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F E B R U A R Y 2 0 1 1 | SEARCH - THE INDUSTRIAL SOURCEBOOK 23

EDITORIAL

Archana [email protected]

he definitive decade that was 2001-10 was quite a decisive one and one full of upheavals. It was all about the cheer and the fear, the ecstasy and the agony, the after taste which still lingers. The churn that was the last decade has also chiseled some great practices, policies and people the decade that we are embarking upon and the year itself, will demand new leaders, fresh ideas and liberating policies. But

more importantly, we need to leverage on the learnings from the past and build a hope called India, ultimately showcasing its manufacturing might.

A hope and promise to make India the global manufacturing hub, a giant of an economy, a preferred investment destination, is a shared dream, and a shared responsibility as well, among the whole value chain. It incidentally was a dream of the last decade, a reality we must make in this decade that we are living, it is just like a promise that we must keep to retain everybodys faith who believes that Indias potential is still not well understood.

India is a country with contradictions, our growth story remains shaky, but sturdy quite a contrast we must agree. Shaky, because we are still several notches away from the expected standards, be it infrastructure, quality, standards and policies among others. Then again, the heat of the unbridled optimism is cooling under the winter chill as some of the economists are revising Indias growth forecasts downward and inflation forecast upward. A sign of worry

But the ever optimist Indian would argue and we will agree that 2010 will go down in the history of Indian markets as a year that witnessed the revival of government divestment process with the Coal India IPO emerging to be the jewel in the crown. It was also the year when India stood out as one of the favourite emerging markets among foreign investors. The year also witnessed the Sensex rising to beyond the historic high of 21,000 marks on Diwali Day, skyrocketing our hopes, aspirations and belief in Indias growth story.

The manufacturing output growth rate was supported by increases in consumer durables, capital goods and intermediate goods production in FY10. The strong performance of the manufacturing sector could partly be attributed to the base effect. During FY11 (up to August 2010), capital goods and consumer durables continued to record a high growth rate. The overall state of the economy for FY11 is positive in all respects, especially when juxtaposed with FY10.

As we build hope and fortunes, heres wishing each one of our readers a very fruitful year, a year which is full of positive competitiveness and unparallel returns. The Best of 2010 is dedicated to the decisive decade, as the year becomes one of the stepping stones to success.

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SEARCH - The Industrial Sourcebook is registered with the Registrar of Newspapers of India under No. 67827/98. Views and opinions expressed in this publication are not necessarily those of Infomedia 18 Limited. Infomedia 18 Limited reserves the right to use the information published herein in any manner whatsoever. While every effort has been made to ensure accuracy of the information published in this edition, neither Infomedia 18 Ltd nor any of its employees accept any responsibility for any errors or omission. Further, Infomedia 18 Ltd does not take any responsibility for loss or damage incurred or suffered by any subscriber of this magazine as a result of his/her accepting any invitation/offer published in this edition. No part of this publication may be reproduced in any form without the written permission of the publisher. All rights reserved.

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24 SEARCH - THE INDUSTRIAL SOURCEBOOK | F E B R U A R Y 2 0 1 1

We Should Set Our Sights On Achieving A Robust Aerospace IndustryHEMANT LUTHRA, President Systech Sector, Mahindra & Mahindra

EXTREME ENGINEERING

CONTENTS

Pg 49

PSLV-C15 LAUNCH | Pg 70

MissionPossible

VIEW FROM THE TOP

This rumbling had a silencing effect. As the gigantic Polar Satellite Launch Vehicle-C15 lifted off making heart stopping roaring sound, fogged by the cloudy emission, it did silence many doubting heads. It also cleared the fog of doubt about Indias capability to make the PSLV-C15 a mission possible, paving the way for Indias manned mission to space. Overcoming technological challenges and adding many firsts to its credit, managing this complex mega project is a case study in itself. It is also every engineers dream to be part of this exhilarating journey. Here is the first-hand account of the project, problems and the ultimate pride

36 NATIONAL NEWSLatest In The Indian Manufacturing

23 EDITORIALRewinding The Demanding Year

44 WORLD NEWSSnapshot Of Latest Global Happenings In The Manufacturing Domain

TECHNOLOGY TRENDS80 Manufacturing Enterprise Landscape Transformation Melting Barriers, Harmonising Business Processes

APPLICATION ZONE88 Mechatronic Systems Smart Solutions To Complex Problems

EXTREME MINING62 National Aluminium Company Taking The Path Less Trodden

BEST OF 2010BEST OF 2010


PRODUCT UPDATE

CONTENTSSPECIAL IN THIS ISSUE

234 PRODUCT INDEX Alphabetical Listing Of Products Presented In The Issue

244 ADVERTISERS LIST Advertisers List In Chronological Order

PRODUCT UPDATE154 General Products Rolling Out The Best-in-class224 International Products Showcasing Product In A Global Arena

SMART STRATEGIES106 Bottom Of Economic Pyramid Innovation Eyes Inclusive Capitalism

SME ADVANTAGE128 Strategic Thinking Nurturing Right Talent For Scaling-up Business

FACTORY FUNDAMENTALS114 Asset Management: I0 Simple Steps Sprucing Up Assets Before Demand Rebounds 122 Environmental Management Churning Assets From Waste

REPORT132 Engineering Expo Pune 2010 Creating A Perfect Trade Ecosystem136 Hannover Milano Fairs India 2010 A Realm Of Global Competitiveness140 Engineering Expo Ahmedabad 2010 Taking The Triumph Forward144 Engineering Expo Indore 2011 Echoing Success 148 F&S Environment Excellence Awards Reaping Benefits Of Growing Green Opportunities 152 F&S Manufacturing Summit 2010 Navigating Towards Operational Excellence

PREVIEW86 HiTech Manufacturing Show Growth Stays Constant112 Engineering Expo Chennai 2011 Tracking Impending Opportunities

INDUSTRY UPDATE - STEEL

54 Challenges & Opportunities Mission 200 Million Tonne By 2020

EQUIPMENT BUYING GUIDE94 Used Machinery Ensuring BIG Savings

DESIGN INNOVATION98 Growth Imperatives Breakthrough Strategies By Design

NATIONAL NEWS


ubber imports have doubled to over ` 2,000 crore in April-October

2010 and, along with a surge in other sensitive items including automobiles, edible oils and milk, led to a 14.1 per cent rise in import of such products during the same period to ` 40,499 crore.

With domestic supplies not meeting the demands, rubber imports have risen 93.1 per cent to ` 2,026.84 crore from ` 1,049.6 crore during April-

October 2009, according to data released by the Commerce and Industry Ministry.

Currently, domestic rubber prices are about ` 210-215 a kg, whereas international prices are about ` 240 a kg. Last month, to increase domestic availability of the item and check rising prices, the government had cut import duty on natural rubber to 7.5 per cent from 20 per cent for shipments up to 40,000 tonne till March 31, 2011. After that date, the duty will be reinstated at whichever

is the lower of 20 per cent or ` 20 a kg. Automobile imports also saw a 114.3 per cent jump to ` 1,249.92 crore during the period, while that of parts and accessories of motor vehicles rose 30.1 per cent to ` 8,607 crore.

Imports of sensitive products from Indonesia, China, Argentina, Korea, Malaysia, the US, Germany, Ukraine, Thailand, Australia, Cote D Ivoire, the UK, Czech Republic, Vietnam and New Zealand have gone up.

he Central E l e c t r i c i t y R e g u l a t o r y C o m m i s s i o n

(CERC) wants the private sector to play an increasingly important role in strengthening the power t r a n s m i s s i o n sector. This is similar to the existing trend in the power generation sector. There is tremendous scope for augmenting the c o u n t r y s transmission &

distribution sector and the private sector must play an important role in this direction, said CERC Chairman Pramod Deo.

The regulator is currently in the process of awarding three

major transmission projects to enhance the reach capacity and stability of the national power transmission grid in the Western and Northern regions.

We have recently identified

three projects worth $2 billion for private sector participation, Deo added.

The regulator had previously awarded three projects to ensure seamless transmission of power covering the Eastern and North Eastern regions. Two of the projects are being commissioned by Reliance Transmission and one by Sterlite Technologies.

Deo has also expressed concern over the huge regulatory assets (claims for tariff hike accepted by the State regulator but not allowed to realise) created by distribution utilities in the country.

TPrivate sector must play vital role in T&D

RRubber imports double to ` 2,000 crore in April-October

merican oilfield service provider Schlumberger has executed ONGC

contract for drilling countrys first shale gas well in Damodar Valley. The Houston-based companys Asian arm drilled the well and submitted its report to the Central Government company in January. Schlumberger will drill three more wells subsequently to

establish the possibilities of producing shale gas in India.

