Frugal Manufacturing- Is it a Chinese Nomenclature?

Posted on April 10, 2007 by indra

I came to know of the term ‘frugal manufacturing’ after the news reporters wrote about the interview of Carlos Ghosn, the legendary boss of Renault Motors, France. He talked so highly about the frugal manufacturing that has been mastered by Indian engineers. I started thinking if it is another term meaning basically the famed ‘lean manufacturing’ of Toyota Production Systems. However, I decided to resort to goggle to help me. Here are some excerpts that may be of use to those in manufacturing.

As defined, ‘frugal manufacturing means that our manufacturing processes must embody the basic principles of saving resources and being environmentally friendly.’ Be it the processes in manufacturing petrochemicals or steel alloys, the basic objective must consider how to avoid or minimize waste. For this purpose, all the waste gas and water required in the process must be utilized comprehensively and recovered. Heat from all the processes must be fully utilized.

Similar developments have come in shaping of components and parts. Semi-finished products can be directly forged into shapes close to those of the final products, leaving only a little final processing to be done. Precision forging, and lost foam casting- investment casting have cut down the number of steps to reach the final precision dimensions required for the assembly. Waste material generated during the machining operations to reach the final dimensions have reduced.

Even gear teeth of component such as differential gears and pinions are rolled eliminating the cutting and finishing processes. Parts shaped out of metal powder under a thermal quasi-static pressure are precise enough to be used directly or with a minimal machining in assembly. Some specific metals, such as aluminum alloy, can be directly forged to the required shape in a process called semi-solid shaping. The surfaces of such products need no processing.

Presented below is the concept of frugal manufacturing in automobile manufacturing by one Chinese expert.

Product design must ensure energy conservation. For instance, the manufacturing technology for a certain model car may be very advanced and its manufacture may waste very little resources, but if its engine technology is not very advanced and it has high oil consumption, it is not an energy-conserving product. Therefore, in all manufacturing industries, ensuring the lowest possible consumption of energy and resources in the use of their products must be considered together with conservation of resources and energy in the production process when we are designing a product. It can be said that a good manufacturing engineer acknowledges this as a basic principle, but quite often fine divisions within the profession and the lack of mutual communication makes it difficult to comprehensively address all these issues, and various problems arise. For example, the key to getting an automobile to save oil lies in the efficiency of the engine, but it is not just a problem of engine engineering. It also involves body design, the air resistance coefficient, the selection of materials for the various parts, and the weight of its chassis and shell. All these things are done by different departments and engineers. When they are integrated in the end, all requests are taken into account. When I was working in Sweden, I saw a Volvo billboard on which was written, “You can put a Volvo truck on a Volvo car without crushing the car.” This shows how strong the Volvo car is. By contrast, if you press to hard on the hood of a Japanese car when you’re waxing it, you’ll put a dent in it. When designing a car, Japanese put economy first. The whole car is very light and gets great gas mileage. Swedes are proud of their heavy and strong cars. The German Mercedes Benz has the heaviest chassis in the world. The Mercedes Benz Company once did a test in which they put a Mercedes in the middle of a seven car chain with an American, South Korean and Japanese car in front and in back of it on an expressway and then initiated a chain reaction crash. The other six cars were flattened but the Mercedes retained its shape, chiefly because its chassis is heavy and the body is very strong and resists compression. Seen from today’s point of view, this idea does not completely conform to the requirement of frugality and is not entirely conservative. When making cars, Japan and South Korea give greater consideration to saving energy and resources. America cars are a compromise in which economy is balanced against stability and reliance. Therefore, our products design must be guided by a comprehensive scientific outlook on development.

Third, when making a product, we must take into account its disassembly and the sorting and recycling of its parts when it is scrapped, not just the convenience of the manufacturing process, in order to create a frugal society. Nowadays, we are confronted with a significant problem, the problem of what to do with discarded electronic products. All electronic products contain large quantities of various kinds of metals, including precious and rare metals. They are very valuable and they are scattered throughout the products. In addition, most of them were welded in, making it difficult to extract them when the product is scrapped. This is a big problem, another aspect of which is the problem with the sealing, dismantling, recycling and maintenance of the coolants in home appliances like air conditioners and refrigerators.

On the whole, the guiding principle for our whole manufacturing industry must take into account what is helpful to creating a frugal and environment-friendly society. At present, China’s industrial sector is growing rapidly. The manufacturing industry has always been dominant (making up 38% of GDP). In another 15 or 20 years, the manufacturing industry will still be a major sector as well as a big consumer of energy resources. Therefore, the manufacturing industry must shoulder this responsibility and create a frugal society in all respects.

Recently, many countries have enacted laws concerning product recycling. In addition to considering conservation in the design, manufacturing technology, materials selection and product use, there is still a very important issue, using materials as fully as possible through recycling, circulation and reuse of waste materials. The United States, for instance, has legislation concerning recycling auto parts. I believe that if we have such a conception of frugal manufacturing and form an accompanying set of technologies and a design philosophy, then we will have the basis for such legislation, and can prompt our government to pass such legislation.

