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Ramuavtar Dixit Senior sales executive…, 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 my internal mentor Mrs. Malvika Mago for providing all facilities for carrying out this project work.
Yogesh Sharma Pg20090126
CROMPTON GREAVES LIMITED is a major player in the Transformer industry in India. The objective of the project was to study the effectiveness of marketing activities of the company and to know about the sales and after sale service provided by the company to their corporate clients and expectations of corporate clients. NEED FOR THE STUDY This report is an outcome of the study undertaken for assessing the Effectiveness of marketing activities with reference to the and after sale service etc.The data collected has been subjected to analysis and interpretation on the basis of objective and suggestions have been given at the end, which will help the company to improve their service for taking steps for toning up the satisfaction of corporate clients. OBJECTIVE OF THE STUDY
To study the Effectiveness of marketing activities of CROMPTON GREAVES LIMITED
To find out the problems in the marketing department of the company if any. To give the suggestions regarding those problems, to the company. To study the various factors that influences the consumers to purchase the products of CGL
Chapter-1 Introduction to the topic
Effectiveness of marketing activities is the quality of marketers to optimize their efforts and achieve the best short-term and long-term results. Effectiveness of marketing activities is related to Return on Marketing Investment (ROMI) and Marketing ROI which helps to describe the relationship between costs and the returns achieved either in form of profits or leads.. When we want to measure the effectiveness of marketing campaign, there are three things that are essential to know. One is cost of marketing, second is revenue or leads generated from this campaign and lifetime value of a customer. Marketing is a process by which organizations create and distribute products that are not only desired by customers but they are willing to purchase those on given price. Cost of Marketing means comparing different sources of marketing and to decide which one will work better for your business campaign, like sometimes generating a brochure can cost you more as compared to make an ad in newspaper. It must be you to decide your marketing strategy on cost or its effectiveness. Next thing comes is revenue generated from specific sales after its marketing campaign and how much sales is increased after adopting a specific technique. Final thing to measure the marketing effectiveness is Customer Lifetime Value; it is the amount of gross profit generated per year by a customer multiplied by number of years they continue to purchase the same product. If a company creates a good understanding of how their consumers make a purchasing decision, this understanding can help in making a good marketing campaign and they will be able to enhance their marketing effectiveness. Lastly, there is small percentage of some factors that are out of control of marketers that can potentially impacts the effectiveness of marketing activities.
Effectiveness of marketing activities can also be enhanced by changing the current marketing strategy of company to be more successful like changing the marketing infrastructure, or taking another advertisement agency into consideration. Measuring marketing effectiveness is not an easy thing but it can be made easy by hit and trial method and learning from past experience. It has four dimensions: Corporate – Each company operates within different bounds. These are determined by their size, their budget and their ability to make organizational change. Within these bounds marketers operate along the five factors described below. Competitive – Each company in a category operates within a similar framework as described below. In an ideal world, marketers would have perfect information on how they act as well as how their competitors act. In reality, in many categories have reasonably good information through sources, such as, IRI or Nielsen. In many industries, competitive marketing information is hard to come by. Customers/Consumers – Understanding and taking advantage of how customers make purchasing decisions can help marketers improve their marketing effectiveness. Groups of consumers act in similar ways leading to the need to segment them. Based on these segments, they make choices based on how they value the attributes of a product and the brand, in return for price paid for the product. Consumers build brand value through information. Information is received through many sources, such as, advertising, word-of-mouth and in the (distribution) channel often characterized with the purchase funnel, a McKinsey & Company concept. Lastly, consumers consume and make purchase decisions in certain ways. Exogenous Factors – There are many factors outside of our immediate control that can impact the effectiveness of our marketing activities. These can include the weather, interest rates, government regulations and many others. Understanding the impact these factors can have on our consumers can help us to design programs that can take advantage of these factors or mitigate the risk of these factors if they take place in the middle of our marketing campaigns.