Shale gas accounts for 21 per cent of US total gas production. Now India is also exploring possibilities of producing shale gas and ONGC is investing ` 120 crore for the

pilot project underway at West Bengal and Jharkhand. With growing demand for energy, companies are looking at shale gas. Recently, we completed the drilling of the first well within 40 days and data are being studied at our lab in the

US. The pilot project has seven stages and plans to drill three more wells for evaluation, said Anil Swani, VP, Schlumberger Asia Services.

AONGC drills countrys first shale gas well

Schlumberger will drill three more wells subsequently to establish the possibilities of producing shale gas

in India.

Financial Year 2010-11 (April-March)

Amount of FDI inflows*

(In Rs. crore)

(In US$ mn)

April 2010 9,697 2,179May 2010 10,135 2,213June 2010 6,429 1,380July 2010 8,359 1,785August 2010 6,196 1,330September 2010 9,754 2,118October 2010 6,185 1,3922010-11 (up to October 2010) # 56,755 12,3972009-10 (up to October 2009) 85,077 17,604%age growth over last year ( - ) 33 % ( - ) 30 %

FDI Equity Inflows (Month-wise) During The Financial Year 2010-11:

Sector 2010-11 (April-

October)

% age to total Inflows (In

terms of US $) Services Sector 9,933 21 % Computer Software & Hardware

2,524 9 %

Telecommunications 4,824 8 % Housing & Real Estate 3,294 7 % Construction Activities 3,239 7 % Power 4,482 5 % Automobile Industry 1,964 4 % Metallurgical Industries 4,220 3 % Petroleum & Natural Gas 2,421 3 % Chemicals 949 2 %

Sectors Attracting Highest FDI Equity Inflows:

Amount Rupees in crores (US$ in million)

Note: Cumulative Sector- wise FDI equity inflows (from April 2000 to October 2010) - Annex-B.

Share Of Top Investing Countries FDI Equity Inflows: (Financial years):


Source: Department of Industrial Policy & Promotion,Ministry of Commerce and Industry, Govt. of India

Country 2010-11 (April- October)

%age to total Inflows (in terms

of US $) Mauritius 20,523 42 % Singapore 5,815 9 % U.S.A. 4,168 7 % U.K. 1,571 5 % Netherlands 3,488 4 % Cyprus 1,956 4 % Japan 2,652 4 % Germany 380 2 % France 1,485 2 % U.A.E. 1,233 1 % Total FDI Inflows *

56,755 -

Note:(i) *(i) *Includes inflows under NRI Schemes of RBI.(ii) Cumulative country-wise FDI equity inflows (from April 2000 to October

2010) Annex-A.(iii) %age worked out in US $ terms & FDI inflows received through FIPB/SIA+

RBIs Automatic Route+ acquisition of existing shares only.

Share Of Top Investing Countries FDI Equity Inflows:


NATIONAL NEWS


EVENTS In India

escribing India as a global player and rising economic power, World

Bank President Robert Zoellick has said the high level of growth in the country is helping the international economy recover from the crippling effects of recent financial turmoil. Indias return to high levels of growth is helping the global economy recover from the crisis, said Zoellick. India, he further said, is a player on the global stage. The countrys status as a rising

economic power is closely connected with how it manages this next phase of growth, balancing rapid development with the environment and most importantly, the need to ensure all people have opportunity.

Having witnessed a slowdown in growth in the wake of the global financial crisis, Indias growth rate picked up to 7.4 per cent in 2009-10 from 6.7 per cent a year ago. The economy expanded by 8.9 per cent in the first half of

the current fiscal, making India one of the fastest growing economies in the world. According to the International Monetary Funds projections, the Indian economy is expected to record a growth rate of 8.8 per cent in 2010-11.

The World Bank Group significantly boosted the support extended to India last year to help offset the impact of the global financial crisis. The Bank Group committed a record US$11.1 billion to India during 2009-10.

DIndias growth helps global economic recovery

andvik Materials Technology, one of the key divisions of S w e d i s h

engineering group, Sandvik, recently announced the launch of new boiler technology for power plants. With this launch, Sandvik becomes the first company to bring value added special boiler tubing to India.

Hakan Kingstedt, MD & President, Sandvik Asia said, India is fast growing, and it has already emerged as a leading economy globally. This has led to new service potential and

product demand. As the Indian economy continues its fast paced growth at around 9 per cent, demand for power will see an exponential rise. New technology will play a significant

role in meeting the challenges of energy sector. This is Sandviks long-term strategic move based on high R&D inputs, which will drive technological changes.

SSandviks new technology to boost Indias power sector

Indias premier industrial trade fair on products and technologies from machine tools, hydraulics & pneumatics, process machinery & eqpt, automation instrumentation, packaging & auxiliaries, IT products, electrical & electronics, material handling, safety eqpt.For further details contact:Tel: 022 30034651Fax: 022 30034499Email: [email protected]: www.engg-expo.com

MaharashtraOctober 14-17, 2011

Auto Cluster Exhibition Ctr, Pimpri

PUNE

GujaratNovember, 2011

Gujarat University Exhibition Hall

AHMEDABAD

Madhya PradeshJanuary, 2012

Poddar Plaza, Nr Gandhi Hall

INDORE

uzlon Group signed a memorandum of u n d e r s t a n d i n g (MoU) with the

Government of Gujarat to develop 1,000 megawatt (MW) of new wind power capacity in the state over the next three years. The MoU covers the development of new capacity in windfarms across the state, with development planned in the districts of Saurashtra, Kutch and other parts of Gujarat. The MoU was signed under the auspices of the fifth biennial Vibrant Gujarat conference.

Suzlon Group has actively participated in Vibrant Gujarat,

since its inception in 2003. Over the past five conferences, Suzlon has signed six MoUs with the Government of Gujarat, committing over ` 14,000 crore for the development of wind farm projects, R&D centers, manufacturing facilities and in a Special Economic Zone (SEZ).

Tulsi R Tanti, founder & CMD, Suzlon Group, said, We are pleased to sign this MoU with the Government of Gujarat. This not only reinforces Gujarats position as one of Indias leading industrial states, but as a visionary leader embracing progressive policies emphasising clean, sustainable development to power a low-carbon economy. This MoU opens up the Gujarat market as an attractive destination for investors in India and around the world, and could drive over ` 6,000 crore in new investments into the state.

SSuzlon to develop 1,000 MW wind power in Gujarat

AERO INDIA 2011Focus: Aerospace and aviationWhen: February 9-13, 2011Where: Air Force Station Yelahanka, Bengaluru, KarnatakaTel: 011 24622228, 24629994E-mail : [email protected] Web: www.aeroindia.in

SME INDIA OUTLOOK 2011Focus: IT & automation solutions for SMEsWhen: February 10, 2011 Where: Novotel, Juhu, MumbaiTel: 022 42081731Fax: 022 24081709Mobile: 09930935112Email: [email protected]

With the launch of new boiler technology for power plants, Sandvik becomes the first company to bring value added special boiler tubing

to India.

Tamil NaduMarch 11-13, 2011

Chennai Trade Centre

CHENNAI

NATIONAL NEWS


he two-day Vibrant Gujarat Global Investors Summit 2011 concluded

recently with investment commitments of ` 20.83 lakh crore ($450 billion) committed. The investment pledged by national and international corporate giants this year is far higher than the ` 12.37 lakh crore in Summit 2009. As per the official figures, 7,936 memorandums of understanding (MoUs) were signed during the mega event. The investment pledged will provide employment to 52

lakh people, said Honble chief minister Narendra Modi at the valedictory session.

During the summit, Modi had one-to-one meetings with 650 delegates from 43 countries. As many as 1,400 foreign delegates from 101 nations participated this year. The urban development sector was the biggest gainer this time, with investment commitment of ` 2,26,274 crore. Some major projects include Essel Infraprojects ` 5,200 crore solid waste management & sewage treatment projects and L&T infrastructure

developments ` 5000-crore Ahmedabad monorail project. Additionally, the ports and ship building sector witnessed major investments to the tune of ` 1 lakh crore, with as many as 97 MoUs. Adani HPPL pledged ` 8,000 crore to develop a bulk-general cargo terminal at Hazira. The Essar Group signed two MoUs, involving a total investment of around ` 8,100 crore under its group company, Essar Bulk Terminals, for expansion of the deep water terminal at Hazira and extension of the companys Salaya jetty.