There is nothing new in what the Chinese are talking. Have they faked ‘lean manufacturing’ too?

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An Address to Mechanical Engineering Students

Posted on April 10, 2007 by indra

We had two professors at IIT, Kharagpur who were the alumni of engineering college of BHU of those days. Prof. Belgaonkar was the head of mechanical engineering when I was in IIT, Kharagpur. Prof Rajendra Misra headed the production engineering and management which was the part of mechanical engineering then. Mechanical engineering was the most sought after branch in those days in the only IIT of the time. I had some colleagues too from BHU at HM. That was the reason I thought I shall visit and talk to you.

After IIT, I joined the automobile company- the pioneer of the era, and remained with it for almost 36 years. I was fortunate to know about the automobile manufacturing in totality because of our connection with the biggest in business GM and its allied companies in Germany. UK and then Japan such as Isuzu Motors. I was also exposed to Mitsubishi Motors when HM built its car plant in Chennai. I was responsible for all the new projects after a long inning in production. production engineering, and other technical services.

Auto sector went through three clear cut phases since independence. Prior to Maruti entry (1982-1983), it was a monopoly of two big business families that were manipulating between themselves and used to produce around 40,000 cars at maximum in a year. With Maruti, the monopoly gradually ended. The big reason of the success of Maruti Udyog was also its link to the first family of the country’s dynastic ruling party. Real change came after liberalization of economic policies of 90s. Many rather all global car manufacturers entered the Indian market. But the major historic decision for the sector came from Tatas to enter passenger car market and its remarkable success with Indica. Today the country manufactures about a billion plus cars.

What does the car manufacturing mean? Very simply, it consists of assembly and testing of cars on scale varying from few thousands to a lac or more a year. Naturally the entry cars such as Maruti 800, Indica or Santro with annual production of more than 1,00,000 are having higher in-house manufacturing using large scale production techniques. For low volume, the manufacturers prefer to import from the parent plants and only fabricate, paint and assemble.

Car manufacturing comprises two clear group of components- power train and body.

The power trains are mainly mechanical parts, where major components such as cylinder blocks and heads for engines and housings for transmissions are manufactured in house and the rest such as filters, pumps are procured from local or foreign vendors. Many automakers for large scale production models manufacture the parts, assemble and test the power train units in house. But some, where the volume is low still import or buy from local suppliers.

Car body constitutes of sheet metal panels requiring stampings. Car body is fabricated and finished in various shops – body weld shop, painting facilities, car assembly and testing areas.

In every area of manufacturing, many specialized improvement of technologies have contributed to make the facilities flexible to accommodate the changes required. Perhaps Toyota is a single company that has contributed the maximum in perfecting the tools and techniques used in most efficient car manufacturing today.

Mechanical engineers today have a great scope with auto sector- both OEMs as well as component manufacturers. Alluring areas may be design and development, and production engineering and other industrial engineering services. And with thrust on manufacturing to compete with China and for its capability to create large scale employment, auto sector is growing pretty fast. By 2015, perhaps India will be building 3 million cars.

But all are expected out of the engineering colleges and institutes? All top institutes are trying to build a culture of entrepreneurship and innovation among its students and their success in these areas are the measure of their maturity and excellence. IITs have now incubators with assistance from the venture capitalists who are eagerly looking to the younger generation to come out with ideas that can be backed financially. ISB has Wadhwani Centre for Entrepreneurial Development (WCED) to teach entrepreneurship. ISB is unique as a majority of the students are already with five to six years of managerial experience. Similar centers are getting initiated at other IIMs, IITs, and other institutes of excellence too. As reported, more and more students are going for their own enterprises rather than joining a global company with hefty paypackets.

Interest in innovation must be key of any specialized knowledge and learning. It should rather form part of the national character. The basics for innovative outlook must be known to all- from the first-line-worker to the CEO and that can only improve the product and processes, including services. Innovations mean needs to save time, reduce cost, things faster, make things easier to use, improve safety and reliability, and lessen impact on the environment. Is it not the responsibility of all involved in any task that he is assigned to, be he a housewife or prime minister to innovate for better products and processes?

Today, for all aspiring engineers, there are huge potentials.
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It is not only Mittal and Son, it is Jaspal Sandhu too.

Good Communication Matters, but not taught.

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Indian Auto Industry – Two New Alliances

Posted on April 7, 2007 by indra

France headquartered Renault, one among the top 10 carmakers in the world that rolls out over 2 million vehicles every year and Mumbai-based tractor and particularly popular ‘Scorpio’ utility vehicle manufacturer Mahindra & Mahindra (M&M) through their joint venture Mahindra Renault launched last week their first car model Logan in the Indian market within two years of forming their 51:49 alliance.

