Industry2 0 vol 01 issue 03 january 2014 by bhupinder sharma

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A 99 MEDIA PUBLICATION

VOLUME 01

ISSUE 03

JANUARY 2014

PRICE 100

Cover Story Financial Management

TRANSPORT EXCELLENCE

Beside adoption of technology, a social change is must Pg 22

Ravichandran Purushothaman President, Danfoss Industries

Y. Srinivas Reddy Managing Director, Bevcon

Financial Management

FIXING THE HURDLE RATE

Risk measurement is critical to arrive at an appropriate hurdle rate Pg 40

2RENOWNED T. V. Narendran Managing Director Tata Steel Ltd., India & SEA

MANAGING DIRECTORS REVEAL THEIR BUSINESS STRATEGIES

Vineet Agarwal Managing Director Transport Corporation Of India Ltd.

editorial Volume 01 | Issue 03 | january 2014

Managing Director: Dr Pramath Raj Sinha Printer & Publisher: Kanak Ghosh Editorial Group Editor: R Giridhar Managing Editor: P K Chatterjee (PK) Design Sr. Creative Director: Jayan K Narayanan Sr. Art Director: Anil VK Associate Art Director: Anil T Sr. Visualisers: Manav Sachdev, Shigil Narayanan & Sristi Maurya Visualiser: NV Baiju Sr. Designers: Haridas Balan, Manoj Kumar VP, Charu Dwivedi, Peterson PJ & Dinesh Devgan Designers: Pradeep G Nair & Vikas Sharma ONLINE & MARCOM DESIGN Associate Art Director: Shokeen Saifi Sr.Designer: Rahul Babu Web Designer: Om Prakash PHOTOGRAPHY Chief Photographer: Subhojit Paul Sr. Photographer: Jiten Gandhi Sales & Marketing Vice President: Naveen Chand Singh (09901300772) National Manager - Events & Special Projects: Arjun Sawhney (09880436623) National Manager - Print & Online: Rajesh Kandhari (09811140424) Product Manager: Siddhant Raizada (09873555231) GM (South & West): Vinodh Kaliappan (09740714817) Regional Mgr. (North): Vipin Yadav (09999885515) Regional Mgr. (South) : Anshu Kumar (09591455661) Production & Logistics Sr. GM - Operations: Shivshankar M Hiremath Manager - Operations: Rakesh Upadhyay Assistant Production Manager: Vilas Mhatre Ad Coordination: Kishan Singh Assistant Manager - Logistics: Vijay Menon Executive - Logistics: MP Singh, Mohamed Ansari & Nilesh Shiravadekar office address Nine Dot Nine Interactive Pvt Ltd Office No. B201-B202, Arjun Centre B Wing, Station Road,Govandi (East), Mumbai 400088. Board line: 91 22 67899666 Fax: 91 22 67899667 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 For any customer queries and assistance, contact help@9dot9.in Printed and published by Kanak Ghosh for Nine Dot Nine Interactive Pvt Ltd A-262, 2nd Floor, Defence Colony New Delhi-110024 Board line: 91 22 67899666 Fax: 91 22 67899667 Editor: Anuradha Das Mathur Plot No. 725 GES, Shirvane, Nerul, Navi Mumbai 400706. Printed at Tara Art Printers Pvt ltd. A-46-47, Sector-5, NOIDA (U.P.) 201301 www.industry20.com

Technology

Replacement

echnology accelerates progress. It does not mean that mere deployment of a new technology will magically improve the existing situation. Some manufacturing leaders recently revealed that they believe deployment of better technology always yields better results. To the contrary, output always depends on how efficiently you do use the technology. It’s a fact that – in many cases, blind submission to the contemporary waves, drive the decision makers away from examining the versatility, and utilising the full potential of their existing technologies. Examples are not in dearth, where even the technology developer or vendor could not conceive the way of utilisation that the user has developed with the technology. Especially, in a situation of bad economic environment, before replacing the existing technology, every manufacturer needs to repeatedly cross examine the merit of his/her decision. Traditionally, when we think of buying a new technology, we check its pay-back period only, but beside that we also need to scrutinise how much enhancement in profitability over the use of the existing one is truly possible with the new one.

industry 2.0

P. K. Chatterjee (PK) editor@industry20.com

Also, focusing on the possibilities of upgrade or retrofit is important at this juncture. Generally, in work environments, when a challenge first appears, we try to somehow manage that and continue the process – presuming that there is a trick. One or more of the operation team members take credits to know the trick. However, at any such event a thorough research is essential to diagnose the true reason. Once that is found, mending the system becomes easier, and it fetches a permanent solution. It’s true that every technology has its own life, and in today’s situation it is too short. However, complete replacement of a technology in a plant also offers new challenges. Besides the economic factor, the first major challenge arises from grooming the users and the second one is seamless integration. Recently, one technology head from a renowned manufacturing company explained to me that – when they had a good volume of orders in hand but they found a new technology could make them more productive, they decided to go for a new plant with the new technology. The old plant is still running with several innovations. The company is doing good business.

- technology management for decision-makers | january 2014

contents departments Editorial....................................................01 Advertisers’ Index................................... 02 Industry Update.......................................04 Market Trend.............................................14 Techwatch................................................20 Event Report............................................43 Product Gallery....................................... 46 Business Index........................................ 48

advertisers’ index HP..........................................................IFC

cover story

Mahindra Trucks...............................3, 5, 7

22 Encouraging Excellence In The

Transport Industry

Dell.................................................... 10, 11 Hannover ................................................17 Bry Air Asia............................................. 21

In a large country like India, all challenges of the transport sector cannot be addressed by the govt. alone, so a PPP model is inevitable.

Everest Pressure & Vacuum

Cover Design: Anil T

Premium Transmission......................... BC

business info

Supply Chain

12 Low Growth Rate

29 Predictions For 2014 Operational resilience will come to the

World’s crude steel production was 127 million tonnes in November 2013...

forefront of managing supply chains...

Economy & Expectations

Mining & Minerals

17 The Turning Point

30 Developing The Lignite Sector Production of lignite has increased...

Global economy is still under risks...

Systems............................................... IBC

36 Food Preservation Radiation processing of food can be undertaken for export markets too...

Safety & Security 38 Lighting With Security In a facility, multiple systems are monitored and managed remotely...

Survey Revelations

Challenges & Solutions

financial management

18 Improving ESDM Industry

34 Solving Machining Mystery

40 Fixing The Hurdle Rate Risk measurement is critical to arrive

Value-added mfg. is must...

Market & Strategy

A UK-based manufacturer eliminates the hand finishing processes…

27 “We will make new facilities...” T. V. Narendran, MD, Tata Steel, talks on their business strategies…

28 “TCI will focus on express and supply chain business...” V. Agarwal, MD, TCI, unfolds part of his operational strategy for 2014...

january 2014 | industry 2.0

- technology management for decision-makers

at an appropriate hurdle rate...

Quality & Innovation 42 Saving Energy In Steel Mills Siemens offers a new solution...

Management & Strategy 44 Bridging The Gap Is Important Customer experience strategy directly influences competitiveness...

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industry update CG opens its smart grid devices manufacturing facility

G has launched its state-of-the-art Smart Grid facility at the Global Village, in Bengaluru for full-fledged manufacturing of Smart Grid devices. Besides manufacturing Smart Grid devices, the facility will support economic development, foster job creation and boost an understanding of Smart Grid solutions in the energy field. The Smart Grid devices manufactured in this facility will offer numerical solutions to Indian Utilities and Industries in the Transmission and Distribution (T&D) segment, and provide improvement in the electric grid to make it more efficient and reliable. CG has invested 80 million INR in this facility, which can employ more than 100 people. The Smart Grid facility will manufacture Substation Automation products, Distribution Automation devices, Pro-

Marubeni bags JSWSL’s contract

SW Steel Limited has awarded a contract to Marubeni Corporation (Marubeni), for the supply of a slab sizing press for its hot strip mill. In the project, Marubeni will be the prime contractor and MitsubishiHitachi will design and supply the mechanical equipment. The slab sizing press is planned for commissioning by December 2015. ‘Slab sizing’ is a preparation process, which preprocesses slabs (semi-finished product) before they are loaded to a hot strip mill. The process enables increased production of hot rolled coils by preventing yield losses. The slab sizing press will be located in front of the hot strip mill. Steel consumption in India is expected to expand in the medium- and long-term as a result of the country’s burgeoning middle-class.

january 2014 | industry 2.0

Laurent Demortier, CEO and MD, of Avantha Group Company CG

tection and Control systems, Advanced Metering Infrastructure (AMI) and Telecommunication Solutions. It will also

offer Global Engineering Services such as Systems Integration, Installation, and Commissioning. The facility is fully equipped with modern equipment to ensure an annual production capacity of 10,000 units of Power Line Carrier Communication Terminals (PLCC) and Intelligent Electronic Devices (IED). Commenting on the inauguration, Avantha Group Company CG’s CEO & Managing Director Laurent Demortier said, “The opening of CG’s Smart Grid manufacturing facility in Bengaluru is a result of intense planning with the Indian stakeholders: customers, regulators and employees. I thank all of them for what they have achieved so far. Expansion in Smart Grid markets is a key strategy of CG. After America and Europe the Bengaluru facility will spearhead Smart Grid operations in Asia.”

Exports of pharma products grew in Dec 2013

ndia’s pharmaceutical products exports in December 2013 has grown to US$ 857.61 M, an increase of 17.52% compared to November 2013, reports InfodriveIndia.com, an Indian research company involved in export & import market research. This finding is based on export data of the research company and export shipping bills filed at Indian customs by exporters from India through December- 2013 at more than 110 ports in India – like JNPT, Bombay Air and Sea, Chennai Air & Sea, Delhi IGI Air, Delhi Tughlakhabad ICD, Delhi Patparganj, Kolkata Air and Sea, Bangalore Air and some more. Pradeep, Chief Research Associate of InfodriveIndia.com, informs, exports of medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses has grown month on month basis by 19.48%. Total value of exports in December- 2013 was 785.63 M, compared to November 2013, there was an increase of 128.08 M, growth

- technology management for decision-makers

rate in percentage terms is 19.48%, the major destination countries were the US, South Africa, Kenya, Nigeria and Russia and major Indian ports were Bombay Air, JNPT, Hyderabad Air, Hyderabad ICD and Bengaluru Air. Exports of medicaments consisting of two or more constituents has fallen month on month basis by -8.11%. Total value of exports in December- 2013 was 37.64 M, compared to November 2013, there is a decrease of -3.32 M, growth rate in percentage terms is -8.11%, the major destination countries were Nepal, the US, China, Zimbabwe and Germany and major Indian ports were JNPT, Raxaul, Hyderabad ICD, Bengaluru Air and Delhi TKD ICD. Exports of pharmaceutical goods has grown month on month basis by 45.72%. Total value of exports in December- 2013 was 20.74 M, compared to November 2013 there was an increase of 6.51 M, growth rate in percentage terms is 45.72%.

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industry update Air Products’ new manufacturing facility to start operations

ir Products recently held a ceremony to dedicate its new Liquefied Natural Gas (LNG) heat exchanger manufacturing facility in Manatee County, Florida – which will double the company’s manufacturing capacity of its proprietary technology. The facility, adjacent to the Port of Manatee, currently employs over 50 people and will begin manufacturing as scheduled within the month. The location for Air Products’ Port Manatee manufacturing facility provides ready access to port services and will facilitate global shipping of what is typically already very large equipment. It will also allow Air Products to now manufacture the even larger LNG heat exchangers that are being demanded by the market. The roughly 300,000-square-foot facility could employ approximately 250 employ-

DICV receives several awards

aimler India Commercial Vehicles (DICV), the 100% whollyowned subsidiary of Daimler AG, has been bestowed with the ‘CV Maker of the Year’ award by Apollo-CV awards. For its Bharat Benz trucks 3128 and 1217, the company has also won the ‘HCV Cargo Carrier (above 25 tonnes GVW)’ and ‘CV Innovation of the Year’ awards respectively. In 2013, BharatBenz 3123 won the ‘Best Rigid Haulage Truck of the Year’ and Bharat Benz as a brand won the ‘CV of the Year’ award. This was within three months of the launch of its trucks in the market in September 2012. The awards, besides adding fillip to the brand’s performance in India, also acknowledges the long sought positive transformation the brand Bharat Benz has brought to Indian truckers.

january 2014 | industry 2.0

John McGlade, CEO, Air Products, delivers remarks at dedication of the company’s new LNG equipment production facility in Port Manatee, Florida.

ees in a four year ramp-up period. The company has manufactured LNG heat exchangers as large as 15.5 feet (4.7 metres) in diameter, 180 feet (55

metres) long, and weighing as much as 500 tons (455 metric tonnes) at its existing Wilkes-Barre facility for over 45 years.

