GOODS & SERVICES TECH

Rallied by the GST, an army of robots is preparing to march into Indian warehouses

Quartz india
Quartz india

From the busy highway that runs through it, Gurugram’s Sector 34 doesn’t quite look like a hotbed for the robotics revolution. It’s a dystopian confusion of glass-fronted buildings, roadside shacks, and maddening traffic, all of which comprehensively camouflage the quest for order and efficiency underway here.

Inside a spanking new office block, there are still unoccupied workstations in the two-and-a-half floors leased by GreyOrange. The robotics company founded in this commercial hub bordering New Delhi in 2011 is preparing for new employees, and a wave of new business, to come through its doors. A five-minute drive away at Hi-Tech Robotic Systemz, another homegrown firm that focuses on industrial automation, there’s a similar air of anticipation.

The two companies await a common but consequential development: for India’s goods and services tax (GST) to upend the country’s warehousing industry.

“Our market size pre-GST was $300 million-$500 million annually,” said Samay Kohli, GreyOrange co-founder and CEO. Now, he reckons, the six-year-old company, which counts Tiger Global and Blume Ventures among its investors, is staring at an opportunity worth at least $6 billion.

For Hi-Tech, the overall target was around 3,000 robots by the end of 2022. But the GST has prompted a reset. “I think we might approach that target by 2020,” said Ritukar Vijay, head of autonomous technology and business strategy at the company.

The rationale for such optimism is simple. As the GST subsumes a range of central and state taxes to turn India into a single market, it removes all variations in local taxation rates that once forced businesses to operate multiple warehouses across 29 states and seven union territories. Structured primarily to avoid paying multiple taxes for the same goods, this warehousing network is now primed to rationalise itself to trim costs and improve efficiency.

So, although their sheer numbers will come down, warehouses will get much bigger—between four and 10 times the size of the current facilities—as companies realign their logistics networks to serve wider swathes of the country from a single hub. “I think post GST, half-a-million square feet is going to be kind of the minimum threshold at which people will build,” said Kohli.

To operate such facilities efficiently and reliably, businesses will need more than just trained manpower.

Butler and sorter

Kohli, 30, began building robots in high school. The tinkering got a lot more serious after he entered the Birla Institute of Technology and Science in Pilani. Of the five years at Pilani, Kohli spent half outside campus, mostly at robotics contests. It helped that the engineering school didn’t have a minimum attendance requirement.

Buoyed by some strong performances at international competitions, and work experience placements in the US and Korea, Kohli and his college-mate Akash Gupta founded GreyOrange. The company, now based in Singapore, was named that way because initially the two weren’t sure about what exactly they wanted to build. Going with colours, they figured, was safe: Grey for wisdom (and grey hair), and orange for creativity and fun.

By the end of 2011, they had decided to zero in on the warehousing industry, focusing on streamlining the process of retrieving and sorting items in a facility. “When you’re running the operations in a very traditional manner, the predictability becomes very tough,” Kohli explained. “Let’s say 50% of the goods may get out in 15 minutes but some goods might predictably get out in two hours. Some will get out in 14 hours. It can go up to as much as two days.”

 For businesses, the clearest cost benefit of using GreyOrange’s robots at scale is leaner inventory. 

One part of GreyOrange’s solution for this mess is the Butler. The boxy robot ferries shelving units to a human operator—who either picks up items from the shelves, or puts things back in—before moving them back to their assigned spot inside a warehouse. The Butler moves at a little over a metre per second (around 4.3 kilometres an hour) and can lift 500 kilograms. It may seem slow but the robot can do far more than the 14 kilometres that a human warehouse worker usually walks in day.

Butler works in tandem with GreyOrange’s Pick-Put-to-Light (PPTL) system, where a set of light-based signals guide human operators to pick, or place, items on a shelving unit brought to them by the robot. A barcode-based scanning process also tracks items being moved in or out of a shelving unit. The final piece in GreyOrange’s warehousing troubleshooter is the Sorter (the Linear Sorter to be precise), which helps segregate packages on the basis of destination, volume, weight, or other parameters.