INTERNATIONAL ENGINEERING AND TECHNOLOGY FAIR (IETF) Focus: Solid waste management, water purification, stainless steel, welding, eco-products, auto parts, etc.When: February 10 12, 2011 Where: Pragati Maidan, New Delhi Tel: 0124 4014060 - 67Fax: 0124 4014080 & 4014057Email: [email protected]: www.ietfindia.in

RENEWTECH INDIA 2011Focus: Renewable Energy and Emerging TechnologiesWhen: February 17-19, 2011 Where: Bombay Exhibition Centre, Goregaon (E), Mumbai Tel: 022 26605550Fax: 022 26603992 / 93E-mail: [email protected]: www.renewtechindia.com

DIEMOULD INDIA 2011 Focus: Dies & moulds, press toolsWhen: April 7 10, 2011 Where: Chennai Trade Centre, ChennaiTel: 022 28526876 / 28508976Fax: 022 28503273E-mail: [email protected]: www.tagmaindia.org

BLECH INDIA 2011 Focus: Sheetmetal working, automation & robotics When: April 14 17, 2011 Where: MumbaiTel: 0124 4524200Fax: 0124 4524234Email: [email protected]: www.blechindia.com

FASTENER FAIR INDIA 2011Focus: Fastener and Fixing Technologies.When: April 16 17, 2011 Where: Bombay Exhibition Centre, Mumbai Tel: 0124 4524200Fax: 0124 4524227Email: [email protected]: www.fastenerfair.com

EVENTS In India

reep-feed grinding represents the most revolutionary invention in the

grinding sector, which has been developed by COSMOS with profile grinding. Creep-feed grinding is a profile grinding method involving deep depth of cut. This method provides higher performance levels than possible with conventional grinding as a result of larger wheel contact arc and an appropriate machine concept.

Simple creep-feed has long since become a thing of the past. 500mm/min, for a long time considered as the sound barrier has long since been exceeded. Since those days, the field of application has been

extended in many directions. Depending on the machine design, creep-feed grinding is now accomplished within any axis of movement or combination thereof.

All models have been designed with the production environment in mind and feature ultra-rigid polymer concrete or mehanite grade cast iron machine beds giving a small footprint, traditional CNC or Touch screen control options and fully enclosed guarding.

C

T` 20.83-lakh-cr MoUs signed at Vibrant Gujarat

he Central G o v e r n m e n t released the defence production

policy for the first time recently, intended to create an eco-system, which is conducive for private defence industry in the country particularly for the small and marginal enterprises. It is an attempt to promote reliance in the defence sector and the

government will give preference to indigenous design development and manufacture of defence equipment The policy will design and integrate platform systems within the country in line with the sectors long-term

integrate perspective plan. Also, all viable approaches such as formation of consortium, joint ventures and public-private partnerships will be suitably explored.

The make category of the defence procurement

procedure 2011 will be simplified in such a manner that it enables both public and private industry to meet defence requirement as fast as possible.

TGovernment releases first defence production policy

The government will also set up a separate fund to provide for necessary resources to public and

private sectors including SMEs.

COSMOS develops first creep-feed with profile grinding machine in India

NATIONAL NEWS


ybrid power s y s t e m s manufacturer Eaton Corporation has

introduced its hybrid electric system into the Indian city bus market with debut on the Tata Motors electric hybrid Starbuses. Eaton has also begun offering a complete line of electric vehicle charging systems to further reduce fuel consumption & harmful emissions.

Eaton is well positioned to deliver effective power management technologies that

help our customers control costs and reduce their energy requirements. Hybrid-powered buses have the potential to impact environmental sustainability in a very big way.

Tata is an innovative leader in the Indian bus market and is making important progress in reducing energy use and greenhouse gas emissions, said Krishnakumar Srinivasan, MD, Eaton Truck Division, India. Eaton worked with Tata to specially design the system for buses that run on compressed natural gas (CNG). The hybrid system combines a 5.9 litre Cummins CNG engine rated at 172 kilowatt (230HP) with an electric motor having a peak power output of 44 kilowatt.

AUTOMATION EXPO 2011Focus: Indsutrial automation, factory automation, robotics, instrumentation, sensors, etc.When: April 21 23, 2011 Where: Chennai Trade Centre, Chennai, IndiaTel: 022 28803977 Fax: 022 28819008 E-mail: [email protected] Website: www.automationexpo.in

RENEWABLE ENERGY WORLD CONFERENCE & EXPO- INDIA 2011Focus: Renewable energyWhen: May 05 - 07, 2011Where: Pragati Maidan, New DelhiTel :- 0124 4524205 / 4524200 Fax: 0124 4381162E-mail: [email protected]: www.renewableenergyworldindia.com

INTERMACHINERY INDIAFocus: Machinery & equipmentWhen: June 09-11, 2011Where: Bombay Exhibition Centre, MumbaiTel: 022 40376700Fax: 022 24962297Email: [email protected]: www.worldexindia.com

AUTOMOTIVE ENGINEERING SHOWFocus: Automotive manufacturing technologiesWhen: June 10-12, 2011 Where: Chennai Trade Centre, ChennaiTel: 022 32019137E-mail: [email protected]: www.focussedevents.com

METEX INDIA 2011Focus: Metal and metallurgical equipment, technologies and supplies When: September 22 24, 2011 Where: KTPO Trade Centre, BengaluruTel: 022 42107804Fax: 022 40034433Email: [email protected]: www.metex-india.com

EVENTS In India

obe Steels decision to set up a greenfield plant in joint venture with

Essar Steel is part of a larger multi-pronged strategy by the Japanese steelmaker to gain a foothold in Indias growing steel market. While Kobe is eyeing a significant presence in automotive steel, the company is also pursuing possible joint ventures with SAIL and NMDC that will ensure its presence at the cutting-edge of new generation, iron-making techniques that could be up to 15-20 per cent more cost effective than present ones.

Thus, one part of Kobes

strategy to make steel sheets used for making cars, is similar to what Sumitomo Industries, JFE Corp or Nippon Steel plan to do with Indian partners like Bhushan Steel, JSW Steel and Tata Steel respectively, gain a share of the rapidly growing automotive steels market by having a manufacturing presence here. As Malay Mukherjee, CEO, Essar Steel Business

Group, said, The auto industry is expected to be a major driver for steel demand in the country in the years to come. This MoU will further strengthen Essar Steels product portfolio to enable it to produce steel for high-end applications in the auto segment. However, what makes Kobes strategy different from the other Japanese steel companies and even the likes of other global steel majors like ArcelorMittal or Posco, is that it is looking beyond high-value steel products at alliances that could adopt and make use of alternative iron-making technologies developed and owned by it.

KKobe Steels multi-pronged strategy for Indian market

HEaton delivers hybrid power systems for buses in India

n h a n c i n g productivity has always been the prime concern for

SMEs. In this backdrop, INK Business Media will hold SME India Outlook 2011. The theme for the conference to be held on February 10, 2011, will be Capitalising IT & automation for manufacturing excellence.

The target sectors for the

summit include chemicals & process equipment, food processing, pharmaceuticals, plastics & packaging, engineered products, etc. The conference aims to provide delegates a unique opportunity to get updated on the latest technologies in IT & automation.

The conference will provide attendees an opportunity to meet the stalwarts from the IT

& automation industry as well as network with 200+ decision makers, funding agencies, banks and venture capital firms in the SME sector. It will not only give them first-hand information on customised programmes, specifically designed for SMEs but also give them a peek into the right business mantras implemented by those who have been there and done that.

EINK Business Media to organise SME India Outlook 2011

The hybrid system combines a 5.9 litre Cummins CNG engine rated at 172 kilowatt (230HP) with an electric motor having a peak power

output of 44 kilowatt.

WORLD NEWS


hina, where gridlocks in cities have become a major source of

public concern, continues to be the worlds biggest car producer and market for the second year, as its auto sales hit 18.06 million last year, registering a 32.37 per cent increase. Chinas car output topped 18.26 million last year, an annual increase of 32.44 per cent, Zhu Yiping, Associate Secretary-General China Association of Automobile Manufacturers (CAAM) said recently.

According to Gu Xianghua, Deputy Secretary-General, CAAM, the sales record last year was achieved because of

Chinas stable economic growth, car consumption policies and its accelerated industrialisation & urbanisation.

China overtook the US in 2009 for the first time to become the worlds largest auto market by selling 13.65 million vehicles, up 46 per cent

year-on-year, while production jumped 48 per cent to 13.79 million. But the Chinese were in no mood to celebrate their high rating in car sales as Beijing and Shanghai have already imposed heavy restrictions on

buying cars as a measure to ease recurring gridlocks.