Agrochem, pesticide markets to grow

ccording to Market Research Reports’ recent study, the expansion of the global agrochemical and pesticide industry is forecast to reach 8.7% p.a. in the coming years. Between 2007 and 2013 the market increased with an average annual growth of 9.8%. Currently, herbicides, plantgrowth regulators, and anti-sprouting products cover the largest part of the world market accounting for 41.5% of the demand – while the remaining market share is divided between insecticides (27.1%), fungicides (21.5%), disinfectants (3.4%), and other agrochemicals and pesticides (6.5%). As per this report, China, France, Germany, India and the US represent the largest agrochemical and pesticide markets. Based on the analysis and an advanced model that takes into account the actual market size, trends, forecast market growth, and changes in the market environment, Global Research and Data Services calculates the Market Potential Rates, the pre-

- technology management for decision-makers

Ranking 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

Country China United States India Azerbaijan Turkey Egypt Macedonia Moldova Ghana Germany Ukraine France Malaysia Slovakia Poland Senegal Philippines Morocco Italy Estonia

Market Potential Rate 0.79 0.38 0.20 0.18 0.17 0.16 0.15 0.14 0.14 0.12 0.12 0.11 0.11 0.11 0.11 0.11 0.10 0.10 0.09 0.09

dicted market potential of the country in the coming years. Larger the Market Potential Rate, more potential the market has in the next years; and conversely, smaller the rate, less potential the market is considered to have in future. Based on these Market Potential Rates, the top 20 highest potential agrochem and pesticide markets in the coming years are presented in the table.

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industry update DCBL completes one-year of operations in north-east

almia Cement Bharat Limited (DCBL) recently celebrated one year of operations in the North East. The company launched its operations in 2013 on the plank of ‘’Kommitment to the nation - Now in North East’ with Mary Kom announced as the brand ambassador for the company in the region. The anniversary event held at the Spring Valley Resort, Sonapur, was attended by 400 people including sales promoters, customers, key dealers, employees and partners. To mark the completion of the landmark first year, the company unveiled a coffee table book ‘365 days of excellence,’ encapsulating events and achievements of the brand since its launch in the North East. “Dalmia Cement operations in the North East have played a pivotal role in sustaining growth, signifying best-in-class quality and strength. It is a moment of pride to be the only brand to have achieved over a million tonnes of sales in just the first year of operations in North East,” said M. C. Kini, CEO - North East, Dalmia Cement Bharat Limited.

WACKER group expands its technical centre

he Munich-based chemical group WACKER is strengthening its presence in India. It has opened its expanded technical centre for silicone products in Amtala near Kolkata. Operated by the joint venture Wacker Metroark Chemicals (WMC), the enlarged regional competence centre now comprises state-of-the-art applications technology – and test equipment for silicone products needed in the textiles, personal care, automotive and construction industry. The chemical group is thus responding to the growing demand for silicone products, and the emerging needs of regional customers for technical support and expertise. The investment amounts to around half a million Euro. Continued growth in the Asian region prompted enlarging the technical centre in the north-east of India. The extended centre, now spanning about 1,800 square metres and furnished with the state-of-the-art equipment, supports silicone customers in the personal care, textile, automotive and construction sector in the development of new products and applications for the region’s markets. Soumitra Mukherjee, Managing Director of WMC, praised the investment as an important milestone for the joint venture. He said, “WACKER and Metroark have been working together with great success for over a decade. With our range of high quality silicone

products, we are already market leaders in many industries in India today. And with the new labs, we are able to offer our customers even more effective local support.” Dr. Christian Hartel, President of WACKER SILICONES, said, “By advancing our lab capabilities, we will leverage our local competence to fulfill our customers’ needs in the growing

Wacker Metroark Chemicals’ enlarged technical center in Kolkata

regions of India and South East Asia even better. Our top-notch equipped technical centre for silicone applications sets new standards in service, advice and transfer of expertise, offering our customers and business partners considerable added value.” Levi Cottington, Executive Director of WMC, emphasised: “The investment in our facility shows WACKER’s commitment to the Indian market. It clearly indicates that our company continuously expands its technical expertise in Asia.”

BASF expands capacity for producing mobile emission catalysts

ASF Catalysts India Private Limited (BASF) is expanding its mobile emissions catalysts production capacity in Chennai. After completion of a 47,000 sqm facility, the company will have an enhanced emissions catalysts operation in Chennai – with new production lines and manufacturing capabilities. Startup has been planned in the first quarter of 2015. On project completion, a total of nine manufactur-

january 2014 | industry 2.0

ing lines will be housed in the new site, producing light duty, heavy duty and motorcycle emissions control catalysts to meet growing market demand and customer technology needs. “The pending expansion of Bharat Stage IV1 (Euro IV equivalent) emissions control regulations in India combined with overall vehicle production growth will drive a significant increase in demand for our advanced emissions

- technology management for decision-makers

control solutions. BASF is investing to more than double our manufacturing capacity in India to help customers meet these emerging needs. At the same time, this expansion project will allow us to establish Chennai as our regional production hub to serve the fast-growing motorcycle manufacturing markets in India and ASEAN,” said Anup Kothari, Vice President, Mobile Emissions Catalysts Asia Pacific.

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DISA India to launch new moulding machines

ISA India will launch another horizontal flask-less moulding machine – The DISA MATCH 24/28 at the upcoming IFEX 2014. This year will witness the 10th edition of International Exhibition on Foundry Technology, Equipment Supplies and 5th edition of Cast India Expo – Exhibition for Indian Casting Manufacturers, which is scheduled for February 7-9, 2014 at Ahmedabad, Gujarat. This event is India’s only trade fair on foundry industry. “We at DISA India are proud to bring forth yet another exciting launch at IFEX this year. With the

launch of the first fully made in India MATCH 24/28 machine, we believe it will serve as a game changer for the Indian Foundry market. Previously, we launched the DISA MATCH 20/24, which was designed and manufactured to deliver high capacity of 180 un-cored mould/hour and now, we are pleased to report that there are more than six lines in operation in Indian foundries. It is indeed a moment of pride for the DISA team that the Indian operation is now introducing the latest technology locally,” said Viraj Naidu, Managing Director, DISA India Ltd.

DISA MATCH 24-28 (NXPowerLite)

BORG Energy to invest in India

ORG Energy India, a subsidiary of BORG, Texas USA, has announced its plans to invest USD 45 million in Indian market for rural electrification, and EPC (Engineering, Procurement and Construction) projects within next six months. The company plans to power 18,000 homes in northern India in next 150 days with BORG Astra Plus Home Series, a range of fully loaded micro solar power plants, which are specially designed to meet the energy needs of domestic households and Solar Farm Master Series Controller targeted at generating power for irrigation projects in India. In the words of Dr. Boaz Augustin, Jr. Managing Director, BORG Energy, Asia Pacific, “We will invest 45 Million USD in India within next six months. We commit 25 million USD for rural electrification projects using solar power, and 20 million USD will be used for EPC Projects in U.P., Tamil Nadu, Rajasthan, Bihar and Andhra Pradesh. We have ambitious plans to install BORG power plants in 2.5 million households in various states of India over the next three years. We are currently developing appropriate retail network of 220 Borg Power Play show-

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Dr. Boaz Augustin, Jr. Managing Director - Asia Pacifc, BORG Energy

rooms in India. BORG Play showrooms are BORG’s exclusive outlets offering experience zones to consumers.” He further stated that the challenge lies in creating greater awareness for green and clean technology, highlighting benefits of solar power by providing power security and generate own electricity for self consumption, thereby reducing dependence on

industry 2.0

grid power to the Indian consumers. In India, there is currently supply-demand gap of 12%, necessitating the need to introduce power cuts, both scheduled and unscheduled to all types of consumers. He added that BORG product line is customised for Indian power conditions. BORG’s products will be distributed through distributor network and franchisee model in India.

- technology management for decision-makers | january 2014

business info

Low Growth Rate World's crude steel production for the 65 countries reporting to the World Steel Association (worldsteel) was 127 million tonnes (Mt) in November 2013, an increase of 3.6% compared to November 2012. World steel capacity utilisation ratio 100% 90% 80%

81.1%

80.7%

2012

Indian company JSW Steel Ltd., belonging to the JSW group, has reportyed Crude Steel production for November 2013, at 10.72 lacs tonnes showing a growth of 78 per cent over the corresponding month of the previous year.

100%

75% 5

50%

25% Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13

january 2014 | industry 2.0

China (Mt)

World (%)

- technology management for decision-makers

Jul-13

Aug-13 Sep-13 Oct-13 Nov-13

Row (%)

China (%)

-5

Growth (% year on year)

Production (Mt)

Row (Mt)

75.8%

Oct

Nov

Sep

Aug

Jul

Jun

May

Apr

Mar

2013

Achievement of Jsw Steel

125%

Feb

Jan

Dec

Nov

Oct

Sep

Jul

Aug

50%

World (Mt)

77.5%

60%

150%

Jun-12

79.0%

71.5%

Crude steel production

80.0%

75.9%

75.0%

74.4%

70%

Jun

hina’s crude steel production for November 2013 was 60.9 Mt, up by 4.2 per cent compared to November 2012. Elsewhere in Asia, Japan produced 9.3 Mt of crude steel in November 2013, an increase of 8.9 per cent over November 2012. South Korea’s crude steel production was 5.6 Mt in November 2013, down by -0.2 per cent on November 2012. In the EU, Germany produced 3.7 Mt of crude steel in Nov. 2013, an increase of 5.7 per cent compared to Nov. 2012. Italy produced 2.1 Mt of crude steel, -4.5 per cent less compared to November 2012. France’s crude steel production was 1.3 Mt, an increase of 3.5 per cent on November 2012. Spain produced 1.2 Mt of crude steel, up by 15.5 per cent on November 2012.

Turkey’s crude steel production for November 2013 was 3.1 Mt, up by 3.0 per cent on November 2012. In November 2013, Russia produced 5.5 Mt of crude steel, a decrease of -0.7 per cent compared to the same month of 2012. Ukraine’s production was 2.5 Mt in November 2013, down by -7.9 per cent on November 2012. Brazil’s crude steel production for November 2013 was 2.7 Mt, a decrease of -2.8 per cent compared to November 2012. The US produced 7.1 Mt of crude steel in November 2013, up by 5.3 per cent on Nov. 2012. The crude steel capacity utilisation ratio for the 65 countries in November 2013 was 75.8 per cent and it is 0.3 percentage points higher compared to November 2012. It is -1.7 percentage points lower than October 2013.

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market trend

Booming

Second Hand Culture In the present circumstances, when overall economic scenario is not so conducive to the growth of business, the volume of India’s second hand and recycled market (used goods market) is growing.

hether it is consumer product, automobile, industrial raw material or machine, owing to the economic slowdown and high cost of capital, India’s second hand and recycled market is likely to grow up to Rs 1,15,000 crore in 2015 from the current estimate of Rs 80,000 crore, indicates an ASSOCHAM study. “Whether consumer goods like electronics, durables or automobiles – used cars, or the industrial machinery in the capital

january 2014 | industry 2.0

goods sector, the options of retrofitting and re-usage are being considered more actively than ever before,” says D. S. Rawat, Secretary General ASSOCHAM, adding that high interest rates, risk aversion and subdued investment appetite have led to this state of ‘second hand’ culture. When it comes to consumer items, the rise in income may not be commensurate to the rise in aspirations, and the insatiable aspirations are leading consumers to the second hand market to fill the gap, reveals the ASSO-

- technology management for decision-makers

CHAM paper on “Growing second hand market in India.” The second hand market (used goods market) in the country is estimated at around Rs 80,000 crore including the automobile segment. According to Rawat, India’s second hand market was worth about Rs. 60,000 crore in 2011, it went up to Rs. 69,000 crore in 2012 and to Rs. 80,000 crore in 2013, and is expected to touch whopping Rs. 1,15,000 crore by 2015 with the Compound Annual Growth Rate (CAGR) of about 15%. With the current economic slowdown, majority of the households look for cheaper alternatives for everything. Nearly 45% of the respondents to ASSOCHAM’s survey feel that buying second hand goods from reliable platforms is worthwhile. “Needs have multiplied but income hasn't," revealed majority of the respondents justifying their choices. For a largely floating community of young professionals in all metropolitan cities of India unwilling to compromise on their lifestyle needs, the second hand market has been offering a more convenient and financially viable means of shopping. “Brand buy-backs, exchange schemes, online platforms and

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mobile marketplaces offer smart and convenient options for consumers keen to ‘trade in to trade up,’ alleviate financial strains and/or quell environmental and ethical concerns,” adds the ASSOCHAM paper. Rawat further points out that it's not just incomes that are driving second hand markets. The product cycles are smaller and durability is coming down, which has also given a fillip to second hand markets. Now, because of shorter life cycles of products, the replacement demand has gone up, and low-cost new products and second hand markets have become substitutes. The entire second hand market is slowly moving from a highly fragmented business to a more organised avatar, he adds. Till eight or ten years back, the second hand market in the country was primarily driven by local specialised second hand zones like Chor Bazaar in Mumbai, Daryaganj in New Delhi etc. Demand for second hand consumer durables, especially the lower priced items like mobile phones, seems to be dipping. But the demand for textbooks, tablets, DVD and other high-end handsets remains robust, there are some product categories that are still going great guns like second hand text books etc.

