Posted on May 21, 2013 by

Manufacturing India: And BanglaDesh

During my sole visit to BanglaDesh, I had some opportunity to visit some of facilities of apparel manufacturing in early 90s- basically huge halls with large number of sewing machines both in Dacca as well as in Chattogram. As far as I remember the women or girls working there used to get some 10-15 takas per day. It was the Chinese who provided the clothes and other materials including stitching thread and buttons. They managed the technical and marketing aspects of the organisations.

Over the years BanglaDesh has changed and march ahead. I was surprised that BanglaDesh exports more apparel than India. Manas Chakraborty rightly points out the way Bangladesh has gone ahead. “Over the past few years, Bangladesh has successfully used its low-cost advantage to become a base for garment manufacturing. This has led to the migration of millions of people from rural areas into the manufacturing sector, with women being the biggest beneficiaries. Significantly, the share of employment in the formal sector in Bangladesh is 27.9%, well above that in India, and the proportion of working women in formal employment is even higher.”

A natural question is : Why Indian states Bihar, West Bengal and Assam or for that matter, the north eastern states could not take the clue from the BanglaDesh to excel in textile trade?

A recent unprecedented mishap in BanglaDesh killed around 1200 of the employees of an apparel making company.

An article appeared in ‘The NewYork Times’-‘After Bangladesh, Seeking New Sources’. It made me think over a question. Why has a New York fashion company searched for other countries, from Guatemala to Vietnam to Indonesia including BanglaDesh, capable of supplying top retailers like Bergdorf Goodman and Neiman Marcus beside China but not India with teeming millions remaining unemployed? After the multistory factory collapse in Bangladesh, the mass-market retailers are again in search of alternative suppliers from different locations and their senior executive are planning trip to Vietnam, Cambodia and perhaps Indonesia to seek alternatives. Why are they not looking to India as another China like source?

Further as per news reports, the Chinese have reached Bangladesh to help and invest in the industry, but not Indians.

Interestingly, some Indian entrepreneurs also outsource the apparels for export and domestic consumption to Bangladesh and as an excuse they blame the non-availability of skilled labour in India. Why should Indian industrialists only talk about the labour law and government support without providing any leadership to skill and organise the unemployed millions of women in India who can do the job willingly and better?

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Manufacturing India: News and Views-1

Posted on May 20, 2013 by

Even in gloom around mainly because of political mess, many things are happening in India that are pretty inspiring.

1. Coram International, the Netherlands-based coordinated design bathroom company, which set up a wholly-owned subsidiary in India in 2012, also has plans to set up a manufacturing facility for its flagship products in India, which is identified as the “sweet spot” for Coram. “India is likely to emerge as the manufacturing base for our operations in Asia over the next few years,” said Niels Pilaar, CEO, Coram International.

2. Karl Slym heads Tata Motors now and if we go by media he had a fix for the ailing Tata Motors, as its sales for most of the products are declining.

3. Automotive electronics maker Bosch has launched its electric drives manufacturing facility in Chennai. The plant, with an investment of Rs 35 crore, has a capacity to manufacture 2.2 million window systems, 7,00,000 wiper systems and 500,000 thermal parts systems per annum. The company expects to start with around 30 per cent localisation in the initial stage.

4. India has developed its first vaccine – Rotavac– under public-private partnership. The indigenous low-cost vaccine, to prevent rotavirus diarrhoea that claims the lives of about 1 lakh children a year, will soon hit the market. Priced at around Rs 54 ($1), it will be a boon for developing countries that are fighting the killer virus. Can someone responsible puts a figure for ‘soon’?Will there be one for malaria too?

5. Manufacturing must get it due priority if India is to remain in race for poverty alleviation. “Manufacturing strategy of most firms is still not addressing certain fundamental issues of competition: need to change product mix rapidly, need to introduce new products based on indigenous R&D, need to use process innovation and quality improvement process to reduce cost of operations and consequently price of product.”