Beijing, which already has about 5.10 million cars, restricted new car sales to 2.40 lakh per year. Shanghai also has a similar policy. Around 2,15,425 people applied for car purchase licences in Beijing

in January, but only 20,000 will be issued one through a monthly lottery. Beijings measures to tame traffic jams would not affect car sales as the city accounted for a fraction

of the countrys annual sales, said Xiong Chuanlin, Deputy Secretary-General, CAAM. But Dong Yang, deputy director of the CAAM said that other cities could follow suit by limiting car purchases.

GREEN MANUFACTURING

EXPO 2011

Focus: Equipment & machinery

When: March 16 -17, 2011

Where: Orange County

Convention Center, Orlando,

Florida, US

Tel:+1 310 9969413

Fax:+1 310 9969499

E-mail: [email protected]

Web: www.greenmfgexpo.com

PROMAT 2011

Focus: Material handling &

logistics

When: March 21- 24, 2011

Where: McCormick Place

South, Chicago, IL, US

Tel: 800-345-1815

Fax: 704-676-1199


Web: www. promatshow.com

IFPE 2011

Focus: Fluid power, motion

control, power transmission

When: March 22 - 26, 2011

Where: Las Vegas Convention

Centre, Las Vegas, NV, US

Tel: +1 414 2984167

Fax: +1 414 2722672


Web: www.ifpe.com

HANNOVER MESSE 2011

Focus: Industrial automation,

motion, drive & automation,

energy, power plant technology,

etc.

When: April 4-8, 2011

Where: Hannover, Germany

Tel: +49 511 890

Fax: +49 511 8932626


Web: www.hannovermesse.de

EVENTS Abroad

CChina Worlds biggest car producer & market for 2nd year

fter reporting two months of growth in 2010, Brazils factory output

slackened marginally in November due to cheap imports, which led to a build-up of inventories in some industries. Factories produced 0.1 per cent less in November as compared to October 2010, Brazilian Census Bureau recently stated. The lower figure could ease some pressure on Brazils Central Bank to raise

interest rates sharply, but will stoke fears about the harm to the industry caused by the strength of the Brazilian currency Real.

Andre Luiz Macedo, the Industry Manager of the

Brazilian Census Bureau, said, Industrial production has been stable for four months. Inventories are the highest in home appliances, but imports have also affected the metals, shoe and textile sectors.

Real is close to two-year highs against the dollar, and analysts say that its strength is undermining competitiveness of the local production. Underlying demand in Brazils economy continued to grow, they added.

A

China overtook the US in 2009 for the first time to become the worlds largest auto market by selling 13.65 million vehicles, up 46 per cent y-o-y.

S Treasury Secretary Timothy Geithner has claimed that China

is expected to be the US largest trading partner 10 years down the line, adding that the US is benefitting because of the economic ties between the two nations. It is very

important to understand that this is a relationship with very substantial economic benefits to the US, Xinhua quoted Geithner as saying. He also said that in 2010, American exports to China exceeded the $100-billion mark. They are growing at about twice the pace of our exports to the rest

of the world. This means that our exports to China will double in the next 4-5 years, which in turn means that China is likely to become our largest trading partner in roughly 10 years from today, he added. Currently, both the countries are each others second largest trading partners.

UChina slated to be largest trading partner for the US

Brazils industrial output slips as cheap imports push up stocks

WORLD NEWS


SHEETMETAL ASIA 2011Focus: Sheetmetal fabrication technology & machineryWhen: May 19-22, 2011Where: Bangkok International Trade Exhibition & Convention Centre (BITEC), Thailand Tel: +660 2642 6911Fax: +660 2642 7433E-mail: [email protected]: www.intermachshow.com

ATLANTIC DESIGN & MANUFACTURING 2011 Focus: Industrial design, rapid prototyping, engineering When: June 07-09, 2011Where: Jacob K Javits Convention Center, NY Tel:+1 310 4454200Fax:+1 310 9969499E-mail: [email protected] Web: www.canontradeshows.com

MANUFACTURING EXPO 2011Focus: Machinery & processing technologyWhen: June 23-26, 2011Where: BITEC, Bangkok, ThailandTel: +66 26867207Fax: +66 26867208E-mail: [email protected]: www.manufacturing-expo.com

CANADIAN MANUFACTURING TECHNOLOGY SHOW 2011Focus: Machine tools, automation technologiesWhen: October 17-20, 2011 Where: Direct Energy Centre, Toronto, Canada Tel:+(1)-(313)-4253000Fax:+(1)-(313)-4253400E-mail: [email protected]: www.sme.org

EVENTS Abroad

ndia and South Korea are set to expand their year-old bilateral

trade pact at a time when India has concluded talks for a more ambitious agreement with Japan. Both the countries will set up a joint committee, which will review the existing bilateral trade arrangement and work to further expand the level of liberalisation, said a commerce ministry official. Both the countries have signed a comprehensive economic partnership agreement in August 2009 that came into effect in January 2010. The treaty includes trade in goods & services as well as

investments. It also deals with competition and Intellectual Property Rights. India is also the only country to obtain a commitment for temporary migration of professional workers from South Korea under the World Trade Organization rules.

Though India and South Korea are the 3rd and 4th largest economies in Asia, bilateral

trade between them is only $12 billion in comparison with $42.5 billion trade between India and China in 2009-10.

South Korea, Indias 11th largest trading partner, is the second country after Singapore with which India has signed such a treaty. This agreement covers more than 85 per cent of Indias trade. A similar bilateral pact with Japan, talks for which have concluded, is more ambitious, covering 90-95 per cent of traded goods.

According to the official, Indias trade with South Korea grew 40 per cent up to October in 2010 compared with 31 per cent contraction during January-October 2009.

IIndia, South Korea set to expand existing trade pact

itsubishi Motors will streamline production in Japan, the US and

Europe while increasing output in emerging markets, including Brazil and India, a recent report revealed.

By redistributing resources, the automaker aims to lift global production to 1.5 million units. In the US, Japans fourth-largest automaker will stop production of three models designed only

for the North American market, such as the Eclipse (now manufactured at a plant in Illinois). But the company will increase output of such models as the Outlander sports utility vehicle can be sold in other foreign markets.

In Europe, it will stop production of the Colt subcompact model next year, while the firm also plans to reduce or freeze production of certain models at Japanese

plants. Meanwhile, the Japanese automaker will invest in Brazil to boost local production, while preparing to start output from India by investing in a local partner.

It is also exploring a joint venture in India with Frances PSA Peugeot Citroen.

Mitsubishi Motors aims to manufacture low-priced vehicles based on minicars jointly developed with Nissan Motor Co.

MMitsubishi Motors to target Brazil & India

he global economy is expected to grow 3.3 per cent in 2011 and 3.6

per cent in 2012, according to a report released by World Bank. According to The Global Economic Prospects 2010 report, developing countries are expected to grow six per cent in 2011 and 6.1 per cent in 2012. They will continue to outstrip growth in high-income countries, which is projected at

2.8 per cent in 2010, 2.4 per cent in 2011 and 2.7 per cent in 2012, quoted Justin Yifu Lin, Chief Economist & Senior VP Development Economics,

World Bank. The world economy is entering into a new phase of recovery, he added. The report also predicts that Chinas economy is to grow 8.0 per cent this year and 7.8 per cent in 2012.

For China, domestic demand contributed some 7.8 percentage points to the overall growth of 10 per cent in 2010, with net trade contributing the remainder, the annual report said.

TGlobal economy to grow 3.3 per cent in 2011

The Global Economic Prospects 2010 report predicts that Chinas economy is to grow 8.0 per cent this year and

7.8 per cent in 2012.

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As an industry, we are gaining maturity with better understanding of how to be cost-competitive and yet meet the quality demands on As an industry, we are gaining maturity with better understanding of how to be cost-competitive and yet meet the quality demands on the global stage, opines the global stage, opines Hemant Luthra,Hemant Luthra, President- Systech Sector, Mahindra & Mahindra, in an exclusive interview with President- Systech Sector, Mahindra & Mahindra, in an exclusive interview with

Sudhir MuddanaSudhir Muddana. Excerpts. Excerpts

WE SHOULD SET OUR SIGHTS ON ACHIEVING A WE SHOULD SET OUR SIGHTS ON ACHIEVING A ROBUST AEROSPACE INDUSTRYROBUST AEROSPACE INDUSTRY

PRESIDENT- SYSTECH SECTOR, MAHINDRA & MAHINDRA

PRESIDENT- SYSTECH SECTOR, MAHINDRA & MAHINDRA


NDIAN AEROSPACE INDUSTRY ON AN UPWARD GRAPHHistorically, the Indian aerospace components manufacturing industry has been largely inwardly focussed, ie, the emphasis has been on domestic consumption. However, over the past few years,

the focus has shifted and some private sector companies are already addressing the needs of international customers. The industry, on the whole, is gaining maturity with better understanding of how to be cost-competitive and yet meet the quality demands on the global stage. I believe the journey has barely started, and the industry will certainly witness rapid growth with larger workforce migrating into India in the years to come.