Growing aspirations of the middle class and the dream of owning a car have fuelled second hand car sale.

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D. S. Rawat, Secretary General ASSOCHAM

Women are more likely to buy second hand books, luxury goods items, apparel; while men are more likely to buy second hand CDs, DVDs, used cars, motorbikes etc. In making a choice between buying new or used, 18-24-yearolds are the most likely to opt for second hand DVDs and CDs as a first choice, while the over-55s prefer buying these new. However, most dealers across major cities say that sales of second hand products in categories such as refrigerators, Air-conditioners and washing machines are definitely lower than what they used to be, especially for the past one or two years. The used-car market in India is highly fragmented; only 20% is organised. There are authorised dealers such as Maruti's True Value, Hyundai's Advantage and Honda's Auto Terrace etc., who have easy financing options. But higher prices, due to warranty and quality checks, are a deterrent and many invariably opt for the unorganised segment. But, this segment is likely to grow with more players likely to join the potential market. Mercedes, Audis and BMWs continue to be favourites amongst the category of second hand luxury cars – while Skoda

and Volkswagen cars are the most sought-after ones in the slightly low-end brands. Growing aspirations of the middle class and the dream of owning a car have fuelled second handcar sale, and spurred the growth of the used car market. While the organised trade accounts for 20 per cent of the total volume of sales, the unorganised trade accounts for the remaining 80 per cent. The paper further points out, there's low organised second hand market for consumer durables in India. ASSOCHAM experts say 25 to 30% of the product lines in each of these segments get upgraded every year, and the shorter product cycles translate into increased replacement demand. While fridges, washing machines etc., witness moderate demand, LCD TVs seem to be selling like hot potatoes. The market typically consists of second hand dealers coordinating with showrooms and picking up items junked by customers as part of an exchange offer by a retailer, discloses the paper. Dealers further say that the hike in petrol prices has also added to the growing interest of people in the used car market, and people are coming out to look out for better deals instead of investing double the amount on a new car. After automobiles, textbooks are the most active category in the second hand segment. The textbooks constitute 25 per cent – the highest share of the 'forsale' listings on OLX, an online classified site. The second hand market for textbooks is booming like anything. Many websites have come up solely dedicated to selling second hand books, popular names like madbooks.com, second hand booksindia.com etc.

industry 2.0

- technology management for decision-makers | january 2014

market trend

Economy Still A Challenge ASQ 2014 Manufacturing Outlook survey indicates that 65% of manufacturers experienced revenue growth in 2013, but nearly half still consider the economy the biggest challenge.

hile 64% of respondents worldwide network-based data and information that provides expect increased revenue in 2014, that real-time understanding, reasoning, planning, manpercentage is down from years past, agement and related decision making of all aspects albeit slightly. In last year’s Manufacof a manufacturing and supply chain enterprise. turing Outlook Survey, 65% anticipated growth in According to the results, only 13% of those sur2013, and 66% of respondents to the 2012 outlook veyed said they use smart manufacturing within survey anticipated growth in 2013. In both 2012 their organisations. Of those organisations that and 2013, 70% of manufacturers said they expericlaim to have implemented smart manufacturing, enced revenue growth compared to just 65% in this 82% say they have experienced increased effiyear’s Manufacturing Outlook Survey. ciency, 49% experienced fewer product defects and Despite the percentage of manufacturers expect45% experienced increased customer satisfaction. ing raised revenues in 2014, 46% of the respondOf the organisations that reported using smart ents say the economy continues to be the biggest manufacturing, cost was the primary challenge, hurdle to operations, while 18% said the shortage followed by access to necessary infrastructure, and of skilled workers is the biggest challenge they overcoming resistance from employees. foresee in 2014. Other hurdles identified include, Thirty-three per cent have applied them at the ‘global competition,’ ‘lack of new products,’ ‘govplant levels, and 29% have integrated smart manuernment sequestration’ and ‘lack of leadership.’ facturing across all levels of the organisation. Respondents to the ASQ 2014 Manufacturing Of the manufacturers that have not implemented Outlook Survey represent the aerospace, automosmart manufacturing, interest, cost and resistance tive, food, medical device, pharmafrom management continue to stifle ceutical and utility industries, among deployment, according to the survey. others. The survey was fielded in a The results of the survey show that digital survey Nov. 21-Dec. 5, 2013. 37% of those surveyed have no interof the respondents worldMore than 700 manufacturing profesest in smart manufacturing, while wide experienced revenue sionals around the world responded to 29% say cost is the biggest challenge. growth in 2013. the survey. In addition, 14% said resistance from According to ASQ Chair John Timmanagement is the biggest hurdle, merman, “While certain economic when considering a smart manufacindicators are improving, the curturing system. of the respondents worldrent state of the economy is a topic of According to the results of the wide expect increased revenue in 2014. concern for manufacturers. Quality ASQ 2014 Manufacturing Outlook tools provide a systematic and reliSurvey, 15% of respondents expect able approach for manufacturers to their organisations to decrease staff, increase customer loyalty, improve while 36% expect their organisation operational efficiencies and reduce to hire additional staff. Thirty-five per of the respondents feel the defects that help increase market cent expect staff to maintain current economy is the biggest hurdle to operations. share and economic prosperity.” levels. Furthermore, 49% expect salIn addition to the questions on manary or merit increases in 2014, while ufacturers’ financial outlook for 2014, only 4% expect salary reductions. the survey asked about manufacturASQ conducts the Manufacturing ers’ use of smart manufacturing ─ that Outlook Survey annually to gauge of the respondents use the Smart Manufacturing Leadership manufacturing professionals’ view on smart manufacturing within their organisations. Coalition defines as the integration of the year ahead.

65%

64%

46% 13%

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economy & expectations

The Turning Point

The global economic scenario is improving. However, still it is not completely free from risks.

T Jim Yong Kim, Group President, World Bank

he world economy is projected to strengthen this year, with growth picking up in developing countries and high-income economies appearing to be finally turning the corner five years after the global financial crisis, says the World Bank's current Global Economic Prospects (GEP) report. The firming of growth in developing countries is being bolstered by an acceleration in highincome countries and continued strong growth in China. But, growth prospects remain vulnerable to headwinds from rising global ‘interest rates’ and poten-

tial volatility in capital flows, as the US Federal Reserve Bank begins withdrawing its massive monetary stimulus. J. Y. Kim, Group President, World Bank, says, "Growth appears to be strengthening in both high-income and developing countries, but downside risks continue to threaten the global economic recovery. Performance of advanced economies is gaining momentum, and this should support stronger growth in developing countries in the months ahead. Still, to accelerate poverty reduction, developing nations need to adopt structural reforms that promote job creation, strengthen financial systems and shore up social safety nets." Global GDP growth is projected to firm from 2.4% in 2013 to 3.2% this year, stabilising at 3.4% and 3.5% in 2015 and 2016, respectively, with much of the initial acceleration reflecting stronger growth in high-income economies.

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survey & recommendations

Improving Indian

ESDM Industry

According to two studies that were recently conducted by the IESA, in association with Frost & Sullivan and Ernst & Young respectively, development of an ecosystem for bridging the demand-supply gap and creating a conducive environment for ‘high value added’ electronics manufacturing are very essential for India.

he report by India Electronic and Semiconductor Association (IESA) and Frost & Sullivan (F&S) analyses the growth and opportunity in the Indian Electronic System Design and Manufacturing (ESDM) market. However, in ‘Disability Identification Study’ with Ernst & Young, IESA examines key macro issues that are impairing the growth of electronics manufacturing industry in the country. The ESDM industry in India is expected to grow at a CAGR of 9.9% to reach US$94.2 billion by 2015. This is more than twice the

january 2014 | industry 2.0

growth rate of the global ESDM market, and presents immense potential for the domestic market. Currently, 65% of demand for electronic products is met by imports, and even the balance 35% that is manufactured in India is mainly ‘Low Value Added Manufacturing.’ The two reports emphasise on developing an ecosystem for bridging the demand-supply gap, and making concrete recommendations to the government to create a favourable environment for ‘High Value Added’ electronics manufacturing facilities. Disability Identification Study: It focuses on key issues

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across different electronic segments – such as consumer electronics, IT systems and hardware and industrial electronics, and highlights key issues preventing the growth of indigenous manufacturing of electronics in India. Frost & Sullivan's Report: It presents detailed product wise SWOT analysis of 25 high priority products that accounts for nearly 82% of the overall electronics consumption in India. It also has recommendations for bolstering an ecosystem to meet the demand of these 25 top products that are strategically important for the country. This

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report also captures four key components used in these 25 products, as the focus has to be for both products as well as component manufacturing. Sanjeev Keskar, Chairman, IESA says, “As per the government’s National Policy on Electronics, we have a $100 billion investment target to meet by 2020. To put an entire ecosystem on track, certain fundamentals have to be set right. With the clear recommendations in this report, it’s time to adopt necessary changes to boost domestic product development and manufacturing. Ensuring speedy implementation of the new initiatives and taking corrective measures on certain key irritants will go a long way in building confidence – ushering manufacturing investments into the country. “As this study corroborates, providing a favourable environment for developing the ecosystem in the country could eliminate disability costs associated with local manufacturing and lead to enormous development of the overall ecosystem, focusing on the top 25 priority products along with key components could be a huge step forward in solving the problem,” he adds.

Summary of the issues as per E&Y’s research • Tax related disabilities such as Basic Custom Duty (BCD) on import of end products, Higher Excise Duty for domestic manufacturers, STB, VAT, long procedures for availing concessional duty on import of components and more, collectively impact to about 3 to 6% of revenue, for Indian manufacturers. • Higher cost of finance impacts 2 to 14% of revenue; this includes higher interest rates,

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greater cost of working capital financing, capital and design expenses. • Poor domestic availability of components constitutes to about 3 to 5% of revenue, taking into account higher inventory carrying costs and additional freight cost due to import of components. • Higher manufacturing cost due to poor infrastructure forms 0.5 to 1.5% of revenue due to unreliable power supply and higher cost of real estate. • Higher cost of international marketing impacts less than 1% of the revenue.

Summary of E&Y’s recommendations • Speedy implementation of the various schemes of the National Policy on Electronics of 2012 including the EDF. • Give a boost to innovation and creation of Intellectual Property (IP) assets within India – by encouraging setting up of both business Incubators, and Centres of Excellence in identified verticals. • Overhaul of the taxation structure for ITA-1 products – including grant of ‘Deemed Export’ status, soft loans and interest subvention, VAT/CST rebate and BCD rationalisation to overcome inverted duty structure. • Give a fillip to component ecosystem by encouraging domestic manufacturing of key components and establishment of a Free Trade and Warehousing Zone (FTWZ) to be setup near a major port or EMC, with same benefits under both EMC and M-SIPS scheme of the NPE-2012. • Reduce transaction costs by simplifying procedures and adopting self-declaration route as far as feasible. • Aggressively pursue anti-

dumping cases, with a view to protecting interests of our domestic manufacturers.

Gist of F&S’s study From the top 25 high priority electronic products that account for 82% of overall electronics consumption in India, the top five product categories alone account for 60% of the overall electronics consumption. Some of the high consuming electronic products identified are: • Mobile Phones 38.85% • FPD TV 7.91% • Notebooks 5.54% • Desktops 4.39% Power electronics/supply, Processor, LCD display, Memory and PCB feature among the top four components contributing to the product Bill of Materials (BoM) – across majority of the top twenty five high priority products. According to the report, 69% of local consumption of the top twenty five priority products are currently met through imports.