6. Eureka Forbes, a Shapoorji Pallonji Group company, is acquiring Lux International, a Switzerland-based home appliance firm with a 100-year history, marking the group’s first overseas acquisition. Can every household in India get a water purifier?

7. Japanese auto manufacturer Suzuki Motor Corp. is reorganizing its Indian operations in an attempt to streamline production systems in a country where it is the biggest car maker by sales, but is lagging behind rivals in the motorcycle market.

8.India has proposed to set up three funds with a combined corpus of Rs.17,500 crore to boost local research and manufacturing of telecom products as it seeks to cut dependence on imports at a time when the current-account deficit has widened to a record and also to reduce security concerns posed by such imports, particularly from China.

9. The Osaka-headquartered Panasonic, which makes the Viera brand of TVs and the Econavi line of ACs, will continue investing at least Rs 300 crore on a yearly average in India till 2015 as it aims to launch products and take up share in key product categories.

Sony, which recently consolidated its mobile phone business with the company that markets its Vaio laptops, Bravia TVs and cyber-shot cameras in India, has said it would triple its investment to Rs 300 crore in mobile phones this financial year.

10. Sandvik Asia is planning to set up a facility to manufacture construction equipment and infrastructure machinery. The plant will be operational by mid of 2015.The company is planning to set up a facility to manufacture construction equipment and infrastructure machinery. The plant will be operational by mid of 2015.

11. G e r m a n l u x u r y c a r m a ke r Mercedes Benz plans to infuse a fresh investment of 250 crore into its Indian arm to double its production capacity to 20,000 vehicles by the end of this calendar.

12. The government’s decision to set up an inter-ministerial committee on quadricycles brings to sharp focus a debate that, if handled right, can have enormous beneficial consequences for India. Can Bajaj win the war?

I shall agree with TN Ninan that he expressed in his weekly column in Business Standard:
“Many Indian entrepreneurs, big as well as small, decided quietly in the last few years that they were better off investing in other markets. Despite their running battles with the taxman, many global giants can’t seem to get enough of India. Unilever wants to increase its stake in its Indian subsidiary, just as GlaxoSmithKline, Siemens and others have already done. Japan’s consumer products giants Sony and Panasonic are committing themselves afresh to the Indian market, after having ceded the first-mover advantage to Korean rivals.”

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Manufacturing India: MNCs

Posted on May 17, 2013 by

MNCs entered colonial India some even in late nineteenth century as traders. After independence, many got out, but some continued and set up its manufacturing plants in India. Scores of new ones have come in.

For example,in 1888 Lever Brothers introduced Sunlight soap in India. It happened just four years after Sunlight was launched in England. Today Hindustan Unilever Ltd. is a Rs. 26,000-crore company. It today produces for domestic consumption as well as for export. Its innovation of Pureit, the low cost and effective portable water filtration system can be revolutionary for preventing waterborne deceases.

In 1867, Siemens set up the first direct telegraph line connecting Calcutta and London and thereby it laid foundation of Siemens AG’s association with India.

Siemens is now one of the biggest engineering companies in India with annual revenue close to Rs 13,000 crore. Siemens started its first manufacturing in 1955, medical equipment in 1959,electric motors in 1966 and electronic equipment in 1987. Today, Siemens employ 20,000 persons in 23 factories in India competing with other European engineering company such as ABB and Schneider that entered the Indian market and also with Indian engineering companies such as Crompton Greaves and Thermax. Siemens has set up a corporate technology centre in India and earns about 15 percent of its revenues from overseas business.

Genera Electric still remains one of the world’s top engineering company with huge manufacturing in US. It has a long history of association with India. In 1902, GE built the power station at the Shivanasamudra Falls for supplying electricity to Kolar Gold Mines. GE supplies nuclear power plants, jet engines and locomotives to Indian Railways and employs around around 14,500 people with its India revenue of about 2.8 billion US Dollars, but it doesn’t manufacture any of its high tech products for which it is known in India. GE got known for its low cost health care equipment innovated and manufactured in India, and its GE Technology Centre. GE also pioneered the BPO sector in India.

