ElectroMech guns for new business

The recession has hit the automotive and supplier industries in India particularly hard, and a number of capital goods manufacturers who supply to these have been badly affected as well. ElectroMech Material Handling Systems (India) Pvt Ltd is not one of them.

It’s business as usual at India’s largest manufacturer of industrial cranes, and the company has already produced 750 so far in 2008–9, more than ever in its 30-year history. ElectroMech has been largely untouched by the liquidity crisis so far because of its diversified customer base, of which automotive and ancillaries account for no more than 30 percent.

Construction and infrastructure, which account for 30 percent, are continuously on the upswing, and power at 20 percent is also growing, according to managing director Tushar Mehendale. General industry and heavy engineering make up the rest.

Mehendale admits that the downturn has brought about a significant shift in production priorities in favour of those customers who are willing to take delivery of – and pay for – their cranes sooner, but he expects ElectroMech’s business with the automotive industry to pick up by end-2009. “The India story still holds good, I’m convinced,” he says.

Accordingly, an investment of Rs 25 crore in expanding its Pune facility is going ahead entirely as planned, with capacity here set to double to 2,000 cranes by May. But even before that, its second facility i n Chennai, in which it has invested Rs 10 crore, will be completed next month on schedule.

“Of course it helps that the prices of bought-ins has reduced since October, when our plans solidified, because that reduces our project cost,” he points out. “And now we are actually in a situation where banks are approaching us begging us to borrow.”

In addition, it is presently setting up an automated girder manufacturing line at its Pirangut plant that will drastically reduce the time taken to fabricate a girder, and thus shrink the time it presently takes to build its cranes — one month for a single-girder and 1½ months for a double-girder crane. ElectroMech has been effectively hedged against the rapid rise in steel prices by its short order conversion cycle, enabling it to offset the increases by writing the most current prices into its contracts.

Smart growth

The company has grown at 53 percent compounded annually for the last nine years, from a turnover of Rs 3.25 crore in 2000 to a projected Rs 150 crore in 2009. While 50 percent of its business comes from customised material handling systems it develops for a variety of applications, a good half comes from standard crane systems and components from leading European crane manufacturer Abus Kransysteme GmbH of Germany, of which it is the exclusive India representative. These consist of a variety of overhead cranes in single- and double-girder configuration, and wall-travelling cranes. “We focus on workshop duty cranes, not process cranes used in the steel industry, for instance, although we do supply those as well,” Mehendale says. Abus HB modular light crane systems for assembly operations, and jib cranes account for a minor four percent.

While its multinational competitors Kone and Demag supply only standard products, ElectroMech is the only industrial crane supplier in India presently that designs and engineers a crane expressly suited for the customer’s business needs. As many as 40 percent of the cranes it supplies are fully customised.

If the need is for a standard product, then it can supply one from Abus’s extensive portfolio. In this case it fabricates the main structure (girders) to Abus designs modified to conform to Indian regulations, and adds on the hoisting equipment (wire rope hoists), travel equipment, electronic controls, and cables, supplied by Abus in the form of a kit.

The company has also developed an innovative stacker crane. Designed for optimal use of warehousing space, this crane uses the structure of the racking system for support and can be married with automation to replace forklift trucks for a completely remotely operated storage and retrieval system.

Automotive growth

The company boasts a market share of more than 70 percent share in the automotive/ancillary sector in the Pune region, Mehendale says. It has an installed base of more than 50 cranes of ranging from 1t to 40t SWL (safe working load) at Tata Motors’ various plants in and around Pune and in Uttarakhand, and is in the process of supplying 80 more to Tata’s World Truck plant in Lucknow. These will be a combination of small Abus cranes for chassis handling and customised cranes for moving semi-assembled chassis between lines, he reveals.

It has also installed 22 cranes at the JCB Manufacturing, with another order expected when a planned expansion at the Talegaon complex is given the go-ahead. In fact, its cranes are also in action at the Caterpillar dumper plant in Tiruvallur, and at the Telcon facility in Dharwad. The commercial vehicle and off-highway industries account for as much as 45 percent of ElectroMech’s automotive sector revenues. “All the cranes at MAN Force Trucks in Pithampur are ours. We will also be supplying Abus cranes for the press shop at the Mahindra Navistar project in Chakan. We’ve also had discussions with Marcopolo,” he says, adding that the company is also a supplier to TSI (formerly Stokota), Tata DLT, and Hyva.

The Cummins Power Generation plant right next door has 24 of its cranes. TACO Group companies including TACO Visteon and Automotive Stampings & Assemblies Ltd are other big customers. It is building a 16m-lift crane for Gestamp Automoción, an international supplier of metal components and structural systems, which is setting up a facility in Chakan for Volkswagen. The recession has hit the automotive and supplier industries in India particularly hard, and a number of capital goods manufacturers who supply to these have been badly affected as well. ElectroMech Material Handling Systems (India) Pvt Ltd is not one of them. It’s business as usual at India’s largest manufacturer of industrial cranes, and the company has already produced 750 so far in 2008–9, more than ever in its 30-year history. ElectroMech has been largely untouched by the liquidity crisis so far because of its diversified customer base, of which automotive and ancillaries account for no more than 30 percent.

Construction and infrastructure, which account for 30 percent, are continuously on the upswing, and power at 20 percent is also growing, according to managing director Tushar Mehendale. General industry and heavy engineering make up the rest.

Mehendale admits that the downturn has brought about a significant shift in production priorities in favour of those customers who are willing to take delivery of – and pay for – their cranes sooner, but he expects ElectroMech’s business with the automotive industry to pick up by end-2009. “The India story still holds good, I’m convinced,” he says.

Accordingly, an investment of Rs 25 crore in expanding its Pune facility is going ahead entirely as planned, with capacity here set to double to 2,000 cranes by May. But even before that, its second facility in Chennai, in which it has invested Rs 10 crore, will be completed next month on schedule.

“Of course it helps that the prices of bought-ins has reduced since October, when our plans solidified, because that reduces our project cost,” he points out. “And now we are actually in a situation where banks are approaching us begging us to borrow.”

In addition, it is presently setting up an automated girder manufacturing line at its Pirangut plant that will drastically reduce the time taken to fabricate a girder, and thus shrink the time it presently takes to build its cranes — one month for a single-girder and 1½ months for a double-girder crane. ElectroMech has been effectively hedged against the rapid rise in steel prices by its short order conversion cycle, enabling it to offset the increases by writing the most current prices into its contracts.