Before we go on to say that India is THE market for the global cleaning industry to look at, an assessment of the present market forces, the trends and economic factors contributing to the overall growth is important. Five years back, CIJ reported about the ‘take off’ of the Indian Cleaning Industry. There were only a handful of international cleaning companies in India then. Mergers and acquisitions had not caught on. Awareness about international cleaning standards were trickling in and the Indian cleaning industry agreed on the need to come together to set standards and look at common issues. More and more companies, national and international, looked at outsourcing of workplace maintenance as the best option to focus on their core competencies. The resulting boom in the business of Building Service Contractors led to the realisation that India needed a number of trained housekeepers. There was also need for latest technologies and know-how; partnerships and collaborations.
The last two years have been a journey to further consolidate the industry, experience the advantages of expansion & tie-ups, and also to learn from the mistakes, if any.
Leaving the global downturn way behind, the Indian Cleaning Industry is catching up with its growth agenda – better organisational structure, awareness, new partnerships, mergers, de-mergers… Competition, both national and international, is the driving force. The industry estimates a positive growth in the coming year – a growth which could even be around 50%! There is a big market to be tapped in.
How soon and how effectively this will be captured depends on the industry ability to foresee future growth and form strategies, says a few Indian Cleaning industry professionals.Anil Sethi Managing Director, Manmachine India Pvt Ltd
Many international companies are looking at India to partner with local companies and establish a market for its products. In fact, more than 15% of the hits on the Manmachine website even come from countries like Romania and Mexico, besides Italy, Germany and China. India is definitely the market of the future and in the coming years we will get to see many more international tie-ups and acquisitions. At the macro level, this is one of the outcomes of international tie ups and at the micro, a result of the downturn.
It’s a normal business process for global companies to enter India through local tie-ups based on high projections, good credit facilities and expectations of high turnover which is just not happening. Every new player will make this offer to capture the market. In this process, other players will stand up to maintain the competition and growth.
Growth is not just in terms of figures. It is also in terms of structure and expansion. While, internationally a few companies have gone for management change, restructuring, expansion and change in corporate name, Manmachine has achieved growth in terms of making inroads into the smaller pockets of the market, including two-tier and three-tier cities Udaipur, Jamshedpur or Vizag. We have tried to reach different segments too with sales and services and also invested in infrastructure.
Manmachine has opened a much bigger office in Hyderabad and a zonal office in Punjab and adopted IP based technology linking the eight offices. Manmachine did face difficult times but we have utilised them to our benefit by consolidating, strengthening our base and preparing ourselves for a far bigger growth.
The need to expand comes from the demand in certain segments like pharma or city-sweeping for specialised cleaning technologies. Newer technologies have been coming into India. We have recently introduced the upright stand on vacuum and carpet cleaning machines, which are easy to manoeuvre and clean in a short time.
The receptiveness to newer technology is mixed. The reluctance or non-receptiveness could be an outcome of the inadequate spread of awareness or attempt to educate the end users on the part of the equipment suppliers. Nonetheless, the future is bright with 90% of the market still untapped and an expected growth of not be less than 30%.
We need to firstly comprehend the upcoming market segments. The automotive industry in India, the third largest in the world, has more than 10% growth every year. To clean so many cars we would need a great number of cleaning equipment too! Similarly, we also need to focus on infrastructure, residential complexes, ports … All this will fuel demand for cleaning equipment. The Commonwealth Games too will boost the growth of the cleaning industry.
Thus, the focus of the cleaning industry cannot be confined to the metros there is a huge market down the line. It requires investment of time and energy to reach these sectors. In fact, in the time and resources that go into selling a cleaning machine in India, we can sell a lot of other technologies in 20% of that time. India is a difficult market and requires a lot of hard work when it comes to selling cleaning equipment but definitely it is THE market of the future.Sanjeev Baitmangalkar Managing Director, Roots Multiclean Ltd
When Roots Multiclean Ltd joined hands with Hako as the joint-venture partner in the early 90s, the concept of mechanised cleaning was almost non-existent in India or was known in very small pockets. Roots went in for the tie-up for more than one reason – to understand the technology involved in the big and vast product spectrum manufactured by Hako and to bring world class products to the Indian market – either as imported offering or indigenously developed in India. Over a period of time, Roots has developed its own capability to design and manufacture various types of cleaning equipment and can compete with international brands.
Besides, the dirt you clean in Europe and America is different from what you clean in India and Asia. Unlike the machines made in the West, what we develop here are designed for the Indian conditions. General Motors in the late 80s used this phraseology while trying to sell cars in Europe, ‘Made for European handling’, because of the way European roads were. The American cars were not made to handle curvaceous European roads. Similarly, Roots had the design and development capability to build machines tailor-made to suit Indian/Asian needs.
Growth can be looked at in different forms – in sales numbers, in terms of productivity, in profit numbers and even in capability development. Over the years, Roots has focussed on strong design, engineering and R&D capabilities. It is this engineering strength that international manufacturers look at when they seal tie-ups. Hako saw strength in Roots engineering and they offloaded certain development work to Roots. They also saw that Roots has the capabilities of developing new products but the difference between Germany and India is that here we can apply what we call frugal engineering. In Germany they do not.
While products need not be over-engineered or over-designed, the thinking needs to be different. Carlos Ghosn of Nissan Motors recently said that Indian designers could really look at the cost-effective areas and eliminate unwanted costly additions to processes. He said that the Indian engineer thoughts of how to do with one while the others thoughts of doing the same with five. This is the ‘strength of Indian engineering’. Nissan discovered it now, Hako discovered it in Roots last decade.
We have different partners for different types of equipment. We give them access to Indian markets and they use the Roots brand as their channel. The companies we have tied up with are Delfin, Porto Technica, Interpump, Powerwash, Cleanfisk, Minuteman, Schwarze, Soteco, Capitani and TTS. We buy and sell these products in the Indian market.
The Indian end user is very price sensitive. Products from Europe and the USA are expensive and the duty component adds to the cost. Roots, on the other hand, can provide high end products with cost advantage and meet the cleaning needs of the Indian and Asian markets more cost effectively. These factors are acknowledged by global manufacturers and they look at Roots for the same.
Although, Roots is there for so many years, the Indian cleaning industry, by and large, has woken up only in the last couple of years. It will take time before we catch up with the world.
To understand a technology, it needs a little bit of education. Hence, progress will be concentrated in pockets in the near future. Even though almost a sizable part of the market is yet to be tapped, there will be greater demand from sectors like industry, institution, city cleaning, healthcare, pharma and hospitality.
As far as the increase in duty is concerned, it is very small – 2% of the countervailing duty. Relatively speaking, with Roots developing products here and selling them in India and overseas, this change is not consequent for those who can claim modvat on the duty.