As it appears from the media, this alliance spearheaded by the legend of the global car industry, Renault’s CEO Carlos Ghosn and M&M’s charismatic managing director Anand Mahindra may well set the future for joint ventures in India’s fast growing automobile business. The auto industry may leave behind the history of many failed alliances of the first phase.

If the media can be believed, Ghosn who has worked in the world’s three largest car markets-US, Europe and Japan – was clearly in awe of Indian engineering, when he found the Indian counterpart managed to shave 15% off the Logan’s production costs over and above what Renault initially planned. Ghosn thought his company had done a pretty good job with it. So came his compliments when he was present in Nasik with Anand Mahindra to inaugurate the facility. ”But the Indian engineer innovate and create a product frugally. Engineers in other parts of the world always need more resources to do the same thing… They (global automobile companies) will have to show the humility to come into this country and learn. It isn’t possible to demonstrate such innovation when you work out of markets where resources are not at a premium… Sure, capital costs are huge issue in this business. But we are discovering through our partnership with M&M that the level of investment for a specific objective can be done frugally.” Mahindra and Renault will produce 50,000 Logans M&M’s facility in Nashik. The new venture has invested in setting up a stamping shop, a paint shop with pre-treatment facility and an assembly line dedicated to Logan. (Making of Logan in India)

Carlos, a global auto industry legend for reviving Nissan Motor of Japan, in which Renault is the single largest shareholder, appeared to be very much impressed with India’s expertise in frugal manufacturing. He further added candidly, “China is also a low-cost manufacturer. But there is something unique about India’s frugality of engineering and management. If I have to fight the battle on low cost, I am going to do it (with a base) in India. It will be difficult to develop a low-cost car of the future without involving India. The benchmark of low-cost manufacturing: If you want to be serious in India, you must not cross $3,000 in product cost. Ratan Tata’s Rs 1 lakh car: It is a very interesting project. We will be watching it closely.”

As reported, the joint venture Mahindra Renault has invested only Rs 700 crore in facilities and reengineering to roll out the Logan compared to the Rs 1,600 crore, Tata Motors spent on building the first version of Indica. However, the cost for Indica is no comparison as it was a totally new car, and for Logan, it is just adaptation for Indian market by developing the right hand version of the Logan.

Let me confess I heard the term ‘frugal manufacturing’ for the first time and more so as it came from a person as famous as Ghosn. Perhaps ‘frugal’ is a synonym of ‘lean’. Ghosn meant the lean manufacturing by frugal manufacturing. Am I correct? I stand to be corrected if I am wrong.

Another big news came from Pune. On April 02, 2007, the 50:50 joint venture between Fiat Auto India and Tata Motors – was formally inaugurated with an announcement of an investment of Rs 4,000 crore (660 million euro) at the Ranjangaon (60 km from Pune) plant over the next five years. The first stage of investment will be of around Rs 2,500 crore (470 million euro) out of which Rs 1,500 crore (250 million euro) will be for the car plant. The plant will start production of passenger cars, engines and powertrains around the middle of 2008. The company has planned to make 1,00,000 cars and 2,00,000 engines and powertrains.

With these two alliances, both the Indian automakers are aiming to extend its presence globally assisting each other mutually with its strength. With consolidation over the last few years, the Indian automakers are technically strong enough to move on as equal partners. Mahindra & Mahindra with its successful Scorpio and Tata Motors with its Indica platform and Ace have proven its strength as OEMs unlike the Chinese automakers still known more for piracy.

The two alliances are in line with the trends of business strategies all over the world.

———————-
`Indian connection a must for low cost car manufacturing’
A no-nonsense car, anyone?
New York auto show gets into gear

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Chinamania

Posted on April 6, 2007 by indra

You must have seen my entry- China Invades India’s Manufacturing Sectors’. That got published in Patnadaily.com too. While my blog didn’t attract comments (now I have inserted the ones from Patnadaily.com), there were some critical ones on the later site.

‘The article does amuse me a bit because so many years have passed and still some people write such article which should be written 10 or 15 years ago…– ‘They can make final product even cheaper than the cost that you pay for raw material because buying large quantity is always cheaper than buy small amount. It is not dumping but Chinese simply work hard and smart.’ This was in a long comment from one Dake Yu. I don’t know if ACMA members would agree to this logic.

Another comment from Mr. SS Sharma having business background was equally revealing.

” I am all for Chinese imports. I can relate objection to Chinese imports only with racism and not with protecting interest of Indian manufacturers as our own Indian Customs and excise have assured that genuine manufacturers are adequately harassed in India. If India seriously wants to compete with China then rather than offering SEZs to neo colonialists it should ease the rules of Customs and excise in general so that whoever wishes can start and run manufacturing business smoothly.’ It goes father, “Recently my office in UK received a bulk order for manufacturing some electronic devices from a renowned company. Here is part of two quotations one received by my Indian office from an Indian supplier and second received by my Hong Kong office from a Chinese supplier for the sub assemblies of the same order. It tells every thing at once.

