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History Of Crompton Greaves Marketing Essay

Introduction

Crompton Greaves (CG) is part of the US$ 4 bn Avantha Group, a conglomerate with an impressive global footprint, operating in over 10 countries.

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.

History

The history of 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.

Products & Services Offered

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 "Superbrand" status in January 2004. It is a unique recognition amongst the country's 134 selected brands by "Superbrands", UK.

Acquisitions – Crompton Greaves Ltd., now an Indian MNC

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 sub-stations, 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.

Manufacturing, Marketing and Service network

CG's business operations 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 four 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.

PRODUCTS >> INTERNATIONAL

The International Operations Division, a specialised Business unit of Crompton Greaves spearheads the export thrust for both in-house manufactured products as well as out-sourced synergistic products (made with CG's total quality assurance and financial involvement) for supply to Trade, Industry, OEMs and Power Utilities.

The product portfolio for Trade, Industry and OEMs includes all types of domestic and industrial fans and appliances; a wide spectrum of general and special purpose lamps and luminaires; motors and pumps for industrial, domestic and agricultural applications; and a complete range of products, components and accessories for low voltage control and switchgear panels. CG's wide range of quality products, backed up by the Global Seal of International Certifications and Listings (which include VDE, UL, CSA, SAA), competitive pricing and contemporary design features remains the preference globally of all the customer segments we operate in.

CG's Power Transformers and Instrument Transformers, MV to EHV Switchgear, Distribution and Station Class Lightning Arresters and large HP motors, conforming to International Specifications, have become the first choice of Utilities for efficiency and reliability, coupled with cost-effectiveness. Leading EPC contractors and Technical Consultants now base their offers on Transformers, Switchgear and HT Motors from us, witness to their excellent performance in demanding markets around the world for many years.

With our establishment and consolidation in the field of Information Technology over the last few years, CG also provides, based on technical and distribution alliances with the world leaders, 'Value-for-Money' turnkey solutions (through systems integration) for leading computing and net-working companies, encompassing high end switching and transmission equipment, multi-vendor hardware and optimal software.

The far reaching distribution network and Customer base established has fuelled exports all over the world - Australasia, Americas, Europe, the Middle East and Africa.

Financial Highlights

CG Stand-Alone

CGIBV – consolidated*

CG – consolidated**

Particulars in Rs. Crore

31st March, 2010

31st March, 2009

31st March, 2008

31st March, 2010

31st March, 2009

31st March, 2008

31st March, 2010

31st March, 2009

31st March, 2008

Gross Sales

5516

4904

4223

3824

4128

3006

9375

9031

7181

Less: Excise Duty

232

293

347

0

0

0

234

294

349

Net Sales

5284

4611

3876

3824

4128

3006

9141

8737

6832

Less: Operating Expenses

4427

3973

3390

3442

3794

2781

7864

7742

6086

Operating Profit

857

638

486

382

334

225

1277

995

746

Notes:

*Consolidated Accounts of CG International BV, the holding company for CG’s international operations.

** includes results of CG Stand-alone and CGIBV Consolidated.

● In 2010, Gross sales grew by over 12% to reach Rs.5516 crore. Net sales increased by 15% to Rs.5284 crore.

● Manufacturing, construction and operating expenses as a percentage to net sales has remained constant at 69%.

Expenditure

2009-10

2008-09

2007-08

Manufacturing, construction and operating expenses

3622.96

3196.42

2798.6

Total Expenses

4498.13

4046.38

3462.07

Profit before tax & extraordinary item

870.26

614.27

485.65

Operating Expenses as percentage of sales turnover of CG - consolidated in 2010 = (Operating Expenses/Net sales)* 100 = 86.03 %

Operation Initiatives

● TECHNOLOGY INITIATIVES: During FY2010, several platform technology initiatives were identified. Some of these involved areas such as noise vibration, nano-dielectrics, GIS technology, medium voltage drives and vacuum interrupter technology. Two new technology groups were formed, covering product reliability and analysis of power systems; and two R&D centres were globalised. These were the Analytics Centre, and the Electronic Design Centre.

● IPR ACHIEVEMENTS:

FY2010 saw CG apply for 151 patents, and 116 design registrations. In addition, R&D has been focusing on publications. In the year, there were 40 publications – 13 in international conferences, 24 in national conferences, and three in international journals.

● TECHNOLOGY NETWORKS:

R&D has created and sustained 11 technology networks comprising experts and their laboratories in India and abroad. Seven of these were added during FY2010. These networks cover power systems, power quality, HV products, dielectrics, drives, reliability, electronics and others.

● INTEGRATION WITH CG’S OVERSEAS UNITS:

There were 19 R&D projects initiated during FY2010 in association with CG’s overseas units: eight in Belgium, four in Hungary, three in Ireland, and two each in Canada and the US. Nine of these were completed by the end of the year.