Kohli assures that all this technology drastically improves reliability, while reducing the time taken to process an order. For instance, if an e-commerce company would normally ship out 10,000 items an hour, most of those products would typically be ready for despatch in two hours. “We can actually, for 99% (of items), get it to 15 minutes,” he said.

For businesses, the clearest cost benefit of using GreyOrange’s robots at scale is leaner inventory. The inability to reliably despatch goods, Kohli described, can force companies to have five different warehouses to service a single area like the National Capital Region. “They’re duplicating, or triplicating, or having five times the inventory on stock,” he said. “They just need what’s actually consumed.”

Drawn by the need for greater efficiency and reliability, more than 55 warehousing facilities nationwide currently use GreyOrange robots, and business is doubling every year. On its list of clients are logistics firms like DTDC and Delhivery; e-commerce companies, including Flipkart, Myntra, Jabong, and Pepperfry, and large fast moving consumer goods (FMCG) players (which it didn’t name).

But the firm, which has raised at least $35 million so far and is near break even, is on to bigger things. Only 30% of its business comes from India at the moment, with Japan and Europe being its biggest global markets. It entered the Latin America region last month, and is poised to mark its presence in the Asia-Pacific region this year.

Forklift conundrum

At neighbouring Hi-Tech Robotic Systemz, there’s a different approach to improving Indian warehouses.

Founded in 2004 by Anuj Kapuria, an engineer who dropped out of a PhD programme at Carnegie Mellon, the company spent its early years focusing on autonomous vehicle technology. Kapuria wasn’t entirely an outsider to the industry; his father, Deep, is chairman of Hi-Tech Gears, an automotive component maker that supplies to Daimler and Honda, among others. After a few years of developing the technology platforms, Kapuria entered the warehousing industry in 2011 with solutions primarily for material movement.

Hi-Tech has three main offerings. The Novus Carry, an autonomous industrial vehicle that can be configured for multiple functions, including pulling trolleys or carrying materials to and from conveyor belts. Then there’s the Novus Omnistore, which allows for vertical stacking of storage units using multiple robots.

 The Indian warehousing industry is currently operating with a 15% shortfall in skilled forklift drivers. 

“Also, we are converting existing forklifts or pallet trucks, which are already there in the warehouses,” said Vijay, an engineer who worked in the IT industry before moving into robotics. “So, you just have to give the pick points and drop points, and the whole material movement within a warehouse or a manufacturing facility will happen (automatically).”

Hi-Tech’s interest in turning conventional forklifts into autonomous vehicles is partly the result of a human resource crunch. The Indian warehousing industry is currently operating with a 15% shortfall in skilled forklift drivers, according to Vijay, a problem that’ll worsen as facilities become bigger and increasingly clustered around strategic locations after the GST kicks in. “People are looking outside to manage those large warehouses,” he said. “Specifically, when they are located at a single location, there will also be (a) limitation of skilled labour (availability).” A promised 30% reduction in operating cost over three years is also helping draw customers.

With 150 of its robots deployed across the manufacturing and warehousing industry, including at Volvo, Eicher Motors, Ford, and online furniture seller Urban Ladder, Hi-Tech has gained traction in the market. But the GST will allow it to shift up a gear or two.

Already, customer enquiries have more than doubled, Vijay estimated, even as Hi-Tech’s marketing team works to make inroads into the FMCG and e-commerce segments. “In the last couple of months, we have done multiple pilots in various geographies for the top four-five FMCG companies,” he said, declining to reveal names. “And within two-three months, we’ll be getting not only specific orders but we will be actually signing papers with them for long-term deployment across geographies.”

Emboldened by the GST, the robots are coming.

Goods & Services Tech: This is the second in a series of articles on technology-driven startups that could benefit from India’s biggest tax reform, the Goods & Services Tax.

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