Cost-effective and ‘green’ packaging solutions from NEFAB India

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NEFAB India wants to be a prominent packaging solutions provider to the auto industry.

Story by: Anusha B

The auto industry is highly price-sensitive, and in need of packaging solutions that are highly cost effective. To cater to these demands of the auto industry, NEFAB India, a wholly-owned subsidiary of NEFAB AB, Sweden, is offering ‘green’ packaging solutions. This, it is confident of, will reduce the environmental impact and packaging material content. Without letting the quality of its products slip, the company is keen to popularise ‘green’ packaging solutions. This is also a part of NEFAB India’s strategy to be the most recognised industrial packaging brand by 2020. For the auto industry, the lucrative part of the ‘green’ packaging solution the company offers, expressed Prasad Mandrolli, Marketing Manager, NEFAB India, is the recycle-ability of materials. “Our business concept is all encompassive. We want to offer complete packaging solutions that reduce total cost, and environmental impact,” mentioned Prasad.

Leveraging experience to address industry needs

An ISO 14001:2004 certified company, Bangalore-based NEFAB India is looking at ‘green’ packaging solutions as a way to carve out a position for itself in a market that is dominated by unorganised players. Prasad is of the opinion, that the packaging sector is dominated by unorganised players that employ corrugated, wooden and steel fabrication materials. Only a few players like Nefab India, claimed Prasad, in the organised sector, use materials that are recyclable. Scant respect for environment, and excessive use of tropical wood, rainforest plywood, etc., is a given according to him. Neither is this sustainable, nor is it good for the environment. It is not in keeping with the strategies that the auto industry is keen to rely on, stated Mandrolli. He opined that there is a need to get the priorities right. There is a need to analyse the impact on the environment of the packaging materilas used. The cost of packaging is offset by reducing the cost of damages.

With manufacturing facilities at Manesar, Pune and Chennai, NEFAB India draws from the experience of its parent in providing packaging solutions to telecom, energy, industry, vehicles, healthcare and aerospace industries. Since 1949, the Swedish company, which clocked a turnover of SEK 3.3 billion in 2016, has grown from a product-oriented company into a market-oriented company. Specialising in complete packaging solutions that reduce their customers’ total costs while minimising environmental impact, the company is keen to create a niche for itself in India. Aware that the packaging industry in India is devoid of major entry barriers and needs low investment, NEFAB India, averred Prasad, has found out that the unorganised players often copy solutions and offer them at a lower price. This is a big challenge, he opined. Confident of carving out a place in the auto industry in India by addressing their exacting needs, NEFAB India, according to Prasad is keen to address the need for standardisation, cost an supply chain requirements. “The automotive industry is highly price-sensitive and the packaging solutions have to be cost effective. Standardisation is a need for this industry,” he explained. Prasad explained that there is a need to offer cost-effective and innovative solutions. He drew attention to services like container loading and lashing that are cost-effective and help to eliminate damages.

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Weather challenges

Terming packaging needs of the auto industry as significant, Prasad pointed at factors like weather and impact. “To design a packaging solution, impact and weather change has to be factored in. In sea freight, due to condensation inside a container, a phenomenon called ‘container raining’ takes place,” he added. To absorb moisture, use of container dehumidifying agents like container desiccants are suggested. Desiccants absorb moisture present in the container and prevent ‘container raining’ to affect the packaging as well as the product. Weather challenges also apply to domestic movement. Quite often, ‘close body’ containers as packaging solutions along with container desiccants are advised. Stressing upon the basic function of packaging as a means to assist in product handling, Prasad said, “We design packaging solutions keeping in mind the supply chain and total cost of logistics. This includes multi-material engineering. Typically, the packaging design would vary for fork lift handling, sling, overhead crane and manual handling.”

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Entire supply chain has to be considered when a packaging solution is designed. This helps to optimise packaging for various modes of transport, storage and distribution. Packaging is not just a box a designer designs; not for the auto industry for certain. The complex shapes of auto industry products, aggregates, etc., and their nature calls for complex packaging needs. A packaging solution therefore has to be acceptable in a supply chain as well as confirm to the needs of the auto manufacturer. Apart from the modes of transport, storage and distribution details, there is a need to mention the product details and handling precautions.

It is often the case that not one single packaging material a manufacturer suggests to his client. It is material neutral. If there is a need, the manufacturer suggests a hybrid solution. This often comprises of two packaging materials. Typically for an expendable flow, plywood, pinewood, OSB, corrugated boxes, pallets, etc., are suggested. Also suggested is a combination of these packaging materials. For a returnable flow, more sturdy materials like steel, rugged wooden skids, plastic containers, or a combination are used to provide a solution. “All our packaging solutions are RoHS, ISPM 15, FSC and E1 compliant, and suitable for exports to various countries,” expressed Prasad. He said further, “There are several parts that go into the making of a vehicle. It is therefore difficult to have a standard questionnaire for packaging design. When designing expendable packaging solutions for automotive industry, we try to gather information regarding product logistical flows, the supply chain process and storage or shelf details.”

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In the case of returnable packaging, the inputs that are needed remain more or less the same as that of an expendable packaging solution. The company however has to also concentrate on gathering information on project life, to and fro flow, and transport costs. Since returnable packaging involves capital investment, it would be useful to know the payback period and the Return on Investment (RoI). Typically, a returnable packaging solution has a certain life period. Returnable flow should be economically viable as there are return freight costs involved. The auto industry accounts for 15 per cent of the company’s turnover according to Prasad. It is steadily growing. “We are not involved in direct exports as of now. A majority of our customers use our packaging solutions to export their products. As of now, a little over 50 per cent of our packaging is used for exports,” Prasad mentioned. It is here that NEFAB India is keen to offer ‘green’ packaging solutions. It is looking at it as a way to understand as well as address the exacting needs of an automotive industry customer. Something, which an organised player can perhaps do better, and attach more value to.