Indian Supplier, Terms & Conditions:-

Excise Duty :- 16%
Ecess :-3 % on Excise
VAT :- 4%
Octroi :- 3 %
Payment :- 50 % advance 50 % against delivery
SPECIAL NOTE :-
PLEASE DECLARE THE DESIGNING COST IN YOUR PURCHASE ORDER
BECAUSE IT ATTRACTS 16% EXCISE DUTY ON DESIGNING COST
AND YOU CAN AVAIL THE CENVAT ON THE SAME.

Chinese Supplier:
Call me if you have any problem

I have removed the actual quote amount and other details for commercial reasons but Indian Supplier had quoted double the price of Chinese supplier besides quotation of Indian supplier had lot of extra ‘%’ sign. Obviously after saying ‘Resurgent India, India shining etc’, sitting in my UK office, I forwarded the order to my Hong Kong office to process.” Will some one from the administration replies to these frustrating conditions and PM and FM will find a way out? How can the country come back in manufacturing without that?

However, my main points in the article were:

Indian traders must not adopt unfair means of changing the description of the items to attract less import duty in their invoices and must not manipulate the values of the invoices.

Indian government must have a rational import duty for raw materials and finished goods.

Chinese must not sell rather Indian traders must not buy the products rejected by Americans and EU countries and sell it to Indian customers.

Chinese must not copy the traditional handicrafts and handloom items such as Kanchivaram and Banarasi silk sarees that is sold by unscrupulous Indian traders as original.

Chinese must not put ‘Made In India’ mark on their products.

Chinese government must not subsidise the export to make it competitive. How can the cost of a product be less than the cost of the raw materials used in it?


And none who put their comments talked about it.

It is known to every one that it was American retail biggies such as Wal-Mart that developed the low cost manufacturing capabilities of China by providing all inputs, as the American manufacturers couldn’t have reduced the labour cost in US because of headstrong unions. EU countries also followed the American solution to go to China. India’s manufacturing sector was not ready to meet the American demand at that time. However, the things have changed and changing fast in favour of India in manufacturing sector too. At least in some sector such as auto components and textiles, Indian manufacturing may succeed, as Indian manufacturers intend to fight the competition from China.
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Piracy Move on China Seen as Near

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Globalisation’s offspring

Posted on April 5, 2007 by indra

‘The Economist’, April 7, 2007 has these insertions in an article captioned as above. http://www.economist.com/opinion/displayStory.cfm?Story_ID=8960441

A pack of fast-moving, sharp-toothed new multinationals is emerging from the poor world.

So far this year, Indian firms, led by Hindalco and Tata Steel, have bought some 34 foreign companies for a combined $10.7 billion. Indian IT-services companies such as Infosys, Tata Consultancy Services and Wipro are putting the fear of God into the old guard, including Accenture and even mighty IBM.

These are very early days, of course. India’s Ranbaxy is still minute compared with a branded-drugs maker like Pfizer

Infosys rightly sees itself as more agile than IBM, because when it makes a decision it does not have to weigh the opinions of thousands of highly paid careerists in Armonk, New York. That, in turn, can make a difference in the scramble for talent. Western multinationals often find that the best local people leave for a local rival as soon as they have been trained, because the prospects of rising to the top can seem better at the local firm.

A firm like Tata Steel, from low-cost India, would never have bought expensive, Anglo-Dutch Corus were it not for its expertise in making fancy steel.

IBM now has over 50,000 employees in India and ambitious plans for further expansion there. Even as India has become the company’s second-biggest operation outside America, it has moved the head of procurement from New York to Shenzen in China.


It has a special report too ‘Hungry tiger, dancing elephant’. http://www.economist.com/business/displaystory.cfm?story_id=8956676

The annual investors’ day (of IBM) is usually held in New York, though it once took place in faraway Boston. By going to Bangalore, the technology giant was sending a strong message. With 53,000 employees, India is now at the core of IBM’s strategy. With other big developing countries, including China, Brazil and Russia, it is fast becoming the firm’s centre of gravity.

Mr Palmisano announced that IBM would invest a further $6 billion in India over the coming three years, up from $2 billion in the previous three. That sum does not include any acquisitions of Indian companies. (It has already struck some big deals, notably buying Daksh, an Indian outsourcing company, in 2004.) Some locals wondered how IBM would manage to spend all that money. But booming demand is pulling wages higher in India and costly training is now needed to lure workers being courted by other companies.

IBM’s Indian adventure highlights three overlapping themes. Emerging economies increasingly count as a threat to established global firms, as well as an opportunity. Indian services firms such as Infosys and Wipro are starting to give IBM-and its old rivals, Accenture, EDS and Hewlett-Packard-a run for their money. As globalisation accelerates, this is forging a new vision of what it is to be a successful multinational company.