Can one day GE India set up its own manufacturing facilities for locomotive engines or gas turbines in India and export to other Asian countries. Interestingly, GE has set up a wind turbine factory in Pune.

Philips Electronics was known for its radio sets and transistors in 50s and 60s. In 1995, Philips was number 3 TV maker in India. Today, it figures nowhere in competition to Samsung and LG in present digital era. However, Philips remains market leader in lighting and compete well with local brands such as Surya, Bajaj and Sylvania Laxman. Philips started making healthcare related imaging products that helped Philips to sustain its profitability.

SKF, the Swedish bearing set up its first bearings manufacturing plant to meet the needs of automotive sector in Pune in 1965.In 1989, SKF started its second plant in Bangalore in 1989.In 2008, SKF set up a Rs 250- crore customised-bearings plant in Ahmedabad. In 2009, SKF set up a global technical centre in Bangalore too.Eighty percent of its resources are now devoted to providing solutions to the global parent and the rest for domestic solutions. SKF employs today around 3,000 people and commands an almost 50 percent share in the automobile aftermarket. The presence of the manufacturing plants for companies such as SKF and TIMKEN in India is good enough indicator of the manufacturing strength of India.

Alfa Laval, the Swedish firm, entered India in 1937 and last year it completed 75 years. Alfa Laval India is one of the largest supplier of technical processing products in the biotech, brewery, distillery, food, pharma, comfort climate, energy and refrigeration, refinery, petrochemicals and wastewater applications. The company’s offer includes everything from equipment to complete solutions, which are often tailor-made to meet the specific process requirements of the Indian customer. The company has its manufacturing facilities at Pune, Satara and Sarole in India.

Finnish Nokia is well-known for its cell phones. Even though India was one of the largest market for cell phones, cell phone manufacturers were hesitant to set up a manufacturing plant in India. However, Nokia that has a number of manufacturing plants around the globe set up one of its largest factories in Chennai in India to manufacture cell phones. Nokia has recently launched the latest offering in its Asha series, in the presence of company’s global chief executive officer (CEO) Stephen Elop in New Delhi in an attempt to stay in the fierce smartphone race.

The government must discuss with all the foreign companies having manufacturing establishments in India to explore the potentials for exporting as much as possible to take care of the country’s fiscal deficit.

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Manufacturing India: PSUs

Posted on May 13, 2013 by

Just after independence when the big industrial houses were not ready to put its money in capital intensive manufacturing sectors, be it steel, machine tools, shipbuilding or even drugs or telephone sets, the government decided to set up PSUs in almost all the sectors. Pandit Nehru called them ‘the new temples of modern India’.

According to a study by globalisation advisory firm Zinnov, the public sector in India gives employment to 1.4 million people and 40% of PSUs operate in the manufacturing sector. “India is a hub of 225 PSUs operating across verticals, with 16 of these companies featuring in the global list of top 2,000 companies. With their growing size and dominance, PSUs have started looking at IT to address the global competition. Examples like SBI, which has done one of the largest Core Banking Solution implementation globally or BPCL which has made early investments in Big data make the segment very lucrative for the technology companies.” “India is a hub of 225 PSUs operating across verticals, with 16 of these companies featuring in the global list of top 2000 companies.

1. Bharat Dynamics Ltd:BDL was established in July 1970 under the control of Ministry of Defence with the prime objective of establishing a production base for guided missiles in India. It is now one amongst a few strategic industries of the world having the capability to produce the most advanced guided missile systems for Armed Forces.

2. Bharat Earth Movers Ltd: Bharat Earth Movers Limited is a premier ISO 9001-2000 Company in India and the second largest manufacturer of earthmoving equipment in Asia. A four- decade-old multi-locational and multi-product company, BEML has vital applications in diverse sectors of economy such as coal, mining, steel, cement, power, irrigation, construction, road building and railway. It has expanded its product range to cover high-quality hydraulics, heavy-duty diesel engines, Welding robots and undertaking of heavy fabrication jobs.

