles to go as India still depends upon foreign players for high end products, making the cost prohibitive for many project sites.
Designing of different types of cranes is being undertaken either as per the guidelines provided by collaborators or from the outright purchased detailed drawings which are adapted to suit the particular conditions specified by the end user. Some of the organisations have developed software for design calculations and have been able to achieve upto 10 per cent reduction in raw materials for the same load capacity.
With little or no innovation the technology is static. The R&D work is limited to the designing effort in adapting the cranes to suit the particular requirements but there has not been any real breakthrough in assimilating basic know-why or R&D to develop new concepts.
Since the technology has been obtained from diverse sources, the individual equipment manufacturers have adopted their own norms and standards. Due to diversity of product design, the quantities produced individually of fitments and hardware are small and hence advantage of economy of scale cannot be taken for product improvement and cost reduction.
The field of material handling equipment embraces a vast array of systems and equipment, though cranes, conveyors, and forklift trucks form the three main segments. Material handling is an important part of factory and industrial processes. It covers the entire spectrum of functions such as waste handling, assembly line management, storage and material transport.
A typical material handling system includes several smaller components that work side by side, to make the everyday business more efficient and cost effective. New advances in technology have revamped the entire material handling system and function. Robotics and automation techniques are increasingly becoming prevalent. But until recently, the Indian industrial market relied on very rudimentary material handling equipment, compared to the standards of industrially developed countries.
Government's focus on development of infrastructure in the country to fuel overall economic growth has had a huge positive impact on the sector.
The MHEs are instant hit in logistic sector. The Indian logistics market is expected to grow annually at the rate of 8-10 per cent till 2015. The usage of MHE has been now refers to the total management of all materials. Significant savings in time, labour and materials result from effective materials handling achieved through a series of well-coordinated and inter-related procedures. This overall management system is achieved through plant-wide integration encompassing every step in the manufacturing process, where the flow of information is essential for monitoring, coordinating and tracking each process - from the arrival of raw materials onto the plant floor through to dispatch of final product awaiting shipment.
While, India today has the capacity to manufacture most of the products that are classified under the material handling equipment segment, the difference is one in the level of sophistication, to put it simply. A modern automobile plant, for example, may opt for high-end imported system instead of a locally manufactured one. One reason for this is even today, the segment is dominated by the unorganised sector, which accounts for roughly 80 per cent of the products.
India tends to be lacking in infrastructure, a fact that makes its logistics costs very high by international standards. Consequently, access to highly functional logistics systems is becoming an increasingly important competitive factor. Indian companies are outsourcing their logistics functions to external providers who provide transport plus a range of services, such as packaging, labelling, billing and tracking. These third party logistics providers are assuming an important role in the sector.
Increase in input materials costs, wages, interest and transportation have forced companies to pass on the burden partially to consumers. A large part of the increase in cost needs to be offset with the improvement in efficiencies in operations, if Indian industries have to compete globally. High logistics and warehousing costs in India shows that there is lot of inefficiency in the operations, making Indian companies less competitive compared to their counterparts. Getting the right amount of goods at the right time and at the right place is extremely critical now than ever before, especially when budgets are tight and customers, unforgiving. Worldwide, internet utilisation, combined with proliferation of reverse logistics and the impact of technology in real time logistics event management and visibility are fundamentally changing the role of logistics management in organisations.
In order to succeed in the market place, companies must be ever so cognisant of these trends and develop a logistics management that capitalises of the best-of-breed technological solutions available so that they can meet their customer demands for today while at the same time bracing them selves up for tomorrow. Fortunately, conventional disregard for logistics has been now replaced with wisdom and cautious optimism, fuelled by the desire to compete globally, meet the demands of customer service in addition to lowering costs, and create more value along the supply chain. In a sense, corporates are now seeing logistics as a strategic thrust forward instead of being a tactical approach, as was the case previously.
Chennai remains at the top position for MHE segment. It was backed by a spurt in the number of warehouses and container freight stations (CFS) in and around the city. There are over 100 large warehouses and a few more are to come up in the next few months. At present, there are around 15 CFS in and around the city and a few more are expected to come up with Chennai port emerging as a major container handling port. This will, in turn, boost the demand for MHE like forklifts, pallet trucks, stackers, order picker and reach trucks. The Indian MHE market has been pegged at over Rs 5,000 crore with Larsen & Toubro and Godrej as major players. The Indian MHE industry is expected to grow steadily. The improvement in the Indian economy will result in accelerated demand for goods movement and create opportunities for suppliers of goods-handling products and services of all types. The need for MHE is directly related to the amount of cargo and freight traffic. India will see a major pull in the demand for these equipments, says a report.
Key challenges faced by equipment manufacturers, who believe in India-specific solutions, that there is no adequate protection available on account of poor patent laws and their enforcement. Also, unlike China, India has allowed the import of huge cranes at normal custom tariffs. This has led to great influx of very old used cranes (much beyond their service lives), through under invoicing route and has made India a virtual dumping ground for such junk. More of rental market demand for slewing cranes is being met by the import of such used machines. China banned the import of huge cranes 10 years ago, which led to a surge in the sales of new equipment.
Another bottleneck is the non-uniform tax regime (VAT, sales tax, entry tax) across the country. The skill gaps and shortage of trained manpower are major issues which the industry is facing today. Although, the up-scaling of projects and shrinking timelines, has resulted in higher levels of mechanisation, up-gradation and development of the talent pool required for the operation and maintenance of latest equipment has not kept pace with the demand. As a result, the industry is facing an acute shortage of skilled manpower.
Since a large proportion of the Indian lifting equipment sector is conservative in terms of adopting newer technologies, the Indian market still lacks presence of world-class companies. Recently a lot of international companies have started importing their technologically advanced products in India through their Indian partners/distributors.
Apart from this the largest drawback faced by the crane manufacturing industry is that most of the PSU tenders and several consultants are not at par with the developments in the global crane industry. Low priced tenders are preferred even if the manufacturer is providing the bare minimum in terms of technical specifications as per the requirements of the tender. A price premium is difficult to demand even if the bidder proposes any extra features which might be beneficial. The reason for this lies with the fact that the bidders are evaluated at the same level as per the specifications of the tender. To be precise, the latest technology available in the market might not be apt for the inflexible (and often obsolete) tender specifications. This in turn results in technical disqualification of the bidder and thus disadvantageous to both PSUs as well as consultants.
The total Indian lift market size is nearly 7000 units including all types of powered lift trucks. Of these, diesel forklifts currently have the biggest sales volume. One in every two trucks sold is a diesel forklift. This is a far cry from the past where 3/4th of the forklifts sold were diesel forklifts. With rapidly improving technologies battery powered forklifts or electric forklifts are quickly gaining the share in the Indian market. AC technology powered electric trucks are quickly approaching diesel engine driven lift trucks in terms of speed and power. Growth in the warehousing & logistics industry has led to need for more productive warehouse trucks. Increased demand for warehousing has also spurred development in flooring technology and industrial cleaning equipment. There has been increasing trend in hiring the equipment rather than outright purchase. Until now, customers would buy a material handling system and create an asset. But now days, customers ask for lift trucks on hire where they get the requisite number of equipment with a certain uptime guarantee in return for a monthly rental'. This ensures that the customer gets the equipment he wants without incurring
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