A Case Study Presentation HI-TECH ARAI LTD., · PDF file1 SME CONFERENCE Confederation of...

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SME CONFERENCE

Confederation of Indian IndustryChennai

27.04.2007

A Case Study PresentationHI-TECH ARAI LTD.,

Madurai

GROWING & ACHIEVING EXCELLENCE THROUGH PEOPLE

PAST:

The name was M/S. HI-TECH ANCILLARIES LTD.

A tiny family concern as private limited company with initial equity of Rs.4.25 lacs. By 31st March 1990, the annual sales was Rs.80 lacs, equity base was Rs.12.00 lacs and the accumulated loss was Rs.33.00 lacs (almost 3 times the equity base).

The total manpower was 75.

Technical collaboration with M/S. Arai Seisakusho Co. Ltd., Japan.

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PRESENT:

The name is M/S. HI-TECH ARAI LTD.

As of 31st March 2007, the annual sales turnover has touched Rs.190 crores.

The profit before tax for the year 2006-2007 is Rs.30 crores, the equity base is Rs.5.60 crores, and the cumulative surplus (profit ploughed back) is Rs.65.00 crores.


CURRENT STATUS IN THE INDUSTRY:

Leader in the market in the OE market with 70% market share. Exports to Yamaha (Japan), Thailand, France, Indonesia ,China and Piaggio (Italy), all for OE market only. Now the Company is in Joint Venture with M/S.Arai Seisakusho Co. Ltd., Japan and M/S. Mitsubishi Corporation, Japan.

The Japanese equity holding is 47%

Now the company also has a Windmill Division with currently 16windmills in operation.(5.00 megawatts).

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THE STATUS-THEN AND NOW

1990 2007SALES 80 Lacs

(COMPOUNDEDGROWTH

190 CroresANNUAL25%)

PROFIT BEFORE TAX

-8.4 Lacs(Loss)

30 Crores

ACCUMULATED PROFIT

-23 Lacs(Loss)

65 Crores

EQUITY 12 Lacs 5.6 Crores

MAN POWER 75 675

BUILDING TRUST

EMPLOYEE DIGNITYTRANSPARENCY (DECISION MAKING)VISIBILITY (ACTION)OWN THE WHOLE FAMILYCOUNSELLING

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CORPORATE VALUES (GUIDING PRINCIPLES)

1. EMPOWERMENT

2. OPEN NESS

3. TEAM WORK

4. RESPONSIBILITY TOWARDS SOCIETY

20.827.7 32.1

39.954.2

69.4 78

100

120136

160

190

0

20

40

60

80

100

120

140

160

180

200

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Gross Sales (Rs in Crores)

5

4 6.19.6 12.1 14.2

22 24.130

4045

55

65

0

10

20

30

40

50

60

70

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Net Worth (Rs in Crores)

2.2 2.8 3.8 3.7 3.4 4.3 5.27.8

12.515

25

30

0

5

10

15

20

25

30

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Profit Before Tax (Rs in Crores)

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THE CORE BELIEF IS THAT IT IS POSSIBILE TO ACHIEVE ZERO DEFECT

AND ACHIEVE LEADERSHIP

IN THE MARKET


• TRAINING• BENCH MARKING• EMPLOYEE INVOLVEMENT• EMPLOYEE EMPOWERNMENT• ROOT CAUSE CORRECTIVE ACTION• TEAM WORK• UNIVERSAL RESPONSIBILITY• THINKING STATISTICALLY• ORGANISATION CULTURE BUILDING• SUSTAINED MANAGEMENT COMMITMENT

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HI-TECH ARAI LIMITEDMILESTONES