Recommendations by Frost & Sullivan • Aim to meet 50% of demand for twenty five high priority products by local high value added manufacturing by 2018. • Address >20% of the disability cost in producing the high priority products locally by normalising duty structure and cost of working capital. • Provide subsidies / low interest loans to address working capital issues for SME manufacturers. • Provide a single window system for quick clearance of applications under the M-SIPS and EMC policies. • Skill Development Council needs to focus on developing skill-sets needed in the ecosystem for the twenty five high priority products.

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- technology management for decision-makers | january 2014

techwatch

n the modern automotive industry, the topic of lightweight construction is at the very top of the to-do list. Due to the challenges of climate change and the rising costs of raw materials, a reduction in emissions and the consumption of resources have become a top priority. Moreover, manufacturers must construct vehicles that are considerably lighter in order to compensate for the huge weight of batteries, for example, in the electric vehicles of the future. Research is, therefore, intensifying its endeavours to develop concepts which combine Carbon Fibre Reinforced Plastic (CFK) with other lightweight construction materials, such as aluminium or magnesium. How can metal and plastic be joined securely, however? Due to the complexity of the components and the differences in

the chemical properties of CFK and metal, new tailor-made joining and assembly technologies have yet to be developed in some cases. Dr. Sergio Amancio, a Materials Researcher at the Helmholtz Zentrum Geesthacht and Junior Professor, was recently awarded “GHTC - the German High Tech Champion Award 2013 in Lightweight Design” for Friction Spot Joining The sleeve presses into the metal layer (2), the metal gets soft (3) and upon retraction of the sleeve, the CFK deforms into the metal layer (4). – FSpJ, a joining technology, which he has researched and registered for patent November in the course of the scienapproval. The prize which is endowed tific symposium “Green Technology with 10,000 Euro was presented to made in Germany,” which was held in him before an invited audience on 18th Tokyo, Japan.

Multifunctional Probe Based On Quantum Physics

team of researchers, including members of the University of Chicago’s Institute for Molecular Engineering, highlighted the power of emerging quantum technologies in two papers published in the Proceedings of the National Academy of Sciences. These technologies exploit quantum mechanics, the physics that dominates the atomic world, to perform disparate tasks such as nanoscale temperature measurement and processing quantum information with lasers. The two papers are both based on the manipulation of the same material, an atomic-scale defect in diamond known as the nitrogen vacancy centre. Both works also leverage the intrinsic ‘spin’ of this defect for the applications in temperature measurement and information processing. This spintronics approach involves understanding and manipulating the spin of electronics for technological advancement.

january 2014 | industry 2.0

In one PNAS paper, David Awschalom, a Principle Investigator on both papers and a Liew Family Professor in

This image represents the nitrogen-vacancy centre in the atomic arrangement of diamond. The dark spheres are carbon atoms, and the yellow sphere is a nitrogen atom. The ‘V’ is the nitrogen-vacancy centre, from which a nitrogen atom has moved to replace a nearby carbon atom. Teams led by the University of Chicago’s David Awschalom are exploiting this atomic defect to develop new quantum technologies.

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Molecular Engineering at UChicago, and six co-authors at the University of California, Santa Barbara and the University of Konstanz described a technique, which offers new routes toward the eventual creation of quantum computers, which would possess far more capability than modern classical computers. The quantum thermometer application, reported in another PNAS paper, represents a new direction for the manipulation of quantum states, which is more commonly linked to computing, communications, and encryption. In recent years, defect spins had also emerged as promising candidates for nanoscale sensing of magnetic and electric fields at room temperature. With thermometry now added to the list, researcher Awschalom foresees the future possibility of developing a multifunctional probe based on quantum physics.

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Photo Credit: Sergio Amancio

New Technology Developed To Join Plastic With Metal

Measurement, Simulation In One System

imulation is a key aspect of modern automotive development today. This places additional demands on the measurement systems used in testing and calls for a comprehensive solution for measurement, control, regulation and simulation united in one system. imc Meßsysteme (manufacturer), together with its Indian partner ATS, offers imc HiL, a turnkey solution for Hardware-in-the-Loop (HiL), bringing together trials performed in the real, physical world with simulation. imc HiL fulfills the increased demands of HiL test stands. Furthermore, its compact design and PC-independent operation allow mobile HiL applications in road trails. For integration of simulated components or environmental models into the measurement setup, imc HiL is based

in real time on an embedded processor inside the measurement hardware – synchronous to the measurement of real physical quantities.

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on the industry-wide standard MatLab/ Simulink. Models created in this environment are directly integrated into the measurement system and executed

cover story

ransportation plays a major role in building efficiency and responsiveness of a supply chain. Fifty-five per cent of the total goods movement in India takes place by road. Any delay in supply of goods leads to cost escalation. Like many other developing countries, India too has several challenges that need to be overcome to build robust supply chains. So, we are mostly leaning towards (information) technology. There cannot be any debate on the fact that we need to adopt Information Technology (IT) to build better supply chains. But we often miss the reality that IT alone cannot create excellence, unless we also focus on improving the inherent working conditions in the transportation industry. Apart from road infrastructure issue, there are many underlying burning issues in the Indian transportation industry that need to be brought out,

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analysed, understood and addressed. In today’s who-will-bell-the-cat situation, Mahindra Group has taken an impressive initiative in this direction. The recently concluded Mahindra Transport Excellence Awards 2013 affirmed their claim that “Mahindra Builds Three Things: Products, Services and Possibilities.”

Reaching all the pockets of the transport industry Beside building high-performance trucks that are designed in India with special attention to the country’s conditions, for example creating ergonomic design through extensive research, Mahindra also focuses on enabling people to rise in life. Mahindra Trucks and Buses Ltd. (MTBL) manufactures products catering to the specific needs of the customers. They have their high-performance factory in Chakan, Maharashtra.

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Encouraging Excellence In The

Transport Industry

Building robust supply chains is possible only through improving our transportation sector. In a large country like India, all challenges of the sector cannot be addressed by the government alone, so PPP model is inevitable. Mahindra group has taken a pioneering step in this direction. By P. K. Chatterjee

As their vehicles are tested rigorously for assured high performance even in the toughest of conditions, as their m-POWER engine passes the test for integrity with local components for 15000 hrs – the company’s association with the people of all walks of the Indian transport industry is also time-tested.

Effort to drive a positive change in the transport ecosystem The Indian transporters are facing many challenges – such as cost versus value focus, asset / non-asset based operations, business scope and scale, driver management, effective application of information technology, maintaining service level and quality management. Adding to these challenges, there are the ever increasing demands of the customers, rise in price of fuel, increasing toll and escalating cost of manpower.

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To empower the transport industry overcome these challenges, Mahindra has pioneered a programme called ‘MPOWER.’ Designed in association with the prestigious IIM Ahmedabad, the programme aims at bringing professionalism to the trucking industry through youth transport entrepreneurs. In the words of Anand Mahindra, Chairman and Managing Director, Mahindra & Mahindra, “The guiding philosophy of this programme is empowering the next generation of India’s transporters/ fleet owners to take forward their family business with their own vision.” Half a dozen highly accomplished faculty members of IIMA conduct the 13-day-long course that covers subjects like professionalism, business planning, market and segments, HR practices, service quality, financial management and accounting, supply chain management, legal and regulatory matters, utilising information technology and other

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- technology management for decision-makers | january 2014

cover story The third batch with 21 participants is undergoing the MPOWER training from 13th January, 2014. Dr. Pawan Goenka, Executive Director and President (AFS), Auto & Farm Equipment Sector, Mahindra & Mahindra has also announced the Mahindra MPower War Room, a sequel to MPower management development programme for the second generation youth transporters, in a bid to provide the right tools and techniques for running their businesses successfully and profitably.

Transport excellence awards

Nalin Mehta, MD & CEO, MTBL, is communicating the message from Anand Mahindra, Chairman and Managing Director, Mahindra & Mahindra.

industry focused sessions. Today, MPOWER has successfully completed two phenomenal batches containing 65 young transporters. The participants of both batches believe that their experience has been very rich. And they are confident of taking their family business to the next level by applying all the learning from the MPOWER programme.

With a view to identifying excellence, innovation and change leadership in the transport ecosystem by recognising efforts towards – ‘Accepting no limits,’ Alternative thinking’ and ‘Driving positive change,’ Mahindra Trucks and Buses instituted the Mahindra Transport Excellence Awards in the year 2011. On 9th January, 2014, in New Delhi, at a grand ceremony, MTBL distributed the Mahindra Transport Excellence Awards for 2013. An assembly of over 600 people from the transport ecosystem – like dignitaries from Ministry of Road Transport & Highways (GoI), eminent grand and expert jury members all drawn from the transport world, media delegates, top fleet owners and transporters of India, dealers, senior members of team Mahindra and MTB team participated in the occasion. Hon’ble Minister of Road Transport & Highways, GoI, presided over the proceedings, which his ministry decided to support.

The new MTBL initiative for drivers’ daughters, the Girl Child Scholarship under the banner of MAHINDRA SAARTH ABHIYAAN is being announced.

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Panelists (LtoR) - Dr. Rohit Baluja, President Institute of Road Traffic Education (IRTE); Anil Shukla, Additional Commissioner of Police (Traffic), Delhi; Rajeev Lochan , Director (Road Safety), Ministry of Road Transport and Highways, Govt. of India; Sanjay Bandopadhayaya, the Hon’ble Joint Secretary of Ministry of Road Transport and Highways, Govt. of India; Dinesh Tyagi, Director International Center for Automotive Technology (ICAT); Rakesh Batra, Partner, Ernst & Young (EY) and Pirojshaw Sarkari, Chief Executive Officer, Mahindra Logistics

The eventful evening started with a panel discussion on road safety, in which field experts ─ Rohit Baluja, President, Institute of Road Traffic Education (IRTE); Anil Shukla, Additional Commissioner of Police (Traffic), Delhi; Rajeev Lochan, Director (Road Safety), Ministry of Road Transport and Highways, GoI; Sanjay Bandopadhayaya, the Hon’ble Joint Secretary of Ministry of Road Transport and Highways, GoI; Dinesh Tyagi, Director International Center for Automotive Technology (ICAT); Rakesh Batra, Partner, Ernst & Young (EY); and Pirojshaw Sarkari, Chief Executive Officer, Mahindra Logistics highlighted the status quo from different angles, and focused on the measures being taken to improve the situation. Several to-do points on driving positive changes emerged out of the interactive discussion, in which the audience too added their views. The Q&A session, as a part of the panel discussion, highlighted several important issues pertaining to our transport ecosystem. Prominent CV (Commercial Vehicle) financiers – ICICI Bank and IndusInd Bank got the top honours in their category. These awards were given based on the growth strategy adopted for the HCV segment, customer orientation demonstrated and innovation in SME and retail segment. Four runners in each category followed by the winners took their awards – one of them, a humble driver, Mahendra Singh Rajput of Santosh

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Gill Earthmovers, who had salvaged the situation when his truck caught an ugly fire, won a brand new Mahindra TRUXO 25 truck through a vote-ometer based selection process. The lady HCV truck driver, Yogita Raghuvanshi, who had recently been gifted a truck TRUXO 25 by Mahindra Trucks and Buses Ltd. (MTBL), narrated her story and the brave heart got an unprecedented and impromptu standing ovation. Yet another industry first, the new MTBL initiative for drivers’ daughters, the Girl Child Scholarship under the banner of MAHINDRA SAARTHI ABHIYAAN was unveiled after Nalin Mehta (MD & CEO, MTBL) read out the message from Anand Mahindra for the occasion (Mahindra couldn’t attend the event due to sudden illness). According to the condition, M&M will support the higher education of the girl children of the drivers after successful completion of their 10th std. examinations. People from eight load segments (Finished Metals, Dry Bulk, Cement, Automotive, Tankers, Refrigerated Goods, Exim Containers and Open Segment) presentingsixteen winners – a new way of slicing the transport segment outperformance received their awards. Dr. Pawan Goenka (President Automotive & Farm Equipment Sectors, Mahindra and Mahindra) announced MAHINDRA MPOWER WAR ROOM, the sequel to MPOWER MDP for youth transporters;

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- technology management for decision-makers | january 2014

cover story

Mahendra Singh Rajput of Santosh Gill Earthmovers, who had salvaged the situation when his truck caught an ugly fire, won a brand new Mahindra TRUXO 25 truck through a vote-o-meter based selection process.

and seven starry-eyed youngsters won Lady and Youth Transport Personality Awards.

accelerate positive changes in the modus operandi of our transport sector.

