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editorial Vol. 09 | Issue 07 | february 28, 2010

Managing Director: Dr Pramath raj sinha Printer & Publisher: Kanak Ghosh

Putting

Editorial Group Editor: r Giridhar Assistant Editor: P K Chatterjee Sub-Editor: reshmi Menon dEsign Sr. Creative Director: Jayan K Narayanan Art Director: binesh sreedharan Associate Art Director: anil VK Manager Design: Chander shekhar Sr. Visualisers: PC anoop, santosh Kushwaha Sr. Designers: Tr Prasanth & anil T Chief Designer: N V baiju Photographer: Jiten Gandhi brand managEmEnt General Manager: Nabjeet Ganguli salEs & markEting VP Sales & Marketing: Naveen Chand singh (09971794688) National Manager-Events & Special Projects: Mahantesh Godi (09880436623) National Manager Online: Nitin Walia (09811772466) Assistant Brand Manager: arpita Ganguli GM South: Vinodh Kaliappan(09740714817) GM North: Pranav saran(09312685289) GM West: sachin N Mhashilkar(09920348755) Coimbatore: D K Karthikeyan (09843024566) Kolkata: Jayanta bhattacharya (09331829284) Production & logistics Sr. GM Operations: shivshankar M Hiremath Production Executive: Vilas Mhatre Logistics: MP singh, Mohamed ansari, shashi shekhar singh officE addrEss Nine Dot Nine Interactive Pvt ltd C/o KPT House, Plot 41/13, sector 30 Vashi (Near sanpada railway station), Navi Mumbai 400703 for any information, write to info@industry20.com for subscription details, write to subscribe@industry20.com for sales and advertising enquiries, write to advertise@industry20.com Printed and published by Kanak Ghosh for Nine Dot Nine Interactive Pvt ltd C/o KPT House, Plot 41/13, sector 30 Vashi (Near sanpada railway station) Navi Mumbai 400703 Editor: anuradha Das Mathur C/o KPT House, Plot 41/13, sector 30 Vashi (Near sanpada railway station) Navi Mumbai 400703 Printed at silverpoint Press Pvt. ltd, D 107, TTC Industrial area, Nerul, Navi Mumbai 400706.

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business on Hold

R Giridhar editor@industry20.com

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he union budget 2010-11 is around the corner, and the manufacturing community is holding its collective breath. Though the most recent fICCI survey indicates that the double-digit growth registered by the manufacturing sector (since august 2009) will continue for the fourth quarter, there is little visible cheer. The government, concerned by the high rate inflation, its enormous spending commitments, and the paucity of avenues to raise money has been hinting at the withdrawal of the fiscal stimulus package announced last year. With exports still weak, the Indian industry has overwhelmingly opposed any measures that could dampen domestic demand, and lead to a dip in consumption and investment levels. Meanwhile, rising inflation and the incipient recovery of the global economy is pushing up the cost of input materials, labour and transportation. Manufacturers, on their part, are reluctant to increase prices— and continue to look for creative ways to manage the situation. The employment picture has also not changed substantially, and organizations are still cautious about hiring. on positive side, the government is making active efforts to secure greater involvement of the private sector in large government-led programmes focused on defence manufacturing, energy, aerospace and railways. since, these areas

industry 2.0

were previously limited to the public sector, this move is welcome. That’s because it will enable the domestic manufacturing industry and its legion of suppliers acquire new technologies, skills and manufacturing abilities—and achieve world-class levels, much like the auto industry and the space sector. However, progress on this front hinges on how quickly the government can move and facilitate a productive publicprivate partnership. Despite robust domestic demand, the industry has placed its capex plans on hold—while the near-term uncertainty over the direction of the economic policy is resolved. so, it is important that the government move quickly to restore flagging confidence, and take steps to strengthen the growth momentum and continue the stimulus measures. The industry is also looking for a slew of practical measures from the government—more investment in infrastructure (roads, power, ports, etc.); rapid implementation of the GsT regime to ease administrative problems; a benign interest regime and better availability of loans; maintenance of a competitive exchange rate to spur exports; simplification of the convoluted income tax and corporate tax rules; a revised Companies act that is in tune with the times; and the continuation of the disinvestment programme. a big wish list, for sure. Will the finance Minister deliver? We’ll know soon. n

- technology management for decision-makers | february 28, 2010

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contents Cover Design: Rohit A Chandwaskar Picture courtesy: www.photos.com

facilities & operations 148 Enabling Innovation for Product Development Product lifecycle management facilitates faster development of ready-to-market products.

152 Choosing the Right Software If product lifecycle management software benefits large companies, then the medium businesses can avail benefits of product data management to ease manufacturing challenges.

22 cover story

38 Building & Leveraging a Metrics Framework

22 Steering the Growth Wheel

An integrated metrics framework helps business intelligence systems in providing effective supply chain decision making.

The Indian logistics industry is at the threshold of scaling newer challenges and growth opportunities.

42 Designing an Optimal Supply Chain Network

32 Moving Towards Bright Days

A look at how Facilities Installation Planner (FIP) helps evaluate and redesign the supply chain.

Changing social and economic factors will give a fillip to the growth of the Indian logistics industry.

in conversation

156 Perfecting the Art of Design Engineering Design validation tools enable economic testing of new product designs sans physical prototypes.

management & strategy 159 Mitigating Climate Change Considerable efforts are being made to reduce carbon emissions.

departments 01 Editorial 06 Industry Update 14 Survey Report

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30

Maha MuzuMdar Vice President Supply Chain Marketing, Oracle

S Sridharan Managing Director TAKE Solutions

15 Advertiser Index 16 Status Quo 161 Product Update

Inside Cover Design: Baiju N. V. Picture courtesy: www.photos.com

INSIDE 46

Measuring the Effectiveness of Manufacturing Supply Chains Indian manufacturing has come a long way since the liberalization of the economy. Companies have relentlessly focused on adopting and assimilating new technologies, using modern manufacturing practices, and focusing on quality to achieve operational excellence. However, the economic downturn during the past months has dramatically shifted the focus to issues like productivity, efficiency and cost reduction. But, is India Inc. taking a hard look at its supply chain?

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48

Supply Chain Metrics—Large Manufacturing Companies

78

Supply Chain Metrics—Small & Medium Manufacturing Companies

- technology management for decision-makers

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industry update Repower, eOLe-ReS Sign agreement

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Epower Systems, in which Suzlon Energy holds 90.71 per cent shareholding, and French wind and solar power developer EOLE-RES, have signed

The agreement includes supply of 26 wind turbines for Langres Sud wind farm. an agreement for the supply of 26 wind turbines. The agreement includes supply of REpower MM92 turbines—with a hub height of 88.5 meters and two

megawatts (MW) of rated power for Langres Sud wind farm in the department of Haute-Marne in the Champagne-Ardennes region. At full power the wind farm achieves a total generating capacity of 52 MW. The 26 wind turbines are expected to be delivered and commissioned by October 2010. EOLE-RES is the French subsidiary of RES Méditerranée SAS, which specialises in wind farm and solar power projects. Tulsi Tanti, chairman and managing director, Suzlon Energy, said, “France is among the world’s leaders in wind energy installations, and an important market for REpower. We are pleased to welcome this order, which underlines REpower’s strong presence in the European wind market.” n

event update Renewtech India 2010

The event will showcase products, technology solutions and emerging technologies in the world of renewable energy. Venue: Auto Cluster Exhibition Centre Chinchwad, Pune Tel: +91-22-2660 5550 E-mail: info@renewtechindia.com Date: 9 March to Website: www.renewtechindia.com

11 March 2010

Bangalore International automotive expo 2010

The trade show will showcase over 500 world class automotive brands, designs and technology. Venue: Palace Grounds, Bangalore Tel: +91-80-2234 2611 Date: E-mail: info@biae.in 11 March to Website: www.wmcpl.com/auto 15 March 2010

Diemould India 2010

Areva T&D Bags Two New Projects

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reva’s Transmission and Distribution (T&D) division has bagged two contracts from Power Grid Corporation of India (PGCIL) for extra high voltage turnkey projects at Moga (Punjab) and Bhiwani (Haryana) plants. The two orders, with a combined value of 2800 MINR, are for the supply and installation of 765/400 kV air-insulated substations (AIS) for northern grid-II and northern grid-III. Areva T&D will also provide 765 kV circuit breakers and substation automation systems as part of the project. Both plants are scheduled for commissioning by the end of the first quarter of 2012. n

Renault Plans Independent Network

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enault India is planning to independently strengthen its base in India. The company has announced that it would set up an independent distribution network to support the new products. The company is planning to introduce several new cars from its international portfolio here in India. “We will create an extensive nationwide distribution network in the next 30 months to ensure

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our customers are assured of seamless service,” said Marc Nassif, country general manager and MD, Renault India. Fluence and Koleos would be the first cars to roll out of the company’s greenfield manufacturing plant in Chennai in 2011, followed by other models from the global Renault portfolio. Plans are also underway to introduce a small entry level car. n

- technology management for decision-makers

The event will display new innovative products and manufacturing process, covering the entire gamut of the tooling industry. Venue: NSE Complex, Goregaon, Mumbai Tel: +91-22–28526876 E-mail: mumbai@tagmaindia.org Date: Website: www.tagmaindia.org 18 March to

21 March 2010

Chemspec India 2010

The exhibition will showcase a wide range of new products, technologies and services from the agrochemical, dyestuffs, biotechnology, water treatment, contract and toll manufacture, cosmetics and healthcare sectors. Venue: NSE Complex, Goregaon, Mumbai Tel: +91-22-24044477 E-mail: vijay@chemicalweekly.com Date: Website: www.chemspecindia.com 15 april to 16 april 2010

automotive engineering Show 2010

The event will display a wide range of manufacturing technologies, equipment, tools and methods of assembly for the automotive industry. Venue: Chennai Trade Centre, Chennai Tel: +91-22-4020 1000 E-mail: info@focussedevents.com Date: 14 May to Website: www.focussedevents.com

17 May 2010

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industry update Business Confidence Levels Rise in India

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usiness confidence levels in India have exceeded the October 2009 levels by 7.03 per cent, according to the latest National Council of Applied Economic Research (NCAER)—MasterCard Worldwide Index of Business Confidence. The study states that the current Business Confidence Index (BCI) rating of 153.8 points, compared to the October 2009 rating of 143.7 points and July 2009 rating of 118.6 points, is the highest rating recorded since January 2008 (154 points). The index is based on a survey, which measures business confidence on four indicators relating to ‘Overall economic conditions six months

from now’, ‘Financial position of the firm six months from now’, ‘Investment climate’ and ‘Level of capacity utilisation’. All four indicators carry equal weight. The survey also looks at trends within firmspecific business outlook indicators, includes a Political Confidence Index (PCI) and studies the global economic crisis and its impact on various industries. T V Seshadri, vice president and country general manager, South Asia, MasterCard Worldwide, said, “The study has captured the upbeat economic climate in India, which is now almost close to the positive ratings during early 2008.” n

asia’s SMes to Focus on Costs, Quality Control Post-recession

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merging from the recent recession, Asia’s small and medium sized enterprises (SMEs) are today focusing on costs and quality control, says a new report from the Economist Intelligence Unit, titled, ‘Towards the recovery: Challenges and opportunities facing Asia’s SMEs’. Export-oriented SMEs are altering their strategies to focus on markets closer to home, as they expect demand from Western economies to stay weak. Based on interviews with corporate officers at SMEs and regional experts, and a review of recent studies published by authorities such as the IMF, the Asian Development Bank (ADB) and national governments, the report assesses the challenges and opportunities facing SMEs in Asia, and China in particular. SMEs form a crucial market segment as they are the

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biggest employers in many of the region’s economies. They were hit hard by the global recession, particularly those companies reliant on exports. The report, however, adds that though Asia’s SMEs faced a tough period, they are in the right region to take advantage of the upturn. A new intra-regional trade dynamic is also expected to help SMEs. If Asia’s larger economies do become sources of final demand, this will help drive intra-regional trade. The proliferation of freetrade agreements (FTAs) in Asia is testament to policymakers’ commitment to this goal. “SMEs are the entrepreneurial lifeblood of the Asian economies, and those that have shown the toughness and flexibility to survive the financial crisis may well be tomorrow’s corporate stars,” says David Line, Editor of the report. n

- technology management for decision-makers

Biofuel Project Gathers Momentum

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he new project, titled, ‘Applications of Biofuels for Aviation’, under the Indo-Canada Science & Technology Cooperation Programme, has brought together several partners under one roof. Recently, an agreement was signed with regard to the project, between Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL), Indian Institute of Petroleum (IIP), Indian Institute of Science (IISc), Indian Institute of Technology Kanpur (IITK), Infotech Enterprises (IEL) and the Department of Science and Technology (DST). The project will be coordinated by Hyderabad-based IEL. It will focus on two streams - developing aviation specific biofuels and blends and development of propulsion and specific combustion technology applicable to blended biofuels. The fuel development will be carried out jointly by IIP, IOC and HPCL, and analysis and testing will be done at research and development institutes. Meanwhile, evaluation tests will be carried out in Canada. The project is being sponsored by DST, Global Innovation and Technology Alliance (GITA) in India, which is an initiative of CII and the Government of India, DST and the International Science and Technology Partnership (ISTP) in Canada. The project partners include Pratt & Whitney Canada (P&WC) and several Canadian research institutes. The biofuels will be developed from feedstocks specific to India and Canada and will be selected based on sustainability of supply and potential for Green House Gas (GHG) emissions reduction. Efforts will be made to focus on developing and validating technologies to convert bio-feedstocks to commercial aviation fuels, with specific focus on second or third-generation feedstocks, which do not compete with food or water resources. Infotech will coordinate the work planned in India, modelling and design support, combustor analysis, redesign and validate the engine components. n

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VERTICAL MACHINING CENTERS

THE 2010

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industry update Indsil, Muscat Overseas Plan JV

The joint venture will develop a ferro chrome smelter in the Sultanate of Oman.

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ndsil Hydro Power and Manganese along with its group sister company, Indsil Energy & Electrochemicals have collaborated with the Muscat Overseas Group (represented by Al-Tamman Trading

Establishment) to set up a new joint venture, to establish a 75,000 tpy ferro chrome smelter in the Sultanate of Oman. The project would have access to 100 per cent captive chrome ore, which would be made available from the existing mining operations of the Muscat Overseas Group. Indsil will provide the technology, operating and marketing expertise for the project. The share capital would be held equally by both parties to the joint venture. The project is expected to cost about Rs 140 crores and is expected to be operational by end of 2011. n

Stone India, Sumitomo Join Hands

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tone India and Japan-based Sumitomo Electric Industries have signed an understanding effective from February 15, 2010, to enter into a joint venture (JV) in a phase wise manner—to locally manufacture air springs in India. The two companies had entered into a technical collaboration agreement in November 2007 for selective manufacturing and assembly of air spring systems for Railways in India. Following this collaboration

agreement, Stone India had commenced bulk supply of air springs to Indian Railways. The company had also entered into a separate agreement with Japan-based Tokai Rubber Industries, a subsidiary of Sumitomo Electric Industries for supply of conical springs for primary suspension system of Railways. Stone India is planning to export metal parts of air springs to Sumitomo Electric Industries. n

Tata Power, East West Power Sign MoU

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ata Power Company and Korea East West Power Company (EWP) have signed a Memorandum of Understanding (MoU) to identify and execute operation and maintenance (O&M) opportunities relating to third party generation assets in Asia, Middle East and Africa. Under this MoU, Tata Power and EWP have initiated a technical cooperation in the field of O&M of the generation assets. The technical co-operation will cover exchange of information, best practices and exchange of personnel relating to the O&M of generation assets. Prasad Menon, managing director, Tata Power, said, “The MoU will enable exchange of technical cooperation with Korea East West Power Company. Apart from the domestic market, we aim to explore and extend our partnership in widening our O&M portfolio in the Asian market and look forward to the association.” n

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- technology management for decision-makers

alps Partners with Huntsman textile effects

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lps Industries has entered into a strategic partnership with Huntsman Textile Effects for exclusive supply of materials for their eight production facilities in India. As per the agreement, Huntsman TE, besides materials, will also provide technical service support to Alps Industries to ensure compliance with stringent global customer requirements. Paul Hulme, president, Huntsman Textile Effects, says, “India is an important market for us as we continue to expand in Asia Pacific, and we recognise the importance of our key partners in India.” Huntsman Textile Effects is a global provider of dyes and chemicals to the textile and related industries. n

tII acquires Stake in France Co Sedis

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ube Investments of India (TII) has acquired a controlling stake in Sedis Group, France, through acquisition of 77 per cent of equity of its holding company, Financiere C10. TII acquired the shareholding directly from the financial investors in FC 10 (75 per cent) and a few other shareholders. The management shareholders will continue to hold the remaining shares in FC10 and be associated with Sedis for a period of three years. Sedis is a manuTII plans to offer a complete range of facturer of industrial products to its Indian and engineering class and global customers. chains in France. It has two plants in France and a marketing company in the United Kingdom. L Ramkumar, MD, TII, said, “With this acquisition, we will be able to offer the requisite technical skills and a complete range of products to meet the requirements of our customers both in the Indian and global markets.” n

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industry update Spicer Plans Hypoid Gear Plant in Pune

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designed and manufactured hypoid picer India, a joint venture gears with high power density. company of USA-based Dana “Indian-based OEMs are demandHolding and Anand Automoing improved efficiency, power dentive Systems, recently announced sity, fuel economy, the groundbreaking torque-carrying cafor a new hypoid pacity and weight gear manufacturing reduction,” says facility and testing James E Sweetcentre in Chakan at nam, president and Pune. The new plant CEO, Dana Holding will manufacture Corporation. Dana’s AdvanTEK Spicer India, esseries of axles. Dana Holding’s AdvanTEK series. tablished in 1993, The greenfield is a supplier of axles, driveshafts manufacturing plant, spread over (also known as propeller shafts), 50,000 sq ft in Chakan, will prodrivetrain products and genuine duce 2,40,000 gear sets annually. service parts. n AdvanTEK axles comprise specially

Oracle Introduces New Solution

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racle in collaboration with HP has launched an accelerate solution to help midsize industrial manufacturing companies streamline their IT implementations. The new solution offers hardware, software and services to help midsize industrial manufacturers effectively manage and grow their businesses.

The solution is built on HP’s BladeSystem infrastructure and StorageWorks Modular Smart Arrays. A range of hardware configurations are available based on the number of Oracle e-business suite users. The product helps reduce the length of the implementation cycle and accelerate time to value and return on investment. n

Geometric Launches v2.1 of DFMPro

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eometric has launched version 2.1 of DFMPro for Pro/ ENGINEER and SolidWorks with new advancements and a new injection moulding module. The new advancements are expected to help designers check manufacturability of plastic designs within the CAD environment. DFMPro is an automated Design for Manufacturability (DFM) review tool facilitating upstream manufacturability validation and identification of areas in design that are

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difficult, expensive or impossible to manufacture. The product allows quick and in-depth examination of product manufacturability through advanced design rules for manufacturing processes like milling, drilling, turning, sheet metal fabrication and injection moulding. The injection moulding module helps users validate the designs to check for uniform wall thickness, recommended rib parameters, appropriate draft angles on core and cavity surfaces. n

- technology management for decision-makers

Waaree Energies to Set up Solar PV Power Plant

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olar photo voltaic (PV) module manufacturing company, Waaree Energies, is planning to set up a 20 MW solar PV power plant in Gujarat. The company has received approval from the Government of Gujarat, to set up the plant, under the Solar Power Policy 2009. The proposed power plant will be installed and commissioned by end 2011. The plant will be built at an estimated cost of Rs 300 crores. “We have received the first Letter of Intent (LoI) from the Gujarat government for 20 MW and are expectHitesh Doshi, Chairman, Waaree Energies. ing LoIs from other governments for 80 MW in the near future,” said Hitesh Doshi, Chairman, Waaree Energies. The energy produced from the plant will be fed to the grid of the state power utilities, for which a Power Purchase Agreement (PPA) will be signed. The company is also planning to undertake similar projects in other states in India and abroad. Waaree Energies, which was established in 2007, with an aim to providing alternative energy sources, is planning to increase its solar modules’ strength from 30 MW to 100 MW. Plans are also underway to make a foray into the mainstream power generation sector. “The total installation of solar energy in India is less than 5 Megawatt today and we need more than five Gigawatt in the next 2 to 3 years,” says Doshi. The Prime Minister of India, Dr Manmohan Singh has set a target of achieving 20 Gigawatt by 2020. “The goal is set. We have to pursue the same,” he adds. n

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survey report

Inclining Towards the Use of

Risk Mitigation Instruments Nearly 40 per cent of respondents of an Atradius survey expect economic crisis to end in H1 2010.

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hirty-eight per cent of respondents, of an Atradius survey looking at the impact of the recession on business in 20 countries, expect the economic crisis to end in H1 2010 with 45 per cent anticipating a rebound in business within the same time frame. In both cases, more than 60 per cent of respondents expect the crisis to end by year end 2010. Accordingly, the responses are fairly consistent with, if not slightly more cautious than, IMF estimates—which signal an end of the recession occurring early in 2010. Despite this, there remain significant concerns about business failures, particularly in distressed industries and the financial services sector. The survey, assessed the opinions of 3500 executives and senior managers from companies in Europe, North America,

Asia and Australia about their views on various economic indicators, expectations of business failures, the value of government actions to stimulate the economy, changes in their use of various risk mitigation instruments and the impact of various factors on cash flow during the economic crisis. Overall, government attempts to stimulate the economy are considered to have had a limited impact in most countries. In 17 of the 20 countries surveyed, more than 40 per cent of respondents have experienced no impact from government initiatives to stimulate the economy. More than 10 per cent of respondents in half of the countries have not even noticed that the government has made any initiatives. What respondents are most interested in seeing from the government are the introduction of more tax cuts or

The recession has had a big impact on the way many companies are doing business. Although some of the results of the survey suggest the opposite result than might be expected, they do show that businesses are paying more attention to managing their business risks and as a result, in many cases, they have been able to improve the performance of their business. Despite this, the short term sentiment of respondents remains cautious and generally pessimistic, particularly when it comes to business failures. As a leading credit insurer operating in more than 40 countries worldwide, these observations are fairly consistent with what we are encountering on a daily business.� Isidoro Unda CEO, Atradius N.V. 14

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- technology management for decision-makers

tax incentives and a reduction in interest rates. In general, it is expected that cash flow would suffer during the recession, however when looking at it in relationship to specific factors, there are just as many factors that have produced an increase in cash flow as have produced a decrease. The accessibility of financing, availability of credit from suppliers and the number of customers are more likely to have resulted in a decrease in cash flow suggesting declines in these factors. Changes in cash sales, the length of time within which customers pay and the availability of credit insurance have resulted in an increase in cash flow, suggesting an increase in cash sales and advance payments and an increase in the focus on receivables management. On an average, there is a greater tendency across most countries surveyed to increase the use of risk mitigation instruments than to decrease use. This holds true for the use of credit insurance, and not credit forms of risk limitation. Most notably, respondents have stepped up the frequency with which they check the creditworthiness of their buyers. In addition, businesses are paying greater attention to sales and cost issues. Finding new markets or sales channels for products, and a heightened focus on customer service have been essential elements of business continuity—as have gaining access to financing and reviews of staffing levels. n Source: Atradius Credit Insurance. www.industry20.com


survey report

Accelerating Growth

In Connected Factory Markets

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ow channel partners are working with connected factory technologies indicates that only a select few are offering the kind of higher–value software and services, which are key to making faster return on investment (ROI) and higher performing connected factory implementations—a reality. Demand for cost-management and productivity enhancement tools in factory floor environments will continue to drive revenue growth opportunities, in a number of industrial automation and control market segments. Perhaps nowhere will these opportunities be stronger than in the collection of hardware and software that enables a factory to become more connected, reports a recent study published by VDC Research. According to research group, strong connections to customers, suppliers, channel partners and

internal engineering, marketing and sales resources will be critical to access the smaller number of harder fought deals available in the current recession. But those connections are only the beginning for suppliers of solutions enabling ‘The Connected Factory.’ Those companies supplying industrial networking, supervisory monitoring and control enhancement technologies will need to do more, including: l Have real-time tracking of rapidly changing customer requirements, preferences and priorities—technical, commercial and financial will be equally acute. l Know specifically what their peers are offering and how competitors are closing deals. With growth slowing in many markets—and going away in some— more peers will be chasing fewer dollars with lower prices and . . . what else?

l Control costs—and understand the impacts on your product or market and channel development strategies—and in turn how that impacts your precious resource allocation, your customer pipeline and your partners’ contribution requirements. VDC observes that most channel partners are only offering basic hardware solutions; such as PCs, routers/switches, servers and sensors. In the words of Christopher Rezendes, Executive Vice President at VDC, “The big misalignment here is that when you look at user/ deployer requirements, it is all about software and integration, and many categories within software and integration services. Hardware is recognized by users as critical, but, the differentiation and margin opportunities are concentrated elsewhere.” n

Most channel organizations targeting Connected Factory opportunities are not offering the software products or integration services cited as most critical by factory and plant managers. Thus, a better channel alignment will unfold wider opportunities.

Courtesy: VDC Research Group

Advertiser index Deccan Cargo ......................................................................BC

Premium Transmission ....................................................... 17

Elecon .................................................................................... 3

Rockwell ............................................................................. IFC

HAAS Automation .................................................................. 9

Siemens ................................................................................. 7

Havells .................................................................................13

Tageutec .............................................................................IBC

Mitsubishi .............................................................................. 5

Zab machine ........................................................................11

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industry 2.0

- technology management for decision-makers | february 28, 2010

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status quo

Adopting Sustainable Practices To Reduce GHG Emissions As far as the environment-friendly operation standard is concerned, the Indian cement industry runs abreast with the global benchmarks.

