Rajesh Gopinath on the scorching smelting sector

Rajesh Gopinath takes a break from the furnace to discuss Multi Mech, his aftersales oriented group that has forged an empire out of neglected niches

INTERVIEWS, PMV

Rajesh Gopinath is an enigmatic individual. On the day we talk, he looks busy and a just a little weary — and the reason for this cuts right to the heart of the present day story of Multi Mech, a company a decade-and-a-half old now kicking off an arms race within aluminium smelting.

For the past three years, Multi Mech has been maintaining a fleet of very special Doosan forklift trucks at the smelters of Qatar Aluminium, and has recently signed several more smelters in the Gulf on the back of this first success of this engagement. Gopinath is now engaging all gears to proselytise more.

“We have been operating Qatalum for three years with 205 forklifts, with the majority of the fleet clocking around 22,000 hours,” explains Gopinath. “The life of a forklift is 25,000 to 30,000 hours, so the Qatar project is proof enough for us to get into other applications.”

Indeed, when I met Gopinath, he and the global team from Doosan Commercial Industrial Vehicle in South Korea had just returned from back-to-back visits to Dubai Aluminium and Emirates Aluminium — two new clients.

“What Doosan and Multi Mech are doing is going to each operation, listening to operators, and trying to understand exactly what they are doing with this tool and how they drive and operate. We study everything about their working environment, and then we try to make changes for them,” says Gopinath.

In alliance with Doosan, Multi Mech has quickly gone from being a non-entity in this segment to being on its way to becoming one of the largest and most dominant forces.

“We now have contracts with four aluminium refineries, and we’re in talks with a fifth — so we’re already one of the largest providers of equipment to aluminium smelters.”

But it all began in 2011, when, with his years of working in aftersales, support and distribution, Gopinath spied an opportunity in the aluminium smelting segment, where the existing provision in the region could best be described as woefully inadequate.

The challenges for a forklift in an aluminium smelter are many: the heat, the dust and pre-eminently the exceptionally strong magnetic forces that course through the air around the power lines delivering electricity for the energy intensive aluminium extraction.

For the Hall-Hérault process to function, an electric current of low voltage but 200,000 to 500,000 amperes is passed through the refining medium, and it takes about 15.7kWh of electricity to produce 1kg of aluminium.

Gopinath details: “There are radiant temperatures that reach 200°C and above, and strong magnetic forces of up to 1,500 Gauss.

“At this level of magnetism, those with pace makers will die immediately, metals implants are a severe hazard and cards will be wiped.

In this context, most forklifts are inadequate at handling either the heat or the dust, while almost no heavily electronic machines can handle the gauntlet of the magnetism. The compromise for most aluminium smelter operators tends to be a medley of cheap, basic and heavily mechanical forklifts.

Gopinath, on the other hand, took it upon himself to approach Doosan with a proposal to develop an entirely novel forklift concept with a number of modifications — many of them still closely guarded secrets.

“Our initial R&D took six to seven months, and after developing the product we tested it at a number of smelters before Qatar Aluminium came out with this big tender,” he explains.

“It is not rocket science what we are doing: it is a basic forklift heavily customised for a particular purpose.”

The tender in question came with a stringent brief for a high-performance product with both magnetic resistance and a long warranty — terms that very few of the major players in the market could satisfy or would be willing to agree to. Multi Mech could and would, and it won the contract.

“As per their tender terms, we had to provide warranty and the machine should also work. Many players were not in compliance, so they were out; we provided 100% compliance, and we made it,” explains Gopinath.

“The tender was in publication for almost eight months because most people were not able to understand it and provide a quote. It said magnetic resistance, and everybody raised their hand. When the manufacturers and suppliers saw it they ruled out any warranty and told the dealers that it was up to them whether they would provide a quote or not.”

With the Qatar contract in tow, Gopinath bided his time. He notes: “We didn’t want to jump from the first day to other aluminium smelters; we were waiting for three years.

“Even when we started operating we were continually making improvements, and now we have a fine end product with all the necessary modifications. When we have approached other smelter plants, everybody knows this, and we have been so busy with orders that we barely have the time to sit down.”

TAKING THE HEAT

“The main innovation is against the heat,” explains Gopinath. “In smelter applications, many companies find that the air-conditioning does not work, and that they are forced to remove the cabin and leave just the front and top glass in place — a situation that is dangerous due to the risk of molten aluminium splashing around the side.”

In other cases, the cabin glass is simply not up to specification and is prone to crack or even break in the event of any aluminium splash. In some cases, forklift manufacturers have responded to this problem by equipping their machines with a second, disposable sheet of glass to protect the cabin.

Multi Mech has taken a different tack, as Gopinath explains: “Our machines do not need a second sheet of glass, because we are the only company that provides glass resistant to splashes of molten aluminium up to temperatures of 220°C.

