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Transcript of Business Opportunity
Business Opportunity for Raychem RPG products in Indian Railways
By:-Devam SaxenaPGDM 2011-13IIM Calcutta
Objectives
Primary Objective To find out what is the requirement of the following products in Indian Railways:
Cable Joints and Terminations Insulators Lightning Arresters
Secondary Objective
To find out how can this market be grabbed, i.e. form a sales strategy
Introduction
Indian Railways – One of the major focus areas for Raychem RPG for FY 2012-13.
Only 25% (approx.) of the total railway tracks are electrified (16001 rkms out of 63028 rkms).
1825 kms of electrification (725 kms new construction and 1100 kms of electrification) is scheduled in the year 2012-13.
Understanding Railwaysbetter…
Organization
Indian Railways
Organization
CR ECR ECoR
ERNCR
NER
WR
WCRSR
SCRNFR
SER
NRSEC
RKMR
NWR
SWR
17 Zones
Organization
68 divisions
Organization
Minister of Railways
Railway Board
• Chairman, Railway Board• Member Electrical• Member Staff• Member Engineering• Member Traffic• Member Mechanical• Financial Commissioner
Organization
Railway Board
17 GMs & AGMs Zone
DRMs Division
Organization
17 GMs & AGMs Zone
DRMs Division
Engin
eerin
g
Mechan
ical
Electr
ical
S&T
Constr
uction
Operat
ing
Commerc
ial
Medica
l
Safet
y
Stores
Accou
nts
Person
nel
Secur
ity
Departments
Organization17 GMs & AGMs Zone
DRMs Division
Higher
Administrativ
e Grade
Senior
Administrativ
e Grade
Junior
Administrativ
e Grade
Senior Grade
Junior Grade
Structure
Organization17 GMs & AGMs Zone
DRMs Division
Junior
Administrativ
e Grade
Senior Grade
Junior Grade
Structure
Organization8
Manufacturing Units
7 Education and Research
Units• CLW Chitranjan
• CORE Allahabad
• DLW Varanasi
• DMW Patiala• ICF Chennai• MRVC Mumbai
• RCF Kapurthala
• RWF Bangalore
• IRICEN Pune• IREEN Nasik• IRIMEE Jamalpur
• IRISET Secunderabad
• IRITM Lucknow
• RDSO Lucknow
• RSC Vadodara
Organization
Need to know more about:-
• The Electrical Department
• The Stores Department• The Accounts
Department• CORE Allahabad • RDSO Lucknow
The Electrical Department
Electrical Department
General Electrical
Traction Distribution (TRD)
OperationsConstruction
Sub-Departments
The Electrical Department
Grade Designation LocationHAG CEE Zonal HQSAG
CESE (Service)CEGE (General)CEDE (Distribution)CETE (Traction)CELE (Locomotive)CEE/CON(Construction)
Zonal HQZonal HQZonal HQZonal HQZonal HQZonal HQ
JAG Dy. CEE (Zonal/Divisional)Sr. DEE
Zonal HQ/Div. OfficeDivisional Office
Sr. DEE Divisional OfficeJr. AEE/Zonal
AEE/DivisionalZonal HQDivisional Office
Gazetted Establishment
The Stores Department
Grade Designation LocationHAG Controller of Stores (COS) Office of COSSAG Chief Material Manager
(CMM)Office of COS
JAG Dy. Chief Material Manager (Dy. CMM)
Zonal HQ/ Divisional HQ/ Depots
Sr. Senior Materials Manager (SMM)
Zonal HQ/ Divisional HQ/ Depots
Jr. Assistant Materials Manager (AMM)
Zonal HQ/ Divisional HQ/ Depots
Gazetted Establishment
The Accounts Department
Grade Designation LocationHAS FA & CAO Zonal HQSAG FA & CAO (G)
FA & CAO (T)FA & CAO (W&S)
Various Locations
JAG Dy. FA & CAO Various Locations
Sr. Sr. AFA Various LocationsJr. AFA Various Locations
Gazetted Establishment
CORE Allahabad
• Centrally responsible for all the electrification work in Indian Railways
• Responsible for several approvals needed by vendors for supplying their products to railways
RDSO Lucknow
• Responsible for development of standards for materials and products needed by Indian Railways