The industry has achieved an installed capacity of 242 million tonnes, and is targetted to reach 300 million tonnes by 2011-12 and 600 million by 2020. India has 97 per cent of the installed by sameer pushp capacity through dry process. The industry has been adopting latest technologies for energy conserhe glue that holds the vation and pollution control, as infrastructure sector is well as on-line process of quality cement, and the growth control—based on expert systems of cement industry is and laboratory automation. Dedirectly linked to the growth of inspite having high demand in India, frastructure sector. India today is our per capita cement consumpthe second fastest growing econtion is very low, where the world omy in the world with the cement average is 396 kg, in India the and construction sector being the per capita consumption is only prime movers. The industry with 156 kg. a total installed capacity of 219 Our cement industry is efficient million tonnes is the second largand eco-friendly, when it comes est cement producer in the world. to energy conservation, the best The construction activity is exlevel is achieved by the induspected to make a significant contry—as far as the data goes 687 tribution in the context of growing kilo calories per kg of clinker and housing needs, development of 66 kWh per tonne cement are at roads and other infrastructure, par with the best achieved levels urbanization etc. in the world. The industry’s effort It is the construction sector, towards control of emissions, which shares the blame of global preservations of ecology and its economic slowdown leading to slackening of demand for housing; Corporate Social Responsibility (CSR) for environment protection but withstanding that hard time, are laudable. The sustainable our cement sector is still growing and long-standing efforts towards at ten per cent when compared to the global average of five per cent. reduction of carbon footprint in the industry is commendable. CO2 In spite of global slowdown emission of and reduction in demand, the 0.82 tonnes Cement Industry needs to be per tonne of complimented for weathering the downturn cement proand recording a commendable growth of duced in 2006 around eight per cent in 2007-08, as well as shows a good in 2008-09. In the current year 2009-10 so far, the pace of growth of cement industry has drop from the level of 1.12 in accelerated significantly above double digit.” 1996 and 0.94 in 2000. Jyotiraditya M. Scindia

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On the technology front, the industry has largely adopted state-of-the-art manufacturing technologies. However, the system for cogeneration of power and technologies for low NOx and SO2 emission are yet to achieve many targets. The initiatives taken by the cement industry for waste utilization are evident from the fact—that production of blended cement in the country in the year 2008-09 was as high as 74 per cent as against only 36 per cent in 2000-01. The industry annually recycles more that 30 million tonnes of fly ash, apart from consuming the entire quantity of granulated blast furnace slag. The rising cost of energy, transportation and persistent raw material pressures have been playing a heavy strain on the cement and construction industry. As a result, the Indian companies have to not only explore alternative sources of energy and materials, but also strive to enhance efficiency. The industry is in search of competitive advantage. It is continuously improving on the innovation and optimization front. While embracing its commitment to grow and compete globally, it is however not neglecting the ecological and environmental needs. The sector is adopting sustainable development practices and conservation measures, while harnessing energy for its use. The industry is fully committed and partner global efforts to reduce Green House Gases’ (GHGs’) impact, and it is mitigating the evil of climate change. n Courtesy: Press Information Bureau, Government of India.

Minister of State for Commerce & Industry

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status quo

Speeding up the Progress with

Research Outcomes

In this age of deteriorating environment, one of the primitive industries of India is showing light to the path of environmentfriendliness. Indian coir industry is getting modernised, new inventions from the Central Coir Research Institute (CCRI) are accelerating the growth process of the foreign exchange fetching industry.

Mobile Fibre Extraction Machine (MFEM) developed by Central Coir Research Institute, Coir Board, Kalavoor.

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C

dr us sarma

oir has been playing an important role in the economy of Kerala, especially the coastal districts of the state. The social life of people across these districts is closely knit with the warp and weft of the products manufactured in the coir units. Of late, the industry has begun to make its presence felt in other coconut producing states of the country as well. The state of Tamil Nadu has gone much ahead in this respect, and in fact large quantities of coir fibre required by the export oriented production units located in Alleppey source their raw material from the state. In the case

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of mechanization also, the state of Tamil Nadu has been making rapid strides, and a large number of entrepreneurs are currently entering into the industry. Similarly, the proliferation of this industry in the states of Andhra Pradesh, Karnataka, Orissa and in some non-traditional states like Gujarat has been quite encouraging. As we all know, the world economy has been reeling under an economic recession, and it is emerging out of its clutches slowly. In the aftermath of the onslaught of the recession, one item which stood conspicuous by its steady performance was coir. The depression in the economic world

- technology management for decision-makers

did not affect the exports of coir, and it proved its stencil strength against the rapids and currents in the world economy. During the year, 2009-10, the export of coir and coir products is all set to surpass the target of Rs.700 crores, an all time high export performance from the country. During the previous year (up to December 2009), the export of coir and coir products from the country was 1,79,667 MTs valued at Rs.555.03 crores. When compared to the same period of the previous year, there has been an increase to the tune of 30.38 per cent in quantity and 19.44 per cent in terms of value.

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Modern technology

The intervention of Central Coir Research Institute (CCRI) in the coir industry has been instrumental in making the coir industry in the country a modern sunshine industry. There were times when mechanization and modernization were not acceptable terms for the industry, since they were supposed to cause reduction in employment opportunities. Now, it has been proved beyond doubt that modern technology is a boon to the industry, thanks to the efforts of Coir Board and its Research and Development wing. With the eradication of crude production and processing methods and introduction of modern equipment, now more and more units are being established in factory set up with higher degree of mechanization. This has resulted in increased productivity, better quality of products and better income both to the entrepreneur and the labourer.

Employment opportunities

The younger generation which was once averse to take up jobs in the coir industry due to low wages, crude production and processing methods are now coming forward to take up employment opportunities generated in the sector. Earlier, the industry used to offer only seasonal employment opportunities to the workers due to monsoon and demands of the trade. Now, the factory set up provides regular employment to the workers, consequently the standard of living of workers has been rising steadily.

Major contributions

Some of the contributions of the Central Coir Research Institute have been major milestones in the history of coir industry. The development of ‘COIRRET’ by the Institute has revolutionized the production process of ‘white fibre’

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by reducing the processing period considerably. This process has also made the job of the workers in the industry easier and hygienic. It is an eco-friendly zero effluent process. Another contribution of the CCRI has been ‘pithplus,’ which elevated the status of coir pith from a menacing substance to a ‘money spinner’, as it found application as a hundred per cent natural manure suitable for a host of crops and horticulture applications. The recent invention of the CCRI, the Mobile Fibre Extraction Machine is going to be an epoch making incident in the history of coir industry by eradicating the perennial problem of shortage of coir fibre in the state of Kerala. In addition to the coir industry, the machine will also help the coconut cultivators by providing additional income to the farmers in the form of income from selling coconut husk, which was thrown away as a waste material. The fibre extracted through this machine can be further treated by the eco-friendly process of ‘COIRRET’ or a ‘conditioner’ treatment developed by CCRI recently, to prepare the best quality of coir fibres for spinning. The day is not far when the coir fibres blended with other natural fibres will provide new opportunities for development of various value added products like soft luggage, conference bags, shopping bags, curtains and Venetian blinds etc. CCRI has already made a breakthrough in this area of research. The dyeing of such products with natural dyes will add further value to these products in terms of eco-friendliness. It seems that two factors, which are going to be of immense help to the industry are globalization and the growing concern over the degradation of environment. Along with the growing

Dew Retting Process Green Husk Fibres: The coir fibres that are obtained from green husks by mechanical means are subjected to soaking in backwaters to remove the colour from the surface. The Central Coir Research Institute (CCRI) of Coir Board developed a process to carry out faster retting of green husk fibres by dipping these fibre bales in RCC tanks on which a bacterial cocktail namely, COIRRET is applied. The effluent arising from the fast retting can also be treated to recycle the water. Recently, CCRI has also developed a new process for treatment carried out on the fibres by Dew retting method. The COIRRET is sprayed on the fibres and the treated fibres are kept in a wrapped condition for a period of 12 hours. This is a zero effluent process and good retted quality coir fibres are available within a period of 12 hours. Dry Husk Fibres: The dry husk fibres mostly produced in Tamil Nadu have been found to be difficult for spinning good soft yarn that is required for the mats and matting industry. In order to convert these fibres into soft fibres for getting good quality yarn, the process involves spraying a combination of a conditioner and EDTA and wrapping the fibres for a period of one to four hours to get the softening /brightening effect. This is a zero effluent process.

consciousness of people on the need of turning to environment friendly products for their needs, the exposure of such products to the customer is also becoming instant, due to the ubiquitous internet access and online facilities. The coir industry is yet to fully utilize these opportunities. Owing to the environment-friendly nature of the products of this industry, the industry can play a major role in the new vista of Carbon Trading. n Dr US Sarma is the Director, Central Coir Research Institute, Coir Board, Kerala.

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cover story

Picture Courtesy: www.photos.com

Indian Logistics and Supply Chain industry is on the verge of a new era. Growing demands triggered by the upswing of manufacturing, retail, food chain and textile sectors will usher a complete facelift of this industry. Changed paradigm, new strategy and technology-aided management will be the key determinants of this transformation process. by p. k. chatterjee

I

n a recent gathering of Logistics professionals, Vineet Kanaujia, General Manager (Marketing), Safexpress said, “Our strategy for growth revolves around adding maximum value to the customers at every level, right from providing world-class warehousing support to managing time-definite express deliveries. Over the years, Safexpress has been relentlessly working towards carving its own niche in the Supply Chain and Logistics space, which

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has made the company stand out in a league of its own.” Thus, adding value at all levels and carving its own niche form the company’s success mantra. On another such occasion, Anil Khanna, Managing Director, Blue Dart Express, said, “We stand committed to support our customer needs and deliver value as we face the new opportunities in 2010.” Obviously, the hint is towards commitment to service and value added packaging as the tool behind Blue Dart’s growth.

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What does the customer want?

A fail-safe delivery in time without damaging goods at a competitive cost—is always demanded by all customers. Obviously, all service providers attempt to address those. Is that all? Then, what is that factor creating difference between the service providers? Customers are no longer happy with the average kind of services and facilities. In fact, almost literally, each customer has a unique requirement, which may depend on the real requirement or just be a mindset. Thus, meeting a single standard no longer works, the need of the hour is customization. But to what extent? Till the time, it does not affect the service provider’s optimised asset utilization. There comes up the thought to be segment-specific.

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Emerging Trends and Need for Innovation Atul Kulkarni CEO, Chowgule Ports & Infrastructure

Q&A

It is quite visible that although the future potential is too bright, the present walkway in front of the Indian Logistics Service Providers (LSPs) is not so even, as there are plenty of problems, such as—inadequate infrastructure, lack of skilled manpower, b reaucratic hindrances and so on. Still, some LSPs have achieved great success here, even during the gloomy days of global economic recession. What is common among these successful players? It goes without saying—their zeal to win, and that leads to innovation. Once again, the word ‘innovation’ is highly confusing. Where to innovate, and how to innovate are the immediate pertinent questions. The answers are quite simple, although often not properly focused on. When a Logistics operator thinks—for whom am I providing the service? Invariably, the answer is the customer. So, looking at the service from the customer’s eye is the first and foremost requirement, and that pinpoints the areas where to innovate. Also, a thought on—what are we really doing?—points towards finding out how more products can be picked, packed and shipped perfectly without loss or damage within the least time. What are the advantages of these? Customer satisfaction, brand loyalty, repeated contracts etc., along with lower labour costs and improved bottom lines for distribution operations and so on—all ultimately leading to enhanced profitability. Additionally, lower fuel, power and water consumption, reduced haphazard movement of goods, people and carriers, less traffic on the course et al—finally summed up to reduced damage to the environment.

Q: What are the emerging trends in the Indian Logistics sector? A: The emerging trend in India is outsourcing of Logistics function to Third Party Logistics Service Providers (3PLs), with whom there is a strategic partnership. The focus is shifting towards concentration on core business activity. More service providers with no asset base but ability to organize resources, and provide innovative solutions will be dominating the market. The warehousing sector will undergo a sea change. Many new concepts and services, which are not falling under traditional warehousing functions, will be offered as value added services. The retail sector will demand high efficiencies and look for zero inventory. Q: How should the Indian Logistics companies innovate to sustain in the coming days? A: The way forward for Indian Logistics companies is to understand the solutions offered by multinationals and overseas entities in order to sustain competition. The thriving large domestic market and already existing network should be used as strength. Training of manpower to deliver desired service levels, and understanding of novinces of operating in diverse cultural background will work to their advantage. It is therefore essential for Indian Logistics companies not to loose focus from the domestic market. The hub and spoke model and cluster approach will further enhance the viability.

However, this also in one way calls for multi modal transport capability, and of course an expanded portfolio, which again invite investment. The fund raising venture through Initial Public Offering (IPO) by supply-chain firm Aqua Logistics fits in here as one of the most recent examples. When F&S felicitated VRL Logistics with the 2009 Voice of the Customer Award for Best Logistics Provider in the Indian Fast Moving Consumer Goods (FMCG) Sector, Nandan Borgalkar, Chief Marketing Officer, VRL Logistics, said, “The award is in recognition of our efficient and prompt service to our customers. VRL has built a strong infrastructure to meet the increasing demands of the customers,

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cover story Major Trends and Ways to Innovate Q: Which direction is the Indian Logistics sector moving towards? A: Well, I see three major trends are emerging. First of all, Supply Chains will no longer compete based on regulatory or tax arbitrage. The ability of LSPs to orchestrate various links of the entire chain, therefore, will become more important. Secondly, the industry (customers of LSPs) is realizing that the asset owner is not necessarily the best service provider. Domain knowledge with execution capability is becoming more important to win contracts. Thirdly—adopt technology or perish. In the past, customers had been forcing LSPs to use technology. This will no longer be the case in future. LSPs will have to take initiatives to assess the technology needs of their customers and provide them with domain specific solutions.

Q&A

Mangesh Pathak Principal, Ambit Pragma Ventures

Q: How should the companies in this sector innovate? A: Saving costs for their customers has been a major selling proposition for LSPs. They will need to shift their focus from saving costs to creating value for the customer. This is possible only if LSPs develop a very sharp domain expertise in select industry verticals. One of the imperatives for the Logistics industry is to find ways to attract and retain talent in the industry. Q: What is your advice to small LSPs? A: For small LSPs to be sustainable, they must develop their niches and grow within them initially.

especially in FMCG sector. Corporates expect fast, reliable and on-time deliveries to reach the ultimate destination; VRL has understood the importance of being able to deliver on time and achieve this within a short span of time.” Focusing more light on Nandan’s statement, GS Ayyer, Vice President (Finance) of the company informed, “A customer always desires committed service from the appointed LSP. Here, service covers activities, namely—timely pick-up, assured last mile delivery and pro-active information flow of this activity to customer.” When explaining why LSPs need to be segment-specific, Ayyer said, “Need of a segmentspecific service provider is felt by a customer for

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getting confidence of handling and delivering shipments as per commitment to the customer’s customers. Segmentation depends on various factors like—product segment, geographical segment etc.” He continued, “In Indian scenario, geographical spread is very wide, and at the same time service providers are high in number. Very few of them are organised, and they do work on strength of their geographical and infrastructural network. Own vehicle strength of the service providers is very meagre in India. Single and up to five vehicles strength players in market operate on route-specific or region-specific strength.” According to Ayyer, multi modal capability of service providers is very important these days. Since in the entire Supply Chain movement of shipments to the end user with different volumes and time sensitivity, engaging different service providers at different legs till last mile delivery is an uphill task to the customer. Hence, it is becoming call of the hour to engage single service provider—who can deliver to the end more economically and time sensitively. With multi-modal capabilities service providers can give one-stop Logistics solution to customers. Fair enough! An interesting fact found through a recent research by Frost & Sullivan (F&S) is the lower preference of end users for long-term contracts with LSPs. Their observations reveal—long-term contracts between LSPs and end user companies were low across all industries in the country. A majority of the companies either had no contracts with LSPs, or had just one year contracts, indicating a tendency toward frequent change of LSPs. F&S Industry Analyst Srinath Manda said, “About 90 per cent of users across industries mentioned cost saving followed by preference to focus on core competency as the primary reasons for engagement of Logistics service providers.” Commenting on Srinath’s statement, U K Kaushal, Head—Pune Plant, Apollo Tyres, opined, “It is a fact that most industries go for short-term contract with the LSPs.” However, the complexity and the volume of the services required play an important role in deciding the term of the contract. In case the logistics requirements are highly specialized, the long term contract may be the preferred choice. Where the volume and the complexity are low, the short term contract fits in quite well with annual plan— especially, in a market where there is competition and inflation.”

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What is the present scenario?

Picture Courtesy: www.photos.com

According to The Associated Chambers of Commerce and Industry of India (ASSOCHAM), “Exorbitant Logistic cost (14 per cent of the total value of goods) in India is primarily responsible for making goods uncompetitive, and may further erode the competitiveness in the international market unless corrective measures are taken.” The chamber feels providing ‘industry-status’ alone would facilitate development of the sector, and bring down the current Logistic cost of 14 per cent to the level of China, where it is 10 per cent. As per ASSOCHAM’s observation, in the developed countries these costs are between six to eight per cent of the total value of goods. A recent CRISIL Research study of the Logistics expenditure in India reveals that the efficiency of Logistics network in the country lags behind that of many developed nations. The research also highlights, the total Logistics spend covering both primary and secondary movement was around 10.7 per cent of the GDP in 2008-09, which is significantly higher than the 5 to 7 per cent across developed nations. The higher spend is largely due to inefficient

Goods are kept in a modern warehouse.

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Customer’s Demand and Evaluation Technique Debojyoti Ray Chaudhuri Assistant Manager – Supply Chain, Kansai Nerolac Paints Q: What is your first question to any LSP approaching you for a contract? A: I will enquire about their fleet size, routes on which they are strong and type of cargo carried.

Q&A

“LSPs must focus on the value added services for long term mutual advantages in terms of Communication system, Vehicle tracking, Loadability, Packaging, Optimal vehicle size and shape, and Cost competitiveness. Every industry has potential to reduce long term cost. However, the initiative by LSPs to understand the complexities of requirements of the end users, and working out integrated solutions—would make long term contracts lucrative. Now, LSPs are growing in size and competency, the long term contracts may be better choice in near future,” explained Kaushal.

Q: How do you assess an LSP’s capability before allotting contract? A: We first check their profile, and it is reviewed by a reference check. We confirm if they can indeed provide a strong service in a particular route. We also check the financial soundness of the company. Q: What kind of value do you look for in an LSP? A: Efficient and responsible transportation of goods... Responsive support staff... Responsibility of entire documetation, which includes filling up road permits in certain states, collection of modvat papers etc... Q: Where do the Indian 3PL service providers need to improve? A: Tracking of consignments, quality of fleet, billing procedures and adequate literacy of support staff of the organization are some of the areas, where they need to improve.

Logistics operations, multiple tax structures, inadequate Logistics infrastructure and unorganised nature of the industry. The fifth annual ‘Voice of the Customer’ study from F&S (just released) finds – LSPs in India performed well above end-user expectations in some key performance criteria, such as—fleet size, vehicle quality, number of warehouses and warehouse size. In parameters, such as—value addition, consignment tracking facility and cost saving initiatives, LSP performance came close to end-user expectations. But the LSPs lagged significantly behind end-user expectations on key performance criteria, such as—process improvement capabilities, material safety and attitude of staff. According to Analyst Srinath of F&S, “Foremost among the challenges in Logistics for a majority of companies across industry verticals are safety of

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cover story Need for Multi Modal Transport Capability

of modern technology or inefficient use of the installed technology. Of course, there are many other problems, such as shortage of adequately trained manpower, bureaucratic interference etc. So, the industry needs to overcome all these stumbling blocks to emerge as the best-in-class worldwide.

Anshuman Neil Basu President, CSCMP, Roundtable Mumbai, India

Q: Where is the need to be a segment-specific service provider? A: Overall, I feel a service provider should not be only segment-specific. As SCM encompasses all the areas of goods movement—from the raw materials till the end user, a service provider should be an expert in all segments or commodities. This gives the service provider an expertise, which everyone is looking at desperately in the growing Indian market.

How is the scenario changing?

Q&A

Q: What does a customer want from an LSP ? A: Complete accountability and ownership. Currently in India, many service providers including multinational corporations (MNCs)—are engaged in providing 3PL services, but most fail to be complete professionals in their services. They rely heavily for a constant support and involvement of their clients, and mostly this becomes a practice over the period. Hence, a sense of ownership is lacking in most cases.

Q: Why multi modal transport capability is important these days? A: Multi modal transport is the future. India cannot afford to lag behind in network and quality of its capability. Private sectors should take the lead and make this world-class. This is India’s decade. Multi modal transport will turn out to be much more cheaper, and will ensure it reaches many places in considerably less time, and thus being more competitive.

goods during transit and warehousing, inefficiency of LSPs in adhering to timelines and the low skill levels of Logistics personnel. Inability of LSPs to keep pace with evolving volumes of end users, and the lack of multimodal transportation capabilities are other impediments. Further, the risk of information leak is a cause for angst among end-users.” Thus, one of the major drawbacks in India is poor Logistics infrastructure that has been raising Logistics costs compared to other countries, and making our products uncompetitive. Another key feature offering a major obstacle to smooth Logistics is the fragmented nature of the industry. Except for only a few very big operators, others do not provide a complete solution. Then there is lack of visibility of Supply Chain because of either lack of deployment

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With rapid growth in Indian manufacturing sector (along with growing textile and organized retail sector) in this globalized era, companies are now looking at concentrating more on their core activities, thus the trend of outsourcing Logistics operation is ever increasing. Third Party Logistics service providers (3PLs) are supposed to possess better skill and knowledge in handling cargo—naturally expectation for better goods handling and market penetration capability from them is very high. A recent Datamonitor survey communicates, “In India, 3PL operators have a 15 per cent share of the Automotive Logistics industry. The 3PL industry receives almost half of its revenues from the automotive sector, and its share of this market is expected to grow around 24 per cent annually to reach 60 per cent by 2012. With the Indian automotive industry set to grow at a robust annual average of 13 per cent over the next five years, and global companies increasingly sourcing components from India, the opportunities for 3PL players are very promising. According to a recent report on 3PL market in India from RNCOS, they expect—improving infrastructure and focus on core business operations will lead the future growth of the Indian 3PL market. The market is projected to witness a CAGR of around 30 per cent during the period 2010-12, harvesting total revenue of nearly US$ 4 billion. ASSOCHAM predicts, outsourcing of 3PL business in India is all set to acquire a size of US$ 90 million by 2012—as the concept introduced in US and Europe is fast catching up the pace to increase the efficiency of domestic corporates through efficient Logistic functions. As far as government’s initiative is concerned, the plans focusing the manufacturing industry will indirectly benefit the Logistics and Supply Chain industry, as so far there is no separate recognition of this industry as an individual industry. The government has taken up major plans to build industrial corridors, inland water way facilities, better connectivity

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What are the emerging trends?

Picture Courtesy: www.photos.com

In the service front, Indian LSPs are gearing up to present a wide spectrum of Logistics services portfolio in all air, water and land segments. Utmost attempts for creating visibility of Supply Chain, and assuring unhindered services with absorption of information and communication technology (ICT) are quite prominent. Enormous efforts are being put to reduce transportation costs, to remain competitive. Also, attention is being paid on improving Reverse Logistics operations. In the policy level, formulation of new strategies, although at its nascent stage, incorporating relief from non-beneficial race of competition is also on cards. Perhaps the statement of Bharat Joshi, Director, Associated Container Terminals best explains that. He feels, “Collaborative supply chains hold tremendous promise for those who can engage in co-opetition.” So, the message is very positive— a paradigm shift from competition to co-opetition is one of the remarkable recent trends.

A loaded truck is coming out of a warehouse.

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Emerging Issues and Remedies Rolf Habben-Jansen CEO, Damco

Q&A

for ports, airport upgradation etc. However, most of the projects are being taken up through public-private participation. A few (not all) major plans include: Delhi-Mumbai Industrial Corridor (DMIC) project worth Rs. 3,60,000 crore to build a Global Manufacturing and Trading Hub with emphasis on expanding manufacturing and service hub, this will boost the Logistics sector too, notably, it will include three sea ports and six air ports. Projects are being formulated for major ports to have minimum four-lane road and double line rail connectivity. Inland water way development projects are also on anvil in the stretch of River Godavari, Kakinada-Puducherry stretch of canals and stretch of Matai river.

Q: India faces the hurdle of lack of good infrastructure for the growth of its logistics industry. What do you feel about this? A: Good infrastructure will definitely promote the Logistics industry in India. Lack of infrastructure adds risks, affects reliability and in general – increases the overall Logistics costs affecting the overall competitiveness of the economy. India is a very vast country where the manufacturing centres and consumption centres are spread across a wide geography, thus state-of-the-art design of Supply Chains will ensure economic and efficient distribution. The country’s trade is dominated by a few gateway ports and the road or rail connectivity to these gateway ports has limited capacity. These need to be addressed urgently.

Gearing up for reaping benefits from the post Goods & Services Tax (GST) implementation era is going on in full swing. Whereby setting up of state-of-the-art warehouses at strategic locations and reformulation of distribution strategies are gaining importance. In the quarter of technology absorption, where recently, Kale Consultants, in their study titled “Technology Adoption in the Indian Logistics Industry” revealed that 76 per cent of Indian Logistics companies need to significantly improve their technology adoption levels, the scenario is changing now. According to NOVONOUS, India spends 15 to 20 per cent of its GDP on Transport and Logistics compared to an average 8 to 10 per cent in other developing countries. The freight transportation industry trends indicate that freight operations that are port based, are to grow at 20 to 25 per cent, with the proposed capacity additions at major and minor ports. Although, thoughts on Green Logistics have been hovering over the entire Indian Logistics industry, translation into practices in a mass scale is yet to start. As on date, to a great extent it is because of administrative pressure. In its true sense, we are just at the doorway of practising Green Logistics. However, with more acceptance of the concept of co-opetition (if taken up seriously by the LSPs), the real era of Green Logistics will commence.