Nipman Fastener looks at CV industry for growth

Nipman Fastener Industries is expanding its product range to cater to the CV industry.

Story by: Bhargav TS

Nipman Fastener Industries Pvt. Ltd. was established in 1997, and specialises in the manufacture of standard and special fasteners. Catering to the needs of auto components manufacturers, the company, in its pursuit for growth, is looking at the CV industry. Keen to address the needs of the CV industry by leveraging its experience and infrastructure, the company is currently serving auto components manufacturers like Abhishek Industries, A.G.Industries, IFB India, Hema Engineering, Hero MotoCorp., Hero Motors, Krishna Maruti, Rico Auto Industries, Rockman Industries, Subros, Sunbeam Auto Components, Trelleborg Automotive, Munjal Showa, Omax Autos, Sandhar Industries, and Unitech Machines. Apart from the CV industry, Nipman Fastener Industries is also keen to address the needs of the tractor industry as well. Specialising in cold forging, the company, according to Anup Kapur, Vice President, Business Development and Marketing, is moving up the value chain. “By entering into the CV and tractor space, we will serve the entire auto industry,” he expressed. Hinting at attaining an amicable balance between the volume intensive two wheeler and passenger vehicle industries, and the tractor and CV industries, Nipman Fastener Industries is seeking growth by expanding its reach in newer areas of the auto industry, and industries that are allied to the auto industry. It was after much deliberation, said Kapur, that the decision to invade the CV and tractor industries was taken.

Manufacturing fasteners in the 4mm to 24mm diameter range, and of numerous types, Nipman Fastener Industries is well aware of the need to supply hot forged fasteners to the CV industry in particular. Producing counter sunk screws, bolt flange spherical screws, round head screws and bolts, hex head collar screws and bolts, shoulder head special bolts, flange screws and bolts, self tapping screws, socket flange screws, hex head collar screws and bolts, weld screws, socket head cap screws and bolts, engine studs, and numerous other types of studs, the company has studied the fastener requirements of the CV industry. Stated Kapur, “Commercial vehicles need 28 mm to 30 mm diameter hot forged fasteners.” “Our core strength lies in cold forging,” he said as a matter of fact. Operating with a philosophy to achieve the best, the company is investing in hot forging technology to be able to address the need of the CV industry. Nipman Fastener Industries has four manufacturing units at Ghaziabad, Manesar, Haridwar, and Bawal respectively. Of these, two plants cater to the two wheeler and passenger vehicle industries. The third plant caters to the Uttarkhand region whereas the fourth plant acts a feeder unit. The Bawal plant of the company was inaugurated recently, and produces fasteners and cold forged components.

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Nipman Fastener Industries entered into a technical collaboration with a South Korean company recently to manufacture steering system components. “The passenger vehicle steering division started commercial production from January 2017 in technical collaboration with a South Korean company that specialises in the manufacture of steering system components,” informed Kapur. He said, “This company makes steering systems for a leading South Korean Tier 1 supplier that in turn supplies to OEMs in India and the world over.” The company has developed three platforms for three different OEMs. There are about eight to nine platforms still under discussion. Forging and machining is done at the Bawal plant, and the machining, assembly and testing is carried out at the Chennai plant. Averred Kapur, “We mainly supply to Tier-1 companies. They in-turn supply to OEMs.” Confident of the steering and fastener business growing steadily, Nipman Fastener Industries, explained Kapur, is looking at contributing to vehicle light weighting with the use of different materials. “There are titanium fasteners and plastic fasteners which can aid light weighting. While titanium may not be applicable for all applications, optimising the use of fasteners will contribute to light weighting as well,” mentioned Kapur.

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The value proposition in the case of fasteners is tied to process differencies. Revealed Kapur, “There’s not much technical difference that can be achieved except process diferencies, which make a big difference.” With the manufacturing infrastructure comprising of forging and thread rolling, heat treatment, electroplating, and dacro coating, the company, which employs lean manufacturing processes, has invested in a modern and well-equipped laboratory. This lab is helping Nipman Fastener Industries to produce fasteners economically. It is also ensuring that the fasteners satisfy the QCD parameters of OEMs. Quipped Kapur, that it is the processes and equipment that differentiate fastener manufacturers at the end of the day. Aware of the demand for zero-defect fasteners, which necessitates flawless manufacture, the company is banking on its lab to support its new endeavours. Expressed Kapur, “An internal process has to be set up to identify defects and correct them at early stage of manufacture. Finished goods should enter the final inspection with a defect-free tag. If not, then the process flow and the procedures will turn out to be uneconomical.” Nipman Fastener Industries achieved a turnover of Rs.170 crore last year. This year it expects the turnover to grow by 15 per cent. The company has began exporting its products, and hopes to achieve a target of 20 per cent by 2020.

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My Eco Energy announces first EuroVI fuel

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My Eco Energy Ltd. (MEE) has announced the launch of Indizel, the first EuroVI emission compliant fuel.

Story by: Ashish Bhatia

With the transition to BSIV emission standards achieved, attention is now on the transition to BSVI emission standards in 2020. The announcement by Pune-based My Eco Energy Ltd. (MEE), that the Indizel fuel is BSVI emission compliant, comes as a surprise therefore. The reason is, there’s still two years for the 2020 deadline to be met. Established in 2011, MEE specialises in the manufacture of bio-diesel. It claims to have launched the first bio-diesel station at Lonikand, Pune, in 2014. It also claims that the bio-diesel it offers is made from renewable vegetable oils and feed-stock like palm stearin and palm fatty acid distillate. Called Indizel, the bio-diesel, according to Sachin Labde, Co-founder of My Eco Energy, is EuroVI emission compliant. Not exactly new, Indizel, for its manufacturer accounts for a new launch on the pretext of it being EuroVI emission compliant. The BSVI emission standard when it arrives in 2020 is expected to be quite similar to EuroVI.