3. Bharat Heavy Electricals Limited (BHEL):BHEL manufactures over 180 products under 30 major product groups and caters to core sectors of the Indian Economy viz., Power Generation & Transmission, Industry, Transportation, Telecommunication, Renewable Energy, etc. The wide network of BHEL’s 14 manufacturing divisions, four Power Sector regional centers, over 100 project sites, eight service centers and 18 regional offices, enables the Company to promptly serve its customers and provide them with suitable products, systems and services – efficiently and at competitive prices.

4. Heavy Engineering Corp. Ltd: HEC was established in the year 1958 as one of the largest Integrated Engineering Complex in India. It manufactures and supplies capital equipments & machineries and renders project execution required for core sector industries. It has complete manufacturing set up starting from casting & forging, fabrication, machining, assembly and testing – all at one location backed by a strong design – engineering and technology team.

5. Hindustan Aircraft Limited: HAL’s supplies / services are mainly to Indian Defence Services, Coast Guard and Border Security Force. Transport aircraft and Helicopters have also been supplied to Airlines as well as State Governments of India. The Company has also achieved a foothold in export in more than 30 countries, having demonstrated its quality and price competitiveness.

HAL had tried to be many things at the same time. In aerospace, an
integrator company assembles all components made by tier-1 companies
to make an aircraft.Tier-1 companies are those that make engines,
fuselages, wings etc. Tier-2 ones are those that make components for
engines, fuselage, etc. Tier-3 firms are those that make nuts and
bolts, the most basic of components. HAL wanted to be all of them at
the same time. In the process it ended up exposing itself and its
inefficiencies. HAL would have evolved as integrator company while
encouraging many vendors for the components.Even with a huge manufacturing facilities, HAL failed to be a major source for different types of aircrafts or for even helicopters.

India has a number of companies for meeting manufacturing requirements
of the huge railways network and defence services. But hardly few of
them have developed products and that at a scale of global
competitors. It is only because of the lack of accountability or
managerial autonomy of the units. A re-engineering of the
manufacturing facilities of railways and defence on the line of
globally competitive enterprises can boost the manufacturing sector to
a great extent.

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Manufacturing India: Machine Tools

Posted on May 7, 2013 by

Machine Tools are the mother machines to manufacture almost every part that goes into engineering products. It was in 1957 that I first came across these machines in the workshop of IIT, Kharagpur. The machine tools in the workshop were left out from the WWII. In 1961, I joined Hindustan Motors that one of the biggest facility manufacturing almost all the parts small and big going in cars, trucks, as well as heavy earth moving machines. And up to 1997 I remained in touch of machine tools industry and its growth in the country, as we did a number of projects at HM procuring the latest machine tools for expansion as well for the new products. That was the period when the machine tools sectors of India got matured.

India stands 12th in production and 7th in the consumption of machine tools in the world as per one of the latest survey that I know. The Indian Machine tool Industry has around 1000 units in the production of machine tools, accessories/attachments, subsystems and parts. Of these, around 20 are in the large scale sector and account for 70 percent of the turnover and the rest are in the SME sector of the industry. Approximately, 75 per cent of the Indian machine tool producers are ISO certified.

India consumes in value terms ($1.74 billion) as against China at $27 billon, Germany $5 billion and Japan $4.5 billion. India ranks 13th in terms of production in value terms at $500 million and 27th in exports. I have seen USA, Germany and then Japan at the top of the industry and its consumption and their sliding down too over the years. The production, consumption, and the exports of the machine tools are clear indicators of the engineering strength and the global position of a country and its economy to a great extent.

Five Indian Machine Tool Companies are among the top 115 Machine Tools companies of the world.

Metal Working Insiders Report published the list of top 115 Machine Tool companies across the world based on their financial results. Five Indian Machine Tool companies found place in the list.
1.According to the report, Ace Micromatic Group on basis of its revenue is the largest machine tool builder in India. The group has Ace Designers, Ace Manufacturing Systems, Micromatic Grinding, Pragati and Micromatic in their group. It produces different types of turning as well as grinding machine tools.