• Technical investigation, statutory clearances, testing and providing consultancy services
Procurement Process
• Promoter of open market
• Utilizes tender system for procurement
• Tenders are called by the Gazette of Stores Department (Table showing Power of Gazette)
• Railways uses two methods:• Procure material through tendering• Contract out the procurement of material
while contracting out the jobs
Tendering Process
Consuming Authority
Concerned Stores
Authority
Tender Applicants
Tender Committee/ Accepting Authority
Firm with winning tender
Creates demand Calls
for Tenders
Submit TendersDiscuss and
accept tender
Supplies the product
Tender Committee
Value Stores Consuming Finance10 L to 30 L Sr. (SMM) Sr. (DEE) Jr. (AFA)30 L to 1 Cr JAG (Dy. CMM) JAG(Dy.CEE/
Sr.DEE)Sr. (Sr. AFA)
1 Cr to 2 Cr JAG (Dy. CMM) JAG(Dy.CEE/Sr.DEE)
JAG(Dy.FA & CAO)
2 Cr to 15 Cr SAG (CMM) SAG (CEDE/CETE) SAG (FA & CAO)15 Cr to 25 Cr HAG (COS) HAG (CEE) SAG (FA & CAO)25 Cr to 50 Cr HAG (COS) HAG (CEE) HAG (FA & CAO)
Tender Accepting Authority
Value Accepting Authority10 L to 30 L JAG (Dy. CMM)30 L to 1 Cr SAG (CMM)1 Cr to 2 Cr SAG (CMM)2 Cr to 15 Cr HAG (COS)15 Cr to 25 Cr AGM25 Cr to 50 Cr GM
Below 10 L, the tender is accepted by AMM for value up to 2 L. Above 2 L, the SMM becomes the accepting authority.
Types of Items Procured
• Stock Items:• Annual requirement can be predicted• EAC: Estimated Annual Consumption• BAVR: Book Average Rate
• Non-Stock Items:• No consumption pattern• Procured as and when needed
Inventory Control
• Use Selective Inventory Control (ABC Analysis)
• Allows for control of larger share of expenses by controlling lesser number of items
• Every year a value is set for Annual Consumption (=EAC * BAVR) for dividing items in ABC categories.
Category % of no. of items % of annual consumption value
A 10 70B 20 20C 70 10
Inventory Control• For example:
• For SE Railways:
• For Eastern Railways:
Category Annual ConsumptionA Rs. 35,00,001 or moreB Rs. 17,50,001 to Rs. 35,00,000C Rs. 17,50,000 or less
Category Annual ConsumptionA Rs. 33,92,001 or moreB Rs. 6,10,001 to Rs. 33,92,000C1 Rs. 25,001 to Rs. 6,10,000C2 Rs. 25,000 or less
Description of Productsconsidered…
Cable Joints and Terminations:
Different Technologies
Heat Shrink
Cold ShrinkCompound
Cable Joints and Terminations:
Among these technologies, the heat shrink technology has proven to be the most suitable technology, as it is very durable, is cost effective and takes least time for setting.
Cable Joints and Terminations:
What Indian Railway requires?
• LT - 3.5 core 1.1kV• Heat Shrink Straight through Jointing Kit for PILC/XLPE
Cables (Size range – 25 mm2 to 400 mm2)• Heat Shrink Indoor/Outdoor End Termination Kit for
PILC/XLPE Cables (Size range – 70 mm2 to 240 mm2)• HT – 3 core 11 kV
• Heat Shrink Straight through Jointing Kit for PILC/XLPE Cables (Size range – 25 mm2 to 400 mm2)
• Heat Shrink Indoor/Outdoor End Termination Kit for PILC/XLPE Cables (Size range – 70 mm2 to 240 mm2)
Cable Joints and Terminations:
• LT - 3.5 core 1.1kV• Heat Shrink Straight through Jointing Kit for PILC/XLPE
Cables (Size range – 1.5 mm2 to 1000 mm2)• Heat Shrink Indoor/Outdoor End Termination Kit for
PILC/XLPE Cables (Size range – 4 mm2 to 1000 mm2)• HT – 3 core 11 kV
• Heat Shrink Straight through Jointing Kit for PILC/XLPE Cables (Size range – 16 mm2 to 400 mm2)
• Heat Shrink Indoor/Outdoor End Termination Kit for PILC/XLPE Cables (Size range – 16 mm2 to 400 mm2)
What Raychem can offer?
