SUMMER TRAINING REPORT On Project topic

Study on marketing activities

Company name- CROMPTON GREAVES LIMITED

Submitted by Yogesh Sharma

Roll No: -20090126 Batch: 2009-2011

ACKNOWLEDGEMENT
It gives me great pleasure to express my deep sense of gratitude to Mr. Ramuavtar Dixitsenior sales executive Marketing, without whose patient guidance and constant encouragement this study would not have come to its present form. I am sincerely thankful to him for permitting me to work on a topic of special interest to me for study. I owe him a debt of gratitude for constructive criticism from time to time during the course of these investigations. I am also highly grateful to other faculty members for providing all facilities for carrying out this project work. My sincere thanks must go to my family members who showed patience and forbearance during the period of our study. Name Yogesh Sharma IILM management school New Delhi

Contents
Introduction ............................................................................................................................................ 4 PROJECT TOPIC........................................................................................................................................ 4 History ................................................................................................................................................ 5 Major Acquisitions................................................................................................................................... 6 Product & Services Offered By Crompton ................................................................................................ 6 BRANCH OFFICES................................................................................................................................. 7 Service Centers ................................................................................................................................. 10 Financial Analysis of CGL........................................................................................................................ 11 Total Income and Profit After Tax Of CGL Stand Alone................................................................... 11 CGL - Consolidated Revenue By Business....................................................................................... 12 CGL performance .............................................................................................................................. 13 CGL Transformers Division..................................................................................................................... 14 Manufacture of Distribution Transformer, Malanpur (M.P.) .............................................................. 16 Financial Analysis .............................................................................................................................. 17 SWOT ANALYSIS .................................................................................................................................... 18 Organization Structure ...................................................................................................................... 20 Competitors Analysis............................................................................................................................. 21 Composition Of Market Share For Transformers In Terms Of Sales Value Cgl And Others Companies .................................................................................................................................... 21 MARKET CAPACITY OF TRANSFORMER MANUFACTURER IN INDIA .................................................... 21 Description of Various Departments Marketing..................................................................................... 30 Production - Design, Manufacturing and Testing Equipment ............................................................. 35 I. Product Design and Planning...................................................................................................... 37 II. Manufacturing process.............................................................................................................. 37 III. Testing: .................................................................................................................................... 38 Finance ............................................................................................................................................. 39 Six Sigma........................................................................................................................................... 40 Information Technology ................................................................................................................ 44 QUESTIONNAIRE ................................................................................................................................... 45 CONCLUSION......................................................................................................................................... 53

Introduction
Crompton Greaves (CG) is the part of the US$ 3 billion Avantha Group, a conglomerate with an impressive global foot print. Since its inception, CG has been synonymous with electricity. In 1875, a Crompton 'dynamo' powered the world's very first electricity-lit house in Colchester, Essex, U.K. CG's India operations were established in 1937, and since then the company has retained its leadership position in the management and application of electrical energy. Today, Crompton Greaves is India's largest private sector enterprise. It has diversified extensively and is engaged in designing, manufacturing and marketing technologically advanced electrical products and services related to power generation, transmission and distribution, besides executing turnkey projects. The company is customer-centric in its focus and is the single largest source for a wide variety of electrical equipments and products. With several international acquisitions, Crompton Greaves is fast emerging as a first choice global supplier for high quality electrical equipment

PROJECT TOPIC
Research on the effectiveness of marketing activities at CGL Distribution Transformer
Division (T2)

PROJECT OBJECTIVE The project has been undertaken with following objectives in mind.

A detailed study on the performance of CGL T2 division for the past four years. Financial statement analysis A detailed study on the marketing activities of T2 division Identifying the problems faced by the marketing department and the

reasons for lower conversion rate of the sales enquires, which includes Preparation of SWOT Analysis for the Tendering and Execution departments.

To

find

out

methods

for

improving

the

effectiveness

of

marketing

activities.

Datas required
Last four years order input Last four years sales details Last four years financial statements

History
Crompton Greaves goes back to 1878, when Col. R.E.B. Crompton founded R.E.B.Crompton & Company. The company merged with F.A Parkinson in the year 1927 to form Crompton Parkinson Ltd., (CPL). Greaves Cotton and Co (GCC) was appointed as their concessionaire in India. In 1937, CPL established, it's wholly owned Indian subsidiary viz. Crompton Parkinson Works Ltd., in Bombay, along with a sales organization, Greaves Cotton & Crompton Parkinson Ltd., in collaboration with GCC. In the year 1947, with the dawn of Indian independence, the company was taken over by Lala Karamchand Thapar, an eminent Indian industrialist. Crompton Greaves is headquartered in a self-owned landmark building at Worli, Mumbai.

Today, Crompton Greaves (CG) is part of the US$ 3 billion Avantha Group, a conglomerate with an impressive global footprint. Mr. Gautam Thapar, the third generation of Lala Karamchand Thapar, is Chairman & CEO of India's foremost diversified corporation, the Avantha Group. Mr. Sudhir Mohan Trehan is the Managing Director of Crompton Greaves Limited since May 2000. He was the recipient of the Outstanding Chief Executive of the Year Award for 2000-2001, instituted by the Indian Institution of Industrial Engineering, for steps he took towards successfully implementing his vision of making Crompton Greaves a world-class manufacturing company. In addition to above, the Board of Directors includes the renowned names of Dr. O. Goswami, Mr. S. Labroo, Dr. Valentin A H von Massow, Ms. M. Pudumjee, Mr. S.P. Talwar and Mr. S.R. Bayman.