M&Ms VENTURE INTO THE LUCRATIVE SPACEMahindra & Mahindra (M&M) identified aerospace as a focus area a few years ago. Subsequently, Plexion was acquired, followed by our first experience of both, engineering and manufacturing outsourcing (ESO and MSO). We have tweaked aircraft and helicopter designs for our clients and built, fabricated & exported 24 planes for some others. Therefore, besides the proven technical credibility, the unmatched Mahindra commitment and engineering DNA drives our foray into the aerospace business. These capabilities have been refined by the Australian acquisitions and allow us to pursue our growth strategy in all three verticals design, aerostructures, and general aviation aircraft. Our plans will maximise the synergies between these areas of our interest. By building a strong and robust design-to-build capability in aerostructures, we will provide the global aerospace industry maximum value as they restructure and reshape their supply chains. We are investing more than Rs 400 crore into our aerospace business.

By channelling the best of our corporate ethos, we are committed to providing quality, timeliness and cost-competitiveness in every initiative of ours. On the aerostructures side, we will offer our customers the flexibility of partnering with us across the value chain from fundamental design activities through manufacturing comprehensive structural assemblies. On the aircraft side, we will build upon the accomplishments of Gipps Aero, which is already selling and supporting aircraft across the globe.

OVERCOMING CHALLENGESOne of the fundamental challenges in the field of aerostructure manufacturing is that it depends on materials imported from abroad to a great extent. This introduces time and cost challenges when it comes to making India a part of the global supply chain. In order to overcome these geographic disadvantages, we would look up to the government to extend its support to this industry through far-sighted infrastructure and taxation plans. Another challenge lies in deploying the trained resources that this industry demands. Again, specialised training schools would be an area where the government could provide significant boost.

INDIAN R&D FACILITIES TO SUPPORT AEROSPACE COMPONENTS MANUFACTURINGIndia has excellent aerospace R&D capabilities in the form of several laboratories working on various high-technology areas. The challenge for the industry will be to harness that knowledge and build sound business models around it. We believe one approach is to build

relationships with the Tier 1 suppliers and other major players in the global aerospace and with the OEMs to chalk out future programmes for speeding up the deployment of the right technologies at the right time.

INDUSTRY POTENTIAL FOR SMEsWe need to co-operate within the industry to build a common aerospace ecosystem as there is certainly enough opportunity in the marketplace to support that notion. SMEs can perform a critical role in this activity there are numerous specialised activities within the component manufacturing lifecycle that could be perfect entry-points, so that we domestically build a strong industrial base spanning from making parts to large-scale integration activities.

GOVERNMENT POLICIES IN SUPPORT OF AEROSPACE Clearly the Defence Offset Policy is a huge enabler and the Government of India has significantly provided a growth momentum to the domestic industry by developing this policy, as well as proactively improving it based on the feedback from domestic and international players. As mentioned, we are honing our competitive edge in the non-offset business, and the government can help us overcome the logistics challenges through forward-looking support in infrastructure development, resource training and taxation structures.

INDIAN COMPANIES TO TAKE OFF TO THE NEXT PHASE OF GROWTHIn our assessment, the developed markets will continue to be major consumers of aerospace goods & services in the near future, although future growth may be driven by BRIC and other developing economies. Unlike some of the other developing economies, we are still lagging behind in aviation infrastructure perhaps the private sector has a promising role to play in overcoming this. In order to accelerate our growth as an industry, we need to pay attention to the fundamentals quality, cost & timeliness. Further, there is a need to fearlessly seek partnerships wherever necessary to speed up the learning process.

INDIA TO BECOME A GLOBAL HUB FOR AEROSPACEA strong comprehensive ecosystem together with government support to balance geographic factors; development of enough scale domestically to attract material & hardware suppliers to manufacture their goods in India, and industry-wide adoption of best practices in terms of quality control will certainly make India a global hub for aerospace industry.

TRENDS TO BE OBSERVED IN THE COMING YEARSAs the industry matures, there will be a gradual migration from metallics to composites in the field of aerostructures. Further, India will move up the value chain to take on more complex work packages and prove that world-class processes can be developed, adopted and maintained indigenously. Ultimately, the focus should be set on achieving a robust aerospace industry that is a force to reckon within civilian and defence aerospace product development, manufacturing and support.

I

CHALLENGES & OPPORTUNITIES


India has set an ambitious target of 200 million tonne steel production by the year 2020. If India plans to meet the set target, it needs to take serious steps to resolve the pertinent challenges viz land acquisition, logistics and coking availability, which are hampering its growth potential. To mitigate these challenges, the industry needs to build its cost competitiveness in order to get equipped for large-scale global operations. Improving labour productivity can go a long way in removing inefficiencies and costs associated with them.

hough the Indian Government has ambitious plans of achieving production of around 200 million tonne by FY20 in order to meet the growing

demand for steel from key end-user industries construction and automobile how probable it is to meet these targets is still a big question. There are certain challenges that threaten the capacity growth of the industry and raise doubts about the ability of the industry to achieve the target of 200 million tonne by 2020. Cost rationalisation is one of the key challenges faced by steel manufacturers. Though India enjoys low raw material costs as compared

to global peers due to self-sufficiency in terms of iron ore, other cost elements such as expensive coking coal imports, high electricity and logistics costs due to inefficient transport infrastructure put cost pressures on the industry.

Further, unfavourable regulatory environment in the form of inordinate delays in land acquisition & mining leases, and unclear relief & rehabilitation policies also dampen the return on investment of large steel players. In terms of raw material availability, though India is self-sufficient in terms of iron ore; it has not been able to realise its full potential. There are huge latent iron ore reserves, which can be exploited through expenditure on

exploration; however, till now the commitment towards this aim is missing. Logistics and infrastructure is another area that needs improvement. Insufficient thrust on building relevant infrastructure in terms of roads, ports and railways has plagued the industrys potential. There is a growing need to put a serious thrust on infrastructure in order to propel growth in the industry. Some of the major challenges that throttle industrys performance and ways to overcome these pertinent issues are discussed here under:

REGULATORY ENVIRONMENTThe regulatory environment plays a major role in the growth and development of any

T

MISSION 200MISSION 200 MILLIONMILLION TONNETONNE BYBY 20202020



industry; metals and mining is no exception to that. Over the last 3-4 years, state governments have signed 222 MOUs to add steel capacity of close to 276 million tonne, yet not many of the envisaged projects have taken off. As mentioned afore, the major issues facing companies relate to land acquisition, securing mining leases, forest clearances and relief & rehabilitation (R&R) policies. POSCO is a prime example that has seen its $12 billion greenfield steel project in Orissa getting delayed by more than two years. Other projects from ArcelorMittal, Tata Steel, Bhusan Power & Steel, Jindal Steel & Power, Sterlite Iron and Steel Company, Uttam Galva and Welspun Power & Steel have been deferred by over three years.

Land acquisition issues are a dampener for large players having plans to set up greenfield projects in the country. Lack of title certificates, improper and non-existent land records makes land acquisition a tedious and a long-drawn process. Further, according to the Indian constitution, land matters come under state jurisdiction. As a result, each state has different legislations that are not in tandem with central legislations. This results in a great deal of confusion and delays decision-making on land-related matters. Furthermore, foreign investments in agriculture land are prohibited in India. Therefore, for a foreign investor to invest in land development in the country, the land must be converted into one for non-agricultural use. This takes time and entails expenses, resulting in unwarranted delays in land acquisition.

To add to the woes, inordinate regulatory delays in obtaining the requisite approvals and mining leases restrict the benefits that can be achieved through these projects. States such as Orissa, Jharkhand, West Bengal and Chhattisgarh have witnessed increased interest from steel majors, mainly due to easy availability of raw materials in these states. In this scenario, restricted raw material supply and setbacks in acquiring mining leases is not favourable for the industry. Policy-makers need to ensure that policies aim at minimising the cost of mining as well as that of mine resources for steel manufacturers.

