Industry 2.0 September 2010 Part - I by bhupinder sharma

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editorial Vol. 10 | Issue 01 | september 2010 | Vol. I

Managing Director: Dr pramath raj sinha Printer & Publisher: Kanak Ghosh Editorial Group Editor: r Giridhar Associate 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 Assistant Production Manager: 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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CelebRatinG AN INDustrIAl

Revival

R Giridhar editor@industry20.com

anufacturing in India is on an upswing. this is a welcome sign—after a muted year. sectors like capital goods, consumer products and autos have registered strong sales numbers in the past few quarters—and many production facilities are running at full capacity to capitalize on the robust demand. the flurry of press releases in recent weeks announcing capacity expansions, new facilities and product launches reinforces the view that confidence in the economy is strong, and that producers are bullish about future prospects. powering this positive sentiment is unabated consumer demand from small towns and rural areas. the aspirations and needs of the country’s vast hinterland are being increasingly shaped by television programming, and are supported by enhanced rural incomes. As consumers become better informed about choices, companies are scrambling to re-jig product offerings through re-design and re-engineering. this vast, emerging market has also created new profitable niches and opportunities for smaller companies— spawning new industrial activity. the Government has also been investing large sums of money to create and improve infrastructure, and has been opening hitherto closed sectors to private investment. the consequent acceleration of activity in areas like power plants, metro railways, highways, ports and civic

industry 2.0

infrastructure has boosted the cement, steel, and the capital goods industries. It has also had a cascading positive impact on suppliers to these industries. With the economy predicted to maintain its pace, all these sectors are likely to do well—and this has spurred additional investments in capacity expansions and new facilities. then there is the growing trend of foreign investment in manufacturing. overseas companies that were hitherto dealing in imported and traded products are setting up manufacturing and assembly plants to reduce costs, customize offerings and increase speed-to-market. other multinational companies are expanding capacities to service regional and international markets from India, or are moving production here to benefit from lower costs and enhanced engineering capabilities. this trend is bringing in new technologies, systems and processes into the country, and helping improve product quality and manufacturing skills. With the defence and aircraft purchase offset clauses set to kick in, the manufacturing sector will experience more activity. this issue of Industry 2.0 magazine is a celebration of the revival in Indian manufacturing—and our effort to honour and recognize manufacturing organizations that have demonstrated exceptional performance in the year gone by. And even while we recapitulate history, we believe that our top 500 will shine even brighter in the years to come.

- technology management for decision-makers | september 2010 | Vol. i

contents

TOP

2.0

Manufacturing

Companies

Cover design: Binesh Sreedharan

58 cover story

Every year Industry 2.0 analyzes and presents a list of the nationâ&#x20AC;&#x2122;s largest and most profitable manufacturing companies. In our 8th annual ranking of the Top 500 companies in India, we present companies, both large and small, that have turned in an exceptional performance during the financial year 2009.

september 2010 | VoL. i | industry 2.0

59 60 98

SeCtor reportS Fertilizer Copper Aluminium Tyre & rubber Steel

108 110 111 112 114

event report 12 Re-engineering your supply chain

facilities & operations 28 Churning profits from plant maintenance

A series of supply chain events, organised by Industry 2.0, held in Chennai, Delhi and Pune, focused on ways to optimize supply chain practices.

Plant personnel are increasingly looking at Factory Intelligence software to achieve profitable production.

market dynamics 16 Security software market to grow The security software market is expected to swell in the coming years, particularly the IAM and web security software segments.

manufacturing technology 20 Establishing power plant equipment production facility

Methodology Top 500 companies Sectoral rankings

The rapidly changing scenario in the electric power generation industry is providing tremendous opportunity to equipment manufacturers.

- technoLogy management for decision-makers

information technology 36 Improving asset utilization RFID integrated with MES provides a much higher level of transparency and productivity.

management & strategy 42 Investing across borders A report on Investing Across Borders (IAB), which compares regulation of foreign direct investment around the world.

54 Benefits of spend management solutions The solutions have been an invaluable resource for empowering procurement teams.

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contents in conversation

JOSE HERNANZ MANAGING DIRECTOR ALFA LAVAL INDIA

BHAVIN B MAVANI COUNTRY MANAGER – INDIA & THAILAND KAROLIN MACHINE TOOL

K R CHANDRASEKAR EXECUTIVE VICE PRESIDENT – SALES LAPP INDIA

LARS SORENSEN MANAGING DIRECTOR DAMCO (SOUTH ASIA)

BRETT CHOUINARD CHIEF OPERATING OFFICER ALTAIR INC

VALMEEKA NATHAN HEAD – ENGINEERING SERVICES INFOSYS

departments

advertiser index

Editorial ...........................................01

Chep Equipments..........................................49

Mint PaanIT ad ..............................................99

Industry Update ............................. 06

Comsol .........................................................37

Mitsubishi Electric ..........................................3

DHL ................................................................7

National Instruments ....................................55

Diesl .............................................................29

Floeter India .................................................43

Exxon Mobil ...........................................IFC, 35

Schneider Electric .........................................57

Faro ..............................................................47

Siemens .......................................................53

Fuji Electric Co ............................................. BC

Siemens UGS PLM ........................................17

HAAS Automation ...........................................5

Swagelok ......................................................41

JCB India Ltd.................................................19

Tagutec ....................................................... IBC

Karolin Machine Tools ...................................25

Think Digit Shopping ...................................105

LG...................................................................9

Uniworld Logistics .........................................39

Technology Update ........................ 18 Product Update............................ 115

reader’s letter Dear Editor, I went through the Apr-May 2010 issue of Industry 2.0, and I quite liked the Cover Story “Modernizing The Casting Process”. — viraj naidu

managing director, disa india ltd.

september 2010 | VoL. i | industry 2.0

- technoLogy management for decision-makers

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industry update Industrial Growth Slips to 7.1% In June

he industrial growth in June has witnessed a decline to 7.1 per cent in June. This is following eight consecutive months of double-digit year-on-year increases in the official index of industrial production (IIP). Sector Capital goods Consumer durables Intermediate goods Basic goods Consumer non-durables

Growth Rate 9.7 per cent 27.4 per cent 8.7 per cent 10.7 per cent 1.3 per cent

Montek Singh Ahluwalia, Deputy Chairman, Planning Commission said that though the industrial growth in June was a little bit lower, a deceleration was expected. He, however, was hopeful that the industrial growth in the current fis-

cal will bounce back to a very high single-digit growth in factory output, in comparison to the average 10.5 per cent recorded for 2009-10. As per the data, the three major constituents of the IIP, witnessed lower year-on-year increases for June as compared to the same month of 2009, viz., manufacturing (7.3 per cent versus 8 per cent), mining (9.5 versus 14.2) and electricity (3.5 versus 8). However, some of the leading sectors within manufacturing continued to witness good growth. For e.g., the growth rates for capital goods and consumer durables stood at 9.7 per cent and 27.4 per cent in June as compared with the June 2009 levels of 13.4 per cent and 16.2 per cent, respectively.

National Innovation Council On anvil

he Prime Minister of India, Dr Manmohan Singh, has approved the establishment of a National Innovation Council to prepare a road map for the decade of Innovation 2010-2020. Sam Pitroda, Advisor to the Prime Minister on Public Information Infrastructure and Innovation, will head the National Innovation Council. The primary function of the

council will include developing an Indian model of innovation focusing on inclusive growth and creating an appropriate eco-system conducive to foster inclusive innovation. The council will also delineate policy initiatives within the Government to spur innovation. The other functions will include the setting up of Sectoral Innovation Councils and State Innovation Councils.

JFe Steel to Strengthen Base In India

okyo-based JFE Steel has signed an agreement with JSW Steel to take an equity position in JSW Steel and to provide the company with technical assistance. As per the agreement, JFE will pick up 14.99 per cent stake in JSW for Rs 4,800 crore. JFE had earlier on November 19, 2009 had

september 2010 | VoL. i | industry 2.0

signed a strategic collaboration agreement with JSW Steel. As per the agreement, JFE Steel will provide JSW Steel with technical assistance for the production of automotive steel and the implementation of operational improvements at JSW Steelâ&#x20AC;&#x2122;s Vijayanagar Works.

- technoLogy management for decision-makers

event update India Chem 2010

The event will showcase products, machinery, equipment and developments in the chemical industry. Venue: NSE Complex, Goregaon, Mumbai Tel: +91-11-23316540 Date: E-mail: rkbhatia@ficci.com 28 October to Website: www.indiachem.in

30 October 2010

International Industrial expo & Conference 2010

The event will have an exclusive display of industrial machinery, machine tools, automation, fire and safety, automobiles and auto components. Venue: Haridwar, Uttarakhand Tel: +91-172-2274801 Date: E-mail: contact@industrialexpos.com 18 November to Website: www.industrialexpos.com

21 November 2010

Rajkot Machinne tools Show 2010

The event will showcase engineering, machine tools, automation and automotive technology. Venue: Race Course Ground, Rajkot, Gujarat Tel: +91-79-26851511 E-mail: kmg@kmgindia.com Date: Website: www.kmgindia.com 24 November to

28 November 2010

International Industrial expo & Conference 2010

The event will have an exclusive display of industrial machinery, machine tools, automation, fire and safety, automobiles and auto components. Venue: Jammu, Jammu & Kashmir Tel: +91-172-2274801 E-mail: contact@industrialexpos.com Date: Website: www.industrialexpos.com 17 December to

19 December 2010

Wind Power India 2011

The event will showcase new technologies, research and development and major innovations for the wind and its ancillary industry. Venue: Chennai Trade Centre Complex, Chennai Tel: +91-20-26613832 E-mail: info@windpowerindia.in Date: Website: www.windpowerindia.in 7 april to

9 april 2011

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SUNDAY

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EVERY HEM, BEAD AND STITCH IN THE RIGHT PLACE AT THE RIGHT TIME. • • • • • • •

Fashion is all about being up-to-the-minute. That’s why Fashion Week choose DHL as their logistics partner, and a supporter of designers everywhere. With a market-leading international network, DHL Express delivers to and from hundreds of destinations all over the world, offering our customers speed, precision and local expertise whenever and wherever it is needed. After all, an event like Fashion Week can’t afford to be even a second out-of-date.

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17.08.10 09:50

industry update M&M Wins Bid to acquire SUV Giant

Gati To Demerge Shipping Division

(L-R) Rajan Wadhera, Chief Executive – Technology, Product Development & Sourcing (Automotive & Farm Sector); Rajesh Jejurikar, Chief Executive – Automotive Division; Dr Pawan Goenka, President, Automotive & Farm Sector; Anand Mahindra, Vice Chairman & Managing Director, Mahindra Group; Bharat Doshi, Executive Director & Group CFO; V S Parthasarathy, Group CIO, EVP – Finance and M&A, M&M and Corporate IT and Pravin Shah, Chief Executive, International Operations, Automotive and Farm Sector at the press conference in Mumbai.

ahindra & Mahindra (M&M) has emerged as the preferred bidder for the acquisition of a majority stake in South Korean sports utility vehicle (SUV) maker, Ssangyong Motor Company (SYMC). The preferred bidder status would require it to enter into a Memorandum of Understanding (MoU) with SYMC, followed by a detailed due diligence process. SYMC is a Korean manufacturer of auto and aggregates, with seven models under five brands. The seven models include two large-sized sedans, four SUVs and one multi-purpose vehicle (MPV). Established in 1962, SYMC has

more than 1,200 dealers globally. The company has a manufacturing plant for gasoline and diesel engines and axles. Following the conclusion of the strategic acquisition, SYMC is likely to continue to function as an independent entity with Korean management. “Korea is one of the world’s leading centres of automotive excellence and Ssangyong brings with it a rich legacy of research and development and innovation. Mahindra and Ssangyong will create synergy, which will make us significant global players,” said Anand Mahindra, Vice Chairman and Managing Director, Mahindra Group.

essar Shipping Ports & Logistics to Demerge

ssar Shipping Ports & Logistics Limited (ESPLL) has decided to demerge its shipping, logistics and oilfields businesses into a separate entity. The company Board of Directors have approved the proposal. The demerger would create two separate entities, named Essar Ports (existing ESPLL) and Essar Shipping (‘Resulting Company’). The company strategy also includes merger of two wholly owned investment subsidiaries into ESPLL. As per the scheme, ESPLL will transfer its shipping, logistics and oilfields services

september 2010 | VoL. i | industry 2.0

businesses to its existing wholly owned subsidiary (‘Resulting Company’). Ernst & Young has submitted a report on the share entitlement ratio, whilst IDFC Capital has provided a fairness opinion to the Board of ESPLL. ESPLL has a port capacity of 76 MTPA, comprising 46 MTPA at Vadinar and 30 MTPA at Hazira. The company is meanwhile planning to increase its ports capacity to reach 158 MTPA by 2013. It has earmarked a total investment of Rs 8,200 crore towards this business, of which Rs 4,600 crore has already been invested.