Claimed to be capable of replacing conventional diesel altogether, Indizel, according to Labde, is blended from three bio-fuels available at Singapore. MEE has not applied for a patent however, said Labde. To do so, it will have to disclose the working details, which it does not want to. Claimed to drastically reduce harmful emissions that conventional diesel is criticised for, Indizel, expressed Labde, emits less carbon monoxide, particulate matter and unburned hydrocarbons. He explained, “Over conventional diesel that contains 500 ppm sulphur, Indizel contains less than 10 ppm sulphur.” Expected to help industries that consume diesel, Indizel according to Santosh Verma, the other Co-founder of My Eco Energy, will help to address pressing environmental concerns. “Not only is Indizel a better alternative to ordinary diesel, it is also economical and suitable since it can offer superior fuel efficiency.” Indizel is also claimed to offer a smoother ride due to its higher lubricity quotient. Meeting European (EN 590 Euro-6) and BIS (IS 1460) quality requirements, Indizel confirms to Petroleum diesel (HSD) EN590 standard according to Verma.

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Pitching Indizel to retail investors across the country as EuroVI emission compliant fuel, and perhaps the only one at the moment, MEE has installed five demo pumps across states like Maharashtra, Rajasthan, Andhra Pradesh and Telangana said Labde. While interested retail investors can experience the difference, the company has invested Rs.250 crore into the venture. Targeting functional traders across industry segments to build a sustainable retail network, MEE aims to launch 50 pumps over the next three months. Claimed Labde that 600 retailers have signed-up. On offer, added Labde, are multi-functional fuel-station models. Manpower training, equipment and guidance will be the responsibility of MEE. Reminding of an asset-light business model employed by new-age cab and transport aggregators, MEE is aiming to carve out a five to 10 per cent market share of the overall diesel market in the next six-to-seven years. The company plans to open 4,000 fuel stations across India in the next four-to-five years. Explained Labde, that the fuel stations will account to different models such as ‘Urban’, ‘Semi-Urban’, ‘Highway’ and ‘Satellite’. They will be further classified as a stand alone business model, and as a shop-in-shop business model. Marketed such that the price of Indizel will make it the most favourable among the diesel varieties available as fuel, MEE, to the channel partner, will offer a storage tank (above ground and below ground), a fuel dispenser, stock (as per usage), a canopy set-up and required automation. The overall investment for a retailer is expected to be in the region of Rs.40 lakh.

MEE plans to price Indizel at two-rupees less than the price of conventional diesel. This makes it tricky to ascertain the revenue potential a retailer could look at given the fact, that the prices of diesel vary from state to state, and from time to time. Fuel pricing has been left out of the purview of GST as of current. From June 16, 2017, it has been announced that the prices of petrol and diesel will be reviewed every day. While the minister of road transport, Nitin Gadkari, has been urging people and industries to shift to greener ways of working, and use alternate fuels, Indizel as a bio-fuel could attract 18 per cent GST, making it costlier than conventional diesel. The Bio-diesel Association of India, in a statement has already made it clear that higher GST rates could adversely impact them. Having zeroed on three locations – Kolhapur, Noida and Vishakapatnam, Indizel, according to Labde, is out of the purview of the petroleum Act due to its high flash point. If the high flash point and competitive pricing will present Indizel with a strong advantage, MEE, in the face of stiff competition from the government owned mighty PSUs has a tough task of convincing motorists ad dealers to be a part, and sustain. Opportunities for MEE lie in sectors like Railways and State Transport Undertakings (STUs). They arise out of the premise that a government mandate requires conventional fuels to be blended with five to 10 per cent bio-fuels by 2018. Stated Verma, “Mandates like these could further boost the potential of our product, and increase the overall market size of bio-fuels. It would also help bio-fuels to attain a significant market share for companies like us.” MEE is looking at an early mover advantage. To take advantage, MEE should convince as well as assure its users of quality, consistency and cost.

GST for the transportation sector

 

GST for the transportation sector and the commercial vehicle industry will dial significant changes.

Story by: V G Ramakrishnan

GST would have rolled out by now, not relenting to the rising clamour for deferring it by a few months from a wide range of industries, and the banking sector. Apart from the deadline to implement GST, much has been discussed about its impact from the product taxation point of view; from the inflation point of view, and from the GDP growth perspective among others. The transition to the new tax regime under GST is likely to have a neutral or slightly positive impact on the commercial vehicle industry. Primary benefit would accrue from the removal of cascading taxes. Experts from diverse fields are of the opinion that GST in its current form does not differ much from the tax it will replace in terms of complexity, the number of tax slabs, and the huge burden of increased paper work.

With close to 60 per cent of the GDP contributed by the service sector, India in 2017 is largely a service driven economy. Manufacturing accounts for 25 per cent of the GDP. With GST simplifying a multitude of taxes on manufactured goods, compliance burden has increased significantly on the services sector, including the transportation sector. If the existing system requires service providers to pay service tax at a flat rate and file returns twice a year, under GST, the number of forms that are required to be filled increases to 37 in a year. This will lead to an increase in the compliance costs. Service organisations that operate in multiple states will have to register in each state that they operate in. This would be necessitated by the complex structuring of GST into Central GST and State GST. Many believe that GST is VAT 2.0 with improvements thrown in for good measure.

