Your views on the warehousing sector in India
India's warehousing sector has been transforming in the last 10 to 15 years, mainly in terms of moving towards more organized storage, utilising vertical space, and improving the safety and speed of operations. Modern warehouses are now seen as a competitive asset rather than a necessary cost. This evolution has been driven by India's growing consumer market, the surge in organized retail, and changing consumer habits. The scarcity of land and menial labour besides competitive pressures in all industries also drive investments for greater efficiency. The Government has acknowledged that about 13% of India’s GDP is accounted for by Logistics costs. This is not competitive compared to a global benchmark of about 8%. The New Logistics Policy is a great step in the right direction as it aims to bring about a set of higher standards in the entire Logistics chain, including warehouses. As reported by Research and Markets, it is anticipated that India's warehousing industry will reach INR 2,872 bn by 2027, clocking a CAGR of approximately 15% between 2022 and 2027. As the demand for convenience and variety has grown, e-commerce has become a big winner, making it possible for consumers to purchase anything from necessities to luxuries, with the click of a button. Supported by secure payment options, e-commerce has experienced a surge in popularity which has further increased the need for organized and efficient warehouses. Given the growing demand combined with the government's support, the sector will continue on its path of transformation and should be a key contributor in helping India reach its goal of becoming a 5 trillion-dollar economy by 2025.
With the economic recession on the card, would the warehousing sector take a hit, your views?
Despite the global economic slowdown and rising inflation rates, India is somewhat protected from recessionary forces due to its strong domestic demand and fast-paced infrastructure development. Most organizations are continuing with long-term capex plans while they may slow things a little for the immediate term. Indian industry, including the warehousing sector, has shown resilience in the past during periods of economic downturn. For instance, cold store warehouses for food and agri products, warehouses for pharma, and third-party logistics would continue to drive growth. While a recession may have some effects on the Indian warehousing industry, there will still be growth opportunities, albeit at a lower rate, in the short term. The long-term growth story remains intact.
How has your organization performed in the last three years?
We have grown significantly in revenue and market share. Growth is mainly driven by the greener range of battery-operated material handling equipment (MHE) that serves manufacturing, distribution, and warehousing industries. Godrej is the largest MHE player in India and has a sizable advantage over the next-largest company in the sector intending to retain and further strengthen its position over the next three years. The business is expanding its capacity by 3x as it anticipates growth in demand from user industries.
Which are the MHE and automation you have launched recently for the warehousing sector? Please share the sustainability and technology features (IoT, telematics).
Most of our development efforts over the last decade have been targeted at the warehouse and clean green MHE. Whether we consider our range of counterbalance forklifts, Narrow aisle trucks, or small ticket equipment, most of them are aimed at safer, more efficient warehouse operations. Godrej 3-wheel Electric forklifts, the new 2-tonne capacity UNO Electric forklift, 1 to 2-tonne capacity PRO series Reach trucks, and 1 to 2-tonne Articulated trucks – all are designed to operate in warehouses. All our products keep getting upgraded in technology to make them more energy efficient and safer to use. They are also benchmarked to global players in India. Our aim has always been to give our customers an indigenously developed and manufactured ‘global’ product. Investments are currently being made in IoT to give customers an insight into their fleet performance and help them optimize MHE fleet operations. These insights will also help Godrej develop products that are more meaningful to our customers’ operations. We have also digitized most of our Service and Rental operations. These single platforms across all stakeholders including our customers, channel partners, and our teams have helped speed up information flow and decision-making while also generating a large amount of data for analysis and driving future improvements.
Can you please give us an overview of the market size of MHEs for the warehousing sector in India and your plans and strategies to increase your market share?
MHE specifically designed to work in warehouses is the fastest growing category in the overall MHE space. This trend is expected to continue during this decade. The various drivers to push the growth of organized warehousing are well in place and the need for efficient and cost-effective material handling solutions has become paramount. According to industry reports, the MHE market in India is expected to grow at a CAGR of 12% between 2020 and 2025. At Godrej Material Handling, we continuously strive to keep improving our product performance. We introduce new technologies as they become viable for our customers. Our Services are designed such that customers can transact in myriad ways to suit their specific needs. We also keep strengthening our market reach and adding new locations as industrial centers emerge. Safety is of course paramount at Godrej and this philosophy is mirrored in all our offerings.
Please share with us your dealers’ network and the after-sales services you offer?
Historically we deployed a direct sales force. We started our journey to establish Channel Partners around 2010 seeking partners who could sell and service our product range. It is a matter of pride that about two-thirds of our partners have been with us for over 10 years. Some of them have seen the next generation enter the business. Between our Channel Partners and ourselves, we have close to 100 touchpoints across India. Our wide network and toll-free number enable us to give a response within a day to customers. Godrej Material Handling offers complete after-sales support for all equipment. We offer technical assistance in terms of Annual Maintenance Contracts (AMC), technical assistance with parts in terms of Comprehensive Maintenance Contracts (CMC), and Operation and maintenance contracts (OMC). We also provide equipment on Rental through our RenTRUST brand. The breadth of Services we offer allows a customer to veritably tailor the Service contract to their specific needs. These periodic offerings are bolstered by offers of mid-life overhauls, upgrades, and trade-in of old equipment. Training is another important part of our Services. We provide driver training besides a range of maintenance programs for our wide product range.
To be a key market leader and gain a competitive edge an organization has to keep innovating its products depending on customers and market feedback. What are the steps you are taking in this regard?
As India's manufacturing industry grows, as competitive pressures increase, as the availability of land and menial labour continues to be a challenge, and as the economics of green become more evident, the demand for advanced MHE will grow. Godrej has always striven to bring the most viable technology for its customers and will continue to do so. Over the last two decades, we have introduced most new indigenous advances to the Indian market – AC motor technology; 3-wheel Electric forklifts; 5-tonne capacity Electric forklifts; a wide range of safety accessories, etc. We are looking at new technologies in traction motors, electronic controllers, hydraulics, telemetry, and of course, new-generation batteries. All new ideas are passed through filters of operational safety, productivity, cost of ownership, and initial investment to determine when and how we introduce them into our products. By 2024, Godrej Material Handling aims to secure a 28% market share for electric forklifts in India, aided by a wide selection of eco-friendly products. Apart from basic product technology, we also innovate our Services. How information is digitized and made to flow is key in this area. Companies across industries are moving towards renting material handling equipment to expand their operations with a lower asset base and staying focused on their core business competencies. To address this need, our Godrej RenTRUST, which is among India’s largest rental equipment players, customizes end-to-end rental solutions including equipment, maintenance, operators, administration, and value-added solutions for its clients.
Financial schemes play an important role in increasing product sales, what are the rental and financial schemes you offer and tie-ups with various financial institutes?
For customers, we have established finance schemes with a few reputed banks. Our Channel Partners avail financial support through Channel Finance schemes. We also offer equipment on rent and lease.
What are your growth plans for your organization? Is there a product launch or manufacturing plant in the offing?
The Indian MHE market is on the path of growth, driven by growth in manufacturing, organized logistics, e-commerce, and infrastructure development. We will continue to introduce new products and services in the market and invest in developing new technologies to facilitate our customers to increase their productivity and safety at their workplace. Currently, we are working on new Forklift platforms and extending our range of Reach trucks. Godrej & Boyce is also investing in building a state-of-the-art manufacturing facility in Khalapur, near Mumbai, for our Material Handling business.