Major Acquisitions
Pauwels Acquisition Crompton Greaves has completed the acquisition of the Belgium-based Pauwels on 13th May 2005.

Ganz Acquisition Crompton Greaves have also successfully acquired Hungarian based Ganz (GTV), engaged in the manufacture of EHV Transformers, Switchgear, Gas Insulated Switchgear (GIS), Rotating Machines and Contracting businesses and Transverticum Kft (TV), engaged in the supporting areas of design, erection, commissioning and commercial activities on 17th October,2006; TV being a subsidiary of GTV.

Microsol Acquisition The acquisition of Microsol Holdings Limited (MHL) and its associate companies in May 2007 is yet another significant stride in CG's journey towards positioning itself as a Global T&D Solutions Provider.

Sonomatra Acquisition Crompton Greaves concluded an arrangement for the acquisition of Societe Nouvelle de Maintenance de Transformations (Sonomatra) of France in June 2008. Sonomatra provides on-site maintenance and repair of power transformers and on-load tap changers, oil analysis, oil treatment and retro filling.

Product & Services Offered By Crompton

The company is organized into three business groups viz. Power Systems, Industrial Systems, Consumer Products. Nearly, two-thirds of it's turnover accrues from products lines in which it enjoys a leadership position. Presently, the company is offering wide range of products such as power & industrial transformers, HT circuit breakers, LT & HT motors, DC motors, traction motors, alternators/ generators, railway signaling equipments, lighting products, fans, pumps and public switching, transmission and access products. In addition to offering broad range of products, the company undertakes turnkey

projects from concept to commissioning. Apart from this, CG exports it's products to more than 60 countries worldwide, which includes the emerging South-East Asian and Latin American markets. Thus, the company addresses all the segments of the power industry from complex industrial solutions to basic household requirements. The fans and lighting businesses acquired Super brand" status in January 2004. It is a unique recognition amongst the country's 134 selected brands by "Super brands", UK.

DIVISIONS OF CGL
HT Motors Power Transformer LT Motors Pumps FHP Motors

REGIONAL OFFICES (ALL PRODUCTS)

Alternators

BRANCH OFFICES
Shunt Reactor Distribution Transformer

Switchgear

Dry Type TransformerBulbs, Tubes

Street Lighting

Crompton Greaves' strength emanates from its business operations consisting of 21 divisions spread across in Gujarat, Maharashtra, Goa, Madhya Pradesh and Karnataka supported by well knitted marketing and service network through 14 branches in state capitals under overall management of four Kolkata, Mumbai and Rail Chennai. Relays regional sales offices located in Delhi, Signalling
Bushings Ceiling Fans Lighting Arrestor Instrument Transformer Stampings

Manufacturing Units
1. Manufacture of Domestic, Agro and Industrial Pumps, Ahmednagar (Maharashtra) 2. Manufacturing range of DC M/C and Railway Traction Motors, Mandideep (M.P.) 3. Manufacture DC Motors in the range of 1.2 to 450KW, Ahmednagar (Maharashtra) 4. Manufacture of Power Transformer and Shunt Reactor, Mumbai (Maharashtra) 5. Manufacture of Distribution Transformer, Malanpur (M.P.) 6. Manufacture of Power Transformers, Mandideep (M.P.) 7. Manufacture of Transformer-AMT Plant, Mandideep (M.P.) 8. Manufacture of Stampings for Motors, Mumbai (Maharashtra) 9. Manufactures High Voltage Induction Motors, Mandideep (M.P.) 10. Signalling Relay Unit, Pithampur (M.P.) 11. Luminaire Division, Mumbai (Maharashtra) 12. Fans & Appliances Division I, Goa 13. Table Fans(Kundaim) Division, Goa 14. FHP Motors Division, Goa 15. LT Motors Division, Goa 16. Switchgear Division EHV, Nashik (Maharashtra) 17. Digital-PSTA Manufacturing, Bangalore (Karnataka)

Transformers Plant, Mandideep

Transformers Plant, Malanpur

Alternators & DC Machines Plant, Ahmednagar

LT Motors Plant, Ahmednagar.

Transformers Plant, Kanjurmarg - Mumbai

DC Machines Shopfloor, Mandideep.

Transformers Plant - Winding Bay, Kanjurmarg - Mumbai.

Research & Development Facility,

Switchgear Unit, Aurangabad

Kanjurmarg - Mumbai

Service Centers
1. Ahmadabad (Gujarat) 2. Bangalore (Karnataka) 3. Bhubaneswar (Orissa) 4. Cochin (Kerala) 5. New Delhi 6. Jaipur (Rajasthan) 7. Jalandhar (Punjab) 8. Kolkata (West Bengal) 9. Lucknow (U.P.) 10. Secunderabad (A.P.)

10

11. Patna (Bihar)CGL Manufacturing Units

Out of Indi 12.

Financial Analysis of CGL

Total Income and Profit After Tax Of CGL Stand Alone

Year 2005 2006 2007 2008 2009

Total Income(cr) 2180 2771 3695 4290 4940

PAT(cr) 115 163 192 314 397

11

It is visible from the stats the CGL has been showing increasing profit after tax for last three years which shows that the company has been growing well, this is the influence of the diversification strategy followed by the company.