And the issue also have an article on the Chinese exertise on piracy: The sincerest form of flattery http://www.economist.com/business/displaystory.cfm?story_id=8961838

COPYING in China goes far beyond fake DVDs, watches and handbags. “We can copy everything except your mother,” goes a saying in Shanghai. Soy sauce with fizzy water passed off as Pepsi, fake Cisco network routers (known as “Chisco’s”) and mobile phones that look like the latest offerings from Nokia can all be easily found. So, too, can fake blood plasma.

And now comes cars of all brands..

What was once a trickle has since become a stream. Toyota’s badge, Honda’s name (which became “Hongda” for motorcycles) and Nissan’s bumpers have all been the subject of legal wrangles. Shuanghuan Automobile got into trouble for copying Audi’s famous four-ring logo a few years ago. It then copied the design of Honda’s CR-V, called it the SR-V and appears to have won the subsequent legal tussle. Last month the firm won an export licence, and it plans to start shipping another model, the CEO (pictured)-a sport-utility vehicle with a striking resemblance to the BMW X5-to Romania and Italy.

Perhaps this is the strength of China.
———————————
The story of India Inc’s deal mania

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Feel good? April fool!

Posted on April 4, 2007 by indra

Are we heading for some worse news than India and Pakistan getting out of World Cup after a defeat from Bangladesh and Ireland respectively?

Here comes the other devastating news of crash in sensex. Nearly 617 points were lost in the haemorrhage, rivaled only by the 826-point crash on May 18 last year on the first business day of the new financial year. The selling wave wiped out Rs 1,44,000 crore of shareholder wealth, engulfing all sectors of industry. Banking, information technology, real estate and automobile stocks were the worst hit. And many, who master in finding some reason for the mishap or massacre, blame it to the RBI’s surprise inflation-busting measure.

I wonder if it reflects the performance of the companies and the dividend that they will announce for the year. Will the growth slump or the supply get dried? But perhaps, as usual some Rungta, Jhunjhunwala, Kejriwal will go for suicide as I saw one in good old days of HM. An honest cashier got allured by the dream future through share market took away company’s money and invested in hope to return it safe in locker back in time before the people know it. It didn’t happen because of a similar crash and he crushed himself under the local train.

But today, the investments in shares are more popular. Many have placed their life time earning with some portfolio managers. What happens if the crash hits them on the wrong side? Let me tell you that they are master risk takers. They will bear it.

But the special issue of ‘Outlook‘ on the ‘state of the nation’ offered by my friend, Shri YK Singh furthered my miseries. Articles after articles, it has painted the grim picture from ‘the other India’ (as it called it), as it silently suffers. And it also claims,’ This is the “nearly-forgotten” India of the poor and downtrodden people numbering 250-300 million or perhaps the double of that with an earning average of Rs 500 per month or less. And this happens even after spending of around Rs 40,000 crore in the Ninth Plan (1997-2002) meaning around Rs 8,000 per month per poor.

Will there be worse news affecting the nation as such in days or months to come? The answer may be in affirmative with elections in UP soon.

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Can Communists Run The Country?

Posted on April 4, 2007 by indra

With my experience of working in the largest industrial unit of its time in West Bengal since 1961, and a longer association because of my education in Presidency College and IIT, Kharagpur, I feel pained with both the political and economic conditions of the state. Nandigram episode was almost the climax of the system. I was very happy when during my February 2006 stay in Bidhannagar, I heard communists addressing the issue of acquisitions of agriculture land for industries at various rallies and public meetings to create an acceptable atmosphere through education of the need of the industrial development. It was the right step for implementation. But perhaps, it was not sufficient a preparation or not carried out with the people concerned. I was amazed, when I heard about the protest by the farmers, and the field-labourers against the acquisition of land for the Tata Motors Singur. I got shocked the way police and cadre of CPM attacked Nandigram. That could never be a solution. Many and me too will go by his honest attempts to pull up West Bengal with fast track industrial development, but the means adopted were wrong and unjustified. The CM lost his face. “What happened in Nandigram was unfortunate. We apologise for the incident.”

It is interesting to hear the CM and the minister of industry saying boldly, “Rapid industrialisation was the only option left for the all-round development of the state and tackle the rising problem of unemployment. Agriculture is not a “viable option for growth any more.”

Both the hawks as well as doves in the party at the recent Delhi meet have endorsed the decision. CPI(M) state secretary Biman Bose has announced: “The state government would not succumb to any pressure or any misinformation campaign. At least Rs 20,000 crore industrial projects are in pipeline at this juncture.”

All news pertaining to West Bengal in the business newspapers are positive with increasingly high confidence. But my question is related to the outcome of 30 years and more of the rule in West Bengal by CPM led- United Front. Perhaps no other state of the country, not even Kearat (that is the point of difference) is lucky enough to have so long of political stability (rule of a single party and one chief minister). Why couldn’t it produce the expected results both on human development index and social equity?