1985- HI-TECH ANCILLARIES LTD WAS REGISTERED1986- 1ST UNIT IN TANAKKANKULAM1987- TECHNICAL COLLABORATION WITH ARAI

SEISAKUSHO CO LTD1990- TOTALLY PROFESSIONALISED1991- SECOND UNIT IN TRICHY1991- AWARDED BEST SSI UNIT IN THE DISTRICT1992- AWARDED BEST SSI UNIT IN THE DISTRICT1992- THIRD UNIT IN K.PUDUR1992- SET UP R&D CENTRE IN K.PUDUR1993- AWARDED BEST UNIT IN THE STATE1994- JOINT VENTURE WITH ARAI SEISAKUSHO CO LTD

AND MITSUBISHI CORPORATION, JAPAN


1994- NAME CHANGED TO HI-TECH ARAI LTD.1995- NEW COMPOUNDING UNIT AT KAPPALUR1995- FOURTH UNIT IN K.PUDUR1997- FIFTH UNIT (DEDICATED TO MARUTI UDYOG LTD) IN

K.PUDUR1999- MOST MODERN FACTORY BEING SET UP AT

K.PUDUR1999- HI-TECH ARAI Q.C. CIRCLE TEAM WON THE FIRST

PLACE IN Q.C. CIRCLE COMPETITION IN TAMIL NADU STATE CONDUCTED BY CII(S.R.)

2000- HI-TECH ARAI Q.C.CIRCLE TEAM WON THE FIRST PLACE IN Q.C. CIRCLE COMPETITION IN SOUTHERN REGION CONDUCTED BY CII(SR)

CONTINUES………………

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2000- IN OCT 2000, HI-TECH ARAI ‘S TWO Q.C.CIRCLE TEAMSWON BOTH THE FIRST AND SECOND PLACE IN Q.C.CIRCLE COMPETITION IN TAMILNADU CONDUCTED BY CII (SR).

2000- IN JUNE 2000, THE CO. INITIATED ENVIRONMENT MGMT. SYSTEM CERTIFICATION PROGRAMME AND AND OBTAINED THE CERTIFICATION IN JULY 2001( ISO 14000)

2001- IN NOV.2001, A PRESTIGEOUS QUALITY PERFORMANCE AWARD FROM MARUTI UDYOG LTD. WAS RECEIVED.

2002- IN DEC.2002, TWO Q.C. TEAMS WON BOTH DISTINGUISED AWARD AND MERITOROUS AWARD IN AN INTERNATIONAL CONVENTION HELD BY QCFI .

2002- THE COMPANY INSTALLED TOTAL COST MANAGEMENT SYSTEM PROGRAM.

2003- THE COMPANY WAS ACCREDITED ISO 9000:2000 CERTIFICATION

CONTINUES………………


2004- QC COMPETITION:STATE LEVEL (TAMIL NADU) - FIRSTREGIONAL LEVEL (SOUTHERN) - FIRSTNATIONAL LEVEL - SECOND

2005 - AWARDED BY CII & APAC (AIDS PREVENTION & CONTROL PROJECT) AS “BEST INDUSTRY IN PRACTISING THE HIV / AIDS PREVENTION PRACTICES”.

2006 - FIRST EXPORT ORDER FROM CHINA.

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VISION1993- To become market leader

in the country within five years

1997- To become one of the top three in the world in the field of Oil Seals.

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MISSIONMISSIONTO PRODUCE HIGH QUALITY PRODUCTS, AT COMPETITIVE PRICES, COMBINED WITH ON-

TIME DELIVERY, STRICTLY ADOPTING ENVIRONMENTAL

FRIENDLY PROCESSES

OathOur Company Philosophy is

TO PRODUCE HIGH QUALITY PRODUCTS AT COMPETITIVE PRICES COMBINED WITH ON-TIME DELIVERY STRICTLY

ADOPTING ENVIRONMENTAL FRIENDLY PROCESSES

This Philosophy is supported by followingdeep rooted beliefs

• High Quality products shall be produced by practisingTOTAL QUALITY MANAGEMENT AS A WAY OF LIFE

• Competitive Prices shall be achieved throughSUSTAINED EFFORT ON CONTINUOUS IMPROVEMENT

• On-Time Delivery shall be maintained throughTEAM EFFORT

• Environmental friendly processes shall be adopted by practisingENVIRONMENTAL MANAGEMENT SYSTEMS

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ENVIRONMENTAL POLICY

WE, HI-TECH ARAI LIMITED,MADURAI, ARE ONE OF THE LEADING MANUFACTURERS OF PRECISION AUTO COMPONENTS NAMELY OIL SEALS,’O’ RINGS,REED VALVE ASSEMBLIES AND TECHNICALLY SPECIFIED MOULDED RUBBER PRODUCTS.

