SUMMER TRAINING REPORT

On

Project topic

Study on marketing activities

Company name- CROMPTON GREAVES LIMITED

Submitted by

Yogesh Sharma

Roll No: -20090126

Batch: 2009-2011

2

ACKNOWLEDGEMENT

It gives me great pleasure to express my deep sense of gratitude to …Mr. Ramuavtar Dixit…senior

sales executive Marketing, without whose patient guidance and constant encouragement this study

would not have come to its present form. I am sincerely thankful to him for permitting me to work on

a topic of special interest to me for study. I owe him a debt of gratitude for constructive criticism from

time to time during the course of these investigations.

I am also highly grateful to other faculty members for providing all facilities for carrying out this

project work.

My sincere thanks must go to my family members who showed patience and forbearance during the

period of our study.

Name

Yogesh Sharma

IILM management school

New Delhi

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Contents Introduction ............................................................................................................................................ 4

PROJECT TOPIC................................................................................................................ ........................ 4

History ................................................................................................................................................ 5

Major Acquisitions................................................................................................................................... 6

Product & Services Offered By Crompton ................................................................................................ 6

BRANCH OFFICES................................................................................................................................. 7

Service Centers ................................................................................................................................. 10

Financial Analysis of CGL........................................................................................................................ 11

Total Income and Profit After Tax Of CGL Stand Alone................................................................... 11

CGL - Consolidated Revenue By Business....................................................................................... 12

CGL performance .............................................................................................................................. 13

CGL Transformers Division..................................................................................................................... 14

Manufacture of Distribution Transformer, Malanpur (M.P.) .............................................................. 16

Financial Analysis .............................................................................................................................. 17

SWOT ANALYSIS .................................................................................................................................... 18

Organization Structure ...................................................................................................................... 20

Competitors Analysis............................................................................................................................. 21

Composition Of Market Share For Transformers –In Terms Of Sales Value Cgl And Others

Companies .................................................................................................................................... 21

MARKET CAPACITY OF TRANSFORMER MANUFACTURER IN INDIA .................................................... 21

Description of Various Departments Marketing..................................................................................... 30

Production - Design, Manufacturing and Testing Equipment ............................................................. 35

I. Product Design and Planning...................................................................................................... 37

II. Manufacturing process.............................................................................................................. 37

III. Testing: ............................................................................................................... ..................... 38

Finance ..................................................................................................................... ........................ 39

Six Sigma........................................................................................................................................... 40

Information Technology ................................................................................................................ 44

QUESTIONNAIRE ................................................................................................................................... 45

CONCLUSION................................................................................................................... ...................... 53

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Introduction Crompton Greaves (CG) is the part of the US$ 3 billion Avantha Group, a conglomerate with an

impressive global foot print. Since its inception, CG has been synonymous with electricity. In 1875, a

Crompton 'dynamo' powered the world's very first electricity-lit house in Colchester, Essex, U.K. CG's

India operations were established in 1937, and since then the company has retained its leadership

position in the management and application of electrical energy.

Today, Crompton Greaves is India's largest private sector enterprise. It has diversified extensively and is

engaged in designing, manufacturing and marketing technologically advanced electrical products and

services related to power generation, transmission and distribution, besides executing turnkey projects.

The company is customer-centric in its focus and is the single largest source for a wide variety of

electrical equipments and products.

With several international acquisitions, Crompton Greaves is fast emerging as a first choice global

supplier for high quality electrical equipment

PROJECT TOPIC

Research on the effectiveness of marketing activities at CGL Distribution Transformer

Division (T2)

PROJECT OBJECTIVE

The project has been undertaken with following objectives in mind.

A detailed study on the performance of CGL T2 division for the past four

years.

Financial statement analysis

A detailed study on the marketing activities of T2 division

Identifying the problems faced by the marketing department and the

reasons for lower conversion rate of the sales enquires, which includes

Preparation of SWOT Analysis for the Tendering and Execution

departments.

To find out methods for improving the effectiveness of marketing

activities.

Data’s required Last four years order input

Last four years sales details

Last four years financial statements

History

Crompton Greaves goes back to 1878, when Col. R.E.B. Crompton founded R.E.B.Crompton & Company.

The company merged with F.A Parkinson in the year 1927 to form Crompton Parkinson Ltd., (CPL).

Greaves Cotton and Co (GCC) was appointed as their concessionaire in India. In 1937, CPL established,

it's wholly owned Indian subsidiary viz. Crompton Parkinson Works Ltd., in Bombay, along with a sales

organization, Greaves Cotton & Crompton Parkinson Ltd., in collaboration with GCC. In the year 1947,

with the dawn of Indian independence, the company was taken over by Lala Karamchand Thapar, an

eminent Indian industrialist. Crompton Greaves is headquartered in a self-owned landmark building at

Worli, Mumbai.

Today, Crompton Greaves (CG) is part of the US$ 3 billion Avantha Group, a conglomerate with an

impressive global footprint. Mr. Gautam Thapar, the third generation of Lala Karamchand Thapar, is

Chairman & CEO of India's foremost diversified corporation, the Avantha Group. Mr. Sudhir Mohan

Trehan is the Managing Director of Crompton Greaves Limited since May 2000. He was the recipient of

the ‘Outstanding Chief Executive of the Year’ Award for 2000-2001, instituted by the Indian Institution of

Industrial Engineering, for steps he took towards successfully implementing his vision of making

Crompton Greaves a world-class manufacturing company. In addition to above, the Board of Directors

includes the renowned names of Dr. O. Goswami, Mr. S. Labroo, Dr. Valentin A H von Massow, Ms. M.

