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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 - 66 1970 - 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 - 66 1970 - 85POST
1986
Entrance in the telecommunications and industrial electronics
sector.
Undertook turnkey engineering projects
Began providing information technology services.
1937 - 66 1970 - 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
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
0
10000
20000
30000
40000
50000
60000
70000
80000
2000 2001 2002 2005 2006 2012 2013
Net Sales
Rs. In
Mn.
Years
Historical Scenario of EBIDTA & PAT
-2000
-1000
0
1000
2000
3000
4000
5000
6000
7000
8000
2000 2001 2002 2005 2006 2012 2013
EBIDTA
PATRs. 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