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GST, there is no doubt, is a game changer. Whatever may be its shortcomings as of current, it is a game changer since it creates a single market with uniform tax rates across the country. This singular change has the potential to have a wide ranging impact on the transportation sector. It also has the potential to have a wide ranging impact on transport companies and truck manufacturers for years to come. GST is not the largest transformative tax legislation to either transform or disrupt the Indian economy. For the transportation and commercial vehicle industry, GST is expected to bring about a significant change. Changes that would broadly focus on the following factors: sales volume, segmental shifts, ancilliary businesses transitioning to the organised side, and OEMs developing strong positions and revenue streams. Changes would also broadly focus on factors such as the transformation and consolidation of the transportation industry. If and how the purchasing power of large fleet operators can be increased, and the impact on brand pofitability among others.

Warehouse transformation

The imminent change GST will drive is the redesign of warehouse network. Historically companies operated warehouses in various states to avoid multiple taxation. These warehouses were in many cases sub-optimally designed. They were used only to add additional costs across the supply chain, both in-bound and out-bound. With GST doing away with the need to maintain warehouses across states, manufacturers are quickly reorganising warehouse locations by shutting down sub-optimal facilities and consolidating into larger spaced facilities. In many cases organisations are cutting down the number of warehouses they have had by more than half, or by one third of their original network strength. Companies in high velocity inventory turns sectors may still continue to operate with many warehouses since their requirement is demand driven than being tax policy driven. The outcome of such rationalisation is expected to result in lesser yet larger warehouses that are markedly automated.

While it is likely that many companies will actively create or enhance warehouse closer to the manufacturing location as this will increase their ability to stock and service low volume products and improve efficiency, the impact of this reformation in warehouse network will impact transporter route plans, frequency of routes and vehicle tonnage requirement. As more goods are transported to larger stock holding warehouses, transporters will require higher tonnage trucks since the probability of corporates transforming to full load trucks over partial loads will be high. This trend is expected to increase demand for higher tonnage trucks in the next two-to-three years. Commercial vehicle manufacturers can expect a further acceleration of growth in the segments above 25-tonnes.

New routes will emerge as companies relocate warehouses to lower cost locations; locations with larger land availability. Market access and costs in balance will also play a role. This change will over time lead to the creation of a hub and spoke model. Markets particularly in East and parts of North India (like Punjab, Haryana, Himachal Pradesh, J&K and Delhi) are likely to move faster in creation of hub and spoke models. Over the long term, vehicles with less than two-tonnes will predominantly serve last mile connectivity. Vehicles in the four and 10-tonne segment (LCVs and some ICVs) will serve as a connection between the hub and spoke. Vehicles over 25-tonnes will serve as a connection between manufacturing locations and the hub.

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Since the transportation industry operates on the basis of growth by tonnage, higher economic growth may not necessarily translate into higher volume growth for truck manufacturers. Segmental shift to higher tonnage will be evident over the medium and short term as the market adjusts to a structural change. From a freight stand point, demand for larger trucks could push freight rates up, and until the market reaches a balance. As the size of trucks increases, ticket size of trucks will grow. The ability of transporters to invest in business will rise too. While service debt could affect fleet acquisition plans, it coupled with the implementation of Bharat Stage IV emission norms will increase vehicle prices significantly. It is fairly established that the cost of BSIV upgrade will be significantly higher (as a per centage of the product cost) in lower tonnage vehicles compared to higher tonnage vehicles. The combined factors of emission upgrade and GST could churn the transport segments. One possible scenario that may emerge is of large transporters increasing their grip on first mile. Medium-sized operators could operate predominately in the hub to spoke segment, and small and individual truckers operate the spoke and last mile based on their financial capability. Transporters could increase their focus on niche segments, which require particular vehicle type to optimise the balance sheet.

Supply chain and vendors

GST is expected to drive changes in the business model across sectors. The transportation sector will have to evolve quickly. Two aspects of GST, chosen as examples, provide an indication of the changes that will sweep the transportation sector. First, the score system – similar to credit rating scores provided for each registered entity, will reflect an entity’s adherence to tax system, process and procedure. Corporates and companies can choose who to contract transportation based on the scores. As GST works on the principle of input tax credit, only those vendors and supply chain partners that file returns, will attract business. Transporters will have to maintain clean books of accounts and refrain from tax avoidance to avoid the risk of losing business. Companies and corporates looking for input tax credits will choose vendors that adhere to the new tax regime. GST is ushering in an era where market will regulate tax payment practices. Second, is the e-way bills. e-way bills will have an impact on the way transporters function. In this regard, GST is creating a digital foot print of each transaction and transport. Every e-way bill will have a certain period of validity. Transporters would be required to complete the delivery within the stated period. This will act as a huge deterrent for transporters, market load operators and small transporters in particular, against delay in delivering the cargo. A new e-way bill (from the consigner) will have to be generated beyond the validity period. Transporters will need to evolve their business practices. GST will call for a change of mind-set.

Organisational change

The prime objective of GST is to bring more and more transactions under the tax net; to increase transparency and compliance. The threshold for companies to register for GST has been lowered to Rupees-two million per annum as compared to Rs.10 million per annum limit in the past. Companies that were exempt from tax will now come under the tax net. This has the risk of making their products more expensive, and less competitive, as compared to the products produced by large-size organisations. The economy on the whole, is likely to get more organised. With increase in competition, smaller sized organisations are likely to ‘professionalise’ their operations, and grow to scale or exit. This trend is expected to play out among transporters as well. Transporters are also expected to engage in business transactions with vendors that are organised. This will enable them to benefit from input tax credit. While the current practice of consigners paying the tax on transportation will continue under GST, transporters that provide additional services will eventually charge GST and take credit for many input items like lubes, insurance, and tyres among others. Some of the services offered by roadside service providers like tyre retreading, repairs and maintenance are to come under the GST net. They will thus move up the value chain as GST compliant enterprises. The velocity of this movement will increase after the government brings petroleum products under GST. With increasing complexity in trucks, truck manufacturers can look at an increase in maintenance contracts, increase in the quantity of vehicles serviced, and at authorised service points.