Education for which West Bengal was almost at the top in India seems to be miserably neglected by the government. According too a former vice-chancellor, Calcutta University, “Most school teachers belong to the CPI(M)-affiliated unions and don’t feel the need to deliver. Teachers are highly paid and highly pampered. Thus, absenteeism is rife and when teachers take classes, they don’t teach properly.” A 2002 survey by the state government itself found that most of the primary and upper primary schools lacked infrastructure and they faced consistently low teacher attendance. What can be the government’s answer for this?

The Pratichi Trust, founded by Amartya Sen, carried out a survey in Purulia, Birbhum and West Midnapore districts in 2001 and reported: “We realised that 30 per cent of the students didn’t attend classes. Only 7 per cent of those who didn’t take private tuitions (since they couldn’t afford to) could write their names. So, the poor continued to be excluded from education.”

It is surprising that even after this long a period of Marxists rule in West Bengal, some other economic indicators are equally poor for the state. The percentage difference of per capita income in rural and urban West Bengal is almost the highest at 171.75%, and only 28.53% pf households have been provided with electricity connections (NCAER data)

According to the latest report of National Sample Survey Organisation (NSSO), West Bengal tops the hunger list of India, with at least 71.6 lakh suffering from food shortage and over 8.8 lakh of these not getting two square meals a day, all through the year. At least 10.6% of the rural population and 0.7% of the urban population in West Bengal do not get adequate food in some months of the year.

While we all agree that industrialization is the only way, can someone from CPM such as very vocal and media savvy SitaramYachuri and Karats explain why did it take 30 years and more to realize that? Are they not misleading the simple countrymen, the ‘aam aadmi’ about the advantages of the communist’ model of governance?
———————–
Kolkata has more jobs than Delhi, Chennai

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Kothapally and Raj Samadhiyala

Posted on April 3, 2007 by indra

To come out of the mental agony created after reading the lead article-‘The elephant must remember’ of the Outlook’s special edition on the ‘state of the nation’ about ‘the other India’, I tried to dig deep and found some stories that helped me recover.

The people of two villages got luckily empowered and participated to change their destiny.

Madhavi Tata has come out with the story of Kothapally.

In 1998, Kothapally, the village in Andhra Pradesh Rangareddy district of Andhra Pradesh faced a severe water shortage. Kothapally had no tanks, its wells ran dry, crop yield plunged and villagers came to accept abject poverty as their lot.

A year later, the International Crops Research Institute for Semi-Arid Tropics (ICRISAT) chose Kothapally for an experiment in a community watershed scheme. The villagers were initially wary as they thought tanks would lead to flooding. So, the institute built an earthen check dam on common land at a cost of Rs 35,000. The benefits started accruing in the first season itself. A group of six farmers could realize the potential and decided to try icrisat’s advice. In six months, “the wells were gushing with water and our yields were much higher”. Others were willing to give water conservation and soil management a shot. Within years, groundwater level rose 27 per cent, yields went up, farmers could grow post-rabi and post-kharif crops like vegetables and flowers, and earnings quadrupled. The villagers now own 40 autos, six tractors and five lorries to transport their produce. And Bijili Laxmi, a marigold farmer from this village has a drastic change in her daily routine. ‘From getting up at 5 am daily and trekking 6 km to fetch water, she now just has to turn the tap.’

Lola Nayar has another story in her article that is all about the sorry state of affairs of ‘the other India’ but for this story of the combined attempts of NGO and the people that are making a change in the rural hinterland-albeit very slowly:

Almost on the opposite side on the India’s map is Raj Samadhiyala, a village 20 km from Rajkot in the drought-prone Saurashtra region of Gujarat. From being a poverty-stricken hamlet, its 2,000-odd dwellers today harvest three crops, including 20 varieties of vegetables. The personal annual incomes range between Rs 50,000 and Rs 12 lakh. The primary healthcare centre works to full attendance, each house has a toilet, water connection and drainage system, there’s full enrolment in the local primary school, and the village is safe and secure with no reported thefts.

The credit goes to Hardevsinh, a post-graduate who chose to stay back to change the village. He says, “I bridged the gap between the panchayat and the people by setting up village community leaders. These leaders were accountable for results from their respective communities.” The village was able to introduce water harvesting, build 45 checkdams, create a network of farm ponds and percolation tanks that raised the water table over the years

Further down, Ashish Kothari, a member of environmental action group Kalpavriksh, his article, has also some good news from another village in Maharashtra.

Hiware Bazaar, near Ahmednagar in Maharashtra, started harvesting rainwater and re-vegetating the hills around it in the 1980s. Prior to this, it had to beg authorities to send water tankers in summer. Today, it provides clean drinking water to all its residents, and irrigates much of its agricultural land. All village children now attend school and health facilities have improved considerably.

Several hundred villages in the Alwar district of Rajasthan have achieved water self-sufficiency and increasing agricultural stability through water harvesting structures promoted by the Tarun Bharat Sangh.