CGL - Consolidated Revenue By Business

The company has been showing increased significant revenues generated from the power segment of the market, which shows are growth of the company and its success in the power segment.

The EPS of the company has increased as compared to the previous year this shows that the company is performing well and has added to the wealth of the shareholders. Also the company has adopted a good capital structure which has increased the companys EPS and cash EPS. The Net Sales to Working Capital is greater than one which means that the company is making good use of the working capital and is generating sufficient funds to return the loans; the operating leverage of the company is near 13% which shows that the company is making good profit. The company can make use of debt in its capital structure since it has zero debt to equity ratio. Also, the interest coverage ratio has noticeably increased which shows that company is making good use of the debt.

12

CGL performance

13

CGL Transformers Division

The transformers division of Crompton Greaves began operations over 60 years ago with their first supply to the US Army. The initial inputs for technology came from collaborations with Brush Transformers and Hawker Siddeley Power Systems of U.K. The company then forged a technology arrangement with Westinghouse Electric Corporation U.S.A. for transformers of up to 400 kV to serve international demand. The Transformer Division is the highest exporter of Power Transformers from India, a position it has maintained consistently since 1997-98. Exports of the division amount to over 50% of the total transformer exports from India! Products of the Transformer division are exported to

14

over 40 countries worldwide. The Crompton Greaves Transformer division is known for its wide range, reliable designs, excellent materials and globally benchmarked manufacturing practices. Crompton Greaves is among the very few companies worldwide that designs and manufactures the widest range of Power & Distribution Transformers and Reactors from 160kVA to 415MVA, 500kV Class to fulfill the specific demands of the Power & Industrial sectors and the Railways. With an installed base of over 120 million kVA in Transformers, Crompton Greaves has emerged as the largest Indian supplier of a wide range of Transformers and Reactors for all critical applications. These Transformers and Reactors find use in industries such as Power Utilities, Process Industries, Railways, Mines, Electricity Boards, Industrial users etc in both the Domestic as well as Global markets. The division has the capability to manufacture transformers from 400 kVA to 900,000 kVA (in a bank) 3.3 kVA to 500 kV class for various applications confirming to IS, IEC, EN, AS, BS, ANSI and other international standards. All the plant operations are certified under the ISO 9001 and ISO 14,000. The Division has technologically superior manufacturing facilities in Mumbai, Gwalior and Bhopal with a total installed capacity of 18,500 MVA. Crompton Greaves incorporates the latest technology, superior raw materials and state-of-art manufacturing facilities to build transformers of superior quality and with high degree of reliability. The four transformer manufacturing facilities of CGL are listed below:

1. Manufacture of Power Transformer and Shunt Reactor, Mumbai (Maharashtra)

2. Manufacture of Distribution Transformer, Malanpur (M.P.)

3. Manufacture of Power Transformers, Mandideep (M.P.)

4. Manufacture of Transformer-AMT Plant, Mandideep (M.P.)

15

Manufacture of Distribution Transformer, Malanpur (M.P.)

Bhopal plant covers an area of over 30,000 sq meters. The Kanjur Plant in Mumbai manufactures Power Transformers up to 400 KV and Shunt Reactors. The Mandideep plant manufactures Power Transformers of 132 & 230 KV range. The new integrated Distribution Transformer division (T2) at Malanpur is spread over 20,000 sq meters. The Malanpur plant manufactures Distribution Transformers up to 20MVA, 66 KV. The consumer products of the plant are customized and are assembled according to the needs of the customers, Job type of production is carried out. Based on function the transformers can broadly be divided into Power transformers, Distribution transformers and other types of special transformers for welding, traction, furnace etc. 1) Low Power Transformers: The power transformers are used to transform power voltage from the generation point to the transmission point and are installed at the generation site right up to the last substation just before distribution activities commence. This transformer is used to either step up or step down power to match the voltage requirements. They are oil filled transformers with its range spanning from 11kV 765kV. Power transformers would account for about 65-68% of the total value of the transformer industry. 2) Distribution Transformers: A distribution transformer is used to transform power voltage from a substation to final end of consumption. The basic purpose of a distribution transformer is to provide end user with low voltage power. A distribution transformer could either be oil filled or dry type by nature, with range spanning from 1.1 kV to 11kV. Distribution transformer would account for the remaining 32 -35 % of the total value of the transformer industry. 3) CR Transformers: A dry type transformer is used where there is space constraint and higher chances of occurrence of fire. Special fire resistant insulation is used in this type of transformers. These are mostly used by industrial and corporate clients at software parks, hotels, hospitals, high rise buildings etc. These transformers are categorized as distribution transformers due to their nature of operation, i.e. at the end users locations.

16

Financial Analysis
NET SALES (FY2006-FY2010) Year 2005-06 2006-07 2007-08 2008-009 2009-10 CG DT T2 Division(in lacs) 9513 12576 17909 20410 21268 Rate Of Growth 32.7 32.2 42.41 13.97 4.20 CG Power System Asia(in lacs) 115318 170644 187346 231179 269670 Rate Of Growth 37.42 47.98 9.79 23.40 16.65

% share of 8.2 7.4 9.6 8.8 7.9

The Units net sales increased at almost 33% in the financial year 2006 and 2007 which is quite proportionate to the growth rate of the Power System Asia which was 38% and 48% in the year 2006 and 2007 proportionately. The net sales growth rate for Asia in the year 2008 was about 10% on the other hand the sales for CG D2 T2 plant increased by approx. 43%. The Net Sales for this plant has increased by 14% and 4% in the year 2009 and 2010 respectively. The T2 unit Malanpur accounts for about 7% to 10% of the Nest Sales of the CGL PS Asia.