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Transformation long-haul

GST transformation is about change in money (tax reform), matter (business process, model) and mind (compliance). Rather than an overnight transformation, it will take time. Evidence of change will emerge only in the next 24 to 36 months. Any expectation of a quick change will lead to expectation mismatch and disappointment. GST entails a long-haul. It entails a long-haul journey for the transportation and commercial vehicle industry to realise the benefits. With GST the transportation sector and truck makers are embarking on a journey that will lead to a significant improvement in productivity, cost efficiency and growth.

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V G Ramakrishnan is the Managing Director and Partner of Avanteum Advisors.

Impact of GST on CVS

GST would have come into play by the time this copy will hit the stands. Turning India into a unified common market, albeit with four slabs, GST for CVs effectively translates into a tax bracket of 28 per cent for trucks, not fitted with lifting or handling equipment, of the type used in factories, warehouses, dock areas or airports for short distance transport of goods; tractors of the type used on railway station platforms; part of the foregoing vehicles, including people movers for the transport of ten or more persons including the driver, and motor vehicles for the transport of goods (other than refrigerated motor vehicles). The 28 per cent GST tax slab also applies to tanks and other armoured fighting vehicles, whether or not fitted with weapons, and parts of such vehicles. Trailers and semi-trailers; other vehicles not mechanically propelled; parts thereof (other than self-loading or self-unloading trailers for agricultural purposes and hand propelled vehicles (hand carts, rickshaws and the like for example) fall under the same slab as well. Fork-lift trucks other than work trucks fitted with lifting or handling equipment also come under its ambit. Special Purpose Vehicles (SPVs) like breakdown lorries, crane lorries, fire fighting vehicles, concrete-mixer lorries, road sweeper lorries, spraying lorries, mobile workshops and mobile radio logical units have also been classified under the 28 per cent slab rate. Cranes (including cable cranes; mobile lifting frames, straddle carriers and work trucks fitted with a crane) have been slotted into the 18 per cent GST tax bracket. Tractors (except road tractors for semi-trailers of engine capacity more than 1800 cc) have been slotted in the 12 per cent tax slab. Agricultural tractors are claimed to have been slotted in the 18 per cent tax slab. The 12 per cent slab also applies to electrically operated vehicles. Biodiesel and mixtures thereof, not containing or containing less than 70 per cent by weight of petroleum oils and oils obtained from bituminous minerals are slated to be levied with 18 per cent GST. This slab will also apply to refrigerated motor vehicles. Pneumatic tyres, of rubber used in buses or lorries, will be charged at 28 per cent. These include retreaded or used tyres, flaps and inner tubes.

 

Impact of GST on CVS

Transforming the CV industry

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At the India Sustainability Leadership Summit 2017, circular economies and sustainable development goals were stressed upon.

Story by: Ashish Bhatia

Organised by Frost & Sullivan and TERI – The Energy and Resources Institute, the Indian Sustainability Leadership Summit 2017, held at Mumbai recently, delved upon Circular Economies and Sustainable Development goals (SDGs). Drawing attention to business models, tools, technologies, solutions and approaches, a part of the summit were the ‘Sustainability 4.0 Awards’, which acknowledged the agents of change. Aimed at encouraging the adoption of sustainable development practices in organisations, and to recognise the efforts of front runners, 19 awards, under the three heads of leaders, challengers and believers, were presented to deserving companies. Reliance Industries won the Sustainable Corporate of the Year Award. Tata Motors won the Safety Excellence Award, and Mahindra won the Sustainable Factory of the Year award for their engine manufacturing plant at Igatpuri, near Nashik . Henkel Adhesive Technologies India won the (Large Business) Leaders Award.

Circular economies and newer business models

Encompassing circular economies and new business models, the first session looked at how businesses are achieving SDGs. Defining circular economy as an alternative to a traditional linear-economy (make, use, dispose) where resources are used for as long as possible, and maximum value is extracted from them, the panelists touched upon recovering, and regenerating products and materials, at the end of their service life. With SDGs at the core, the session looked at how SDGs, spearheaded by the United Nations, have come to build upon the principles agreed under Resolution A/RES/66/288, known popularly as ‘The Future We Want’. It is a non-binding document released as a result of Rio+20 Conference held in 2012 at Rio de Janeiro, Brazil. The 17 SDGs, covering economic, social development and environmental protection, provide an opportunity for engagement. They also provide for a new type of partnership to address global challenges. With the inaugural session touching upon how business leadership transforms the future of business, and designs future development pathways apart from measuring business values and sharing the imperatives to achieve SDGs, the session saw panelists point at the 2030 Agenda for Sustainable Development. It is a set of 17 global goals with 169 targets between them.

Chairing the session, G S Gill, Distinguished Advisor, TERI, touched upon the various aspects considered while embedding SDGs into an organisation. Expressed Dr. Jaco Cilliers, Country Director, UNDP in India, that the mistrust between the private sector, public sector and the think tanks has lead to sustainability that is hardly effective. Mentioned Rajiv Ranjan Mishra, Managing Director – India, CLP Power India, “The Government should help by pricing resources correctly.” Averred Randal Newton, Vice President – Enterprise Engineering, Ingersoll Rand, “The need is to achieve a few goals over the short to medium term as the key to achieve SDGs. There is a need to achieve 50 per cent reduction in greenhouse effect by 2020.” “An investment in the region of USD five million is required to make the products efficient,” he mentioned. Newton referred to a market study by China Energy Service Company (ESCO), which mentions the need to generate new business models which are sustainable. He also touched upon the world’s largest manufacturer of small-wheel, zero-emission electric vehicles – Club Car. It is a Ingersoll Rand brand, and is claimed to offer a cleaner, quieter alternative to fossil-fuel propelled vehicles. Namita Vikas, Group President and Global Head – Climate Strategy and Responsible Banking, Yes Bank Ltd., spoke about the need to invest USD seven-to-eight million to mitigate climate change. “There is a need for green bonds to invest in circular economies. There is also a need to leverage the funds, to bring about an interesting subvention for environmental projects and advocate climate literacy,” she said. Rajiv Ranjan Mishra mentioned that there is a need to price resources at their true price. “There is a dire need to stay away from excessive government interference or subsidiaries,” he quipped.