There are five factors driving the level of effectiveness of marketing activities that marketers can achieve: Marketing Strategy – Improving marketing effectiveness can be achieved by employing a superior marketing strategy. By positioning the product or brand correctly, the product/brand will be more successful in the market than competitors’ products/brands. Even with the best strategy, marketers must execute their programs properly to achieve extraordinary results. Marketing Creative – Even without a change in strategy, better creative can improve results. Without a change in strategy, AFLAC was able to achieve stunning results with its introduction of the Duck (AFLAC) campaign. With the introduction of this new creative concept, the company growth rate soared from 12% prior to the campaign to 28% following it. Marketing Execution – By improving how marketers go to market, they can achieve significantly greater results without changing their strategy or their creative execution. At the marketing mix level, marketers can improve their execution by making small changes in any or all of the 4-Ps (Product, Price, Place and Promotion) (Marketing) without making changes to the strategic position or the creative execution marketers can improve their effectiveness and deliver increased revenue. At the program level marketers can improve their effectiveness by managing and executing each of their marketing campaigns better. It's commonly known that consistency of a Marketing Creative strategy across various media (e.g. TV, Radio, Print and Online), not just within each individual media message, can amplify and enhance impact of the overall marketing campaign effort. Additional examples would be improving direct mail through a better call-to-action or editing web site content to improve its organic search results, marketers can improve their marketing effectiveness for each type of program. A growing area of interest within (Marketing Strategy) and Execution are the more recent interaction dynamics of traditional marketing (e.g. TV or Events) with online consumer activity (e.g. Social Media). Not only direct product experience, but also any stimulus provided by traditional marketing, can become a catalyst for a consumer brand "groundswell" online as outlined in the book Groundswell.
Marketing Infrastructure (also known as Marketing Management) – Improving the business of marketing can lead to significant gains for the company. Management of agencies, budgeting, motivation and coordination of marketing activities can lead to improved competitiveness and improved results. The overall accountability for brand leadership and business results is often reflected in an organization under a title within a (Brand management) department. Exogenous Factors - Generally out of the control of marketers, external or exogenous factors also influence how marketers can improve their results. Taking advantage of seasonality, interests or the regulatory environment can help marketers improve their marketing effectiveness.
INDUSTRIAL MARKETING AT CROMPTON GREAVES Industrial marketers have to develop their capabilities in supplying even more complex “total solution” that include both tangible (service). Thus, technical product marketing has recently received increased scholarly attention. The process of acquiring and delivering such products entails coordinating the activities of buyers and sellers, as the details of each equipment are agreed during oftenextensive interaction between the two sides. The relationships between employees in the buying and selling’s firms are therefore important before during and after delivery. The term “Technical Product Marketing” embraces all this. Marketing of technical solutions for electrical distribution substation is synonymous with project marketing that in turn encompasses relationship and industrial marketing. Eg:- CROMPTON GREAVES Vs AREVA , BHEL Vs ABB etc Industrial marketing management also called Business-to-Business marketing; it is defined by the nature of the customer- a profit seeking or a budget constrained organization seeking help in achieving its goal through the purchase of goods and services. Industrial marketing is unique in its concern for long term strategic
relationships with customers, the complexity of the buying process, and the mutual dependence of technology is at the core of buyer seller relationship. A typical scheme involvesConstruction Heavy equipment Light equipment Components Subassemblies Raw materials Processed materials The four key dimensions in applying the marketing concept to Industrial Marketing were(a) Aiming for improved profit performance, with sales volumes and market share but not as important as in consumer marketing. (b) Identifying customer needs, which require understanding the economics of the customer’s operations, then structure of the industry within which they operates and how they compete. (c) Selecting customer groups for emphasis, the classic problem of market segmentation, which takes on special meaning in industrial marketing because of the high degree of buyer seller interdependence after the sale (d) Designing the product/service package, where there is seldom a standard product itself and the product must be invented.
