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Crompton Greaves’ Operation Overhaul
By: Jude Abreo (81), Ketan Mokal (82) ,Mridu Sharma (83) Namish Sharma (84), Namrata Kumar (85), Nikhil Nagdeote (86)
100% subsidiary of the UK based CPL, under the
name of PWL.
GCCL acquired a 26% stake, which was later
increased to 50% in 1956.
A joint venture company between GCCL & CPL
was amalgamated with PWL
1937 - 661970 -
85POST 1986
Conversion from single location limited product
manufacturing company into a multi location multi
product manufacturing company.
Entered into technical collaboration agreements.
Experience of all time low profitability.
Conversion of seller's market into a buyer's
market .
Declining in productivity
1937 - 661970 -
85POST 1986
Entrance in the telecommunications and industrial
electronics sector.
Undertook turnkey engineering projects
Began providing information technology services.
1937 - 661970 -
85POST 1986
Timeline Operations Marketing Finance IT Systems HR External
1982-84
Falling demand, higher production capacity and higher employment resulted in declining productivity
Change from seller's market to buyers market
Market Gripped By Recession
Raw material (steel) storage time was 147 days although the processing time was 1-48 hours
Marketing searched for production orders based on the planning department optimum load calculations
1990-95
Competition with unorganized sector
Low margins and low pricing power
Fast information delivery/sharing intra and inter company is missing; rectified with the use of infotech systems to vendors also.
Negotiations with labor unions for productivity increase of 38% in 1991 and 20% in 1994
Low entry barrier to motor and consumer electronics manufacturing
High competition from MNC's in telecom equipment manufacturing
2000 onwards
Production capacities not consolidated
Net losses reported
Only 1.5% of turnover was spent on R&D
Measures taken at Nashik Plant
Shop Floor workers sent to visit customers for
first hand responses.
Cross functional team (CFT) formed to
minimize rejections & deliveries.
Value added management approach.
During 1993-95, unit had more than 21000
Kaizens, making it highest number of kaizens
in the country.
Measures taken at Nashik Plant
Single Piece Flow(SPF).
Arranging machines in anticlockwise, ‘U’-Shape.
This concept was combined with kitting to reduce
wastage and better inventory control.
Inventory carried decline to 2.35 months(1994-
95) from 2.87 months(1992-93).
Inventory turnover ratio was improved due to
Computerized model.
Measures taken at Nashik Plant
Improved housekeeping and material organizing.
Layout was changed to minimize transport.
None of the, machines were grounded, which
meant layout can be change easily.
Detailed instructions both in English & Marathi
were displayed at various spots.
To reduce energy wastage various cost of energy
per machine per hour charts were displayed.
Single Piece Flow (SPF)
For Example
If there was No Material or No
order, a red bulb lit up; Similarly
basket was full ,a yellow bulb lit
up.
Due to this efficiency improved by
10 %
CFT Initiatives
For Example
A malfunctioning in
magnetic sensor which
cost Rs.80,000 and take
six week to import was
fixed in just Rs.440.
It was set right by local
manufacturer within two
days.
Andon Devices
For Example
Any fault in insulation
of copper wire resulted
in a signal from the
andon device.
Pipe Colour Coding
Color Coded Dies & Fixtures
Improvements(1990-95)
Turnover doubled – more than 1000 crore
Productivity – 12 Lakh/man/yr from 6 Lakh/man
per yr
Profits increased by six times.
Managerial efficiency improved from 23% to 51%.
Manpower requirement reduced by 30 %
With job security union assured productivity increase
of 38% in 1991, and further 20% in 1994.
Improvements(1990-95)
Employee training- 3% from 1%
Skilled workers contributed to routine task at the same
time they were given authority .
With same production volume
Space required reduced to 1/4th
Turnover /Rotation of space increased 3 times
Small batches offer more flexibility & higher
customization
Inventory turnover – 2 (1992) to 7.5(1995)
Down again
Entry barriers were low
Domestic market was dominated by
unorganized players
Telecomm market – high competition
CGL reported net losses in the fiscal 2000
Low investment 1.5 % of the turnover on R &
D
Activities in late 1990s
Plans to split in three companies
Power and Industrial
Transformers, Switchgears, Circuit breakers, HT and LT motors,
Alternators etc
Spread its root in India, Belgium, Ireland, Canada, USA, Ireland,
Indonesia and Hungry
Consumer Products
Fans, Light Sources, Pumps, Geysers, Mixers etc.
Digital
Telecom Service Providers both govt. and private
Procedural delays led to plan being deferred
Activities in 2000
CGL setup 5 member committee to review its
operation
Sudhir Tehran was the head of this committee,
taken over from Nohria as CEO in 2000
Focus on lessening Cost (First Phase) Consolidation of production capacities at factories
Closing down some Corporate Offices
Shifting of offices
Reducing Employee Strength
Major Acquisitions(Second Phase)
• Pauwels Group of Belgium in May 2005
Strong market Presence
excellent list of satisfied global clients
Transformed Indian leading entity to global leader
• Ganz Transelektro and its Associate Company
Transverticum in Hungary, in October 2006
• The acquisition of Microsol Holdings Limited,
Ireland, in May 2007
Third Phase
Synergising Operations
Integrate its resources involved in R&D,
manufacturing
and marketing
Benefiting from Order Backlog
To capitalise on Pauwels’ large order backlog
Transforming from Products Company
to Solutions Company
Historical Scenario of Net Sales
2000
2001
2002
2005
2006
2012
2013
0
10000
20000
30000
40000
50000
60000
70000
80000
Net SalesRs.
In
Mn.
Years
Historical Scenario of EBIDTA & PAT
2000 2001 2002 2005 2006 2012 2013-2000
-1000
0
1000
2000
3000
4000
5000
6000
7000
8000
EBIDTAPATR
s. In
Mn.
Years
Awards and Achievements:
Received Golden Peacock Innovative
Product / Service Award-2007.
Crompton Greaves bags CII-EXIM Bank
award for excellence,2010
CG wins three contracts from PGCIL valued
at Rs 231.7 Crore.
CG wins Wind Onshore Projects in France
Thank You
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