- technoLogy management for decision-makers

yderabad-based Gati Limited has decided to de-merge its shipping division into a wholly owned subsidiary, named ‘GatiShips’. The move is with an aim to allow the company to focus on the core segments of express distribution and supply chain, with a special focus on the cold chain. The company has also decided to establish a new division for supply chain and cold chain. Under the brand ‘Gati RedSun’, the new division will offer cold and ambient supply chain solutions. The strategy is expected to allow it to bring into alignment its existing subsidiary and the Kausar brand as a product offering under the new division. Under ‘Redsun’, the company will offer complete E2E cold chain solutions comprising temperature sensitive storage and product life cycle management. The other product lines under this brand will include managed services for contract logistics, services for distribution value added services, re-engineering and consultancy services and business process outsourcing services. The restructuring plan is part of the company’s comprehensive ‘Go to Market’ strategy for its 2014 silver jubilee vision, which includes to turn into a half a billion dollar (Rs 2,500 cr) company. The ‘Go to Market’ approach is in two main divisions, viz., Gati Express Distribution (surface and air) and Gati RedSun Supply Chain and Cold Chain Solutions. The Gati Express Distribution will comprise product lines and services including express parcel and freight services, transport solutions (full truck, LTL and rail network) and international express and freight. “Our strategy is clearly on a focused growth for the two major areas we see as the future of Gati - express distribution and supply chain (ambient and cold chain) solutions. As such, these are the two verticals in which Gati is now being restructured,” said Mahendra Agarwal, Managing Director & CEO, Gati Limited. The company also aims to focus on the auto, telecom and consumer electronics sector.

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event report Re-engineeRing YouR

SupplY Chain

A series of supply chain events, recently organized by Industry 2.0, has highlighted several ways to re-engineer the supply chain practices in order to gain better efficiency, more visibility and enhanced financial support.

upply Chain Focus Series 2010, the first phase of a multicity string of events organized by Industry 2.0, in order to enable senior managers involved in operations, manufacturing planning and supply chain to understand how to improve their supply chain management techniques, and reflect on the strategies and tactics needed to re-engineer their supply chains for the future, has just

concluded with an overwhelming response from the participants. This time the events were conducted in three cities, namelyâ&#x20AC;&#x201D;Chennai, New Delhi and Pune. Attendees in all the cities well endorsed the concept, arrangements and views kept by the speakers, who were all highly experienced and eminent professionals from different quarters of Indian supply chain and logistics sector. Besides traditional core manufacturing segments like Heavy Engineering, Textile, Pharmaceuticals, Automotive, Electrical Appliances, Paints and coats etc., each event found a fairly large group of representatives from the emerging and fast expanding segments like IT, Telecom, Food processing, Wood & pulp processing, Other agro industries, Footwear manufacturing etc.

Adroit Mentors

Ajit PAndAlAi

K. K. jAin

PrAshAnt AgArwAl

Amit muKherjee

mAnAs KumAr nAg

VirlAV BhAtiA

dhirAj KAlAni

g. goPAlAKrishnAn

sAndeeP shArmA

Vineet mehrotrA

rAmesh dorAiswAmi

roger Corns

K. VenKAtAChAlAPAthy

nitin AgArwAl

PrAdiP nAdKArni

september 2010 | VoL. i | industry 2.0

- technoLogy management for decision-makers

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The Chennai MeeT

ndustry 2.0 rolled out its Supply Chain Focus vehicle from Chennai, the well known city of logistical importance as the gateway to the South Indian market and trade. In the event, Amit Mukherjee, Head Supply Chain and Group CIO, RPG Group, discussed the needs and ways for building a supply chain for the future, highlighting the challenges, strategies and solutions from the fast rising

retailing business point of view. Ajit Pandalai, General Manager– Logistics, Blue Star highlighted the need for and possible ways for improving sales planning and using demand forecasting to manage supply chains. M K Nag, Chief General Manager (SME Business Unit) and K Venkatachalapathy, Deputy General Manager–(SME-SCFU) SME Business Unit, State Bank of India (SBI), described how the bank

is extending its support to speed up the supply chain functions. Vineet Mehrotra, Director–FMCG, CHEP India, explained the benefits of palletization in the logistics process, and specially drew attention on how use of standardized pallets can reduce the overall logistics cost. S Vasudevan, Manager–Purchase, Wabco–TVS, focused on several practically verified means to improve the supply chain efficiency.

Voices from some

attendees in Chennai “The networking opportunity with others from various sectors was indeed enriching both professionally & personally.” V. AnAnd generaL Manager (SaLeS LogiSticS) hyundai Motor india SriPeruMbudur

rAhul shrimAli Manager - PurchaSe ab Mauri india chennai

“It’s been a well organized programme, inviting professionals from different verticals of the Industry. The person from ‘retail’ vertical (VP – Spencer’s Retail) has been very candid in his speech on the problems faced by their industry, and the solutions they have worked out. SBI has showcased the importance of the banking institution—industry tie up. More so, about the involvement of MSMEs and the industry group.”

“I found the seminar quite value-adding. I appreciate the effort towards organizing it.” PrAteeK PAreKh Sr. Manager Strategic Sourcing aShok LeyLand Ltd chennai

t.A.B. BArAthi VP – SuPPLy chain WheeLS india Ltd. (tVS grouP) chennai

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“Excellent rhetoric on retail supply chain by Amit, and very valuable insight on eVFS and e-DFS from SBI. The Industry 2.0 event is info packed. Please keep arranging more such programmes.”

industry 2.0

- technoLogy management for decision-makers | september 2010 | VoL. i

event report

The I new Delhi MeeT

n the second event in New Delhi, Prashant Agarwal, Senior VP, Textile & Apparel Practice, Technopak Advisors, talked about creating customer value through efficient supply chain, opportunities in Indian supply chain and logistics industries and strategies for excellence. Venkatachalapathy of SBI explained how the bank has changed its modus operandi to strengthen the supply chain process through creating an online collaborative platform for the banks, buyers and sellers for facilitating transactions and financing across the (financial) supply chain. Dhiraj Kalani, Senior Consulting Manager at Wipro Consulting Services delivered his presentation on the need,

benefit and ways of measuring the performance of a supply chain. Keeping in view the retailing business, Sandeep Sharma, VP–SCM and Commissary, Barista Coffee Company, ran the attendees through the good management practices in some of the critical areas of supply chain like vendor management and cold chain for food supply. K K Jain, Deputy GM (Optimization), Indian Oil, focused on supply chain management in petroleum (downstream). Vineet Mehrotra of CHEP India showed how palletized movement can reduce the cost of logistics. Virlav Bhatia, VP–SCM, Reliance Retail (North), kept his presentation on modern ways of managing warehouses and stores.

Voices from some

attendees in New Delhi “Your workshop was really very good and well oraganized.”

“This was a wonderful, educative and interactive programme.”

l. n. shArmA Senior Manager – MateriaLS & LogiSticS Methodex SySteMS neW deLhi

sAndeeP sAxenA aSSiStant generaL Manager uSha internationaL gurgaon

“I am really thankful to 9dot9 team for organizing such a good event. It has not only shown the progress that our country is making about material handling and movement, but also the participation shows that people are now becoming aware about potential saving and risk involved in supply chain.”

“It was a great session meeting with various people from different companies. I would be happy to participate in such events in future.”

sAChin shArmA Manager – MateriaLS internationaL tobacco coMPany ghaziabad

s. K. dAsh generaL Manager LogiSticS Videocon induStrieS gurgaon

“I am from forest based industry, wherein we are in bulk movement of goods, like wood, coal, lime, paper. The event provided a good update on how the supply chain operators’ world is changing. Security issues in SCM was new to us. Barista Coffee model was an eye opener. Pallet sharing by CHEP provided clues for possibilities for collaborative working. Warehousing sector update was excellent.” dhArmendrA dAuKiA generaL Manager - raW MateriaLS Jk PaPer Ltd. neW deLhi

september 2010 | VoL. i | industry 2.0

- technoLogy management for decision-makers

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The Pune MeeT

une in Maharashtra being one of the major industrial cities of Western India, is quite an important logistics destination, thus the third event of this phase of Supply Chain Focus Series was conducted there. Ramesh Doraiswami, Vice President– Supply Chain and BKC, Johnson & Johnson Medical (Asia Pacific), through his presentation drew a picture of the supply chain that we will witness in the coming days. He also pointed out the steps that should essentially be followed to build a world-class supply chain. Venkatachalapathy of SBI drew attention on the importance of

integrating finance at all stages of supply chain, he also explained the facilities that the bank is extending to smoothen the process. Highlighting the challenges in the field because of the shifting trend of the modern supply chain, Nitin Agarwal, Project Manager, Miebach Consulting India, suggested the new focus areas, where attention must be paid. Dhiraj Kalani of Wipro highlighted how technology helps realizing the four perspectives that an organization takes up to mark the SC performance management system. Roger Corns, Director–

Sales, Automotive, CHEP explained why unitization and palletization are imperative in the coming days. Rajan Ekambaram Project Manager from Miebach talked on the ways to build modern warehousing and storage facilities. Pradip Nadkarni, CEO & President, Paradigm Inc., described a case study of supply chain optimization for spare parts. Ganapathi Gopalakrishnan, Senior Manager–Procurement, Reliance Industries stressed on the need and described the ways to build and manage a collaborative supply chain.

Voices from some attendees in Pune “ I feel the event provided a fantastic networking opportunity. Speakers were also very good. Other arrangements were also satisfactory.” shreedhAr VAidyA Senior Manager MateriaLS Mahindra hinoday induStrieS Ltd

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“I found the programme very useful as it gave us lot of time to network among the people from the field. Speakers also focused on diverse subjects, so there were no monotony. Some of the things discussed here are already in use in our firm, and those are yielding good result. Overall, it was a good effort.” lt. Colonel goVind tAhil generaL Manager – LogiSticS enercon india, Pune

“Your Seminar on ‘Re-Engineering Your Supply Chain For Excellence’ was indeed a great event. The speakers were high profile personalities from their fields. The team from State Bank of India specially were very informative on Industry Financing and the contents of their presentation have helped our Finance Team in Enercon India Ltd considerably.”

Quality of the speakers was good. Content was also fine. The event provided enough opportunity for networking.

luCAs john deP gen Manager - LogiSticS enercon (india) Ltd, MuMbai

B r deshPAnde Senior Store & exciSe officer rieco induStrieS Ltd Pune

industry 2.0

- technoLogy management for decision-makers | september 2010 | VoL. i

market dynamics

Security Software Market To Grow

Picture Courtesy: www.photos.com

As many organizations are planning to tighten their data security, the security software market will grow in the coming years. Among other enterprise software, IAM and web security software market will find the most importance.

The consumer security software market remains the largest security software segment, with 2010 revenue projected to reach $4.2 billion.

orldwide security software revenue is forecast to surpass $16.5 billion in 2010, an 11.3 per cent increase from 2009 revenue of $14.8 billion, according to Gartner. Although, the economic downturn slowed security revenue to seven per cent growth in 2009, organizations have indicated an intention to give priority to security budgets. “Most segments of the security software market will continue to grow over the next few years, although a significant degree of variation is expected between the more-established and less-mature technologies,” said Ruggero Contu, Principal Research Analyst at Gartner. “Overall, security will remain one of the fastest-growing areas within the enterprise software market.” Gartner analysts said security software markets will weather the current economic downturn better than in 2001 and 2002, because the market conditions

september 2010 | VoL. i | industry 2.0

are dramatically different in terms of maturity, penetration, confidence in IT, and geographic and vertical mix. “Security software vendors that have a balanced mix of channel, new license and maintenance revenue streams and flexibility in contractual terms, such as software as a service (SaaS), open source and outsourcing, have the strongest options for continued growth and to even out the risk,” Contu said. “Shrinking discretionary spending budgets have heightened competition for new maintenance and license revenue streams and placed a renewed emphasis on vendor performance and viability,” he added. The consumer security software market remains the largest security software segment, with 2010 revenue projected to reach $4.2 billion, up from $3.9 billion in 2009. The endpoint protection platform (enterprise) market is the no. 2 security software segment, with revenue on pace to reach $3 billion in 2010, up from $2.9 billion in 2009. The security software market continues to benefit from prioritization and demands related to compliance requirements, as well as the need to keep up with everincreasing sophistication and volume in the threat landscape. “During the next 6 to 12 months, products delivered as SaaS and appliances will continue overtaking traditional software

- technoLogy management for decision-makers

licensing as the preferred purchasing methods,” said Matthew Cheung, Senior Research Analyst at Gartner. “Delivery as a suite in sub-segments such as enterprise endpoint security, identity and access management (IAM), and web security will be the most prevalent product delivery types. Despite major vendors seeking to consolidate, opportunities exist for smaller niche players and product specialization, and local expertise is expected to remain a valued factor,” he added. Compliance remains an important driver across many segments, particularly user provisioning, security information and event management (SIEM) and mobile data protection. “The growing sophistication of the threat landscape—with malware composed of multiple components that can be installed after the initial infection and the exploits of socially engineered trojans, which trick end users into downloading and executing malicious files—will push organizations and consumers to invest in endpoint security products in coming years,” Cheung said. IAM is a critical component of enterprises’ security strategies. Gartner clients indicate that about eight per cent of their security budgets are currently dedicated to IAM. This area is composed of technologies with varying levels of maturity and adoption; overall, the IAM market is estimated to grow to more than $12 billion by 2014.

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technology update

Supporting Enhanced Automation Possibilities The new integrated Programmable Logic Controller (PLC) and robot controller from ABB helps provide powerful performance for robotic production cells. The AC500 PLC is expandable to meet changing requirements.