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cover story Need for Contemporary Knowledge Sanjay Goel Chairman, GTC Group

Q: What are the areas where Indian LSPs need to innovate? A: Education is one area where service providers have to innovate a lot. Most of the institutes are providing knowledge, which is not contemporary or relevant to the ever changing Supply Chain scenario. They have to look beyond the universities or colleges – which are giving just degrees.

Q&A

Q: What are the emerging trends in our Logistics and Supply Chain sector? A: The sector is in continuous evolving mode. The future will bring mergers and acquisitions amongst service providers, so that economies of scale can be availed.

Q: How should they do that? A: They may ask industry experts to conduct workshops and devise programmes, which are concurrent with the industry.

Conclusion

3PL industry will continue to gain more and more importance. However, competition will be manifold, because of the entry of the expert and financially sound foreign players, as well as big Indian players from other fields, e.g., Gammon India. Some segment-specific expertise will gain much more importance. For example, because of the fast growth of the food product industry, opening of the food chain outlets and shifting food culture in different parts of the country, 3PL in food Supply Chain (Cold chain) will carve a successful niche segment. However, LSPs with versatile capabilities will find more opportunities. Customers’ need for complete solution will be acute. Getting contracts for only a section of Logistics and Supply Chain functions (of a company) will be more difficult gradually, except for a few areas like landfill, slag removal contracts, generally where there will be no requirement for storage. Ultramodern warehouses with huge capacity and versatile capabilities are to come up at many strategic locations. Their list of functions too will start including many innovative services, which may include jobs like repair and maintenance, spot testing of damaged products.

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- technology management for decision-makers

For every Indian LSP, to win in the market battle of cut-throat competition, deployment of advanced technologies will be most essential, as it will bring in real time visibility of operations leading to making prompt decisions in every aspect. Moreover, to a great extent ICT can nullify the potential losses due to lack of the country’s infrastructure. For example, route diversion in time because of advanced information of traffic congestion, saving perishable goods from natural or unforeseen adverse situations etc. Multi modal transport capability will find huge demand, as it will lead to offering economic packages for goods shipping. Also, from manufacturers’ end there will be tremendous effort to improve Reverse Logistics, which is a weak area of our Supply Chain today. Focus on safety and security of goods in transit will receive more attention. Right tracking technology will ease the job for LSPs. In order to taste the pie, the small and medium operators will look for strategic alliance and growth partnership to be capable from all angles. There is no alternative, as money market will not go easy for them till the Logistics and Supply Chain industry is given official recognition or status of a full fledged industry sector; once again the recent launch of Rs 150-crore IPO of Aqua Logistics bears its witness. The company had to extend the closing date as the issue was not fully subscribed, also it had to reduce the price band to Rs 200-225 per share from proposed Rs 220-230. However, experienced 3PL service providers of Indian origin seem to overcome all the blows, if they can smartly throw their dice to join hands and form ties to share experience and efficiency of one another. Thus, it is time to rethink, reengineer and rebuild through M&A and co-opetitive approach. The ever growing need for people with field-specific knowledge will force the operating companies— to either create their own training institutes or join hands more firmly with the existing academia to influence practice-oriented redesign of their syllabi. At the outset I drew your attention towards value addition, I am not lost in the bush of words, at the end I say, to be in the market tomorrow the process of value addition has to be endless. Because, what you do today, will be imitated immediately, thus, the unceasing flow of adding values to value added products will continue to retain unique identity in the market. n

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cover story

“LSPs Will Have Access to

Software Solutions That Offer Instant ROI” Information technology (IT) helps Logistics Service Providers (LSPs) in enhancing quality of customer service, reducing revenue leakage and containing costs. SaaS platforms delivering webbased software on a pay-for-use model do not call for huge initial investment to reap benefits of IT. S Sridharan, Managing Director, TAKE Solutions, unfolds some of the potential areas to P K Chatterjee, where Indian LSPs can take IT advantage through pay-for-use pricing model.

S Sridharan, Managing Director, TAKE Solutions What type of area-specific solutions are being sought by the Indian Logistics Companies? Unlike procurement of materials, use of software solutions by customers for managing procure-to-pay processes for services, especially Logistics services, has always been very limited in India. The process of requisitioning and procuring Logistics services is usually administered manually, leaving little scope for logistics providers for improvement in quality of customer service. Also, Logistics Service Providers (LSPs) in India are spending significant energies towards expediting payments, as this process typically involves multiple entities within and outside the customer organization. Their inability to submit electronic invoices, which enable instant verification and processing, puts added pressure on the already difficult working capital management scenario. Until now addressing these challenges required investments in software solutions and IT from both

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- technology management for decision-makers

service seeking and service providing companies. With web-based technologies and pay-for-use software-as-a-service (SaaS) solutions, Logistics companies in the organized and unorganized sectors now have access to instant Return On Investment (ROI) solutions that address these challenges. These solutions not only automate the order-tocash and accounts receivable processes for LSPs, but also the procure-to-pay and accounts payable processes for their customers. They also bring the capabilities to track transactions, shipments and packages, as well as providing automated alerts to customers. Do you find any notable paradigm shift among the small fleet operators—as far as adopting software solutions is concerned? The problems that small fleet operators face are no different from that of the large ones—except that their working capital pressures are far stronger. As a result, their propensity to invest in software solutions, and to adopt new technologies, is low. The onus is on the software solution providers to make such solutions accessible to them at affordable cost—once again this highlights the need for zeroinvestment, pay-as-you go software solutions for all members in the business ecosystem.

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For very small LSPs, which are not computer literate, the challenge is to deliver these solutions through familiar technology options like cell phones. What sort of difference do you find in use and demand of software solutions among Indian Logistics operators compared to their peers in the developed countries? Fundamentally, the logistics industry in India is fragmented. There are a large number of small and medium businesses, which rely heavily on few essential assets supported by manual labour. Given the fragmentation, most customers in India are forced to have multiple LSPs and allocate their requirements across them based on SLAs commensurate with the general industry automation levels. Take warehousing for example, the level of automation here—even for a large LSP is very small compared to those in the developed countries. With increased consolidation in the industry, the ability to invest and benefit from automating operations, and processes across organizational boundaries, would increase. This would drive the software solutions focus from effective operations and visibility—to capability building and efficiency generation. For example, in warehousing, this will result in increased demand for software solutions that support compliance labeling, use of hand-held devices, cross-docking capabilities, system assisted operations etc. What is the most recent technology in this field according to your assessment? Adoption of web-based software for business ecosystems through SaaS model will see a lot of demand. These solutions offer the twin advantages of addressing the needs of the small and mid-sized LSPs in terms of lesser cost and fewer resources, as well as being easy to adopt and use. Mobility, combined with business applications delivered on SaaS model, is expected to see increased LSP adoption—this will not only improve visibility of their operations internally, but can also help in offering value added services to their customers. Though RFID is another talked about piece of technology, the adoption rates would depend significantly on how concerns over issues such as costs and its applicability in heavily metallic environment are addressed. Can you give an idea of the payback period after a software solution is deployed in a Logistics firm? With multi-tenant SaaS platforms delivering webbased software on a pay-for-use model, LSPs

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will have access to software solutions that offer instant ROI. For instance, LSPs could benefit from automating their order-to-cash and accounts receivables and shipment or package tracking processes, using SaaS platform for delivering high-value Supply Chain Solutions to trading partners in a multi-enterprise business ecosystem. Such solutions come with low and affordable fixed monthly subscription options. Unlike software solutions delivered on a licensed model, the LSPs would gain instant ROI as soon as they join the ecosystem, through membership attribution and readiness to do business with potentially all their customers. There is no investment and no pay-back period involved. Payback-period would be relevant only for software solutions delivered on a licensed model and technology solutions involving procurement of hardware. It is well known that India has got infrastructural problems, which is being addressed these days, apparently in a big way! However, it will take a long time to be at par with other developed countries. Under such circumstances: How can IT reduce logistics losses (say time loss, fuel loss, loss due to traffic jam etc.) in a big way? Logistics losses are as much a result of infrastructural issues as they are of the way we use the available infrastructure. For example, on one hand most companies continue to pay for warehouse storage space they have booked in private warehouses—but not used, on the other hand many LSPs are unable to pass the benefit of booked but unused space in their facilities. This is a direct result of the cost plus methods adopted in pricing facilities and services. Software solutions can help not only truly enabling and managing shared resources and facilities, but also track and bill customers accordingly. Similarly, software solutions can also help LSPs in building cross-docking, drop-ship, direct-storedelivery and mobile sales capabilities, even with existing infrastructure. What is your message to the Indian Lsps? Research has repeatedly established that Indian LSPs can benefit significantly from adopting advanced methods and technologies in Supply Chain, and using them to offer better services to end users and customers. Web-based software solutions delivered using a multi-tenant SaaS platform, are now available for LSPs on a pay-for-use pricing model. LSPs should actively consider adopting and benefiting from such solutions in their reach, as they come with near zero investments and no worries on ROI. n

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- technology management for decision-makers | february 28, 2010

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Picture Courtesy: www.photos.com

cover story

GearinG uP

To Drive Huge Wheels of Growth The future of the Indian logistics industry is very bright considering some major transforming social and economic factors, which will give fillip to its growth. Timely preparation will help the service providers in shouldering the huge upcoming load. by vineet agarwal

H

ealthy economic growth in India is increasingly being supported by the robust industrial growth. One of the significant sectors that supports almost all industrial activities is the Logistics Sector, which is also witnessing this commensurate growth. Indian logistics sector grew phenomenally at the rate of eight

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february 28, 2010 | industry 2.0

to ten per cent annually between 2002 and 2007, riding on favourable factors such as country’s changing tax regime, growth across major industry segments like automobile, pharmaceutical, FMCG and the emergence of organized retail. The future for logistics outsourcing or 3PL, multi-modal logistics services, and Offshore Development Centre (ODC) services has become very bright in the recent times. The growth in the logistics sector can be attributed to increased participation from foreign players. With globalization and entry of international players across verticals through Foreign Direct Investments (FDIs) or Foreign Institutional Investments (FII), a general shift in the business activities undertaken can be noticed, wherein the companies

- technology management for decision-makers

outsource their logistics requirements in order to reduce costs. It is one of the core factors for the growth of logistics sector in this country. India holds an important position on the global logistics map, and it offers immense opportunities for growth to the logistics service providers. Over the last two decades, economic globalization, trade liberalization and competitiveness have enhanced transportation needs to such an extent—that now competent logistics management activities relating to the procurement, transport, transshipment and storage of goods—are not only just an economic support, but also recognized as an economy driver. As per a research by Datamonitor, the Indian logistics market will reach a value of $125 billion in

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2010, increasing from approximately $100 billion in 2007.

The growth of the logistics sector is affected by various other factors like development of infrastructure. Proper emphasis on the following elements will further accelerate the growth of the sector: l Logistics hubs l Commercial warehousing l Logistics parks l Implementation of GST Logistics hubs: Currently, there are around 12 established logistics hubs in India, which are concentrated around key industries like pharmaceuticals, auto and auto-components, textiles, machinery and electronic goods. These hubs are: l North: Haryana, Himachal Pradesh, Delhi and Punjab l West: Maharashtra, Gujarat and Rajasthan l South: Andhra Pradesh, Tamil Nadu and Karnataka l East: Orissa and West Bengal Maharashtra, Gujarat and Rajasthan in Western India have huge potential for growth—as approximately 30,000 acres of land has been notified for the development of non- IT/ ITes SEZs. Going South, Andhra Pradesh, Tamil Nadu and Karnataka are flourishing due to the presence of huge automobile and auto ancillary manufacturing market. Moreover, these states have a bright future in terms of logistics business—as several multi-product, automobile and textile SEZs are expected in this region. The sector is also expected to benefit from the booming pharmaceutical, auto component and agri-input industry, and presence of seven ports facilitating international trade. The states of Haryana, Himachal Pradesh, Delhi and Punjab in Northern India are thriving on the organized retail market and food

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Picture Courtesy: www.photos.com

Need of the hour

processing industry. It is believed that maximum supply of retail malls in the country will come up in North India, and it will give a fillip to the logistics sector. Apart from the established and emerging hubs, the logistics players in India are also eyeing the ‘promising’ hubs like Jamshedpur, Alwar, Ahmedabad, Bangalore and Ambala. These cities have the potential to be developed into logistics hubs, considering the fact that manufacturing activities are increasing there.

Commercial warehousing: Another very strong potential for growth lies in commercial warehousing. With double-digit manufacturing growth and the sharp advent of modernized retailing, warehousing will play an ever important role in the supply chain industry. Commercial warehousing, particularly free trade warehousing in the special economic zones across the country, is expected to witness tremendous growth, reaching in excess of 150 million square feet by the end of 2010.

Warehouses are evolving from a

conventional storehouse

to a completely scientific inventory management set-up focusing on value

added services

Warehouses are evolving from a conventional storehouse to a completely scientific inventory management set-up focusing on value added services. As the concept of ‘third party logistics’ is fast catching up in the country, warehouses are also growing apace by providing additional services such as packaging, labeling, bar coding, consolidation and break up of cargo and reverse logistics etc. The government’s investmentlinked tax incentives for setting up cold storages and agriculture warehousing facilities too will provide an impetus to the logistics sector. With strong growth

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- technology management for decision-makers | february 28, 2010

33


Major

factors, which will shape the growth

of the logistics sector, will be publicprivate participation,

technology

deployment, investments in infrastructure and integration of logistic services in organized retailing and food processing sector, there is a dire need to upgrade infrastructure to ensure optimal distribution and storage of perishables. Logistics parks: The concept of Logistics Park is emerging, but it is at a nascent stage. Logistics parks provide the right framework to bring about economies of scale, standardization and efficiency. This takes the standard of logistics services to higher level and helps unleash the true potential of logistics. For logistics parks to gain traction, there is a need for the government to push for more freight corridors and integrated multi-modal transpor-

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february 28, 2010 | industry 2.0

Picture Courtesy: www.tcil.com

cover story

tation network. As land acquisition proves to be the biggest challenge, the government should identify the logistics points, and provide land on public-privatepartnership basis—to build logistics parks. Just as land is earmarked for industrial, commercial and residential purposes, land needs to be allocated for logistics activities too. Implementation of GST: As the country is getting ready for the proposed Goods and Services Tax (GST) to be implemented, the conventional concept of establishing warehouses near manufacturing and raw material facilities is undergoing a transformation. As GST will standardize rates across the nation, there is a lot of consolidation expected in the warehousing segment—as companies will be able to manage bigger warehouses at few strategic locations. Introduction of GST will also lead to greater adoption of a hub-andspoke model in infrastructure segments such as warehousing, cold chain, container freight stations etc. GST will also reduce logistics costs and enable industry players to reduce prices.

Safe present and promising future

India possesses substantial op-

- technology management for decision-makers

portunities for growth in the logistics industry in the coming years. All this is possible when due recognition will be given to the logistics sector by providing it ‘industry’ status, and acknowledging it as a ‘strategic enabler’. Also, to further speed up the growth of the sector, other impediments should be worked upon; like stringent documentation, checkpost delays, poor infrastructure and lack of skilled labour. Indian logistics sector attracted investments worth Rs. 23,200 crore in first half of 2008, according to a study by Assocham. That time, it outperformed major sectors such as aviation (Rs. 20, 890 cr), metals and mining (Rs. 8500 cr) and consumer durables (Rs. 6000 cr) among others. According to CRISIL, the logistics sector in the country is expected to gain Rs.5,96,114 crore in annual revenues by 2013-14. This strong growth in the sector will be backed by favourable regulatory environment and greater thrust on logistics infrastructure spending. Introduction of GST and development of logistics parks will give a boost to the sector, which is expected to post an 11 per cent compound annual growth rate (CAGR) for the next five years.

Looking at the future

Future outlook of the logistics industry is bright – as it depends on the economy which is expected to continue to grow. With increasing trend in the freight traffic in last couple of years, logistics industry will keep pace with growth of the external as well as domestic trade. Major factors, which will shape the growth of the logistics sector, will be public- private participation, technology deployment, investments in infrastructure and integration of logistic services. n Vineet Agarwal is the Executive Director of Transport Corporation of India.

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cover story Maha Muzumdar Vice President Supply Chain Marketing Oracle

Integrating the

Business Processes Is Absolutely Critical for SCM

In a scenario, when enterprises constantly need to predict, innovate and align their operations in tune with the prevailing market conditions, in an exclusive interview with Industry 2.0, Maha Muzumdar, Vice President, Supply Chain Marketing, Oracle, explains how information technology (IT) can help the Indian manufacturing and distribution industry reach the next levels of growth.

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- technology management for decision-makers | february 28, 2010

35


cover story How is IT helping supply chain managers worldwide? The biggest value proposition on a company, as a whole, is the impact it has on the profit and loss—as that has direct implications on the company’s performance. Specifically, when we talk about managers, supply chain management (SCM) technology can allow them to oversee the cycle time, making sure they have the right information at the right time to make the right decisions—because it is a very information-centric environment. When we talk of supply chain, we talk about the physical flow of goods. Secondly, there is flow of cash. So, when you move a product and a customer buys it, they pay you cash, this cash has to

Substantial

companies still operate on

systems that western

companies operated on ago

15 years

go up the supply chain. The third thing is the flow of information, which is enabled by technology. Through advanced capabilities of planning, execution and sourcing, one can automate business processes, which leads to lower cycle times and more efficiency. From the point of view of operations, decision making, accelerating cycle times and driving key performance for the company, there is no doubt that technology plays a very vital role. In fact, if you look at a supply chain, which does not have adequate technology infrastructure, you are not going to have that instantaneous sharing of informa-

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february 28, 2010 | industry 2.0

tion. All the market leaders today use technology to reach higher levels of growth. Do you feel that distributed manufacturing will be the trend in the near future in India? When we talk about distributed manufacturing, my interpretation—it is ‘virtual manufacturing’. There is not even a single company that manufactures a complete product without the help of suppliers or (other) manufacturers. When we talk about India, we have got a vast pool of highly skilled resources. People in the western countries are viewing India as a big opportunity, and they wish to set up manufacturing plants here. The challenge is the logistics infrastructure in the country, which needs to be fixed. Because when companies are considering India for outsourcing and manufacturing, they are also thinking about moving goods. But, here the infrastructure has stayed behind. China is now the manufacturing shop floor of the world—because of its brilliant infrastructure. What sort of integrated approach is being found in SCM nowadays? The whole notion of SCM is all about breaking barriers and silos. Historically, companies were organized by functions. Supply chain management is all about horizontal business functions, therefore, integrating the business processes is absolutely critical for SCM. We, at Oracle have built our solutions with a very processcentric view, around intelligence and dashboards. Firstly, we plan to combine the process-centric approach with an informationcentric one. The second aspect is about integrating solutions, such as—sales and operations planning with CFO Suite, thus making sure that the supply chain is

- technology management for decision-makers

aligned with corporate goals. Our sales and operations planning solution integrates profit and loss with supply and demand. When you link your supply chain processes and integrate that with your financial planning systems, you are actually able to link your corporate goals and strategies, your performance metrics, performance targets and budgets with your supply chain goals, as a result, when you run your supply chain, you are completely aligned with the CEO and the CFO of the company. What sort of new approach is necessary as far as Indian manufacturing organizations are concerned? When we talk about new approaches for Indian manufacturing, I feel many companies are still operating out of legacy systems, spreadsheets, fax and phones and other manual processes. Substantial companies still operate on systems that western companies operated on 15 years ago. This is the time for them to look at the latest technologies, and leverage their activities to streamline business processes and supply chains, ensure automation, have instant visibility for decision making. Thus, the most urgent thing is to enable instant sharing of information across the enterprise. These are some of the approaches that Indian companies need to look at—moving away from fragmented manual processes to the state-of-the-art —like the western world. How can application of IT in manufacturing and SCM take the Indian business runners in to the next level of excellence? When we talk about SCM excellence, there is a whole process view around, what we think our pillars of excellence, that compa-

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nies need to have in order to not only be market leaders but also to sustain their market leadership. Five key things that I would like to talk about are—the ability to predict, adapt, innovate, align and sustain. Predict means ability to sense and shape demand—(say) how can you influence a customer’s buying behaviour, so that you are able to shape that demand and sell more of your goods in the market? Adapt refers to building flexible and adaptive supply chain, integrated best-in-class logistics network, transportation management, warehouse management, global trade management - all these processes—to provide a very seamless best-in-class customer experience. And as changes happen in the market place, you must have infrastructure to rapidly respond and quickly adjust your supply chains to ensure you are not losing your business. Innovation comes in multiple dimensions. We talk about product innovation, service innovation, process innovation etc. But when we talk of supply chains, people talk only of supply and demand. There are three legs to a supply chain—product, supply and demand. The whole notion of integrating product life cycle management into your supply chain is ensuring that—as you build in new products, they are optimized for cost and time. This is how you accelerate innovation, and ensure that they are designed for supply. The key benefit is—it shrinks your time-to-market, and thereby captures market share, more profitably. Aligning your supply chain with your corporate plans is to deliver on the profitability matrix, which your company has set for themselves. Sustainability includes a number of areas or activities, such as

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energy consumption, green house gas reduction etc. Now, energy consumption means—how do you quickly understand what energy are you consuming and how can you minimize wastage? There are specific solutions that we offer, so that companies can effectively monitor their respective energy consumptions. The other thing is green house gas reduction. A large percentage of carbon footprints comes from transportation. How can you optimize your transportation network and make sure that only the fully loaded trucks are moving? Our solution shows the way. What is your comment on cost effectiveness of deploying IT in the Indian manufacturing scenario? When we talk about cost effectiveness, companies need to look at the value or the return on investment (ROI) they will get. They need to have focus on ROI, the value and payback. It is not a cost-centric view, but a value centric view that companies need to have. But then the reality of the scenario is that all companies can afford to invest in infrastructure. There are flexible models that they can use. The traditional approach is—companies take technologies and implement them in their facilities. They become the owner. The other option on demand is ‘you pay as you go’. Software-asa-service (SAAS) can also be an attractive option for companies that don’t want to invest heavily upfront, and basically use the system on demand. How can IT help in ensuring green manufacturing? We have a solution specifically made for green manufacturing. The product actually monitors in real time the energy consumption that happens in an organization, a facility and plant or shopfloor.

We are bringing in the product with sensor-based capabilities to understand real time consumption of energy. So, it allows you to correlate energy consumption to production and value added activities. The moment you have visibility to non-value activities, you are able to manage better and eliminate waste. What is your message to the Indian manufacturers and supply chain management operators? Supply chain derives significant value, it has direct impact on customer satisfaction and

To be competitive

in this market, companies must adopt technology in their supply level to become global

profitability. Companies in India should move away from manual processes, and take them to the next level. To be competitive in this market place, they must adopt technology in their supply level to become global. They need to take a more holistic integrated view that does not just consider technology, but looks at people, process and performance measures in an integrated fashion to drive some key benefits. Lastly, I would like to say that India is a very important market for Oracle. The country is still on a positive growth path. We would like to focus on this region. n

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cover story

Building and Leveraging Metrics Framework

To Drive Supply Chain Performance A well designed and integrated metrics framework increases the capability of business intelligence systems to provide accurate insights for effective supply chain decision making. A metrics framework-based approach to supply chain performance management is fundamental to leverage investments in business intelligence and analytics. by tejas faldu, srikanth krishna

S

upply Chain Performance Management (SCPM) has been a critical area for consumer packaged goods (CPG) companies in their efforts to develop an agile, lean and efficient customer-oriented supply chain. A robust SCPM infrastructure is crucial to realize the benefits of various collaborative initiatives. However, CPG companies need to resolve some crucial questions before making

significant investments in SCPM initiatives. These include: l Is there an enterprise-wide awareness and understanding of strategic and financial objectives? l Is there an understanding of the financial impact of supply chain performance on overall corporate performance? l Are all processes and roles in the supply chain mapped to key metrics to determine performance?

l Is there a mechanism to periodically review actual supply chain performance and redefine performance measures in the changing business context? l Is there an integrated single view of supply chain performance across functions and hierarchies? l Is senior management able to quickly determine the causes for supply chain failures? We shall now focus on defining and building a ‘metrics framework’ to effectively leverage and drive supply chain performance management.

Developing the supply chain metrics framework

A balanced set of metrics, aligned to various supply chain functional areas—demand planning, customer management, warehouse management, need to be identi-

Metrics belonging to different classes Strategic Objective

Typical Metric

Class

What it signifies

Customer Satisfaction

Perfect Order

Strategic

Reliability of the supply chain to meet customer orders in quantity, in-time, quality and with complete accuracy on documentation.

Manufacturing Schedule Adherence

Tactical

Ability of manufacturing to supply as per planned manufacturing schedule and meet desired inventory levels for a make-to-stock item or meet desired customer delivery schedules for make to order items.

Customer Satisfaction

Machine Downtime

Operational

Loss of manufacturing capacity due to various reasons like machine breakdown, planned preventive maintenance, stock-out of input materials, etc.

Customer Satisfaction

Supplier Delivery Schedule Adherence Operational

Ability of vendor to supply as per planned supply schedule.

Operational Excellence

Cash-to-cash Cycle Time

Strategic

Time taken between cash spent to purchase raw material to the time taken to realize cash-on-sales to customers, e.g. days of inventory, accounts receivable in days, accounts payable in days.

