Case Study : Crompton Greaves Ltd Operation Overhaul

Crompton Greaves’ Operation

Overhaul

By: Jude Abreo (81), Ketan Mokal (82) ,Mridu Sharma (83)

Namish Sharma (84), Namrata Kumar (85), Nikhil Nagdeote (86)

100% subsidiary of the UK based CPL, under the name of

PWL.

GCCL acquired a 26% stake, which was later increased to

50% in 1956.

A joint venture company between GCCL & CPL was

amalgamated with PWL

1937 - 66 1970 - 85POST

1986

Conversion from single location limited product manufacturing

company into a multi location multi product manufacturing

company.

Entered into technical collaboration agreements.

Experience of all time low profitability.

Conversion of seller's market into a buyer's market .

Declining in productivity

1937 - 66 1970 - 85POST

1986

Entrance in the telecommunications and industrial electronics

sector.

Undertook turnkey engineering projects

Began providing information technology services.

1937 - 66 1970 - 85POST

1986

Timeline Operations Marketing Finance IT Systems HR External

1982-84

Falling demand,

higher production

capacity and higher

employment

resulted in declining

productivity

Change from seller's

market to buyers

market

Market

Gripped By

Recession

Raw material (steel)

storage time was

147 days although

the processing time

was 1-48 hours

Marketing searched

for production orders

based on the

planning department

optimum load

calculations

1990-95

Competition with

unorganized sector

Low

margins

and low

pricing

power

Fast information

delivery/sharing intra

and inter company is

missing; rectified

with the use of

infotech systems to

vendors also.

Negotiations

with labor

unions for

productivity

increase of

38% in 1991

and 20% in

1994

Low entry

barrier to

motor and

consumer

electronics

manufacturing

High competition from

MNC's in telecom

equipment

manufacturing

2000

onwards

Production

capacities not

consolidated

Net

losses

reported

Only 1.5%

of

turnover

was spent

Measures taken at Nashik Plant

Shop Floor workers sent to visit customers for first hand

responses.

Cross functional team (CFT) formed to minimize

rejections & deliveries.

Value added management approach.

During 1993-95, unit had more than 21000 Kaizens,

making it highest number of kaizens in the country.

Measures taken at Nashik Plant

Single Piece Flow(SPF).

Arranging machines in anticlockwise, ‘U’-Shape.

This concept was combined with kitting to reduce wastage

and better inventory control.

Inventory carried decline to 2.35 months(1994-95) from

2.87 months(1992-93).

Inventory turnover ratio was improved due to Computerized

model.

Measures taken at Nashik Plant

Improved housekeeping and material organizing.

Layout was changed to minimize transport.

None of the, machines were grounded, which meant

layout can be change easily.

Detailed instructions both in English & Marathi were

displayed at various spots.

To reduce energy wastage various cost of energy per

machine per hour charts were displayed.

Single Piece Flow (SPF)

For Example

If there was No Material or No order, a

red bulb lit up; Similarly basket was full

,a yellow bulb lit up.

Due to this efficiency improved by 10 %

CFT Initiatives

For Example

A malfunctioning in magnetic

sensor which cost Rs.80,000 and

take six week to import was

fixed in just Rs.440.

It was set right by local

manufacturer within two days.

Andon Devices

For Example

Any fault in insulation of

copper wire resulted in a

signal from the andon

device.

Pipe Colour Coding

Color Coded Dies & Fixtures

Improvements(1990-95)

Turnover doubled – more than 1000 crore

Productivity – 12 Lakh/man/yr from 6 Lakh/man per yr

Profits increased by six times.

Managerial efficiency improved from 23% to 51%.

Manpower requirement reduced by 30 %

With job security union assured productivity increase of 38%

in 1991, and further 20% in 1994.

Improvements(1990-95)

Employee training- 3% from 1%

Skilled workers contributed to routine task at the same time they

were given authority .

With same production volume

Space required reduced to 1/4th

Turnover /Rotation of space increased 3 times

Small batches offer more flexibility & higher customization

Inventory turnover – 2 (1992) to 7.5(1995)

Down again

Entry barriers were low

Domestic market was dominated by unorganized players

Telecomm market – high competition

CGL reported net losses in the fiscal 2000

Low investment 1.5 % of the turnover on R & D

Activities in late 1990s

Plans to split in three companies

Power and Industrial

Transformers, Switchgears, Circuit breakers, HT and LT motors, Alternators etc

Spread its root in India, Belgium, Ireland, Canada, USA, Ireland, Indonesia and

Hungry

Consumer Products

Fans, Light Sources, Pumps, Geysers, Mixers etc.

Digital

Telecom Service Providers both govt. and private

Procedural delays led to plan being deferred

Activities in 2000

CGL setup 5 member committee to review its operation

Sudhir Tehran was the head of this committee, taken over

from Nohria as CEO in 2000

Focus on lessening Cost (First Phase)

Consolidation of production capacities at factories

Closing down some Corporate Offices

Shifting of offices

Reducing Employee Strength

Major Acquisitions(Second Phase)

• Pauwels Group of Belgium in May 2005

Strong market Presence

excellent list of satisfied global clients

Transformed Indian leading entity to global leader

• Ganz Transelektro and its Associate Company Transverticum

in Hungary, in October 2006

• The acquisition of Microsol Holdings Limited, Ireland, in May

2007

Third Phase

Synergising Operations

Integrate its resources involved in R&D, manufacturing

and marketing

Benefiting from Order Backlog

To capitalise on Pauwels’ large order backlog

Transforming from Products Company

to Solutions Company

Historical Scenario of Net Sales

0

10000

20000

30000

40000

50000

60000

70000

80000

2000 2001 2002 2005 2006 2012 2013

Net Sales

Rs. In

Mn.

Years

Historical Scenario of EBIDTA & PAT

-2000

-1000

0

1000

2000

3000

4000

5000

6000

7000

8000

2000 2001 2002 2005 2006 2012 2013

EBIDTA

PATRs. In

Mn.

Years

Awards and Achievements:

Received Golden Peacock Innovative Product /

Service Award-2007.

Crompton Greaves bags CII-EXIM Bank award for

excellence,2010

CG wins three contracts from PGCIL valued at Rs

231.7 Crore.

CG wins Wind Onshore Projects in France

Thank You