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Commercial ‘normal’ and competitiveness

The plenary session looked at sustainability to dial a commercial ‘normal’ and competitiveness. Touching upon sustainable leadership through aspects like responsible financing, manufacturing, green infrastructure and development, the session saw panelists delve upon aspects like demand aggregation for greener products as well. Ajay Shankar, Former Secretary, Department of Industrial Promotion and Policy, Ministry of Commerce & Industry, Government of India, and Distinguished Fellow – TERI, reiterated the need for ESCO model. He termed the model as a profitable investment, and stressed upon the frugal use of resources during manufacture. Shankar stated that the stakeholders ought to look at sun-rise sectors like hydrogen fuel production. Echoing Shankar’s sentiment about ESCO, Aalok A Deshmukh, Head – Energy Efficiency, Global Operations, Schneider Electric, called for it to be made a Key Performance Indicator (KPI) at leading organisations across industry verticals. Dilip N. Kulkarni, President Agri-Food Division at Jain Irrigation Systems Ltd., stressed upon nurturing energy as a third crop. “The nexus between energy, water and food will help to mitigate climate change,” he opined.

Drawing attention to Indian Railways, Shivendra Mohan, Executive Director, Environment Directorate, Railways Board, Ministry of Railways, stated that railways has achieved 10 to 12 per cent gain in traction energy. “There is a scope for additional 20 per cent improvement in fuel efficiency with the help of optimised driving assistance and a better payload to tare ratio,” he said. A further 15 to 20 per cent can be saved over a five year period by setting up a 1 kMW solar plant and a 170 MW wind plant, averred Mohan. Advocating the need to use alternative fuels in railways, Mohan drew attention to bio-fuels posing a limitation. Highlighting the fact that 20 per cent of freight running has been substituted by alternative fuels like CNG, Mohan explained, “In furnaces, LNG is being used. Apart from initiatives like water recycling, at Indian Railways, we are developing water bodies, and adopting green certification (ISO 14001/1SO 15001) across our manufacturing facilities and workshops.”

Smart sustainable businesses

The first of the two practitioner sessions delved upon technology and solutions for a smart, sustainable business. Touching upon risk management at three levels – oversight and governance, business and strategic risk management, and day-to-day risk management, Rakesh Agarwal, Vice President, at Reliance Industries, spoke on the subject of integrated risk management framework. He called upon the need for businesses to meet legislative requirements and implement, manage and foster voluntary initiatives at the corporate level. Terms like lean structure, internal crowd sourcing, use of shared resources and Industry Revolution 4.0 also found a mention in his speech. During the waste water treatment and recycling at manufacturing plants session, Dr. Mrityunjay Chaubey, Global Vice President – Environment and Sustainability, UPL, mentioned the need to adapt new ways to treat waste. He stressed on to primary, secondary, and tertiary sludge treatment.

Drawing immense interest, the second session touched upon high efficiency solar heating and power technologies against the backdrop of NITI Aayog’s statement about encouraging electric vehicles. Siddharth Malik, Managing Director, Megawatt Solutions, expressed that the future lay in efficient energy solutions. He drew attention to the MWS Smart Tree developed by his company. In comparison to a conventional solar panel, the MWS Smart Tree is an aesthetic alternative said Malik. Each tree, he explained, contains a trunk, and configurable branches of various capacities. S.N Rao, Chief Technology Officer, OMC Power, spoke about micro-grid technology. Ashok Chawla, Chairman, TERI, stressed upon the need to think in the forward direction. Stressing upon a bright future, he expressed optimism. Stating that the challenge is in building a sustainable model, Chawla said, the need is to mainstream it.

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International Tractors: Bullish about Growth

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International Tractors is banking on growth by providing ergonomically advanced products that best suit the needs of the farmers.

Story by:

Anirudh Raheja

International Tractors Limited (ITL), which manufactures and markets Sonalika brand of tractors, reported a robust 19.6 per cent increase in sales at 81531 units in FY2016-17, the highest sale of tractors to be ever recorded in the history of the company. In comparison, tractor sales in India grew 18 per cent in FY2016-17, recording a sale of 582844 units according to the Tractor Manufacturers Association. In FY2015-16, 493764 tractors were sold. Increasing the market share from 11.9 per cent to 12.3 per cent, domestic sales of ITL grew 18 per cent, at 69290 units. Exports registered a growth of 29.3 per cent at 12241 units in last fiscal. Bullish about growth, and keen to provide ergonomically advanced products (tractors) that best suit the needs of farmers, ITL has commissioned a fully integrated tractor plant at Hoshiarpur, Punjab. Spread over an area of 85 acres, the new plant is located adjacent to the existing plant. With a capacity to produce two lakh tractors per annum, the new plant will elevate the total manufacturing capacity of ITL to three-lakh units. The existing plant has the capacity to make one-lakh tractors per annum. Fueled by an investment of Rs.800 crores, the new plant is fully equipped to roll out tractors ranging from 20 hp to 120 hp in a takt time of two minutes. Engineered to produce tractors up to 180 hp according to Amrit Singh Mittal, Vice Chairman, ITL, the new plant will support the company’s move to higher capacity tractors, and exports. “Ninety-nine per cent of the tractors sold in India may amount to a power output of less than 60 hp, we are confident that the tractor industry will soon graduate to higher hp engines,” he said. Stressing upon a modern approach, Mittal averred that mechanisation in agriculture is rising. On the account of exports, claimed a source close to the company, that plans are being drawn to export one-lakh tractors. These would be produced at the old plant.