Operational Excellence

Total Supply Chain Cost

Strategic

Total costs incurred in the supply chain including warehousing, logistics, purchasing, planning, manpower costs, etc

Customer Satisfaction

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- technology management for decision-makers

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Metrics bank for Inventory Management Process Metrics

Performance Attribute

Class

Measurement Hierarchy

Formula

Inventory Turnover Ratio

Asset Utilization

Strategic

Product

(Monthly COGS/ Average Total Inventory Value)* 12

Inventory Carrying Cost

Cost

Tactical

Product

Inventory Value* Cost of Capital

Finished Goods Inventory

Asset Utilization

Operational

Product, Geography

FG Inventory Value and % of Total Inventory Value

fied to address decision-making requirements. These metrics should be mapped to the processes of each supply chain function, the overall business strategy and the roles responsible for executing these processes.

Establishing the right metrics The key characteristics of metrics include: Reliability—This refers to the consistency of the metric used to measure a given process. As long as the circumstances governing the process do not change, the metric should return a fairly consistent value. A large diversified manufacturer uses Cost of Goods Sold (COGS) as the basis for calculating inventory turns. Since the manufacturer had a substantial import content of raw materials, exchange rate fluctuations led to sharp variations in COGS, even when overall sales were constant. Such variations in COGS led to similar variations in inventory turns though sales and inventory value, the two key determinants of inventory turns, were constant. Under these circumstances, COGS is an unreliable metrics for computing inventory turns. Validity—A valid metric is one that measures the concept in a specific business context.

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Unit of Measure

Metrics Influenced

Metrics Influenced By

Freq.

Role

No

Monthly

Supply Planner, Cash-toSupply Chain Cash Cycle Head Time

Forecast Accuracy, Manufacturing Schedule Adherence, Sales Returns

Value

Monthly

Financial Analyst, Supply Chain Head

Total Supply Chain Costs

Inventory Value, Cost of Capital

Daily

Supply Planner, Sales Manager

Days of Inventory

Forecast Accuracy, Manufacturing Schedule Adherence

Value %

Many CPG manufacturers today focus on making their demand planning and fulfillment processes agile and responsive, through greater collaboration with sales, supply chain and manufacturing. One metric for measuring the effectiveness of this collaboration process could be the number of ‘expedited work orders. While this metric may suggest inefficient planning in the first place, from a collaboration point of view it can be indicative of a more healthy process of revising supply plans to reflect actual demand changes in the markets. Accessibility—Good metrics must be easily accessible, i.e., retrieved with reasonable effort and cost. Relevant—Metrics need to be meaningful so that concerned functions/ people can relate to the information and take intelligent and proactive decisions. Additional considerations about metrics include: l Metrics are most useful when embedded in a metrics model that represents a business process l The criticality of a metric is determined by the process performance insight that it provides. l Metrics need to be assigned to roles that have process execution, monitoring and tracking responsibilities

Linking metrics to overall strategic objectives This involves multiple steps: l Determine the strategic objectives to evaluate your supply chain (e.g., customer satisfaction, enterprise profitability, etc.). l Under each of these strategic objectives, build related supply chain metrics hierarchy starting with high-level metrics—suggestive of the overall health of the supply chain, to mid-level and lower-level metrics—more tactical or operational in nature.

Creating the detailed metrics bank This is a multi-step process to create an exhaustive set of related metrics that involves: l Associating metrics with each supply chain process l Mapping the metric to the role that is directly accountable and responsible for its measurement and performance l Identifying the class of the metric based on the information and process health insight it conveys l Building high-level interdependencies of metrics based on common knowledge and understanding of basic processes l Identifying the various dimensions to enable a comprehensive view of the metric

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- technology management for decision-makers | february 28, 2010

39


cover story Product Availability at Shelf

Store Inventory Availability

Forecast Accuracy POS & Shelf Inventory Availability

Ordering Efficiency Promotion Plan Visibility

Order Quantity vs. Demand

Collaboration Process Adoption

Documentation Accuracy

Ordering Frequency

Leveraging the supply chain metrics framework Now, we shall demonstrate how metrics frameworks can

No metrics framework is likely

to identify all relevant variables. However, enterprises must make a conscious effort to build a metrics model—that is comprehensive enough for their business

context

february 28, 2010 | industry 2.0

Staff Productivity

Order Fulfillment Time Customer Transit Time Variance

Manufacturing Schedule Adherence

Quality Adherence

Warehouse Productivity

A guided analysis path for ‘Product Availability at Shelf’

l Determining how metrics will need to be computed l Determining the frequency at which the metrics will be measured—this will also be governed by the granularity of available data and the costbenefits associated with a certain measurement frequency

40

CPG Manufacturer OTIF Delivery Performance

Backroom Clearance Time

be leveraged to enhance supply chain performance.

Generating insights using causeand-effect guided analysis A metrics framework is a collection of relevant metrics. These metrics are inter-related to establish a cause-and-effect relationship, which helps in determining the root causes of failure of various business processes. To illustrate this, let us focus on ‘product availability at shelf’ as an effect and start building a metrics framework. The end objective is to ensure product availability at the shelf. The framework clearly highlights the need to collect important metrics like forecast accuracy, order fulfillment times, manufacturing schedule adherence etc. In the absence of a good framework, having data regarding ‘product availability at shelf’ and not of the related metrics, would severely limit constructive use of the end-result data. A word of caution—‘every metrics framework is unique.’

- technology management for decision-makers

Each enterprise is expected to have a metrics framework, which is unique in terms of number, the types of causes as well as the hierarchy, and criticality of causes to the end-effect. Key points to be considered while defining the metrics framework include: l No metrics framework is likely to identify all relevant variables. However, enterprises must make a conscious effort to build a metrics model—that is comprehensive enough for their business context. This can be best achieved by deploying a cross-functional team with a strong understanding of underlying processes and responsibility for process execution. l Top management sponsorship is also critical to ensure that the metrics framework identified by the cross-functional team is aligned with the overall enterprise objectives. l Some element of judgement and approximation in developing the metrics framework is unavoidable. Given this, there should be a focused effort to identify the most relevant and high impact causes.

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A Simple Supply Chain Scorecard Typical Metric

Performance Attribute

Strategic Objective

Benchmark Baseline

Entitlement

Target

Actual

Benefits from Improvement

Perfect Order

Reliability

Customer Satisfaction

75%

90%

80%

60%

$50M savings in lost sales

Order Fulfillment Time

Responsiveness

Customer Satisfaction

3 days

2 days

2 days

3 days

$10M additional revenue from surge orders

Forecast Accuracy

Process Improvement

Operational Excellence

85%

95%

90%

75%

Key enabler to customer satisfaction and operational excellence

Cash-to-cash cycle time

Asset Utilization

Operational Excellence

90 days

75 days

85 days

105 days

$70M reduction in working capital; $10M savings in interest cost

Total Supply Chain Cost as a % of COGS

Cost

Operational Excellence

15%

10%

10%

18%

$45M reduction in direct cost; $20M reduction in indirect cost

l Like metrics, metric frameworks tend to be highly contextual in nature. They are dependent on the team developing them— knowledge, goals for measurement, and vision on how the SCPM system should integrate with the overall enterprise performance management objectives. Besides people, data availability, accuracy etc. are other factors that must be considered. These also act as constraints in designing the metrics framework. l Metric framework cannot be static, and has to be continuously refined to align with enterprise objectives. As the enterprise IT landscape changes, metrics ignored earlier for lack of data availability may need to be accommodated to make the framework more robust and relevant.

Quantifying financial impact of supply chain metrics This process is used to link supply chain metrics to financial Key Performance Indicators (KPIs). Example, cash-to-cash cycle time metrics framework linked to return on assets, total supply chain cost metrics framework linked to net margin through COGS etc. We need to establish the link with financial measures as it helps quantify the performance of supply chain metrics and better

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understand its full impact on the enterprise’s top line and bottom-line. Enterprises use these scorecards to determine priorities for investments for improving processes and related technology. Such scorecards help establish a standardized ‘single version of truth’ on supply chain performance, which is quantifiable and understood by all entities in the organization.

Review the supply chain scorecard in the Sales and Operations Planning (S&OP) process While metrics reflect the overall health of the supply chain and various functions, they need to be supported with process mechanisms. These mechanisms enable a joint review and formalization of corrective plans from a crossfunctional perspective. Some best practices for implementing effective sales and operations planning (S&OP) processes include: l Establishing pre-scheduled meeting, with well-defined agenda, with critical players in the supply chain, along with their cross-functional teams l Articulating and quantifying the performance of the supply chain. This in turn leads to performance measures for individual players of the network

l Adequate review of metrics and root causes at functional levels to make cross-functional S&OP meetings effective l Benchmarking supply chain performance with the best in and across industries Another key requirement to enable an effective S&OP is to have the IT capability to aggregate and structure enormous supply chain information and data—originating from disparate IT systems. This facilitates overall view of the supply chain.

Conclusion

Supply Chain Performance Management is a process-centered approach towards business decision-making. It helps manage supply chain performance, using a metrics framework for stakeholders, managers and employees, within an integrated management environment. SCPM should be a business-critical process; driven by metrics and supported by business intelligence. With increasing competition and changing market forces, tapping into this critical asset is essential in sustaining competitive advantage in the CPG space. n Tejas Faldu is a Senior Consultant with Infosys’ Retail and CPG practice. Srikanth Krishna is a Senior Project Manager with Infosys’ Retail and CPG practice.

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41


cover story

Designing an Optimal

Supply Chain

Network using Mathematical Models Facilities Installation Planner (FIP), a software based on Mixed Integer Programming (MIP) offers a solution to evaluate and redesign the supply chain. FIP, specifically customized for GST, has added features like path algorithms, and comprehensive databank of distance information that allow companies to rapidly redesign their supply chain. by r krishnamurthy

Goods and Services Tax

(GST) is a destinationbased tax on consumption of goods and services— with an input credit mechanism across the value chain

42

february 28, 2010 | industry 2.0

G

oods and Services Tax (GST) is a destination-based tax on consumption of goods and services—with an input credit mechanism across the value chain; i.e., taxation is only on a value added basis. GST is likely to subsume most indirect taxes (currently levied on both goods and services) under a single umbrella. Major taxes likely to be subsumed are CENVAT, VAT and service tax. GST would also mean removal of the existing CST, which is payable on inter-state sales; a tax that is not allowed to be set off against further taxes in the value chain.

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GST is likely to be introduced by April 2010, and likely to have a dual structure to be administered both at the Centre and State level.

Impact of introduction of GST

GST would have significant impact on the supply chain network of companies. This is because the tax structure would fundamentally move away from taxes that cannot be set off (and hybrid situation) to a tax structure based on value add, on an all India basis. This would mean that there wouldn’t be any taxation so long as there is no value add between transits. Hence, a product that moves from Pune plant to Vashi warehouse to a depot in Andheri would be charged the same total quantum of GST irrespective of the length and location of the transfers (assuming there is no valueadd in the transfers). Hence, if the same product flows from Pune plant to Jaipur warehouse to Andheri depot, the GST would be the same, though the supply chain cost would obviously be higher. The implication of this: l It is now possible for us to create a supply chain network that focuses only on the supply chain costs rather than on taxation; The supply chain network would be tax neutral as far as GST goes. However, on a case basis, there would be other taxes such as Entry tax/Octroi that would still be levied. l The efficiency of supply chain would fundamentally only depend on

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the minimization of cost, such as primary and secondary freight, CFA charges, warehouse fixed and variable cost, depot fixed and variable cost etc. The following considerations (not limited to these choices) will serve as the key factors for designing a new supply chain: l Choice of warehouse locations, depot locations with respect to the p lants an d th e m arkets l Design of the supply chain such as meshed design vs. hub an d sp oke v s. c ombinations thereof l Choice of the warehouse capacity and depot capacity l Choice of mode of transport such as road (9 tonner vs. 15 tonner vs. 20 tonner) and rail (Half rake, full rake, two point rake) for the different linkages l Inventory and transportation strategies—such as replenishment cycle, safety stock, milk runs etc.

GST opportunity for supply chain redesign

Most of the companies in India have grown their supply chain over the years on an incremental basis. The Logistics and Supply Chain industry has seen significant changes such as: l Introduction of technology in information technology / information systems, material handling, transportation etc. l Expansion into new geographic markets, e.g., low volume rural thrust l Proliferation of products and brands, increase in number of stock keeping units (SKUs) l Availability of specialized service providers for transportation, 3PL/4PL, warehousing etc. These changes have an overarching impact on the Supply Chain Network Design and Operations. Some of these changes have been rapidly adopted

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by newer companies as well as multi-national companies (MNCs), however, most companies still need to relook at theirsu pply chain network or operations. GST is yet another development that could have a significant impact on on the supply chain network design, because it removes one of the key erstwhile design considerations, namely indirect taxation. This gives companies a fresh incentive to relook at the supply chain network.

Network redesign using mathematical modeling

Any supply chain consists of the following key entities namely: l Suppliers (raw materials / sub assemblies / parts) l Manufacturing plants l Warehouses l Depots l End customers Based on the demand of different products in different markets, a company tries to optimize supply chain cost by ensuring that: l The location of the different entities are appropriately based on demand / supply, on a long term basis, as also the service levels l Capacity of the different entities are appropriately based on demand/supply and supply chain strategy l Number of the different entities l Structure of the supply chain network in line with the supply chain strategy Modeling the entire supply chain network and simulating the supply / demand / capacity of the system (or based on past actual performance), is an effective, inexpensive and comprehensive method to evaluate the performance of the network under different input conditions. MIP is the mathematical tool used for Network Design and Optimisation.

FIP product using MIP

This allows us to model the supply chain, and simulate its operations in an efficient and cost effective manner. The inputs to the MIP include: l Details, such as location of entities like suppliers / plants / warehouses / markets l Details of linkages between these entities l Variable / fixed cost of operations at the relevant entities l Mode options for all the links and the cost of the mode option l Demand / supply / capacity of the relevant entities The output of the MIP is: l The behaviour of the supply chain network for different

Mixed integer programming (Mip)

is a technique that allows modeling of the supply chain and simulating the operations of the same. combination of demand / supply / capacity l The choice of structure / location / capacity / number of each type of entity l Cost / contribution of the system for a particular demand / supply / capacity / cost configuration Other possibilities with MIP: l Since MIP is a simulated model of the real supply chain, it is possible for us to create various scenarios of demand / supply / capacity and study the response. l Also, we can study the possibility of redesign by using ideas such as ‘hub and spoke’ etc., to study which design works best without compromising the service levels.

GST approach

The overall objective of the

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43


cover story GST assignment is to critically evaluate the structure, design and capacities of the supply chain, so that it can be optimized in such a way that the cost of supply chain is minimized while ensuring that the service levels are met. IGSA uses a customized version of the Facilities Installation Planner (FIP) to model the client’s network. The customisation takes into account additional requirements such as finding additional linkages between two entities, data on distances / costs of these linkages etc. The approach is customized for each customer using the following steps.

Input stage

Understanding the network: We study the ‘as is’ supply chain network in terms of the location / capacity of the different entities, the flow of products through the different entities and the modes used for the product flow. In addition, we also understand the heuristics (rules) used in the supply chain such as—treatment of part shipment, type of trucks, service levels required, hub-spoke rules etc.

Data population: We then populate the different types of data into the GST FIP, including: l Master data (Location of suppliers / plants / warehouses / markets / mode) l Transaction data (Market demand / supplier supply / plant availability / warehouse capacity / freight cost between links / tax) l Constraints data (Factors that make the model customized to ip advantages l Speed of execution l Database of more than 1200 districts l Multi period specific algorithms l Scenario / ‘what if’ analysis l Modeling supply chain strategies

44

february 28, 2010 | industry 2.0

the client’s real life situation, for example, capacity of the mode / unavailability of certain modes in certain links etc.) Data quality and comprehensiveness is vital for the model’s accuracy; we use our own database and algorithms to plug information gaps—where the client does not have the data. This greatly increases the speed of execution.

Output stage

Base run—ideal case: We would run the ‘Base Run’, which would replicate the demand / supply / capacity for a historical period (last one month, last year) as is appropriate for the client / industry. This would study the performance of the model against the actual, and ensure that all entities are adequately connected. It also gives the ideal flows (not taking into account exigencies / day to day sub optimal decision making) within the network for least cost.

Scenarios and strategies: Then we add the required constraints as per the client’s requirements to make the model more representative of the reality. This would make the network suboptimal but closer to reality. The next step involves interaction with the client and trying out the following: l Scenarios—These test the behaviour of the supply chain network for different cases of demand / supply / capacities / constraints l Strategies—These refer to specific changes in the design in the network such as hub and spoke / fully meshed / hybrid for the same demand / supply / capacity/ constraint and behaviour of the supply chain network.

Advantages of such a solution

The structured approach and

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data bank provides the following advantages: l Speed—We have designed different types of supply chains from cement companies to FMCGs to consumer durables to commodities, and hence we can very quickly adapt to a new template or use the existing templates. Our FIP product is customized for network design, and has been tried and tested in other client situations. l Database for data completion—Network design requires a significant amount of data; while most corporates have demand / supply data, they may or may not have the freight data for each linkage between plant-warehouse and warehousemarket etc. We have built a database of linkages for more than 1200 districts, which lists the distance link-wise and that can be used as surrogate. l Long term view—The model has the capability to run on a multi-period (two to five-yeartime-cycle) basis. This is the key given that the supply chain network design has long term ramifications. l Scenarios—We have created a number of scenarios that take into account changes in the input data in terms of demand / supply / capacity / constraints – to study the impact of the above on the outputs cost / contribution / product flows. l Strategies—We have created specific algorithms for finding out the K shortest path between entities; this is useful in case of evaluating supply chain strategies such as hub and spoke / meshed network and combinations. l IGSA has also developed other heuristics to look at candidate locations for the hubs and the spokes. n R Krishnamurthy is a Partner of IGSA.

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supply chain metrics

Measuring the

effectiveness of Manufacturing Supply chainS

Indian manufacturing has come a long way since the liberalization of the economy. Companies have relentlessly focused on adopting and assimilating new technologies, using modern manufacturing practices, and focusing on quality to achieve operational excellence. However, the economic downturn during the past months has dramatically shifted the focus to issues like productivity, efficiency and cost reduction. But, is India Inc. taking a hard look at its supply chain? By Sukriti Katiyal

O

ur annual study of supply chain management (SCM) metrics for India’s top manufacturing companies examines how effectively companies are managing the procurement and distribution of goods. Since, SCM is usually a complex process involving a number of variables, our study is based on published financial data that provides an overall view of the efficiency of supply chain operations within an organization. SCM metrics

that involve customer-linked measures like “order fulfilment time”, “percentage on-time delivery”, etc. , are not covered in this analysis.

The Selection Process We used the Centre for Monitoring of Indian Economy (CMIE)–Prowess database to source data for this study. This regularly updated database is a comprehensive, authentic source of financial information on the Indian industry. Readers should note that

Calculating The Composite Score Ranking Logic

Rank Weight

Finished Goods Holding Period

Lower value is better

50%

Work in progress holding period

Lower value is better

50%

Raw Material Holding Period

Lower value is better

50%

Creditors Days Available

Lower value is better

30%

Debtors Days Available

Higher value is better

30%

Cost of Goods Sold (as % of sales)

Lower value is better

20%

Category

Inventory Cash-to-cash Cycle Time Financial Health Indicators

46

Parameter

Fixed Assets Turnover Ratio (FATR)

Higher value is better

20%

PBIDTA (as % of sales)

Higher value is better

20%

february 28, 2010 | industry 2.0

- technology management for decision-makers

there has been no attempt to refer to annual reports of companies or any other database except CMIE-Prowess for this analysis. Only manufacturing companies—spanning a wide variety of sectors—were selected from the CMIE-Prowess database for analysis. For a company to be a part of this year’s ranking, it was necessary that complete data for financial years 2007 and 2008 be available in the CMIE-Prowess database. Additional filtering was performed to eliminate companies for which the database had missing or error values (for selected parameters). The analysis was done on two sample sets. One for large companies, and another for SMB manufacturers. The principal reason for distinguishing between SMBs and large manufacturing companies was to eliminate the size bias that would influence the ranking of SMBs. Companies were classified on the basis of net sales figures—1,537 companies were classified as SMEs (sales between

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methodology ranking, we grouped the Supply Chain Metrics: companies into different Large Manufacturing Companies sectors to ensure approIndustry Sector Large priate peer comparison. Three categories of 1 Auto Ancillaries 48 data, comprising eight 2 Automobiles and Construction Equipment 26 parameters, were select3 Cement 24 ed to represent the char4 Chemicals 63 acteristics of the internal 5 Cosmetics & Cleaning 13 supply chain of manufacturing companies. These 6 Diversified Manufacturing 20 are: Inventory (paramParameters and Ranking Process 7 Drugs and Pharma 51 Comparing firms across sectors eters include raw mate8 Electrical Machinery 20 would have led to misleading re- rial holding period, work 9 Electronics 25 in progress holding pesults, because within each sector 10 Ferrous Metals 79 the need for the working capital riod, and finished goods funds is contingent on the nature of holding period); Cash-to11 Food & Beverage 64 operations. Industries with lengthy cash cycle time (creditor 12 Generators and Power Equipment 14 production cycles will require larger days available, debtor 13 Glass & Ceramics 15 working capital compared to sec- days available); Financial 14 Non-Electrical Machinery 28 tors with shorter production cycles. health indicators (cost 15 Non-Ferrous Metals 11 Consequently, for our analysis and of goods as a percentage of sales, 16 Paper & Wood Products 12 fixed asset 17 Petroleum Products 12 Supply Chain Metrics: Small & turnover ra18 Plastics & Polymers 18 Medium Manufacturing Companies tio, PBITDA 19 Textiles 65 Industry Sector Small as percentage of sales). 20 Tyres Tubes & Rubber Products 10 1 Auto Ancillaries 123 While the 21 Wires & Cables 12 2 Automobiles & Construction Equipment 25 inventoryTotal 630 3 Cement 15 related pa4 Chemicals 138 rameters are 5 Cosmetics & Cleaning 18 the most important for generated through the following evaluating the supply process: 7 Drugs and Pharma 112 First, the selected companies chain efficiency of any 8 Electrical Machinery 31 manufacturing organiza- were segregated into large and SME 9 Electronics 54 tion, other parameters categories. In both categories, every 10 Ferrous Metals 125 like creditors and debt- company was assigned to an industry 11 Food & Beverage 149 ors days available shed sector (based on the primary nature light on the ability of of industrial activity carried out by 12 Generators & Power Equipment 33 organizations to manage the organization). Companies in ev13 Glass & Ceramics 36 liquidity positions. In the ery sector were ranked relative to 14 Leather & Leather Products 14 current economic slow- other companies within the sector 15 Machine Tools 20 down, where the cash on each of the eight parameters. The 16 Non-Electrical Machinery 62 has become king again, ranks obtained by each company on managing both debtors each of the eight parameters were 17 Non-Ferrous Metals 32 and creditors is vital for individually weighed to generate 18 Non-Metallic Mineral Products 21 operational efficiency. individual composite scores. (The 19 Paper & Wood Products 91 weights assigned to the parameters We also have included 21 Plastics & Polymers 96 certain financial param- are shown in the table Calculating 22 Textiles 288 eters that indicate the The Composite Score). Finally, the overall health of manu- composite scores were arranged 23 Tyres Tubes & Rubber Products 29 in ascending order (within each facturing companies. 24 Wires & Cables 25 The composite score category), to produce the final comTotal 1537 for every company was pany rankings. n Rs 10 to Rs 300 crores), and 630 as large companies (sales greater than Rs 300 crores). In each set, the identified companies were segregated by industry sector (24 industry sectors for SMEs and 21 for large companies). Sectors with less than 10 representative companies were eliminated. Finally, we ranked 2100+ companies.

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47


supply chain metrics CORPORATE FINANCIAL PERFORMANCE Rank

Company Name

Industrial Activity

Net Sales (Rs. Crore)

Cost of Goods Sold (as % of sales)

Fixed Assets Turnover Ratio (FATR)

2007

2008

2007

2008

2007

PBDITA (Rs. Crore)

PBDITA/Net Sales

2008

2007

2008

2007

2008

Auto AncillAries 1

Jay Bharat Maruti Ltd.

Other Automobile ancillaries, nec

519.76

657.39

0.87

0.87

3.24

4.11

42.77

49.09

8%

7%

2

Munjal Showa Ltd.

Shock absorbers

701.51

719.84

0.81

0.81

3.61

3.71

53.2

47.3

8%

7%

3

Sona Koyo Steering Systems Ltd.

Drive transmission & steering parts

583.63

690.16

0.80

0.80

2.55

3.01

63.79

67.83

11%

10%

4

F C C Rico Ltd.

Automobile ancillaries

280.29

316.09

0.75

0.75

9.57

10.79

56.35

55

20%

17%

5

Sandhar Technologies Ltd.

Automobile locks

354.89

386.89

0.78

0.75

2.49

2.63

37.19

38.14

10%

10%

6

Toyota Kirloskar Auto Parts Pvt. Ltd.

Drive transmission & steering parts

589.03

637.04

0.67

0.67

1.65

1.78

102.52

116.65

17%

18%

7

Sunbeam Auto Ltd.

Auto castings

840.86

783.7

0.78

0.79

5.70

5.33

49.14

47.76

6%

6%

8

Krishna Maruti Ltd.

Auto seating systems

400.45

525.11

0.86

0.88

6.77

9.03

29.14

41.65

7%

8%

9

Omax Autos Ltd.

Other Automobile ancillaries, nec

695.24

725.63

0.77

0.80

2.01

2.16

76.56

76.78

11%

11%

10

Automobile Corpn. Of Goa Ltd.

