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