BB has introduced an integrated Programmable Logic Controller (PLC) and robot controller for robot cell applications. The new product offers cost saving, ease of use and powerful performance in a single unit. The unit combines ABB’s AC500 PLC with IRC5 robot

controller, making it an integrated unit and also helps in eliminating the cost and space of a separate PLC cabinet. Besides, it is also expected to reduce the time associated with the set up and operation of robotic production cells. The controller includes up to three local I/O boards plus bus communications for remote I/Os. It provides users with a single point of control for a range of production cell functions, including peripheral production equipment such as grippers, feeders and ancillary machines. All of the main communications standards, including DeviceNet, PROFIBUS

DP, CANopen and Modbus TCP are supported, as well as wireless communications. The controller is thus suitable for virtually any factory site. The product features a software framework, which helps simplify programming and operation and also helps remove the need to set up a communication infrastructure between the robot controller and PLC. The framework includes user friendly interactive displays on the robot controller HMI—the FlexPendant. The integrator can thus be started on a higher level and can concentrate on the specifics of the installation. The main benefit of the PLC is believed to be its flexibility. Using the Control Builder software helps programmers to develop a complete, unified development environment including all six IEC61131-3 programming languages and tools for configuration, debugging and visualization.

Realizing The Power Of ICT

wakening to a new era of Information and Communication Technology (ICT), the Indian Small and Medium Enterprises (SMEs) have found a voice for their silent revolution of establishing a strong base alongside large corporate houses and multinational corporations. They have realized that Internetbased services have become the need of the hour, offering a most-efficient way to reach out to millions across the country and outside. Although this phenomenon has become popular across sectors, there are a large number of SMEs who are yet to embrace this change. ICT tools help provide an impetus for sustainable development and growth for SMEs. Some of the benefits comprise: ● Cost-effective tool for marketing ● Streamlining business operations and verticals such as sales, operations, human resources and manufacturing processes

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● Increased productivity ● Better reach to existing and potential

clients by faster internal and external communication, and ● Enhanced relationship with customers and partners A recent conference organised by IndiaMART.com and Internet and Mobile Association of India in New Delhi on ‘Free for SMEs’, delved on maximizing the usage of Internet tools and solutions across the SME value chain. The event highlighted the significance of spreading awareness among SMEs to make them appreciate the potential impact of ICT tools in their businesses fully. Brijesh Agrawal, COO, IndiaMART.com noted that SMEs lack willingness to access Internet. “If they (SMEs) overcome this, all they require is 15 minutes to one hour of time in a day to effectively utilize the services of these online marketplaces and enhance their business prospects

- technoLogy management for decision-makers

tremendously,” he observed. Although the penetration level remains low among SMEs, they have reported gradual progress in use of Internet-based tools. Kumar Manish, Proprietor, Madhulika, said, “We have ensured automation of all our enterprises. ERP software is being used to control the business operations. Besides, we have also computerized various divisions in our company such as production, sales, purchase etc and heavily depend on bar code technology.” He further added that their website, www.madhulikaonline.com, powered by IndiaMART.com, has also been benefitical in getting bulk orders from across the country during festivals. From looking up for the meaning of a word to searching addresses online, the presence of Internet has affected our lives in every which way. For businesses across the industries, it is fast becoming bigger than than any other media.

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manufacturing technoLogy

estAblishing PoWer PlAnt EquipmEnt production Facility in india

Alone Will not ensure success With the rapidly changing scenario in the country’s electric power generation industry, the equipment manufacturers will find a huge potential, however, they will have to get prepared for the new era wherein the evolving partnership with the utility companies will create more challenges for them—in terms of volume, technology and efficiency. by rajabahadur v arcot and sharada prahladrao

ccording to ARC estimates, India which currently in terms of total electricity generation ranks sixth in the world, would require its existing generating capacity to be enhanced to at least 350 GW by the end of the 12th five-year plan. Assuming that the generating capacity goes up to 175 GW by the end of 2012, the challenge would be to bring to the grid an additional 175 GW, a monumental task if we go by the previous track record. The electric power industry faces numerous challenges that include equipment production capacity constraints apart from others. Currently, the power plant equipment production capacity in India is around 10,000 MW, with the State Owned Enterprise (SOE), Bharat Heavy Electricals (BHEL) contributing the bulk of it. All this is set to change in the next couple of years. While BHEL is enhancing the equipment production capacity in stages

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to 20,000 MW by 2012, other companies have announced their plans to enter this market. With the demand for electric power already outstripping supply by about 10 per cent, it is not surprising to understand investors’ interest in entering the power plant equipment market. Larsen & Toubro, JSW, and Reliance are setting up facilities in the country to manufacture power plant equipment through the joint venture (JV) route. Recent JVs and capacity additions include: L&T and Mitsubishi (4,000 MW); JSW and Toshiba (3,000 MW); Bharat Forge and Alstom (5,000 MW); NTPC–BHEL (5,000 MW); GB Engineering and Ansaldo Caldie (1,500 MW); Reliance Infrastructure and Shanghai Electric (10,000 MW). While these plans certainly look impressive, the new entrants and the country’s electric power industry have to overcome many challenges before they can make tangible contributions to help the

- technoLogy management for decision-makers

industry add the required generating capacity. Challenges on the human resource front, availability of special material, project engineering and management, adequate manufacturing capacity outside of boilers, turbines, and generators, quickly ramping up the ability to competitively meet the customer demands and their specifications, and such others are bound to confront the industry and the new entrants. Until now, the dominant utility companies in India have been SOEs, but moving forward the industry would witness private util-

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ity companies including merchant producers playing a greater role. Recently the State announced Ultra Mega Power Project (UMPP) schemes. Each UMPP will be of 4,000 MW capacity and they will be playing a major role in augmenting the countryâ&#x20AC;&#x2122;s generating capacity. The scheme involves the award of the contract on tariffbased competitive bidding. The other major shift is the use of super critical boiler technology in place of the conventional 200 and 500 MW plants currently in use. While it would be interesting to track the developments

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as they unfold, ARC believes that new market players must quickly act on all the challenges enumerated above. The special emphasis must be on ramping up their ability to competitively meet the customer demands and their specifications. They must focus on committed and reliable performance, and building their ability to deliver; and this poses serious challenges especially to new players. They have to build partnership relationships with major equipment suppliers, such as automation suppliers. Successful operation of utilities built

industry 2.0

with committed tariff will call for maximizing the plant availability, and this in turn calls for extensive use of asset management and optimization solutions. Integrated operation of plant-level automation systems, optimization systems, and asset management and other enterprise solutions are also required if utilities are to benefit from power trading operations. The cluster formation could be a way forward for companies to address the challenges on the human resource front. And this is probably happening with Tiruchirapalli (Trichy) in Tamilnadu emerging as a major hub. The establishment of BHELâ&#x20AC;&#x2122;s boiler plant has contributed to the city emerging as a hub. Cethar Vessels and GB Engineering are two homegrown companies vying for recognition as power plant equipment manufacturers. Cethar Vessels has alliances with companies, such as Riley Power, a subsidiary of Babcock Power, USA; Harbin Turbine, China; and Kraftanlagen Muenchen. Recently, GB Engineering signed an agreement with Ansaldo Caldie, Italy for manufacturing super critical boilers. The other hub could be Pune, where Thermax Babcock and Wilcox is located. ARC believes that companies interested in electric power industry and power plant equipment manufacturing should seriously evaluate the opportunities that India offers. Even though in recent months many companies have announced their plans to set up production facilities in the country, their success would be determined by their ability to forge relationships with other suppliers, so that they can deliver on committed performance. Rajabahadur V Arcot is the Vice President & GM, ARC Advisory Group, India.

- technoLogy management for decision-makers | september 2010 | VoL. i

manufacturing technoLogy

Jose Hernanz Managing Director Alfa Laval India

How is the Indian Process Plant Equipment industry shaping up? Over past few years Indian process plant equipment sector has gone through several phases of evolution. You will find the manufacturing facilities equipped with modern machinery, and they are producing very sophisticated equipmentâ&#x20AC;&#x201D;such as high pressure heat exchangers, spiral heat exchangers, multiwall vessels, air coolers, multi-tubular reactors etc. They have competent engineers, skilled technicians and qualified welders. The process equipment also demands various exotic materi-

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als to be used in the process, and Indian process equipment manufacturing is not lacking behind in any of the fields of technology, designs, materials, pressure & temperature handling capabilities, material handling and logistics. What are the latest trends in this industry as per your observation? Lately, we have seen a trend of global equipment manufacturers shifting their bases to Asia, India being one of the favoured destinations. They have brought the latest technologies, made significant investments in order to

- technoLogy management for decision-makers

improve the quality of India made equipment to be on par with their global competitors. This has led to resurgence in confidence in Indian manufacturing, which can be observed in many examples of Indian companies now going global. While competing in the global market place with players that are several times larger than them, Indian PPE (Process Plant Equipment) industry has recognized the significance of innovation and modern techniques across different dimensions. Concepts like TQM (Total Quality Management), Lean Manufactur-

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“Indian process plant equipment industry has recognized the significance of innovation” The Process Plant Equipment (PPE) industry has evolved primarily on the basis of the needs and demands to set up core process industries in India. It is of a vastly divergent nature with regard to the products manufactured, technology used and the equipment required by the process industry. It is also a highly capital and labour intensive segment with a strong engineering orientation—where the products are mostly custom built. Alfa Laval India is a company well known for its presence in the Indian PPE industry, manufacture and supply of key components and systems in separation, heat transfer and flow technology. In a tête-à-tête, Managing Director of the firm Jose Hernanz reveals his observations to P. K. Chatterjee, on the status quo of the industry. Excerpts...

ing, Six Sigma and Business Process Mapping have swept most of the organizations—as they pursue the promise of dramatically improved competitiveness through quality, service, productivity and profitability. What kind of recognition are the India-made PPEs getting in the international market? Today products manufactured in India are finding good footing in global market. India is being perceived as a huge potential hub for global manufacturing base for many leading global players. Many international compa-

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nies like Alfa Laval, J. L. Smidth, Atlas Copco, Sulzer, etc., already have their presence here, while others have technology tie-ups with renowned Indian equipment manufacturers. The internationally renowned consultants in the process industries like Flour Daniel, Bechtel, Foster Wheel, LG, Daelim, Jacobs, Kvaerner, Mitsui Babcock, Linde, ABB Lummus, Technip, Dow Chemicals, BASF, Udhe and Toyo Engineering have offices in India. They are increasingly using the Indian process plant manufacturers’ expertise in engineering and manufacturing for outsourc-

industry 2.0

ing—since they are in the process of creating global vendor database for the purpose of expanding their purchase options. What are the growth accelerators of this industry based on the status quo of the Indian manufacturing sector? Investments take place where there is market. Some slowing down activities in the other part of the world also made the investment diversions to countries like India and China. India got its advantage due to English language and skilled learned ready manpower for these fields.

- technoLogy management for decision-makers | september 2010 | VoL. i

manufacturing technoLogy Increasing domestic and international demands for quality products at competitive price can take this industry into a completely different trajectory as regards its growth. Additionally, there are global consultants scouting in Asia for wider and cost competitive purchase options. Mergers and acquisitions (followed by technology absorption) will also give the sector immediate boost in scale and global footprint, especially for those who want to stay abreast with the latest developments in the industrial world. Since economies of scales, higher technical expertise and experience coupled with manufacturing excellence bring down the production costs, we can see

Increasing domestic and international demands for quality products at competitive price, can take the process plant equipment industry into a completely different trajectory.” that the industry is in the process of consolidation with the smaller players acting as sub-contractors to the bigger players. Supply chain management with Small Scale Industries (SSI) is excellent in India. What are the apparent hurdles on the growth path of this sector? Despite a good progress, the sector has a long way to go before we can say that it has really gained muscles. On an average, the design and engineering part of the industry need to upgrade itself with the latest software and communication methods of international standards. The

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percentage of companies doing so is very small at present, and it is confined mostly to the bigger companies. The process plant equipment manufacturing sector, barring a few exceptions, is still following traditional manufacturing technologies. Few bigger companies use CNC machines, but most of the manufacturers who are small players cannot afford to invest in these machines. Automation in production processes like fabrication or welding techniques is not up to global standards. This results in inconsistent performance in areas like quality and precision. Poor infrastructure facilities here pull down on delivery and time schedules. Also, industry and labour laws in India need to be seriously looked into. Issues of safety, health and environment (SHE) are causes for concern in small and medium sized companies. They are often unable to convince big buyers that their SHE policies and their implementation within their factories are at acceptable levels. Often, despite having an acceptable product, they fail to prequalify for foreign orders. The technology in this sector globally has always been developed through mutual co-operation between the user, process licensor and the manufacturer. In India, user industries are not giving the domestic companies this opportunity of developing new products. They instead prefer to import the equipment. How are the Indian PPE manufacturers gearing up to be globally competitive offering modern technologies? In order to face the global market demands, the industry is in for stronger marketing focus with a strategic planning and a product development strategy in place.

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Today’s top most priority is to achieve—high quality and service at reduced operations’ costs. Many are entering into technology transfer agreements and technology tie-up to upgrade their products or processes. To make themselves more competitive, they are implementing latest ERP; relooking at their manufacturing methodologies, capacity expansions and downsizing to enhance cost competitiveness. Supply Chain Management (SCM) is looking at streamlining the entire supply chain; from supplier to manufacturer, right through to the final customer. SCM has the primary goal of reducing inventory, increasing the transaction speed by exchanging data in real time. Focus on CRM (Customer Relationship Management) analyses all aspects of interaction that a company has with its customers, whether it be sales or service related. Trend to go for the bought-outs has increased significantly, indicating more sub-contracting to avoid investments in standard or low-tech items in production. The industry is taking serious steps to improve productivity, reduce inventory and undertake measures for better financial management. What is your comment on the export potential for this industry? With a pick up in the domestic market, exports is not a priority for this sector. However, it does have good potential for exports. The majority of the exports are to the Gulf taking advantage of the investment in that region, and its proximity to western India has helped. At present the export market is likely to see a major thrust by companies who foresee better profitability and business prospects abroad, especially in the developing countries.