Other Automobile ancillaries, nec

334.92

336.13

0.72

0.72

11.22

11.33

33.71

32.54

10%

10%

11

Bosch Chassis Systems India Ltd.

Suspension & braking parts

366.52

544.78

0.69

0.70

2.30

3.51

56.79

83.7

15%

15%

12

S L Lumax Ltd.

Auto head lights

230.78

312.53

0.81

0.76

2.03

2.58

23.92

52.94

10%

17%

13

Minda Industries Ltd.

Automobile equipment

393.1

404.3

0.80

0.80

2.56

2.62

39.81

47.81

10%

12%

14

Rico Auto Inds. Ltd.

Automobile ancillaries

776.49

719.01

0.78

0.77

1.41

1.29

97.09

103.06

13%

14%

15

Sharda Motor Inds. Ltd.

Automobile ancillaries, nec

304.79

368.54

0.77

0.78

2.42

2.95

42.88

48.71

14%

13%

16

Endurance Systems (India) Pvt. Ltd.

Shock absorbers

374.77

394.23

0.88

0.85

3.64

3.70

19.35

18.02

5%

5%

17

Amtek India Ltd.

Automobile ancillaries

476.46

771.72

0.72

0.69

0.71

1.10

140.2

224.54

29%

29%

18

Amtek Auto Ltd.

Automobile ancillaries, nec

894.26

1191.32

0.65

0.63

0.80

1.03

290.5

412.32

32%

35%

19

Lucas-Tvs Ltd.

Electrical automobile parts

914.81

965.53

0.77

0.78

3.86

4.11

103.71

106.06

11%

11%

20

Banco Products (India) Ltd.

Automobile engine parts

265.71

305.03

0.69

0.63

3.04

3.16

39.7

64

15%

21%

21

Gabriel India Ltd.

Shock absorbers

521.31

475.42

0.74

0.74

3.27

2.99

116.87

33.3

22%

7%

22

Spicer India Ltd.

Axle shafts

577.18

638.83

0.69

0.68

4.91

5.31

65.59

71.06

11%

11%

23

Rane (Madras) Ltd.

Steering gears

329.94

349.57

0.73

0.67

3.96

3.85

31.11

61.77

9%

18%

24

Automotive Axles Ltd.

Axle shafts

461.76

617.32

0.74

0.75

2.77

3.71

84.73

106.51

18%

17%

25

Tata Toyo Radiator Ltd.

Radiators

308.83

331.21

0.75

0.66

3.35

3.15

31.31

49.3

10%

15%

26

Hinduja Foundries Ltd.

Automobile ancillaries

394.18

451.44

0.69

0.68

1.39

1.58

41.76

55.71

11%

12%

27

Motherson Sumi Systems Ltd.

Wiring harness & parts

1100.54

1328.08

0.67

0.68

2.23

2.72

217.72

224.27

20%

17%

28

Ucal Fuel Systems Ltd.

Carburettors

298.46

306.01

0.62

0.63

1.73

1.81

42.84

41.07

14%

13% 12%

29

Denso India Ltd.

Electrical automobile parts

427.69

474.43

0.79

0.79

6.30

7.00

56.88

55.75

13%

30

Jamna Auto Inds. Ltd.

Leaf springs (Automotive)

278.58

469.68

0.73

0.68

3.21

4.99

7.83

60.16

3%

13%

31

Sundram Fasteners Ltd.

Automobile ancillaries

1193.83

1216.35

0.55

0.56

1.62

1.69

168.38

168.86

14%

14%

32

Automotive Stampings & Assemblies Ltd.

Auto sheet metals parts

33

Subros Ltd.

Automobile ancillaries, nec

34

Wheels India Ltd.

Wheels for automobiles

313

301.25

0.84

0.81

3.98

3.71

29.8

20.82

10%

7%

647.21

662.83

0.78

0.77

2.69

2.72

76.74

87.94

12%

13%

1005.36

1143.73

0.82

0.82

3.05

3.48

86.8

112.16

9%

10%

35

Halonix Ltd.

Auto head lights

280.61

359.86

0.61

0.69

1.79

2.61

48.09

69.73

17%

19%

36

Bosch Ltd.

Automobile engine parts

3895.21

4505.05

0.62

0.60

4.43

4.98

1071.27

1132.77

28%

25%

37

Sundaram-Clayton Ltd.

Suspension & braking parts

855.94

458.77

0.65

0.69

1.71

0.97

178.26

78.43

21%

17%

38

Shriram Pistons & Rings Ltd.

Pistons

479.34

555.05

0.49

0.48

0.73

0.83

108.29

123.96

23%

22%

39

Turbo Energy Ltd.

Automobile ancillaries

466.74

486.48

0.63

0.63

3.30

3.44

122.11

126.55

26%

26%

40

Pricol Ltd.

Automobile equipment

605.93

636.82

0.75

0.85

1.89

2.26

98.28

82.07

16%

13% 14%

41

Brakes India Ltd.

Suspension & braking parts

1418.65

1655.83

0.70

0.73

2.51

3.07

209.55

234.65

15%

42

Lumax Industries Ltd.

Auto head lights

547.84

533.24

0.84

0.84

3.13

3.05

48.6

44.73

9%

8%

43

G K N Driveline (India) Ltd.

Drive transmission & steering parts

296.61

336.05

0.57

0.57

1.55

1.75

56.6

59.94

19%

18%

44

Delphi-T V S Diesel Systems Ltd.

Fuel pumps, diesel

502.98

467.69

0.68

0.63

1.83

1.57

108.02

71.71

21%

15%

45

Avtec Limited

Automobile ancillaries, nec

573.68

478.75

0.76

0.73

2.02

1.61

82.08

75.03

14%

16%

PBIDTA = Profi t Before Interest Tax Depreciation and Amortization. Previous Year: 1st April 2006 to 31st March 2007. Latest year: 1st April 2007 to 31st March 2008.

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large manufacturing companies WORKING CAPITAL CyCLE Debtors Days Available (Days) 2007

2008

Creditors Days Available (Days) 2007

2008

Raw Material Holding Period (Days) 2007

WIP Holding Period (Days)

Finished Goods Holding Period (Days)

2008

2007

2008

2007

Composite Score

2008

44.97

33.67

10.29

8.49

2.92

2.69

0.63

0.57

39.7

46.65

45.47

16.04

12.89

3.11

3.14

0.71

0.87

43.2

31.66

33.43

55.41

51.8

18.2

15.87

2.99

2.59

0.77

0.59

44.4

NA

35.42

43.47

41.51

NA

25.1

NA

3.04

NA

8.66

46.7

NA

52.34

67.16

54.21

NA

23.06

NA

3.85

NA

1.66

47.5

NA

34.65

45.58

47.93

NA

30.88

NA

2.67

NA

4.56

49.5

32.27

39.42

53.21

49.36

15.87

20.22

8.42

9.41

1.11

1.21

50.9

20.91

23.73

80.18

66.33

4.44

5.35

0.27

0.22

7.52

3.61

51.0

26.07

34.26

43.62

34.2

8.75

10.23

2.69

3.18

4.68

4.98

51.7 52.3

41.82

50.35

63.91

62.52

11.93

15.75

16.25

16.3

1.87

1.47

80.85

55.57

86.54

71.89

40.47

30.61

8.18

6.91

4.02

4.43

53.7

42.81

46.05

55.7

65.17

22.38

32.01

3.75

3.33

2.14

2.72

54.3

41.58

42.24

55.93

57.42

18.59

22.19

3.74

5.42

1.64

1.97

54.7

36.03

51.5

46.21

46.05

23.55

33.01

10.05

15.73

0.23

0.12

56.5

38.61

34.65

61.75

60.41

29.85

20.7

5.96

5.55

3.01

2.77

57.5

37.94

38.84

35.28

50.63

7.37

7.45

3.96

5.07

6.3

11.55

60.1

50.96

47.13

75.93

79.74

15.7

16.84

83.84

58.38

0.21

0.14

60.2

46.2

44.31

74.31

80.12

21.93

17.65

59.4

54.64

0.24

0.3

60.4

38.49

46.42

45.82

51.77

24.41

30.81

6.33

7

8.97

8.17

60.4

66.68

74.18

36.63

35.94

48.54

52.28

11.52

13.33

9.97

11.57

60.9

39.32

45.2

39.29

51.04

25.03

28.25

7.88

10.33

6.01

4.36

60.9

43.48

48.12

92.82

93.74

18.05

20.67

12.2

13.66

2.63

4.72

61.9

45.15

46.01

53.2

53.64

29.76

30.3

10.25

9.85

20.66

19.73

63.0

34.82

33.44

48.09

57.85

42.11

38.86

13.58

14.11

1.66

1.27

65.8

48.92

53.98

77.6

74.14

49.22

49.71

6.74

7.5

5.86

6.8

67.3

57.55

60.18

52.72

53.56

33.54

36.08

27.85

35.32

0.92

1.35

67.3

39.6

44.73

55.87

57.84

35.23

37.62

9.4

11.61

7.87

6.55

67.4

38.59

48.92

55.58

93.75

28.62

31.47

4.36

8

7.91

7.46

68.1

26.14

25.82

44.6

53.37

32.02

37.8

4.1

3.73

8.41

11.69

69.7

46.3

40.16

55.61

86.9

12.19

19.67

15.75

23.27

2.48

4.99

70.5

69.22

68.57

38.26

43.51

29.88

34.05

23.16

26.75

18.61

18.45

72.0 73.0

23.15

25.75

49.94

60.23

38.58

42.71

4.69

4.34

4.18

4.18

13.34

12.6

29.57

29.65

56.52

59.56

5.53

6.42

6.01

4.69

74.0

41.7

40.72

48.93

68.62

34.92

41.08

14.03

15.4

0.95

1.17

75.3

64.09

77.17

18.82

42.15

53.53

57.61

1.92

15.26

26.72

27.51

76.0

39.48

42.29

77.03

71.21

48.33

42.84

16.16

13.78

17.24

19.09

76.4

48.23

79.51

40.95

41.2

28.23

57.98

5.43

10.73

17.34

46.01

77.1

57.28

62.32

52.85

58.1

32.24

34.45

17.39

24.49

18.55

19.47

77.2

56.98

70.58

51.03

76.06

41.02

47.96

14.52

17.23

9.72

18.79

78.3

63.08

68.34

39.61

42.45

69.41

80.58

7.5

12.11

4.57

10.14

78.7 80.0

51.63

54.89

47.03

54.96

40.47

43.22

17.53

16.87

10.48

13.98

35.38

42.64

69.28

81.85

29.51

30.42

4.5

9.71

8.53

13.22

81.4

19.1

21.17

70.77

75.7

53.11

56.79

19.06

16.02

5.04

4.08

83.9

20.31

37.04

64.21

63.53

36.1

55.29

5.68

8.69

13.24

13.88

84.0

57.24

66.79

61.86

74.49

41.91

54.81

14.54

22.07

7.53

11.34

86.7

Net Sales = Total Income – Other Income - extra ordinary income – prior period income – indirect taxes www.industry20.com

AuTo

18.25 33.79

AnCIllArIEs

18.73 32.76

Source: CMIE Prowess database

industry 2.0

- technology management for decision-makers | february 28, 2010

49


supply chain metrics CORPORATE FINANCIAL PERFORMANCE Rank

Company Name

Industrial Activity

Net Sales (Rs. Crore)

Cost of Goods Sold (as % of sales)

Fixed Assets Turnover Ratio (FATR)

PBDITA (Rs. Crore)

PBDITA/Net Sales

2007

2008

2007

2008

2007

2008

2007

2008

2007

2008

Axle shafts

295.4

358.44

0.83

0.84

3.93

4.81

23.59

26.1

8%

7%

Bharat Forge Ltd.

Automobile ancillaries, nec

1941.95

2306.95

0.57

0.56

0.77

0.89

519.83

611.49

27%

27%

Federal-Mogul Goetze (India) Ltd.

Piston rings

402.9

627.52

0.52

0.59

0.60

1.05

48.07

67.2

12%

11%

46

Axles India Ltd.

47 48

Automobile And construction equipment 1

J C B India Ltd.

Earth moving machinery

2051.37

3186.27

0.70

0.71

7.12

9.38

358.81

621.4

17%

20%

2

Hero Honda Motors Ltd.

Motorcycles

10267.95

11011.68

0.75

0.75

5.71

5.28

1387.49

1573.76

14%

14%

3

Maruti Suzuki India Ltd.

Passenger cars

15250.5

18490.7

0.71

0.79

3.74

3.63

2586.4

3121.9

17%

17% 12%

4

Action Construction Equipment Ltd.

Mobile cranes

248.63

411.35

0.80

0.79

6.90

4.83

29.81

50.11

12%

5

New Holland Fiat (India) Pvt. Ltd.

Passenger cars

137.38

1321.42

0.96

0.85

0.28

1.26

63.48

165.25

46%

13%

6

Mahindra & Mahindra Ltd.

Utility Vehicles incl. jeeps

10250.36

11587.19

0.71

0.74

3.87

3.63

1648.21

1733.02

16%

15%

7

Escorts Construction Equipment Ltd.

Mobile cranes

360.55

540.12

0.82

0.80

16.68

7.58

29.32

42.12

8%

8%

8

L & T-Komatsu Ltd.

Earth moving machinery

809.46

1297.31

0.69

0.65

6.95

9.01

104.05

216.06

13%

17%

9

Honda Siel Cars India Ltd.

Passenger cars

3902.63

3957.55

0.78

0.92

8.13

4.08

479.42

484.06

12%

12%

10

Eicher Motors Ltd.

Motorcycles

1981.67

2233.25

0.77

0.81

5.05

5.57

143.26

137.57

7%

6%

11

Punjab Tractors Ltd. [Merged]

Tractors

977.42

988.08

0.83

0.79

8.67

8.64

125.71

113.42

13%

11%

12

Escorts Ltd.

Tractors

1864.31

2098.68

0.78

0.79

1.64

1.92

157.58

103.18

8%

5%

13

Atlas Cycles (Haryana) Ltd.

Bicycles

492.87

579.01

0.86

0.81

6.42

6.10

77.37

20.31

16%

4%

14

Elecon Engineering Co. Ltd.

Material handling equipment

719.78

829.03

0.65

0.68

3.66

2.92

116.42

140.51

16%

17%

15

Hindustan Shipyard Ltd.

Ships, boats, etc.

332.13

407.01

0.75

0.69

5.10

4.62

225.07

62.73

68%

15%

16

Tata Motors Ltd.

Heavy commercial vehicles

27522.88

29312.99

0.76

0.74

3.29

2.07

3362.32

3512.44

12%

12%

17

Titagarh Wagons Ltd.

Railway wagons, coaches, etc., nec

284.44

565.04

0.77

0.86

6.21

10.97

49.34

97.95

17%

17%

18

Mahindra International Ltd.

Commercial vehicles

357.49

467.78

0.87

0.89

5.06

3.91

2.61

3.16

1%

1%

3873.48

3244.41

0.78

0.83

3.00

2.57

220.34

149.56

6%

5%

621.67

665.45

0.92

0.85

3.01

3.32

58.6

90.47

9%

14%

2459.09

2586.69

0.65

0.74

9.35

8.14

335.17

388.8

14%

15%

19

T V S Motor Co. Ltd.

Two wheelers

20

Hindustan Motors Ltd.

Passenger cars

21

B E M L Ltd.

Earth moving machinery

22

Swaraj Mazda Ltd.

Light commercial vehicles

603.46

670.35

0.89

0.89

11.74

5.99

35.57

53.1

6%

8%

23

Ashok Leyland Ltd.

Heavy commercial vehicles

7420.84

8054.43

0.82

0.81

3.56

2.99

707.71

895.14

10%

11%

24

Asia Motor Works Ltd.

Heavy commercial vehicles

98.22

540.2

1.46

0.98

0.57

1.06

10.82

23.41

11%

4%

25

Force Motors Ltd.

Light commercial vehicles

1003.19

927.77

0.79

0.87

2.43

2.39

21.92

-7.33

2%

-1%

26

Hindustan Aeronautics Ltd.

Aircrafts

8647.57

10292.53

0.93

0.70

2.10

1.61

2133.63

2936.4

25%

29%

29%

cement 1

Penna Cement Inds. Ltd.

Cement

704.63

868.56

0.38

0.35

0.54

0.40

192.66

255.86

27%

2

My Home Inds. Ltd.

Ordinary portland cement

425.99

779.28

0.28

0.32

0.23

0.46

165.75

320.28

39%

41%

3

Andhra Cements Ltd.

Cement

99.56

442.25

0.79

0.48

0.61

1.48

70.4

89.62

71%

20% 34%

4

J K Lakshmi Cement Ltd.

Cement

851.03

1138.17

0.38

0.33

0.39

0.41

267.04

390

31%

5

Grasim Industries Ltd.

Cement

8799.46

10671.83

0.47

0.47

0.90

0.71

2656.48

3719.79

30%

35%

6

Madras Cements Ltd.

Cement

1566.74

2012.95

0.36

0.38

0.45

0.31

564.49

764.96

36%

38%

7

Ambuja Cements Ltd.

Cement

6336.66

6240.58

0.31

0.29

0.64

0.49

2384.26

2835.26

38%

45%

8

J K Cement Ltd.

Pozzolana portland cement

1250.12

1473.23

0.38

0.35

0.43

0.42

358

438.85

29%

30%

9

Shree Cement Ltd.

Cement

1411.92

2149.95

0.26

0.28

0.42

0.77

660.45

918.33

47%

43%

10

Dalmia Cement (Bharat) Ltd.

Cement

1118.48

1654.62

0.44

0.60

0.37

0.55

428.41

633.41

38%

38%

11

Mangalam Cement Ltd.

Ordinary portland cement

225.19

536.45

0.44

0.44

0.51

0.92

63.5

164.07

28%

31%

12

K C P Ltd.

Cement

252.26

344.87

0.35

0.42

0.76

1.14

83.95

112.87

33%

33%

13

Heidelberg Cement India Ltd.

Cement

397.87

578.91

0.52

0.53

1.13

1.62

54.76

113.8

14%

20%

14

India Cements Ltd.

Cement

2256.46

3088.83

0.35

0.35

0.27

0.26

737.22

1149.09

33%

37%

15

Century Textiles & Inds. Ltd.

Cement

3232.04

3545.61

0.45

0.46

0.81

0.70

573.03

657.24

18%

19%

PBIDTA = Profi t Before Interest Tax Depreciation and Amortization. Previous Year: 1st April 2006 to 31st March 2007. Latest year: 1st April 2007 to 31st March 2008.

50

february 28, 2010 | industry 2.0

- technology management for decision-makers

www.industry20.com


large manufacturing companies WORKING CAPITAL CyCLE Debtors Days Available (Days)

Creditors Days Available (Days)

Raw Material Holding Period (Days)

WIP Holding Period (Days)

Finished Goods Holding Period (Days)

2007

2008

2007

2008

2007

2008

2007

2008

2007

16.45

13.81

64.2

63.54

39.63

38.86

40.8

44.94

4.22

Composite Score

2008 3.43

89.6

40.11

47.14

131.97

122.78

50.57

49.86

25.82

25.31

12.35

12.14

89.7

55.91

41.78

135.02

109.29

79.6

49.71

43.92

31.25

54.34

29.59

104.4

36.61

34.95

63.86

53.3

24.07

15.13

1.54

1.51

4.45

6.41

15.9

7.75

9.36

36

43.32

8.76

10.47

0.76

0.76

1.94

1.62

16.7

15.14

12.53

48

39.8

13.32

12.42

0.95

1.03

8.88

7.14

20.1

41.65

38.85

66.38

51.9

26.41

25.02

3.03

2.69

4.94

5.15

25.0

NA

39.09

190.11

81.43

NA

19.86

NA

0.75

NA

11.18

27.8

23.27

25.11

69.55

68.41

19.46

18.21

1

2.06

17.72

16.82

29.5

85.08

80.59

46.57

45.93

5.87

1.65

12.61

11.4

31.1

41.23

71.52

66.01

67.45

62.5

21.3

19.99

1.82

3.17

31.3

0.31

0.96

27.81

42.05

23.22

27.25

1.12

0.83

4.38

13.07

31.6

25.17

24

70.57

54.21

22.33

21.05

2.32

2.38

12.34

13.34

31.9

210.22

146.39

49.5

46.53

31.91

31.49

5.3

4.65

15

21.45

33.8

55.62

66.61

111.28

107.27

33.19

30.61

2.46

3.12

6.35

5.57

35.0 37.2

108.89

93

98.77

92.28

36.15

39.94

3.19

3.58

9.24

12.19

130.91

169.04

125.72

139.99

62.01

65.1

55.36

68.63

9.02

4.75

37.7

163.48

151.11

487.06

615.35

140.68

125.93

88.62

143.82

0.9

0.79

38.3

8.57

10.79

78.74

102.43

18.96

18.53

5.45

5.33

12.46

14.16

39.2

37.92

31.67

122.3

79

75.56

57.03

14.63

5.7

7.59

18.68

40.9

49.25

49.06

87.72

85.87

34.64

23.17

0.96

2.71

18.84

23.42

41.2

7.02

10.14

48.95

49.55

23.3

28.61

2.45

3.15

14.21

17.99

41.7

23.19

19.64

89.2

74.31

51.78

48.48

8.74

10.61

9.03

9.09

42.4

117.56

161.08

180.37

140.92

92.76

109.77

39.52

43.05

15.1

16.69

43.3

119.1

92.22

99.06

97.15

34.16

35.91

4.34

6.23

20.42

21.45

44.7

20.51

17.96

69.71

81.77

24.72

28.77

7.8

6.51

22.14

24.54

48.5

16.37

30.93

69.55

124.15

91.84

60.44

1.13

1.83

60.45

28.63

52.7

37.38

42.21

91.98

108.07

55.06

64.42

14.63

14.89

19.54

19.16

54.9

64.16

59.26

1149.82

1378.13

170.99

299.13

129.68

152.42

30.62

39.01

55.3

15.68

12.39

43.74

55.77

65.01

77.08

2.83

2.61

2.39

2.97

18.9

6.96

6.5

67.53

46.01

144.88

106.46

6.51

9.56

0.39

0.71

20.4

53.55

15.69

195.66

57.31

107.18

134.72

5.85

2.61

5.02

2.24

22.6

11.39

6.72

50.88

55.98

94.94

89.91

6.75

8.7

3.43

2.85

22.7

18.81

20.3

61.63

65.39

78.92

72.01

5.37

4.71

6.73

6.81

25.0

13.52

11.5

70.74

64.85

99.99

147.16

10.39

6.17

2.47

2.61

28.5

7.28

38.23

52.38

102.64

147.62

7.24

11.59

2.5

3.25

29.1

12.62

61.81

71.03

105.59

128.41

15.8

9.98

3.68

3.02

29.9

5.06

5.67

80.74

64.6

165.02

135.96

25.49

13.96

4.06

3.09

30.2

23.91

20.66

181.13

131.96

96.3

77.36

6.13

5.77

41.52

57.27

31.7

8.45

2.55

67.58

40.23

267.34

81.24

34.78

16.95

6.6

3.56

32.7

25.67

36.5

109.81

82.93

170.3

96.17

80.77

61.03

2.36

4.03

33.9

15.29

8.87

63.02

55.62

140.56

95.14

11.42

15.25

7.15

4.27

34.7

35.07

29.45

77.77

134.86

182.63

187.58

10.76

12.31

2.87

3

35.0

19.01

17.05

48.9

62.71

107.28

105.15

12.87

11.19

14.92

14.62

35.5

Net Sales = Total Income – Other Income - extra ordinary income – prior period income – indirect taxes www.industry20.com

cemeNT

3.96 13.41

AuTomoBILe

60.96

AnD COnsTruCTIOn EquIPMEnT

67.56 44.58

Source: CMIE Prowess database

industry 2.0

- technology management for decision-makers | february 28, 2010

51


supply chain metrics CORPORATE FINANCIAL PERFORMANCE Rank

16

Company Name

Industrial Activity

Saurashtra Cement Ltd.

Net Sales (Rs. Crore)

Cost of Goods Sold (as % of sales)

Fixed Assets Turnover Ratio (FATR)

PBDITA (Rs. Crore)

PBDITA/Net Sales

2007

2008

2007

2008

2007

2008

2007

2008

2007

2008

Ordinary portland cement

270.77

417.65

0.59

0.50

0.59

0.68

64.79

75.33

24%

18%

17

Birla Corporation Ltd.

Cement

1560.57

1729.9

0.36

0.39

1.03

1.05

521.22

614.46

33%

36%

18

Lafarge India Pvt. Ltd.

Cement

1172.62

1346.92

0.29

0.28

0.32

0.28

253.1

443.99

22%

33%

19

Ultratech Cement Ltd.

Cement

4927.26

5533.42

0.39

0.37

0.60

0.43

1472.57

1812.33

30%

33%

20

Prism Cement Ltd.

Cement

555.43

757.86

0.43

0.33

0.66

0.69

140.89

332.08

25%

44%

21

A C C Ltd.

Cement

5728.46

6909.77

0.34

0.35

0.56

0.60

1936.96

2360.71

34%

34%

22

Chettinad Cement Corpn. Ltd.

Cement

731.51

930.36

0.38

0.40

0.53

0.44

239.33

347.19

33%

37%

23

O C L India Ltd.

Cement

786.42

765.2

0.52

0.43

0.69

0.36

185

243.59

24%

32%

24

Cement Corpn. Of India Ltd.

Cement

428.48

311.53

0.30

0.41

0.95

0.96

218.3

90.12

51%

29%

chemicAls 1

National Fertilizers Ltd.

Urea

3876.03

4178.58

0.78

0.80

3.38

4.09

392.81

267.14

10%

6%

2

Nagarjuna Fertilizers & Chemicals Ltd.