Pudumjee, Mr. S.P. Talwar and Mr. S.R. Bayman.

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6

Major Acquisitions

Pauwels Acquisition

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

Ganz Acquisition

Crompton Greaves have also successfully acquired Hungarian based Ganz (GTV), engaged in the

manufacture of EHV Transformers, Switchgear, Gas Insulated Switchgear (GIS), Rotating Machines and

Contracting businesses and Transverticum Kft (TV), engaged in the supporting areas of design, erection,

commissioning and commercial activities on 17th October,2006; TV being a subsidiary of GTV.

Microsol Acquisition

The acquisition of Microsol Holdings Limited (MHL) and its associate companies in May 2007 is yet

another significant stride in CG's journey towards positioning itself as a Global T&D Solutions Provider.

Sonomatra Acquisition

Crompton Greaves concluded an arrangement for the acquisition of Societe Nouvelle de Maintenance

de Transformations (Sonomatra) of France in June 2008. Sonomatra provides on-site maintenance and

repair of power transformers and on-load tap changers, oil analysis, oil treatment and retro filling.

Product & Services Offered By Crompton The company is organized into three business groups viz. Power Systems, Industrial Systems, Consumer

Products. Nearly, two-thirds of it's turnover accrues from products lines in which it enjoys a leadership

position. Presently, the company is offering wide range of products such as power & industrial

transformers, HT circuit breakers, LT & HT motors, DC motors, traction motors, alternators/ generators,

railway signaling equipments, lighting products, fans, pumps and public switching, transmission and

access products. In addition to offering broad range of products, the company undertakes turnkey

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projects from concept to commissioning. Apart from this, CG exports it's products to more than 60 countries worldwide, which includes the emerging South-East Asian and Latin American markets.

Thus, the company addresses all the segments of the power industry from complex industrial solutions

to basic household requirements. The fans and lighting businesses acquired “Super brand" status in January 2004. It is a unique recognition amongst the country's 134 selected brands by "Super brands", UK. DIVISIONS OF CGL

regional sales offices located in

Distribution Transformer Shunt Reactor

Crompton Greaves' strength emanates from its business operations consisting of 21 divisions

spread across in Gujarat, Maharashtra, Goa, Madhya Pradesh and Karnataka supported by well knitted marketing and service network through 14 branches in state capitals under overall management of four

Bushings Lighting Arrestor

Dry Type Transformer Bulbs, Tubes

Ceiling Fans

FHP Motors Pumps

Street Lighting

Chennai. Relays Rail Signalling Delhi, Kolkata, Mumbai and Stampings

HT Motors LT Motors Power Transformer REGIONAL OFFICES (ALL PRODUCTS) Switchgear

Alternators

BRANCH OFFICES

Instrument Transformer

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Manufacturing Units

1. Manufacture of Domestic, Agro and Industrial Pumps, Ahmednagar (Maharashtra)

2. Manufacturing range of DC M/C and Railway Traction Motors, Mandideep (M.P.)

3. Manufacture DC Motors in the range of 1.2 to 450KW, Ahmednagar (Maharashtra)

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

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

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

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

8. Manufacture of Stampings for Motors, Mumbai (Maharashtra)

9. Manufactures High Voltage Induction Motors, Mandideep (M.P.)

10. Signalling Relay Unit, Pithampur (M.P.)

11. Luminaire Division, Mumbai (Maharashtra)

12. Fans & Appliances Division – I, Goa

13. Table Fans(Kundaim) Division, Goa

14. FHP Motors Division, Goa

15. LT Motors Division, Goa

16. Switchgear Division – EHV, Nashik (Maharashtra)

17. Digital-PSTA Manufacturing, Bangalore (Karnataka)

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Transformers Plant, Mandideep Transformers Plant, Malanpur Alternators & DC Machines Plant,

Ahmednagar

LT Motors Plant, Ahmednagar.

DC Machines Shopfloor, Mandideep.

Research & Development Facility,

Transformers Plant, Kanjurmarg - Mumbai

Transformers Plant - Winding Bay, Kanjurmarg - Mumbai.

Switchgear Unit, Aurangabad

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Kanjurmarg - Mumbai

Service Centers 1. Ahmadabad (Gujarat)

2. Bangalore (Karnataka)

3. Bhubaneswar (Orissa)

4. Cochin (Kerala)

5. New Delhi

6. Jaipur (Rajasthan)

7. Jalandhar (Punjab)

8. Kolkata (West Bengal)

9. Lucknow (U.P.)

10. Secunderabad (A.P.)

Year Total Income(cr) PAT(cr)

2005 2180 115

2006 2771 163

2007 3695 192

2008 4290 314

2009 4940 397

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11. Patna (Bihar)CGL Manufacturing Units

Out of

Indi

12.

Financial Analysis of CGL

Total Income and Profit After Tax Of CGL Stand Alone

12

It is visible from the stats the CGL has been showing increasing profit after tax for last three years which

shows that the company has been growing well, this is the influence of the diversification strategy

followed by the company.