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KMT_Advert_Industry_2.0_210x280mm_Rev3_KMT_Anzeige_89x130mm 13.09.10 09:06 Seite 1

Waterjet Cutting Faster with 6,200 bar • • • • •

Increased productivity Reduced abrasive cost Improved cutting edge quality Ability to cut thicker materials Proven technology from the market leader

KMT GmbH • KMT Waterjet Systems Karolin Machine Tool Private Limited Indian Offices: Mumbai, Phone: +91-22-285-724-94 • Fax: +91-22-285-724-97 New Delhi, Phone & Fax: +91-11-255-091-11 www.kmt-waterjet.com • info@kmt-waterjet.com

materials & processes

“Reliable, easy-tooperate products will remain successful in the long run” Karolin Machine Tool, popularly known as KMT, is a wholly-owned subsidiary of KMT GmbH— KMT Waterjet Systems, Germany. The company is a leading provider of ultra high pressure pumps and related accessories for waterjet cutting. Bhavin B Mavani, Country Manager - India & Thailand, KMT, in an interview with P K Chatterjee, discusses the growth of the Waterjet Cutting technology in India and its future prospects. Excerpts...

Bhavin B Mavani Country Manager - India & Thailand KMT

How do you look at evolution of Waterjet Cutting as a technology over the years? The industry has been using pressurized water to remove sand and stones from mines or at constructions sites for decades, however, the precision Waterjet Cutting started finding its feet in the industry in the 1970s. In the initial years, this technology was used for cutting soft materials, using Pure Waterjet Cutting. As the industry sought for improvement in the productivity and overall efficiency, the technology further evolved to Hydro-Abrasive Waterjet Cutting to cut hard materials such as metals, alloys, composites, stones, glass and so on. Technological development

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and industrial need resulted into further advancements like multiple cutting heads, 5-axis robotics cutting, cutting with 6200 bar pressure etc.

a safe cutting method. If we talk about the green aspect, it is an environment friendly process as it does not produce any hazardous gases or fumes.

What are the main advantages of Waterjet Cutting technology? Waterjet Cutting has many advantages such as versatility, flexibility and ease of operation. Other advantages such as no heat affected zones, quick drawing-to-cut piece cycle, elimination of costly secondary operation, high material utilization with close nesting and no re-sharpening of tools—place Waterjet Cutting as a unique cutting process. One has to take basic industrial safety measures, however, this technology acts as

How would you compare Water Jet Cutting with Laser Cutting or Plasma Cutting? Well, many a time you will find more than one processes is available for an application but with detailed evaluation of all the aspects of the applications and the user’s need, one can select the most suitable process for that particular application. Waterjet finds its competitive edge in many applications over other cutting methods and the secret lies in the fact that it is a cold cutting process, which

- technoLogy management for decision-makers

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can cut a variety of materials (metallic as well as non-metallic), even with very high thickness. You will find applications in the field where Waterjet Cutting is the only cutting option available. How is the Indian industry adapting to this technology? Indian users started using this technology long back, however, the technology is becoming more popular over the last few years. The industry has witnessed the benefits of Waterjet Cutting and also its capability to cut a variety of materials with intricate shapes. This has increased the acceptance level of the technology significantly over last few years. Around 50 per cent of the users of this technology are into metal cutting and job shops followed by nearly 25 per cent of the users in the automotive 3D Pure Water Cutting. The rest are in to stone, glass, fibre cement, insulation and other material cutting. What are the main reasons for more installations in the job shops? Waterjet Cutting is a versatile cutting method wherein you can use the same machine to cut a variety of materials/jobs. This is the major attraction for job shops to serve a large base of the customers with single cutting machine. Also, the profits available in job

work charges, compared to reasonable operating cost of Waterjet Cutting, results in higher Return on Investment (ROI) and shorter payback period. Is there any other industry segment that has still to be benefited by adopting this technology? Everyday the industry is adopting Waterjet Cutting to newer applications and materials and I believe, there is no limit to it. But, I know of certain highly popular applications in Europe and USA, which are either not present in India or are just at its beginning. Such applications could be leather cutting, food cutting (cake, pizza, fish, vegetables, meat etc.), aerospace components, micro machining (cutting with small diameter jet), etc. What are the latest developments in this technology? While the need of industry is finding newer applications for Waterjet Cutting everyday, the manufacturers are also developing new products continuously to support that need. Ultra high pressure pump is considered to be the heart of a Waterjet Cutting system. Traditionally, the industry has been using 4000 bar (or 3800 bar) pumps in Waterjet Cutting but development of 6200 bar (90000 PSI) seems to be changing the rule of the game. Cutting, with 6200

Comparison of cutting technologies Attribute Warping / Deformation Material Hardening Burr Formation Need for Reworking Loss of Material Tolerances Hazardous Vapours Multilayer Cutting Material Thickness Non - Metallic Materials Multi-Head Application Composites

Laser Yes Yes Yes Yes Yes 0.1 mm Yes No < 25 mm No No No

Plasma Waterjet Yes No Yes No Yes Minimal Yes Minimal Yes Minimal 0.2–0.5 mm 0.1–0.3 mm Yes No No Yes < 80 mm > 250 mm No Yes — Yes No Yes

Source: www.kmt-waterjet.com

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industry 2.0

bar pump seems to be the way forward in the Waterjet cutting as it cuts faster and deeper with less consumption of abrasive, water and electricity per piece/component. Most recently, we have become the first one in the industry to have developed Waterjet Cutting pumps with 7000 bar (100,000 PSI) technology, which will be available to the market by 2011.

Complex shape metal cut piece

You mentioned about ’Green Aspect’, could you please elaborate the same in context of Waterjet Cutting? The entire Waterjet Cutting process is safe and environment friendly as no dust or hazardous vapours are produced. There is no need for cutting oils, gases or emulsions. While cutting with 6200 bar, you also save on electricity, water and abrasive consumption per piece, which also supports the ‘Green Aspect’. How do you foresee the future of Indian Waterjet Cutting industry? The Indian Waterjet Industry has grown rapidly over the last few years, and I believe, it will grow at an even faster pace in to the coming years. This will result in to demand for more competitive solutions, and the suppliers with most reliable and easy-to-operate products backed-up by strong after-market support will remain successful in the long run.

- technoLogy management for decision-makers | september 2010 | VoL. i

facilities & operations

Churning

Profits From Plant maintenanCe

With an increasing need to better visualize and control manufacturing processes, plant personnel are looking at Factory Intelligence software to undertake profitable production.

Picture Courtesy: www.photos.com

by aspandyar karkaria

Factory intelligence, a section of business intelligence can add a lot of value to the organization.

ndian economy expanded at a better-than-expected 7.4 per cent in 2009-10 and manufacturing has been at the forefront of driving this growth. There has been a renewed confidence in the sector, with more and more multinationals looking at India to expand their manufacturing facilities. The signs of a great revival are beckoning, especially after the sector lost some of its sheen during the industrial downtrend as a result of worldwide recession. While the country’s gross domestic output grew by 8.6 per cent in the fourth fiscal quarter, manufacturing cruised at 16.3 per cent.

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More Indian companies and the subsidiaries of the foreign multinationals are now looking at optimum utilisation of their facilities, and amongst others, sustain cost advantage. It is therefore getting incumbent on them to find ways to reduce wastages and rejections, ensure minimal downtimes of their plants and machinery and optimum production runs, build partnerships with reliable vendors and even pay due attention to the process of procurement itself. To do all this and more, businesses will increasingly require systems that can enable scientific validated decision-making to run a profitable and growing enterprise.

- technoLogy management for decision-makers

Many may argue that with the advent and spread of Enterprise Resource Planning (ERP), the use of information technology in manufacturing has come of age, and that this is the panacea to all the information gaps plaguing manufacturing. While not entirely untrue, ERP does not provide the necessary ‘method to madness’, but with time will become a part of the infrastructure. But what the enterprises will need is to make sense of all the information that the ERP contains such that the right information is available to the right people, in the right form and at the right time. We are talking about ‘Actionable Information’. This is about looking beyond the traditional reports and into the realm of business intelligence and the wave has already started building up with organisations now gearing up to take this leap. And lest it is seen just as a big enterprise

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Picture Courtesy: www.photos.com

facilities & operations

Factory intelligence application provides the necessary insights to the key decision makers thereby enabling them to undertake ‘profitable production’.

necessity, SMBs too will see a wide adoption of this necessary decision support tool. Only to focus on one specific area of importance, but which often gets a poor billing when it comes to MIS, is the plant maintenance activity. This is one of the areas where Business Intelligence (BI) applications called factory intelligence in this case, can add a lot of value to the organisation. Plant maintenance more often than not is neglected as the ‘greasing department’. Manufacturers continue to invest heavily in lean manufacturing, quality initiatives and continuous improvement programmes to boost performance and profitability. Yet, they battle manufacturing inefficiencies. Many companies have invested in sophisticated technology, such as human machine interface (HMI) and supervisory control and data acquisition (SCADA) packages, specifically to help better visualize and control manufacturing processes. None of these systems inherently stores the historical data needed to troubleshoot faults, machine failures and process issues. As a result, many fly blind, with virtually no information about how their equipment is performing. Beyond what they can see or touch, there is no tangible data with which to troubleshoot faults

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and product quality issues or to support recommendations for improving productivity. What companies need is a way to monitor machine and process parameters continuously, as well as a way to store data for analysis. In short, critical process information should be at your fingertips so you can ‘see the forest for the trees’. Unlike traditional data collection and data historian systems, factory intelligence application is designed for plant maintenance and engineering personnel. It allows them to monitor product quality, machine faults, utility usage and environmental factors that affect production. Factory intelligence application provides the necessary insights to the key decision makers thereby enabling them to undertake ‘profitable production’. It is necessary to understand the effect of process variables on the final yield. There exists a direct correlation between the process parameters and the quantity and quality of the final output. And one can ignore this vital insight at one’s own peril. Hidden herein are those small nuggets of costs, which if let to multiply can erode the bottom line, and if contained, can prove to be the proverbial ‘profit out of thin air’. Equally important is to understand the impact of downtimes on

- technoLogy management for decision-makers

the cost of the final product. The overhead cost, opportunity cost, cost of rejection and rework and the associated cost of maintaining consumables and spares inventory can all lead to erosion of profits. If the key decision makers have information related to Mean Time Between Failures (MTBF), Mean Time To Recovery (MTTR), machine history and associated details, a proactive action can result in reduced downtimes and thereby cost savings. Storing historical manufacturing data improves operator efficiency by clearly showing the relationship between operator activity and production results. Operator training is another area which can benefit from a factory intelligence application as it identifies the root cause of particular equipment going down. Factory intelligence applications allow the key decision-makers to analyse the plant operations across product lines, operators and shifts and across timelines. It also enables certain key capital investment decisions, a primary one being, if you should keep maintaining the machine or should you replace it. Business Intelligence applications are here to stay and increasingly so as a necessity. Decisionmakers do not have the luxury to spend time in making meaning out of the information overload they are subjected to. They need insights that can result in action. Factory Intelligence is one of the ways. Now plant maintenance departments can be profit centres too. As they say, no one can stop the idea whose time has come and business intelligence is set to be that idea. Manufacturing will never be the same again and plant maintenance is set to get its due place under the manufacturing sun. Aspandyar Karkaria is Sales Manager – India and ASEAN, Altair.

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facilities & operations

“Use the cables, which are designed for a particular application” As far as fire accidents are concerned, 15.48 per cent of these disasters in the state as of March 25, 2010 are attributed to fire caused by short-circuit and related electrical issues. Cables play a major role in these unfortunate events. In an exclusive interview, KR Chandrasekar, Executive Vice President—Sales, LAPP India, explains to P. K. Chatterjee, how use of safe cables can mitigate the risk of propagation of fire and yield of toxic gases during such an unfortunate mishap. Excerpts...