Marginal farmers (many of them Dalit women) in seventy-five villages in Zaheerabad area of Andhra Pradesh’s Medak district had to migrate elsewhere for work. But now, after over 15 years of sustained efforts by villagers aided by the NGO Deccan Development Society, there is self-sufficiency in food production, which has generated several thousand human-days of work. Remarkably, this has been done by reviving traditional seed diversity, linking up the production of traditional cereals to the public distribution system, and promoting organic farming.

In Orissa, researchers looking at satellite images of forest cover have noticed a marked improvement in some parts of the state. This is due to the untiring efforts of villagers to reclaim greenery. They have also initiated 10,000 forest protection committees with little or no outside help. Their motivation? Improved availability of fuel and fodder, revitalisation of water sources and greater control over their immediate lives.

Other such initiatives have sprung up across many states: protection of sea turtle nesting sites in Orissa and Kerala, people’s sanctuaries in Rajasthan and Nagaland, conservation of black buck, cranes, or waterbirds by communities in Andhra Pradesh, Punjab, Rajasthan, Orissa, Bihar and elsewhere.

While many of the above examples are initiated by villagers themselves, there are also many that have been catalysed by government officials or NGOs.

It excites me and makes me hopeful. I wish some thing could happen faster covering the whole of rural and urban poor. The question before the people who are in leadership and also those who matter in keeping them in those roles is a simple one.

Will such models be replicated in lakhs of other villages that need it badly? Can the energy of all those NGOs, corporate houses, and institutions be synergised to speed up the process?

Posted in economy, rural india | Leave a comment

Management Matters

Posted on April 2, 2007 by indra

Be it a public or private enterprises, management is key. And many times it requires only some commonsense. One needn’t have an IIM, or Stanford/ Harvard background. Let us look at two stories- one from the pubic sector and the other from the private.

Lalu Prasad Yadav, Union Railways Minister in India Today’s Special Conclave Issue April 9. 2007 with the theme- ‘CHALLENGES FOR THE BRAVE NEW WORLD’ had this story of his approach that brought the turnaround.

As you all know, the railways is a big network with approximately 14 lakh workers. It runs 1,100 trains every day and carries more than 1.5 crore passengers. Till yesterday, the Railways was in a very bad shape, not even in a position to pay dividend. It was completely bankrupt. The Rakesh Mohan Committee had come up with various suggestions: dissolve the Railway Board and create a regulatory commission; decrease the staff strength; increase the railway budget every year, increase passenger and freight fares every year; privatise services.
When the UPA came to power in 2004, I wanted to become the home minister but they made me the railway minister and I said okay. I started looking into its functioning and found that accidents were a common feature in the Railways and I used to think, what if these keep happening and I had to face Parliament every day. If accidents happen every day, the MPs will keep asking for my resignation every day and one day I might have to resign too.
I got down to the job earnestly and one of the first things I told the Railway Board was that they must have honesty, commitment and vision. We felt if we increased the fare it would affect the masses. Instead, we reduced the fares. Every day, approximately, 60-70 lakh people travel in Mumbai suburban railway where the passenger fare is already low, but still we reduced the fare by a rupee. We also reduced the fare of the goods train.
I assured all 16 lakh gang men, signalmen and others that they will not be retrenched. The turnaround in the Railways is not one man’s effort, I have merely directed it. I just said we will not let anybody steal. We have to stop it. I have personally checked goods trains, weighed the goods on the weighing machine and found huge disparities in load booked and the actual load carried. Several officers have been punished. Earlier the loading and unloading used to take seven days, now it has been reduced to five days. By taking these few small steps only, we were able to save about Rs 10,000 crore. Not just that, we have reduced the expenditure and last year we had a surplus of Rs 13,000 crore and we have paid dividends. This year again we had a surplus of Rs 20,000 crore. We have money now. We are going to get new coaches designed for every class.

Lalu delegated, demanded, and perhaps facilitated too. And he got the results. I wish he would have used a similar approach in running of Bihar also. And perhaps Prime Minister should shift Lalu to power ministry where he can repeat the same performance. Sushil Shinde with a background of police department could have taken some lessons from Lalauji and brought a similar efficiency in power sector by taking ruthless steps to cut down the 30-40% losses because of theft.

And then we can go to ‘The incredible story of Tata Motors and the Rs 1-lakh car’ as told by Robyn Meredith, Forbes.