CHAPTER-2 COMPANY PROFILE
CROMPTON GREAVES LIMITED (CGL) is India’s largest private sector enterprise. It has diversified extensively and is engaged in designing, manufacturing technologically advanced electrical products and services related to power generation, transmission and distribution, besides executing turnkey projects. 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. Crompton Greaves (CG) is part of the US$ 3 billion Avantha group, a conglomerate with an impressive global footprint. With a turnover over RS. 4200 CRORES, the company is India’s largest private sector enterprise in the business of electrical engineering.
The company is organized into three business groups viz. Power Systems, Industrial Systems and consumer products. Nearly, two-thirds of its turnover accrues from products lines in which it enjoys a leaderships 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. In addition to offering broad range of products, the company undertakes turnkey projects from concept to commissioning. Apart from this, CG exports it’s product to more than 60 countries worldwide, which includes the emerging south-east Asian & Latin American markets. Thus , the company addresses all the segments of the power industry from complex industrial solution 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
CG’s business operation consist of 22 manufacturing divisions spread across in Gujarat, Maharashtra, Goa, Madhya Pradesh and Karnataka, supported by well knitted marketing and service network through 14 branches in various states under overall management of 04 regional sales offices located in Delhi Kolkata Mumbai and Chennai. The company has a large customer base, which includes State Electricity Boards, Government bodies and large companies in private and public sectors. At Crompton Greaves there is always a passion for quality. The company has the unique distinction of being the first one to receive an ISO 9000 certification for finance and administration. The commitment has the unique distinction of being the first one to receive an ISO 9000 certification for finance and administration. The commitment to responsible business through quality, technology and productivity has helped the company to receive many certifications in the ISO 9000/9001:2000/14001 series. The company’s twenty three divisions/ regions have been accredited with ISO9001:2000 certification; Seven manufacturing units have been accredited for ISOI 14001 and four units for OHSAS 18001. The Light sources division is one of the few business units in India in lighting industry to receive dual certificate of ISO9000 :2000 was well as ISO14001 and OHSAS 18001, Certification for Occupation Health and Safety management system .The company’s Fans, Motors, Automation and control products are approved by the CSA , BASEEFA, and CE. With several international acquisitions, Crompton greaves(CG) is fast emerging as a first choice global supplier for high quality electrical equipment.CG has completed the acquisition of the Belgium-based Pauwels on 13th May 2005.The Pauwels has transformer manufacturing facilities in five countries (Belgium , Ireland , Canada, USA, and Indonesia) and well spread distribution network across the globe, this makes a significant impetus to the company’s international presence. CG have also successfully acquired Hungarian based Ganz(GTV) ,engaged in the manufacture of EHV
Transformers, Switchgear ,Gas insulatedSwitchgear(GIS), rotating Machines and contracting businesses and Transverticum Kft(TV) which was a subsidiary of GTV, engaged in the supporting areas of design, erection, commissioning and commercial activities on 17th October,2006.The acquisition of Microsol Holdings Limited (MHL) and its associate companies ,based in Ireland with facilities in UK and USA, in May 2007 is yet another significant stride in CG’s journey towards positioning itself as a Global T&D solutions Provider. The acquisition of Societe nouvelle de maintenance de Transformatures(Sonomatra) of France in June 2008 ,will enhance Crompton greaves capabilities in the services segment of its transmission and distribution business.
Crompton Greaves limited is truly India’s industrial ambassador to the world.
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 bn 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.
Pauwels Acquisition Crompton Greaves has completed the acquisition of the Belgium-based Pauwels on 13th May 2005. The group has manufacturing facilities in Belgium, Ireland, Canada, USA and Indonesia and well spread distribution network across the globe. The acquisition catapults the company amongst top ten transformer manufacturers in the world. It has truly transformed into an Indian MNC making a long-cherished dream finally come true. Apart from strengthening it's foothold in the Indian market, Crompton Greaves acquisition of the Pauwels Group and it's transformer manufacturing facilities in five countries is expected to provide a significant impetus to the company's international presence. The additional turnover of approximately Rs.1,380 crore of Pauwels Group for it's last financial year is expected to increase Crompton Greaves' International business to around 50% of it's turnover, making the company a force to reckon with, in the international market.