KR Chandrasekar Executive Vice President— Sales, LAPP India

What kind of accidents are happening in Indian manufacturing plants and factories as a result of using unsafe cables? Short-circuit fire accidents are the most common phenomena caused due to the usage of poor quality cables. In most cases, the material is not FR (Flame Retardant) which is a property of the insulation material to check the spreading of fire by itself and self-extinguishing. Further, since most of the building wires used are PVC, which contains chlorine, when the wire catches fire, the chlorine reacts with oxygen present in the atmosphere giving out dense toxic smokes. Also, it emits corrosive acids

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that cause irritation to humans who inhale these gases—eventually causing unconsciousness. Moreover, the dense smoke impairs vision and prevents people from locating a safe exit—which causes panic during these emergency situations. What should the factory or plant management do to mitigate the risk of such accidents? FRLS (Flame Retardant Low Smoke) PVC and Halogen free wires and cables can be quite useful to minimize these kinds of tragedies. FRLS PVC is a special grade PVC that limits the amount of smoke that is generated when the wire or cable catches fire,

- technoLogy management for decision-makers

and also at the same time it is self-extinguishing. However, the most effective way of dealing with these kinds of tragedies is using Halogen Free wires and cables. Halogen free wires and cables are special materials used for insulation and outer jacketing of wires and cables. These materials are free from halogens (namely chlorine, bromine, fluorine, iodine), which are the main cause for releasing huge amount of toxic smoke and corrosive acids when the wires burn. Sustained exposure to toxic smokes when inhaled leads to serious damage or even fatality. Since halogen free materials are free from these substances, halogen free wires

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What are the new technologies that are being deployed in the cable segment to enhance safety? Research based development and enhancement is the universal technique that is helpful in coming-up with safe as well as advanced technology, and this rule is applicable for the cable industry as well. Use of insulation materials, which are free from halogens (i.e. Halogen Free) and use of oxygen free copper is pivotal in enhancing the safety. What sort of actions should be taken by the Indian cable manufacturers to disseminate the concept of FRLS cables or halogen free cables? Educating masses is the most crucial initiative that will trigger awareness about the importance of FRLS cables or halogen free cables. Tactics like informative seminars on the ill-effects of inappropriate cabling, educative write-ups in technical journals and workshops for designers, consultants and users are highly effective in spreading the word about the usage of safe connectivity solutions. As an organization, we are also very upbeat about addressing the concerns attached with inappropriate usage of connectivity solutions causing many evitable accidents. Especially, the recent short- circuit fire accidents are glaring witnesses to the lapse of cabling, harming life and property, and are calling for attention of the users to go the safe- way. What is your opinion on perfect cable laying practices in plants and factories to reduce accidents? It is highly recommended to use the cables, which are designed

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for a particular application (stationary application, flexible or highly flexible application, torsion stress, festoon systems, outdoor use, direct burial). They have a special cable design and are tested accordingly. The broad assembly guidelines are based on some key points, which depend on specific applications. For exampleâ&#x20AC;&#x201D;required clearance space from the floor, walls and adjacent cables to be maintained meticulously, also it is necessary to maintain the bending radius conditions of the cable, and it is advisable to separate cables for different cable categories (Power, Signal and Control cables). What type of routine inspection is required for the cables used in factories and plants? The user must ensure that electrical systems and operating equipment are tested for their proper condition by an electrician or under the direction and supervision of an electrician. This has to take place before the first start up and following a change or repair before restarting. The intervals of checking must be set so that resulting defects, which are expected are promptly determined. The period of use of products can often only be determined empirically in the respective applications. The fixed cables and cords have a higher period of use and they allow longer checking intervals. Shortened intervals are recommended for cables and cords that are used at the limits of the permissible range. This especially applies with reference to minimum bending radius, or with reference to temperature range, or with radiation to (say sunlight), or with tensile loads, or with influence of surrounding

industry 2.0

Picture Courtesy: Achim Hering

and cables are the safest for human life.

In Sweden, this small fire house was loaded with cable trays full of cables. These were connected between the floors, causing cable penetrations between fire compartments. When the penetrants were installed, the Government invited their local firestop manufacturers to install their products. The kindling was placed below the trays. These kindling blocks were set on fire. The fire quickly engulfed all trays. Results were mixed. An enormous amount of smoke was generated before the fire was extinguished. Trays twisted and buckled.

chemical substances and unconfirmed durability and with water collection or condensation in the area of the connection points. Cables and lines should be subjected to a visual inspection with regard to changes to the appearance, at the latest when it must be feared that unusual (electrical, thermal, mechanical or chemical) overloading has occurred.

- technoLogy management for decision-makers | september 2010 | VoL. i

supply chain & Logistics

Lars Sorensen Managing Director Damco (South Asia)

“Inland waterways infrastructure in India is under-utilized” Project cargo logistics is on a rise in industries such as power, oil and gas and mining. And with the Government’s increasing focus on developing infrastructure, project cargo movement is set to get an impetus. The sector, inspite of its challenges, is therefore poised to grow higher in India. Lars Sorensen, Managing Director, Damco (South Asia), in an interview with Reshmi Menon, discusses the various growth opportunities of this sector and also elaborates on the prospects of inland waterways as a preferred choice for project cargo movement. 34

september 2010 | VoL. i | industry 2.0

How would you describe the growth of project cargo logistics in India over the years? Project cargo logistics has witnessed tremendous growth over the years in India. There are several factors which are driving this growth. India is witnessing rapid industrialization and infrastructure development. Government and private investors are investing in large scale infrastructure projects in energy, power, roads, ports, railways and irrigation. This is leading to increased demand in project logistics. Also, many Indian infrastructure companies

- technoLogy management for decision-makers

are winning large scale turn key projects in markets like Middle east, Africa and Latin America. This has resulted in the export of project logistics cargo from India. The procurement and implementation of project cargo is truly global now, and the transportation of project cargo material across global locations has increased manifold. What are the prime challenges faced by this sector? Project cargo movement requires careful planning and adequate attention to safety and security. The cargo transported in project cargo

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movement is usually over sized and hence require the use of heavy lift equipment and special trucks to transport the cargo. The cargo also needs bulk vessels, which can handle the cargo and carry the cargo safely and securely. The logistics and transportation infrastructure is one of the key challenges faced by the project logistics industry as the roads, bridges and ports are critical to the efficient movement of cargo. In India to transport project cargo one needs multiple clearances from various road authorities and other regulatory bodies. This also takes significant planning and detailed documentation.

dimensional cargo as compared to roads. Transportation through roads usually disrupts regular traffic and any break down can possibly affect the general public and the environment. Inland waterways on the other hand are relatively congestion free and offer a safe and secure mode of transport for the cargo. Also, we could consider deploying barges or smaller ships to transport the over dimensional cargo. However, the inland waterways infrastructure in India is under utilized in the current scenario. As a result we have not seen enough investments made in developing inland ports and connecting infrastructure.

As the project cargo volumes are expected to increase in the future, how can India gear up to meet this increasing demand? India needs to continuously invest in improving the overall transport and logistics infrastructure to prepare for the growth in project logistics. Ports, roads, bridges and other transport infrastructure need to be upgraded to boost project cargo logistics. We can also significantly ease the documentation and clearance process from the multiple road authorities to reduce the challenges involved in procuring the necessary approvals to move the cargo.

As challenges rise, how can companies (project cargo movers) maintain quality of services? There will always be challenges in the movement of project cargo and the project cargo service provider offers skills and experience in managing the complexities involved in the transportation of the cargo. More challenges would only mean extra planning and preparation for the successful completion of the movement of the cargo. Take for example, route planning. The route of project cargo movement has to be reviewed for possible bottle necks and challenges and adequate plans need to be drawn to meet these challenges.

Could you throw light on the challenges of project cargo movement through inland waterways? Inland waterways represent one of the best modes to move the large

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What are the major requirements of customers that every project cargo transporter should meet? The project cargo transporter must

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have access to special equipment and transport options to move large dimensional cargo. Such equipment is not very easy to find in all locations and hence the project cargo transporter needs to have a good industry network of partners. The project cargo transporter must also have a very deep understanding of the regulatory aspects of the movement of the cargo through roads or other modes like rail and inland water ways. The project cargo transporter must have good process to plan and prepare the door to door movement of the cargo. Most of the project cargo customers would be looking for experienced service providers who have handled several such movements. The service providers must also have good health, safety, security and environment management processes to ensure the safety of the cargo, personnel and environment. Overall the project cargo customers would be looking for capable, experienced and well networked service providersâ&#x20AC;&#x201D; who can come up with innovative solutions to transport their cargo safely and timely. How do you foresee the future of project cargo logistics in India? The future of the logistics industry is indeed very bright. India is one of the fastest growing economies in the world. This is boosting industrialization and rapid infrastructure building. In such a scenario the demand for logistics services is bound to increase in the future.

- technoLogy management for decision-makers | september 2010 | VoL. i

information technology

Picture Courtesy: imec.ie

With MES, the inventory manager needs a strategy, planning and testing to ensure successful implementation.

Bundling Technology And MES To Improve Asset Utilization RFID integrated with MES provides a much higher level of transparency and productivity. It covers a majority of MES functions like scheduling operations, production control, document control, data collection and performance analysis. by hemant satam

anufacturing Execution Systems (MES) integrated with Radio Frequency Identification Device (RFID) has shown sustainable benefits by streamlining and bringing higher visibility to inventory management. Thus, with best-in-class manufacturers adopting MRP (Manufacturing Resource Planning) and RFID due to various competitive reasons, the focus has shifted from ‘Why’ to ‘How’ to implement.

september 2010 | Vol. i | industry 2.0

With MES—as with all IT (Information Technology) solutions, the inventory manager needs a strategy, planning and testing to ensure successful implementation. The strategic plan is the basis of various steps required to be taken for deploying IT-related policies across the manufacturing organization. This sets the tone at a specific level to establish priorities or what requires to be changed. An analysis at this stage leads to Rapid Improvement

- technology management for decision-makers

Events (RIEs) and value stream maps, using which the inventory management team can carry out the lean manufacturing process. The strategy and planning activities revolve around capturing data on—on-hand stock, pipeline stock, storage and fleet locations, distance to the nearest warehouse, spatial needs, products that bring maximum profits, etc. It is also driven by alignment of IT with business objectives, ability to integrate innovation and creating competitive differentiation using the latest technologies. The software system is an integral and crucial element of the inventory management strategy. While RFID play a crucial role in the collection and management of such data, numerous software platforms are available to help enterprises build technology and

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information technology

evolution

The of RFID has made MESs and ERPs much more powerful, providing real-time information, making forecasts more accurate and improving decision-making. MES to improve asset utilization, market responsiveness, reduce finished goods inventory, build forward forecast visibility, reduce load turn-downs and vendor lead-times, minimize costs and maximize customer satisfaction. They allow loading planning components in a time-phases manner, to adjust historical sales data and retail price profile data, re-plan strategies for inventory planning for all products at every distribution node.

Customize MES for your needs

With the need among best-inclass manufacturers varying from faster and cheaper manufacturing processes to innovations to growth, MES need to be customized keeping strategic objectives

september 2010 | Vol. i | industry 2.0

in mind. Current MES packages come with collaboration features, web-based dashboards to store and view production systems and modules that can be plugged in to include new plants and warehouses in the MES. To ensure the customization meets your requirements, all your processes, plants and objectives should be put through a detailed analysis. You also need to select your software implementation partner very carefully. This is particularly so because current solutions have multiple features for a range of uses. The software implementation partner needs the domain expertise to understand your work environment and operations for which the MES has to be configured. There is also the challenge of integrating the MES with the Enterprise Resource Planning (ERP) application. If this challenge is overcome—and integration is easier now with the latest applications, integration partners and standards—it will create a truly robust and more holistic information system that can span the entire network of plants, sales offices, warehouses and headquarters. The Returns on Investments (RoIs) will thus be up to 50 per cent in two to three years.

RFID to the rescue

The evolution of RFID has made MESs and ERPs much more powerful, providing real-time information, making forecasts more accurate and improving decisionmaking. After being used for so long for automobile security, access control, wildlife tracking and toll collection, RFID has now entered the realm of contactless payments, supply chain and inventory management. One of the main reasons for the increased acceptance of MES and RFID is the emergence of mature software and

- technology management for decision-makers

system integrators, which have designed and developed new applications. For instance, RFIDbased returnable container tracking solutions and RFID-based asset tracking solutions. Shippers, receivers or transportation companies that seek to establish accountability for lost containers can use RFID-based returnable container tracking solutions. These solutions have Auto-ID. As the containers enter a ‘receiving’ area or leave a ‘shipping’ gate, appropriately-placed RFID readers read and record the uniquely-coded tags into the returnable container tracking system. This application allows the administrator to assign ‘shipping’ and ‘receiving’ queues to operators. Operators are then allowed access to assigned queues. Another solution that is becoming increasingly popular is the EPC Global Class 1 Generation 2, UHF RFID-tag based asset tracking solution. This solution uses a hand-held RFID reader. Encoded and printed tags are affixed to assets while the handheld reader-based asset management application reads the asset tags and displays the details to the user. This solution helps manage the entire life-cycle of the asset, starting from introduction into service to disposal and withdrawal from service. The back-end MRP application generates various kinds of customized reports for use by the IT support or marketing division. Such solutions have proven benefits as any inventory manager will attest. They are making the inventory manager’s dream come true. Days not so far off are to present more amazing applications to ease further the inventory managers’ jobs. Hemant Satam is the Delivery Head, Application Management, Datamatics Global Services.

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#225, ST Bed Extn., 5th Main Koramangala, 4th Block, Bangalore 560034. India. Phone: +91 80 â&#x20AC;&#x201C; 40833406 Email: logistics@uniworld-logistics.com Website: www.uniworld-logistics.com

information technology

â&#x20AC;&#x153;Simulation techniques are constantly evolvingâ&#x20AC;? Computer aided engineering (CAE), basically refers to a set of techniques, which help in assessing different aspects of a product that are generally designed by CAD. The main advantage of adopting this method is use of its ability to test and simulate a product without building it physically. Brett Chouinard, Chief Operating Officer, Altair Inc., talks to P K Chatterjee, on the advancement, growing popularity and potential of this technology. Excerpts... advancements in simulation data management, process capture and automation. What kind of difference in CAE application are you finding between developed and developing countries concerned? We find that companies in developing economies are entering CAE for the first time, but are very quick learners. They are learning from the approaches taken to similar problems in developed countries and are eliminating the learning curve. I notice that the engineers here are much more open to learning, and are eager to participate.

Brett Chouinard Chief Operating Officer Altair Inc.