CGL - Consolidated Revenue By Business

The company has been showing increased significant revenues generated from the power segment of

the market, which shows are growth of the company and its success in the power segment.

The EPS of the company has increased as compared to the previous year this shows that the company is

performing well and has added to the wealth of the shareholders. Also the company has adopted a good

capital structure which has increased the company’s EPS and cash EPS. The Net Sales to Working Capital

is greater than one which means that the company is making good use of the working capital and is

generating sufficient funds to return the loans; the operating leverage of the company is near 13%

which shows that the company is making good profit. The company can make use of debt in its capital

structure since it has zero debt to equity ratio. Also, the interest coverage ratio has noticeably increased

which shows that company is making good use of the debt.

13

CGL performance

14

CGL Transformers Division

The transformers division of Crompton Greaves began operations over 60 years ago with their first

supply to the US Army. The initial inputs for technology came from collaborations with Brush

Transformers and Hawker Siddeley Power Systems of U.K. The company then forged a technology

arrangement with Westinghouse Electric Corporation U.S.A. for transformers of up to 400 kV to serve

international demand. The Transformer Division is the highest exporter of Power Transformers from

India, a position it has maintained consistently since 1997-98. Exports of the division amount to over

50% of the total transformer exports from India! Products of the Transformer division are exported to

15

over 40 countries worldwide. The Crompton Greaves Transformer division is known for its wide range,

reliable designs, excellent materials and globally benchmarked manufacturing practices.

Crompton Greaves is among the very few companies worldwide that designs and manufactures the

widest range of Power & Distribution Transformers and Reactors from 160kVA to 415MVA, 500kV Class

to fulfill the specific demands of the Power & Industrial sectors and the Railways. With an installed base

of over 120 million kVA in Transformers, Crompton Greaves has emerged as the largest Indian supplier

of a wide range of Transformers and Reactors for all critical applications. These Transformers and

Reactors find use in industries such as Power Utilities, Process Industries, Railways, Mines, Electricity

Boards, Industrial users etc in both the Domestic as well as Global markets.

The division has the capability to manufacture transformers from 400 kVA to 900,000 kVA (in a bank) 3.3

kVA to 500 kV class for various applications confirming to IS, IEC, EN, AS, BS, ANSI and other

international standards. All the plant operations are certified under the ISO 9001 and ISO 14,000. The

Division has technologically superior manufacturing facilities in Mumbai, Gwalior and Bhopal with a total

installed capacity of 18,500 MVA. Crompton Greaves incorporates the latest technology, superior raw

materials and state-of-art manufacturing facilities to build transformers of superior quality and with high

degree of reliability.

The four transformer manufacturing facilities of CGL are listed below:

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

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

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

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

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

Bhopal plant covers an area of over 30,000 sq meters. The Kanjur Plant in Mumbai manufactures Power

Transformers up to 400 KV and Shunt Reactors. The Mandideep plant manufactures Power

Transformers of 132 & 230 KV range.

The new integrated Distribution Transformer division (T2) at Malanpur is spread over 20,000 sq meters.

The Malanpur plant manufactures Distribution Transformers up to 20MVA, 66 KV.

The consumer products of the plant are customized and are assembled according to the needs of the

customers, Job type of production is carried out.

Based on function the transformers can broadly be divided into Power transformers, Distribution

transformers and other types of special transformers for welding, traction, furnace etc.

1) Low Power Transformers: The power transformers are used to transform power voltage from

the generation point to the transmission point and are installed at the generation site right up to

the last substation just before distribution activities commence. This transformer is used to

either step up or step down power to match the voltage requirements. They are oil filled

transformers with its range spanning from 11kV – 765kV. Power transformers would account for

about 65-68% of the total value of the transformer industry.

2) Distribution Transformers: A distribution transformer is used to transform power voltage from a

substation to final end of consumption. The basic purpose of a distribution transformer is to

provide end user with low voltage power. A distribution transformer could either be oil filled or

dry type by nature, with range spanning from 1.1 kV to 11kV. Distribution transformer would

account for the remaining 32 -35 % of the total value of the transformer industry.

3) CR Transformers: A dry type transformer is used where there is space constraint and higher

chances of occurrence of fire. Special fire resistant insulation is used in this type of transformers.

These are mostly used by industrial and corporate clients at software parks, hotels, hospitals,

high rise buildings etc. These transformers are categorized as distribution transformers due to

their nature of operation, i.e. at the end users locations.

Financial Analysis NET SALES (FY2006-FY2010)

Year CG DT T2 Division(in lacs) Rate Of Growth CG Power System Asia(in lacs) Rate Of Growth % share of T

2005-06 2006-07 2007-08

9513 12576 17909

32.7 32.2 42.41

115318 170644 187346

37.42 47.98 9.79

8.2 7.4 9.6

2008-009 20410 13.97 231179 23.40 8.8

2009-10 21268 4.20 269670 16.65 7.9

The Unit’s net sales increased at almost 33% in the financial year 2006 and 2007 which is quite

proportionate to the growth rate of the Power System Asia which was 38% and 48% in the year 2006 and 2007 proportionately. The net sales growth rate for Asia in the year 2008 was about 10% on the

other hand the sales for CG D2 T2 plant increased by approx. 43%. The Net Sales for this plant has increased by 14% and 4% in the year 2009 and 2010 respectively. The T2 unit Malanpur accounts for about 7% to 10% of the Nest Sales of the CGL PS Asia.