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. MHL, based in Ireland with facilities in UK and USA, is engaged in the business of providing sub-station and distribution automation for the utility industry including MV and HV sub-stations, new sub-stations and retro-fitting solutions for existing sub-stations. The acquisition reinforces CG's ability to design, build and service world-class substations, with state-of-the-art automation & high-end engineering.
Sonomatra Acquisition Crompton Greaves concluded an arrangement for the acquisition of Societe Nouvelle de Maintenance de Transformateurs (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. The approximate enterprise value of this acquisition is €1.30 mn. This acquisition will enhance Crompton Greaves' capabilities in the services segment of its transmission and distribution business and is the company's fourth international acquisition.
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 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.
HT Motors Power Transformer Alternators
Pumps FHP Motors
Switchgear Distribution Transformer Shunt Reactor Dry Type Transformer Bulbs, Tubes Street Lighting
DIVISIONS OF CGL
REGIONAL OFFICES (ALL PRODUCTS)
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)
Transformers Plant, Mandideep
Transformers Plant, Malanpur
Alternators & DC Machines Plant, Ahmednagar
LT Motors Plant, Ahmednagar.
Transformers Plant, Kanjurmarg - Mumbai
Transformer Plant, Mandideep
Ceiling Fans Plant, Goa
DC Machines Shopfloor, Mandideep.
Transformers Plant - Winding Bay, Kanjurmarg - Mumbai.
Research & Development Facility,
Switchgear Unit, Aurangabad
Kanjurmarg – Mumbai
CGL Transformers Division ,Malanpur(M.P.) 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 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.)
Manufacturing division of 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 6568% 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 2005-06 2006-07 2007-08
CG DT T2 Division(in lacs) Rate Of Growth CG Power System Asia(in lacs) Rate Of G 9513 12576 17909 32.7 32.2 42.41 13.97 4.20 115318 170644 187346 231179 269670 37.42 47.98 9.79 23.40 16.65
2008-009 20410 2009-10 21268
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.
ORGANIZATIONAL STUDY OF CGL MALANPUR DIVISON (M.P.)
I. II. III. IV. V. VI.
Marketing Materials & Stores Production (Design, Manufacturing & Testing Equipment) Human Resource Information Technology Engineering & Maintenance
I. Marketing The Marketing Department at CG Malanpur Division operates in basically two modes:
Customers Quotation Marketing Design Order Received (Letter of Intent)
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:
• • •
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. After the transformer is ready to be delivered the Dispatch section sees to it that all the necessary precautions are taken while the final product is loaded on the truck to be delivered. Various accessories that are related to the products are also packed with the transformer and are delivered to the customer. The Marketing Section keeps track of
II. Materials & Stores
Terms of Payment Purchase Order Price and Discounts Bill of Materials
Negotiations Vendors SAP-3
103 Movement (Stock-in, No Accounting Entry) Material Received 105 Movement (Unload & Quality Assurance) Stores
Storage & Security
It performs following major functions: • • 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 Stocki) providing physically a safety stock ii) Providing cushion lead time
It reconciles errors in inconsistencies and tries to eliminate root causes of these errors.
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) Accuracy of information is most important for ERP system to act. ii) The 2nd important issue is the precaution one has to take in order launching (to shop floor). This has to be correctly entered. iii) 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. 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: -
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. ii) 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. The Materials Department of the company plans the material requirement during one complete operating cycle and integrates it with its strategic plans. The materials kept in the Stores are issued to the Production Department in time according to the plans made by the Planning Department. Quality Check Other than the functions mentioned above the materials department also supervise the materials quality, for this two major functions are performed:
i) 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. ii) 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 materials department safely stores the materials received in the Stores with appropriate utilization of the space available.
III. 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.
Production Process Diagram
A. 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.
Specification Bill of Material
GTP (Guarantee Technical Particular) Customer Details Letter of Intend Letter of Acceptance 31 Planning
YES Purchase Order Acceptance of Customer
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.
