Click to watch Daniel P. Malone -
Click to watch Daniel P. Malone -
asia resources

Need an office in Asia? Office suites, meeting rooms, virtual offices, network access

free downloads
ASIA: "Hong Kong Competition Commission Publishes Draft Guidelines - A key step toward bringing the

ASIA: "Hong Kong Competition Commission Publishes Draft Guidelines - A key step toward bringing the Competition Ordinance into full force" alert. 4-page by DLA Piper.

proceed to download

back to index backASIAtalk October,  2005

India: Manufacturing Cuts the Flab, Roars Back to Form

Behind the numbers, the story of the revival of Indian manufacturing is unfolding. The latest data from the IIP reveals that manufacturing grew 8.2% in the last quarter, and nearly 10% in April-August ‘05. ETIG takes a look at why manufacturing is staging a comeback.

Indian manufacturing is gaining from a clear focus on key parameters like operating costs, efficiency and innovation. Fuel & power, critical & neglected inputs were amongst the first targets. Fuel & power expenses vis-à-vis sales of ten sectors within manufacturing between FY00 and FY05 show that while sales have grown at a CAGR of 11.5%, power and fuel expenses have grown at 7.3% only.

This is despite a substantial rise in fuel prices during this period, but for which the results would have been even more pronounced. Chemicals and steel, for which fuel costs form a significant part of the total cost of production, have brought down the fuel/sales ratio by 4.2 and 2.8 percentage points respectively.

Working capital, hitherto not thought of as a cost-cutting tool, has gained prominence. For a sample of 43 companies with annual sales of over Rs 1,000 crore, the working capital/sales ratio has fallen from 12.1% in ‘95 to 5.6% in ‘05. The total sales for these companies in FY05 was Rs 6,30,000 crore. At a 10% interest rate for short-term borrowing, this corresponds to a savings of over Rs 4,000 crore a year.

Indian manufacturing is also leveraging innovation like never before, using it to push the envelope on operational efficiencies.

The greatest contribution of innovation to Indian manufacturing is faster product development, smart supply chain and deployment of lean manufacturing for dynamic production and supply of customised products — all these aided by the deployment of IT applications,” says RN Mukhija, president, operations EBG, L&T. V Madhavan, Vice President — Technology, Anand Automotive Systems details the improvements in the auto ancillary business.

Reduction of lead time for new product development has come down by as much as 50% in the past three years. For example, the development of the brake system in India takes six months, in Korea it is 8 months, in Germany 12-14 months. Then there's reduction in inventories — by about 20 to 30% in the last four years, added to which is the reduction in defects from about 20,000 parts per million (ppm) to below 100 ppm.” On a scale of 1-10, says Srivastava, Indian manufactured goods quality could be seven, against Germany's nine.

Probably the greatest transformation has been brought about by a change in workers' mindsets and an improved work culture. While problems still exist, there is a substantial change in the attitude of a work force that wasn't always flexible, and who are, themselves, feeling the impact of globalisation in Indian industry.

Research by ET Intelligence Group confirms that a big part of the change is also attributable to the entry of matriculates/graduates into the work force, who have a better understanding of the changes happening all around and the consequences of a rigid stand. A statistic to prove the point is the substantial decline in the number of industrial disputes. As per CMIE data source, the number of recorded disputes fell from 1,825 in 1991 to 1,166 in 1996 to 489 in ‘03, the latest available.

Source: India Times - GAI

previous page

go top

search our site



Other articles from the same issue (October,  2005).

Becoming Chinese
play read on

India Takes First Steps in Electronics
play read on

The economics of compensation in Asia
play read on

Rapid Penetration Into The Emerging Markets – The Toyota Way
play read on

How Confucianism shapes Korean culture
play read on

China's overseas acquisitions skyrocket
play read on

India: Manufacturing Cuts the Flab, Roars Back to Form
play read on

Vietnam: MPVs rule the automobile market
play read on

Aisan To Use Chinese Plant to Develop and Test Manufacturing Methods It Can Use Worldwide
play read on

Our Free eJournals

To visit GlobalAutoExperts Directory, click here.

©2008 | HCI Group, Ltd.
101 West Big Beaver Road, Suite 1400 | Troy, MI 48084 USA
USA Tel: +1.248.687.1060 | USA Fax: +1.248.927.0347
Fax UK: +44.(0)845.127.4765 | Fax Europe: +31.20.524.1659 | Fax Asia: +852.3015.8120