Another problem facing the industry is obtaining forest and environmental clearances. There have been cases of mines being closed due to non-clearance under the Forest (Conservation) Act, 1980. In addition, there are other problems such as

reduction in the mining area and lessees being forced to restrict their activities to broken-up areas. Furthermore, despite the Supreme Courts directions on sending applications for clearance to the Ministry of Environment and Forests within two weeks of proposals being submitted, state forest departments have a lacklustre attitude and keep applications pending for years. The government has taken initiatives to ensure that some of these problems could be resolved. The National Mineral Policy 2006 has targeted the issues relating to transferability of prospecting and mining leases, streamlining criteria for grant of mineral concessions, transparency in the mine allocation process, land acquisition reforms and forward looking resettlement and rehabilitation (R&R) policy guidelines. It is hoped that an early enactment and implementation of the new policy, which is pending for some time, will be a definite positive step in the direction of Indias target of attaining 200 million tonne by 2020.

COKING COAL SHORTAGEIndia faces a huge shortage of coking coal due to limited domestic supply that is not commensurate with the rising demand. Coking coal consumption in the country has grown exponentially on the back of increased steel production. Coking coal reserves in the country are limited as compared to overall coal reserves. Reserves form 13 per cent of total proven coal reserves of 105.8 billion tonne. Its production in India stood at 33.3 million tonne in FY09, just 17 per cent of the countrys total coal consumption.

Not only the availability of coking coal, but also its quality is a matter of concern for the industry. This is also one of the reasons for increased dependence on coal imports. Imported coal is mixed with the domestic coal to boost its calorific value. It is expected that the demand for coking coal in India will increase on the back of a strong steel sector, which will in turn lead to higher imports. The key stakeholders need to take several initiatives to deal with deficiency in coking coal. Investment in coal beneficiation can go

a long way in improving the quality of coal. Further, investment in technology to boost production levels can help mitigate coking coal deficiency to some extent. More focussed and aggressive acquisition initiatives by companies will also help to mitigate the impact of low availability of domestic coking coal.

LOGISTICSInadequate infrastructure and logistics facilities have significantly affected the steel industry and have resulted in serious cost implications. Every tonne of steel produced requires transportation of four tonne of material. This implies that close to 200 million tonne of steel production by FY20 would require transportation of 800 million tonne of material. It highlights the need for huge investments in key infrastructure including railways, ports and roads. An efficient transportation network, be it rail, road, sea or air, is of paramount importance today, since unlike in the past, when

upstream production and downstream processing by large integrated players was conducted at a single location, the process now entails the two activities being carried out at varied locations by different players.Railways: There are several issues related to the infrastructure of railways that have reduced its importance as the preferred mode of transport in the country. Delays in rake movement, congestion, lack of multiple access points at steel plants and insufficient line capacity are some of the infrastructural problems the industry is facing today. According to FY09 Railway Budget, steel-related traffic is expected to rise enormously by FY12. This calls for immediate and urgent steps to rev up rail infrastructure in the country.Roads: Roads are another area of concern. Of the total road infrastructure in the country, national highways account for a mere 2 per cent, while express highways are non-existent. It is an irony that rural and other roads comprise 80 per cent of the countrys total roads, measuring 3.3 million km, in the worlds second-fastest growing

India still lags behind its closest competitor China on many fronts. If the sheer size of the industry is considered, Indias steel production is close to one-tenth of China. Further, in terms of capacity additions, China ranks well ahead of India. China was able to add 300 million tonne capacity between FY03-08 as compared to 20 million tonne by India. This indicates a wide gap that India needs to bridge with respect to China.

FACT

FACT

FACT



economy. Although the government aims to build roads measuring 20 km a day, it has till now been able to achieve not more than 9 km. The work on this need to be expedited on an urgent basis, if road infrastructure bottlenecks are to be cleared on a war footing. According to the Joint Plant Committee (JPC), close to 24,000 million tonne-km of materials will be transported across the country by FY12, and the road traffic for finished steel will be around 26,228 million tonne-km by then.Ports: The steel industry is one of the important users of port facilities and accounts for around 25 per cent of port traffic. Since the share of blast furnaces in total steel production is expected to remain more than 60 per cent during the Eleventh Five-Year Plan, the importance of port infrastructure will also continue to be high. This is because the countrys reliance on blast furnaces will require import of low-ash coking coal, which will give a further boost to port traffic. Currently, Indian ports face challenges in terms of low productivity, high costs, long vessel turnaround periods and lengthy custom delays, which hardly bodes well for the industry. Such bottlenecks add to the costs of steel manufacturers and impede their profitability.Power: The condition of the power sector in India, though unfavourable, is showing signs of improvement. The steel industry, which requires 3,276 MW of power according to the Eleventh Five-Year Plan, is facing issues including frequent outages and high voltage fluctuations. This has led to the over-dependence on blast furnace route requiring higher coking coal (procured mainly through imports) for steel production and has underplayed the importance of electric arc furnace (EAF) as an alternative method of steel production. The use of EAF has been limited due to high electricity costs. Hence, there is a need to invest in the power sector for which the government has announced many ultra mega power projects (UMPPs). However, such investments are hard to procure, since the

basic source of power generation (coal) is deficient.

The industry is grappling with coal shortage, which is expected to increase significantly from FY14 with the establishment and initiation of new power projects. This deficit in coal supply is expected to touch 74 million tonne in FY12 and around 120 million tonne by FY14. However, in light of these challenges, the government has taken initiatives to boost power generation in the country. The establishment of UMPPs is a step in the right direction. Further, in order to improve fuel linkages for power generation, the government has allowed UMPPs to use surplus coal from their allotted coal blocks, for power generation as compared to the earlier practice of transferring excess coal to Coal India at notified prices, which were 40-50 per cent lower than the market prices. However, the overall scenario is not bleak. The situation is expected to improve exponentially once the governments plans for upgrading the countrys road, power, rail and port infrastructure are put into action and it invests $500 billion (as planned) in infrastructure development during the Eleventh Five-Year Plan. The key to success will be appropriate utilisation of funds and the speed at which these projects are implemented.

MANAGING COSTSCost management is one of the important driving factors for success in any industry, and steel industry is no exception to that. Managing costs enable the companies to secure favourable returns on investment in order to announce viable projects. Steel industry faces a peculiar kind of situation as the sales realisation of the industry is largely dependent on global pricing, the cost structures in various countries are very different. Some of the costs are external to any company like taxes, logistics cost etc. However, there are other cost elements that are under a companys control or rather dependent on a companys decision

on location, procurement and supply. With steel prices expected to hover around the $600 per tonne-mark in the near future, managing the external and internal costs would be critical to ensure healthy rate of returns for new projects and viability of greenfield projects in capital-intensive industry like steel.

Steel companies face unprecedented threats to their financial health, if they fail to manage costs forced on them by a downturn. Yet, managing costs is easier said than done. Many companies respond to a downturn by cutting costs, striving to release cash, reduce borrowings and stabilise their operations. This trend tends to accelerate in the course of a downturn, with businesses putting cost management at the top of their agenda. Now that the enterprises are seeing a sign of recovery, the question that is being asked is: Once savings have been implemented, does a business consign cost management to history and return to previous patterns? Emphatically not. In fact, effective cost management has to become engrained in businesses DNA in order to tackle the future challenges. Low-cost production is no longer a matter of choice, but a necessity. Cost management is about deploying a structured approach to achieving sustainable cost leadership. While a lot of organisations might be taking a few steps to reduce costs, very few can claim to have cost management as part of their DNA.

WHAT DRIVES COST FOR THE INDUSTRY?India has a fragmented steel industry structure with few integrated steel manufacturers and many mid-size and small-size manufacturers. They range from the left-most end of steel value chain, who manufactures basic intermediate products like sponge iron & pig iron to the right-most end, who re-roll, galvanise and colour coat the cold-rolled coils. Many of the manufacturers who had set up their plants during 1960s-1970s have become prominent players in the Indian steel industry today. One aspect common to all these manufacturers is the age of their technology.

As technology gets old and manufacturing methods are streamlined, the psyche gets set to not disturb the things that are working well. As the old adage goes: If it isnt broke, dont fix it. However, there is a tremendous potential of saving costs, if producers follow a structured approach of identifying the cost

India has a fragmented steel industry structure with few integrated steel manufacturers and many mid-size and small-size manufacturers.

