Materials can be handled mechanically or manually. Ambitious projects and a focus on quality are driving material handling equipment usage, discovers Charu Bahri.
Material handling equipment has traditionally been pitted against low-cost labour in India. So, substantially capital expenditure-intensive material handlers - including a variety of cranes, loaders, reach stackers, conveyors and forklifts - have traditionally had fewer takers except in must-use situations. But rising labour costs, growing awareness about the benefits accruing from using material handling systems and favourable macroeconomic trends could change all that.
Somnath Bhattacharjee, President, Material Handling Solutions and Equipment & Project Solutions Business, TIL Ltd, cites greater focus on higher productivity, improved safety standards, better reliability, compliance with changing regulatory demands and finally competitive total cost of ownership as factors that bode well for the material handling equipment sector.
"The Indian market is slowly responding positively towards material handling equipment, largely because of rising manufacturing output. Multinational companies entering India, industries scaling up and the modernisation of work flow processes creates a demand for such equipment to facilitate distribution and production. Demand for Terex's EOT cranes, light crane systems etc. is rising. We estimate the size of the Indian overhead crane market to be around Rs 2,500 crore," says Manojit Acharya, Head-Material Handlings, Demag Cranes & Components.
The prospects of tower cranes are especially bright because of a slew of infrastructure projects in the pipeline: high-rise real-estate projects, hospitality projects and thermal power projects with higher cooling tower and chimney specifications. Forklifts, low tonnage vehicles used to transport pallets within confined spaces, find some use in the construction industry as well. Most are in the 1-5 tonne range, though higher capacity equipment is available as well.
Industry projections peg the overall demand for material handling equipment at $870 million by 2014. The demand for mobile cranes is slated to rise from 8,000 units in 2010 to 11,750 units in 2014, while the demand for tower cranes is set to rise more than threefold from 200 to 700 units during the same period and demand for forklifts will increase from 4,000 to 7,500 units.
Interestingly, the immediate outlook isn't quite as promising. "In times of plenty, demand for material handlers is the last to pick up as it takes some time for production to reach previous levels and for the need to emerge," observes Neville H Wankadia, General Manager - Marketing, Godrej Material Handling Equipment. ôWhen the going slows down, orders for material handling equipment are the first to be axed owing to low usage. This anomaly leaves only the serious players to compete in the field."
"The EOT crane industry was expected to keep up its 10-12 per cent CAGR notched between 2005 and 2009 through to 2015. But this year has been flat. While our business has grown, the markets are temporarily stagnant. We hope this temporary phase ends in 2013," adds Acharya.
"Demand is sluggish at present because of the number of stalled and frozen projects," says Tushar Mehendale, Managing Director, Electromech. "Inquiries are forthcoming and the interest is there, but promoters are awaiting the cost of borrowing to come down. In this context, recent measures to ease external commercial borrowings as well as expectation on RBI reducing the lending rates combined with a definite push to get India back to the path of reforms, will help turn the situation around. I expect the good effects of these steps to kick in by the first quarter of the next fiscal."
According to Bhattacharjee, "Demand for material handling equipment in India has been growing at 15-20 per cent in the past couple of years, vis-a-vis the GDP growth rate of 7.5-8.5 per cent. Declining economic activities this year owing to global economic volatility, slower reforms, lack of political consensus, slower capital inflow in the core sector and the adverse exchange rate, have necessitated a downward revision of the GDP growth forecast to around 5.5 per cent. Material handling equipment has fared poorly as well in recent months. The year-on-year demand in certain categories has fallen as much as 30 per cent."
"Anupam is a leading player in the industrial crane market, which alone is worth around Rs 1,500-1,800 crore," says Mehul Patel, Managing Director, Anupam Industries Ltd. "India has many fragmented players and very few organised players operating in this segment. Demand for industrial cranes has been stagnant and marginally dec¡lining in the past two years owing to the general slowdown of power, steel and infrastructure sector." Still, he is hopeful that the finance minister's current aggressive moves will revive positive sentiments and put the large Indian domestic economy back on the growth path. "We estimate an annualised growth rate of around 20-30 per cent for this industry in coming years," he adds.
Different demand trends emerge from an industry in limbo. Nowadays, suppliers are seeing greater demand for hiring contracts where users get the requisite number of equipment with a certain uptime guarantee in return for a monthly 'rental'. That way, customers get to use the equipment needed without incurring prohibitive capital costs and the vendor maintains the ownership of the equipment.
Wankadia explains why these trends are emerging. "Increasing competition and the dynamic economic scenario are calling for a financially prudent way of using material handling systems," he says. "As a result, the global trend of customers wanting to avail of pre-owned or hiring services has started to gain ground in India. Customers are no longer looking at buying a material handling system and creating an asset." Demand for pre-owned equipment market is also catching up owing to the uncertain economic scenario. "Pre-owned equipment is as good as new but a lot cheaper, thus making this mode of usage and long-term hiring the latest trends in the material handling industry," he adds.
With an eye on versatility, users are also seeking products capable of doing the work of both forklift and warehouse equipment, in indoor as well as outdoor applications. Using a single piece of equipment can eliminate the need for double handling, moving pallet from lorry to rack in one step. The articulated forklift, the answer to this growing need, is a very narrow aisle truck (VNA machine) with lift heights up to 9 m and aisle width as low as 1.6 m requiring minimum space for operations. "Godrej Material Handling Equipment is pitching this machine to buyers looking at optimising available space without compromising on productivity," says Wankadia.