After the economy slumped in the late 1990s–just when expenses for developing the passenger car hit home–Tata truck and bus sales plunged by 40%, and Tata Motors lost $110 million in fiscal 2000. It was the first red ink seen since 1945. Executives were stunned. “It was corporate India’s biggest loss,” says Ravi Kant, managing director of Tata Motors. “The crisis changed us.”
But Tata Motors, part of India’s largest conglomerate, first had to reset its ways. Change started with a spring 2000 meeting at the Lakehouse, a bungalow across the street from the company’s main factory in Pune. Kant, then in charge of the commercial vehicle division, needed fresh ideas instead of rigid resistance, so in an experiment, he called a meeting of 20 of his most promising young managers–all under 35 years old.
“I have a problem,” he said in his matter-of-fact tone. “The company is bleeding.” He asked for ideas on how to stop the gush of red ink. Okay, they told him, trim costs.
Girish Wagh was there, just 29 then. He remembers the shock of what came next. “Ravi Kant said that 1% in cost cuts would be a rounding error. He asked for 10%!” says Wagh. “Never had we thought of such a target.”
Every single year until then costs had gone up, not down. Kant told them to present a basic plan that very afternoon, in front of him and–alarmingly–all their bosses.
They worked frantically. By the 3 p.m. meeting, their wildest ideas were on the table. Taken together, they added up to 6.5%. “A breakthrough!” Kant remembers thinking. But that’s not what he said. “Please go back and think again,” he told them. He needed 10%, not 6.5%. “You’ve got three weeks.”
The young team took some measures even as it scrounged for more. In came benchmarking, purchasing from Internet auctions, outsourcing parts to more efficient suppliers and boosting revenue by selling Tata-made dies to other companies.

The transformation of Tata Motors had begun with the searing loss in 2000, but it continued with a return to profit in the fiscal year ending March 2003. By then it was producing two car models and selling a bit abroad. Today, after buying or partnering, the company has vehicle projects around the globe and exports 11% of output, mostly to South Africa.
Efficiency is way up: It now takes between 12 and 15 minutes to change a die on the passenger car assembly line, down from two hours in 2000. The company’s break-even point for capacity utilization is one of the best in the industry worldwide.
Between 2000 and 2006 nearly 6,000 workers left the company with early-retirement deals. Meanwhile, the once radical e-sourcing idea has become routine for Tata, which ran 750 reverse auctions on Ariba in the past year to bring down purchasing prices by an average of 7% for everything from ball bearings to the milk served in the company cafeteria.

Except for a right leadership that showed determination to be globally competitive, nothing had changed at Tata Motors. Tata Motors is the only Indian company in the passenger car sector.

And that difference made Tata Motors what it is today, when the other two (HM and Premier) because of the lack of the steely management will to survive and grow got vanished from the passenger car manufacture.

Posted in education, governance, management | Leave a comment

MD- Tata Motors! Why is this Bigheadedness?

Posted on April 1, 2007 by indra

I had just finished going through an incredible story of Tata Motors in Forbes. No one can question the creditable and successful entry of TELCO, now known as Tata Motors, in passenger car manufacture. The two old monopolistic Indian passenger car manufacturers couldn’t survive the onslaught of competition when the Indian economy opened after post liberalization of 1991. One died, the other is gasping.

However, I was amazed and shocked to read a report that appeared almost in all newspapers. Why should Tata Motors managing director Ravi Kant be so adamant and blunt in asserting the right regarding setting up of its Rs 1 lakh car plant at Singur that has created so much of controversy? He can certainly defend the company’s selection of Singur as the site for its proposed small-car plant. But he can’t say what he has been attributed to have said. Ravi Kant said, “We choose where we want to set up the plant and nobody has the right to speak about the location. It is entirely our choice.” The statement smells arrogance. Tata Motors and its MD owe to the people of the country a technical explanation behind selecting Singur over the other locations suggested by the government. It is important as many including myself suggested that Tata Motors would have selected the other location rather Singur- the highly fertile 1000 acres of cultivation land. MD would have presented a matrix showing the ranking of the different locations on various parameters desired for a right plant location.

How illogical and authoritarian it looks when Ravi Kant asserts, “I personally visited twice all the six sites shown by the Bengal government. I was part of the decision-making process in which Singur emerged as the clear choice based on sound business sense.”

As I was told by one of my friends, Ravi Kant is an alumnus of my own IIT, Kharagpur. As a senior, I expected he would have given an engineer and manager-like an answer rather than replying like an autocrat dictator.

Many who don’t like the decision of Singur are the well wishers of Tata Motors and feel proud about its performance over the years. The whole of India is looking forward for a great technical breakthrough of the company with this unique product of Rs 1 lakh car and wish a grand success of the venture. But Ravi would have been humbler in his statement.
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Trinamool warns Tata Motors of ‘serious consequences’
P.S. Here is how the selection of location is explained by a global corporation:

Mr Paul Otellini, Intel’s president and chief executive officer has been cited in a March 26-dated story on http://news.xinhuanet.com thus: that Intel chose Dalian (a port city in northeast China’s Liaoning Province) over a dozen other sites, including cities in Israel and India, because China is Intel’s fastest growing market and the cost of production is lower; and that infrastructure, education, adequate power, water and logistics in Dalian were all factors in securing the deal.

And some good news from Singur– Singur locals look at alternative means of employment

Posted in industry, manufacturing | Leave a comment