WE ARE COMMITTED TO:

-STRIVE FOR CONTINUAL IMPROVEMENT OF OUR ENVIRONMENTAL PERFORMANCE BY PREVENTION OF POLLUTION AND MINIMISATION OF WASTES

-PROMOTE ENERGY SAVINGS AND CONSERVATION OF RESOURCES

-COMPLY WITH ALL APPLICABLE LEGISLATIVE, REGULATORY AND OTHER REQUIREMENTS

-ACHIEVE THE ABOVE BY CREATING AWARENESS AMONG OUR EMPLOYEES THROUGH PROPER COMMUNICATION, TRAINING AND PROVIDING CONDUCIVE WORK ENVIRONMENT

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OUR HIV / AIDS POLICYTo help maintain harmony at the workplace as well as strengthen the existing bond between employer and the employee, the company’s policy on HIV/AIDS would be as follows:1. The company would provide a safe and healthy work environment for employees.2. The company would educate its employees and the family on prevention, care and counseling

of HIV/ AIDS by providing information through posters ,leaflets, articles in the company journal and having interactive sessions. Particularly , attention would be given to dispel ill –conceived notions and myths.

3. A HIV Positive person would be allowed to continue to work in his/her job unless medical conditions interfere with the specific job that he/she is doing . In such case only if it is necessary , the employee will be shifted to another position where he/she would be comfortable.

4. The company would educate its employees on safe blood donation and transfusion.5. If an employee has been infected , information about the illness would be kept confidential by the

company. Only the immediate boss would be kept advised to prevent any eventuality on the shop floor.

6. No employee can refuse to work along with an HIV positive employee. In fact , the company would expect all employees to ensure that the affected person is comfortable and gets a feeling of being a part of the family.

7. The company , as a policy would not discriminate against any staff infected by HIV/AIDS with regard to promotions, training and other privileges as applicable to all employees of the company.

8. The company can ask a person who is being offered a job , to undergo general medical tests before the issue of the appointment letter. The test would not cover HIV / AIDS.

9. HIV / AIDS test will not be a part of the annual health check ups , unless specifically asked for by an employee.

10. The company would preferably arrange for the availability of condoms at the work place.It is hoped that with this policy , it would be possible to control the epidemic from spreading , to

build positive attitudes towards those infected , to promote health and safety amongst the employees. This , in turn , will assist in bringing about higher productivity and efficiency in the company’s operations.

HUMAN RESOURCE

28.151819000126752007

26.6717.651600036002006

23.4131360025812005

20.682012000-65692004

16.32810000NIL6202003

12.5811780076202002

12.06257000115802001

10.7737560095202000

8.63284100134751999

7.6114320034201998

6.8734280094071997

5.54422080113751996

4.34541470163381995

3.2862950282891994

2.62959082251993

2.59100540822081992

2.36337270141141991

1.06-80-751990

(RS. IN LACS)

PRODUCTION/ EMPLOYEE

(RS. IN LACS)GROWTH (%)

SALES

GROWTH (%)

NO. OF EMPLOYEESYEAR

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Savings(Rs in Lakhs)

1631605NIL11994-95

22020801.2931995-96

28027703.7361996-97

380321011.27111997-98370399023.00171998-99340542031.00251999-00

4306940103.01332000-01

5207800132.69462001-02

642002-03

ProfitBefore tax

SalesTurnover

SavingsNo. ofCircles

Year

293 822003-04 12500 1250

10000 780219.30

Quality CirclesAnnual Savings (Rs.in lacs)