Accelerating social transformation

Creating a future roadmap

Although road transportation sector is the backbone of our supply chains, the sector is yet to get its due recognition. Under such scenario, Mahindra’s effort is quite admirable. Their un-biased pan-India approach to find out the innovators was a mammoth job. However, beside doing business, the noble work that they started three years back has truly created a great wave in the Indian transport sector. Everybody likes to get recognition for the job that he/she performs. Only the people from a specific field realise the value of the people serving in that area. Importance and significance of even the smallest contribution of the people appears to be great at the time of true crisis. However, as the truck moves on, these unrecognised fellows’ great (timely) contributions are also forgotten. MTBL has been successful in creating a sound platform for all these unrecognised heroes of Indian transportation industry. Their contributions are now being highlighted, telecast and those are being presented to the whole Indian society. Obviously, it will boost to

It is not true that the challenges in the Indian transport industry are new or not at all known. But centering around the award ceremony, Mahindra Group has successfully created a way to disseminate those and possible innovations to mitigate them. Sharing of the innovative approaches (ideas) like – improving base plates of the carriers to suit the types of the goods, creating triple corridors in trailors, using special locks for goods, using devices for keeping the driver awake, maintaining a dhaba with all kinds of facilities etc., will have a great impact on the overall improvement of the Indian transport sector. All these best practices will spread across the country. Government is aware of many of the challenges, like need for highway safety & security, better medical facility, sanitation facility, resting facility along the highways, need for special highway currency etc. However, in a big country like India, nothing is possible without Public-Private Participation (PPP model). Mahindra’s initiatives have also paved the way for the same.

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market & strategy

T. V. Narendran MD, Tata Steel Limited, India & SEA

“We will continue to invest in building new facilities and capabilities” Although, 2013 was not a supportive year for the global steel industry, Tata Steel strategically managed to tackle the situation. T. V. Narendran, Managing Director of the company, in a free wheeling chat with P. K. Chatterjee, narrates his company’s achievements in the previous year, and reveals some of their strategic plans for 2014 to build much higher capability to deliver in future at the end of the recessionary cycle. Excerpts…

he previous year 2013 has been a challenging year for Tata Steel, as our expansion in capacity has coincided with a slowdown in the steel consuming sectors like automotive and construction. However, as we have opened up new market segments like the SME segment, and also further leveraged our existing customer relationships and distribution network, we have grown at 10 to 12% over the last year, which is much better than the market.

In 2014, we will continue to invest in building new facilities and capabilities – as we are bullish about the long term growth prospects of our country. We have completed the three million MT expansion in Jamshedpur, taking our capacity in Jamshedpur to 10 million MT, and should commission the first phase of our six million MT steel plant in Kalinganagar in Odisha towards the end of the next financial year. Our SE Asian operations continue to improve.

We have been recognised for our work by being conferred the Prime Minister’s Trophy for the best steel plant, and have also recently got the CII Sustainability Award. The emotional connect between our employees and the company is one of our greatest strengths, and this – coupled with the relationships that we have with our customers, distributors and other partners and service providers – is one of the reasons why we feel confident that we can deal with all challenges that come to our way.

To get real time, in depth focus on the Indian Manufacturing Industry, please log on to:

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market & strategy

Vineet Agarwal MD, Transport Corporation of India

“In 2014, TCI will continue to focus on express and supply chain business” Although logistics sector is one of the most important business sectors functioning in any country, in India it is yet to get its due recognition. Transport Corporation of India (TCI) is one of the major players in this sector. Vineet Agarwal, Managing Director of the company, in an exclusive chat with P. K. Chatterjee, expresses his views on the sector and unfolds part of his operational strategy for 2014. Excerpts…

he logistics sector witnessed slow but sustained growth in the movements of goods across sectors like auto, commercial vehicles, heavy engineering and capital goods. Steady implementation of large infrastructure projects, despite tight credit situation and fewer policy reforms, also contributed to the growth of this important sector. The sector has benefitted from the newly formed regulatory authority to hasten road projects, creation of infrastructure debt fund for large infrastructure projects, allotment of Rs. 5000 crore to NABARD for agri-storage facilities. It however, eagerly awaits

january 2014 | industry 2.0

GST implementation to enable creation of the common market and permit free and unimpeded movement of goods and services across the country. Despite slow recovery of the economy, TCI has been able to deliver stable performance, and managed to hold on to market share with improved margins. Our strategy to reduce exposure to high-credit freight business and compensate it with the Express, and SCM business has benefitted us. But, low pass thru of frequent hike in diesel price to customers impacted our margins. In 2014, TCI will continue to focus on express and supply chain business, and service high

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growth verticals like pharmaceuticals, retail, auto etc. We expect non-conducive policy environment like indirect tax regime, widespread industry fragmentation, high credit cost and lack of adequate and robust infrastructure to remain key challenges in this year too. The sector will also remain dependent to a large extent on the improvement in transport infrastructure due to lack of warehousing and cold chain infrastructure. The year should also see greater cooperation between logistics experts in industry, trade, services and academia to meet the challenges.

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supply chain

Top 10 Supply Chain

Predictions For 2014

In the context of the 3D value chain, operational resiliency is clearly dependent on being demand aware and data driven, but it is also about digital execution: leveraging data to broaden and extend 'supply chain intelligence,' so IDC Manufacturing Insights expects that for 2014. 1. Operational resiliency

Operational resiliency will be the focus of supply chain strategies in 2014 and beyond.

2. Technology investment

4. Integrated planning

5. Demand orientation No longer exclusive to consumer industries, manufacturers will look for ways to further develop a ‘demand orientation’ through demand sensing and capture.

6. Risk and resilience

Manufacturers will prioritise risk and resilience capabilities, particularly in supply chain monitoring and visibility.

Supply chain technology investment will involve modernising existing systems – while also trying new approaches.

3. Closer to demand Volatile demand and extending supply will put pressure on supply networks to be closer to demand.

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8. Data management

The need to be faster will require manufacturers to explore more deeply integrated supply chain planning and fulfillment functions.

Manufacturers will renew interest in the data management and governance organisation in 2014.

9. Dig sites

In the context of procurement and interest in driving more productive collaboration, B2B commerce networks will become anthropological ‘dig sites.’

10. Data-driven value

7. Emerging markets

Global trade management will mature as a critical capability in managing growth in emerging markets.

Manufacturers will seek new ways to extract data-driven value, leveraging mobile and cloud for access anywhere, anytime.

industry 2.0

- technology management for decision-makers | january 2014

mining & minerals

Developing The

Lignite Sector Although its calorific value is low, the production of lignite, one among the commercial sources of energy, has increased significantly in India. Improved technology for extraction of lignite at deeper regions is the need of the hour. By N. C. Joshi

ignite is popularly known as ‘Brown Coal.’ It is formed due to bio-decay of vegetations, metamorphism and other geological processes over thousands of years. In these processes vegetation is converted to Peat – Lignite - Bituminous Coal – Anthracite Coal. Lignite is tan brown in colour and brittle to

january 2014 | industry 2.0

handle. It is characterised by its high moisture content, low ash content and low heating value. Unlike coal, lignite is not traded in any significant extent in world markets, because of its relatively low heat content (which raises transportation costs on unit ‘energy’ content basis) and other problems related to transport and storage.

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Lignite is extensively used in pit head thermal power plants and industries nearby.

Importance of lignite in energy security Lignite deposits in India is confined to states of Tamil Nadu, Gujarat, Rajasthan, Pondicherry, Jammu & Kashmir and Kerala where coal is almost absent.

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In view of rapidly increasing demand for energy, non availability of coal deposits for exploitation in the above states, problems faced in the transportation of coal from far off coal fields and high transportation cost involved in transporting coal over a long distance, it is considered necessary that the lignite deposits available in these states are exploited for power generation, which would be the best economic and viable option. It can be the major alternative and important source of energy in the country – not only for thermal power generation but also in meeting the demand from other industries such as cement, textiles, chemical etc.

Lignite resources State-wise distributions of Indian lignite shows that major part of the resources are located in Tamilnadu followed by Rajasthan, Gujarat, Pondicherry, J&K, Kerala, and West Bengal.

There has been an increase of about 4460 MT of reserves during the last five years due to active and intense exploration taken by several agencies. Similarly, the reserve brought under proved category has increased from 4177.18 MT as on 1st April, 2007 to 6180 MT as on 1st April, 2013 – thus making available more deposits for immediate exploitation.

Depth-wise and statewise lignite resources Out of the total geological resource of 43215 MT, only about 8769 MT (20.29%) is available within the depth of 150 m., which can be mined with the presently available technology. About 13440 MT (31.10%) is available between the depth of 150 and 300 m that cannot be mined with the available technology. About 21007 MT (48.61%) is available at a depth greater than 300 m. There is a need to exert more efforts to exploit these

deep seated resources (79.71%) occurring at depths greater than 150m, through advanced/alternative/clean coal technologies such as UCG, CBM etc. About 60% of the total reserves in Tamil Nadu lie at a depth of more than 300m. Though Tamil Nadu is having 34847 MT - 80% of the National Lignite resource, the mineable category is 3735 MT, - only 9% and the remaining 30612 MT - 91% is deep seated. Hence, the exploitation of lignite resources in Tamilnadu is not proportionate with the available reserve.

Problems in development of lignite mines There are some constraints in the development of lignite mines in the country, these include mainly: • Economically minable lignite reserves occur in the states of Tamilnadu, Puducherry and Rajasthan. Shallow lignite deposits are available in the

State-wise resources as on 01, April 2013 in Million Tonnes (MTs) Sr.No.

State

Proved

Indicated

Inferred

Total

Tamilnadu

3735.23

22900.05

7712.43

34347.71

79.48

Rajasthan

1167.02

2671.93

1850.57

5689.52

13.16

Gujarat

1278.65

283.70

1159.70

2722.05

6.30

Pondicherry

0.00

405.61

11.00

416.61

0.96

J&K

0.00

20.25

7.30

27.55

0.06

Kerala

0.00

9.65

0.02

West Bengal

0.00

1.13

1.64

2.77

0.01

6180.90

26282.67

10752.29

43215.86

100.00

Total

Depth-wise and state-wise lignite resources in Million Tonnes (MTs) S.No.

States

0-150m

150-300m

>300m

Total

Tamilnadu & Puducherry

6122

8412

20230

34764

Rajasthan

1901

3011

777

5690

Gujarat

708

2014

2722

J&K

Kerala

West Bengal

8769

13440

21007

43215

Total

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industry 2.0

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mining & minerals states of Gujarat, Jammu & Kashmir, Kerala and West Bengal. Also, transportation of lignite to far off places is not desirable – as it is prone to spontaneous ignition. Hence, development of lignite mines and lignite based thermal power stations has to be confined to these regions. • Owing to low heat value of the mineral and high moisture content, higher productivity has to be achieved in the opencast mines with a compulsory pit head linkage – to make lignite mining economically viable. • Meager ‘proven’ category of lignite – The total estimated lignite reserves in the country as on 01.01.2013 is 43215 millon tones. This includes 26283 million tonnes of indicated category, 10752 million tones of inferred category. The proven lignite reserves is 6180 million tones, which constitutes only 14.30% of the total reserves and available at a depth less than 150 metres. Such a small percent-

age of proven reserves of the total reserves offers a narrow range of choice for starting new lignite mine projects. • Deep seated lignite and limitation of technology – About 80% of total lignite reserves in the country occur below the depth of 150 metre, and mining of this lignite is not economical with the present day technologies, viz., continuous mining using Specialised Mining Equipment and Conventional mining using Shovel and Dumper. Though 20% of resources fall within 150m depths, part of the resource fall in high stripping ratio, thin and multiple seams, surface, constraints, environmental issues etc. To exploit the deep seated lignite, technologies like ‘underground coal gasification’ are to be developed and adopted.

Economics of lignite mining • Most of the deposits are associated with hydro-geological problems.

• At present open cast mining is being adopted for lignite mining throughout the world. Underground mining is not followed due to weak roof and floor condition, spontaneous combustion nature of lignite, existence of high pressure aquifer system below lignite. • Continuous mining technology directly results in the high capital cost. • The activities associated with lignite mining like blasting, spoil dump reclamation and afforestation, dewatering and depressurisations etc., add to the burden on lignite production cost. • All the above factors lead to very high specific investments to develop a lignite deposit.