The division’s profit has significantly mounted up in the past three years as can be easily visualized from the chart.

17

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

Wide product range to provide solutions to different customer segments

like Thermal / Hydro power generation clients , transmission agencies ,

distribution and industries . Maj or presence in domestic power market and wide installed equipment / customer base. Prompt after sales service, understanding of Indian conditions & wide

geographical spread Significant technology absorption and adaptation capability to suit local

needs. Contemporary integrated manufacturing base and infrastructure Highly committed engineering, technical and managerial manpower International quality ( ISO 9000/9001:2000/14001 series, OHSAS 18001,

etc.) at competitive prices Strategic Management with a blend of

appropriate measures. WEAKNESSES

Technology development constraints. Limited financing capacity for large EPC projects & uncompetitive financing costs.

Operational constraints (flexibility, speed of response etc.) vis-à-vis

competitors.

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higher Inadequate recovery from traditional customers – Utilities / SEBs

working capital requirements adversely affecting profitability

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

Growth rate of economy envisaged (6-8% p.a.) in next few years to

stimulate large demand in infrastructure. Government has fixed up the target of 78,577 MW of capacity addition for XIth Plan (2007-08 to 2011-12). Boost to power transmission sector & privatization moves i n distri bution sector. The total transmission capacity is planned to increase from the existing

capacity of 9,450 MW to 37,150 MW by 2012.

To secure cheaper power through large size power projects, the

government launched Ultra Mega Power Projects (UMPPs) with the target

to produce 4000 MW by 2012. THREATS

Delay / deferment of projects adverse impact on domestic business.

Technology leaders unwilling to share new technologies and insisting on

their terms / imposing Licensing restrictions on Territories. International players consolidating & setting-up local manufacturing bases. Increasing competition from large MNCs with greater financial & strategic

muscle and speedier response.

Lowering of Import Tariffs below the WTO bound rates Continued

customers insistence on qualification/ experience requirements

Roadblocks for introduction of Indigenous Technologies. 19

Departments No. of employees Production 14

20

Organization Structure

Marketing 5

Quality Assurance 11

Services 2

Design 14

Six Sigma 2

Engineering 2

Maintenance 2

Finance 5

Materials & Stores 7

Human Resource 2

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

Companies

MARKET CAPACITY OF TRANSFORMER MANUFACTURER IN INDIA A major part of the transformer manufacturing capacity of India is contributed by the major players like 1-BHEL 2-CGL 3-ABB 4-AREVA

Crompton Greaves

Ltd. 21

30000 MVA p.a.

Are

va

Tel

k

Kan

oh

ar

Cro

mp

ton

Kir

losk

ar

BH

EL

Vo

ltam

p

EM

CO

Bh

arat

AB

B

Oth

ers

BHEL

ABB

Areva

EMCO

Bharat Bijlee

Voltamp

Telk

25000 MVA p.a.

17000 MVA p.a.

15000 MVA p.a.

12000 MVA p.a.

7000 MVA p.a.

5000 MVA p.a.

3000 MVA p.a.

25%

20%

Whereas the total transformer manufacturing capacity of India in MVA is

approx. 200000 MVA p.a. CGL is one of the highest MVA producer in India. MARKET SHARE OF TRANSFORMERS SALES

45%

40%

35%

30% Power Transformer

Distribution Transformer

15%

10%

5%

0%

The above are the market share captured by some major transformer

manufacturers.

PRICE COMPETITIVENESS OF COMPANIES 22

BHEL 19%

CGL 22%

ABB 21%

Areva 21%

EMCO 17%

Crompton BHEL ABB Areva EMCO

PRICE COMPETITIVENESS OF COMPANIES

25%

20%

15%

Series1

10%

5%

0%

Greaves

Ltd.

The company who can offer best quality at affordable prices often turns out to

be a winner. It has been observed that 22% respondents have rated CGL for

offering best quality at affordable prices; followed by AREVA & ABB at 21%,

then BHEL at 19% and at the end EMCO 17% respectively (In % AGES)

Company

23

2001-02

Company 2005-06

CGL 19.2

BHEL 12.7

VIJAI 20.0

OTHERS 46.2

TOTAL 100.0

CGL 27.0

BHEL 18.9

VIJAI 12.8

Others 41.3

TOTAL 100.0

24

Company 2007-08

CGL 18.3

BHEL 12.0

VIJAI 15.3

OTHERS 54.4

TOTAL 100.0

Crompton Greaves working in front of other companies

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

contributed by the transformers supplied by CGL i.e. every 7 th transformer in

the country is a CGL make transformer. High market share is due to

customer’s confidence in our reliable products and services. However many international players entered in the Indian market like ABB, Siemens, Areva

and many more to come, CGL is ready to face & counter future competition by

continuous up gradation in its technology & services. In spite of such stiff

competition, CGL has maintained increasing order book position and has increasing turn over values. Purchase Methodology - All the customers prefer to purchase through tender as indicated by over 100% of the respondents. Funding Procedure - Majority of the customers are funding the projects from the domestic funding or own funds i.e. 35%; next way preferred is through

World bank/ADB i.e. 28%; others are financial instituti ons which is 24% and ECB 13%. 25