Tracing its roots to 1969 when it manufactured its first farm equipment (thresher), ITL in an effort to enhance its technical capabilities entered into a joint venture with Renault Agriculture, France, and Class Tractors, Germany, in 2000. This was 14 years after ITL produced the first tractor in 1996. The company began producing engines in-house in 2001. By 2005, the company grew up to become the fourth largest manufacturer of tractors in India. It tied up with Japanese diesel engine specialist Yanmar. The new plant, by leveraging technology, and the experience the company has gained over the years, will contribute to the endeavour to produce a good number of aggregates in-house. Aggregates like engine, chassis, sheet metal parts, differential and transmission.

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Operations

The new plant will hike ITL’s capacity to produce tractors to 300 from the current capacity to produce 225 tractors per shift. ITL at present runs two eight-hour shifts. When the demand increases, a shift is extended to 10-12 hours, said Mittal. In an effort maintain a competitive edge in what is termed as the biggest tractor market in the world, third shift is also pressed into service if the need arises. ITL manufactures an entire range of engines – from 20 hp to 110 hp, at the plant. The engine plant has an installed capacity of 500 engines per day, and has been engineered such that it will play an importat role in ITL’s endeavour to develop engines of different capacities. There are 24 engine test beds. With the current emission compliance standards for tractors being BSIIIA, ITL’s Sonalika brand of tractors have been affected with the Supreme Court order to stop sale as well as the register BSIII vehicles from April 01, 2017. In many parts of India. RTOs not wanting to attract contempt of court, are said to refuse registration of tractors that complying with BSIIIA emission regulations. This is despite the emission standards for tractors being different from what the trucks and buses follow. Informed Raman Mittal, Executive Director, ITL, that the (tractor manufacturers) association is making the required presentations, and is hoping that business is not significantly affected.

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Producing two, three and four cylinder engines, in naturally aspirated and common rail turbo-diesel guise, the engine plant of ITL has over 23 production stages. Particular attention is paid to the quality of manufacture from the initial stage. Averred Amrit Singh Mittal, “India is a price sensitive market. It is important therefore that we develop fuel efficient products.” Post deregulation, price of diesel has been rising. In the wake of that, the company is working on a completely new series of tractors that are stylish, ergonomically sorted and comfortable. ITL, in a bid to address the exacting needs of the Indian market, developed a 35 hp DI35Rx Sikander tractor recently. Powering the tractor is a three-cylinder unit that generates a torque of 157 Nm peak torque. Transmission is a constant mesh design with six forward and six reverse gears. For superior fuel efficiency, the hydraulic pump of the tractor can be disengaged from the engine when not in use. “This reflects on our understanding of the Indian market,” quipped Mittal. He pointed at the four tractors his company launched in October last year. “These tractors have beeen designed and engineered for potato farming, and are equipped with adjustable track width, a hydraulic system that was specially developed, and have a compact turning radius to help them maneouvre in the field without damaging the crop,” opined Mittal. Pramod Rajan, Head, R&D, ITL, expressed, “We are developing a six-cylinder 120hp engine for tractors. Production of this engine will begin later this year. The engine will find application in big tractors the company exports. The 120 hp engine platform will be leveraged to produce higher capacity engines mentioned Rajan. A 200 hp engine is on the anvil too. If this will provide a glimpse of ITL’s plans for the future, the 120 hp tractor, informed Rajan, will be equipped with a 24+24 transmission, and offer a massive 4,500 kg lifting capacity. Of the opinion that a tractor should transform into a status symbol, Rajan revealed that engines above 50 hp are being equipped with common-rail technology. The change in emission standards for engine above 50 hp is said to be a reason for this. The other is perhaps, the rising sale of tractors in the 40 to 50 hp range. In the last five years, most tractors sold in India are in the 40 to 50 hp range.

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Tractor transmission

If the engine assembly makes for an interesting insight at the ITL plant, the transmission line adds to the knowledge of tractor manufacture. Found on the line are transmission cases, gears, shafts, clutch plates, and more. Multi-speed transmissions are produced with a 12+12 speed range. To maintain consistency, the company manufactures four wheel drive axles in-house. Stating that the shift to 50-60 hp tractors in India is likely to happen faster than expected, Rajan revealed that they are working on an eight forward and two reverse speed transmission. It will be upgraded to 12 forward and 12 reverse gearbox, and introduced in the 60 hp segment followed by the 40-50 hp segment as well. ITL is also working on 30 hp tractors with hydrostatic transmission. The company plans to export them to Europe and US.

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For tractors to withstand tough working conditions, ITL’s gear shop manufactures between 250 and 400 different components. The facility has a capacity to manufacture 1.5 million parts per annum. A total of 112 machines including 22 gear hobbing machines and 12 gear shaving machines have been installed. Also, a part are a Seal Quench Furnace (SQF), induction hardening and pit type furnace. A modern metallurgical lab has been set up. It contains Leco Spectrometer and a Micro Hardness Tester from USA among other test equipment. A Japanese spectrometer is used to ensure the quality of spur, bevel and helical gears is right.