“The previous rate of breakage meant that if you had 150 forklifts working, you would need to have almost three containers of glass to hand — because every one or two weeks the glass would start breaking. Our glass will also break, but the frequency will be less — that’s the difference.”

The other disadvantage of not having a cabin, or having a cabin and having to remove it due to faulty air–conditioning systems, is the direct impact that is has on productivity.

“As per HSC regulation, a person working near a furnace cannot work continuously in the heat, and if they are in the heat, there must be shift changes. As a result, most companies are now saying that everything must be air-conditioned,” explains Gopinath.

As cabins do not come as standard on forklifts, aluminium smelters that buy basic forklifts as a policy look to fabricate cabins locally, before attaching them, along with the AC systems, to the machines.

Doosan’s machines, on the other hand, come with factory–moulded cabins for the machines as a rule, making Multi Mech, according to Gopinath, “the only company that has a factory-built cabin for this application”.

The other obvious and added benefit of this is that the integrity of the cabin envelope is guaranteed and under warranty, and the air-conditioning have been specced, designed and tested by Doosan, as the manufacturer. “With our machines the health and safety is increased, and productivity will also increase,” nods Gopinath.

“We now are supplying a large number of 16t machines to the smelter industry, and we have supplied everything from 3t to 45t range.

“Doosan has a product up to 25t, and 45t is under development, so for the moment, if there is a need for a 45t machines, we provide a CVS Ferrari, Kalmar or another brand.”

WIDE OF THE FIELD

The second big challenge is the magnetism, which can cripple the electronic systems of a machine, but also physically manipulate any ferrous components — the brakes for one.”

“If the liner or shoe brake is supplied on the machine, it will interact with the magnetic fields, pull to the brake drums and jam,” says Gopinath, who distributes oil-cooled hydraulic brakes as standard in his Doosan machines.

The benefits of this are two–fold, as he notes: “Oil is not a good conductor for magnetism, so my machines will not jam and the frequency of overhauling is three years in extreme conditions, or five years normally.”

He continues: “An aluminium smelter operates 24/7, and it cannot afford to have the machines breakdown for even an hour — so that is how we also operate. For the 205 Qatalum machines, we expect no more than 10 breakdowns a day — and the length of those breakdowns is greatly reduced.

“We do have lined brakes, but as a distributor I am promoting oil-cooled hydraulic disc brakes. My machines comes at a higher cost compared with other machines, but I am also making a low margin — we are betting on a long relationship with the customer, fewer complaints and long-term savings.”

Then there are the electrics. Gopinath notes: “At just 300 Gauss, the electronics that make up the engine management system are at risk. The moment the solenoid will not shut off or vice versa, you have a problem — and both can be a problem when solenoids are exposed to magnetic fields.

“There are electrical systems in the engine, fuel system, transmission and instrumentation — everything that gives you the parameters of the machine or provides operator alerts. The more computerised your machine, the more problems you will have in aluminium smelter.

“The precise way in which we protect our machines is a secret, but for all our smelter products we go less electronic — always — and we make them simpler for the operator. Every machine will break down, but insulated, heat-resistant components will minimise this.”

HEAVY MODDING

The list of modifications goes on, and also includes special tyres from Doosan, Continental or Nexen (from South Korea) that contain special admixtures that prevent that from melting in contact with molten aluminium and heavy-duty construction equipment axles, which alone, Gopinath notes, factor an additional $8,000 into the vehicle price.

Importantly, the Doosan machines also incorporate a chassis design specifically modified to prevent cracking — a problem common to many forklifts exposed to the extreme conditions within a smelter.

“Our competitors all experience cracking in the chassis in most of their machines, but our machines do not experience any cracking in their chassis,” asserts Gopinath, noting: “With each manufacturer there was a problem: what we have done is with an understanding of each of these manufacturers.

“For around 30 years, aluminium smelters in the region have been working with a range of temporary and trial and error solutions. One smelter bought Linde machines with electronically operated hydrostatic transmissions and they had to cancel the contract immediately. With each manufacturer — Hyster, Caterpillar, Komatsu — there was a problem.

“Caterpillar recently developed a problem with chassis cracking. Caterpillar makes good machines — of that there is no doubt — but in this application they have been developing chassis cracks — and it’s not only Caterpillar.
“It’s all about how you invest in the product. If I’m Caterpillar and I have thousands of machines working in the UAE, why should I focus on the aluminium smelter segment?”

BUILDING BUSINESS

Multi Mech today is a fairly diversified business group, with interests across aftersales, training, rental, leasing, and direct sales and distribution. It is also spread across oil and gas and has about 400 rental machines in Qatar leased out to big companies — a single company has 50 wheel loaders.

However, the success of the Doosan forklift side of the business is quickly becoming evident, and is anticipated to make up a significant portion of the company’s future revenue.