Insulators: Different Technologies
Porcelain
Polymeric (Composite)
Insulators:
Among these technologies, the polymeric technology has proven to be the most suitable technology, as it is lightweight and thus, easy to handle and install
Insulators
What Indian Railway requires?
• 25 kV Post Insulator (Polymeric/ Composite)• 25 kV Solid-core/cut-in Insulator (Polymeric/ Composite)• 25kV Solid-core suspension Insulator (Polymeric/
Composite)• 25 kV Stay Arm Insulator (Polymeric/ Composite)• 25 kV Bracket Insulator (Polymeric/ Composite)• 25 kV 9-Tonne Insulator (Polymeric/ Composite)• 132 kV Support Insulator (Polymeric/ Composite)• 132 kV Disc Insulator (Polymeric/ Composite)
Insulators:
• All types of polymeric insulators up to 36 kV• Where we lag behind is the RDSO approval
What Raychem can offer?
Lightning (Surge) Arresters:Different Technologies
Porcelain
Polymeric (Composite)
Lightning (Surge) Arresters:
Among these technologies, the polymeric technology has proven to be the most suitable technology, as it is lightweight and thus, easy to handle and install
Lightning (Surge) Arresters:
What Indian Railway requires?
• 132 kV Lightning Arrester, and• 42 kV Lightning Arrestor
Lightning (Surge) Arresters:
• Polymeric Surge Arresters from 1.1 KV to 800KV range.• Porcelain Surge Arresters from 6.6KV to 36KV range.• Where we lag behind is the CORE approval.
What Raychem can offer?
Research Methodology
Unstructured (Informal) Interactions
Structured (Formal) Interactions
Data Collection and Analysis
Principle and Assumptions
Consumption
Maintenance
Construction
Maintenance:
Business Opportunity = EAC * BAVR
Construction:
• 1825 Kms of Construction planned• Estimate per unit distance available• Consumption=(Consumption per unit
distance )* (Total distance)• BO = Consumption * Price as per estimate
(Exhibit)
Data, Findings and Analysis
Data for South Eastern Railways (2493 Rkms):-
Stock ItemsP.L. No. Description EAC BAVR (Rs.) Business
Opportunity (Rs.)
46453544
Stay Arm Insulator
1225 1291.17 1581683.25
46453562
Post Insulator 16 N/A N/A
46453570
9 Tonne Insulator
310 1325.46 410892.6
46453672
Sectioning Insulator
50 3591.44 179572
46454767
Bracket Insulator
1275 1170.39 1492247.25
Total 3664395.1
Data for Eastern Railways (2422 Rkms):-Stock Items
P.L. No. Description EAC BAVR (Rs.) Business Opportunity (Rs.)