B. 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 opening. c) Preparation of insulating material Pre-compressed boards, perma-wood (un-impregnated identified laminated wood which can withstand temperatures of up to 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 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). C. Testing: The division has 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 a 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.
CG - Transformer designs are proven for dead short circuits by tests conducted at the independent, accredited short circuit laboratory of the Government of India.
IV. 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 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. 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 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. The workmen are also given Compensatory Leaves which are subject to the number of extra shift work.
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.
V. 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 positions. 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.
VI. Engineering & Maintenance
The Engineering Department at this division takes care of the machinery needs of the plant, for which they perform the function of tendering to purchase machines. For this they prepare a detailed report on the use of machine and profits earned against usage of the machine. The Maintenance Department takes care of the Spare Parts requirement at the plant and issues purchase orders of the spare parts. They also perform the function of maintenance of the machines. Pre-emptive Maintenance The Department performs the regular functions of maintenance at the plant depending on the usage of the machines: • • • • • • 100% Usage Monthly basis 85% Usage Quarterly basis 75% Usage Half-yearly basis
If at all a breakdown occurs at the plant, the operator of the machine fills a breakdown format and lists the problem in it. The problem is identified as major or minor and accordingly a corrective action is taken to reduce the breakdown time.
Commercial Central Excise Duty Customer Pai Factor y Pass Collection of Branch
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: 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 fee 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.
Chapter 3 Research Methodology
For formulating marketing strategies, it is imperative to understand the concepts of marketing management with specific reference to industrial marketing for industrial product. It is also necessary to understand the concepts of strategic management with particular refrence to marketing strategy. Also it is essential requirement, to understand the electric power scenario and the reforms being carried out in this sector in india as compare to elsewhere in the world the literature survey was carried out by reviewing the books and articles of renowned authors to built up the frameworks for formulation of marketing strategies for providing right solutions in terms of right product. Primary data Primary data collection has been done by questionnaire method undisguised structured form. Sample Customers were taken from existing and prospective users State Electricity Board(SEB’s) Industries ,Contractors, Consultants and independent power producers(IPP’s). The data collected was analytically examined. The responses were categorized on the various variables that affect the buying behavior of the organization. The factors determining customer satisfaction, which affect repeat purchases, were also critically examined. Questionnaire The questionnaire is designed with close ended questions only. While designing the questionnaire, a wide range of parameters has been given due considerations. The questions have been mostly objective with multiple options. The various characteristics are related on the basis of importance and weightage given in the decision process.
Some questions have been designed so as to obtain relevant information of the profile and nature of the company. The details of the questionnaire are placed in annexure and the response is analyzed. Secondary data Secondary data collection has been done by referring to CGL journals and brochures, annual reports, Indian Electronics manufacturers association’s (IEEMA) monthly journals, IEEMA production figures , and compilation of notice tenders(NITs). A study was made on the effectiveness of marketing activities , market scenario, market Identification of turnkey solution concept, Identification of the competition an the customer. Sampling The sampling process considered to interview/get the response from atleast one respondent from each customer segment. The samples are chosen such that samples are involved in this type of business activity and are aware of the various facts of transformer purchase to given correct opinion. The study was conducted and the respondents were mainly from the commercial and engineering department. The study was conducted during the period of May’10 to june’10 . The personal interviews were conducted with respondents from NTPC Ltd, State electricity board(SEB’s) Bhushan Steel Ltd.& ABB Ltd. This ensured a great variation in terms of respondents that included actual customers and policy makers. Sample size The sampling units under consideration are the senior executives ,of various companies The sample size taken was 20.
LIMITATION OF THE STUDY
The research has been carried out under the following constraints:• • • • The time period of the research is very small. The sample size collected for the research work is insufficient. The Questionnaire is subjected to error. The sampling units under consideration are the senior executives of various companies • • Future plans of the company will not be disclosed to the trainees Latest data of the company could not be available as the company’s website have not been updated.
Chapter 4 AN AL YS I S AND IN TE RP RE TATI ON
Q.1 Organization belongs to
Interpretation Different industries require different types of transformers . Here it is observed that the customers of CGL are from different sectors. This graph shows that the transformers
manufactured by the CGL are providing good service and because of this the customers are from every sector .