SIX SIGMA AND QUALITY

The Six Sigma movement is central to Crompton Greaves, and is led from the top. Quarterly reviews of Six Sigma projects are conducted by the Managing Director with the Six Sigma Core Committee. During FY2010, the Company achieved the following milestones:

● EXECUTED 66 SIX SIGMA BLACK BELT PROJECTS, in addition to 98 projects last year, across all divisions. Our methods and results were appreciated by key customers.

● SUPPLIER QUALITY POLICY (SQP) REACHED MATURITY. Any vendor who manufactures critical-to-quality (CTQ) products is passed only after a rigorous assessment of the vendor’s design, manufacturing and quality systems by CG’s quality auditors. SQP is now fully integrated with the Company’s SAP system. Thus, if a supplier does not meet the quality

benchmarks set by the Company, SAP blocks any purchase order involving such a vendor. FY2010 saw 443 CTQ vendor audits. Thanks to CG’s consistent drive towards improving vendor quality, 440 of these passed the Company’s stringent quality and process standards.

● LAUNCHED THE COMPANY’S CORRECTIVE ACTION PREVENTIVE ACTION

(CAPA) SOFTWARE. Jointly developed by CG’s IT and Quality teams, this software logs in daily quality issues, and identifies: (i) what went wrong; (ii) why it went wrong; (iii) what was the impact of it going wrong; (iv) what corrective action was taken, and by whom and when; (v) whether the corrective action worked; and if so (vi) what has been put in place to ensure that the problem does not repeat itself. Today, a shop-floor manager can review all such information on his computer.

A. ENERGY CONSERVATION MEASURES TAKEN:

During the year, several energy efficient technologies and processes have been implemented by the Company’s divisions in fulfillment of the Company’s commitment to conserve energy and reduce the adverse impact of consumption of fossil fuels on the environment. Energy consumption and usage of renewable energy is regularly monitored across all divisions/offices of the Company. Efforts are also made to conserve energy through implementation of green technology and manufacturing of low noise products. During the year, the Company won the National Energy Conservation Award from the Ministry of Power for its efforts in improving efficacy of FTL Lamps.

The typical measures taken towards energy conservation are:

● Automation in seasoning process for better optimization of on-off cycle of heater, resulting in energy saving

● Doing reactive power compensation to enhance power factor

● Change of reciprocating compressor by screw compressor

● Installation of electronic chokes in light fittings resulting in reduced energy wastage associated with conventional chokes

● Installation of new regenerative oven at Bhopal plant resulting in useful utilization of otherwise wasted heat

● Usage of solar lamps in street lighting within the factory

B.ADDITIONAL INVESTMENTS AND PROPOSALS, IF ANY, BEING IMPLEMENTED FOR REDUCTION IN CONSUMPTION OF ENERGY:

● Replacement of Aluminum fans with FRP fans in Industrial 3 phase exhaust fans to reduce energy requirements

● Installation of LPG fired furnace instead of LDO/Electric fired furnace

● Achieving superior control and reduced energy consumption in milling machine by using retrofitting motor drive

● Reduction in motor working hours by replacing mechanical clutching system with electrical clutching in boring machine

● Commissioning of dedicated smaller DG set for street & emergency lightings for reducing diesel consumption

● Connection of regenerative drive to motor test set up for feeding energy back to the grid

C. IMPACT OF THE MEASURES AT (A) AND (B) FOR REDUCTION OF ENERGY CONSUMPTION AND CONSEQUENT IMPACT ON THE COST OF PRODUCTION:

The above measures have resulted into effective management and utilization of energy resources and have resulted in cost savings for the Company. However, since the Company’s manufacturing processes are not energy intensive, the energy conservation measures have a negligible impact on the Company’s overall cost of production of goods.

Future outlook

The quality of households is enhanced when their money is invested into products such as fans and lighting for basic comforts. Their lives are literally touched by delight. Similarly, Crompton helps electricity boards and other utilities to reach electricity to the last home and factory. Therefore, every individual in India who uses electricity can be considered as Crompton customer. Hence, the company continues to further and consolidate the initiatives that Colonel Crompton set into motion by focusing on meeting increasing customer demands for products that are eco-friendly, energy efficient and with intelligent monitoring and control systems.

All economic indicators point towards the manufacturing sector being the future driver of India's economic growth. India is today preferred destination for sourcing various engineering goods not only due to low cost but also due to high quality of products. Although, the climate for the manufacturing sector is bright, the concern is the threat of imminent competition from global players who are already in the process of setting up manufacturing facilities in India. The market is expected to remain competition with an added element of competition from imported products.

However, several measures that the company has already taken and it's plans for the future, together with business impact of the Pauwels acquisition, will equip the company to respond in adequate measure to this competitive pressure.

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