The divisions profit has significantly mounted up in the past three years as can be easily visualized from the chart. 17

SWOT ANALYSIS
Situation analysis begins the process of strategy formulation and there is need to find external opportunities and internal strengths. The individual parameters are hereby listed-

STRENGTHS
Wide product range to provide solutions to different customer segments like Thermal / Hydro power generation clients , transmission agencies , distribution and industries . Maj or presence in domestic power market and wide installed equipment / customer base. Prompt after sales service, understanding of Indian conditions & wide geographical spread Significant technology absorption and adaptation capability to suit local needs. Contemporary integrated manufacturing base and infrastructure Highly committed engineering, technical and managerial manpower International etc.) at quality ( ISO 9000/9001:2000/14001 series, OHSAS 18001, prices Strategic Management with a blend of

competitive

appropriate measures.

WEAKNESSES
Technology development constraints. Limited financing capacity for large EPC projects & uncompetitive financing costs. Operational competitors. constraints (flexibility, speed of response etc.) vis--vis

Inadequate recovery from traditional customers Utilities / SEBs working capital requirements adversely affecting profitability

higher

18

 Less than 20 % of the sales enquires are being attended and converted into orders.

OPPORTUNITIES
Growth rate of economy envisaged (6-8% p.a.) in next few years to stimulate large demand in infrastructure. Government has fixed up the target of 78,577 MW of capacity addition for XIth Plan (2007-08 to 2011-12). Boost to power transmission sector & privatization moves i n distri bution sector. The total transmission capacity is planned to increase from the existing capacity of 9,450 MW to 37,150 MW by 2012. To secure cheaper power through large size power projects, the

government launched Ultra Mega Power Projects (UMPPs) with the target to produce 4000 MW by 2012.

THREATS
Delay / deferment of projects adverse impact on domestic business.

Technology leaders unwilling to share new technologies and insisting on their terms / imposing Licensing restrictions on Territories. International players consolidating & setting-up local manufacturing bases. Increasing competition from large MNCs with greater financial & strategic muscle and speedier response.

Lowering customers

of

Import insistence

Tariffs on

below

the

WTO

bound

rates

Continued

qualification/

experience

requirements

Roadblocks for introduction of Indigenous Technologies.

19

Organization Structure

Departments
Production
20

No. of employees
14

Marketing Quality Assurance Services Design Six Sigma Engineering Maintenance Finance Materials & Stores Human Resource

5 11 2 14 2 2 2 5 7 2

Competitors Analysis
Composition Of Market Share For Transformers In Terms Of Sales Value Cgl And Others Companies

MARKET CAPACITY OF TRANSFORMER MANUFACTURER IN INDIA

A major part of the transformer manufacturing capacity of India is contributed by the major players like 1-BHEL 2-CGL 3-ABB 4-AREVA

Crompton Greaves Ltd.

30000 MVA p.a.

21

BHEL ABB Areva EMCO Bharat Bijlee Voltamp Telk

25000 MVA p.a. 17000 MVA p.a. 15000 MVA p.a. 12000 MVA p.a. 7000 MVA p.a. 5000 MVA p.a. 3000 MVA p.a.

Whereas the total transformer manufacturing capacity of India in MVA is approx. 200000 MVA p.a. CGL is one of the highest MVA producer in India.

MARKET SHARE OF TRANSFORMERS SALES

45% 40% 35% 30% 25% 20% 15% 10% 5% 0% BHEL Areva ABB EMCO Telk Crompton Kirloskar Voltamp Kanohar Bharat Others

Power Transformer Distribution Transformer

The above are the market share captured by some major transformer manufacturers. PRICE COMPETITIVENESS OF COMPANIES

22

BHEL CGL ABB Areva EMCO

19% 22% 21% 21% 17%

PRICE COMPETITIVENESS OF COMPANIES

25% 20% 15% Series1 10% 5% 0% Crompton Greaves Ltd. BHEL ABB Areva EMCO

The company who can offer best quality at affordable prices often turns out to be a winner. It has been observed that 22% respondents have rated CGL for offering best quality at affordable prices; followed by AREVA & ABB at 21%, then BHEL at 19% and at the end EMCO 17% respectively

(In % AGES) Company 2001-02

23

CGL BHEL VIJAI Others TOTAL

27.0 18.9 12.8 41.3 100.0

Company CGL BHEL VIJAI OTHERS TOTAL

2005-06 19.2 12.7 20.0 46.2 100.0

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Company CGL BHEL VIJAI OTHERS TOTAL

2007-08 18.3 12.0 15.3 54.4 100.0

Crompton Greaves working in front of other companies

Market Share

- A major part of the installed transformer capacity of India is

contributed by the transformers supplied by CGL i.e. every 7 th transformer in the country is a CGL make transformer. High market share is due to

customers confidence in our reliable products and services. However many international players entered in the Indian market like ABB, Siemens, Areva and many more to come, CGL is ready to face & counter future competition by continuous up gradation in its technology & services. In spite of such stiff competition, CGL has maintained increasing order book position and has increasing turn over values. Purchase Methodology - All the customers prefer to purchase through tender

as indicated by over 100% of the respondents. Funding Procedure - Majority of the customers are funding the projects from

the domestic funding or own funds i.e. 35%; next way preferred is through World bank/ADB i.e. 28%; others are financial instituti ons which is 24% and ECB 13%. 25