Q.2 Lin e o f a c t i vi t y i n e l e c t r ic a l i n d u s t r y
Interpretation This figure shows that the nature of industry should also be known so that it becomes easy to provide the product according to their specifications . As it is observed that the transmission industry requires the transformers the most and the distribution , generation have also the requirement for the product.
Q.3 T yp e o f e l e c t r ic a l e q u i p m e n t re q u i r e d
Power transformer 54%
Distribution transformer 46%
Interpretation It is also necessary to know that which type of transformer wiil be required by the industry and the chart indicates that most of the industries require the power transformers then the distribution transformer.
Q.4 Ro u t e o f p u rc h a s e
Tender Notifications 66%
Involved consultants 22%
Interpretation The chart shows that most of the industries prefer to purchase transformers through the tender notifications while some of the industries purchase by the help of consultants.
B u yin g pa t t e rn
Annually When required Once in 2 years Others
50% 24% 20% 6%
It is clear from the chart that 50% of the industries are purchasing the transformers on the regular basis i,e. every year. Some 24% of industries purchase it when required while the rest purchase the transformer once in 2 years
Q.6 S ta n d a rd t e r m s o f p a ym e n t
Alw a ys Allow for release ad va nce P a yment Through letter of credit Through banks/finan cial institution (IDBI etc) others 11% 35% 25% 45%
Very often 19%
It is clear from the chart that the 45% industries are giving the advance payments for the products , some are using letter of credit i.e. 25% while 35% are taking the help of banks and financial institutions and rest 11% are using other means.
Q.7 E x e c u t e d bu s i n e ss w i t h t h e c o m p a n ie s
CGL BHEL AREVA ABB OTHERS
49% 15% 10% 12% 14%
Interpretation The chart shows that most of the industries had executed their business with CGL in
spite of the major players such as BHEL, AREVA, ABB are in the market . This shows that CGL is the leading industry in the transformers.
Q.8 Ra t i n g i n te r ms o f p r ic i n g an d q u a l i t y o f t h e p r o d u c t
The chart indicates that CGL is the leading company in the transformer industry in the terms of price and quality of the transformers the Company provide to other industries.
Q.9 S e r vi c e a ft e r s a l e s p r o vi d e d b y CG L i s
Outstanding Very good Good Average
56% 24% 12% 8%
Interpretation The survey shows that most of the industries are satisfied by the after sale service provided by CGL. CGL is a prestigious company having a great brand name.
Q.10 Are you satisfied with the service provided by CGL?
Interpretation It is clear from the chart that most of the industries are satisfied with the product and services provided by the CGL .
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. • Major 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 projects & uncompetitive financing costs. Operational constraints (flexibility, speed of response etc.) vis-à-vis competitors. Inadequate recovery from traditional customers – utilities / SEBs –> Higher working capital requirements –> adversely affecting profitability.
OPPORTUNITIES • infrastructure. • Boost to power transmission sector & privatization moves in distribution sector • MW by 2012. The total transmission capacity is planned to increase from the existing capacity of 9,450 MW to 37,150 Growth rate of economy envisaged (6-8% p.a.) in next few years to stimulate large demand in
• power projects (UMPPs) with the target to produce 4000 MW by 2012.
To secure cheaper power through large size power projects ,the government launched ultra mega
THREAT • projects –> Adverse impact on domestic business • licensing restrictions on territories. • consolidating & setting-up local manufacturing bases. • Increasing competition from large MNCs with greater financial & strategic muscle and speeder response. • Lowering of imports tariffs below the WTO bound rates continued customers insistence on qualification / experience requirements –> Roadblocks for introduction of indigenous technologies. International players Technology leaders unwilling to share new technologies and insisting on their terms / imposing Delay / deferment of
Chapter 5 FI NDIN GS ,RE C OM M END ATION AN D C ON C LUSI ON
FINDINGS MARKET CAPACITY OF CGL IN INDIA A major part of the transformer manufacturing capacity of India is contributed by the major players like BHEL, CGL, ABB , Areva etc. The details are as follows:Crompton Greaves Ltd. BHEL ABB Areva EMCO Bharat Bijlee Voltamp Telk 30000 MVA p.a. 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.
