By Madhumita Mookerji
Federal Engineers has come a long way since it started out more than 40 years ago as a small crane manufacturing company. Today, it is one of the largest in the business and, importantly, it has funded its expansion entirely through internal accruals. It specialises in cranes that are heavy-duty machines, working 24×7, 365 days in a year since these find application in steel melt shops (SMS). Therefore, it is important to build several safety features into these workhorses, Zubein Buhariwalla, CEO, Federal Engineers, tells Steel 360. He also says that due to the very high quality of the machines, these do not need any maintenance contracts. Excerpts from an interview:
Q. How has the journey been like for Federal Engineers over the last 40 years in terms of performance? What factors led to the focus on lifting solutions and cranes for the steel industry in particular?
A. Federal Engineers was started by D.K. Buhariwalla & Partners in 1973 as a small company for manufacturing cranes. Federal Engineers has now grown into one of the largest manufacturers and the largest exporter of cranes in India. Federal Engineers has grown steadily using its own internal accruals instead of taking loans from banks to expand. This policy has helped the company tremendously.
Federal Engineers has also invested heavily in technology and automation which is the main reason our quality is being rated as no. 1.
Due to the high quality of our products, we have often been selected as the first preference for cranes that operate in steel melt shops where the conditions are very extreme. Due to the very high quality, our cranes, at present, are operating in more than 50 countries worldwide without having any sales offices outside India.
Q. Walk us through your product portfolio… Which of these are particularly used in the steel industry? How are cranes for the steel industry different from the others?
A. Federal Engineers specialises in cranes that work in steel melt shops (SMS) and rolling mills. These are special open-winch type machines designed specifically for performing in steel plants. The list of cranes being manufactured by Federal Engineers is:
- Ladle handling/teeming cranes up to 300T capacity;
- Scrap handling cranes;
- Scrap charging cranes;
- Rotating trolley billet handling cranes;
- Transfer trolleys; and Scrap yard gantry and semi- gantry cranes
There is a huge difference between cranes designed for the steel industry and workshop duty cranes. Cranes that are employed in steel plants are non-standard open winch type, heavy-duty cranes which are very different from standard closed winch type cranes that find application in workshops.
In a steel plant, the crane is the heart of the plant which works non-stop for 24 hours, 365 days in a year without stopping and with minimum maintenance. These highly critical cranes have to be designed to work in extreme conditions of heat and dust continuously without any stoppage in production.
Due to the tough conditions in which these cranes operate, several safety features have to be taken into consideration. Due to the exhaustive experience at Federal Engineers, we design our cranes using both theoretical design and practical inputs attained from the various sites worldwide.
Q. Which other industries, apart from steel, does Federal Engineers offer lifting solutions to? What is the share of the steel industry in your revenues?
A. Federal Engineers has the capacity to provide lifting solutions to various industries. However, due to the high quality of our products and recommendations from our clients, our entire capacity is always booked by the steel industry.
Q. Tell us about the company’s manufacturing facilities. Are there plans to expand your existing facilities?
A. Federal Engineers currently has six factories with a state-of-the-art CNC centre and approximately 40,000 sq mt of production area. The company has heavily invested in the huge CNC centre and has the capabilities of manufacturing all sub-assemblies like gearbox, wheel assembly, pulley assembly, drum assembly on CNC machines etc.
We are constantly investing in technology and we can proudly say that Federal Engineers is the only company in India which has a complete CNC machine centre and has the capacity to manufacture all the sub-assemblies in-house.
All the factories are located in and around Navi Mumbai. The company is constantly expanding its factories and adding new technologies in and around the existing facilities.
Q. Apart from sales, does Federal Engineers also offer maintenance contracts? How much do such contracts contribute to the topline?
A. Due to the very high quality of our cranes, maintenance is very minimal and, therefore, these machines do not have any maintenance contracts. The clients can get their team trained by Federal Engineers.
Q. The steel industry has not been doing too well for the past few years. How has that impacted the cranes and lifting solutions business in general?
A. The steel industry is a cyclical one, which has an approximate life of 10 years but which can vary, of course. course. There are many ups and downs in this industry and no specific pattern can always be gauged. Federal Engineers has been able to survive in this turbulent industry by heavily investing in automation and technology. This has also helped us to produce cranes with a smaller team. We have also controlled our financials which has helped us tremendously.and technology. This has also helped us to produce cranes with a smaller team. We have also controlled our financials which has helped us tremendously.
Q. How do you expect the steel industry to perform? What factors could boost the industry, going forward?
A. Even though we are seeing a lot of orders this year and next year, we cannot predict the steel industry’s future as prices of steel keep fluctuating. We are very optimistic and hopeful that the plans of the government to increase the production of steel to 300 million tonnes (MnT) by 2030-31 will be implemented which shall, in turn, give us a lot more orders, going forward.
Q. What are the company’s future growth plans? Also, is it looking to enter any other areas of business, looking at acquisitions etc?
A. Federal Engineers’ main focus is supply of cranes and lifting solutions to steel plants. We may look at starting new verticals and product lines which will be very similar to the cranes we currently manufacture.
Q. Are there any investment plans? If yes, in which areas and how much and how will the investments be funded?
A. Federal Engineers is continuously investing in the CNC machines and new technologies like robotic welding design etc. The investment for this expansion shall be funded by Federal Engineers without any bank loans.
Q.What is the market size of the lifting solutions business in India? Going forward, what is the growth likely to be, say, over the next two years?
It is very difficult to determine the overall market size of the lifting solutions industry but it is approximately around INR 3,000 crore and growing yearly. The growth rate of this industry is very difficult to determine.
Q. What are the challenges and opportunities in the cranes market in India and how can these be resolved? What are your expectations from the government in terms of boosting this business?
The cranes industry is a highly competitive one in India and there are more than around 500 companies manufacturing such products in the country. The cranes industry is facing a vast number of challenges in terms of delayed payments, very low prices and very high bank loans taken by several companies.
Federal Engineers is the only company in the cranes industry which does not have any bank loan and has very strong financial strength. Our policy of refusing orders for bad payment terms has helped our company attain this high financial strength. The company has a very strong policy of not under-designing its cranes just to match low prices.
This policy has helped us get more orders from our clients worldwide. We are expecting this new government to help us by giving benefits to exporters who are helping to earn more foreign exchange.