Acharya observes that a decade back, most companies in India were using cranes based on archaic designs and with very few safety features and/or automation. Now, Demag offer designs that enable the building structures to be optimised and which incorporate many safety features.
According to Patel, "Recent technological advancements and innovation are improving the drive controls of industrial cranes and their metallurgy and mechanical and electrical components. Demand for world-class cranes over traditionally designed Indian cranes is increasing. Rising demand is also seen for lighter and compact cranes because of the need to maintain higher uptime and lower cost of ownership. Demand for services is growing too as customers become more conscious about safety. We are fully geared up to meet these demands and have expanded our technological and service offerings with a team of highly experienced manpower."
It isn't a smooth road ahead for material handling machine suppliers. But marathon runners will come out strong.
Case Study 1
Rental to owned crawler cranes
Equipment: Low-capacity crawler cranes
Vendor: Imported second-hand equipment of Japanese, European, Malaysian stock (used on rent)
User: Valecha Engineering Ltd Application: Handling material for the construction of the Chennai Metro and city infrastructure such as flyovers and bridges. "While developments in this field in India are encouraging, our experience suggests that cranes made overseas, especially those coming out of European markets are sturdier and more rugged," says Vidhu Shekhar, Purchase Manager, Valecha Engineering Ltd. "Plus, hiring pre-owned cranes is cost-effective. A choice of equipment is made after considering the site conditions, load to be lifted, approachable level, etc."
Observation: "Material handling crane application for infrastructure projects is all set to change as the government cracks down on the usage of imported pre-owned equipment," adds Shekhar. "Clients are also becoming more conscious about the choice of cranes and introducing guidelines to make the usage of cranes with enhanced safety features compulsory. Low-capacity crawler and all terrain cranes manufactured by companies like Kobelco, Tata, TIL, Sany, Ace and Titagarh Wagons will find more takers as these new guidelines are enforced."
Case Study 2
Quality conscious forklift users
Equipment: Godrej 3 tonne and 5 tonne diesel forklifts
Vendor: Godrej Material Handling Equipment Pvt Ltd
User: Shirdi Industries Ltd, a manufacturer of MDF, particleboard, pre-laminated MDF and particleboard, laminates, flooring, door skins, panel doors, modular furniture and other allied products.
Application: "We have purchased eight Godrej 3 tonne and 5 tonne diesel forklifts for our Rudrapur and Mumbai plants," says KK Mishra, Vice President, Shirdi Industries Ltd. "Apart from the excellent quality of forklifts, we have been getting constant service and spare parts backup from Godrej."
Observation: While the manufacturing, logistics and infrastructure sectors are driving demand for material handling equipment, immense scope exists to widen its application. Material handling equipment usage needs to be strengthened across industries. Any application where a unit-sized load (1 tonne and above) is required to be moved and stacked at a height, requires forklifts.
Case Study 3
Equipment: Two custom-designed cranes, a 120 mt gantry crane with a special attachment and multilayer rope drum, and a triple girder design-customised gantry crane with four 25 mt crabs.
Vendor: Electromech User: Soma Enterprises Ltd
Application: Excavation of an underground water tunnel from Kalher to Kapurbavdi for Brihanmumbai Municipal Corporation, to replace the outdated water supply pipelines running from the Tansa reservoir to Mumbai. The cranes served as a mucking crane for the removal of overburden while digging a shaft of 100 m depth and 10 m diameter at Kalher and they helped to carry individual components of a 1-km-long tunnel boring machine through this shaft and assemble these parts in the tunnel opening out from the shaft. Some of these components weigh up to 100 mt.
Observation: In order to lower an 11-m-long, 95 mt component through the shaft, Electromech designed a special attachment beam for the gantry crane fitted with two 30 mt chain pulley blocks and two wire rope slings. This arrangement allowed the component to be precisely tilted to a predetermined angle and then lowered through the tunnel. A multilayer rope drum with a guiding mechanism was provided as well, necessitated by the 100 m height of the lift and total wire rope of almost 2.5 km. The same crane was also used for routine vertical movement of manpower for which a 15 mt auxiliary hoist was provided. The second crane with a unique triple girder design and four crabs of 25 mt each facilitated the manoeuvering and assembly of the longer TBM parts. Precise crane movements allowed these parts to be aligned and matched.
Case Study 4
One-of-a-kind design cranes
Equipment: Two 350/50 tonne forging cranes
Vendor: Anupam Industries Ltd
User: L&T special steel and heavy forging plant at Hazira, Gujarat
Application: The Anupam 350 tonne forging crane is helping L&T forge heavy-duty turbine shafts used for a nuclear power plant turbine generator. It has a shock absorbing mechanism fixed at the upper pulley block. The forging crane operates in tandem to hold a single-work hot metal piece and rotates it in an automatic synchronised mode during online forging with 7,000 tonne press. All these cranes have a state-of-the-art PLC system with sophisticated control and data monitor/transfer system to the plant's main control room.
Observation: The 350 tonne forging crane is the first-of-its-kind manufactured in India and among a few in the world.
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