Crompton Greaves Operation Overhaul

By: Jude Abreo (81), Ketan Mokal (82) ,Mridu Sharma (83) Namish Sharma (84), Namrata Kumar (85), Nikhil Nagdeote (86)

1937 - 66

1970 - 85

POST 1986

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 - 85

POST 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 - 85

POST 1986

Entrance in the telecommunications and industrial electronics sector. Undertook turnkey engineering projects

Began providing information technology services.

Timeline

Operations Marketing Falling demand, Change from seller's higher production market to buyers capacity and higher market employment resulted in declining productivity
Raw material (steel) Marketing searched storage time was for production orders 147 days although based on the the processing time planning department was 1-48 hours optimum load calculations Competition with unorganized sector

Finance

IT Systems

HR

External Market Gripped By Recession

1982-84

Low margins and low pricing power

1990-95 High competition from MNC's in telecom equipment manufacturing Production capacities not consolidated 2000 onwards Net losses reported Only 1.5% of turnover

Fast information Negotiations delivery/sharing intra with labor and inter company is unions for missing; rectified productivity with the use of increase of infotech systems to 38% in 1991 vendors also. and 20% in 1994

Low entry barrier to motor and consumer electronics manufacturing

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

80000 70000 60000 Rs. In Mn. 50000 40000 30000 20000 10000 0 2000 2001 2002 2005 2006 2012 2013 Years

Net Sales

Historical Scenario of EBIDTA & PAT

8000 7000 6000 Rs. In Mn. 5000 4000 3000 2000 1000 0 -1000 -2000 EBIDTA PAT

2000

2001

2002

2005

2006
Years

2012

2013

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