What are the latest developments in the field of CAE? First of all, CAE simulation is to drive concept designs, more upfront CAE than later in the design phase. Then, coming up multi-disciplinary simulation and optimization, with emphasis on mass optimization using topology and topography methods. Statistics methods are now being applied to simulation through massive computing. Improved scalability up to 1000+ cores of some solvers like RADIOSS is quite significant. Also, there are noticeable

september 2010 | Vol. i | industry 2.0

What is your comment on the growing application of mechatronics in very common gadgets? The simulation of electrical circuits and solid state electronics has been around for quite some time. Likewise, the simulation of control systems using mathematical engines is also quite popular. Using CAE and MBD (multi-body dynamics) tools, we can also simulate structures and how they operate during their operation. The key is to link them together in an integrated system model. As of this time, there is a rather shallow penetration of this sort of system modeling but it is rising rapidly, and will continue to do so

- technology management for decision-makers

both for more common gadgets as well as complex electromechanical systems. How simulation techniques are evolving to offer more accurate results for very uncommon environments? Simulation techniques are constantly evolving to solve more complex physical phenomena with increasing accuracy. I expect that in the future, we will be able to simulate a large percentage of both common and uncommon environments with some degree of confidence. The key enablers of this success will be improvements in the solver engines, specifically in material and interface (contact) modeling as well optimization techniques to determine the complete simulation space for complex problems. What kind of steps are being taken worldwide to reach the simulation software to small manufacturers? There are three main issues for small companies entering into sophisticated simulation modeling. One is hardware to run the software, next is the software or softwares that will be needed to solve the potentially complex simulations, and the last is training to ensure that users can produce consistent accurate and verifiable results. Computing power is getting more accessible everyday through more powerful desktop computing, harvesting desktop computers in clusters usings software like Altairâ&#x20AC;&#x2122;s PBS Pro, and cloud compute power is becoming available to nearly anyone.

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management & strategy

Investing Across Borders (IAB), a World Bank Group initiative, compares regulation of foreign direct investment around the world. IAB 2010 provides selected indicators of foreign direct investment regulation in 87 economies. A report.

InvestIng

Across Borders

ike trade, foreign direct investment (FDI) has occurred throughout history. From the merchants of Sumer around 2500 BCE to the East India Company in the 17th century, investors routinely entered new markets in foreign dominions. In 1970 global FDI totaled $13.3 billion. By 2007 it was nearly 150 times higher, peaking at $1.9 trillion. The economic crisis slashed global

september 2010 | VoL. i | industry 2.0

FDI flows by about 40 per cent in 2009, affecting all economies, sectors and forms of investment. Mergers and acquisitions in highincome economies contracted the quickest after the 2007 subprime mortgage crisis in the United States contributed to banking and fiscal crises in Western Europe and Japan. The contagion gradually spread, affecting new investment in emerging markets and devel-

- technoLogy management for decision-makers

oping economies. Developing economies fared marginally better during the crisis. FDI in developing economies fell 35 per cent in 2009, compared with 41 per cent in high-income economies. With the global recession receding somewhat, FDI will likely recover in the near future. Most indicators signal that FDI will be higher in 2010 than in 2009. The recovery in FDI is good news for economies suffering

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management & strategy from the global economic downturn and seeking to stimulate economic growth. The benefits of FDI for economic development have been well established. A global network of 80,000 multinational corporations and 800,000 foreign affiliates has helped create millions of jobs, transferred technology, upgraded skills, fostered competition and contributed to the fiscal standing of many economies. Through capital spillovers, FDI has encouraged the adoption of new production technologies. Foreign companies have also stimulated knowledge transfers

onerous start-up procedures,

excessive licensing and permit requirements, and time-consuming export and import processes are among the factors that can make an economy less attractive to foreign investors. by training local workers, developing their skills and introducing new management practices and better organizational arrangements. Foreign investment has also helped break up cozy local oligopolies and cartels. Opponents of FDI point out that its impacts are often limited and in some cases detrimental— the consequences of crowding out local competition, enclave production with limited forward and backward linkages, and ‘race to the bottom’ effects often related to labour and environmental issues. While the main social argument for FDI is that it generates employment, job creation may be limited and work opportunities may even decrease

september 2010 | VoL. i | industry 2.0

if local firms are driven out of the market by increased competition, or if acquired companies are restructured. Critics also cite cases of severe pollution and environmental destruction caused by companies in the extractive and energy sectors. Though some of these criticisms are warranted, evidence for such claims is often based on narrowly-focused studies of certain industries and economies. While the potential drawbacks of individual investment projects should not be underestimated, most research and empirical evidence finds that, on balance, FDI helps foster development in recipient economies. The benefits of FDI are particularly amplified in economies with good governance, well-functioning institutions and transparent, predicable legal environments.

IAB indicators

The Investing Across Borders (IAB) indicators measure FDI regulation in four specific policy areas. They aim to complement existing measures of quality of business environments. Quantitative data and benchmarking can be useful in stimulating policy debate and action, both by exposing potential challenges and by identifying where policy makers might look for lessons and good practices. Indicators can also provide a basis for analyzing how different policy approaches—and different policy reforms—contribute to broader desired outcomes such as FDI, competitiveness and growth. The following examples illustrate how the areas of regulation measured by IAB can be reflected in foreign investors’ decision making. A company seeking to expand its global presence will assess its options before deciding on a location for its investment. One of the first determinants of loca-

- technoLogy management for decision-makers

tion is whether the company is allowed to enter and operate in a specific market. Though most economies have liberalized and opened most sectors to foreign investment, some industries continue to be protected from foreign competition. IAB’s Investing Across Sectors indicators find that while primary and manufacturing sectors are mostly open, some industries—such as media, transportation, energy and telecommunications—remain restricted in many economies. Some of the more restrictive economies include large ones such as China, Mexico, the Philippines and Thailand. Even if a foreign company can enter a particular sector, it may face other barriers to market access and operations. Onerous start-up procedures, excessive licensing and permit requirements, and time-consuming export and import processes are among the factors that can make an economy less attractive to foreign investors. IAB’s Starting a Foreign Business indicators show that in some economies—foreign companies must complete lengthy procedures to obtain investment approvals, adding weeks and sometimes months to the start-up time. In other economies, the procedures can be done online and take only a few days. Once a foreign company has been established in a new market, it is likely to need to acquire real estate for its operations. Administrative barriers to FDI often include difficulties associated with securing access to land. The ability to access land or buildings with secure ownership rights, at transparent prices, and with limited restrictions can be critical to a foreign investor’s decision on whether to invest in a new market. IAB’s Accessing Industrial Land indicators find that foreign

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companies cannot own land in some economies. In others, leasing land can take up to five months. And while most economies have both cadastre and land registry systems, less than half of those in the IAB sample have systems for sharing land-related data across agencies. A foreign company might also be concerned about its ability to resolve disputes with commercial partners. Complex commercial contracts require reliable and flexible dispute resolution mechanisms, and companies often prefer to have alternatives to court litigation. Investors favour environments where they have flexibility in deciding on arbitration proceedings and where outcomes are more secure and easily enforceable. Thus a stable and predictable arbitration regime, as part of the broader legal framework, is another factor that can affect conditions for FDI. IAB’s Arbitrating Commercial Disputes indicators show that economies generally recognize arbitration as a mechanism for resolving commercial disputes, although some do not have special arbitration laws. Party autonomy levels and enforcement mechanisms for arbitration awards vary. For example, some economies have adopted rules to ensure prompt enforcement of arbitration awards. In contrast, in other economies it takes more than two years to enforce a final arbitration award. The IAB indicators comprise measures of the characteristics of laws and regulations (de jure indicators), and their implementations (de facto indicators). • Investing Across Sectors indicators measure the degree to which domestic laws allow foreign companies to establish or acquire local firms. The indicators track restrictions on foreign equity ownership in 33 sectors, ag-

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FDI in high-income and developing economies, 1970–2009

gregated into 11 sector groups, including primary, manufacturing and service sectors. • Starting a Foreign Business indicators record the time, procedures and regulations involved in establishing a local subsidiary of a foreign company in the form of a limited liability company. • Accessing Industrial Land Indicators evaluate legal options for foreign companies seeking to lease or buy land in a host economy, the availability of information about land plots, and the steps involved in leasing land. • Arbitrating Commercial Disputes indicators assess the strength of legal frameworks for alternative dispute resolution, rules for arbitration and the extent to which the judiciary supports and facilitates arbitration. The indicators compare national regimes for domestic and international arbitration for local and foreign companies. The indicators are structured to reward good regulation and efficient processes. Transparent, predictable and effective laws and regulations are critical to ensuring that foreign investment

industry 2.0

results in a win-win situation for investors, host countries and their citizens. A solid, consistently applied legal framework gives investors confidence in the security of their property, investments and rights. The IAB project does not advocate for reducing all regulatory barriers, but hopes to improve understanding of how to maximize the development benefits of FDI through appropriate regulatory frameworks.

Goals of IAB indicators

The World Bank Group’s Doing Business project provides the methodological foundation for the IAB indicators. The Doing Business indicators compare regulation of domestically owned small and medium enterprises. Those indicators have helped stimulate hundreds of reforms worldwide and draw millions of visitors to their online database every year. Many users of Doing Business data—including governments, policy makers, academics and other stakeholders—have expressed interest in complementary indicators on regulation of foreign-owned companies. The

- technoLogy management for decision-makers | september 2010 | VoL. i

management & strategy IAB indicators aspire to meet different stakeholders’ needs for information, analysis and policy action. Foreign investors and governments concerned about the competitiveness of their economy’s business environment have a broad range of resources at their disposal. IAB does not provide a complete picture of economies’ investment climates and should be used in conjunction with other tools to analyze business environments, diagnose their strengths and weaknesses, and, if appropriate, guide reforms. IAB’s value is based on its ability to identify specific, actionable and practical steps that governments can take to increase domestic investment competitiveness in the policy and regulatory areas measured by the IAB indicators. The following features differentiate IAB from other data sources:

Actionable, reform-oriented indicators: The IAB indicators identify specific impediments to FDI in the legal, regulatory, administra-

tive and institutional frameworks of each economy covered. The indicators are reform-oriented because the identified problems can be addressed in the short and medium term to strengthen an economy’s investment climate. They are based on standardized questionnaires, allowing for straightforward international comparisons of results, providing examples of good practices and encouraging exchanges of information between economies. Local expertise: The IAB indicators are based on information collected from more than 2,350 local experts and practitioners representing leading law and accounting forms, chambers of commerce and investment promotion institutions. These experts bring a wealth of knowledge based on their experiences advising foreign investors on market entry and operations in their economies.

Focus on laws and their implementation: The IAB indicators evaluate the scope and strength of laws and regulations as well as, where possible, their implementation.

Audiences and uses for the IAB indicators Audience

Uses

Governments and investment promotion intermediaries

n Identify and share regional and international good practices that help

Foreign investors and site location consultants

n Facilitate decisions on global investment locations by complementing

Advisers and consultants on investment policy and promotion

n Identify legal, regulatory, and administrative impediments to econo-

guide policy advocacy priorities.

n Stimulate and advise investment policy reforms.

n Strengthen the credibility of information provided by investment promo-

tion intermediaries by using third-party evaluations of the investment climates. n Benchmark economies against one another to refine investment promotion strategies and publicize successes in improving investment climates. other information sources.

n Provide easy to use, practical indicators on the efficiency of investment

processes and the strength of investment laws as implemented worldwide and make them available online. mies’ attractiveness for investment.

n Analyze regional and global good practices to better target and design

advisory efforts.

n Foster competition to strengthen FDI regulations by allowing econo-

mies and regions to compare themselves.

n Monitor and evaluate the impact of investment climate reforms.

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- technoLogy management for decision-makers

Many economies have adopted modern laws and rules, but these are often not applied effectively. The combined measures of de jure and de facto performance provide a more comprehensive, realistic picture of business conditions. Periodic updates: The IAB report will become a regular publication measuring changes in FDI regulation worldwide. Similar initiatives have shown the power of regularly updated indicators to stimulate dialogue and actions that can lead to systemic, long-term reforms. IAB’s ability to capture and recognize these improvements on a regular basis gives political actors compelling tools for engaging in strategic communication and for initiating or sustaining reform momentum.

Evolution & limitations

The IAB indicators have limited thematic coverage. The four topics covered by this report were chosen from a wide range of policy variables that affect investment climates and influence investment decisions. These include the host economy’s market size and location, availability of natural resources, macroeconomic performance, infrastructure quality, labour and production costs and quality of governance and institutions. Many competitive factors (such as market size, location and natural resource availability) cannot easily be influenced by public policy. Furthermore, other policy-level drivers of FDI (such as macroeconomic performance, infrastructure quality and human capital) can only be influenced in the medium to long run. In contrast, most of the areas of business and FDI regulation measured by IAB can be affected in the short run and at comparatively low cost to governments, providing an excellent opportunity for near-term benefits.

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management & strategy In its conceptual and developmental phases (2006-08) the IAB project considered and tested indicators measuring policy areas such as employment of expatriate workers and managers, investment incentives and promotion, currency convertibility and repatriation, expropriation, breach of contract, public procurement, environmental and social regulation and intellectual property. The team ultimately decided on the more modest thematic coverage of the four topics presented in this report based on what was desirable, feasible and practical. IAB favoured topics that could be affected by public policy in the short term and information

well

A -designed, effectively implemented legal and regulatory framework signals to investors that foreign investment is welcome. that could be captured through surveys of local experts. It aimed for indicators that assess the treatment of a typical foreign investor and offer enough variation across economies to warrant the development of global indicator set. While legal and regulatory frameworks for FDI are typically not the primary drivers of investment decision, all other conditions being equal, they can tip an investment decision in favour of a particular economy. Strong, stable, legal and regulatory frameworks help create a more transparent, predictable business environment conducive to business and investment. Thus a welldesigned, effectively implemented legal and regulatory framework signals to investors that foreign investment is welcome.

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However, understanding the limitations of the IAB indicators is just as important as understanding their scope. This section gives an overview of the IAB project’s limitations in three areas: substantive, focusing on the content and thematic coverage of the indicators, methodological, concerned with the questionnaire design and data collection, and limits to the implications of the indicators, addressing their potential interpretation, uses and relationships with various economic and social data.