Response time- The responses received takes 3 to 6 months as the products being purchased are generally costly and through tenders however sometimes,

responses received takes more than 06 months. Buyer selection process - The suppliers were selected on the basis of tender

and order being given to the lowest or the chosen one, ho provide best quality in cheaper prices. Buying Frequency - The buying frequency indicates that there is no set pattern followed by the SEBs / Utilities / Industries in the pre-reform era

and the equipments were procured as and when required. Competition- The results indicate a mix response with likely increase in

competition. Rating of various attributes of products- The results in the chart clearly marks that customer wants the best quality at best prices. The quality and

price are the front-runners at 24% and 23% respectively followed by ‘After Sales Service’ and the delivery. The customers are not interested in the brand

image in the industrial purchases. Rating of the companies in terms of quality- Customers perceived quality as

the most important criteria. The respondents have rated the product-

performance of major equipment suppliers. It has been observed that 22%

respondents have rated CGL with the best quality of products. It is closely foll owed by BHEL at 21 %, AB B at 20% & A reva a t 19%.Quali ty of EMCO has not been up to the mark. Ranking of the companies on the basis of price- The Company who can offer

best quality at affordable prices often turns out to be a winner.

It has been observed that 22% respondents have rated BHEL for offering

products at high prices; followed by CGL at 21% ,then ABB at 20% and at the

end Areva and EMCO at 19% & 17% respectively .

26

SEB’s 38%

Utilities 42%

Industries 20%

Power Transformers 60%

Distribution

Transformers

40%

27

CUSTOMER SEGMENT

SEBs

Utilities

Industries

CGL caters to the customers in various segments. 38% of the supplies are to

the State Electricity Board’s (SEB), followed by 42% to various Utilizes like

NTPC Ltd., PGCIL, etc. It caters to Industries by 20% of its supply.

PRODUCT MIX

Quality 24%

Price 23%

Delivery 18%

After Sales

Service

20%

Brand Image 15%

28

Power Transformer

Distribution Transformer

CUSTOMER CRITERION FOR VENDOR SELECTION

BHEL 21%

CGL 21%

ABB 20%

Areva 20%

EMCO 18%

29

The results in the chart clearly marks that customer wants the best quality at

best prices. The quality and price are the front-runners at 24% and 23%

respectively followed by After Sales Service and the delivery. The customers

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

PRODUCT QUALITY RATINGS OF COMPANY

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

Tendering

Customers

Order Received (Letter of

Intent)

Specification

Design

Bill of

Material

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

Quotation

Marketing

Description of Various Departments Marketing Marketing

Tendering Execution

o o o o o o o o o

Enquiry received from regions

Preparation of design

Costing Preparation

Guaranteed Technical Particular or GTP Sheet Preparation ( This document contains

information about the various sub-components and variation in costing depending upon what is used)

Techno-Commercial Deviations

Formal Offer Submission

Order Finalization

Order Received

Contract Review

Execution

Once the order is finalized by the customer, the marketing department begins the planning

phase of the order. Each order takes about 21 days to get its basic designing done and this

duration is divided according to the various steps involved in the complete production process.

The marketing department keeps the customer informed about the progress of his order and coordinates the internal activities so as to get the order completed within the allocated

duration. If the customer makes some post order changes, the designing team interacts with the customers about the concerned details and whatever technical and monetary changes should be made in the contract. 31

SAP

-3

32

It releases orders to the shop floor/vendor. Reschedules due dates of existing open orders. Analyze and update system planning factors like lot size, lead time, safety stock, scrap allowances. Cushion Stock- i) providing physically a safety stock

ii) Providing cushion lead time It reconciles errors in inconsistencies and tries to eliminate root causes of these errors.

Purchase Order Bill of

Materials

Terms of

Payment

Materials Price and

Negotiations Vendors

103 Movement (Stock-in,

No Accounting Entry) Material Received

105 Movement (Unload &

Quality Assurance)

Stores

In-Time Issuing

It performs following major functions:

Discounts Storage &

Security

It identifies the key problem areas that require immediate action. It tries to solve critical material shortage problems so that corrective action can be taken which must act as an information for the next period-

i)

ii)

iii)

Accuracy of information is most important for MRP system to act.

The 2nd important issue is the precaution one has to take in order launching (to shop floor). This has to be correctly entered.

Before releasing an order, it ensures that the components are physically

available, so periodic checking of actual inventory status and the one available in the system is necessary.

In case of a discrepancy, then few people can be deployed in checking inventory from time to time

physically in the shop floor. Any correction may be entered in the system and the process continues till the discrepancy disappears.

Other than the functions mentioned above the materials department also supervise the materials quality, for this two major functions are performed:

103 Movement:

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

105 Movement:

The materials are then unloaded from the truck into the stores and the quality assurance department checks whether the materials received are of appropriate quality. During the 105 movement, the 33

34

materials department safely stores the materials received in the Stores with appropriate utilization of

the space available.

The materials kept in the Stores are issued to the Production Department in time according to the plans

made by the Planning Department.