Land acquisition • Acquiring the land for mining in the fertile cultivable lands and R&R are prime tasks. • Developing a new open cast mine and operating existing mine require acquisition of land on continuous basis. This continues to be a critical issue. Non availability or required quantum of land at specific locations affects the advancement of mine. Land acquisition is becoming difficult and expensive as the land owners demand high compensation, high Resettlement & Rehabilitation package and employment. Most of the lignite blocks in Tamil Nadu and Gujarat are located in fertile agriculture land with thick population posing difficulty in acquisition of land for mining.

Difficulties in getting clearances for the projects Lignite is extensively used in pit head thermal power plants and industries nearby.

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There are some difficulties in getting faster clearance for the

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Projected lignite production for 12th plan in MillionTonnes (MTs) 12th PLAN State

2012-13

2013-14

2014-15

Tamil Nadu

24.23

Gujarat

16.24

17.48

Rajasthan Total

2015-16

2016-17

24.23

25.08

27.20

124.97

18.53

20.00

21.60

93.85

8.89

9.89

15.09

17.67

19.80

71.34

49.36

51.60

57.85

62.75

68.60

290.16

lignite projects; these can be classified as following: Tariff based competitive bidding route: for setting up lignite based power projects: • In this process, initiative of power projects has been shifted from the hands of generator to the hands of distribution companies. The tariff based competitive bidding comes up without differentiation between coal based power projects and lignite based power projects. The lignite based power projects require higher gestation period as well as higher capital – because of its low heating value. Therefore the tariff of a lignite based power project cannot compete with coal based power project of equivalent capacity.

• Ministry of Power has advised that lignite based power projects can be taken up under case II of the competitive bidding. • Under Case- II the procurer of power specifies location specific project with specific fuel allocation such as captive mine. • Lignite based power project can be set up through this mechanism only when the bids are invited by a party – who specifies that power should be generated using lignite available at the location specified. Under this scenario, setting up a lignite based power project in future is remote, and hence starting of the linked lignite mine is also remote.

Plan period wise all India lignite production trend and annualised growth rate Plan period

Terminal Year

Production in MT

Incremental Production over previous plan period MillionTonne

IV Plan

1973-74

3.32

0.76

V Plan

1978-79

3.30

(-) 0.02

VI Plan

1984-85

7.84

4.54

VII Plan

1989-90

12.36

4.52

VIII Plan

1996-97

22.64

10.28

IX Plan

2001-02

24.81

2.17

X Plan

2006-07

31.13

6.32

XI Plan

2011-12

43.10

11.97

XII Plan

2016-17

68.60 (projected)

25.50

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Total 12thPlan

Recent trends in lignite production in India The country has seen an expansion in total energy use during the last five decades, with a shift from non-commercial to commercial sources of energy. Accordingly, the production of lignite, one among the commercial sources of energy, has increased significantly.

Development of lignite sector in different fiveyear-plan periods Lignite production in the country first started at Neyveli during 1961-62, in Gujarat during 1979-80 and in Rajasthan during 1997-98. Lignite production, which was 2.563 MT at the end of Third Five Year Plan, has increased substantially – and reached a level of 31.129 MT at the end of 10th Five Year Plan. The incremental Lignite production over the previous plan period up to 12th Plan period is: 25.50 MT (refer table on left).

Projected lignite production for 12th plan The estimated total Lignite production during the 12th plan period is 290.16 MT, and the availability at the terminal year of 12th plan is projected at 68.60 MT. State-wise, year-wise production for 12th Plan period are given in the table above. The author is the Deputy Director (M&C), PIB, New Delhi.

industry 2.0

- technology management for decision-makers | january 2014

challenges & solutions

Solving Deep

Machining

UK-based Fine Cut Advanced Engineering manufactures cast aluminium and CNC machined aluminium Rotational moulding tools, EPS moulding tools, 3D Models and precision engineered parts. They were looking for a solution to eliminate the hand finishing processes in their products. Industrial Tooling Corporation (ITC) offered them the right solution…

nitially, the surface finishes on some of its mould tools were a concern to Fine Cut and it is the pursuit of manufacturing excellence of the Fine Cut engineers that led them to investigate potential new solutions. With deep cavity machining on many mould tools; tool deflection and rigidity severely affected the surface finishes and this in turn led to extensive hand finishing processes. To eliminate this post machining task, Fine Cut introduced ITC’s 2001 and 2131

january 2014 | industry 2.0

Mystery

Cyber Series of long reach carbide cutters with radii. With an overall reach from 100 to 200mm, the long reach cutters are useful for many mould cavities. For deeper cavities, the West Sussex business combines the ITC cutters with Schunk Tribos tool holder extensions. This enables the 5-axis head of the machine tool to conduct complex machining forms in cavities beyond 250mm deep. Fine Cut’s CAD/CAM Manager, Danny Welsh comments, “We

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initially tried the ITC long series tools on jobs – where we had tool reach and surface finish issues that were created by previous tooling vendors. Immediately, the surface finish improved and it drastically reduced our hand finishing. From this point, we tried additional ITC cutters – and they all performed remarkably well. I firmly believe in buying quality equipment for our machine shop as it makes the job a lot easier.” On a recent project to machine a fluid tank mould tool

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from aluminium, Fine Cut introduced ITC's extra long reach 2142 aluminium ball nosed 12mm diameter cutters. Welsh says, "In instances when our 5-axis machines have been busy, we have used the 2142 cutters on a 3-axis Dugard Eagle for roughing and profiling the mould tools. The 12mm diameter 2142 Series ball nose is such a rigid and robust cutter – that we use it for machining the complete 150 mm deep cavity. The surface finishes have been impeccable. The finishes are so fine that we can machine with a 0.5mm step-over as opposed to 0.1mm with some of our other cutting tools. This increased step-over also improves our cycle times and productivity rates." Despite the ITC cutters improving productivity times, the priority for Fine Cut is product quality. Welsh continues, “The majority of our jobs are one off tools, so shaving a few minutes off a job is of no consequence to us. We have a 3.6m bed on our 5-axis machine, and we often machine large aluminium billets above 200kg, with such large jobs production times can be days, so saving a few minutes is of little relevance.” The success of the first ITC cutters made such an impression in the Fine Cut’s machine shop, the company acquired additional cutters. Beaming with delight Welsh reveals, “With the solid carbide ITC cutters, we can comfortably machine beyond 200mm deep cavities with a 12mm diameter end mill. This

Fine Cut serves virtually all industries.

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The success of the first ITC cutters made such an impression in the Finecut machine shop, the company acquired additional cutters.

On a recent project to machine a fluid tank mould tool from aluminium, Fine Cut introduced ITC's extra long reach 2142 aluminium ball nosed 12 mm diameter cutters. cutter operates at over 15,000 rpm with a 5m/min feed rate to deliver exceptional surface finishes. This is a credit to the rigidity of the tool and its holder.” Fine Cut serves virtually all industry sectors and this is highlighted by some of its recent projects that include mould tools for mechanical diggers, a kayak, Hi-Fi speakers, medical X-ray machines, jerry cans and toys for a children’s charity. “With such a diverse workload, we now use ITC’s BritCut range with a long flute length for roughing our mould tools and a range of standard and long length square and ball nosed cutters from 6 to 20mm diameter for general

machining and finishing operations. For machining brass castings, we have been using ITC’s 4041 Series of harmonic flute end mills.” “The ITC representative has always proven knowledgeable and very keen to provide advice. This exceptional level of service is another reason why we are delighted to use ITC tools. As the business moves forward and our work increases in complexity with new challenges, we will be looking to ITC to support us in meeting these challenges by providing special tooling that ITC can manufacture in the UK to our exact specifications,” concludes Welsh.

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challenges & solutions

Food Preservation Radiation processing of food involves exposure of food to short wave radiation energy. This can be undertaken both for export and domestic markets. By M. V. S. Prasad 36

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ood is vital for human existence. Conservation and preservation of food is essential for food security and it provides economic stability and self-reliance to a nation. The need to preserve food has been felt by mankind since time immemorial. The seasonal nature of production, long distances between production and consumption centres and rising gap between demand and supply have made this need even more relevant these days. The hot and humid climate of a country like India is quite favourable for growth of numerous insects and microorganisms that destroy stored crops and cause spoilage of food every year. Spoilage can also occur due to chemical and physiological changes in stored foods. Sea-foods, meat and poultry may carry harmful microbes and parasitic organisms that cause illnesses associated with their consumption. As in other parts of the world, India has also practised various methods of food preservation – such as sun drying, pickling and fermentation, which were supplemented with more energy consuming techniques such as refrigeration, freezing and canning. Each of these methods has its merits and limitations. Man has always been in the search for newer methods to preserve foods with least change in sensory qualities. Radiation processing of food is one of the latest methods developed for this purpose. Food Technology Division (FTD) of the Bhabha Atomic Research Centre (BARC) is involved in the research on food preservation through radiation. Radiation processing of food involves exposure of food to short wave radiation energy – to achieve a specific purpose such as extension of shelf-life, insect disinfestations and elimination of food borne pathogens and parasites. In comparison with heat or chemical treatment, irradiation is considered a more effective and appropriate technology to destroy food borne pathogens. It offers a number of advantages to producers, processors, retailers and consumers. Though irradiation alone cannot solve all the problems of food preservation, it can play an important role in reducing post-harvest losses and use of chemical fumigants. Expertise and know-how for designing, fabrication and commissioning of irradiators is available in the country with the Department of Atomic Energy (DAE) and BARC. In India commercial food irradiation could be carried out in a facility licensed by the Atomic Energy Regulatory Board (AERB). The DAE has set up two technology demonstration units in India. The Radiation

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Processing Plant at Vashi, Navi Mumbai, mainly meant for treatment of spices, dry vegetable seasonings like onion flakes, and pet foods, is being operated by the Board of Radiation & Isotope Technology (BRIT). KRUSHAK (Krushi Utpadan Sanrakshan Kendra), Lasalgaon, was set up in 2002 by BARC, to demonstrate low dose applications of radiation – such as control of sprouting, insect disinfestations, and quarantine treatment. KRUSHAK was the 1st Cobalt-60 gamma irradiation facility in the world, outside US, to be certified by USDA-APHIS for phytosanitary treatment enabling export of mango from India to the US in 2007 after a gap of 18 years. The microbiological, nutritional and chemical aspects of radiation-pro-

Krushak (Krushi Utpadan Sanrakshan Kendra), the technology demonstration plant set up by BARC at Lasalgaon, district Nashik, Maharashtra. cessed foods have been studied in detail around the world. None of these studies have indicated any adverse effects of radiation on food quality.

Commercial prospects in India In India, radiation processing of food can be undertaken both for export and domestic markets. Food could be processed for shelf-life extension, hygienisation and for overcoming quarantine barriers. Huge quantities of cereals, pulses, their products, fruits and vegetables, seafood and spices are procured, stored, and distributed throughout the length and breadth of the country. During storage and distribution grains worth of thousand of crores of rupees are wasted due to insect infestation and related problems. Radiation processing can be used for storage of bulk and consumer packed commodities for retail distribution and stocking. The author is the Director, PIB, Chennai. He has taken inputs from the Bhabha Atomic Research Centre (BARC).

industry 2.0

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safety & security

Lighting With

Security

In a manufacturing facility, an automated system manages multiple functions – like intrusion detection, lighting control and HVAC integration. All these systems are monitored and managed remotely using mobile apps with iPhones and iPads.

Omni-Bus products also control ceiling exhaust fans.

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he owner of Hoist, a Chicago-based company manufacturing lift trucks, was utilising Leviton Security & Automation products in his vacation home. At a certain juncture, when in his 200,000 square feet wide manufacturing facility, came up a need for increasing security and reducing energy expenses, he thought of implementing the commercially focused product offerings of Leviton into his manufacturing facility. Although there were existing sub-systems, they were not capable of communicating with one another, and could not be controlled remotely. So, those devices were replaced with a comprehensive system from Leviton. The all-embracing range of solutions provider’s

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OmniPro II security and automation control system, which is UL-rated for Commercial Burglary, monitors intrusion with both wired and wireless security sensors ─ and includes cellular communications. Separate security partitions exist for the manufacturing space and front office areas.

Leviton’s Omni-Bus lighting control is being used for overhead and bay lighting.