In the aluminium smelting arena, on top of the 205 machines that Multi Mech has already delivered to Qatalum, the company is in discussions with the large smelter companies for a pipeline of 600 units across the region.

“So we’re talking about 600 machines for three years down the line, and the total market size for forklifts in the UAE is 10,000 across all segments,” states Gopinath. “In aluminium I’m taking a 30% share of the market.

“Not everybody will change overnight, but we are in constant dialogue, and were recently called as a single bidder for another project.

“Two years down the line, our forklift business in the GCC will be worth $50m to $75m, and it’s not just the trucks: the aftersales and parts demand coming from aluminium operations is huge — they use a lot of consumables. I know this from Qatar.

“We currently stock 100-150 machines in Jebel Ali — no one else in the Gulf stocks that many forklifts — and at any given time we have 40 in production and 40 in shipment, so it’s a big volume.”

TAKING STOCK

While the speed of this conversion appears rapacious, Multi Mech has clearly been biding its time in anticipation of this moment — with Gopinath all the while carefully sowing the seeds of his future coup in the aluminium industry.

“My first target was the major rental companies, even if we suffered a little bit,” he says.

“We gave them all special finance arrangements and warranties two years down the line. I get my money slowly — I am investing two years in advance — but the advantage is that wherever they go, they have Doosan — and that has increased my market share.

“We have a target custom and we have done very well — Al Faris only buy from us, but they only pay me two years down the line from the rental. Now all the smelter people are coming to us. One of the best rental companies, Hertz Equipment Rental, is only buying our machines for Doha and Oman.”

Today, Multi Mech has a $300m turnover, and Gopinath’s target is to grow this to $500m, including business in India. From three original partners, it has grown to around 850 people working across the Gulf countries.

“The material handling in the GCC probably makes up 20% of our business, including rental, but each year it depends on the contract,” notes Gopinath. This year we are probably more focused on the aluminium smelter side and supply, but in 2008 to 2009, the service side of the income was very high.

“If you average it out, 30% of the revenue comes from machinery supply, 30% from service, 10% from safety equipment, and the rest from rental, leasing and peripherals.

“This year the leasing will take a bigger part, because we are buying more machines to dedicate to rental.”

Despite his astronomical rise, Gopinath remains pragmatic and ecumenical in his dealing with other dealers, distributors and rental operations in the market.

“It is not always my own machines I am supplying,” he notes. “Sometimes I will have to supply 50 machines from us, and I will need to outsource 10 machines and buy them from a local dealer — so we are not fighting with any of the dealerships here, because I buy machines from each of the dealers.

Testament to his confidence in the level of innovation present in the Doosan machines, Gopinath is vague about the intellectual property rights of his creations.

Instead, he places his faith in his bond of trust with the MD of the Doosan division and the ethos of the family-owned Korean group.

“One time this was challenged, and Doosan sent a letter saying: ‘This project is the brainchild of Rajesh Gopinath.’ — what more do you want?” he quips.

Gopinath is not so much apart from these corporate issues, as he is more engaged with the practical matters in front of him — his intellect was honed on the assembly line.

He boldly asserts that it will take 30 years for the competition to catch up.

A mechanic at heart, he adds: “I love to enter a problem market, and to fix the problem areas with proper machines.”

MILITARY RECORD

Gopinath arrived in Dubai in 1993 after being headhunted by the Kanoo Group from a heavy vehicles factory producing battle tanks for the Indian military.

In Dubai he joined Kanoo as a senior technician before leaving on good terms in 2002 to found Multi Mech. Starting out with just two other people, the company secured its first aftersales services contract with the Kanoo Group in Dubai.

“I started Multi Mech with the idea of training people to provide multiple services though a single point of contact, and we successfully managed that,” explains Gopinath, adding: “We started as a small firm with small contracts; never did we have these big contracts in mind.”

Based out of Al Quoz, Multi Mech went on to provide training and aftersales outsourcing to parties including, in 2004, the armed forces — a role that soon developed into Multi Mech managing a fleet of 450,000 pieces of machinery.

“We started out managing six locations with the UAE armed forces, carrying out everything from maintenance and repairs to modification and overhauls — you name it,” explains Gopinath.

“We did that for seven years, finishing in 2011, by which point our profit margins had come down and we had been stretched out to 11 locations. In the end we said thank you, but we have to stop.”

Multi Mech is currently close to concluding a further contract with the US military, through DynCorp International.

“The contract was based on Iraq and Afghanistan,” says Gopinath. “Machines are flown to us via Dubai World Central and we overhaul them before they are sent off to the next destination.

“We handled 1,500 machines within a year and a half — when the target was three years. The machinery included everything from motorcycles to cranes, Humvees and over 100 reach stackers — basically everything except battle tanks. We also have experience with communications vehicles and fire vehicles.”

Multi Mech holds ‘blue certification’ with the US military — a coveted award making it preferred for future contracts.

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