Inventory management

Transformers are not an off-the-shelf product, and are customized to meet individual customer

requirements and order specifications. Each transformer is identified by assigning a job number (JN),

each having a separate bill of material. Hence, they have two types of raw material inventory: -

1. Raw materials which are procured against specific JN:

JN wise items are procured on the basis of monthly requirements. Depending on the process cycle,

inventory for high-value items is optimized. The required levels of raw material are maintained in the

inventory. Raw materials such as copper rods and CRGO sheets are procured based on specific JN's. By

using technical production management tools like ERP System and CPM, they estimate our job-specific

requirements for raw materials like copper rods and CRGO sheets. On receiving copper rods, the same

are sent for job work to convert it into the requisite size of conductors as per the customer

specifications. The process of converting the copper rods into conductors is normally completed in

fifteen days. Received materials are issued to the shop floor on the basis of requisitions generated by

the shop floor team.

2. Raw materials which are common to all types of transformers:

The requirement for these items are estimated based upon past consumption data, future

requirements, lead time, ABC analysis, and market sensitivity, minimum stock levels and reorder levels.

The company keeps its raw material purchase policy flexible enough to absorb seasonal factors as well

as unforeseen ups and down in the raw material requirement.

Periodically, a report is developed on non-moving items and appropriate decisions are taken in time to

dispose off the same.

35

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

Production - Design, Manufacturing and Testing Equipment They use state-of-the-art technologies in their in-house design department, and strive to upgrade the

products based on customer feedbacks and engineering expertise of their technical teams. Apart from continuous improvement, every effort are being carried out to reduce the input cost by increasing

efficiency in manufacturing cycle, reduction of cycle time, reduction of raw material cost and procuring improved products/machines from third-party vendors and so on. Few accomplishments achieved are:

Introduction of CTC conductors have decreased cycle time for windings. Installation of the new oven in 2007 utilizing the "autoclave with Vapor Phase Drying process" which has helped to reduce cycle time of the process of drying active parts from approximately nine days to three days.

Acceptance

NO

Specification

Technical Design GTP (Guarantee

Technical Particular)

YES

Customer

Details

Letter of

Intend

Letter of

Acceptance

Order

Technical

Specification

of Customer

Planning

Design Department Bill of

Material Purchase

36

CGL uses state-of-the-art technologies in their in-house design department, and they strive to upgrade

their products based on customer feedbacks and engineering expertise of their technical teams. The

electrical designs are made using Excel software’s and mechanical drawings are made using the

software’s AutoCAD, Inventor and ProE. Apart from continuous improvement, every effort are being

carried out to reduce the input cost by increasing efficiency in manufacturing cycle, reduction of cycle

time, reduction of raw material cost and procuring improved products/machines from third-party

vendors and so on.

Production Department

Production Process Diagram

37

I. Product Design and Planning

Since all transformers are tailor made, on receipt of the customer order, the manufacturer commence

designing the transformer as per customer needs. The drawing is then submitted to the customer for

approval. The drawing and bill of material are then issued to various departments to carry out further

work as per design.

II. Manufacturing process a) Core Building

CRGO (Cold Rolled Grain Oriented) steel sheets are used for manufacturing core laminations by the sub

contractors. They cut required size of laminations by high accuracy shears. Laminations are stacked in

step lap - interleaved fashion to minimize core losses, exciting current and noise level. The yokes and

limbs are firmly clamped between steel channels in manner, which reduces vibration, and inherent

noise.

b) Winding

Annealed/half-hard copper conductors either in the form of a strip or round wires are used in winding

operations and dimensions for the winding such as inside diameter and outside diameter are

maintained by selecting proper Mandrel. Insulation is provided as mentioned in the design output. The

coil tapping leads and phase leads are taken out according to the design output. Coils are kept under

clamping pressure and sent for ovening.

c) Preparation of insulating material

Precompressed boards, perma wood (un-impregnated identified laminated wood which can withstand

temperatures of upto 1100c); craft paper, crepe paper, etc. are used as insulating material. Components

such as cylinders, wedges, spacers, rings etc. are made from these materials by different operations like

cutting, edge rounding, chamfering, drilling, machining etc.

d) Core Coil Assembly

The coils are concentrically assembled on the core limbs as per the design details. The core and coil

assembly is rigidly supported and clamped. The main leads and tapping leads of coils are then connected

to bushings and the tap changers respectively. All these leads are properly clamped and insulated to

ensure required electrical clearance and creepage.

A tap changer is a selector switch that allows the voltage ratio of the transformer to be changed by

increasing or decreasing the turns of the winding. The tapping leads of the coils are connected to the tap

changer to allow the additional turns to be brought into or taken out of circuit. In some distribution

38

transformers, the tap changer switch is an off load manual switch, while in others, the tap changer is an

on-load automatic switch.

e) Tank finish and paintings

After welding, tanks are pre treated by shot blasting. They are thoroughly cleaned before applying a coat

of zinc chromate primer paint on external surface. One coat of weather resisting enamel finish paints is

then applied on outside surface of the tank. To all interior surfaces a coat of heat and oil resistant paints

is applied. The final coat of external paint is applied, prior to dispatch of ready transformer, fitted with

accessories and fittings.

f) Ovening

Hot air drying is carried out to remove moisture from the active parts of the transformers. For

transformers up to 33 kV class drying is carried out in well ventilated ovens for a period till insulation

resistance builds up to specified value. For larger transformers, above 33 kV class, drying takes place in

vacuum drying oven. The core - coil assembly is initially heated for a predetermined period by admitting

heated kerosene vapour, and then they are placed under vacuum. This cycle is repeated till all the

moisture is extracted.

g) Tanking

Active parts (Core-coil assembly) after drying are placed in the tank. Bushings of specified rating are

mounted on the top or side as per design and connected to end terminals. Tap changing switch is

provided and connected to various tapping leads as per design. The top plate is tightened at specified

torque and the filtered oil is filled under vacuum. The tank is tested for leakage by subjecting it to the

required pressure after all other accessories are fitted on the tank. The oil is used for further insulating

purposes plus the removal of heat from the windings. The assembly of the windings on the core allows

gaps to enhance the oil circulation around the windings. The tank is constructed with fins or tubes to

allow better circulation of the oil and to provide a greater surface area for contact with the cooling air.