Indian steel industry has been striving to streamline its supply chain operations by increasing the performance efficiency through elimination/outsourcing of non-value added activities, planning effective transportation and developing information technology to link and exchange information within and between organisations.



drivers, building improvement hypothesis, running analytics and developing business cases for improvement. Structured approach to monitoring the benefits is an integral part of cost management. Inadvertently, there are production bottlenecks and excess capacities in machinery, which could be tapped inexpensively with the knowledge that lies within the minds of the organisation. Many-a-time, this internal knowledge is not churned and finetuned towards their efficacies and corresponding cost benefit analysis.

Managing costs in this industry is a challenging issue, given that few controllable cost levers are available across the value chain. Some key cost challenges include: Raw material availability

quality and volume (iron ore, coal, coke, ferro alloys, etc.)

Raw material prices movement

Currency price movement Dependence on available

transport infrastructure ports, roads, rails, local transporters.

WHERE TO ACT - UNDERTAKING THE INITIATIVESSteel companies should undertake the following initiatives, amongst others, to optimise cost:

YIELD OPTIMISATIONOrganisations leave the topic of yield improvement to the R&D department even when the shift supervisors, the machine operators, mill workers and helpers might have many innovative untried ideas in their mind, which can help in substantially optimising the yield. A new technology or upgradation of specific equipment in the manufacturing line definitely leads to improved results but not without any capital expenditure. Hence, better operating practices with a keen eye to reduce all possible wastes that are generated and continuous improvement in maintenance procedures can lead to yield improvement. Post that, if better technology is available within budget that can help in better measurement & control, deal with product quality and consistency issues, reduction in heat cycle times, improved maintenance methods, etc, then the same should be

definitely tried rather than making yield losses.

OVERALL EQUIPMENT EFFECTIVENESS The many manufacturing efficiency improvement methods in the steel industry worldwide and also in India, ranging from lean sigma, TPM, quality circles, etc, tend to confluence on one central theme when it comes to asset utilisation and that is overall equipment effectiveness (OEE). OEE is one such lever whose improvement results in significant cost savings for any manufacturing set-up. Improvement in OEE attacks the Six big losses as they are called in the operations management parlance viz.

breakdowns, set-up and adjustments, small stops of machines, reduced speeds of running, start-up rejects and production rejects.

OEE is a measurement that reports the overall utilisation of resources for manufacturing operations. This metric directly indicates the gap between actual and ideal performance. OEE breaks the performance of a manufacturing unit into three separate but measurable components: availability, performance, and quality. It is unlikely that any manufacturing process can run at 100 per cent OEE. Many manufacturers benchmark their industry to set a challenging target.

OEE is a product of machine availability, product quality and the manufacturing performance efficiency. Here availability is a ratio of actual operating time and planned production time, performance is a ratio of ideal cycle time and actual operating cycle time for a unit piece of manufacturing (e.g. unit metric tonne) and quality is a ratio of number of good pieces to the total number of pieces manufactured. The generally accepted worldwide goals for each factor of OEE are availability - 90 per cent, performance - 95 per cent, quality - 99.9 per cent, thus leading to OEE - 85 per cent.

Even big names in the Indian steel industry have an OEE in the range of 50 to 60 per cent. This fact itself indicates a tremendous scope of improvement for steel producers.

Indian steel manufacturers are increasingly adopting OEE measurements to achieve the following: Improve asset efficiency and utilisation to

best-in-class Identify/resolve root causes for efficiency

loss Prioritise assets that need to be

improved Increase organisational capacity without

significant capital spend Reduce manufacturing costs Support growth & improve profit

SUPPLY CHAIN OPTIMISATIONIndian steel industry has been striving to streamline its supply chain operations by increasing the performance efficiency through elimination/outsourcing of non-value added activities, planning effective transportation and developing information technology to link and exchange

information within and between organisations. However, the supply chain managers in steel industries are confronting significant challenges to meet service levels, which can be primarily attributed to Raw materials that constitute majority of

the cost of production for steel manufacturers have shown significant volatility in the recent past. This has resulted in alteration of normal purchase plans, and hence, delivery schedules for most of the steel manufacturers.

Steel manufacturers often are exposed to fluctuations in the currency exchange market as important raw materials like coal is often imported from countries in Asia-Pacific region.

Majority of the small and mid-sized steel long product manufacturers have taken up a decentralised production model with final rolling facilities closer to the customer and primary metal production facilities in regions enjoying tax breaks. This production structure has increased emphasis on efficiency related to interplant logistics.These uncertainties along with other

regional and organisational practices have put significant pressure on costs associated with inbound & outbound supply chain of

Inadequate infrastructure and logistics facilities have significantly affected the steel industry and have resulted in serious cost implications. Every tonne of steel produced requires transportation of four tonne of material. This implies that close to 200 million tonne of steel production by FY20 would require transportation of

800 million tonne of material.



steel industry. Major cost reduction initiatives taken up by steel manufacturers towards this include network redesign; transit losses reduction; automation; transportation mode alignment; freight negotiation reverse auction, etc.

MANPOWER PRODUCTIVITY IMPROVEMENTSteel is no more the labour-intensive industry it used to be. Earlier perception of huge workforce associated with steel plants does not quite hold true in todays world. For POSCO, number of employees per million tonne of steel produced stands approximately at 700, whereas the same for organisations in India is between 3,000-4,000. The number is even larger when PSU majors are taken into account. During the last decade, the steel industry had drastically reduced manpower all around the world. In the US, it was down by 70-80 per cent. In Japan, it was down by approximately 50 per cent, whereas in UK & Germany the same can be quoted between 60-70 per cent. India is also seeing a similar trend with PSUs steadily shedding their ageing workforce through voluntary/ age linked separation schemes. Private sector steel manufacturers have also put increased focus on manpower optimisation or redeployment to achieve superior productivity. Primary improvement initiatives taken up by steel companies in this area are head count reduction; broadening span of control; and productivity improvement.

CHALLENGES IN COST MANAGEMENTAchieving sustainable benefits from cost management have never been easy. The challenge is to instill a pervasive cost management culture, to the point that it becomes a regular, normal and expected part of business life. There needs to be a paradigm shift, such that cost management becomes relevant to front and back office operations, to the shape of the business model, to the portfolio of customers (are they sufficiently profitable?) and to organisations at whatever point they are in the economic cycle, in whatever sector or in whatever geographic region.

Executives need to be patient and develop a communications strategy that emphasises on the improvements achieved through efficient consumer response and what they mean for the enterprise as a whole. Time must be set aside for the change process to take effect, creating an environment where employees feel like they are treated fairly. Costs saved in one part of the business can be invested elsewhere, so that there is still a sense of expansion and optimism. Executives must have enough humility to accept where cuts need to be made, rather than playing competitive games with their colleagues over budget levels. And finally, cost management need to become a routine, normal part of business operations, rather than something that is identifiably short-term and done only in response to a crisis.

KEEPING THE SHINE FOREVERThe steel industry is striving to sustain its shine. However, as mentioned earlier, the challenges are many. The industry and the government need to take initiatives to tackle the issues hindering the growth prospects, especially to meet the ambitious target of achieving 200 million tonne by FY20.

This article is an excerpt from white paper titled, Indian Steel Industry 2010: Time To Steel by Ernst & Young


NATIONAL ALUMINIUM COMPANY

TAKING THE

PATH LESS

TRODDEN

E SANDEEP PAI AND SUMEDHA MAHOREY

Making the impossible possible and overcoming all the challenges requires strong will, determination and a sustainable futurist outlook. Creating history in the bauxite mining in a region with absolutely no basic facilities and connectivity with the outside world, National Aluminium Company (NALCO) has proved this to be true. Standing tall, tackling these extremities for decades is NALCOs Panchpatmali mine at Damanjodi, Orissa, which has changed the way bauxite mining is being done in India. Because of its high-tech, eco-friendly and socially-oriented business approach, it has earned a high stature and set a precedent for other companies to follow.

astern Ghats, a beautiful stretch of mountains spanning over a thousand kilometre from Visakhapatnam in Andhra Pradesh to Kalahandi in

Orissa, is renowned as the bauxite belt of the country. Four thousand feet high, extending roughly parallel to the coast, this belt is also home to one of the most successful mining endeavours in Indian history.

THE BAUXITE STORYAround 40 years ago, it was estimated that more than 2 billion tonne of bauxite was present in this hilly region. Today, with over 4.8 million tonne of this estimate being extracted annually, this figure just constitutes a speck in the ocean of abundant resources that still lies untouched in this vast expanse.

Back then in the 70s, the bauxite deposit from this belt was not considered economically-viable because of its low alumina and high silica contents. Another

reason was the reluctance to mine in a region that was located in one of the most backward districts of Orissa, with no rail-road connectivity and deep forest cover as the roadblock .