Substantive limitations

• IAB focuses on regulation of FDI, not portfolio investment. • Thematic coverage is limited to four discrete policy areas. • IAB focuses on national laws and, in some cases, on countries’ ratifications of international conventions. It does not focus on international investment agreements. • The project does not cover legal regimes for special economic zones (SEZs), export processing zones (EPZs), and other areas governed by special legal frameworks designed to promote FDI and exports.

Methodological limitations

• IAB is not a survey of investor or company perceptions. • IAB data is not based on a statistically significant sample of respondents in each economy. • The IAB indicators are not necessarily representative of all investment projects. • Data on the efficiency of administrative processes refer to each economy’s largest business city only. • For these data, the methodology assumes that an investor and its legal counsel have full information on what is required and that they do not waste time when completing procedures.

- technoLogy management for decision-makers

• The IAB indicators are not specifically designed to indicate whether treatment of foreign investors is more or less favourable than that of domestic enterprises.

Limits to interpretation and use

The IAB indicators do not examine whether more regulation is preferable to less. They focus on good regulation. IAB data should not be used as a proxy for government reforms in general, and governments should not assume that improvements in the indicator scores will increase FDI. Due to these and other limitations, the IAB indicators are only partial measures of the topics they cover. They are limited in scope and explanatory power when it comes to actual policies and business realities. Circumstances in each economy must be considered when interpreting the indicators and their implications for policies and the investment climate.

What’s next?

Investing Across Borders is a new initiative that the IAB team aims to continue to improve in the future. Over time the team hopes to increase the number of economies surveyed, introduce rankings and other direct comparisons for each topic measured, and engage a growing number of questionnaire respondents. Though there are currently no plans to expand the report’s thematic coverage to other areas of FDI regulation, this option will be considered if there is specific and sufficient demand from governments or other stakeholders to carry out the additional research. The IAB team also intends to leverage the report’s findings in the research, analysis, and reform advisory work of the World Bank Group and its partners.

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management & strategy

“Product engineering programmes should be approached more strategically”

Valmeeka Nathan Head of Engineering Services, Infosys

Competent product engineering service providers not only help a manufacturing company in introducing its products faster to market, but also they can boost the process of establishing the product in the market. The service offering portfolio of such an efficient partner company includes the entire lifecycle of a product from R&D, design, development to product support. In a tête-à-tête, Valmeeka Nathan, Head of Engineering Services, Infosys, explains the nittygritty of such services to P. K. Chatterjee. Excerpts... 50

september 2010 | VoL. i | industry 2.0

What are the benefits that a manufacturing company can derive through partnering with a ‘product engineering’ service provider? There are multiple benefits for a manufacturing company partnering with a product engineering service provider. Let me bring forward a few of them. First of all, in many cases, engineers of manufacturing companies are caught up with detailed engineering and programme management activities, which limits the time they could spend on innovation. By partnering with product engineering service providers, they can focus on the core of their businesses and innovate better. Manufacturers can also benefit from the multi-industry, multi-technology experience brought to the table by engineering service providers. For example, we applied our expertise in the advanced light composite material from the aerospace industry, to a leading trailer manufacturer—resulting in huge benefits, such as improved fuel efficiency and better

- technoLogy management for decision-makers

thermal insulation on their trailers. Thus, manufacturers benefit from the cross pollination of ideas. You know, winning combination of engineering expertise, engineering bandwidth (scale) and programme management are key for successful product engineering programmes. But often, due to the fluctuating nature of multiple capabilities and associated resource requirements, manufacturers struggle to meet cost, time and quality targets. By partnering with product engineering service providers, manufacturing companies get access to large pool of engineering expertise and engineering bandwidth. This enables them to rapidly scaling up in meeting product engineering challenges. Product engineering partners—due to larger base of their diverse customers, have the levers to smartly manage the fluctuating engineering expertise and bandwidth requirements in their customers’ (manufacturing companies) programmes. Thus, the manufacturing company gains from the smart management of fluctuating engineering capacity. What kind of capability assessment is necessary while choosing a ‘product engineering’ partner? Product engineering programmes should be approached more strategically, and there should be enhanced trust and alignment between the organizations. Continuous lowering of engineering spend can be achieved only by long-term partnership with joint commitment to strategic deliverables and disciplined governance mechanism at the highest level. Never decide the partner based on hourly rate alone. Contract is for leveraging partner company’s commitment, ownership of deliverables, systems and best practices. Product engineering programmes require systematically leveraging capable quality resources and

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best practices in the front-end activities for success of the product. Obviously, the impact of any ineffective engineering decision made during the early stages will be multiplied several hundred times during the later stages and haunt the product’s success. Hence, due consideration of all aspects of the product engineering partner is a must. Holistic assessment should be the priority, not just the rate card. Partner’s vision and focus on quality and robust processes is an important factor for succeeding in complex, long-term programmes. This is what the partner is expected to invest in, in addition to complying with the current established process and metrics. Partner’s ability to attract and retain the best engineering talent from the industry is very essential. In addition, ability to provide a model to absorb the knowledge gained into corporate knowledge systems, and periodically review estimation models are important. Similar programmes by the size and complexity—carried out by the partner company should be an important factor to be considered. It should be noted that, most of the time a product engineering partner’s exposure to the same industry may help in gaining early acceptance of the customer’s programme team and at best increase efficiency only; but innovation requires bringing in best practices from other sectors. Hence, the familiarity of the partner to a particular industry need not turn out to be a great advantage in the long-run, as this can also be achieved quickly with any other product engineering partner with less exposure in that particular industry. What are the areas where normally the partners extend their services? Depending on the maturity of the

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relationships, this varies from complete systems engineering to support—in select areas like concept design, detailed design, analysis and optimization, prototyping and testing, sustenance engineering. Generally, techniques like lean engineering, QFD (Quality Function Deployment), DFSS (Design for Six Sigma), VA/VE (Value Analysis / Value Engineering) etc., are leveraged during the various stages of product engineering for enhanced value. It is important to differentiate between the individual (brilliance) and the institutionalized contributions. How does the ‘product engineering’ partner help the company for its success in the market? This can be categorized into many ways. Say, by enabling to bring product innovations early to the market; while leveraging process innovations. Also, by optimizing the total cost of ownership (TCO) through smart management of fluctuating resource requirements and by employing better processes and techniques such as lean engineering, DFSS, VA/VE etc. Moreover, the partner helps in improving productivity and quality of the product through technology. For example, through application of Knowledge Based Engineering (KBE), partner engineers are enabling customers to carry out more complex and detailed design iterations quicker, which leads to better designed products in shorter cycle time. Service providers can also help customers (manufacturing companies) to grow in new geographies, where they do not have presence. Partner companys’ global presence can be leveraged to enhance their visibility in the emerging markets. Is it possible for any single partner company to take care of all aspects of ‘product engineering’

industry 2.0

while its scope/gamut is so wide these days? Yes, it is possible for a single partner catering to the end-toend product engineering needs of a customer during all phases of product engineering—provided the partner company is matured in expertise and scale to partner at various phases of the programme. For example, early phases like product portfolio analysis, product selection etc., require consulting expertise. Front end of the product development phases require systems engineering capabilities, and the later phases require strong programme management, design, analysis and optimization capabilities.

Product engineering partners have the levers to smartly manage the fluctuating engineering expertise and bandwidth requirements in their customers’ programmes. The success of a new product development programme lies in the ability and agility of the organization in assembling winning combination of various capabilities required, in a nimble manner, at various phases of the product development. How can such a partner help in enhancing post-sale product servicing facility of the manufacturer? There is wealth of product feedback that comes from the end customers’ experience. It is important to factor this into the development and sustenance activities for continuously enhancing the product performance, as well as for improving future products. Hence, it is vital for the product engineering service provider to partner in these phases.

- technoLogy management for decision-makers | september 2010 | VoL. i

management & strategy

Realizing The BenefiTs Of Spend ManageMent SolutionS Spend management solutions have become an invaluable resource for empowering procurement teams to act as important levers to help the organization achieve profit targets and competitive advantage. by anurag dixit

“A

penny saved is a penny earned,” said Benjamin Franklin. The spend management industry is built around the philosophy behind this quote. Spend management can be loosely defined as an approach to control and optimize expenditure; to ensure that money is spent in a manner most advantageous to building and selling products or services at a maximum profit.

september 2010 | VoL. i | industry 2.0

Spend management started gaining popularity in the mid 1990s as companies started focusing on process automation. With the use of improved software solutions that brought higher visibility into spending patterns and trends, companies began leveraging their spend by rationalizing vendors, controlling ‘maverick’ or out of contract spending and by using metrics like purchase price variance to ensure that they get the most out of every dollar

- technoLogy management for decision-makers

or rupee spent. Since purchasing teams are responsible for negotiating pricing and contracts, it is their responsibility to manage spend prudently. This makes spend management an activity that is normally overseen by the Chief Procurement Officer (CPO) or the head of purchasing; although, it is common to have a controller or some other finance official as a part of this exercise. In recent times, the global economic slowdown has had a

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Answers for industry.

management & strategy strong negative impact on the topline growth directly affecting the profits earned. This has put the focus on procurement teams and their ability to generate savings to bolster the bottom line. In this scenario, spend management solutions have been an invaluable resource for empowering procurement teams to act as important levers to help the organization achieve profit targets and provide the much needed competitive advantage. For example, to generate a crore rupees in profit, a company has to earn Rs 10 crore, if it has a 10 per cent profit margin, Rs 14 crore with a 7 per cent margin and Rs 33 crore with a 3 per cent margin. Aberdeen has seen enterprises achieve 5 to 20 per cent cost savings for each dollar brought under management. Comparing the cost of generating such revenue with the cost of saving a crore of rupees gives us a clear idea of the importance of astute procurement and the benefit that spend management solutions deliver, especially in difficult times when the Cost of Goods Sold (COGS) rises above normal. Broadly speaking spend management involves reviewing an organization’s expenditure on a regular basis, identifying the instances where the spending

september 2010 | VoL. i | industry 2.0

could have been reduced, identifying savings opportunities and then designing and executing a strategic sourcing plan to realize those identified savings. This is typically followed by a contract management process to enforce compliance and ensure that savings generated don’t slip through process gaps. This process is then repeated over and over again with increasing degrees of intelligence and efficiency to continually service the ‘savings pipeline’—thus leading to a transformed state of procurement. Thus, we can breakdown spend management into three distinct processes—spend analysis to identify saving opportunities; strategic sourcing to realize these savings and contract management to sustain these savings by ensuring compliance and monitoring contract usage. Numerous vendors offer software solutions that assist each process. A spend classification and analysis solution will allow organizations to cleanse complex, distributed and inconsistent spend data and classify it according to a specific taxonomy (Industry standards such as UNSPSC or custom taxonomies can be used) thereby increasing the visibility. This ‘clean’ data is then ready for in-depth and detailed analysis to dig out savings opportunities. The

- technoLogy management for decision-makers

next step is to build and execute a sourcing strategy to realize those savings and this is done through strategic sourcing solutions (commonly known as eSourcing), which include eRFx and reverse auction functionality. These solutions automate sourcing processes such as RFX creation, scoring and evaluation of vendor responses and bid optimization etc. thus allowing organizations to efficiently and easily define and manage the most complex sourcing requirements. The eAuction functionality provides a robust platform for competitive bidding, enabling the buyer to get the best possible price from the most suitable vendor. Once the best deal has been secured, organizations can use contract management solutions to author and manage even the most complex contracts with ease. Furthermore, using ongoing spend data, the contract management solutions can provide insight on contract usage, out-of-contract spend (or maverick spend) and contract utilization to procurement teams, enabling them to ensure that their savings goals are met. It is clear from this definition that spend management is a critical tool in any procurement organization’s arsenal, as a technology driven process to replace much more cumbersome and ineffective ways of manual purchasing. Sure enough, spend management solutions have seen a high level of adoption in global organization of all sizes and in all industries, and real life reports of benefits and fast return-on-investment (up to 20X in one year after implementation) are very encouraging for the future of spend management technology. The best benefits will be delivered by an integrated spend management approach and not through a fragmented approach

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management & strategy

Spend management needs to be initiated with clear objectives and goals in mind with organization-wide acceptance.

as seen today. Companies willing to traverse this path need to first implement a spend analysis system followed by a strategic sourcing system, which needs to be further complemented by a contract management system. Keeping this in mind it makes most sense to work with an experienced vendor offering the entire suite of spend management solutions so as to ensure seamless integration resulting in a symbiotic environment which breeds maximum Return on Investment (RoI) on the solution investment. Spend management is designed to bring about a sea change in the way procurement is done and as with any activity that brings change, it needs to be initiated with clear objectives and goals in mind with organizationwide acceptance. Some of the best practices that have resulted in successful implementation of spend management solutions

september 2010 | VoL. i | industry 2.0

are garnering top management support, hiring senior managers who have previously seen through such projects, to clearly define the business objective and draw up a detailed roadmap, commit sufficient resources, set up internal benchmarks to measure performance, and put into practice performance objectives designed to incentivize procurement professionals to use the technology for their daily work. In recent times, we have seen spend management gaining increased adoption amongst Indian companies; however, it is more common to engage in ‘opportunity based sourcing’ which is mostly tactical in nature—visà-vis strategic sourcing based on actual spend intelligence. In India, often, professionals focus on ‘low hanging fruit’ that can be easily achieved though conventional online sourcing—albeit for much smaller benefits. Organiza-

- technoLogy management for decision-makers

tions will start seeing the real benefits from spend management, when they extend it to all areas of purchasing and not just the most obvious opportunities. This requires the spend data to be clean and well classified to facilitate an in-depth analysis to uncover the hidden opportunities. The highlight of spend analysis is the creation of a strong pipeline of savings opportunities which can then be fed to the sourcing teams and addressed on the basis of priority. Spend analysis tracks and analyses the current spend in the organization providing great visibility to the procurement professional to target the exact area of improvement. This will help companies make better strategic decisions on their procurement and generate greater savings out of their sourcing. Anurag Dixit is Vice President—Marketing at Zycus.