Very large transformers have banks of fans to provide greater air-cooling and are operated in

conjunction with temperature sensors. Some transformers also have forced oil circulation using a

pumping system and an oil cooling circuit. In installations where the use of transformer oil needs to be

avoided, the cooling medium used can be gas (nitrogen is often used).

III. Testing:

We have state-of the art testing facilities including a fully equipped testing room for carrying out of all

routine tests such as temperature rise test, zero phase sequence test etc. Every transformer is tested for

routine tests specified in the standard specification on the completion of which a test certificate to this

effect is issued.

All transformers are tested in our sophisticated laboratory for the following routine tests conforming to

National and International Specifications on the completion of which a test certificate to this effect is

issued.

Voltage Ratio.

Winding resistance.

Impedance Voltage.

No load and Load Losses.

No load Current.

Dielectric tests.

Paid Branch Office

Factory

Pass

Collection of

Payment After the acceptance of the order from the customer, the company starts the assembling of the

transformer according to the technical specification of the customers; after the assembling and testing is

completed the finance department issues an invoice and performs 3 major functions:

39

CG - Transformer designs are proven for dead short circuits by tests conducted at the independent,

accredited short circuit laboratory of the Government of India.

Finance Invoice Commercial Invoice Central Excise Duty

Customer

40

Payment of Central Excise

Duty: The finance department makes sure that the central excise duty on the products is paid to

the competent authorities, only when the duty fees is paid the product is allowed to pass from

the factory gate.

Commercial Invoice: The

finance department also issues a Commercial Invoice a copy of it sent to the branch office and

the other copy is sent to the customer. The payment from the customer is received on the basis

of the terms of payment and other details mentioned in the invoice.

Six Sigma

The company focuses upon improving the quality of its products hence it appointed an external

consultancy company SIX SIGMA Consultant Inc. to eliminate the defects in its projects. The Six Sigma started in 2002 in CGL and was instated in Malanpur Divison in 2002. The employees in this department

are designated as Black Belts (for people who are higher in hierarchy) and Green Belts for the people who are lower in hierarchy at the divisional level. The department is the company is supervised by the

MD himself. The problems in the production process are handled in the forms of projects and the

department has to think out-of-the-box to find solution to the problems. The following methodology is used to remove defects:

DMAIC Methodology

Define the problems

The department forms cross-functional teams to identify the problems. These teams use the Process Map to identify the key problematic areas. The problems are defined as:

Y=f(x)

Where X are the various factors which are responsible for the problem Y and these “Xs” may be in thousands.

A tool knows as CED (Cause-Effect Diagram) or Fishbone Diagram is used to define Xs.

Fishbone Diagram

Environment

Measurement

Method

Material

Man

Machine

DEFECT

The various Xs are defined from the fields listed above in the diagram.

Measure and Analysis

To measure the impact of the various Xs FMEA tool (Failure Mode & Effect Analysis) is used. This tool uses 3 parameters to determine the ratings:

o o o

Severity of Y

Frequency or Occurrence of X

Detection of X (As the detection of X increases its rating decreases)

On the basis of these parameters the RPN ( Risk Priority Number) of various problems is determined. The various Xs listed are categorically divided with the help of benchmark line

according to the reducing affect of the X on the problem Y. The scrutinized Xs are subjected to various statistical tools to obtain the major Xs in order to find the real-life solutions to the problems.

Improve & Control

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

The company implements ‘six sigma’ in every aspect of its functioning to offer best services and quality

to its customers. For eg: The Green Belt supervises the IPQ (In-house Process Quality) in its divisions.

Other than this the Suppliers are rated according to SQP (Supplier Quality Process) in which various Clauses are defined which need to be satisfied by the supplier only then it can be a supplier to the divison. 41

42

The CTQ (critical to quality) raw materials are supplied only by the suppliers who are able to clear the

75% cut-off in the listed clauses while this is 65% for the non-CTQ raw material suppliers.

On an average a project takes about 3 months for completion and the half the time i.e. 1.5 months is

spent in identifying the problems

Human Resource

The HR Department mainly performs the following functions:

Administrative & Statutory Compliances: These are the normal day to day activities which the HR Department has to perform in the company. They see to the regulatory organizational duties concerning the employees and the rules and regulations defined in the Factory Act. Recruitment & Planning: The HR department forecasts the manpower needs of the company on the basis of the sales plan defined in the yearly budget plan. In order to fulfill the division’s

manpower requirements the HR Department performs the functions of recruitment and training, the recruitment procedure consists of following basic steps: Questionnaire & Interview Salary & Wages: The salary and wages are basically divided as per the classification of the

employees, they are basically categorized into 3 groups:

o

o

Trainees: The trainees are recruited from the following sources:

ITI (Electrical)

These trainees are basically appointed for duration of 2 years with a stipend of Rs. 2500 and are also provided with hostel facility and Mess Facility. The trainees are also

provided with 7 Casual Leaves(CL) and 7 Sick Leaves(SL) as per the Apprentice Act.