Response time- The responses received takes 3 to 6 months as the products being purchased are generally costly and through tenders however sometimes, responses received takes more than 06 months. Buyer selection process - The suppliers were selected on the basis of tender

and order being given to the lowest or the chosen one, ho provide best quality in cheaper prices. Buying Frequency - The buying frequency indicates that there is no set

pattern followed by the SEBs / Utilities / Industries in the pre-reform era and the equipments were procured as and when required. Competition- The results indicate a mix response with likely increase in competition. Rating of various attributes of products- The results in the chart clearly marks that customer wants the best quality at best prices. The quality and price are the front-runners at 24% and 23% respectively followed by After Sales Service and the delivery. The customers are not interested in the brand image in the industrial purchases. Rating of the companies in terms of quality- Customers perceived quality as the most important criteria. The respondents have rated the product-

performance of major equipment suppliers. It has been observed that 22% respondents have rated CGL with the best quality of products. It is closely foll owed by BHEL at 21 %, AB B at 20% & A reva a t 19%.Quali ty of EMCO has not been up to the mark. Ranking of the companies on the basis of price- The Company who can offer best quality at affordable prices often turns out to be a winner. It has been observed that 22% respondents have rated BHEL for offering

products at high prices; followed by CGL at 21% ,then ABB at 20% and at the end Areva and EMCO at 19% & 17% respectively . 26

SEBs Utilities Industries

38% 42% 20%

CUSTOMER SEGMENT

SEBs Utilities Industries

CGL caters to the customers in various segments. 38% of the supplies are to the State Electricity Boards (SEB), followed by 42% to various Utilizes like NTPC Ltd., PGCIL, etc. It caters to Industries by 20% of its supply. PRODUCT MIX

Power Transformers Distribution Transformers

60% 40%

27

Power Transformer Distribution Transformer

CUSTOMER CRITERION FOR VENDOR SELECTION

Quality Price Delivery After Sales Service Brand Image

24% 23% 18% 20%

15%

28

The results in the chart clearly marks that customer wants the best quality at best prices. The quality and price are the front-runners at 24% and 23% respectively followed by After Sales Service and the delivery. The customers

are not interested in the brand image in the industrial purchases.

PRODUCT QUALITY RATINGS OF COMPANY

BHEL CGL ABB Areva EMCO

21% 21% 20% 20% 18%

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Description of Various Departments Marketing

Marketing

Tendering

Execution

The Marketing Department at CG Malanpur Division operates in basically two modes: Tendering

Customers Quotation Marketing Design Order Received (Letter of Intent)

Bill of Material

Specification

Since CG Malanpur division is a Job-Type production unit, the division takes order from the customers which vary according to the customer requirements. The Marketing Department takes following steps: 30

o o o o

Enquiry received from regions Preparation of design Costing Preparation Guaranteed Technical Particular or GTP Sheet Preparation ( This document contains information about the various sub-components and variation in costing depending upon what is used)

o o o o o

Techno-Commercial Deviations Formal Offer Submission Order Finalization Order Received Contract Review

Execution Once the order is finalized by the customer, the marketing department begins the planning phase of the order. Each order takes about 21 days to get its basic designing done and this duration is divided according to the various steps involved in the complete production process. The marketing department keeps the customer informed about the progress of his order and coordinates the internal activities so as to get the order completed within the allocated duration. If the customer makes some post order changes, the designing team interacts with the customers about the concerned details and whatever technical and monetary changes should be made in the contract.

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Materials

Terms of Payment Purchase Order Price and Discounts Bill of Materials

Negotiations Vendors 103 Movement (Stock-in, No Accounting Entry) Material Received 105 Movement (Unload & Quality Assurance) Stores SAP-3

Storage & Security

In-Time Issuing It performs following major functions: It releases orders to the shop floor/vendor. Reschedules due dates of existing open orders. Analyze and update system planning factors like lot size, lead time, safety stock, scrap allowances. Cushion Stock- i) providing physically a safety stock ii) Providing cushion lead time It reconciles errors in inconsistencies and tries to eliminate root causes of these errors.

32

It identifies the key problem areas that require immediate action. It tries to solve critical material shortage problems so that corrective action can be taken which must act as an information for the next periodi) ii) Accuracy of information is most important for MRP system to act. The 2nd important issue is the precaution one has to take in order launching (to shop floor). This has to be correctly entered. iii) Before releasing an order, it ensures that the components are physically available, so periodic checking of actual inventory status and the one available in the system is necessary.

In case of a discrepancy, then few people can be deployed in checking inventory from time to time physically in the shop floor. Any correction may be entered in the system and the process continues till the discrepancy disappears. Other than the functions mentioned above the materials department also supervise the materials quality, for this two major functions are performed:

103 Movement: The 103 Movement is performed when the stock is received at the company gates, the material is checked against the list of the materials ordered however no entry accounting is done at this moment, the acknowledgment of the reception of the materials is done but its validity is not communicated.