Urea

1819.81

2196.35

0.72

0.77

0.59

0.82

287.77

272.74

16%

12%

3

Paradeep Phosphates Ltd.

Diammonium phosphate (DAP)(18-46-0)

2026.67

2443.52

0.75

0.72

5.68

6.82

190.01

186.3

9%

8%

4

Jindal Photo Ltd.

Photographic or cinematographic goods

363.6

361.28

0.76

0.77

7.95

8.79

37.54

59.68

10%

17%

5

I G Petrochemicals Ltd.

Phthalic Anhydride

585.35

589.75

0.84

0.84

1.83

1.99

62.93

59.85

11%

10%

6

Bodal Chemicals Ltd.

Sulphonated & nitrated derivatives of

257.57

415.08

0.87

0.88

4.87

3.54

19.66

38.98

8%

9%

7

Gujarat Alkalies & Chemicals Ltd.

Sodium hydroxide (Caustic Soda)

1078.31

1163.81

0.49

0.54

0.47

0.50

410.89

412.12

38%

35%

8

B A S F India Ltd.

Leather auxilliaries

772.44

916.27

0.70

0.70

5.20

5.34

90.48

107.88

12%

12%

9

Kansai Nerolac Paints Ltd.

Industrial paints

1308.68

1428.18

0.60

0.57

3.78

3.50

195.48

210.65

15%

15%

10

Jayant Agro-Organics Ltd.

Hydrogenated castor oil

453.44

606.86

0.92

0.96

13.58

19.16

17.36

22.35

4%

4%

11

I C I India Ltd.

Decorative paints

1189.08

1057.53

0.48

0.52

4.27

3.79

611.65

115.87

51%

11%

12

Zuari Industries Ltd.

NPK mixed fertilisers

2790.91

2660.4

0.77

0.82

11.98

12.83

530.57

190.09

19%

7% 8%

13

Deepak Nitrite Ltd.

Para nitrochlorobenzene

416.38

470.48

0.86

0.75

1.97

2.08

69.49

38.74

17%

14

Mangalore Chemicals & Fertilizers Ltd.

Urea

1373.31

1662.2

0.81

0.85

3.63

4.36

73.53

92.44

5%

6%

15

Hindustan Organic Chemicals Ltd.

Organic chemicals

509.53

580.58

0.78

0.75

1.48

1.67

66.26

59

13%

10%

16

Meghmani Organics Ltd.

Pesticides

476.06

601.72

0.74

0.70

2.39

3.05

70.45

70.75

15%

12%

17

Gujarat Narmada Valley Fertilizers Co. Ltd.

Urea

2751.86

3379.01

0.70

0.68

1.69

1.73

624.87

698.35

23%

21%

18

Manali Petrochemical Ltd.

Propylene glycol

316.57

329.46

0.82

0.79

5.25

3.92

36.8

18.77

12%

6%

19

Tata Chemicals Ltd.

Fertilisers

4120.8

4663.62

0.61

0.55

1.65

1.70

826.92

1326.36

20%

28%

20

Gujarat State Fertilizers & Chemicals Ltd.

Urea

3352.2

3600.21

0.75

0.71

1.87

2.00

604.87

545.48

18%

15%

21

Tamilnadu Petroproducts Ltd.

Linear alkyl benzene

827.22

784.22

0.77

0.76

1.33

1.32

45.61

39.22

6%

5%

22

I O L Chemicals & Pharmaceuticals Ltd.

Carboxylic acids

202.69

318.11

0.91

0.86

1.62

1.79

18.77

39.98

9%

13%

23

Kanoria Chemicals & Inds. Ltd.

Inorganic chemicals

434.21

437.17

0.69

0.59

0.63

0.44

84.19

101.72

19%

23%

24

Chambal Fertilisers & Chemicals Ltd.

Urea

2605.6

2791.35

0.72

0.57

0.85

0.68

488.55

545.49

19%

20%

25

Asian Paints Ltd.

Decorative paints

2955.16

3619.35

0.56

0.52

4.74

3.33

464.33

613.9

16%

17%

26

Excel Crop Care Ltd.

Pesticides

411.91

519.13

0.63

0.64

3.21

3.64

46.11

54.23

11%

10%

27

Khaitan Chemicals & Fertilizers Ltd.

Single superphosphate

373.02

399.31

0.92

0.75

3.94

3.30

27.84

31.02

7%

8%

28

Thirumalai Chemicals Ltd.

Phthalic Anhydride

536.51

586.37

0.80

0.74

4.04

3.58

59.14

68.07

11%

12%

29

Pidilite Industries Ltd.

Glues (adhesive)

1156.84

1542.55

0.57

0.55

1.96

1.54

190.75

292.27

16%

19%

30

Coromandel International Ltd.

Ammonium phosphate (16-20-0)

2099.42

3816.73

0.76

0.74

4.19

3.83

221

454.18

11%

12% 10%

31

Indian Farmers Fertiliser Co-Op. Ltd.

Mixed fertilisers

10496.75

12447.8

0.94

0.62

1.95

1.49

1022.36

1205.22

10%

32

Aarti Industries Ltd.

Para nitrochlorobenzene

704.8

887.33

0.76

0.79

1.82

2.23

90.46

118.72

13%

13%

33

Gujarat Fluorochemicals Ltd.

Refrigerant gases

236.85

384.15

0.84

0.70

0.29

0.31

377.59

511.99

159%

133%

34

Micro Inks Ltd.

Printing ink

727.49

1175.71

0.81

0.75

1.73

2.46

-5.49

141.4

-1%

12%

35

Clariant Chemicals (India) Ltd.

Dyes

692.9

869.7

0.74

0.71

3.09

3.61

68.18

72.95

10%

8%

36

Jubilant Organosys Ltd.

Organic chemicals

1714.26

2112.85

0.62

0.58

1.05

0.98

369.66

572.8

22%

27%

PBIDTA = Profi t Before Interest Tax Depreciation and Amortization. Previous Year: 1st April 2006 to 31st March 2007. Latest year: 1st April 2007 to 31st March 2008.

52

february 28, 2010 | industry 2.0

- technology management for decision-makers

www.industry20.com


large manufacturing companies

Debtors Days Available (Days)

Creditors Days Available (Days)

Raw Material Holding Period (Days)

WIP Holding Period (Days)

Finished Goods Holding Period (Days)

Composite Score

2007

2008

2007

2008

2007

2008

2007

2008

2007

34.71

26.46

192.65

196.48

141.53

132.22

9.87

7.65

6.33

2008 5.76

38.0

6.06

6.28

84.22

81.32

100.95

108.89

11.11

14.71

5.41

6.65

38.4

NA

14.55

105.02

141.75

NA

83.64

NA

26.32

NA

4.94

38.7

11.9

11.62

63.71

89.26

114.64

136.12

16.02

13.81

4.8

4.1

39.7

8.93

4.92

79.47

86.68

175.02

187.84

11.26

16

5.08

3.87

41.3

12.48

11.75

82.35

95.07

151.62

162.33

27.52

21.97

4.72

4.07

43.2

7.9

5.49

44.75

73.3

119.61

142.23

20.87

16.63

2.91

5.05

44.4

35.49

38.41

56.77

105.46

98.2

154.41

10.01

13.68

14.66

16.14

44.8

NA

25.24

344.06

331.69

NA

1256.79

NA

33.21

NA

9.89

50.7

96.46

87.93

57.26

60.25

43.71

43.76

1.48

1.18

6.41

6.67

54.6

63.28

51.17

29.38

49.79

17.95

17.91

0.75

0.95

8.46

17.63

55.9

120.7

97.23

93.35

103.87

52.19

37.99

1.91

2.59

19.28

11.38

58.5 60.0

6.02

27.73

23.84

25.25

29.81

1.54

1.35

18.38

23.18

23.27

33.72

53.2

25.33

27.06

1.43

1.94

4.71

6.33

61.5

73.98

71.05

66.79

73.44

23.01

21.99

0

6.01

7.7

7.98

62.6

52.29

53.02

47.27

56.25

65.39

69.59

1.98

1.71

5.61

6.28

64.7

66.41

57.15

57.9

58

47.57

43.86

1.85

1.77

24.47

21.5

64.7

41.48

46.06

40.91

42.82

30.56

26.68

7.95

6.19

26.23

25.64

66.6

265.93

19.41

19.85

13.58

32.84

34.17

0.6

0.51

20.26

25.35

68.7

36.18

34.8

83.19

90.39

29.85

26.57

1.48

1.17

28.65

31.15

70.1

93.37

73.52

66.62

73.92

40.86

47.05

1.43

2.36

15.31

16.66

70.9

68.95

74.77

59.39

45

19.96

23.93

12.08

18.21

24.33

20.41

73.2

6.74

6.02

52.96

55.39

45.64

57.59

0.14

0.15

10.38

4.48

73.4

46.3

49.48

65.88

55.98

37.98

36.05

7.17

6.54

18.37

9.78

74.1 74.5

135.3

131

39.74

52.71

22.76

28.09

19.09

22.78

38.46

24.62

64.09

51.06

64.48

41.4

72.17

68.77

4.24

4.12

12.51

13.08

74.7

35.9

33.84

30.81

31.35

36.18

38.68

2.67

3.19

24.46

23.88

76.7

58.66

58.97

66.46

98.47

61.75

68.41

0.08

1.17

22.78

22.44

77.1

90.55

68.65

48.3

47.3

49.99

54.73

5.1

5.38

23.75

22.64

77.6

25.31

22.61

73.93

70.29

54.64

41.58

5.58

1.57

9.3

9.56

78.4

24.93

25.75

66.83

57.4

27.73

17.73

20.44

18.28

6.12

8.32

79.3

34.92

40.76

36.71

54.88

47.28

56.87

3.95

5.07

15.55

14.84

79.7

60.23

46.51

20.51

27.13

38.27

57.17

3.71

2.75

27.62

26.85

79.7

23.12

22.09

72.8

81.53

31.17

34.6

4.53

4.8

26.57

26.88

80.6

78

73.25

62.75

65.31

29.71

33.86

11.83

10.86

34.21

31.46

80.7

12.75

10.32

22.75

35.25

41.2

38.39

0.26

0.38

35.71

38.51

80.9

70.41

83.31

99.35

44.78

46.42

50.6

4.59

5.96

41.85

31.58

81.5

34.09

38.15

41.31

46.88

43.31

47.22

3.47

4.45

29.42

27.91

81.8

23.85

12.95

105.88

87.35

51.39

59.19

2

1.15

34.16

19.37

84.1

14.84

11.67

35.89

37.31

50.83

60.76

1.36

1.47

34.37

23.08

84.4

81.61

68.72

49.8

37.55

42.58

43.46

36.83

31.96

19.24

21.06

84.6

76.47

122.52

306.72

221.23

102.67

87.91

0.46

1.79

18.23

19.03

84.9

127.14

89.52

139.81

68.22

67.78

53.01

22.98

20.38

17.78

14.09

85.0

68.6

53.1

95.08

68.99

49.26

34.89

14.03

8.48

33.89

26.57

86.0

53.6

53.7

55.93

47.17

77.96

70.81

12.88

13.52

14.33

14.03

87.1

Net Sales = Total Income – Other Income - extra ordinary income – prior period income – indirect taxes www.industry20.com

chemIcALS

5.5 19.44

cemeNT

WORKING CAPITAL CyCLE

Source: CMIE Prowess database

industry 2.0

- technology management for decision-makers | february 28, 2010

53


supply chain metrics CORPORATE FINANCIAL PERFORMANCE Rank

Company Name

Industrial Activity

Net Sales (Rs. Crore)

Cost of Goods Sold (as % of sales)

Fixed Assets Turnover Ratio (FATR)

PBDITA (Rs. Crore)

PBDITA/Net Sales

2007

2008

2007

2008

2007

2008

2007

2008

2007

2008

321.95

459.12

0.81

0.74

2.30

2.62

32.71

76.43

10%

17%

Ethylene glycol

901.85

1327.06

0.65

0.58

0.76

0.91

141.65

345.85

16%

26%

Pesticides

634.26

685.7

0.62

0.67

2.71

3.12

100.49

170.33

16%

25%

Southern Petrochemical Inds. Corpn. Ltd.

Diammonium phosphate (DAP)(18-46-0)

3308.85

1497.12

0.81

0.67

1.85

0.74

-6.13

-54.65

0%

-4%

37

Punjab Chemicals & Crop Protection Ltd.

Pesticides

38

India Glycols Ltd.

39

Rallis India Ltd.

40 41

Sree Rayalaseema Alkalies & Allied

Sodium hydroxide (Caustic Soda)

378.05

451.23

0.63

0.65

0.60

0.70

90.78

97.92

24%

22%

42

Berger Paints India Ltd.

Decorative paints

1164.86

1347.26

0.66

0.63

5.72

5.37

130.26

150.29

11%

11%

43

Shalimar Paints Ltd.

Decorative paints

257.72

301.66

0.67

0.61

7.70

6.96

16.14

23.84

6%

8%

44

Atul Ltd.

Dyes

919.21

1028.97

0.69

0.76

2.14

1.80

90.7

103.7

10%

10%

45

Sudarshan Chemical Inds. Ltd.

Pigments

385.66

397.69

0.76

0.75

3.77

3.73

26.74

33.8

7%

8%

46

Rashtriya Chemicals & Fertilizers Ltd.

Urea

3544.22

5198.5

0.93

0.80

2.91

3.56

369.08

397.71

10%

8%

47

Saurashtra Chemicals Ltd.

Sodium carbonate (Soda Ash)

151.41

312.37

0.73

0.67

0.44

0.78

-0.79

60.18

-1%

19%

48

Bilag Industries Pvt. Ltd.

Pesticides & pesticide intermediates, nec

535.34

788.48

0.57

0.70

1.59

3.11

167.99

234.29

31%

30%

49

United Phosphorus Ltd.

Pesticides

1510.25

1665.8

0.55

0.56

0.73

1.15

358.36

277.54

24%

17%

50

Nocil Ltd.

Rubber chemicals

316.78

379.9

0.78

0.77

1.40

1.68

46.1

27.29

15%

7%

51

Syngenta India Ltd.

Pesticides

850.34

1219.19

0.62

0.68

3.54

4.79

116.87

182.98

14%

15%

52

Nagarjuna Agrichem Ltd.

Monocrotophos

354.86

413.44

0.62

0.64

1.52

1.71

54.42

69.69

15%

17% 8%

53

S I Group-India Ltd.

Phenol

612.14

655.33

0.89

0.82

3.26

3.35

26.28

53.82

4%

54

M C C Pta India Corpn. Pvt. Ltd.

Purified Terephthalic acid (PTA)

1609.4

1774.49

1.00

0.83

1.42

0.71

61.14

46.09

4%

3%

55

G H C L Ltd.

Sodium carbonate (Soda Ash)

1092.08

1085.71

0.58

0.69

0.66

0.74

323.59

276.32

30%

25%

56

Godrej Industries Ltd.

Organic chemicals

759.5

818.48

0.70

0.59

1.86

1.79

141.03

175.18

19%

21%

57

Madras Fertilizers Ltd.

NPK mixed fertilisers

1210.54

1143.31

0.88

0.94

2.60

2.90

7.85

-14.69

1%

-1%

58

Sterling Biotech Ltd.

Gelatin

605.85

910.85

0.38

0.45

0.15

0.21

284.82

406.71

47%

45%

59

E I Dupont India Pvt. Ltd.

Pesticides

991.22

1071.53

0.75

0.73

9.59

6.34

57.89

95.54

6%

9%

60

Ciba India Ltd.

Synthetic colouring substances

515.26

474.13

0.86

0.87

11.22

9.77

102.15

39.28

20%

8%

61

Bayer Cropscience Ltd.

Pesticides

744.61

1184.92

0.65

0.75

3.10

3.60

118.09

101.39

16%

9%

62

Hikal Ltd.

Organic chemicals

238.42

316.37

0.63

0.62

0.71

0.63

66.12

97.71

28%

31%

63

Monsanto India Ltd.

Pesticides

323.05

381.42

0.23

0.32

0.65

1.08

87.47

139.08

27%

36%

cosmetics And cleAning 1

Procter & Gamble Hygiene & Health

t & toilet preparations

575.14

541.64

0.27

0.26

1.62

1.11

201.37

143.77

35%

27%

2

Emami Ltd.

Cosmetics & toilet preparations

499.82

571.91

0.38

0.38

2.32

2.37

82.91

117.65

17%

21%

3

Colgate-Palmolive (India) Ltd.

Preparations for oral or dental hygiene

1338.98

1527.93

0.44

0.41

3.10

3.17

217.85

313.34

16%

21%

4

Rohit Surfactants Pvt. Ltd.

Synthetic detergents

921.26

1092.52

0.85

0.82

4.48

3.19

48.73

76.67

5%

7%

5

Sharp Menthol India Ltd.

Essential oils

390.3

677.4

0.92

0.91

56.65

27.09

18.14

38.21

5%

6%

6

Dabur India Ltd.

Cosmetics & toilet preparations

1609.26

2101.84

0.43

0.43

2.90

3.09

310.63

397.2

19%

19% 18%

7

Jyothy Laboratories Ltd.

Other washing preparations

343.2

365.38

0.53

0.66

1.99

1.47

54.2

64.83

16%

8

Galaxy Surfactants Ltd.

Organic surface-active agents other

322.88

386.51

0.74

0.72

2.13

2.22

50.56

54

16%

14%

9

Reckitt Benckiser (India) Ltd.

Soap, washing preparations, etc.

1100.67

1324.71

0.46

0.51

6.53

5.78

204.66

299.56

19%

23%

10

Henkel India Ltd.

Soap

318.19

393.5

0.75

0.64

0.84

0.90

26.84

41.61

8%

11%

11

Nirma Ltd.

Synthetic detergents

2150.96

2200.14

0.68

0.66

0.68

0.67

511.41

474.26

24%

22%

12

Hindustan Unilever Ltd.

Cosmetics, toilet preparations, soap &

12435.57

14037.3

0.52

0.52

4.24

4.23

2318.06

2494.21

19%

18%

13

Godrej Consumer Products Ltd.

Soap

753.76

892.06

0.51

0.49

2.06

1.94

169.21

195.88

22%

22%

0.66

0.73

0.86

243.47

305.17

26%

24%

diversified mAnufActuring 1

Prakash Industries Ltd.

Diversified

932.15

1254.82

0.66

2

Balmer Lawrie & Co. Ltd.

Diversified

1284.33

1457.29

0.30

0.31

2.34

2.69

120.48

145.2

9%

10%

3

Sintex Industries Ltd.

Diversified

1138.22

1694.41

0.71

0.67

1.19

1.10

249.73

413.62

22%

24%

4

D C M Shriram Consolidated Ltd.

Diversified

2698.68

2488.24

0.81

0.92

1.25

1.17

260.45

994.87

10%

40%

PBIDTA = Profi t Before Interest Tax Depreciation and Amortization. Previous Year: 1st April 2006 to 31st March 2007. Latest year: 1st April 2007 to 31st March 2008.

54

february 28, 2010 | industry 2.0

- technology management for decision-makers

www.industry20.com


large manufacturing companies

Debtors Days Available (Days)

Creditors Days Available (Days)

Raw Material Holding Period (Days)

WIP Holding Period (Days)

Finished Goods Holding Period (Days)

2007

2008

2007

2008

2007

2008

2007

2008

2007

79.84

101.38

76.3

133.41

45.18

43.77

12.01

12.49

28.72

Composite Score

2008 22.53

88.0

27.09

19.82

93.39

42.49

108.77

105.24

11.83

10.66

17

8.42

88.3

79.46

75.31

125.49

74.59

54.04

55.62

6.68

5.05

47.36

39.42

88.8

19.57

41.32

106.27

182.16

19.51

55.06

0.85

3.75

2.1

2.65

89.0

35.62

36.46

97.57

108.41

71.51

61.51

4.01

3.34

5.5

12.08

89.5

34.8

36.05

58.31

53.78

43.44

44.71

6.02

6.15

37.26

37.28

90.1

71.42

75.98

93.19

101.44

40.9

40.19

8.78

8.15

40.8

39.51

90.1

91.25

91.93

80.18

78.14

49.49

40.76

32.06

27.99

26.03

22.21

92.1

75.8

74.43

49.38

58.53

51

43.47

12.45

12.29

30.76

32.22

93.3

85.86

72.79

41.89

42.26

81.9

72.87

2.02

2.7

28.28

35.3

96.1 96.5

71.74

44.03

114.72

72.74

297.91

172.75

7.93

6.38

13.31

9.36

46.56

44.11

104.43

70.1

59.89

47.72

29.75

27.62

39.25

23.86

96.6

100.1

102.69

185.41

169.46

44.52

50.67

10.36

12.48

28.17

28.09

96.6

79.48

69.26

70.42

58.92

43.52

41.87

13.52

12.5

36.65

30.87

101.4

111.06

72.92

96.94

96.4

81.12

68.68

12.59

10.77

45.47

31.08

101.8

62.51

51.91

85.4

77.7

56.53

58.41

8.88

10.73

45.38

26.85

102.0

56.81

60.4

62.6

63.93

66.13

62.67

13.85

12.8

15.88

19.1

102.2

37.54

30.3

173.84

122.53

55.56

55.62

2.97

3.19

13.51

12.36

104.0

29.94

39.01

71.22

66.39

138.86

116.07

7.71

6.3

10.94

24.06

107.0

39.59

56.17

88.95

123.4

60.22

88.44

26.28

32.66

16.76

16.25

108.9

1.85

1.99

106.77

113.34

59.12

54.15

21.31

15.29

2.02

2.88

109.5

81.8

67.58

38.34

21.19

113.71

76.2

151.18

112.82

62.93

45.73

109.6 115.5

54.94

64.89

68.42

88.29

122.48

81.56

9.63

7.62

56.68

51.44

70.38

57.18

55.28

80.57

60.58

59.47

21.02

16.06

45.28

42.36

121.1

98.52

64.26

88.09

105.95

71.22

76.96

21.72

25.84

46.02

27.41

122.6

67.43

60.81

100.29

95.15

121.95

136.31

71.92

75.37

76.85

53.67

131.4

28.65

22.52

122.59

122.13

172.89

130.99

82.16

86.48

54.2

34.2

132.4

7.47

54.54

67.39

43.71

36.68

3.95

1.27

12.19

10.7

12.0

24.83

34.83

37.83

41.14

42.23

1.66

1.82

17.77

16.89

14.4

2.03

2.12

90.06

93.99

26.19

19.87

2.32

1.94

16.47

15.95

15.4

NA

12.13

22.56

34.04

NA

37.7

NA

2.35

NA

9.3

15.4

91.65

77.39

68.5

48.12

0.69

8.51

81.85

82.37

26.21

13.51

16.0

10.14

14.47

73.74

66.33

36.55

37.82

8.51

12

15.61

14.71

17.5

32.88

32.54

26.24

38.03

71.65

66.18

3.54

2.06

11.03

19.24

19.5

46.4

51.24

54.39

55.13

36.2

32.07

23.78

19.66

15.34

17.37

20.0

5.63

5.05

63.58

73.05

31.35

28.42

7.67

4.24

26.4

26.22

20.3

90.72

146.48

91.71

74.45

42.39

41.59

4.32

2.75

24.32

19.9

22.0

32.73

31.1

34.35

30.81

89.9

128.33

8.11

9.46

13.3

19.71

22.3

14.91

12.22

99.38

105.71

59.75

66.36

1.87

2.16

18.45

20.17

23.0

3.85

4.47

98.87

109.55

33.68

48.14

13.73

15.97

27.7

31.52

27.9

30.23

26.67

18.86

19.17

42.72

33.66

0.81

0.86

9.4

7.49

15.9

51.96

54.89

74.67

78.47

60.71

49.33

2.4

2.33

5.75

6.05

19.1

54.88

70.42

89.36

77.62

16.14

13.99

16.56

18.16

15.16

12.14

21.9

59.28

51.46

108.33

53.4

31.74

35.3

2.67

2.51

50.79

72.18

22.5

Net Sales = Total Income – Other Income - extra ordinary income – prior period income – indirect taxes www.industry20.com

coSmeTIcS & ClEAnIng

15.51 28.93

chemIcALS

WORKING CAPITAL CyCLE

Source: CMIE Prowess database

industry 2.0

- technology management for decision-makers | february 28, 2010

55


supply chain metrics CORPORATE FINANCIAL PERFORMANCE Rank

5

Company Name

Industrial Activity

Surya Roshni Ltd.

Diversified

6

Texmaco Ltd.

Diversified

7

Johnson & Johnson Ltd.

Diversified

8

Orient Paper & Inds. Ltd.

Diversified

Net Sales (Rs. Crore)

Cost of Goods Sold (as % of sales)

Fixed Assets Turnover Ratio (FATR)

PBDITA (Rs. Crore)

PBDITA/Net Sales

2007

2008

2007

2008

2007

2008

2007

2008

2007

2008

1097.11

1270.19

0.81

0.83

2.82

3.36

80.68

91.15

7%

7%

433.4

838.43

0.80

0.24

2.92

0.91

51.64

117.99

12%

14%

1513.88

1703.51

0.52

0.50

4.30

4.00

240.49

214.69

16%

13%

1091.36

1292.58

0.45

0.42

1.39

1.02

282.14

364.05

26%

28%

9

Apar Industries Ltd.

Diversified

1448.44

1688.98

0.85

0.85

7.70

13.01

113.52

163.98

8%

10%

10

Aditya Birla Nuvo Ltd.

Diversified

3466.27

3942.01

0.67

0.69

1.78

1.80

652.49

689.13

19%

17%

11

Gillanders Arbuthnot & Co. Ltd.

Diversified

262.3

395.72

0.67

0.71

1.91

1.30

22.69

43.09

9%

11%

12

Kesoram Industries Ltd.