46990094 Composite 9 Tonne Insulator 50 1295 64750
46990112 Composite Stay Arm Insulator 1820 1320 2402400
46990124 Composite Bracket Tube Insulator
3630 1160 4210800
46990173 Composite Bracket Insulator (Std.)
500 1170.39 585195
46990215 Composite Stay Arm Insulator (Std.)
500 1430.28 715140
46990303 Porcelain 9 Tonne Insulator (R-6020)
50 1711.87 85593.5
46610704 Porcelain Stay Arm Insulator (R1-6000)
50 1357.52 67876
46610753 Porcelain Section Insulator (Core-R1-6100)
36 1712.5 61650
46610807 Porcelain Section Insulator (Core-R1-6110)
301 2801.67 843302.67
46610984 Porcelain Stay Arm Insulator P/zone (R1-6002)
525 1515.44 795606
46601010 Porcelain 9 Tonne Insulator P/zone (R1-6020-1)
420 1529 642180
Total 10474493.17
Thus, considering just the stock items for S.E. Railways and Eastern Railways, the total business opportunity is (Rs.3664395.1+Rs.10474493.17=) Rs. 1,41,38,888.27
N.B.: This opportunity can be extended over to all the zones of Indian Railways in the ratio of their route kms, but considering the differences in terrain and geographical conditions, this will provide us erroneous results. If we neglect this error, the total business opportunity across the country would be:
Business Opportunity= Rs. (14138888.27/4915)*63028
= Rs. 18,13,11,464
Construction:
Products Requirement for every 25 kms (a) in units
Requirement for 1825 kms (b=a*73) in units
Price as per the estimate (c) in Rupees per unit
Total business opportunity (b*c) in Rupees
25 kV Post Insulator 20 1460 7822 1,14,20,12025 kV Solid-core/cut-in Insulator
71 5183 7822 4,05,41,426
25kV Solid-core suspension Insulator
15 1095 7822 85,65,090
Section Insulator assembly
12 876 32071 2,80,94,196
25 kV Stay Arm Insulator
650 47450 1320 6,26,34,000
25 kV Bracket Insulator 650 47450 1170.39 5,55,35,005.5Total 20,67,89,837.
5
Construction:Across 1825 kms, the no. of TSS and SP can be approximated to (1825/60=30.41) thirty one. Thus,Products Requirement
for every TSS (a) in units
Requirement for 31 TSS (a*31) in units
Price as per the estimate (c) in Rupees per unit
Total business opportunity (b*c) in Rupees
132 kV Lightning Arrestor Assembly
4 124 1,68,859 2,09,38,516
42 kV Lightning Arrestor Assembly
7 217 24,808 53,83,336
132 kV Support Insulator 20 620 21,199 1,31,43,380132 kV Termination with Disc Insulator
10 310 14,021 43,46,510
25 kV Post Insulator 150 4650 2,474 1,15,04,10025 kV suspension 9 Tonne Insulator
20 620 2,954 18,31,480
Total 5,76,47,322
Construction:
Taking the distance between consecutive SSP as 15, the total number of SSP in 1875 kms will be (1875/15=) 125Thus, total number of SP/SSP= 125 (SSP) + 31 (SP)=156Since, two 42 kV LA assemblies are required for every SP/SSP;Thus, no. of LA assemblies required- 312Price of one LA assembly- Rs. 79606Thus, business opportunity (79606*312)- Rs. 2,48,37,072 Thus, the total business opportunity available through construction is Rs. 28,92,74,231.5 across the country.
Findings:• Very less big players in the market• Present players little myopic.• Competition:
• Cable Joints and Terminations• Yamuna Densons• M-Seal (3M)
• Insulators• Aditya Birla Insulators• Goldstone Infratech Limited• Insulators and Electricals Company (A unit of
Hindustan Vidyut Products Ltd)• BHEL Ceramics• Modern Insulator Limited• Asiatic Electrical and Switchgear Pvt. Ltd.• Deccan Enterprises Private Limited
Findings:
• Tool and Gauge Company• Khattri Castings• Kamgar Engineering
• Lightning Arresters• Oblum Electrical Industries PVT LTD • ELPRO International Ltd.• LAMCO Industries Private Ltd.
Conclusions
Cable Joints and Terminations:
• Requirement for Cable Joints and Terminations cannot be predicted.
• Maximum business via contractors.• Negligible direct business.• More requirement in construction than maintenance• No approvals required.• Required at the Sub-stations and General purposes.• Required by Electrical General Department.• Yamuna Densons – The major competitor.
Insulators:
• Direct business possible• Requirement in both construction as well as maintenance.• Biggest opportunity among the other three products
considered.• Required by Electrical TRD Department.• Require RDSO approval.