2.BFW placed at the 92nd position with a turnover of 60.9 million US Dollars can produce the total solution through a manufacturing system of bigger prismatic components such as cylinder block, cylinder heads, transmission case for different production capacity and varying amount of flexibility for multi-models manufacturing with CNC machining centres and special purpose machining units integrated with an automatic component transfer system.

3.HMT the public sector Machine Tool Company of India with revenue of 53.9 million US Dollars at the 99th position in the Metal Working Insiders Report. HMT produces almost all types of machine tools. It went for collaborations with a large number of machine tools companies from the West. It provides the total solutions including automatic handling of the parts from end to end as transfer machine. HMT has been the pioneer in producing a very wide range of machine tools in its huge facilities at four plants in Bangalore, Hyderabad, Kalamassery and Ajmer. In Hyderabad it produces sheet metal stamping presses. Praga, Hyderabad is also part of HMT.

4.LMW, Coimbatore with revenue of 46.8 Million US Dollars at the 103rd position in the list has CNC machining centres and turning centres in its product range.

5.Jyoti CNC Automation, Rajkot with 28.8 million US Dollars is at 110th positions. Jyoti CNC Automation Pvt. Ltd has acquired Huron Graffenstaden, a France-based high-precision CNC machine manufacturer, valued at Rs 240 crore, in an all-cash deal. Huron with revenue of 55.1 million US Dollars is shown at the 98th position in the report.

Some OEMs such as Tata Motors started building specialised machine tools for using in its manufacturing systems. As a policy, Tata Motors while procuring machine tools from western manufacturers signed an agreement to procure the design and got the right of manufacturing them. It helped them in executing the project fast and at less cost. TAL Manufacturing Solutions Ltd manufactures a wide range of machine tools for its new projects

The latest trends are for high speed machining, near-dry machining, MQL, or machining with minimum quantity lubrication. It aims at heavily reducing coolant costs while being friendlier to the environment and the workers. The absence of high pressure coolant pump saves about 50% energy. Moreover, the tool life is claimed to increase dramatically. Basic processes such as castings, forgings are more precise, almost net-shape in dimensions cutting down the roughing cuts.

As estimated the share of the domestic manufacturers in the Indian machine tool market will increase to 50% by 2016-2017, as against 35% in 2010-2011. The Indian machine tool industry currently has a direct employment of 30,000, which is estimated to double by 2016- 2017.

The major improvements to be achieved over the next few years include in the machine tools sector relate to some technologies: development of high precision machine tools; multi-axes, multi-function machines; heavy duty machine tools; metal-forming machines of various types; critical mechanical elements; machine tool electronics and other sub- systems; as well as software for design / analysis / simulation, machining and manufacture.

Machine tools sector in India could have become the leading in the world but for the presence of HMT machine tools that lived on government protection. It would have set up huge design offices and used outsourcing for the major accessories as was the practice in the Japanese machine tools industry.

The government established Central Machine Tool Institute at Bangalore in the 60′s by the Government of India that was a major event in the history of the Indian Machine Tool Industry. The institute changed its name to Central Manufacturing Technology Institute (CMTI) in 1992 in tune with its current role in the manufacturing scenario in which the machine tool has become just a part of the entire gamut of concerns in the productive endeavors of the manufacturing industries.

One can see the range of the machine tools and accessories produced in India at the IMTEX that is held every second year.India has everything to become a major player in machine tools industry.

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3 Nights in Patna

Posted on May 4, 2013 by

I couldn’t make it to Vaishali to have the feel of the place that nurtured one of the oldest democratic system of governance, where both Mahavir And then Buddha came and created two of the earliest faiths- Jainism and Budhhism, and where Ambpali or Amrapali lived and ruled over the hearts of the mightiest and richest youths of the time and finally took shelter in the Budhhist religious garb.I know that there is nothing left now from that era, but still I was mentally perturbed when I couldn’t make it because of my foolish way of depending on incapable ones for arranging a car even against a good money that I wanted to pay. The excuse was that of heavy bookings due to large number of marriages that day. I took a judicious decision in favour postponing Vaishalli’s visit for next time. Moreover, it was really a bad hot summer day so I never repented for my decision. Further, the exemplary hospitality of my friend, Janardan and his wife more than compensated my agony of not going to Vaishalli’s.