Diversified

2227.3

3001.66

0.48

0.43

0.98

0.74

449.52

704.6

20%

23%

13

Bhilai Engineering Corpn. Ltd.

Diversified

324.83

311.95

0.39

0.40

2.35

2.17

32.4

41.47

10%

13%

14

Kores (India) Ltd.

Diversified

746.32

747.87

0.87

0.81

7.47

5.26

36.76

42.21

5%

6%

15

Hindusthan Engineering & Inds. Ltd.

Diversified

288.43

325.34

0.68

0.64

1.49

1.67

13.46

10.12

5%

3%

16

D C M Shriram Inds. Ltd.

Diversified

621.36

595.77

0.80

0.93

2.04

2.07

34.88

36.88

6%

6%

17

Godrej & Boyce Mfg. Co. Ltd.

Diversified

2792.96

3543.28

0.80

0.80

4.77

5.46

261.76

351.43

9%

10%

18

Voltas Ltd.

Diversified

2521.94

3077.3

1.16

0.49

22.50

9.53

248.17

327.06

10%

11%

19

Andhra Sugars Ltd.

Diversified

584.24

488.86

0.55

0.75

0.73

0.79

148.14

114.4

25%

23%

20

Nahar Industrial Enterprises Ltd.

Diversified

908.78

883.11

0.75

0.84

1.01

1.07

193.38

144.76

21%

16%

drugs And phArmAceuticAls 1

Plethico Pharmaceuticals Ltd.

Drug formulations

327.93

553.85

0.62

0.60

1.74

2.92

99.53

179.27

30%

32%

2

Paras Pharmaceuticals Ltd.

Drug formulations

300.42

335.69

0.39

0.37

1.19

1.32

63.81

74.97

21%

22% 30%

3

Merck Ltd.

Drug formulations

354.71

349.71

0.39

0.38

3.41

3.28

173.39

106.14

49%

4

Ankur Drugs & Pharma Ltd.

Drug formulations

373.55

674.91

0.72

0.70

0.75

0.88

57.91

107.78

16%

16%

5

Shasun Chemicals & Drugs Ltd.

Drugs, medicines & allied products

407.88

463.94

0.66

0.78

1.42

1.69

70.87

57.84

17%

12%

6

Astrazeneca Pharma India Ltd.

Drug formulations

274.2

311.05

0.50

0.34

4.09

3.19

80.68

101.19

29%

33%

7

D S M Anti Infectives India Ltd.

Drugs, medicines & allied products

669.1

1001.55

1.08

0.78

7.42

8.72

17.24

50.05

3%

5%

8

J B Chemicals & Pharmaceuticals Ltd.

Drug formulations

532.46

561.82

0.41

0.36

0.98

0.86

102.35

91.95

19%

16%

9

Pfizer Ltd.

Drug formulations

703.56

734.12

0.41

0.36

4.08

3.70

175.15

459.72

25%

63%

10

Wyeth Ltd.

Drug formulations

299.12

344.88

0.38

0.33

2.60

2.75

117.6

124.62

39%

36%

11

Abbott India Ltd.

Drug formulations

519.45

604.72

0.76

0.82

12.51

13.71

91.87

107.54

18%

18%

12

Hetero Drugs Ltd.

Drugs, medicines & allied products

790.4

831.05

0.69

0.74

2.31

1.79

126.53

131.02

16%

16%

13

Piramal Healthcare Ltd.

Drug formulations

1628.73

1957.49

0.53

0.53

0.95

1.21

343.69

489.56

21%

25%

14

Unimark Remedies Ltd.

Drug formulations

418.52

512.03

0.77

0.77

1.86

1.71

63.12

70.69

15%

14%

15

Claris Lifesciences Ltd.

Drug formulations

381.24

564.4

0.38

0.35

0.50

0.49

102.25

153.03

27%

27%

16

Unichem Laboratories Ltd.

Drug formulations

547.14

579.22

0.51

0.51

1.06

0.90

121.26

112.41

22%

19%

17

Alembic Ltd.

Drug formulations

702.89

1000.32

0.47

0.60

0.93

1.54

123.16

183.02

18%

18%

18

Nectar Lifesciences Ltd.

Drugs, medicines & allied products

447.95

748.62

0.98

0.76

1.46

1.37

100.15

149.65

22%

20%

19

Biocon Ltd.

Bio-tech base drugs

866.82

897.79

0.62

0.58

0.72

0.70

241.15

515.15

28%

57%

20

U S V Ltd.

Drug formulations

653.55

712.38

0.41

0.47

1.17

1.23

194.79

214.14

30%

30% 45%

21

Glaxosmithkline Pharmaceuticals Ltd.

Drug formulations

1612.22

1680.66

0.46

0.40

7.63

6.97

756.23

764.39

47%

22

Surya Pharmaceutical Ltd.

Antibiotics

284.63

488.85

0.92

0.91

1.84

2.32

52.37

89.72

18%

18%

23

Strides Arcolab Ltd.

Drug formulations

460.46

454.02

0.59

0.63

1.36

1.33

78.38

-60.28

17%

-13%

24

Elder Pharmaceuticals Ltd.

Drug formulations

448.44

550.96

0.55

0.53

0.88

0.89

81.92

113.97

18%

21%

25

Aurobindo Pharma Ltd.

Drug formulations

1971.03

2363

0.72

0.66

1.58

1.63

385.67

472.17

20%

20%

26

Aarti Drugs Ltd.

Anti dysentery medicaments

282.89

311.52

0.75

0.81

1.29

1.46

35.62

40.42

13%

13% 26%

27

Novartis India Ltd.

Drug formulations

586

600.21

0.53

0.47

31.80

30.49

141.66

155.36

24%

28

Dr. Reddy'S Laboratories Ltd.

Drug formulations

4188.59

3676.3

0.34

0.45

1.50

1.34

1499.59

755.1

36%

21%

29

Aventis Pharma Ltd.

Drug formulations

923.06

926.8

0.60

0.60

3.78

3.87

267.73

240.37

29%

26%

PBIDTA = Profi t Before Interest Tax Depreciation and Amortization. Previous Year: 1st April 2006 to 31st March 2007. Latest year: 1st April 2007 to 31st March 2008.

56

february 28, 2010 | industry 2.0

- technology management for decision-makers

www.industry20.com


large manufacturing companies

Creditors Days Available (Days)

Raw Material Holding Period (Days)

WIP Holding Period (Days)

Finished Goods Holding Period (Days)

2007

2008

2007

2008

2007

2008

2007

2008

2007

34.38

33.39

9.76

8.15

27.54

24.45

6.96

6.59

23.72

Composite Score

2008 22.89

24.0

77.75

50.34

205.98

141.11

50.41

41

15.82

11.22

2.41

1.76

24.6

14.89

13.77

110.63

83.77

53.26

42.71

3.78

3.27

20.98

22.07

25.0

33.96

31.74

66.49

55.23

66.61

65.51

8.86

9.45

4.68

4.66

25.4

72.38

75.95

131.37

209.89

51.17

47.76

6.22

6.28

10.57

9.88

25.9

55.66

50.95

43.89

52.76

61.5

62.05

5.6

6.13

18.71

22.1

26.0

29.07

27.5

58.51

69.07

53.27

49.28

4.91

5.02

16.35

16.94

27.7 28.3

31.18

27.35

50.83

54.01

70.38

65.15

6.68

8.27

11.22

11.01

79.04

88.47

106.46

110.13

47.88

59.38

32.35

40.04

24.31

19.99

29.8

49.22

57.14

89.94

96.47

35.32

37.8

20.42

26.17

27.77

28.61

32.4

87.78

78.49

50.89

60.51

73.86

84.97

13.84

9.55

37.67

22.92

33.1

17.26

16.76

45.53

59.11

42.46

45.71

4.83

4.83

72.89

92.7

34.2

54.26

60.07

116.56

116.12

44.44

44.28

28.85

35.74

29.25

31.39

34.3

65.62

61.19

101.86

152.11

13.27

108.48

45.75

58.56

20.78

24.33

37.9

20.29

23.43

75.62

104.37

61.83

80

3.47

3.65

104.93

123.7

38.5

34.96

41.35

24.75

59.69

124.82

130.86

12.64

12.96

55.04

78.67

40.5

190.46

160.65

26.85

18.16

12.31

9.7

1.82

0.95

7.74

5.19

15.0

21.09

28.82

67.64

48.73

45.88

56.23

0.45

0.91

15.79

20.58

43.8 43.9

43.15

31.34

37.36

37.17

52.46

49.09

5.9

11.89

29.74

27.41

51.01

65.02

29.68

24.59

45.59

55.04

4.54

4.7

1.56

1.92

45.7

90.24

97.45

83.55

62.72

45.55

35.22

9.67

6.28

15.33

14.36

46.2 46.6

47.87

51.73

86.87

45.56

58.78

51.12

19.49

18.71

30.03

27.63

89.65

64.42

81

44.56

30.91

20.78

6.98

6.45

29.57

25.07

47.9

190.21

204.44

58.96

41.29

54.08

64.14

12.05

8.18

30.13

28.28

48.0 55.8

82.36

57.33

82.67

76.56

5.48

6.55

33.24

31.3

51.18

58.83

88.99

69.5

3.13

3.99

54.17

41.89

60.1

15.27

15.89

27.28

24.59

37.52

26.29

4.56

2.9

35.19

42.73

60.3

NA

101.83

81.08

70.05

NA

60.52

NA

20.36

NA

16.33

60.5

50.66

56.28

57.62

63.18

76.26

64.79

25.75

20.92

22.4

19.92

62.4

71.91

78.2

69.3

79.18

44.11

43.09

48.09

47.51

4.43

3.55

62.6 62.9

75.23

128.93

182.51

172.14

49.6

69.63

10.46

10.8

37.33

28.6

72.98

78.79

72.89

63.82

67.59

74.75

18.24

16.53

21.12

22.49

64.1

84.15

77.68

63.24

60.99

71.65

80.01

6.05

7.31

47.51

31.23

66.3

79.16

64.78

74.09

63.85

35.55

25.37

99.61

92.81

12.33

10.96

66.5

99.76

102.34

91.69

85.54

50.02

70.35

44.99

57.26

4.21

5.1

67.1

37.65

41.72

55.05

53.21

62.29

62.63

16.71

16.77

34.17

36.98

67.1

16.65

12.96

72.29

71.99

52.5

53.51

25.57

23.32

40.41

35.98

67.7

74.45

55.87

52.09

72.05

40.86

45.46

126.63

123.22

0.01

0.03

68.2

116.15

129.12

130.15

211.55

90.02

92.73

10.9

11.11

3.55

4.29

69.2 69.3

90.93

84.53

74.07

58.06

62.1

49.12

40.32

18.36

65.62

50.59

114.28

112.55

63.49

69.16

72.96

82.69

47.16

49.46

6.64

6.46

69.4

83.85

93.44

56.25

76.66

54.5

47.97

34.94

29.82

17.25

20.68

69.5

28.75

28.06

50.05

55.04

60.76

93.35

2.76

2.1

41.67

42.21

70.4

72.84

100.75

83.19

81.11

81.13

88.13

39.91

48.33

9.26

10.27

72.0

23.24

24.35

52.79

51.39

64.71

63.96

18.24

18.77

37.43

42.95

73.2

Net Sales = Total Income – Other Income - extra ordinary income – prior period income – indirect taxes www.industry20.com

DrugS &

37.36 23.29

PhArMACEuTICAls

42.94 25.02

DIverSIfIeD

Debtors Days Available (Days)

mANufAcTurINg

WORKING CAPITAL CyCLE

Source: CMIE Prowess database

industry 2.0

- technology management for decision-makers | february 28, 2010

57


supply chain metrics CORPORATE FINANCIAL PERFORMANCE Rank

Company Name

Industrial Activity

30

F D C Ltd.

Drug formulations

Net Sales (Rs. Crore)

Cost of Goods Sold (as % of sales)

Fixed Assets Turnover Ratio (FATR)

PBDITA (Rs. Crore)

PBDITA/Net Sales

2007

2008

2007

2008

2007

2008

2007

2008

2007

2008

432.28

502.51

0.60

0.51

1.32

1.17

91.71

89.2

21%

18%

31

Sun Pharmaceutical Inds. Ltd.

Drug formulations

2310.11

3211.51

0.57

0.51

2.12

2.48

695.61

1112.02

30%

35%

32

Lupin Ltd.

Drug formulations

2003.03

2585.76

0.58

0.62

1.45

1.71

476.13

648.14

24%

25%

33

Glenmark Pharmaceuticals Ltd.

Drug formulations

799.59

1355.12

0.50

0.41

0.92

0.95

251.76

539

31%

40%

34

Macleods Pharmaceuticals Ltd.

Drug formulations

403.17

521.85

0.70

0.62

1.83

1.69

69.26

74.53

17%

14%

35

Ipca Laboratories Ltd.

Drug formulations

936.38

1111.01

0.54

0.53

1.17

1.09

198.56

231.64

21%

21%

36

Dishman Pharmaceuticals & Chemicals Ltd.

Drug formulations

289.72

361.65

0.66

0.69

0.76

0.68

86.87

101.81

30%

28%

37

Intas Pharmaceuticals Ltd.

Drug formulations

772.92

990.58

0.63

0.62

2.77

2.90

99.44

131.9

13%

13%

38

Panacea Biotec Ltd.

Drug formulations

865.08

862.83

0.51

0.53

1.07

0.86

260.09

245.27

30%

28%

39

Divi'S Laboratories Ltd.

Drugs, medicines & allied products

733.68

1038.31

0.54

0.55

0.94

1.02

257.8

446.25

35%

43%

40

Arch Pharmalabs Ltd.

Drugs, medicines & allied products

362.99

514.65

0.80

0.83

1.51

1.57

77.1

98.39

21%

19%

41

Matrix Laboratories Ltd.

Drugs, medicines & allied products

771.41

967.97

0.58

0.65

0.97

1.06

151.48

-207.17

20%

-21%

42

Ind-Swift Ltd.

Drug formulations

377.52

513.73

1.08

0.88

2.22

1.90

54.3

80.99

14%

16%

43

Wockhardt Ltd.

Drug formulations

1184.15

1292.01

0.50

0.60

0.85

0.86

318

344.5

27%

27%

44

Cipla Ltd.

Drug formulations

3619.31

4284.26

0.43

0.46

1.07

1.04

918.3

965.96

25%

23%

45

Cadila Healthcare Ltd.

Drug formulations

1514.4

1755.5

0.49

0.43

0.93

0.86

324.77

389.6

21%

22%

46

Torrent Pharmaceuticals Ltd.

Drug formulations

894.74

1002.38

0.51

0.40

1.03

0.75

181.23

228.11

20%

23%

47

Emcure Pharmaceuticals Ltd.

Drug formulations

437.06

462.75

0.56

0.54

0.97

0.67

99.63

79.83

23%

17%

48

Cadila Pharmaceuticals Ltd.

Drug formulations

532.01

541.43

0.57

0.48

1.05

0.79

84.52

87.48

16%

16%

49

Ranbaxy Laboratories Ltd.

Drug formulations

3545.59

4108.51

0.41

0.39

0.85

0.89

655.9

1063.27

18%

26%

50

Ind-Swift Laboratories Ltd.

Drugs, medicines & allied products

346.32

454.84

0.74

0.76

0.67

0.74

67.23

89.45

19%

20%

51

Orchid Chemicals & Pharmaceuticals Ltd.

Drug formulations

935.24

1309.32

0.61

0.45

0.37

0.29

317.61

457.52

34%

35%

electricAl mAchinery 1

Unitech Machines Ltd.

Electric signalling apparatus

316.9

353.5

0.29

0.28

1.39

1.08

46.5

50.53

15%

14%

2

Esab India Ltd.

Welding electrodes / sticks / wires /

292.04

346.11

0.64

0.68

3.36

3.50

69.95

86.54

24%

25%

3

Lloyd Electric & Engineering Ltd.

Accessories of air conditioners &

496.19

669.71

0.86

0.85

2.88

2.93

65.2

81.31

13%

12%

4

H B L Power Systems Ltd.

Nickel-cadmium accumulators

511.18

969.89

0.71

0.80

1.63

2.70

73.3

149.55

14%

15%

5

Amara Raja Batteries Ltd.

Storage batteries

602.04

1102.72

0.73

0.79

2.71

3.28

90.87

184.47

15%

17%

6

Usha International Ltd.

Fans

122.89

709.93

0.72

0.72

13.24

13.12

5.14

29.76

4%

4%

7

Fedders Lloyd Corpn. Ltd.

Air conditioning machines / systems

278.29

348.21

0.95

0.98

8.25

6.01

18.32

29.22

7%

8%

8

Blue Star Ltd.

Air conditioning machines / systems

1599.28

2261.47

0.84

0.81

11.51

11.81

123.05

269.73

8%

12%

9

Whirlpool Of India Ltd.

Refrigerators, freezers, etc.

1495.06

1805.14

0.69

0.71

3.36

3.92

44.07

80.4

3%

4%

10

Exide Industries Ltd.

Storage batteries

1888.18

2883.68

0.77

0.77

2.93

3.67

310.16

486.11

16%

17%

11

Carrier Airconditioning & Refrigera-

Window/split airconditioners

588.87

760.84

0.66

0.64

11.13

10.45

43.27

65.93

7%

9%

12

I F B Industries Ltd.

Washing machines

327.07

426.27

0.56

0.60

2.12

3.59

49.12

46.92

15%

11%

13

Value Industries Ltd.

Domestic appliances

1122.66

1302.94

0.86

0.84

1.81

1.39

117

177.91

10%

14%

14

Ajanta Manufacturing Ltd.

Storage batteries

319.08

474.88

0.74

0.78

0.99

1.56

55.2

106.4

17%

22%

15

T T K Prestige Ltd.

Cookers

280.71

326.74

0.67

0.61

5.24

3.52

25.68

35.98

9%

11%

16

Inductotherm (India) Pvt. Ltd.

Industrial furnaces & ovens

261.18

308.57

0.58

0.56

5.54

6.45

93.05

106.68

36%

35%

17

Bajaj Electricals Ltd.

Electric appliances

1088

1384.63

0.79

0.81

9.38

10.27

92.86

152.62

9%

11%

18

Hitachi Home & Life Solutions (India) Ltd.

Window/split airconditioners

325.53

449.46

0.76

0.72

8.08

7.87

28.13

58.27

9%

13%

19

Khaitan Electricals Ltd.

Fans

289.53

329.25

0.77

0.84

11.51

12.62

22.82

30.75

8%

9%

20

Eveready Industries (India) Ltd.

Dry cells

768.48

844.34

0.66

0.79

0.56

0.73

47.07

75.46

6%

9%

electronics 1

X L Telecom & Energy Ltd.

Cordless phone

399.07

525.19

0.91

0.89

17.26

17.41

21.52

33.53

5%

6%

2

P C S Technology Ltd.

Computer systems

419.07

325.53

0.86

0.82

14.06

10.77

17.94

16.84

4%

5%

PBIDTA = Profi t Before Interest Tax Depreciation and Amortization. Previous Year: 1st April 2006 to 31st March 2007. Latest year: 1st April 2007 to 31st March 2008.

58

february 28, 2010 | industry 2.0

- technology management for decision-makers

www.industry20.com


large manufacturing companies

Creditors Days Available (Days)

Raw Material Holding Period (Days)

WIP Holding Period (Days)

Finished Goods Holding Period (Days)

Composite Score

2007

2008

2007

2008

2007

2008

2007

2008

2007

17.68

14.78

51.23

56.48

34.14

41.42

14.57

15.88

52.74

2008 50.94

73.8

88.09

122.99

96.78

117.58

92.36

97.31

58.87

58.54

14.78

13.43

75.0

73.93

76.54

72.54

64.44

76.41

73

24.85

32.49

24.36

31.24

76.5

156.88

134.59

75.79

92.75

120.43

96.87

56.78

51.21

25.49

23.66

77.3 77.8

31.53

40.23

66.75

67.82

74.53

69.02

7.22

7.53

30.98

36.1

59.83

72.62

51.69

50.85

93.9

90.99

22.55

25.07

34.46

33.74

80.1

129.01

106.9

142.41

74.42

89.73

80.07

157.22

154.81

12.47

15.42

80.3 80.3

46.24

49.7

57.72

51.23

107.57

82.84

25.28

15.24

40.01

37.42

37.1

52.75

84.96

63.47

111.07

140.02

3.1

4.56

41.5

36.78

81.6

67.03

66.09

96.65

89.68

84.29

81.63

87.15

64.31

15.09

24.1

83.5

100.69

102.04

67.95

65.04

113.55

107.95

27.5

24.01

26.55

29.44

83.5

99.03

83.65

138.85

105.07

83.58

70.86

82.44

89.51

6.56

5.42

84.1

108.36

98.14

80.77

89.78

62.86

58.96

15.29

21.17

61.31

79.23

85.2 85.4

87.04

108.73

95.16

90.69

89.17

85.64

24.42

29.6

29.43

32.56

95.37

103.41

64.71

90.19

136.21

127.07

28.65

25.63

39.79

32.54

86.1

50.9

54.79

100.72

67.06

79.2

92.23

40.6

42.44

31.31

30.88

87.5

57.23

67.33

67.44

88.05

92.46

82.96

30.84

30.8

33.91

33.3

89.1

58.69

78.47

62.55

80.29

66.02

104.9

13.07

20.55

23.35

30.87

89.5

NA

70.46

126.87

107.11

NA

65.55

NA

29.54

NA

37.86

92.2

93.68

96.57

85.3

90.02

158.95

146.63

48.95

50.89

37.62

34.76

95.5

77.58

73.64

77.96

94.32

103.15

95.3

151.8

157.15

6.2

7.14

96.4

141.71

134.17

97.86

118.04

116.28

127.3

253.83

218.04

30.08

32.9

97.8

59.34

81.28

69.89

80.44

19.51

32.76

2.9

5.58

4.69

3.34

17.1

9.34

10.17

66.12

55.99

27.07

30.25

3.97

4.28

17.28

15.18

21.1

67.87

73.55

34.18

34.04

47.88

53.25

0.97

1.23

9.82

9.65

21.5

96.92

72.11

66.19

50.45

51.08

35.3

23.45

24.89

1.87

2.54

22.8

57.75

50.55

39.52

30.02

33.93

31.31

21.61

21.39

6.44

8.1

23.1

28.28

27.02

103.85

73.76

14.15

14.68

17.63

11.68

31.16

20.96

24.8

54.37

59.12

17.34

23.53

22.48

19.84

18.12

19.78

16.44

20.68

24.9

68.02

69.11

104.63

115.22

24.58

26.15

30.38

26.21

8.82

11.64

27.0

85.74

94.02

18.55

24.64

1.56

2.37

40.19

44.55

27.2

53.64

52.08

43.25

40.49

17.51

17.75

18.73

17.78

27.5

36.59

55.71

103.13

95.41

39.97

56.17

1.22

2.38

16.4

26.94

27.6

23.98

20.62

87.16

90.25

37.6

39.97

11.52

11.49

16.43

20.03

28.6

82.74

80.56

36.92

48.4

71.26

74.72

29.94

27.4

3.38

2.89

30.3

7.14

30.68

17.79

32.53

100.43

87.76

9.11

8.31

22.24

24.63

30.8 30.9

42.95

47.61

70.35

70.92

46.29

41.54

12.16

8.62

50.83

48.44

40.84

52.19

108.82

112.6

71.41

76.43

45.8

39.36

5.83

5.37

31.9

105.4

103.06

106.12

102.15

53.13

62.98

12.09

15.59

27.45

28.34

32.8

56.13

55.18

123.79

141.87

56.3

67.85

8.93

9.06

53.63

36.73

34.8

124.12

168.78

122.34

137

44.43

60.54

35.83

33.96

52.8

69.16

40.0

19.58

17.54

63.97

99.78

52.32

49.98

31.07

26.83

35.65

31.96

42.3

61.9

93.22

21.59

36.36

22.89

25.09

3.24

2.96

0.48

1.41

16.6

113.53

145.03

60.39

97.23

24.54

21.6

1.43

1.81

4.79

3.45

21.8

Net Sales = Total Income – Other Income - extra ordinary income – prior period income – indirect taxes www.industry20.com

eLecTrIcAL

25.61 20.62

MAChInEry

27.12 23.24

DrugS &

Debtors Days Available (Days)

PhArMACEuTICAls

WORKING CAPITAL CyCLE

Source: CMIE Prowess database

industry 2.0

- technology management for decision-makers | february 28, 2010

59


supply chain metrics CORPORATE FINANCIAL PERFORMANCE Rank

3

Company Name

Industrial Activity

Opto Circuits (India) Ltd.

Net Sales (Rs. Crore)

Cost of Goods Sold (as % of sales)

Fixed Assets Turnover Ratio (FATR)

PBDITA (Rs. Crore)

PBDITA/Net Sales

2007

2008

2007

2008

2007

2008

2007

2008

2007

2008

Medical equipment

203.95

340.09

0.57

0.60

3.28

5.19

78.72

140.45

39%

41%

4

yokogawa India Ltd.

Process control equipment

316.67

368.7

0.69

0.76

4.58

6.61

34.86

34.69

11%

9%

5

Electronics Corporation Of India Ltd.

VHF radio systems

921.14

960.01

0.66

0.66

7.94

8.09

209.65

233.68

23%

24%

6

Honeywell Automation India Ltd.

Process control equipment

643.85

866.88

0.72

0.74

8.78

10.56

87.75

103.91

14%

12%

7

C M S Computers Ltd.

Computer peripherals

512.26

504.08

0.68

0.57

3.88

2.52

45.55

36.13

9%

7%

8

H C L Infosystems Ltd.