105 Movement: The materials are then unloaded from the truck into the stores and the quality assurance department checks whether the materials received are of appropriate quality. During the 105 movement, the

33

materials department safely stores the materials received in the Stores with appropriate utilization of the space available. The materials kept in the Stores are issued to the Production Department in time according to the plans made by the Planning Department. Inventory management Transformers are not an off-the-shelf product, and are customized to meet individual customer requirements and order specifications. Each transformer is identified by assigning a job number (JN), each having a separate bill of material. Hence, they have two types of raw material inventory: -

1. Raw materials which are procured against specific JN: JN wise items are procured on the basis of monthly requirements. Depending on the process cycle, inventory for high-value items is optimized. The required levels of raw material are maintained in the inventory. Raw materials such as copper rods and CRGO sheets are procured based on specific JN's. By using technical production management tools like ERP System and CPM, they estimate our job-specific requirements for raw materials like copper rods and CRGO sheets. On receiving copper rods, the same are sent for job work to convert it into the requisite size of conductors as per the customer specifications. The process of converting the copper rods into conductors is normally completed in fifteen days. Received materials are issued to the shop floor on the basis of requisitions generated by the shop floor team.

2. Raw materials which are common to all types of transformers: The requirement for these items are estimated based upon past consumption data, future requirements, lead time, ABC analysis, and market sensitivity, minimum stock levels and reorder levels. The company keeps its raw material purchase policy flexible enough to absorb seasonal factors as well as unforeseen ups and down in the raw material requirement. Periodically, a report is developed on non-moving items and appropriate decisions are taken in time to dispose off the same. 34

The Materials Department of the company plans the material requirement during one complete operating cycle and integrates it with its strategic plans.

Production - Design, Manufacturing and Testing Equipment

They use state-of-the-art technologies in their in-house design department, and strive to upgrade the products based on customer feedbacks and engineering expertise of their technical teams. Apart from continuous improvement, every effort are being carried out to reduce the input cost by increasing efficiency in manufacturing cycle, reduction of cycle time, reduction of raw material cost and procuring improved products/machines from third-party vendors and so on. Few accomplishments achieved are: Introduction of CTC conductors have decreased cycle time for windings. Installation of the new oven in 2007 utilizing the "autoclave with Vapor Phase Drying process" which has helped to reduce cycle time of the process of drying active parts from approximately nine days to three days. Design Department Bill of Material Specification

Technical Design

NO

GTP (Guarantee Technical Particular)

YES Purchase Order

Customer Details

Acceptance of Customer

Letter of Intend Letter of Acceptance

Technical Specification 35 Planning

CGL uses state-of-the-art technologies in their in-house design department, and they strive to upgrade their products based on customer feedbacks and engineering expertise of their technical teams. The electrical designs are made using Excel softwares and mechanical drawings are made using the softwares AutoCAD, Inventor and ProE. Apart from continuous improvement, every effort are being carried out to reduce the input cost by increasing efficiency in manufacturing cycle, reduction of cycle time, reduction of raw material cost and procuring improved products/machines from third-party vendors and so on.

Production Department Production Process Diagram

36

I. Product Design and Planning Since all transformers are tailor made, on receipt of the customer order, the manufacturer commence designing the transformer as per customer needs. The drawing is then submitted to the customer for approval. The drawing and bill of material are then issued to various departments to carry out further work as per design. II. Manufacturing process a) Core Building CRGO (Cold Rolled Grain Oriented) steel sheets are used for manufacturing core laminations by the sub contractors. They cut required size of laminations by high accuracy shears. Laminations are stacked in step lap - interleaved fashion to minimize core losses, exciting current and noise level. The yokes and limbs are firmly clamped between steel channels in manner, which reduces vibration, and inherent noise.

b) Winding Annealed/half-hard copper conductors either in the form of a strip or round wires are used in winding operations and dimensions for the winding such as inside diameter and outside diameter are maintained by selecting proper Mandrel. Insulation is provided as mentioned in the design output. The coil tapping leads and phase leads are taken out according to the design output. Coils are kept under clamping pressure and sent for ovening. c) Preparation of insulating material Precompressed boards, perma wood (un-impregnated identified laminated wood which can withstand temperatures of upto 1100c); craft paper, crepe paper, etc. are used as insulating material. Components such as cylinders, wedges, spacers, rings etc. are made from these materials by different operations like cutting, edge rounding, chamfering, drilling, machining etc. d) Core Coil Assembly The coils are concentrically assembled on the core limbs as per the design details. The core and coil assembly is rigidly supported and clamped. The main leads and tapping leads of coils are then connected to bushings and the tap changers respectively. All these leads are properly clamped and insulated to ensure required electrical clearance and creepage. A tap changer is a selector switch that allows the voltage ratio of the transformer to be changed by increasing or decreasing the turns of the winding. The tapping leads of the coils are connected to the tap changer to allow the additional turns to be brought into or taken out of circuit. In some distribution

37

transformers, the tap changer switch is an off load manual switch, while in others, the tap changer is an on-load automatic switch. e) Tank finish and paintings After welding, tanks are pre treated by shot blasting. They are thoroughly cleaned before applying a coat of zinc chromate primer paint on external surface. One coat of weather resisting enamel finish paints is then applied on outside surface of the tank. To all interior surfaces a coat of heat and oil resistant paints is applied. The final coat of external paint is applied, prior to dispatch of ready transformer, fitted with accessories and fittings. f) Ovening Hot air drying is carried out to remove moisture from the active parts of the transformers. For transformers up to 33 kV class drying is carried out in well ventilated ovens for a period till insulation resistance builds up to specified value. For larger transformers, above 33 kV class, drying takes place in vacuum drying oven. The core - coil assembly is initially heated for a predetermined period by admitting heated kerosene vapour, and then they are placed under vacuum. This cycle is repeated till all the moisture is extracted.