2002-031. 5 Star 1.082. Silver Star 2.043. Rock Fort 5.904. Polestar 5.725. Sun Flower 0.536. Millennium 0.217. Golden Star 1.078. Blue Diamond 0.839. Mount Everest 1.0210.Arai Star 3.9811.Madurai Jasmine 5.2912.White Rose 13.013.Peagle 1.7514.Windows 0.6015.Kurinchy 19.00

16.Agni 0.2917.Discovery 0.2518.Dolphin 0.1819.Thendral 0.1720.Prism 0.0921.Power 0.0522.HTA.Com 0.1123.Eagle 12.024.Everest 12.9925.Arai 9.326.Lion 29.2427.Marshin 2.0028.Sun 0.4029.Unix7 0.2030.Flora 0.1031.Sincere Seven 0.50

32.Madurai Meenakshi 3.0133.Golden Seven 0.1034.Sapthaswaram 3.1035.Radar 5.7336.Radiant 1.0037.Insaat 1.0038.Red Rose 1.0139.Blue Star 4.2540.Globe 2.7541.Titanic 9.20 42.Orchid 7.2043.Vectrum 19.0044.Park Friends 13.0045.Unity QC 7.0046.Butterfly 3.8147.Others 8.25

Total Savings = Rs.219.30 lacs

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QC Circle Competition for Workersconducted by CII

at State, Regional & National Level• 1999-00

– State Level -First– Regional Level -First– National Level -Third

• 2000-01– State Level -First

& Second– Regional Level -First– National Level -Second

• 2001-02– State Level -Third– Regional Level -First– National Level - x

• 2002-03– State Level -Second– Regional Level - x– National Level - x

• 2003-04– State Level -First– Regional Level -First– National Level -Second

“Culture has got everything to do with it – because everything you say, our competitors could copy tomorrow. But they can’t

copy the culture, and they know it.”

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“You can dream, create, design and build the most

wonderful place in the world but it takes people to make

the dream a reality”.- Walt Disney

Culture Building Activity is a marathon race

and not a sprint

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Photo Album

by BANGERA

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SCALING UP

• Demand to chase capacity• Achieve maximum from existing facilities• Every expansion should be for technologically

superior machinery / processes with improved productivity and not for just duplicating existing capacity.

• Step by step expansion• Sustainability of quality and culture after expansion.• Mass Customization.

Basic Philosophy on Scaling Up

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SCALING UP

• Expansion funded by internal accruals and debt.• Use internal accruals maximum for long term debt to finance

scaling up and use the balance for working capital funding.• Reduce working capital funding by

– Long credit period from overseas suppliers at lower interest

– Shorter credit period for customers giving cash discount– Lower inventory and reduced process cycle

• Get the funds in time even at higher cost much more savings and contribution from timely completion of projects.

Funding Strategy

SCALING UP

• Transparency with Bankers• High on business growth and short on rations –

Achieve projected sales and profits targets – ratios and excess borrowings will be excused

• Build a good track record with banks and institutions• Build units in Industrial Estates- Speedy Pollution

Control Clearance, minimum spending on infrastructure like Power, Roads, Availability of manpower etc.

Funding Strategy

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SCALING UP

• Go for Multiple Banking – competition for funding helps

• Foreign Currency Loans• FCNR-B Loans • Buyer’s Credit• Factoring• Debentures

Funding Strategy

SCALING UP

• Gap = Funds required for scaling up – Funds tied up

• This Gap to be managed innovatively till the project goes on the stream. Then the inflows from the project will take care of the Gap –Stretch the suppliers, get faster collections, tight inventory, tight first on overheads, off balance sheet financing etc.

Gap Management

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THANK YOU

A Case Study Presentation HI-TECH ARAI LTD., · PDF file1 SME CONFERENCE Confederation of...

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