Mini/micro computers

2309.97

11673.7

0.88

0.97

25.61

94.25

153.13

463.99

7%

4%

9

Tata B P Solar (India) Ltd.

Solar appliances

668.59

923.27

0.83

0.84

3.90

1.87

62.68

71.56

9%

8%

10

Solectron E M S India Ltd.

Other electronic components

109.32

317.8

0.85

0.91

2.58

9.36

9.51

23.6

9%

7%

11

L G Electronics India Pvt. Ltd.

Television receivers, colour

8178.57

8813.67

0.72

0.73

13.79

15.22

364.59

473.24

4%

5%

12

Videocon Industries Ltd.

Television receivers

6456.58

7669.57

0.70

0.67

0.91

0.96

1516.27

1957.08

23%

26%

13

Bharti Teletech Ltd.

Electronic telephones

2451.43

1552.47

1.24

0.41

72.00

37.19

52.03

38.3

2%

2%

14

Luminous Power Technologies Pvt. Ltd.

Batteries incl. Ni-Cd batteries

282.36

475.3

0.66

0.71

5.81

8.86

33.68

75.16

12%

16%

15

Numeric Power Systems Ltd.

Uninterupted power supplies

272.87

388.78

0.83

0.70

7.89

7.22

27.76

51.84

10%

13%

16

Trend Electronics Ltd.

Television receivers

775.56

833.17

0.92

0.94

4.79

5.67

31.9

30.46

4%

4%

17

Philips Electronics India Ltd.

Consumer electronics

2582

2857.3

0.65

0.69

6.35

7.33

367.6

348.3

14%

12%

18

Bharat Electronics Ltd.

Electronics

4028.11

4250.05

0.63

0.61

6.08

5.74

1133.58

1281.4

28%

30% 6%

19

Mirc Electronics Ltd.

Television receivers, colour

1509.7

1526.54

0.83

0.87

6.07

6.94

90.77

87.24

6%

20

Xerox India Ltd.

Electronic paper copiers

498.4

559.18

0.80

0.83

12.44

12.19

30.5

41.09

6%

7%

21

Smartlink Network Systems Ltd.

Computer peripherals

289.15

303

0.77

0.75

3.44

3.73

35.59

46.17

12%

15%

22

Moser Baer India Ltd.

Magnetic media

2046.07

1970.88

0.53

0.54

0.39

0.38

598.28

529.96

29%

27%

23

J C T Electronics Ltd.

TV picture tubes colour

290.95

339.32

1.04

0.95

0.78

0.86

523.97

-18.72

180%

-6%

24

I T I Ltd.

Switching systems

1781.36

1205.2

0.93

0.98

0.61

0.44

-216

-422.07

-12%

-35%

25

Bharat Dynamics Ltd.

Defence communication equipment

464.65

568.34

0.75

0.89

3.73

5.03

61.47

82.45

13%

15%

891.67

912.77

0.84

0.96

4.19

4.50

92.07

74.08

10%

8%

ferrous metAls 1

Sujana Universal Inds. Ltd.

Cast iron castings

2

Kamdhenu Ispat Ltd.

Bars & rods

297.51

352.48

0.91

0.90

20.89

10.42

18.89

23.44

6%

7%

3

Jyoti Structures Ltd.

Heavy structurals (Bridges & bridge

968.63

1364.62

0.62

0.71

10.59

15.05

126.32

169.5

13%

12%

4

K E C International Ltd.

Heavy structurals (Bridges & bridge

2031.91

2795.5

0.55

0.58

2.75

3.60

253.61

356.1

12%

13%

5

Kalpataru Power Transmission Ltd.

Heavy structurals (Bridges & bridge

1500.79

1696.98

0.64

0.61

4.56

4.62

260.02

263.05

17%

16%

6

I T W India Ltd.

Chains & anchors of iron & steel

408.1

546.01

0.72

0.74

5.92

5.89

79.26

107.17

19%

20%

7

Pennar Industries Ltd.

Cold rolled coils, strips, sheets

320.12

537.85

0.80

0.79

1.99

3.30

35.36

66.32

11%

12%

8

Skipper Steels Ltd.

Welded steel tubular poles

120.51

315.4

0.85

0.86

5.13

5.12

9.51

24.02

8%

8%

9

Icomm Tele Ltd.

Heavy structurals (Bridges & bridge

366.65

755.4

0.80

0.75

3.54

7.34

34.17

72.57

9%

10%

10

Nalwa Steel & Power Ltd.

Sponge iron

225.36

529.78

0.74

0.66

0.74

1.48

41.49

94.5

18%

18%

11

Jindal Industries Ltd.

Tubes & pipes

474.47

610.75

0.91

0.88

23.46

23.20

31.74

41.69

7%

7%

12

Vardhman Industries Ltd.

Cold rolled coils, strips, sheets

282.77

307.31

0.94

0.94

3.13

6.53

9.81

17.04

3%

6%

13

Vallabh Steels Ltd.

Cold rolled coils, strips, sheets

338.7

320

0.92

0.81

4.64

13.57

1.81

10.43

1%

3%

14

Technocraft Industries (India) Ltd.

Tubes & pipes

307.76

332.88

0.57

0.64

1.89

1.76

68.38

66.77

22%

20%

15

Tube Investments Of India Ltd.

ERW tubes & pipes

1782.21

1839.99

0.70

0.75

2.65

2.65

257.85

157.12

14%

9%

16

Kalyani Carpenter Special Steels Ltd.

Alloy steel, nec

568.11

677.76

0.71

0.77

3.74

3.79

54.11

47.23

10%

7%

17

Kirloskar

Pig iron

529.02

736.18

0.72

0.72

2.16

1.93

88.06

99.17

17%

13%

18

Welspun Power & Steel Ltd.

Inds. Ltd.

Sponge iron

230.91

321.85

0.82

0.66

1.38

0.48

28.7

84.23

12%

26%

19

Electrosteel Castings Ltd.

Tubes & pipes

1149.52

1397.26

0.56

0.64

1.63

1.60

212.69

127.96

19%

9%

20

Concast Ispat Ltd.

Bars & rods

331.91

415.41

0.92

0.97

16.18

24.08

16.65

20.77

5%

5%

21

Mahindra Ugine Steel Co. Ltd.

Alloy steel, nec

715.74

920.79

0.71

0.76

2.10

2.40

99.68

106.34

14%

12%

22

Bhuwalka Steel Inds. Ltd.

Flat products

477.05

516.21

0.93

1.01

9.43

8.65

20.71

22.11

4%

4%

PBIDTA = Profi t Before Interest Tax Depreciation and Amortization. Previous Year: 1st April 2006 to 31st March 2007. Latest year: 1st April 2007 to 31st March 2008.

60

february 28, 2010 | industry 2.0

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large manufacturing companies WORKING CAPITAL CyCLE Debtors Days Available (Days)

Creditors Days Available (Days)

Raw Material Holding Period (Days)

WIP Holding Period (Days)

Finished Goods Holding Period (Days)

Composite Score

2007

2008

2007

2008

2007

2008

2007

2008

2007

183.72

182.89

59.49

17.39

103.34

94.23

11.27

8.87

1.63

2008 3.35

24.9

108.46

108.98

122.51

138.02

29.04

33.61

0.46

0.43

6.98

9.69

25.0

336.15

423.95

378.6

426.27

24.34

28.17

21.15

17.47

2.79

2.81

25.2

105.79

95.28

129.1

117.36

22.17

17.33

33.7

41.34

3.36

3.37

28.3

99.17

81.91

88.88

92.99

119.04

0.06

0.18

5.19

5.15

29.9

67.61

23.39

87.45

42.93

30.9

36.08

1.89

0.86

16.47

11.97

30.0

60.71

72.35

55.81

145.82

42.6

43.34

9.92

7.16

0.83

0.33

30.3 30.8

NA

57.14

162.9

59.31

NA

45.6

NA

8.96

NA

2.59

NA

23.72

39.37

45.66

NA

45.49

NA

0.57

NA

23.88

31.6

51.83

52.61

42.3

39.76

64.66

69.43

5.99

6.44

14.33

15.44

33.4

12.63

22.76

74.26

60.83

19.23

36

3.2

4.65

48.55

73.32

33.8

NA

89.15

109.6

92.03

NA

40.79

NA

24.57

NA

11.14

33.8

91.26

75.95

62.91

63.43

48.69

55.08

9.41

7.02

26.08

23.17

34.6 37.4

61.91

56.51

44.77

47.33

48.1

49.67

9.75

9.17

4.09

4.25

45.78

39.09

72.58

79.05

52.61

41.59

6.97

14.15

22.27

22.61

37.9

147.78

193.51

348.85

373.68

193.74

207.85

66.9

63.88

6.18

6.79

40.4

25.33

27.49

54.07

53.68

44.16

49.83

8.63

8.63

25.67

36.07

41.9

66.32

58.5

63.95

62.45

153.47

254.2

7.76

8.37

52.39

58.1

44.2

69.53

67.66

45.46

64

54.51

103.17

7.09

13.42

26.22

24.86

44.3

64.32

63.09

87.7

80.47

82.03

85.3

25.91

45.54

35.55

40.03

46.4

30.02

15.95

294.49

279.76

46.76

52.45

10.52

8.69

11.07

9.98

48.3

338.47

529.75

377.92

490.71

176.22

193.52

42.43

37.3

13.4

18.12

52.3

NA

16.44

1105.42

965.29

NA

261.07

NA

81.13

NA

7.69

54.4

88.81

106.47

32.88

41.4

120.38

3.46

3.94

0.22

10.92

7.85

48.0

29.97

50.98

24.17

55.41

6.61

12.11

0.24

0.29

1.34

1.94

51.5

109.01

112.48

114.08

86.17

30.85

20.56

10.05

3.55

9.88

4.11

51.6

139.62

152.13

196.47

188.3

38.31

37.04

2.63

1.19

4.55

3.44

61.2

97.21

122.8

125.29

125.3

45.83

42.67

4.21

3.77

7.71

7.41

71.6

64.77

63.91

51.32

37.26

35.76

34.09

14.81

13.46

12.7

13.66

77.4

72.37

45.54

20.38

23.95

27.95

24.1

27.67

21.21

6.85

4.37

77.5

50.68

32.75

12.36

13.01

25.76

21.97

7.23

3.94

79.1

247.1

158.44

38.8

30.28

27.11

18.96

1.75

1.36

79.3

13.49

12.85

102.47

25.43

66.49

35.9

0.22

0.11

36.38

15.16

81.9

12.79

17.93

14.7

17.44

23.33

24.57

15.86

17.71

4.31

5.63

83.9

39.72

53.58

52.65

38.24

23.28

18.13

3.76

3.5

11.93

18.81

84.5

49.91

58.44

128.56

51.84

30.31

27.73

13.6

15.95

8.8

9.67

84.6

91.73

105.94

26.22

54.09

141.07

155.74

0

0.62

12.83

13.66

87.0

49.94

54.06

63.49

68.17

31.61

32.66

9.75

8.94

10.65

11.88

87.0

54.25

55.95

69.56

76.56

36.28

41.36

16.72

19.3

5.69

0.92

87.1

37.89

38.28

97.88

103.36

37.25

36.03

4.27

4.99

3.51

5.45

87.2

19.68

18.62

85.64

81.95

38.29

46.82

0.59

0.5

13.31

10.45

87.5

142.83

131.67

61.84

64

103.04

130.4

18.27

3.35

13.85

9.11

89.6

NA

68.69

28.73

10.96

NA

24.53

NA

10.29

NA

23.1

89.8

67.82

63.38

78.67

59.53

56.27

46.42

28.86

24.61

2.11

2.15

90.2

24.23

20.18

25.45

28.4

20.47

20.41

0.33

0.75

14.75

19.88

90.2

Net Sales = Total Income – Other Income - extra ordinary income – prior period income – indirect taxes www.industry20.com

ferrouS

40.41 129.64

METAls

41.47 161.27

eLecTroNIcS

83.73

Source: CMIE Prowess database

industry 2.0

- technology management for decision-makers | february 28, 2010

61


supply chain metrics CORPORATE FINANCIAL PERFORMANCE Rank

Company Name

Industrial Activity

23

Godawari Power & Ispat Ltd.

Semi-finished Steel

Net Sales (Rs. Crore)

Cost of Goods Sold (as % of sales)

Fixed Assets Turnover Ratio (FATR)

PBDITA (Rs. Crore)

PBDITA/Net Sales

2007

2008

2007

2008

2007

2008

2007

2008

2007

2008

437.09

819.72

0.75

0.84

0.89

1.74

86.73

161.47

20%

20%

24

S P S Steel & Power Ltd.

Semi-finished Steel

727.17

1061.7

0.76

0.95

1.51

1.95

60.91

101.41

8%

10%

25

Jai Corp Ltd.

Clad, plated or coated flat rolled

344.21

434.93

0.49

0.58

1.35

1.09

96.79

161.02

28%

37%

26

Nelcast Ltd.

Cast iron castings

306.82

363.39

0.57

0.65

2.29

2.00

42.05

53.95

14%

15%

27

Avon Ispat & Power Ltd.

Cold rolled coils, strips, sheets

462.31

427.62

0.87

0.88

3.59

3.51

32.11

34.67

7%

8%

28

Lloyds Metals & Engineers Ltd.

Sponge iron

296.18

329.67

0.74

0.92

0.97

1.50

-5.75

48.16

-2%

15%

29

R L Steels & Energy Ltd.

Semi-finished Steel

259.5

348.27

0.88

0.86

3.55

3.62

22.73

31.15

9%

9% 16%

30

Electrotherm (India) Ltd.

Semi-finished Steel

726.65

1328.89

0.79

0.74

1.46

1.43

102.89

208.19

14%

31

Manaksia Ltd.

Crown caps

645.4

741.35

0.78

0.80

1.42

1.69

85.65

99.77

13%

13%

32

Jayaswal Neco Inds. Ltd.

Pig iron

1237.97

1477.04

0.73

0.69

1.88

2.22

115.06

183.36

9%

12% 21%

33

Ahmednagar Forgings Ltd.

Forgings

374.78

597.49

0.77

0.78

0.86

1.19

73.64

122.93

20%

34

Lanco Industries Ltd.

Spun pipes

370.89

467.15

0.65

0.62

0.96

1.06

54.2

85.97

15%

18%

35

Oil Country Tubular Ltd.

Seamless tubes & pipes

264.08

340.35

0.77

0.48

3.49

3.26

27.68

89.41

10%

26%

36

Ispat Industries Ltd.

Hot rolled coils, strips, sheets

7593.89

8600.27

0.67

0.69

0.51

0.63

1656.29

1777.76

22%

21%

37

Remi Metals Gujarat Ltd.

Alloy steel, nec

203.65

335.75

0.79

0.90

1.82

1.80

-4.52

288.28

-2%

86%

38

Steelco Gujarat Ltd.

Cold rolled coils, strips, sheets

379.05

365.18

0.85

0.79

3.67

3.65

14.57

14.44

4%

4%

39

Maithan Alloys Ltd.

Ferro alloys

153.76

379.41

0.78

0.75

1.85

2.95

24.68

75.04

16%

20%

40

Jai Balaji Inds. Ltd.

Semi-finished Steel

1057.44

1322.62

0.81

0.82

1.40

0.97

153.43

294.49

15%

22%

41

Jindal Saw Ltd.

Tubes & pipes

3886.44

7396.22

0.80

0.57

3.51

3.41

438.62

1273.29

11%

17%

42

Swastik Pipes Ltd.

Tubes & pipes

383.5

446.14

0.97

0.95

13.47

14.05

14.83

18.04

4%

4%

43

J S W Steel Ltd.

Hot rolled coils, strips, sheets

8574.72

11442.8

0.53

0.61

0.44

0.42

3004.71

3698.4

35%

32%

44

Maharashtra Seamless Ltd.

Seamless tubes & pipes

1410.85

1528.63

0.65

0.78

3.20

3.54

371.31

321

26%

21%

45

Man Industries (India) Ltd.

Tubes & pipes

1122.92

1447.3

0.79

0.89

3.06

3.34

125.36

162.95

11%

11%

46

Balasore Alloys Ltd.

Ferro alloys

343.96

539.78

0.59

0.65

0.53

0.93

51.75

104.62

15%

19%

47

Monnet Ispat & Energy Ltd.

Semi-finished Steel

685.51

1205.68

0.65

0.76

0.42

0.70

224.12

298.32

33%

25% 22%

48

I S M T Ltd.

Alloy steel, nec

1209.02

1220.2

0.60

0.67

0.90

0.80

286.45

262.66

24%

49

Lloyds Steel Inds. Ltd.

Hot rolled coils, strips, sheets

1722.59

2208.16

0.80

0.76

1.21

1.62

86.47

106.63

5%

5%

50

Ramsarup Industries Ltd.

Wires & ropes of iron & steel

1275.46

1757.56

1.01

1.04

12.01

2.39

111.6

160.61

9%

9%

51

Bhushan Power & Steel Ltd.

Flat products

2727.93

3494.26

0.80

0.83

0.48

0.46

676.33

1107.66

25%

32%

52

Facor Steels Ltd.

Flat products

425.96

479.28

0.86

0.91

13.05

11.44

15.39

14.52

4%

3%

53

Ratnamani Metals & Tubes Ltd.

Tubes & pipes

576.71

845.6

0.78

0.68

1.74

2.00

128.34

180.56

22%

21%

54

Viraj Profiles Ltd.

Flat products

2492.44

4006.19

1.04

0.75

5.83

6.18

252.96

309.29

10%

8% -10%

55

Shah Alloys Ltd.

Stainless steel

1265.2

921.93

0.87

0.86

2.59

1.89

110.07

-89.48

9%

56

Ferro Alloys Corpn. Ltd.

Ferro alloys

191.43

302.57

0.36

0.31

0.86

1.26

38.08

92.93

20%

31%

57

Sunflag Iron & Steel Co. Ltd.

Other alloy steels, nec

799.36

957.53

0.75

0.77

1.85

2.17

100.7

112.65

13%

12%

58

Mukand Ltd.

Flat products

1870.51

1979.36

0.54

0.65

1.43

1.42

322.09

303.35

17%

15%

59

Tata Steel Ltd.

Finished Steel (Non-Alloy Steel)

17914.77

20446.38

0.33

0.31

0.54

0.51

7332.12

8841.29

41%

43%

60

Sujana Metal Products Ltd.

Flat products

726.34

750.53

0.93

0.99

3.14

2.76

71.89

69.19

10%

9%

61

S A L Steel Ltd.

Sponge iron

266.25

378.35

0.84

0.69

0.74

0.76

45.57

73.82

17%

20%

62

Nava Bharat Ventures Ltd.

Ferro alloys

565.2

907.23

0.54

0.61

0.69

0.85

195.7

413.5

35%

46%

63

Ruchi Strips & Alloys Ltd.

Cold rolled coils, strips, sheets

475.29

451.71

0.91

0.95

17.21

11.16

10.61

13.27

2%

3% 40%

64

Jindal Steel & Power Ltd.

Iron & steel

3521.51

5395.57

0.36

0.38

0.25

0.35

1396.38

2150.35

40%

65

Zenith Birla (India) Ltd.

Tubes & pipes

378.93

479.97

0.86

0.78

3.26

3.64

38

47.57

10%

10%

66

Everest Kanto Cylinder Ltd.

LPG cylinders & other gas containers

340.85

344.56

0.77

0.62

2.87

1.26

90.44

92.68

27%

27%

67

Uttam Galva Steels Ltd.

Flat products

2590.78

3185.74

0.78

0.87

1.63

1.74

336.17

406.05

13%

13%

68

Welspun-Gujarat Stahl Rohren Ltd.

Tubes & pipes

2725.43

4045.71

0.79

0.78

1.31

1.30

317.68

715.32

12%

18%

PBIDTA = Profi t Before Interest Tax Depreciation and Amortization. Previous Year: 1st April 2006 to 31st March 2007. Latest year: 1st April 2007 to 31st March 2008.

62

february 28, 2010 | industry 2.0

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large manufacturing companies

Creditors Days Available (Days)

Raw Material Holding Period (Days)

WIP Holding Period (Days)

Finished Goods Holding Period (Days)

2007

2008

2007

2008

2007

2008

2007

2008

2007

14.25

13.57

27.59

20.64

48.91

48.49

0.53

0.29

9.19

Composite Score

2008 13.95

90.4 91.0

65.03

74.82

135.59

102.44

106.87

53.55

0.06

0.06

14.95

12.76

35.64

55.92

12.84

26.74

60.97

66.15

9.25

9.17

29.49

14.07

91.7

43.99

55.16

46.5

39.52

24.48

26.55

15.79

19.53

17.78

18.59

93.9

77.84

87.47

59.28

77.38

15.92

16.54

25.59

27.19

8.97

13.38

95.0

22.34

15.88

182.45

170.82

27.26

23.03

0.84

0.93

13.1

9.76

96.8

28.54

28.3

44.86

29.63

22.01

27.55

7.26

4.94

12.17

19.22

97.6

50.46

55.26

132.46

47.31

69.35

76.37

17.06

12.85

7.5

6.05

97.9

75.09

62.15

56.8

48.92

49.4

38.34

14.82

19.58

11.46

12.67

98.2

26.17

25.97

38.41

23.43

66.43

49.74

3.74

3.91

19.23

17.63

99.9 100.1

31.07

27.64

91.8

85.7

25.14

15.37

34.76

39.33

11.96

6.47

71.6

64.24

100.03

81.3

109.29

101.3

10.77

9.23

9.57

9.72

101.1

26.61

32.85

94.33

67.58

44.23

48.43

31.5

29.71

15.4

13.09

102.6

27.54

23.9

112.67

121.13

60.23

68.91

0.66

0.58

10.56

8.29

102.7

74.99

62.33

131.25

102.68

65.43

40.86

43.84

35.53

17.2

7.74

103.5

38.62

33.94

105.06

122.93

21.29

25.95

7.59

6.35

13.09

13.57

103.6

16.68

20.67

48.02

94.19

110.51

109.19

1.18

1.27

9.08

9.66

104.1

38.65

52.42

52.69

72.09

101.81

127.74

0

0.23

4.32

14.86

104.8

48.8

48.56

99.69

50.03

93.41

62.49

14.27

18.34

31.23

16.19

105.3

28.01

25.95

27.26

29.66

23.33

26.36

17.02

19.57

11.96

15.15

106.6

9.92

8.96

116.82

136.47

58.4

50.05

3.77

2.1

10.46

12.12

107.1

40.75

51.71

19.44

36.63

69.03

66.19

13.59

11.25

17.07

21.37

108.9

66.89

68.9

135.84

149.89

30.18

38.74

19.63

14.15

8.66

14.54

111.7

4.67

5.43

165.96

133.73

187.94

135.79

1.24

0.84

5.64

4.07

112.5

20.11

20.94

54.84

47.02

66.31

55

6.79

2.21

24.28

24.96

112.7 113.9

73

75.02

81.3

92.56

61.55

66.83

19.44

20.53

16.81

13.56

21.91

18.39

142.25

109.23

26.39

26.36

32.61

23.06

9.98

7.07

114.7

61.71

64.67

74.7

102.78

31.13

34.18

4.94

2.27

37.32

51.95

115.2

62.63

62.05

89.34

77.3

61.63

74.04

2.45

3.36

14.88

22.89

115.6

15.92

17.33

68.1

73.47

26.11

24.38

14.14

18.13

15.75

18.87

117.2

28.33

35.86

99.01

85.28

37.07

46.26

41.05

33.81

14.49

15.17

118.6

NA

10.84

93.8

21.17

NA

16.14

NA

35.55

NA

32.23

119.6 120.5

23.02

19.73

79.89

30.01

24.19

31.03

9.94

6.19

26.06

31.71

23.06

14.01

86.46

82.66

226.6

275.05

3.13

3.53

21.05

16.46

121.7

23.44

21.63

43.28

22.16

44.88

54.4

12.03

14.08

32.23

27.5

123.4

95.26

96.24

79.79

101.19

36.14

39.85

33.01

36.43

18.02

28.09

125.4

11.44

10.24

95.42

90.74

93.44

104.93

1.41

2.6

25.07

22.47

126.2

80.65

81.44

51.05

68.97

3.71

47.36

9.53

27.94

12.41

23.2

127.5

33.26

10.69

66.88

83.4

47.29

61.86

7.55

4.14

25.14

21.34

127.8

27.96

24.06

67.08

84.4

96.17

85.18

3.82

3.68

45.91

64.13

130.9

33.98

60.57

60.87

117.64

61.5

84.91

23.21

24.07

10.56

11.49

133.1 133.2

29.14

18.33

111.26

92.13

91.58

68.13

9.04

7.63

35.92

34.1

50.19

45.39

129.51

114.3

47.3

30.99

40.88

41.77

31.47

26.09

133.7

31.55

44.72

26.23

87.97

65.95

162.43

30.56

49.53

2.42

12.09

134.2

24.55

27.23

171.06

174.32

66.01

77.54

7.17

8.2

16.38

13.43

135.0

56.41

58.02

145.16

177.43

35.31

54.23

10.61

10.35

37.56

35.9

136.2

Net Sales = Total Income – Other Income - extra ordinary income – prior period income – indirect taxes www.industry20.com

ferrouS

Debtors Days Available (Days)

METAls

WORKING CAPITAL CyCLE

Source: CMIE Prowess database

industry 2.0

- technology management for decision-makers | february 28, 2010

63


supply chain metrics CORPORATE FINANCIAL PERFORMANCE Rank

69

Company Name

Industrial Activity

Net Sales (Rs. Crore)

Cost of Goods Sold (as % of sales)

Fixed Assets Turnover Ratio (FATR)

PBDITA (Rs. Crore)

PBDITA/Net Sales

2007

2008

2007

2008

2007

2008

2007

2008

2007