Lightning (Surge) Arresters:
• Direct business possible• Major requirement for construction.• Required by Electrical TRD Department.• Require CORE approval.
Action Plan
Approach contractors
• Follow all the tenders for electrical works• Approach all contractors participating in the bid
Improve Visibility
• Provide our latest price list to the demand forming department of consumption side.
• Get registered on the e-procurement site• If possible, get into a rate contract with DGS&D
Spread Awareness
• Presentation in front of gazette• Explain why we are better than others
For Cable Joints and Terminations:
Obtain Drawings
• Get RDSO vendor approval for manufacturing.• Obtain required Specifications/ Drawings from RDSO Lucknow.
R&D and Manufacturing
• Manufacture products as per the specifications• RDSO provides assistance which can be sought for, if needed.• Some new specification can also be suggested to RDSO which
if included, provides us an leap over other players.
Get Approvals
• Get RDSO approval for Insulators• Get CORE approval for Lightning Arresters
For Insulators and LAs:
Spread Awareness
• Presentation in front of gazette• Explain why we are better than others
Increase Visibility
• Provide our latest price list to the demand forming department of consumption side.
• Get registered on the e-procurement site• If possible, get into a rate contract with DGS&D
Approach contractors
• Follow all the tenders for electrical works• Approach all contractors participating in the bid
For Insulators and LAs (contd.):
For Insulators and LAs:
According to a Sr. DEE: “If big companies like yours consider acquiring or getting into a partnership with the companies which fabricate products like traction mast, i.e., for which there are no other players in the market, the business will be really helped.”
So, we can also try moving in this direction.
Appendix
Appendix 1: Important Websites:
• Indian Railways (http://www.indianrailways.gov.in/)• Can get links to all zonal railways sites from here
• All codes and manuals (http://www.indianrailways.gov.in/railwayboard/view_section.jsp?lang=0&id=0,5,377)
• CORE (http://www.core.indianrailways.gov.in/)• RDSO (http://www.rdso.indianrailways.gov.in/)• RDSO Vendor Interface (
http://www.rdso.indianrailways.gov.in/view_section.jsp?lang=0&id=0,5)
• RDSO Online Purchase of documents (http://www.rdsoqa.org/qamd/Vendor_Application_Form_next.aspx)
• E-Procurement (http://www.ireps.gov.in)• DGS&D (http://www.dgsnd.gov.in/)
Appendix 2: List of Contractors:• R K Electric Automation Limited, Hyderabad.
• Contact - 04023720426• ECI Engineering & Construction Co. Ltd., Hyderabad.
• Contact - 04024786099• Ranjit and Company, Ranchi
• Contact - 06512511708• BCPL Railway Infrastructures Limited/ Bapi Construction Private Limited, Kolkata
• 13B, Bidhan Sarani, Chanda Plaza, 4th Floor• Contact – 03322198668• http://www.bcril.com
• Bright Power Projects (I) Pvt. Ltd., Mumbai• Contact – 02242333777
• Kalicon Electricals, 50, Prince Anwar Shah Road, Kolkata• Contact – 9339306625
• Bikash Enterprises, 143/C, Dr. Rajendra Road, Kolkata-20• Contact – 03324314825 / 9830016377
• Mukherjee Commercial Enetrprises, Reckjoiani, Rajarhat, North 24 Paraganas, Kolkata-135• Contact - 03325737248
• Macintosh Burn Limited, Kolkata, MBL House, DD 18/8, Sector-1, Salt Lake City, Kolkata – 64• Contact – 03323581418/1420, 03323371654, 03323592645/3068• www.macintoshburn.com
• Swamina International Private Limited, Plot Y-20, EP Block, Sector –V, Salt Lake, Kolkata – 91• Contact – 03364502408
• B. P. Construction, Sri Kunj Apartment, Devi Mandap Road, Ratu Road, Ranchi – 834065• Contact – 06512525232 / 9430144687
Appendix 2: TSS Diagram:
Thank You…