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Access Control readers are at 8 doors with automatic schedules to open/close based upon hours of operation, excluding holidays. The installer, systems integrator TechnoStructure Incorporated out of Naperville, IL, used Leviton’s Omni-Bus lighting control for overhead and bay lighting. Omni-Bus is a DIN-Rail style solution popular in many countries, and in this instance replaced an antiquated (non-communicating) lighting solution. The OmniBus products also control ceiling exhaust fans for air quality control and energy savings. Over twenty zones of heating and air conditioning are integrated into the automation system for scheduled control and remote access, including a dozen zones of infrared ceiling heaters – several of which are located in a separately leased tenant manufacturing

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Integrated Functions Intrusion detection with cellular alarm communications, including separate partitions for the manufacturing space (Shop) and the front office (Office).

Automation of Shop air management and ceiling exhaust fans for air quality control and energy savings.

Access Control with prox card readers at eight doors, with schedules configured for holidays, auto open/ close based on hours of operation.

Omni-Bus lighting for front Office and all Shop overhead / bay lighting – replaced Lutron Grafik Eye control system.

HVAC integration with 21 zones encompassing front Office, Shop, and infrared heaters in a third partition for a leased tenant manufacturing space.

All functions managed and monitored by Hoist’s executive and operations management teams.

Environmental / freeze warning sensor. space. A Leviton Omnistat2 thermostat is even used to control a 4 million BTU gas-fired heater and several air rotation units in the manufacturing space. An environmental sensor is used to warn against freezing temperatures. All subsystems are tied together with over 400 lines of

programming to enable eventbased automation throughout the manufacturing facility. All those system functions are conveniently monitored and managed by Hoist’s executive and operations team simply by using Leviton’s streamlined mobile app designed for iPhones and iPads.

industry 2.0

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financial management

Fixing The

Hurdle Rate

ompanies face investment choices almost every day and itâ&#x20AC;&#x2122;s imperative that each choice is reviewed critically and validated by a quantitative number before taking a final decision. Why? This is so since each project has future cash flows (both inflows and outflows) varying from several months to years and decision of choosing a project is practically irreversible. Further, managers are responsible to ensure that the returns to shareholders are in excess of their expected rate of return. While making a decision to invest future cash flows are to be projected across the tenure of the project and discounted by an interest rate. A simple DCF equation will be as given in Fig. 1. Discount rate or the hurdle rate is the most important determinant in an investment decision. If

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a higher hurdle rate is selected, a firm may end up losing the opportunity, which, in every likelihood, may be selected by its competitors. Alternatively, a lower hurdle rate may make a project look viable to pursue, which otherwise should have been rejected given the risks associated with it. In finance, standard deviation (simplest of statistical measures) is used to define and quantify risk. Itâ&#x20AC;&#x2122;s calculated as variance of actual cash flows from their mean value. The other useful measure is coefficient of variation â&#x20AC;&#x201C; calculated as ratio of standard deviation to mean and is considered as a tool to assess relative risk, when comparing multiple projects for investment. A firm is most likely to select a project with a lower coefficient of variation. Risk measurement is critical to arrive at an appropriate hurdle rate. Hurdle rate in other

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Photo Credit: www.photos.com

Risk measurement is critical to arrive at an appropriate hurdle rate. Several approaches exist for estimating the average return and associated variance from a project. By Jaspal Singh Kahlon

words, represents the expected rate of return for an investor that adequately rewards him/her for the risk associated with the project, and also offsets the opportunity cost foregone by not selecting alternative projects. Several approaches exist for estimating the average return and associated variance from a project. Probabilities can be assigned to each scenario and then a weighted mean may be most likely return from the investment. Probability tree, real options and simulation are several other approaches to estimate the most likely cash flow from a project. Some of the approaches are most relevant in specific cases. For instance, simulation approach or real options are a most practical measure – while considering investment in equity of a listed company. Probability tree and discounted cash flow method is more relevant in case of project selection at a firm level.

Fig. 1: A Simple DCF Equation NPV = – Invtt–0 +

CF1 (1 + r)

CF2 (1 + r)

+ ...

CFt (1 + r)t

Where: NPV = Net Present Value -Invt = Capital invested at start of the project CF = Cash inflows from the project across years r = Discount rate/hurdle rate used to discount the future cash flows to their present value

Fig. 2: Return and Variation

Decoding the Hurdle rate Capital Asset Pricing Model (CAPM) is one of the simplest and most widely used measures to calculate the hurdle rate or cost of capital. Basic equation of CAPM is: ri = rf + β(rm – rf) Where ri = return expected rf = risk-free rate β = beta (measured as a ratio of change in stock price for a unit change in Market portfolio or index) rm = return on a market portfolio In strict technical sense, CAPM is not a universal tool to measure the cost of capital. One of the key limitations is that it is best suited for calculating the cost of capital of listed firms. Using CAPM for valuing an unlisted firm is possible arithmetically but holds little practical relevance. A more practical discount rate in case of SMEs could be a rate that is derived internally considering the firm’s risk profile rather than benchmarking it to comparable listed firms. This is so since in case of SMEs or unlisted firms bank financing is the most dominant and cheapest source of financing. Further, the scale and nature of operations impact the risk profile completely, and hence comparison at times is bound to limit arriving at a correct hurdle rate. Hurdle rate is also impacted by the finance mix. If the option exists to have 50% debt in total investment, the overall cost of capital can be estimated as weighted average cost of capital. Usually with inclusion of debt financing the overall cost of capital (hurdle rate) is expected to lower.

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Despite existence of robust methods to calculate hurdle rate, subjectivity associated with non-quantitative information impacts the quality of estimates drawn, and hence the project selection decision. In a practical scenario, the discounted cash flow equation shown above will neither have constant cash flows year-on-year nor a constant discount rate. Capital invested in a project may also be spread across the tenure of the project, and hence the overall risk profile of the project keeps evolving with each passing year. Fig. 2 attempts to highlight the fact that the return shown by the peak of the graph and variation (risk) by the tail of the slope will vary from year-to-year. In recent empirical research works, several useful measures have been developed that validate the NPV measure (derived from Discounted Cash Flow). Aggregate Internal Rate of Return (AIRR) and Aggregate Return on Investment (AROI) are two such measures that are not dependent on market returns, and hence more relevant in case of unlisted firms and SMEs.

The Author is a finance professional consulting companies on mastering execution skills. He may be contacted through e-mail: jaspalkahlon@gmail.com.

industry 2.0

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quality & innovation

Saving Energy

In Steel Mills Siemens offers a solution that uses hot flue gases from arc furnaces to generate steam.

A new solution from Siemens uses hot flue gases from arc furnaces to generate steam.

he steam produced drawing energy from the hot flue gases from arc furnaces, which was not a usual practice earlier, can be used for other steel mill processes or for generating electricity. The system consists of steam boilers, pipes, water tanks, and pumps – and can be directly integrated into the existing flue gas cooling system. Theoretically, the system could entirely replace conventional cooling. A feasibility study carried out at a steel mill in Turkey revealed potential savings of 44.5 kilowatt hours (kWh) of electricity per ton of steel produced. That corresponds to around 10% of the electrical energy that is normally required. If the steam were used to preheat the feed water for the steel mill’s power plant, for example, the mill would save 45,000 tons of coal per year.

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Electric arc furnaces melt steel scrap under arcs heated to a temperature of about 3,500°C using high-voltage electricity. Depending on the specific furnace operation, up to one third of the energy used escapes in the flue gases. Normally, these flue gases - which can be as hot as 1,800°C - are extracted from the furnace through water-cooled pipes. Because this cooling water circulates within a closed system, it cannot be permitted to form steam. Cooling towers dissipate the excess heat. This is where the solution developed by the experts at Siemens Metals Technologies comes in. The hot flue gas is diverted into a steam generator, where it flows around pipes filled with water. The heat from the gas turns the water into steam. A sophisticated system of nested heating surfaces ensures

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that heat is transferred from the flue gas as efficiently as possible. Special recirculation pumps ensure that the steam boiler is adequately cooled. The system can handle fluctuations in flue gas temperature and volume, and it is specially designed to deal with the high levels of dust, some of which are corrosive, in the flue gas. Continuous steam production, such as that required for generating electricity, can be achieved through the installation of optional storage buffers known as ‘steam accumulators.’ The heat from the flue gas can be recovered even more efficiently – if the gas is directed through an ‘economiser’ after it leaves the steam boiler. In the ‘economiser,’ the gas flows around a second system of pipes, where the remainder of its heat is used to preheat the feed water for the steam boiler.

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event report

Gearing up for the next level

A summit to explore India’s share in global manufacturing and the challenges in becoming a preferred manufacturing destination...

ndustry barons and stalwarts from diverse manufacturing sectors including automobile, pharma, FMCG as well as senior decision-makers from ministries and industry bodies – recently assembled at a summit in Mumbai – to exchange their views on the emerging challenges and build a roadmap to chalk out the growth plan for the Indian manufacturing industry. Representatives from over 25 eminent companies and industry leaders in excess of 45 discussed the emerging trends and challenges, as well as figured out ways to mitigate risks and future-proof the business profitability against the background of the bearish economy. Organised by ET Edge, the summit was opened for the day by Deepak Lamba, President, Times Conferences. It was followed by a Chief Guest address by Narayan Rane, Minister of Industry, Port & Employment, Govt of Maharashtra, who spoke in-depth about creating an export oriented economy to revamp India’s progress. A special address was also delivered by Saurabh Chandra, Principal Secretary, DIPP, who spoke about growth of the manufacturing industry and India’s global standing. Speaking on the occasion, Lamba said, “Manufacturing is the backbone of an economy. Today the Indian manufacturing sector is poised for growth currently contributing 16% to the country’s GDP with a potential to grow six-fold by 2025, to $1 trillion, while creating up to 90 million domestic jobs. Understanding the industry’s vast potential, ET Edge’s Manufacturing Summit aims to provide a business knowledge forum bringing together visionaries and key leaders to discuss and assess the current scenario and India’s journey to become next workshop of the world.” Acting as a knowledge vehicle, the day saw a series of dialogues around issues plaguing the industry at large, including – ‘Where India stands: India’s share in world manufacturing’, ‘Challenges in establishing India as the preferred manufactur-

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A view of the panel discussion on the emerging trends in the Indian manufacturing industry ing destination’, ‘Redefining best practices for next-gen manufacturing excellence’, ‘Skill development: manufacturing driving India’s employment scenario’, ‘Technical innovations: improving capital productivity through next generation technologies’ and much more. Prominent opinion leaders present in the summit were Madhav Lal, Secretary, Ministry of MSME Government of India; Dr Habil Khorakiwala, Chairman & Group CEO, Wockhardt; Dilip Gaur, Group Executive President & Head Copper Business, Aditya Birla Group; Debashis Poddar, CEO Textiles, Bombay Dyeing Textiles; Shantanu Khosla, MD, Procter & Gamble; Satish Pai, CEO Aluminium Business, Hindalco Industries; Anant Kelkar, Head Integrated Supply & Director Manufacturing, Honeywell Automation; Anant Pande, Director Manufacturing, Jubilant Life Sciences; Tom Thomas, ED Technology & Projects, Ceat Tyres; Venkatesh Valluri, Chairman, Ingersoll Rand India and many others who matter in the industry.

industry 2.0

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management & strategy

Bridging the Gap is

Important A new IDC Manufacturing Insight report recently revealed that there is a big gap between companies with a mature or immature customer experience strategy, which directly influences their competitiveness.