In Patna, we stayed at ‘Ghar Angan’, an ethnic resort on the line of Chokhi Dhani in Jaipur to participate in the marriage of Jyoti, my niece with Abhijeet on May 1, 2013.

Ashok has mastered social networking in his job in railways. The way he arranged convenient conveyance from and to airport and assistance for us in Patna is remarkable.While returning, I found a counter of Bihar Tourism Department in the departure area. The person in charge was really courteous. After many years, I could see good colourful brochures for different places and circuits of tourism interest such as Buddhist, Ramayana, Sikh and Sufi in Bihar. Even the fortnight long festival of souls… Pitrapaksha Gaya is the caption of one brochure. It appears the government is trying hard to attract more and more tourists to Bihar. However, Bihar will require a lot of investment in the basic infrastructures of tourism sector- hotels, transportation and management of the places of interest.

As I was told, law and order situation is really excellent. Interestingly, both parties of bride as well as that of bridegroom travelled by road in night only to avoid the summer heat. Almost all the roads that I took were distinctly clean, smooth and well maintained. My wife kept on comparing them those in Noida. But Bihar will have to go miles for improving the education at all levels. Corruption is the main culprit. As I understood from my conversation with some persons working in the sector, even the posts of principals and vice-chancellors are sold. However, the incidence of sexual assault on women is rare. According to the gentleman who dropped me at airport, that because of the continuing rural link of Patnaites.

I don’t know when I shall go again to Patna and visit Vaishalli.

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Cheating Chits: From Sanchayita to Saradha

Posted on April 27, 2013 by

Chit fund had been cheating the greedy or needy poor as well as rich equally since time immemorial. Everyone wishes to earn some extra money or make fast buck. I have still few certificates of Sanchayita that my clerk while in HM in 80s, sold me. He had brought to my company flat in Hind Motors one of the senior managers of Sanchayita, who was an alumnus of Presidency College. I had to extend the due courtesy, though I hardly enjoyed it. My clerk knew my weakness of everyone connected to my alma mater. He wanted his officer to convince me to invest more. As I didn’t open my purse, they were disenchanted that evening and finally left. Perhaps just after a month, Sanchayita scandal was in media and many lost their hard earned money. 

For last few days now, the public outrage in street protests has again been growing over a fraudulent investment scheme run in the name of  ’Saradha’ in West Bengal. Thousands of ordinary men and women have lost their money again in a chit fund. According to media, Mamta Banerji and many leaders of the Trinamool Congress leaders, such as Rajya Sabha MP Kunal Ghosh, Lok Sabha MP Shatabdi Roy and Mamta’s transport minister Madan Mitra had proximity with the dubious firm. Sudipto Sen is the villion CEO of Saradha. And after the arrest, Sen has ignited the bomb that may inflict serious damage to the image of Trinamool of Mamta. This is something that didn’t happen when Sanchayita was busted by the then finance minister of left front, Shri Ashok Mitra. Perhaps, that was due to Jyoti Basu.

Mamata Banerjee’s government would set up a Rs 500-crore relief fund to pay back to some poorer investors in the Saradha depositors. She planned to rake in Rs 150 crore from hiking taxes on cigarettes by 10%, at the same time suggesting that people should “smoke more frequently” — never mind what doctors may have to say on the subject. 

As reported in media,  the victims of Saradha Group hailed primarily from the districts and from villages, who have lost their life savings.Many of the agents are TMC leaders at the grassroots level and even panchayat members. Most cannot return to their homes since they are being hounded by investors. Sanchayita didn’t cause this much of upheaval.

But unfortunately, the government during the last thirty years couldn’t enact laws to protect ignorant Aam Aadami from fraudsters.

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