Godrej Material Handling is one of the major players in the Indian material handling space. In an exclusive interview with Subhajit Roy, Anil Lingayat, Executive Vice President and Business Head, Godrej Material Handling speaks about the industry and his company’s roadmap. He also shared his expert opinion on the major factors buyers should consider before taking decisions about procuring material handling solutions.

How do you find the overall scenario in the market?
The growth of material handling equipment (MHE) industry has been almost flat for the past three years. In India, as in most other countries, the growth of the material handling equipment industry is tied to that of the manufacturing industry. There is a strong correlation between manufacturing GDP growth and MHE sales. Besides, MHE is also linked to the distribution and logistics chain. These two sectors are yet to see government action in terms of GST implementation, land reforms and labour reforms. These have a big impact on manufacturing, logistics and distribution industries. So, industrial growth is the key for growth of material handling industry.

From the beginning of this year order inflow has increased as manufacturing has started picking up. But we have seen a slight pause due to the sudden recent turmoil in the global economy. However, it is not going to continue for long – manufacturing will recover. Then we can expect to see higher sales for material handling equipment.

The government is promoting ‘Make in India’ aggressively. What is the ground reality?
While the intention of the government is very positive, industry is still waiting to see significant change on the ground. The fact is India has certain constraints of its own. Until and unless we overcome regulatory obstacles, getting companies to come and invest in India in manufacturing is not going to be that simple. The government needs to look into basics like availability of industrial land, investor-friendly policies and appropriate labour reforms.

The government has already recognised these factors and we hope it will be able to address and resolve these issues soon. This will lead to significant investments in the manufacturing sector.

How did Godrej Material Handling perform during the past few months?
The MHE market grew by about 15 to 17 per cent in the six months ending June and we have been able to maintain a slightly faster growth, retaining our leadership position.

What is your outlook on the current procurement scenario of MHE?
India is still an emerging economy and will remain so for quite some time to come. However, with growth, the MHE market has started getting refined and more and more customers are seeing the benefits of using different kinds of MHE in different areas of their operations depending on the application. So, while some 15 years ago, most customers managed with standard diesel counterbalance forklifts, today we see faster growth in stackers, reach trucks, powered pallet trucks, etc. the interest in different types of MHE is a good sign that the market is coming of age and will continue to grow and mature.

Having said that, Indian customers still prefer simpler equipment that moves material from a point to another. Their main need is for sound, reliable equipment and responsive service. The overall cost of ownership is what they look at and expect that to be economical. Of course, while there are customers who demand high-end, sophisticated equipment, the numbers are still small compared to other advanced economies. And the question is not just about money – it’s also about capability to adopt technology and manage it effectively. So demand for higher end equipment will grow but perhaps more gradually than rapidly.

How is Godrej placed in this market?
We offer a wide spectrum of solutions across equipment types, capacities and technologies. Our range includes electric and diesel counterbalance forklifts up to 25-tonne capacity, warehouse trucks and special trucks for specific applications. We also manufacture attachments of our own design to address a wide range of handling needs besides offering attachments made by international specialists when the application demands. We also represent global players like Crown Equipment and Hubtex among others in India.

As market leaders we strive to offer the right solution to each customer to meet their needs. Since we have a wide basket from our own manufactured products and those of our foreign partners we can address a range of user needs.

Which are your major focus areas?
Material handling equipment is used in virtually all industries that make or distribute any physical product with some scale of operations. So while we supply our products to maybe two dozen industry sectors, we focus mainly on logistics and distribution, retail, pharmaceuticals, automobiles, heavy and light engineering.

Why a buyer should opt for MHE offered by your company?
The first thing is a supplier must have the ability and desire to offer what the user really needs, not just from a budget point of view but also from the aspect of suitability of the equipment to the user’s needs, duty cycle, operating conditions, etc. At Godrej we ensure that all RFQs are first studied, the application understood and then we respond with a proposal.

Purchasing an equipment is only one of the first steps in the chain. A user needs training in correct and safe operation and maintenance. Customers need support in terms of servicing, repairs, spares, etc. through the life of the equipment which could well exceed 12 to 15 years.

Many customers have multi-location operations and need similar degree of support at all locations. So an equipment supplier must have a network and it must be staffed with trained and qualified people to look after pre- and post-sale needs of users.

Imagine an equipment weighing 4 tonnes, carrying a load of 3 tonnes, running around a factory at 15 kmph! It can be a lethal weapon. Customers therefore need their equipment operators to be trained mainly from the safety point of view. This need is ongoing as operators leave or change their work profiles so new people always need training in safe and correct use of handling equipment.

It is not always the case that a customer needs to purchase equipment. Customers may also want to hire handling equipment for a variety of reasons. Godrej offers the option to sell or hire its products to customers. We also provide trained and qualified operators and mechanics to manage the equipment. In fact we have an ongoing operator training program for young people and maintain a data bank of people trained by us for operating our products.

In cases where customers do not wish to invest in their own manpower and facilities to maintain the MHE, Godrej provides a range of maintenance contracts that takes away the customer’s hassle of maintaining spares, ensuring timely services, manage any repairs, etc.

So to sum up, Godrej ensures that we match the user’s needs with the right equipment, we offer training in its operation and maintenance. We can offer the equipment on sale or on hire and we through our wide network provide a variety of services. I guess these are strong enough reasons for customers to prefer Godrej MHE.

Do you have the adequate network to support after-sales?
We have the widest network in India among all players in material handling equipment. That is one of the strengths we have built over many years. We cover almost every industrial and logistics centre of India through our network. We have nearly 80 contact locations of which around 17 are our own branches and the rest are our dealers’ locations. At each point we have trained service people and spare parts support available.

What about the availability of the spare parts?
We have been continuously improving in the area of spares availability. We have invested in a robust, specialised supply chain software. Today we are very confident that most of the spares which people require for general maintenance of the equipment are available at all locations at which we offer service support.

We can also monitor availability of spare parts at our dealers’ locations in real time. Across our supply chain we maintain over 3,500 SKUs and we can tell which SKU is available at which location and in what quantity.

What about the pricing of your products?
We always focus on giving the right value to our customers and I believe our product prices are well established to deliver this value.

Do you provide finance solutions for potential buyer?
We do support our customers and dealers in this area through our tie-ups with two financing agencies, HDFC Bank and Srei Equipment Finance. If a customer does not wish to own the equipment, we offer them hiring solutions including operations and maintenance support. We believe each customer has his own unique requirement and we should have the right solutions available to meet those needs.

How is the penetration of rent?
Globally, rentals account for nearly 50 per cent of equipment. In India, the trend of hiring equipment is relatively recent and is gradually gathering pace. For us, hiring contributes to around 7 to 8 per cent of our turnover. It will definitely reach 25 to 30 per cent in India in just a few years.

Where do you see the MHE industry as well as your company five years from now?
The industry has to grow – it is quite inevitable. Our aim is to maintain our leadership position and take the maximum share of expected growth.

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We believe each customer has his own unique requirement and we should have the right solutions available to meet those needs

Anil Lingayat, Executive Vice President and Business Head, Godrej Material Handling