g) Tanking Active parts (Core-coil assembly) after drying are placed in the tank. Bushings of specified rating are mounted on the top or side as per design and connected to end terminals. Tap changing switch is provided and connected to various tapping leads as per design. The top plate is tightened at specified torque and the filtered oil is filled under vacuum. The tank is tested for leakage by subjecting it to the required pressure after all other accessories are fitted on the tank. The oil is used for further insulating purposes plus the removal of heat from the windings. The assembly of the windings on the core allows gaps to enhance the oil circulation around the windings. The tank is constructed with fins or tubes to allow better circulation of the oil and to provide a greater surface area for contact with the cooling air. Very large transformers have banks of fans to provide greater air-cooling and are operated in conjunction with temperature sensors. Some transformers also have forced oil circulation using a pumping system and an oil cooling circuit. In installations where the use of transformer oil needs to be avoided, the cooling medium used can be gas (nitrogen is often used). III. Testing: We have state-of the art testing facilities including a fully equipped testing room for carrying out of all routine tests such as temperature rise test, zero phase sequence test etc. Every transformer is tested for routine tests specified in the standard specification on the completion of which a test certificate to this effect is issued.

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All transformers are tested in our sophisticated laboratory for the following routine tests conforming to National and International Specifications on the completion of which a test certificate to this effect is issued. Voltage Ratio. Winding resistance. Impedance Voltage. No load and Load Losses. No load Current. Dielectric tests.

CG - Transformer designs are proven for dead short circuits by tests conducted at the independent, accredited short circuit laboratory of the Government of India.

Finance
Invoice

Commercial Invoice Central Excise Duty

Paid Factory Pass

Customer

Branch Office

Collection of Payment After the acceptance of the order from the customer, the company starts the assembling of the transformer according to the technical specification of the customers; after the assembling and testing is completed the finance department issues an invoice and performs 3 major functions:

39

Payment of Central Excise Duty: The finance department makes sure that the central excise duty on the products is paid to the competent authorities, only when the duty fees is paid the product is allowed to pass from the factory gate. Commercial Invoice: The finance department also issues a Commercial Invoice a copy of it sent to the branch office and the other copy is sent to the customer. The payment from the customer is received on the basis of the terms of payment and other details mentioned in the invoice.

Six Sigma
The company focuses upon improving the quality of its products hence it appointed an external consultancy company SIX SIGMA Consultant Inc. to eliminate the defects in its projects. The Six Sigma started in 2002 in CGL and was instated in Malanpur Divison in 2002. The employees in this department are designated as Black Belts (for people who are higher in hierarchy) and Green Belts for the people who are lower in hierarchy at the divisional level. The department is the company is supervised by the MD himself. The problems in the production process are handled in the forms of projects and the department has to think out-of-the-box to find solution to the problems. The following methodology is used to remove defects: DMAIC Methodology Define the problems The department forms cross-functional teams to identify the problems. These teams use the Process Map to identify the key problematic areas. The problems are defined as: Y=f(x) Where X are the various factors which are responsible for the problem Y and these Xs may be in thousands. A tool knows as CED (Cause-Effect Diagram) or Fishbone Diagram is used to define Xs. Fishbone Diagram

Environment

Method

Man

40

DEFECT

Measurement

Material

Machine

The various Xs are defined from the fields listed above in the diagram. Measure and Analysis To measure the impact of the various Xs FMEA tool (Failure Mode & Effect Analysis) is used. This tool uses 3 parameters to determine the ratings: o o o Severity of Y Frequency or Occurrence of X Detection of X (As the detection of X increases its rating decreases)

On the basis of these parameters the RPN ( Risk Priority Number) of various problems is determined. The various Xs listed are categorically divided with the help of benchmark line according to the reducing affect of the X on the problem Y. The scrutinized Xs are subjected to various statistical tools to obtain the major Xs in order to find the real-life solutions to the problems.

Improve & Control The factors obtained are the major areas which can be improved and controlled to achieve the better quality products.

The company implements six sigma in every aspect of its functioning to offer best services and quality to its customers. For eg: The Green Belt supervises the IPQ (In-house Process Quality) in its divisions. Other than this the Suppliers are rated according to SQP (Supplier Quality Process) in which various Clauses are defined which need to be satisfied by the supplier only then it can be a supplier to the divison. 41

The CTQ (critical to quality) raw materials are supplied only by the suppliers who are able to clear the 75% cut-off in the listed clauses while this is 65% for the non-CTQ raw material suppliers. On an average a project takes about 3 months for completion and the half the time i.e. 1.5 months is spent in identifying the problems

