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Crane manufacturer ElectroMech is doubling the capacity at its Pirangut plant this year. Niranjan Mudholkar visits the plant and talks to Tushar Mehendale, the firm’s MD, to find out what’s driving this growth
When Tushar Mehendale took over ElectroMech in 2000 at the age of 24, it was a Rs2.5 crore company. In a short span of eight years, the company is all set to cross the Rs150 crore mark.
What triggered this growth? Mehendale says: “We preferred to look at ourselves not as a manufacturing company but as a solutions provider. I believe that is the only way in which you can empathise with your client and understand what the client wants. The idea is not to sell a product but provide what the client wants in the most economical and technologically efficient manner.”
Mehendale, who has been educated at prestigious institutes like the Government College of Engineering (Pune), University of Wisconsin (USA), Indian School of Business (Hyderabad) and Indian Institute of Management (Ahmedabad), knows what he is talking about as he ensures that his work philosophy is directly reflected on the shop floor.
For a company like ElectroMech, the scope starts right from the pre-sale stage to being with the client even after the sale. It is through this approach that the company has supplied thousands of cranes not just in different corners of India but also overseas.
Engineering seems to be in the DNA of this company that was started by the late Vinayak Mehendale (current MD’s father) way back in 1979 along with a group of engineers who had worked for the leading crane manufacturing companies in their time. Twenty nine years later, the company is on a phenomenal growth path.
Today it designs, manufactures and services a range of products including industrial cranes, overhead cranes, gantry cranes, electric wire rope hoists and customised material handling solutions. “We consult clients on all aspects from structural design to special attachments to creating well-engineered hoisting and moving solutions,” Mehendale adds.
The market size for the crane industry in India is around Rs2000 crore and ElectroMech is the leader in terms of volumes. “This year we will be producing almost 750 cranes. No one manufactures as many cranes as we do annually,” Mehendale says. Yet, surprisingly, ElectroMech’s market share is only about Rs150 crore. That’s just about 6-6.5%; it is rather a small figure for the largest manufacturer.
“Usually, in a mature market, the largest manufacturer would typically have a share of 25-30%. That indicates the fragmentation in the market,” Mehendale explains.
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“The crane market in India is fragmented geographically; it is fragmented between private and public sector and between the organised and unorganised sector,” Mehendale adds.
Geographical fragmentation is reflected through small players who cater to local industries and big players who are active at the national level.
The difference between private and public sector is easy to understand, particularly in India. “Due to the hangover of the socialistic era, India still has many public sector companies that are white elephants. Even if their orders are large, we prefer not to work with them as they operate in a very lethargic and bureaucratic manner,” Mehendale says.
“Organised players exclusively manufacture cranes while unorganised players are typically fabricators or companies who are small time contractors. They do not necessarily have the expertise to manufacture,” Mehendale says.
So why is India a unique market where such disparity exists? He says: “That’s because, as of now, there are no regulations governing this segment. Government still hasn’t set regulations from the safety point of view or certification point of view for the cranes.”
If not handled properly, these equipment can lead to accidents because you are lifting loads against gravity. “Precaution is essential in the design of the equipment, in selecting its components, the way it is handled and serviced,” he adds. These precautions need to be made mandatory through regulations.
“In the selfish interest, lack of regulations can be good but ElectroMech is a manufacturer with a conscience and we believe that regulations should be in place. Sadly, there is no association for crane manufacturers that can take this up,” Mehendale says.
Regulations or no regulations, the market is heating up with competition but Mehendale does not believe in price competition. “Price competition is for immature players. I believe in being a value competitor and I like it as it encourages innovation and improvement,” he says. He explains the logic.
He says: “Cranes are technologically intense and not price driven. The amount of money that a customer can save by buying a low cost product may immediately be eaten up when the crane shuts down and production is stopped for a day or two. For a Rs200 crore company if production stops for even a day then the loss is almost about Rs60 lakh worth of production. At 15% profit, that’s a straight loss of Rs9lakh per day. So it doesn’t make sense in going for a low-cost low-quality product,” Mehendale says.
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