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ased on IDC’s recent findings from the survey, manufacturing business software solutions provider Epicor Software Corporation has issued a call to action for metal fabrication manufacturers – to prioritise initiatives focused on providing a superior customer experience. It has also re-emphasised the important role of modern Enterprise Resource Planning (ERP) solutions in supporting a mature, customer-centric approach to business. IDC’s report highlights that while the majority of metal fabrication manufacturers agree – that improved customer experience is increasingly important to generating growth and higher profitability, they do not have a clear understanding of how to enhance their overall customer experience, the critical business benefits it can deliver, and the central role that technology can play in providing a superior customer experience. “Many metal fabrication manufacturers are now moving away from producing standard, cataloguebased items to instead manufacture items to custom orders. This suddenly means that no order is the same and customer service becomes absolutely paramount. A manufacturer’s ability to deal with prospects and customers more efficiently, from product design to configuration and production, becomes essential to beating the competition and creating long term customer loyalty,” said Pierfrancesco Manenti, Head of IDC Manufacturing Insights Research Practice in Europe, Middle East & Africa. “Surprisingly, however, our survey revealed that nearly 16%, which is double the rate in other industries, still believe that the single most critical factor for their customers to continue buying from them is only related to meeting their price expectations. They don’t clearly understand the link between operational excellence and its impact on the customer,” he added. The influence of this approach will clearly remain for a while, but leading metal fabrication manufacturers need to understand that factors – such as concerns around supply reliability; poor product quality and long lead time, impact the customer experience negatively. Epicor urges these manufacturers to work on improving their customer and market insight, and address these critical operational factors head-on in order to grow their businesses. John Hiraoka, Executive Vice President and Chief Marketing Officer, Epicor, said, “There is a clear call to action for all metal fabrication manufacturers from this study. We believe that they have a great opportunity to gain competitive advantage

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Key points from the IDC survey • Nearly 16% of metal fabrication manufacturers – nearly the double the rate in other industries – still believe that the single most critical factor for their customers to continue purchasing from them is merely related to meeting their price expectations. • Metal fabrication manufacturers are ready to invest in adapting their IT to react to and serve the customer better (46.4%). • The main barrier to creating greater customer experience is essentially related to a lack of funds to implement the required changes, as selected by more than 47% of respondents. • Nearly 28% of metal fabrication manufacturers believe that ERP is vital – as the platform connects the back office and front office and streamlines business interaction with suppliers and customers. • However, unlike other industries, a high percentage of respondents (nearly 35%) believe the impact on customer experience of their current ERP is still limited. • 23% of respondents in this sector have a homegrown system and 17% have no ERP at all. • Most find that traditional ERP systems don’t support the provision of service to clients or the need to further improve collaboration across business functions well. • New 3D virtualisation technologies rank high, when asked about their expected impact on customers and how they review and collaborate on product design and quality. • Metal fabrication manufacturers are unclear about the benefits of new social and mobile applications. Integrated with ERP, these applications can increase the flow of information across the business, as well as to customers and suppliers, giving staff better access to more accurate, real-time data and ultimately improving customer responsiveness. • CRM is central to creating a superior customer experience.

by taking a more mature approach to customer experience. With nearly twice as many metal fabricators than in any other industry still believing that price is the main influence to customer loyalty, the gap is widening between the mature and immature companies. There is a significant opportunity for those that take the leap to differentiate from their competitors, sell value-added services and increase market share. An open and modern ERP platform that leverages mobile technology and provides more collaborative and customer-facing capabilities including quality, service and warranty management and CRM is central to creating a superior customer experience, which can improve competitiveness. We urge all metal fabrication manufacturers to assess their maturity level around customer experience, and to look at how modern, next-generation ERP capabilities can help them achieve a more customer focused strategy.”

industry 2.0

- technology management for decision-makers | january 2014

product gallery Coolant Cleaners

Cable Joints

riez HydroFlow Permanent Magnetic and Rare Earth Coolant Cleaners are designed for use with surface grinders, gear grinders, honing and lapping machines, broaches, milling and drilling machines, face grinders, oil reclaiming machines and essentially anywhere else where clean coolant is needed. As per the co., these keep machine tools running longer and more accurately with low costs.

he new Elastimold Shrink-FitTM Cable Joint from Thomas & Betts combines the convenience of pre-molded splicing with the range-taking versatility of cold-shrink methods into one, easy-to-install solution. The product features a single-piece body that can be quickly installed using a selfejecting plastic support core, which can be easily removed by hand. The Elastimold Shrink-FitTM Cable Joint is made of high-quality, molded EPDM elastomer, offering the same high durability, quality and reliability of other Elastimold molded rubber products. The ShrinkFitTM method uses no ripcords and no heat, making installation fast, simple and safe.

Eriez – India Tel.: +91 44 26525000 Website: /www.eriez.com

Thomas & Betts Corp. Tel.: +1 901 252 5000 Website: www.tnb.com

Dynamic Air Separator

he RTKM separator is specially designed for use with ball mills that grind coal, petcoke or charcoal. It is an energy-efficient solution, which incorporates the experience attained from over 1500 high efficiency dynamic air separators supplied for grinding applications. As per the manufacturer, it is the obvious choice for new coal-grinding ball mills. FLSmidth Pvt. Ltd. Tel.: +91 44 4748 1000 Website: www.flsmidth.com

Robot For Packaging

Labeling Device

eissner provides an enhanced level of customer convenience by adding a defined ‘peel and stick’ area to its onetouch single-use systems product labels. This added feature gives operators the ability to transfer critical product information from the packaging, which is typically discarded when the product is deployed to documentation that will be saved for future reference or to the rigid outer container in which the biocontainer is being deployed. This quick, easy data transfer process will help ensure accuracy of production records and future product tracking. The size, shape and content contained on Meissner’s One-Touch single-use systems product label will remain the same. The new label, however, will allow some information to be retained for production records and documentation. Meissner Filtration Products Tel.: +1 805 388 9911 Website: www.meissner.com

Air Springs

askawa Motoman has introduced the deltastyle, low-profile Motoman MPP3S ‘short’ robot. As per the company, the MPP3S provides superior performance for highspeed packaging, cartoning and kitting applications. Its high-speed operation – up to 150 cycles/min with full payload, and 40 ms acquisition and release timing – yields extraordinary production results. The robot features a 3-arm, 4-axis configuration with a direct-driven rotary axis to simplify its design.

new series of air spring vibration mounts from Advanced Antivibration Components (AAC) feature excellent vibration isolation of low frequency machines. Air springs use elasticity of air as an isolator, which act as a soft spring. There are no moving parts and therefore these are maintenance free. These air spring mounts handle a wide range of loads simply by changing the inner air pressure. These mounts are featured at the AAC eStore where you can order online, request a quote, download CAD models, check stock plus view catalog and technical pages.

Yaskawa America Tel.: +1 937 847 6200 Website: www.motoman.com

Advanced Antivibration Components – AAC Tel.: +91 516 328 3662 Website: www.vibrationmounts.com

january 2014 | industry 2.0

- technology management for decision-makers

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Bi-stable Latching Relay

Barcode Tracker

ynamic Systems, a Redmond, Washington software developer, specialising in data collection applications, has introduced rugged tablet computers for use with the CheckMate Suite of Barcode Tracking applications based on bar code technology. The rugged tablet computers would be used in conjunction with the CheckMate Software Suite, when it’s necessary to take the full power of the software to the production line or shipping dock within a facility. The Checkmate software, which integrates major functions within an organisation and includes tracking of assets, inventory, documents, job costing, tools and equipment, can now be used anywhere within wireless range of the server.

ohnson Electric offers a disconnect relay product line for smart electric meters. The remote disconnect function in a smart meter aligns with the requirements of the electric power industry’s smart grid initiative. The Ledex-EM product line is a bi-stable latching relay designed to provide the highest electrical performance in a compact package. It offers good switching performance and reliability. Johnson Electric E-mail: sales@johnsonelectric.com Website: www.johnsonelectric.com

Dynamic Systems Tel.: +1 425-216-1204 Website: www.a-barcode.com

Fiber Unit Build-In Lens

Gear Drives

series of miniature right angle gear drives from Stock Drive Products features a lightweight, non-corrosive, all metal construction. They are available with single or double output shafts with ratios of 1:1 or 2:1 at a maximum rpm of 1800. Their maximum continuous hp is 1/8. Identified as the A 271A-... series, they consist of aluminium housings, hardened steel helical gears, steel shafts and brass bearings. Special options on shaft, material and ratios are available on special order. They are not intended for use as speed increasers. Panel mount versions of these miniature drives are available as the A 2Z1A- ... series. Stock Drive Products/Sterling Instrument- SDP/SI Tel.: +1 516 328 3300 Website: www.sdp-si.com

t manufacturing sites, factors that hinder the stable detection capabilities of fiber sensors include accumulation of dust particles on the lenses, damage to the fiber cables that is caused by something being tangled in the cables and cable stress. These fiber units allow more stable detection by incorporating the lens units, with easy and reliable installation with the hexagonal shape. OMRON Corporation Tel.: +81 75 344 7022 Website: www.omron.com

Humidity Sensor

E-Line Contactor Family

aton has launched E-Line Contactor Family – as per the company, it’s the world’s smallest and most efficient IEC Contactor. The powerful, yet compact series will help OEMs and designers reduce panel size and impact on environment. Within this innovative series, Eaton offers Contactors XTCG, Control relay XTRG and Thermal overload relays XTOD. E-Line incorporates latest principles of arc-science and technology, which enables the engineering team to focus on limiting contact bounce, making it one of the most reliable contactors in the world.

eviton offers a Humidity Sensor and Fan Control, a stateof-the-art device featuring digital sensing technology to control ventilation in humid or damp areas. The sensor is designed to detect excess humidity and automatically activate the ventilation fan to help reduce the level of condensation. Contemporary in design, the device features easily adjustable settings for sensor sensitivity, humidity level and automatic time out, which can be set to meet the specific ventilation needs of the room.

Eaton Technologies Pvt. Ltd. E-mail: RajivKumar@Eaton.com Website: www.eaton.com

Leviton Network Solutions Tel.: +91 99 8709 4004 Website: www.leviton.com

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industry 2.0

- technology management for decision-makers | january 2014

product gallery Oily Water Separator

Float Level Switches

hese lighter units have now been added to Victor Marine’s full range of products. Due to the weight constraints applied to this project, Victor Marine faced the challenge of designing and building a lightweight version of their already available CS Series range of separators. Tasked with producing a separator weighing no more than 215 Kgs (dry weight) Victor Marine has produced a fully functional aluminium separator weighing only 169 Kgs (dry weight), which is an incredible 30% reduction in the finished weight of a standard CS Series unit.

utomation Direct’s ProSense line has been extended to include float level switches, which provide a low-cost general purpose solution for single point monitoring of liquid levels

in a variety of applications. The float switches are designed with powerful internal permanent magnets that actuate a highly reliable and repeatable hermetically sealed reed switch – as the float rises and lowers with liquid level. Reed switches carry electrical ratings for both AC and DC voltage for adaptability to many control interface applications. These float switches are available in several different material constructions for compatibility with many types of liquids, a wide temperature range and system pressure requirements; vertical and horizontal mounting styles with several mounting thread variations are offered for ease of installation.

Victor Marine Ltd. Tel.: +44 1708 899780 Website: www.victormarine.com

Automation Direct Tel.: +1 800-633-0405 Website: www.automationdirect.com

Business Index Company ................................................. Page No.

Company ................................................. Page No.

Advanced Antivibration Components – AAC.......46

Fine Cut.................................................................34

Marubeni.............................................................. 04

Air Products......................................................... 06

FLSmidth Pvt. Ltd.................................................46

Meissner Filtration Products................................46

ASQ....................................................................... 16

Frost & Sullivan..................................................... 18

Mitsubishi-Hitachi............................................... 04

ASSOCHAM........................................................... 14

Helmholtz Zentrum Geesthacht...........................20

National Academy of Sciences.............................20

ATS........................................................................ 21

Honda.................................................................... 14

OMRON Corporation............................................47

Automation Direct................................................48

Hyundai................................................................. 14

Siemens................................................................42

BASF Catalysts India Private Limited.................. 08

IDC........................................................................45

Stock Drive Products/Sterling

Bhabha Atomic Research Centre (BARC)............37

imc Meßsysteme.................................................. 21

Instrument-SDP/SI...............................................47

Board of Radiation & IsotopeTechnology (BRIT)....37

India Electronic and Semiconductor

Tata Steel..............................................................27

BORG Energy....................................................... 09

Association (IESA)................................................ 18

Thomas & Betts Corp...........................................46

CG........................................................................ 04

Infodrive India...................................................... 04

Transport Corporation of India.............................28

Daimler India Commercial Vehicles (DICV)........ 06

Institute for Molecular Engineering,

University of Chicago............................................20

Dalmia Cement Bharat Limited (DCBL)............. 08

University of Chicago............................................20

U.S. Food and Drug Administration......................37

DISA India............................................................. 09

ITC.........................................................................34

Victor Marine Ltd..................................................48

Dynamic Systems.................................................47

Johnson Electric...................................................47

Wacker................................................................. 08

Eaton Technologies Pvt. Ltd.................................47

Leviton Network Solutions...................................47

Wacker Metroark Chemicals (WMC)................... 08

Epicor Software Corporation................................45

Mahindra & Mahindra...........................................23

World Bank............................................................ 17

Eriez – India..........................................................46

Mahindra Trucks and Buses Ltd. (MTBL).............22

World Steel Association (worldsteel)................... 12

Ernst & Young........................................................ 18

Market Research Reports.................................... 06

Yaskawa America..................................................46

january 2014 | industry 2.0

- technology management for decision-makers

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