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Human Resource The HR Department mainly performs the following functions: Administrative & Statutory Compliances: These are the normal day to day activities which the HR Department has to perform in the company. They see to the regulatory organizational duties concerning the employees and the rules and regulations defined in the Factory Act. Recruitment & Planning: The HR department forecasts the manpower needs of the company on the basis of the sales plan defined in the yearly budget plan. In order to fulfill the divisions manpower requirements the HR Department performs the functions of recruitment and training, the recruitment procedure consists of following basic steps: Questionnaire & Interview Salary & Wages: The salary and wages are basically divided as per the classification of the employees, they are basically categorized into 3 groups: o Trainees: The trainees are recruited from the following sources: ITI (Electrical) These trainees are basically appointed for duration of 2 years with a stipend of Rs. 2500 and are also provided with hostel facility and Mess Facility. The trainees are also provided with 7 Casual Leaves(CL) and 7 Sick Leaves(SL) as per the Apprentice Act. After the duration of the 1st year these trainees may be observed as CGL Trainee whereby they are provided with some extra facilities. o Workmen (Blue Collar) If a trainee is observed to perform well in this duration of 2 years, he may be appointed as a CGL employee (workmen) and now he receives wages on daily basis. Also, the workmen are appraised using BARS and are graded on a scale of 1to 4 (T-1 to T-4). The first promotion is awarded on the performance of 1st year and then on a basis of 5 years. The employees are now availed with 7CL and 9SL, also the employees are provided with 18 Privileged Leaves which can be availed only after duration of 240 days as a workman.

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The workmen are also given Compensatory Leaves which are subject to the number of extra shift work.

Corporate Recruited (B.E./B.Tech./ MBA) The Corporate Trainees are awarded with a stipend of Rs. 7000 with 7CL and 7SL for 1 year and when observed as a CGL Trainee a stipend of Rs. 9000. o Executives (White Collar) The white collar jobs are categorized into 3 categories: 1) Executives(E-1 to E-3) 2) Manager(M-1 to M-3) 3) Leader(L-1 to L-3) These white collar jobs have 10CL, 15SL and 30PL associated with them (PL can be availed only after a duration of 240 days). The white collar jobs are graded on a scale of 1 to 3. The Salaries are given on attendance basis and a computing software is used for the same.

Information Technology The company uses SAP3 as its ERP system for integrating various departments of the company. The companys various departments float the data on the ERP system and the access to the information is provided to the employees on the basis of their departments and their posts. Various levels of access to the information are defined in the ERP system and the ERP system is operated through the servers at the Bombay center.

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Some questions asked to the marketing manager

QUESTIONNAIRE

1.

Sector to which your organization belongs Government Semi government Industrial sector Private

2-What is your line of activity in electrical industry 45

Transmission Distribution Generation IPP Any others (please specify)

2. Type of electrical equipment usually required/dealt by you

Power Transformers Distribution Transformers

3. How do you route your purchases? Always Mostly Very often Someti mes Neve r

Tender notification through press Involved consultants Any please specify other

4. How do you finance your purchases?

46

Always

Mostly

Very often

Sometim es

Never

External commercial borrowings World bank/ADB/OE C funded Owned finances Financial institution in India Like IDBI, PFC etc Any please specify other

5. Your standard terms of payment Alway s Allow for release advance Payment Pro-rata release as per supply Mostly Very often Sometime s Never

47

Through letter of credit Through banks/financ ial institution (IDBI etc) Any other please specify 6. What is your buyer selection procedure? Always Mostly Very often Someti mes Never

Tenders, Selection on basis of prices Tenders, selection after negotiation Negotiation with the short listed manufacture rs Distributive buying from more than one party Any other please

48

specify

7. What is your buying pattern?

Annually As and when required Once in 2 years Any other please specify

8. What is your vendor selection procedure? 9.

As per pre-qualification Past experience of supplies given to you Reference list of the vendor Brand image Competition level after reforms in the distribution sector

No change Increased competition from global players Emergence of new image of existing players in this field 10. Companies with which you have executed business 49

Crompton greaves ltd (CGL) Bharat Heavy Electricals ltd (BHEL) ABB Areva EMCO VOLTAMP Kirloskar Any other please specify

11. Your rating various attributes of products 1 Quality Price Delivery After sales service Brand image 12. Your rating of the following companies in terms of quality 1 CGL BHEL ABB AREVA EMCO 2 3 4 5 2 3 4 5

13. Your rating in terms of pricing the product 1 CGL BHEL ABB AREVA EMCO 50 2 3 4 5

14. What had been the response time of the suppliers dealt by you?

Immediate Within a fortnight Within a month After a month

15. Total demand expected in the business in the next five years.

distribution

&

power

transformer

1000crs 2000crs 3000crs 4000crs 5000 Crs 6000 crs

16. Technology CGLs CGLs CGLs CGLs CGLs CGLs technology technology technology technology technology technology is is is is is is outstanding very good good average poor very poor

17. Service after sales: How will you rank the following Outstandin Very good g or expensive Good Average Poor Very poor or chea p

Promptness

51

of response Problem repairs Technical competence Promptness of response Timely delivery

18. How will you rank CGL for its range of transformers

Wide range

Inadequate

19. Contribution of CGL in National economy High Moderate Low

20. Customer retention Major strength Minor strength 52

Neutral Major weakness Minor weakness

21. How will you rank CGL for providing invoices?

the complete and accurate

Complete and Accurate

Incomplete and Inaccurate

CONCLUSION

I w as given t he opportunity t o do my summe r i nterns hi p& project in the CGL, which is the largest transformer manufacturing enterprise. 53

To conclude this project report, I can say that the company holds a good market share and is managing well, even when there is a big competition market in front of CGL. The study proves that the com pany has e ntered i nto the technical

collaboration with many i nternational firms through acquisitions. Where the competition, is increasing day by day like this Crompton Greaves is changing its working style in performance and providing after sales services to the customers.

BIBLIOGRAPHY

INTERNET

www.powermin.nic.in

www.google.com , www.cea.nic.in

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