Economy & Market
"Service side players might take over distribution business"
- Nitin Vyas, Managing Director, Beumer Group
Even as prepares the market for alternate fuels in India,
Nitin Vyas, Managing Director, Beumer Group
feels that the cement distribution business might witness the rise of an Uber like aggregator.
Tell us something about your most interesting products in the market?
Automatic bag applicator or placer, specifically for PP/HDPE woven stitched bags because till date no technology supplier has developed such a machine for those kinds of bags. We guarantee a very high shooting accuracy with some of the applicators having already been implemented with our customers in India. In addition, we have also launched our new generation automatic filling machines for cement that are compact in design, consume less power, low on deadweight and with plenty of digital interfaces. It's a completely different level of technology with weighing accuracy higher than what is available in the market. We are also trying to position it under the 'Make in India' and 'Digital India' initiatives of the government. Moreover, we are producing these machines not only for India but also for the global market from India. For instance, we are also supplying from here to China. The last product that we are putting in the packing line is the automatic truck loader machine. At 8 kW it consumes very less power. We have already successfully implemented 35 of these machines here.
To what extent do your machines help in reducing cost at a packing plant?
There are two factors to that. One, you are saving a lot of time. So, for a truck of 20 tonne, which typically takes up to one hour to load, that reduces to 15 minutes. On average, a packing plant operates at around 80 tonnes per hour. If by making a line automatic I am able to take it to up to 120 tonnes per hour, I am making around 30 tonnes per hour increase in productivity. Once that is achieved, my customer can shut down one of the shifts at the plant. That is how you enhance productivity and reduce cost. However, I would also like to add that if you believe that by reducing people you will be also reducing cost, you are mistaken. By putting automation, you will only reduce the number of people and not the manpower cost. Rather, it will either remain the same or be higher. The reason is the moment you put technology, you will need people with higher skills and your cost will also go up. But bring in efficiency to increase productivity and you can produce 15 to 20 per cent more with the same fixed cost. And that's what is actually your saving.
What percentage of your R&D happens in India
We jointly work with our central R&D team for certain products in Germany. We have been allocated certain projects for localisation. But those are not completely driven out of here. Our development centre in India is located on five acres in Gurugram. It has a workshop and four floors of office block with around 200 engineers. We have a big automation lab over there. We do engineering for not only India but also our group companies in Thailand, UK and the Middle East.
Do you perceive any major disruptions happening in cement?
I believe that some amount of disruptions will happen over the next five years in terms of distribution methodology. On the production side, I don't think that many things will change. On the plant side, the only big change that I would see is higher usage of alternate fuels. We do a lot of business in alternate fuels outside India. We intend to start it in India and are in the midst of gauging the market. We see it as a potentially big market.
When you indicate that there is likely to be disruption on the distribution side, what might that entail?
Currently the biggest cost drivers are over there. There will be players who will come in from the services side and take over cement distribution. There are already a couple of start-ups which are doing this in building materials. One of them is trying to consolidate all building materials, viz., cement, steel, gravel, etc., and connecting with the market. I believe that the next step for it would be having a platform for all cement-related industries to become an Uber of cement distribution. In the end, the cement producers would be containers, but the interface to the market would be the service companies who are reaching the material to the end customers. And that can't be stopped. For instance, if I am the National Highways Authority of India (NHAI) and I want cement to be supplied for a road or bridge project, I can't stop a start-up from bidding for the tender. And if I bid, I can negotiate the price at which I will be procuring from top cement manufacturers.
Tell us something about your Beumer Overall Operation Monitoring (BOOM) app?
It has been mainly developed for the packing plant. On the operations side, you can connect it to all your packing or production lines to assess overall equipment effectiveness and analytics. At the execution level, it generates
Given the very traditional nature of the cement business, how have your customers responded to the app?
The moment decisions makers such as business owners, managing directors and CEOs see it, they want to download it. It makes them independent as it allows them to look up reports anytime, anywhere on their mobile phones. We like cab services like Uber or Ola because nobody tells us what we need to do. We become our own executives. We are pushing all the data on to cloud so that it remains secured. Some customers had this apprehension that the app might provide us with their despatch data. To allay their fears, we have provided them with guarantees in form of non-disclosure agreements.
Given that a lot of emphasis is being given to infrastructure creation by the government what is your own outlook for the cement industry?
Although it is far better than earlier, we are still slow. As a country, we spend about 9 per cent of our GDP on infrastructure. In comparison, China at the peak of its development boom was spending 32 per cent of its GDP on infrastructure. In order to expedite infrastructure creation, we need to spend between 12 to 16 per cent of our GDP on infrastructure. Only then can we consume the capacity that has been added. We are sitting on 400 MT of capacity right now. To have good infrastructure in India, you need to have a capacity of 1 billion metric tonnes. But at the rate at
which we are going, we will reach 1 billion metric tonnes only by 2050. However, if we double it, we will we will reach there by 2030. As far as the overall business is concerned, I am very positive. This is going to be a very big year for Indian aviation as a number of runways and terminals are being built. On the port side, Sagarmala, interlinking of rivers and NHAI are going to pick up significant traction.