“The forklift and reach truck market in India is growing rapidly. The industry is demanding latest technologies in equipment, which makes them safe, reliable and efficient,” says SA Mohan, Chief Executive Officer, Maini Materials Movement, which has recently entered into a strategic tie-up with Yale. In an exclusive chat with Equipment India, Mohan elucidates the industry trends, the company’s core competencies and strengths to weather competition.
Tell us about the recent strategic alliance with Yale. The forklift and reach truck market in India is growing rapidly. The industry is demanding latest technologies in equipment, which makes them safe, reliable and efficient. Hence, the tie-up with Yale will allow us to offer a wide range of products with cutting edge technology to Indian customers. The tie-up also involves MMM manufacturing a certain range of products in India cost-effectively. With MMM’s extensive, well-established sales and service network, we expect to drive large volumes for the co-branded products.
What is the nature of the alliance (the investment put in or planned)?At present, it is a strategic alliance. Maini will use its infrastructure to manufacture Yale products. As the volume picks up, we will plan additional investments.
How do you look at the present potential for forklifts in India? The current market size is estimated to be around 5,000-6,000 forklift trucks in India. We expect to participate in the high- volume segment with appropriate products, aiming for a reasonably high market share over the next two to three years.
Is the industry moving towards environment-friendly equipment? Manual to electric shift is a function of application needs. The move to electric from diesel or LPG is a matter which is being debated extensively in the industry. With most industries committing themselves to environment-friendly initiatives, we believe the adoption of electric technology will be faster in the next decade. This will be good for MMM as we are essentially a green company. Maini with its Reva Car (now Mahindra Reva) is still the world’s largest electric car company.
What is the potential for MHE in the warehousing sector? Tell us about the products offered by MMM, the market share and envisaged growth? The warehousing products are expected to see a growth rate ranging from 15-20 per cent CAGR. MMM offers a full suite of products starting from hand pallet trucks, manual and electric stackers, platform trucks, tow trucks, reach trucks, VNAs, etc. Our market share in in-plant material handling equipment is upwards of 30 per cent in India. Internal growth targets will be 2-2.5x industry growth rate. We constantly endeavour to keep a high market share across all product segments.
How do you look at the threat of imported equipment in the MHE segment? Cheap imports tend to spoil the market and end-users get a raw deal in the medium to long run. We believe evolution of industry happens faster with the adoption of newer technologies which are safer, faster and reliable. MMM has always invested heavily into R&D and has always led the market from the front, by being first to introduce new products in the market over the past 10-15 years. With local manufacture of the Yale range of forklifts, we will continue this trend. The key is to stay ahead of the curve to ensure sustainable and profitable growth.
How do you look at the competition, especially in forklifts? The market is crowded with many players. Relative to the overall market size, the number of players is many resulting in fragmented market share. Our key differentiator will be technology and after market services.
To what extent has the fragmented logistics industry opened up? The logistics industry has opened up to the MHE segment primarily driven by high real estate and operational costs. Automotive, engineering, textiles are other growing segments which will drive MHE growth.
What are major trends in the logistics industry? Speed and efficiency combined with economies of scale, will dictate automation and adoption of technology in most industry segments. The logistics industry is no exception to this trend.
What are the market forces according to you that connect the seemingly parallel lines on the macro line, the upgradation of logistics infrastructure and on the micro line?We believe both are largely inter-dependent and not parallel. Speed, efficiency and cost-effectiveness will be key drivers of decision making for all.
What is the demand-supply scenario in the products MMM is dealing with? Demand and supply are fairly well balanced in terms of capacities. Unless there is a very steep climb in demand, supply is not expected to be a limiting factor for growth.
After a tough period last year, are things back on track this fiscal? The recessionary trend seems to have diminished in the past two to three quarters. The market has possibly grown by 15 per cent y-o-y. MMM has been able to fulfill the demands quite easily.
What was the performance like in the last two quarters and where does MMM see itself at ending this fiscal?We have posted robust growth of over 50 per cent in the past two quarters, as compared to the previous year. However, the demand seems to be almost similar to 2008 levels. We expect to end this fiscal with a similar trend.
What sort of topline growth are you looking at in the next five years and where do you see the growth from?Our goal will be to grow at 2-2.5 x of the industry growth rate. Several industry verticals like automotive, infrastructure have ambitious investment plans which will drive our topline growth over the next five years. We believe, this may be termed as the golden period as far as growth is concerned.
How do you look at the hiring and leasing of MHE for logistics, auto and ancillary industries? Hiring and leasing is in its infancy in India for MHE. Interest costs vs cost of available capital is the key for buy or lease decisions for a large number of companies. We believe long-term leasing will gain momentum in the next three to five years. MMM offers its products both on short and long-term rentals.
What are the challenges faced by the MHE industry? The present market size is a challenge to buy input materials cost-effectively. Economies of scale in the supply chain are limited. This keeps input costs high while end selling prices remain stagnant or drop, due to excessive competition.