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TOP

2.0

Manufacturing

Companies

september 2010 | VoL. i | industry 2.0

- technoLogy management for decision-makers

10 ctor re 8 port

nk ing

98 ctoral ra

60 p 500 c

lo gy m

59 ethodo

. DE X. IN 58

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TOP 500 RANKING PROCESS The Industry 2.0 rankings of manufacturing companies have been derived through an extensive and comprehensive analysis of financial data to give you insight into the performance of the manufacturing industry.

determine ranking of manufacturing companies in India, data on key performance indicators was obtained from the CMIE Prowess database. This repository contains information on more than 10,000 manufacturing companies. Organizations were selected based on the availability of financial data for

MANUFACTURING SMBs Auto Ancillary Automobile Cement Chemicals Cosmetics & Soaps Diversified Drugs & Pharmaceuticals Batteries Electronics Ferrous Metals Food & Beverage Gems & Jewellery Electrical Machinery Glass & Ceramics Leather & Leather Products Machine Tools Metal Products Non Electrical Machinery Non Ferrous Metals Non Metallic Mineral Products Paper & Wood Products Petroleum Products Polymers & Plastic Products Steel Tubes & Pipes Textiles Rubber Products Wires & Cables Total

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the years 2007-08 and 2008-09. Subsequenly, companies with negative Profit after Tax (PAT) for the year 2008-09 were eliminated. A total of 2,028 manufacturing companies that met the selection criteria were considered for further analysis. Given a wide range of companies in terms of sales revenues in the sample,

LARGE MANUFACTURING COs 6.4% 1.4% 0.8% 9.4% 1.2% 0.4% 7.1% 0.2% 4.9% 7.6% 14.0% 0.9% 3.6% 1.8% 1.2% 1.0% 3.2% 4.9% 1.8% 1.2% 4.3% 0.7% 6.8% 1.2% 10.9% 2.0% 1.0% 100.0%

Auto Ancillary Automobile Cement Chemicals Cosmetics & Soaps Diversified Drugs & Pharmaceuticals Batteries Electronics Ferrous Metals Food & Beverage Gems & Jewellery Electrical Machinery Glass & Ceramics Leather & Leather Products Machine Tools Metal Products Non Electrical Machinery Non Ferrous Metals Non Metallic Mineral Products Paper & Wood Products Petroleum Products Polymers & Plastic Products Steel Tubes & Pipes Textiles Rubber Products Wires & Cables Total

industry 2.0

5.8% 5.2% 3.7% 10.1% 2.0% 2.3% 7.5% 0.6% 4.5% 9.7% 11.1% 2.3% 2.8% 2.5% 0.8% 0.2% 2.2% 4.3% 1.5% 1.4% 2.5% 2.2% 3.4% 2.6% 5.7% 1.2% 2.2% 100.0%

the 2,028 selected companies were divided into two groups. Companies with net revenues greater than Rs. 300 crore for the financial year 2008-09 were classified as Sample 1 (Top manufacturing companies), while companies with net revenues below Rs. 300 crore were included in Sample 2 (Top manufacturing SMbs). Of the 2,028 companies we looked at, 647 comprised Sample 1, and remaining 1,381 were classified as SMbs. This annual issue of Industry 2.0 lists the ranks of Top 500 Large Manufacturing Companies and Top 500 Manufacturing SMbs in two separate volumes. The performance of the selected companies was compared and ranked across 9 parameters (sales turnover, absolute increase in sales, percentage change in the sales turnover, net profit, increase in net profit, PAT/Sales ratio, return on capital employed and increase across two financial years). This method offered the advantage of eliminating any subjectivity associated with assignment of weights to the parameters considered for ranking the performance of companies. Scores for all parameters were assigned based on the relative rank of an individual company on that parameter. Composite scores were then calculated for each company as the sum of the scores obtained by each company on all parameters. The companies were finally ranked on the composite score.

- technology management for decision-makers | september 2010 | Vol. Vol Vol ol. i

2.0

Top

Manufacturing

2010 2009 Change

COMPanY

InDUSTRY SeCTOR

InDUSTRIaL aCTIVITY

Change In neT

neT SaLeS (Rs Crore)

InDUSTRIaL aCTIVITY

InDUSTRY SeCTOR

COMPanY

Rank

Companies 2007-08

2008-09

RS. CRORe

Hindustan Unilever Ltd.

Cosmetics, Toiletries, Soaps & Detergents

Cosmetics, toilet preparations, soap & washing prep

14037.30

20709.71

6672.41

Coromandel International Ltd.

Chemicals

Ammonium phosphate (16-20-0)

3816.73

9682.56

5865.83

Gujarat State Fertilizers & Chemicals Ltd.

Chemicals

Urea

3600.21

5873.28

2273.07

Cochin Shipyard Ltd.

Automobiles

Ships, boats, etc.

927.92

1342.96

415.04

186

Shree Cement Ltd.

Cement

2149.95

2762.97

613.02

Nestle India Ltd.

Food and Beverage

Dairy products

3498.16

4306.29

808.13

Indian Metals & Ferro Alloys Ltd.

Ferrous Metals

Ferro silicon

729.10

1001.07

271.97

Rohit Surfactants Pvt. Ltd.

Cosmetics, Toiletries, Soaps & Detergents

Synthetic detergents

1092.52

1423.81

331.29

Cummins India Ltd.

Non Electrical Machinery

Internal combustion engines

2425.74

3361.05

935.31

189

Titan Industries Ltd.

Gems & Jewellery

Jewellery of precious metals

3020.05

3852.35

832.30

Reid & Taylor (India) Ltd.

Textiles

Cloth (Fabrics)

142.89

688.88

545.99

244

Aarti Industries Ltd.

Chemicals

Para nitrochlorobenzene

887.33

1430.47

543.14

112

Hero Honda Motors Ltd.

Automobiles

Motorcycles

11011.68

13103.93

2092.25

Cadbury India Ltd.

Food and Beverage

Chocolate confectionery

1282.63

1573.49

290.86

401

Indagro Foods Ltd.

Food and Beverage

Vegetables, frozen

427.07

783.77

356.70

193

Rashtriya Chemicals & Fertilizers Ltd.

Chemicals

Urea

5198.50

8440.93

3242.43

221

Glaxosmithkline Pharmaceuticals Ltd.

Drugs and Pharmaceuticals

Drug formulations

1680.66

1948.16

267.50

145

Amtek India Ltd.

Auto Ancillary

Automobile ancillaries

771.72

975.85

204.13

349

Maharashtra Seamless Ltd.

Steel Tubes and Pipes

Seamless tubes & pipes

1528.63

2113.02

584.39

Colgate-Palmolive (India) Ltd.

Cosmetics, Toiletries, Soaps & Detergents

Preparations for oral or dental hygiene

1527.93

1775.87

247.94

150

Adani Wilmar Ltd.

Food and Beverage

Edible oils

3446.36

5869.74

2423.38

Sun Pharmaceutical Inds. Ltd.

Drugs and Pharmaceuticals

Drug formulations

3211.51

3930.37

718.86

533

Electrosteel Castings Ltd.

Steel Tubes and Pipes

Tubes & pipes

1397.26

1933.55

536.29

598

Emcure Pharmaceuticals Ltd.

Drugs and Pharmaceuticals

Drug formulations

470.71

607.73

137.02

september 2010 | VoL. i | industry 2.0

- technoLogy management for decision-makers

www.industry20.com

PeR

Key/ Hosting

PaT/neT SaLeS

Change In ROCe

ROCe Rs Crore)

Change In PaT

PaT (Rs Crore)

PBDITa (Rs Crore)

Change In neT SaLeS

Meet the top performers of India who have scored big through innovative thinking, cost-optimisation strategies, intelligent marketing and quality products and services, and, of course, sheer hard work.

PeRCenTage

2007-08

2008-09

2007-08

2008-09

RS. CRORe

PeRCenTage

2007-08

2008-09

RS. CRORe

PeRCenTage

2007-08

2008-09

48%

2295.27

3143.85

1726.53

2350.30

623.77

36%

82.93

134.27

51.34

62%

12%

11%

154%

449.28

946.03

204.86

492.27

287.41

140%

16.52

26.24

9.72

59%

63%

536.48

855.47

229.45

432.60

203.15

89%

13.66

24.90

11.24

82%

45%

134.51

262.88

67.46

148.14

80.68

120%

16.32

43.37

27.05

166%

11%

29%

926.92

995.37

268.96

570.13

301.17

112%

16.84

27.21

10.37

62%

13%

21%

23%

646.91

869.55

356.52

536.81

180.29

51%

88.32

120.39

32.07

36%

10%

12%

37%

315.04

429.42

124.31

259.33

135.02

109%

21.67

39.63

17.96

83%

17%

26%

30%

75.17

196.70

47.58

132.82

85.24

179%

15.95

30.80

14.85

93%

39%

429.70

609.26

280.62

396.47

115.85

41%

27.47

31.67

4.20

15%

12%

28%

200.75

312.90

103.15

181.03

77.88

76%

19.49

28.63

9.14

47%

382%

56.82

257.71

27.47

143.58

116.11

423%

18.79

22.62

3.83

20%

19%

21%

61%

118.61

237.21

36.59

83.74

47.15

129%

9.08

17.53

8.45

93%

19%

1578.03

1967.28

972.15

1284.39

312.24

32%

33.79

36.71

2.92

10%

23%

177.23

238.29

98.57

165.72

67.15

68%

24.68

37.34

12.66

51%

11%

84%

41.69

96.88

21.88

57.41

35.53

162%

11.81

26.39

14.58

123%

62%

380.22

521.87

140.66

205.79

65.13

46%

8.46

11.74

3.28

39%

16%

596.71

838.92

369.97

590.51

220.54

60%

28.83

40.54

11.71

41%

22%

30%

26%

224.55

507.67

117.17

346.96

229.79

196%

11.16

21.04

9.88

89%

15%

36%

38%

321.02

410.93

195.24

259.92

64.68

33%

17.64

20.19

2.55

14%

13%

12%

16%

297.88

353.27

216.25

274.50

58.25

27%

95.75

141.53

45.78

48%

14%

15%

70%

152.36

183.35

31.20

61.03

29.83

96%

10.51

13.84

3.33

32%

22%

1111.60

1353.34

1013.62

1261.59

247.97

24%

26.04

26.73

0.69

32%

38%

100.30

323.24

24.36

110.90

86.54

355%

1.57

5.66

4.09

261%

29%

70.50

85.67

22.02

121.63

99.61

452%

4.36

25.57

21.21

486%

20%

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industry 2.0

- technology management for decision-makers | september 2010 | Vol. i

*1) Net sales = Total income – Other income – Extra ordinary income – Prior period income – Indirect taxes. 2) PAT = PBIT – Tax. 3) PAT net of pne = PAT – Prior period income – Extra ordinary income + Prior period expenses + Extra ordinary expenses. 4) Roce = PAT net of pne/Avg capital employed. 5) Capital employed = (paid up equity capital + capital contribution by govt + cap suspense and other acct) +(paid up pref capital + pref suspense account) + (reserves and funds + res revaluation + misc exp not written off) + (borrowings – sec short term bank borr unsec short term bank borr-commercial papers – capital convertible warrants). 6) Source of Data: CMIE Prowess database.

Industry 2.0 presents the Batch of 2010.

2.0 Top

2010 2009 Change

COMPanY

InDUSTRY SeCTOR

InDUSTRIaL aCTIVITY

Change In neT

neT SaLeS (Rs Crore)

InDUSTRIaL aCTIVITY

InDUSTRY SeCTOR

COMPanY

Rank

ManufacTuring coMpanies

2007-08

2008-09

RS. CRORe

156

Indian Farmers Fertiliser Co-Op. Ltd.

Chemicals

Mixed fertilisers

12447.80

33388.86

20941.06

Crompton Greaves Ltd.

Motors & generators

4093.03

4766.59

673.56

Reckitt Benckiser (India) Ltd.

Soap, washing preparations, etc.

1324.71

1533.07

208.36

Printing and service activities related to printing

2112.88

2516.96

404.08

Security Printing & Minting Corpn. Of India Ltd.

Generators Transformers Switchgears and Misc Electrical machinery Cosmetics, Toiletries, Soaps & Detergents Paper, Books, cards and Wood products

Jindal Steel & Power Ltd.

Ferrous Metals

Finished Steel (Non-Alloy Steel)

5395.57

7795.59

2400.02

Castrol India Ltd.

Petroleum Products

Lube oils & lubricants

1977.46

2288.05

310.59

595

Bannari Amman Sugars Ltd.

Food and Beverage

Sugar

541.06

713.29

172.23

245

T R F Ltd.

Automobiles

Material handling equipment

364.74

523.72

158.98

583

Zuari Industries Ltd.

Chemicals

NPK mixed fertilisers

2660.40

6181.92

3521.52

Godrej & Boyce Mfg. Co. Ltd.

Diversified

3543.46

4206.12

662.66

Icomm Tele Ltd.

Metal Products