- With vast experience in the Indian materials handling equipment industry, could you please narrate the sector’s growth story and market outlook for the next five years?
In the Indian MHE industry, the industrial cranes segment is highly fragmented. According to our estimates, the industrial cranes market in India is approximately to the tune of Rs. 1500 – Rs. 1800 crores per annum. This market size has slightly shrunk from a level of 2200 – 2500 crores in the past couple of years due to the slowdown in the Indian economy. Approximately 30 per cent of the cranes are required by government-owned companies and the remaining 70 percent comprises the requirement from private sector. Region wise distribution in terms of quantities shows that Western India contributes 50-55 per cent of the total requirement, while Southern India follows with 20-25 per cent, Northern India with 15-20 per cent, and Eastern India with 5-10 per cent. Roughly 40% of the total crane industry in India is dominated by the top 10 manufacturers in the organized sector. The remaining market shares comprises of more than 300 small crane companies.
The Indian market will evolve on the lines of the markets that today exist in developed countries and we can see the shift already underway. The next 5 years should see the industry return to its 2500 crore market size and 15 – 20% YOY growth rate. Of course, this is subject to a stable, growth oriented approach by the government at the centre that can focus on infrastructure development and establishing India as a manufacturing powerhouse. We are already seeing signs of a turn-around in the economy and are bullish about this stream of recovery to turn into a torrent of growth.
- How optimistic are you after the formation of the new government?
The new government has initiated a wide range of reforms and we strongly believe that these will help achieve goals of boosting the economic growth. For instance the ‘Make In India’ initiative which is very apt in today’s context, as it coincides with the new era of aspirations and economic growth transformation for our great country.
Once the infrastructure projects get going, investments will start flowing into India that will help spur growth. The trigger will come when infrastructure spending starts. In the light of renewed interest on India and recent investment commitments from countries like Japan, China and the United States, we expect the government to work towards cutting the red tape.
All in all with the renewed efforts of the new government and positive sentiments in the industry, we are verybullish about the growth opportunities.
- What are your views on the present economic climate in the country and its impact on Material Handling equipment business?
The last three years have been quite interesting for the Indian industry. On account of the infamous “policy paralysis” the growth of the capital goods industry was affected.
The last 2 years were particularly painful in terms of new business. Luckily for us at ElectroMech not only have we managed to maintain our top line but have also improved our bottom lines on account investments in revamping the processes and making operations more leaner.
- What would you say will be the critical factors for success for leading players like ElectroMech in the coming days?
The immediate future will certainly be interesting for the industry and will come with its unique set of challenges. The pent up demand coupled with clearances on thousands of crores of stalled projects will mean that we could see a sudden surge in demand for capital equipment as well as construction equipment. Maintaining ones quality standards while catering to this volume and at the same time innovating to offer customers the best solutions will be a key factor to success in the coming days. Retaining talent is another factor that will ensure a smooth transition into the growth phase that the coming years should bring.