After the duration of the 1st year these trainees may be observed as CGL Trainee whereby they are provided with some extra facilities.

Workmen (Blue Collar)

If a trainee is observed to perform well in this duration of 2 years, he may be appointed

as a CGL employee (workmen) and now he receives wages on daily basis. Also, the

workmen are appraised using BARS and are graded on a scale of 1to 4 (T-1 to T-4). The

first promotion is awarded on the performance of 1st year and then on a basis of 5 years.

The employees are now availed with 7CL and 9SL, also the employees are provided with 18 Privileged Leaves which can be availed only after duration of 240 days as a workman.

43

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

Corporate Recruited (B.E./B.Tech./ MBA)

The Corporate Trainees are awarded with a stipend of Rs. 7000 with 7CL and 7SL for 1 year and when observed as a CGL Trainee a stipend of Rs. 9000.

o Executives (White Collar)

The white collar jobs are categorized into 3 categories:

1) Executives(E-1 to E-3)

2) Manager(M-1 to M-3)

3) Leader(L-1 to L-3)

These white collar jobs have 10CL, 15SL and 30PL associated with them (PL can be

availed only after a duration of 240 days). The white collar jobs are graded on a scale of 1 to 3.

The Salaries are given on attendance basis and a computing software is used for the same.

Information Technology

The company uses SAP3 as its ERP system for integrating various departments of the company. The

company’s various departments float the data on the ERP system and the access to the information is

provided to the employees on the basis of their departments and their posts. Various levels of access to

the information are defined in the ERP system and the ERP system is operated through the servers at

the Bombay center.

44

Some questions asked to the marketing manager

QUESTIONNAIRE

1.

Sector to which your organization belongs

Government

Semi government

Industrial sector

Private

2-What is your line of activity in electrical industry

45

Always Mostly Very

often

Someti

mes

Neve

r

Tender

notification

through

press

Involved

consultants

Any other

please

specify

Transmission Distribution

Generation

IPP

Any others (please specify)

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

Power Transformers Distribution Transformers

3. How do you route your purchases?

4. How do you finance your purchases? 46

Always Mostly Very

often

Sometim

es

Never

External

commercial

borrowings

World

bank/ADB/OE

C funded

Owned

finances

Financial

institution in

India

Like IDBI, PFC

etc

Any other

please

specify

Alway

s

Mostly Very

often

Sometime

s

Never

Allow for

release

advance

Payment

Pro-rata

release as

per supply

47

5. Your standard terms of payment

Always Mostly Very

often

Someti

mes

Never

Tenders,

Selection on

basis of

prices

Tenders,

selection

after

negotiation

Negotiation

with the

short listed

manufacture

rs

Distributive

buying from

more than

one party

Any other

please

Through

letter of

credit

Through

banks/financ

ial

institution

(IDBI etc)

Any other

please

specify

48

6. What is your buyer selection procedure?

49

Annually As and when required

Once in 2 years

Any other please specify

8. What is your vendor selection procedure?

9.

As per pre-qualification Past experience of supplies given to you

Reference list of the vendor

Brand image

Competition level after reforms in the distribution sector

No change

Increased competition from global players

Emergence of new image of existing players in this field

10. Companies with which you have executed business

Crompton greaves ltd (CGL) Bharat Heavy Electricals ltd (BHEL)

ABB

Areva EMCO

VOLTAMP

Kirloskar

Any other please specify

specify 7. What is your buying pattern?

1 2 3 4 5

Quality

Price

Delivery

After sales

service

Brand image

1 2 3 4 5

CGL

BHEL

ABB

AREVA

EMCO

1 2 3 4 5

CGL

BHEL

ABB

AREVA

EMCO

50

11. Your rating various attributes of products

12. Your rating of the following companies in terms of quality

13. Your rating in terms of pricing the product

Outstandin

g or

expensive

Very good Good Average Poor Very

poor

or

chea

p

Promptness

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

Immediate Within a fortnight

Within a month

After a month

15. Total demand expected in the distribution & power transformer business in the next five years.

1000crs 2000crs

3000crs

4000crs

5000 Crs

6000 crs

16. Technology

CGL’s CGL’s CGL’s CGL’s CGL’s CGL’s

technology technology technology technology technology technology

is is is is is is

outstanding very good good average poor very poor

17. Service after sales: How will you rank the following

51

of response

Problem

repairs

Technical

competence

Promptness

of response

Timely

delivery

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

Wide range

19. Contribution of CGL in National economy

High

Moderate Low 20. Customer retention

Major strength

Minor strength

52

Inadequate

Neutral Major weakness Minor weakness

21. How will you rank CGL for providing the complete and accurate

invoices?

Complete and Incomplete

and

Accurate Inaccurate

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

53

54

To conclude this project report, I can say that the company holds a good

market share and is managing well, even when there is a big competition

market in front of CGL.

The study proves that the com pany has e ntered i nto the technical

collaboration with many i nternational firms through acquisitions. Where

the competition, is increasing day by day like this Crompton Greaves is

changing its working style in performance and providing after sales

services to the customers.

BIBLIOGRAPHY

INTERNET

www.powermin.nic.in

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

55