With next to negligible logistical support, it had become a humungous task even for the Railways to set up infrastructure in this region. This region was impenetrable for any mining company, as it almost had no connectivity with the outside world. Apart from logistics, lack of adequate power



required to run a mine and the subsequent refinery was another major constraint.

Besides the basic infrastructural bottlenecks, there were issues related to availability of human resource. The villagers inhabiting these hills were tribals in true sense. With meagre living resources, reluctance to change and the highest illiteracy rate, communicating with these tribes and convincing them was a Herculean task.

Under such extreme conditions, companies were not too keen to invest, as they were unsure about the returns. In fact, many believed that mining was next to impossible in these regions. However,

National Aluminium Company (NALCO), a public sector enterprise incorporated in 1981, went against the preset notions and demonstrated to the world as to how sustainable and profitable mining can be achieved even under such extremities.

While the company had to overcome a lot of challenges for carrying out mining activities efficiently, with sheer determination and perseverance to achieve the so-called impossible task, NALCO sailed through the storms successfully. Providing an in-depth account on the challenges faced by the company in its earlier days, PK Mohapatra, Executive DirectorMines & Refinery,

NALCO, elaborates, During those years, there was no road even to Damanjodi. Thus, for bringing in equipment and materials to start the exploration process, we had to make alternative kuccha road. For years, we had operated relying on that road before the pucca road came into being.

Another challenge confronting the company was to keep the workforce motivated under such harsh circumstances. Those were the toughest times that the employees had faced. There was no proper shelter, water or food available to them. We started from scratch and now have reached a stage where we have our township with adequate facilities, adds Mohapatra.

THE SURVIVAL INSTINCTSurviving through that phase, Panchpatmali open cast mine now stands as Asias largest bauxite mine located at Koraput district in the southern part of Orissa. Moreover, with an annual capacity of 4.8 MT and under expansion to 6.8 MT shortly, it is the only deposit from the two billion tonne east coast bauxite reserves, which has been mined so far. Over the years, it has bagged certifications to ISO 9001, ISO 14001, OHSAS 18001 and SA 8000 standards. Along with the mine, NALCO currently has Asias largest integrated aluminium complex, encompassing bauxite mining, alumina

refining, aluminium smelting and casting, power generation, rail and port operations.

TRACING THE SUCCESSFUL JOURNEY A visit to Damanjodi reveals the legacy of more than 25 years of sustainable mining, maintaining perfect peace and harmony with its environment and surroundings. From the foothills of Panchpatmali mine, a camera zoom shows a green tabletop mountain with a white coloured rope bisecting it. A further zoom clears the view its not a ropeway but a uniformly covered man-made conveyor. S Sameer

Latest technologies deployed A semi-mobile in-pit crusher is

under development in the far North block.

A surface miner to eliminate drilling and blasting.

N

S

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Top view of Panchpatmali hill



Majhi, Junior Manager, NALCO, explains, This is a 14.6 km single flight long distance conveyor. We use this conveyor stretch to transport bauxite ore from Panchpatmali mine to NALCOs 1.575 MT capacity alumina refinery located at the foothill.

During the journey to Panchpatmali mine, one travels close to the conveyor belt. The plantations are ubiquitous and conspicuous all along. After a while, as the mercury level drops and fog sets in, Panchpatmali hill emerges as a beautiful hill station. Before the mining commenced, this hill was practically barren except for sparse and stunted growth of amla, bushy date palms, ban tulasi and giant grass. However, because of the massive plantation drives taken up by NALCO, the place is wrapped up by lush greenery.

Surprisingly, the central portion of the hill has more plantation cover than even the (unmined) southern part. When asked, SK Patnaik, Sr Manager-Mining, NALCO, states with evident pride, While we pursue mining, we also ensure land reclamation and afforestation simultaneously. Our way of working is different from other miners. There the mining is done first, and reclamation & rehabilitation is done towards the end of the mine life. But here, mining and reclamation are concurrent processes. We carry out extensive plantation not only inside the mine but also in the surrounding valleys. Because of this, today, the hill is witnessing the return of a green lustrous forest on its top.

In future, NALCO is planning to take up huge plantation drives. The vision of the

company is best described by Patnaik. He asserts, We have given this barren hill a forest cover. After the completion of mining, we would like to see this place becoming an attractive hill station in the future.

The mining area of the hill (or the tabletop) is divided into three parts north, central and south. While, the company has mined the central portion for around 25 years, it has just started mining in the north. The southern part of the hill has not been mined as yet. The hill characteristically has

sharp escarpments mostly on the eastern side and steep gradient slopes on the western side.

Moreover, in order to prevent flow of surface run off water from mining areas to the valleys, rolling of mining equipment from slopes, spreading of dust and noise to surrounding, a 15 m width of bauxite has been left on both sides of the hill and trees have been planted well in advance to act as a peripheral green barrier.

This peripheral barrier is one among the

many features of this mine. Company officials give credit to the initial mine planners and executors, who had followed a systematic and scientific approach while designing this mine and its mining methods. Several computer simulated ore body models were experimented in those days to design a suitable mining method, which would not only protect, but also help in enhancing the environment during mining. Over the years, what has evolved is sustainable mining with efficient

environment-friendly operations. With latest equipment and technologies

ensuring high profitability and environment conservation in all aspects, here is an intriguing process that the company follows for sustainable mining.

MINING PROCESS A typical bauxite mine is formed in-situ by weathering and lateritisation of parent rock, which is known as khondalite. The cross-section of the reserve would show the top

Sl.No Vertical profile offormation

Thickness in Mtr.

Rock Type Broken by Remarks

1 Top soil 0-1 Soft Wheel loaders Blast-free2 Laterite 3-4 Hard Drilling & blasting --3 Top bauxite 8-10 Medium hard Drilling & blasting ---

Hard ferruginous Big boulders by rock breakers to prevent Secondary blasting

Blast-free

4 Sub bench 2-3 Medium hard Ripping instead of blasting, using ripper dozers

Blast-free

5 Bottom bauxite 3-4 Soft Backhoe shovel instead of loosening by blasting.

Blast-free

14.6 km single ight long distance conveyor used for carrying bauxite ore

Rock breaking techniques implemented by NALCO

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being covered with an average soil thickness of 0-1 m, followed by ferruginous lateritic overburden of about 4-5 m, and below that lies about 14-15 m thickness of bauxite formation. The partially lateritised khondalite (PLK) is seen below the bauxite layer. The deposits are highly heterogeneous with wide variations in grades and thicknesses.

Analysing these conditions, NALCO has come out with a unique way of mining. Explaining the process, A Chakraborty, GMMines states, Conventional mining method is not effective in this type of deposits, and hence, the trench method of mining was adopted. This method provides staggered working fronts, effective quality control system, maximum ore recovery from undulated floors, fast land reclamation concurrent with mining, etc.

In this trench mining method, the fertile top soil is removed by wheel loaders and then the hard laterite is drilled and blasted. When the blasted laterite is removed

bauxite gets exposed. The top slice of bauxite i.e. about 8-10 m thickness is loosened by drilling & blasting and also by ripping where bauxite is soft. The bottom bauxite of 3-4 m thickness is removed using backhoe shovels, as this does not require either blasting or ripping.

The mining machineries used by the company are mostly wheel-mounted, diesel-powered and hydraulically operated. Equipments include wheel loaders, backhoe

shovels, dumpers, blast hole drills, ripper dozers, water sprinklers, motor graders etc.

NALCO has increased its production capacity from 2.4 MT to 4.8 MT per annum and is under further expansion to 6.825 MT. Patnaik points out, We increased the mine production by introducing higher capacity machines, an in-pit crusher in far off north block and drawing a flexible long distance conveyor from north to present crusher location in the central block such that equipment fleet size remains minimum but the average mine productivity goes very high. The speed of the only conveyor belt has been increased to carry higher tonnage in each hour. Had we continued with the same size of equipments, we would have required large size of equipment fleet leading to high traffic congestion and increased pollution load onto environment.

While the previously aimed target has been achieved, the company is now determined to make this mine blast-free. Currently, the blasts are limited to overburden and top bauxite only. Patnaik says, We aim to make this mine Totally blast-free by resorting to mechanical means of mining in place of blasting. Since surface miner is one of the best alternatives, we conducted several rock analysis studies with the help of IIT Kharagpur and the results were very encouraging. Accordingly, a Surface Miner T1255 of Vermeer (USA) make has been hired and put under trial operation to ac

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