Where as the total transformer manufacturing capacity of India in MVA is 200000 MVA(approx). and CGL is the highest MVA producer in india.
M AR K E T SH AR E OF TR ANS FORM E R S ALE S IN I NDI A
MARKET SHARE OF TRANSFORMERS SALES
45% 40% 35% 30% 25% 20% 15% 10% 5% 0% BH EL C pton rom ABB
Power Transformer Distribution Transformer
EM O C
Market share: A major part of the installed transformer capacity of India is contributed by the transformers supplied by CGL i.e. every 7th transformer in the country is a CGL made 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 the projects from domestic funding or own funds i.e. 35% next way preferred is through world bank /ADB i.e. 28% others are financial institutions which is 24% and ECB 13%.
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 procedure: The suppliers were selected on the basis of tender and
order being given to the lowest or the chosen one, who provide best quality in cheaper prices. Rating of various attributes of products: The results in the chart clearly marks that customers wants the best quality at best prices . The quality and price are the front – runners at 24% and 23% respectively followed by ‘After sales services’ 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 followed by BHEL at 21% ,ABB at 20% & Areva at 19% . Quality of EMCO has not been upto mark. Rating of the companies in terms 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 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.
The study and the analysis of the data tell about marketing strategy for the transformer manufacturers. Thus, we need greater emphasis on the following areas: • Increasing market share – Aim to increase penetration especially in distribution transformer. • Price competitiveness - to meet the levels of the small transformer suppliers. The above can be achieved through:1. Greater participation in the distribution transformer. 2. Pre tendering activities to help customer developing specifications. 3. Increased level of public relations with the customer. 4. Updating the customer with the new technologies by conducting studies. 5. Improving the flow of information and speed of response towards the customer. 6. Effective competitive prices and delivery schedules. 7. Awareness about the market development and competitor strategies. 8. Lowering the inventory of spare parts i.e. effective material management. 9. Providing better After Sales Services to the existing customers.
I was given the opportunity to do my project in the CGL, which is the largest transformer manufacturing enterprise .To conclude this project report , it can be said that the company holds a good market share and is managing well, even when there is cut throat competition in the market. The study reveals that the company has entered into the technical collaboration with many international firms through acquisitions. With the increasing competition ,company has improved their performance in services and provide prompt after sales services. The study on, the factors affecting the marketing environment of the company also helped in knowing the impact on economic, political, social & technological aspects of the firm. Firm has got a large network of customers and thus helped in knowing their perception about the firm’s product quality, price. Reliability and delivery. Overall , it was a great experience to work with such a company who has an excellent marketing strategies and ideal sales/marketing network..
1. Sector to which your organization belongs?
• • • •
Government Semi government Industrial sector Private
2. What is your line of activity in electrical industry?
• • • •
Transmission Distribution Generation Others
3. Type of electrical equipment required?
Power transformer Distribution transformer
4. How do you route your purchase?
Tender notification Involved consultants Others
5. What is your buying pattern?
• • •
When required Once in 2 years Others
6. Your standard terms of payments?
Always Allow for release advance
payment Through letter of credit Through banks/financi al institution(ID BI etc) Others
7. Companies with which you have executed business?
• Crompton greaves limited(CGL) • BHEL • AREVA • ABB • OTHERS
8. your rating in terms of pricing and quality of the product?
1 CGL BHEL ABB AREVA
9. Service after sales provided by CGL is?
• • • •
Outstanding Very good Good Average
10. Are you satisfied by the service provided by CGL?
WEBSITES www.powermin.nic.in www.google.com www.cea.nic.in www.cgonline.com
Magazines and journals IEEMA journals National electricity policy CGL annual report 2007-08, 2008-09, 2009-10
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