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R&D and manufacturing

Employing 200 engineers and 100 technicians, ITL R&D is at the core of numerous initiatives the company is taking. Out of the 200 engineers, 120 engineers are engaged in design projects that will materialise in the future. They are closely supported by 50 product testing engineers. Crucial to the smooth functioning of the world’s largest integrated tractor manufacturing plant with world-class technologies, ITL R&D, according to Rajan, is playing an important role in the design and development of aggregates. The cathodic electro-coating pre-treatment facility has a dip tank of 70,000 litre capacity. The paint shop technology ensures up to 95 per cent paint utilisation, and is manned by six robots. While the sheet metal parts are produced at the press shop, most plastic parts are also made in-house. The company has 26 machines including 19 presses of up to 400 tonne capacity; two laser machines (sourced from Prima, Italy), and three injection moulding machines. To manufacture in-house dies for press tools, sheet metal parts and injection modules, 35 machines work in tandem. The desired level of accuracy is maintained by ITL with 167 special purpose machines and 57 CNC machining centers sourced from Mazak, Japan. To achieve a competitive takt time, castings at the plant are transferred through under pit conveyors. The final assembly line is structured such that every unit undergoes a number of tests. These include a roller test, hydraulic test and a vibration test. To ensure optimal product quality, the company employs quality management systems like Pokayoke.

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Exporting tractors to 80 countries, ITL is developing products that will comply with the stage IV emission norms. These would be aimed primarily at the export markets of Europe and US. ITL is also working on telematics. Testing of a telematics platform, according to Rajan, is on. The results will determine the time to market. Rajan is of the opinion that it will still take some time before the tractor market warms up to the prospect of using telematics. Costs, he said, are a barrier. Looking at expanding its reach in the domestic, and overseas markets, ITL is banking on ergonomically advanced, robust and efficient tractors. Apart from an assembly unit in Cameroon, Africa, the company is setting up a unit in China. A cost sensitive market according to Raman Mittal, the unit at China – expected to be operational at the end of this fiscal – will open up new avenues for the company. With Yanmar agreeing to buy Blackstone Equity Investors’ shares in ITL for Rs.1,600 crores, Yanmar’s holding in the company is set to rise to 30 per cent. This is expected to boost outsourcing. Mittal is keen to see his company export one lakh units. “Out of the one lakh units, 50,000 units will be manufactured for our partner Yanmar’s outsourcing commitments. The remaining 50,000 will be sold independently under the Sonalika brand,” said Mittal.

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Pramod Rajan, Head, Research and Development, International Tractors Limited

Q. What role is the R&D playing in the company’s growth?

A. We have a team of 200 engineers and 100 technicians. Of these, there are 120 design engineers. Supporting them are 50 engineers that carry out testing. Playing an important role, the R&D carries out numerous tasks including design, development, and testing. For example, work is being carried out on a 120 hp engine that will go into production later this year. In India, BS IIIA emission norms apply to agricultural products. So, we are working on the engine for it to meet these norms, and offer superior efficiency. The R&D plays an important role in the design and development of aggregates. With aggregate manufacture and assembly carried out in one plant, we also play a role in developing skin panels. Final processing of 50 per cent parts is done in-house. It is the child parts that are procured from outside.

Q. What new projects are you working on?

A. We are currently focusing on two things – fuel efficiency and performance. We want to improve the fuel efficiency of our product portfolio. Diesel prices have started moving north. Indian customers are very price sensitive, and it is therefore essential that we offer fuel efficient products. Our products are known to be robust, stylish and comfortable. We want to ensure that our products exceed their requirements. With rural markets warming up to new things, expectations are rising. This is making it necessary that we look at styling and comfort in the case of tractors. We will soon launch a completely new series of tractors for the domestic market. These will highlight comfort and styling. We feel that the tractor should be a status symbol.

Q. What role is the R&D playing in exports?

A. We export tractors to Europe and US. For these markets we developed StageIV compliant engines that will go into production in the last quarter of this fiscal. In India, we believe that BSIV emission norms for tractors will come only in 2020. The cost of technology at this point will be very high. We expect an emission norms shift in the category above 50 hp.

Q. How soon could telematics become a standard fitment on tractors?

A. We have already put telematics systems on our test tractors. We have the system ready for customers, and offer to those who demand it. We have not marketed it because cost of having a telematics system is high. The perceived value for customer is not high. It may be not be a standard fitment solution for now therefore, and will be offered only on demand. It is true that the competition is already offering telematics systems on their machines. The cost of telematics, in India, is still on the higher side. Telematics is used by fleet operators. For an individual owner to use a mobile phone makes more sense since it is cheaper. Owning a phone costs no more than Rs.200. Servicing a telematics system every month will cost more that Rs.500 per month. Customer therefore is still reluctant to pay.

Q. What new could ITL offer next year?

A. One of the plan is to shift tractors in the 60 to 120 hp range to common-rail technology. The 120 hp tractor is equipped with a six-cylinder engine. It is aimed at the African market where the land size is huge. This engine can be elevated to produce 200 hp. As per the demand, we will slowly move forward. In India, where the land mass is not as big. We will go up to 75 and 90 hp tractors at the most. For special applications, some government tenders are calling for 100 and 110 hp machines. These would be used for clearing snow, and will account for a very small volume. We do not produce hydrostatic transmissions for India. For Europe and US, we are looking at hydrostatic transmission for less than 30 hp. This transmission could be aimed at the hobby farming segment.

Q. Which do you think are the fast emerging segments in India?

A. In the last five years, the maximum tractors that are being sold are in the range of 40 to 50 hp. In 2011, there was an emission norms change for tractors above 50hp. As far as the tractor industry is concerned, a shift is likely to take place from 40 to 50 hp, and to 50-60 hp. A shift beyond that looks difficult. Tractors in the 40-50 hp range account for 30 per cent of the market. We are currently selling eight forward and two reverse speed transmissions. We are working on 12 forward and 12 reverse gears transmission. This will be offered on 60 hp machines, and later on in the 40-50 hp segment tractors.

Q. Does the rising use of plastics in tractors hint at the need to light weight?

A. There is a requirement for light weighting of tractors. Especially in the rice producing belts in South India. We will introduce products in that segment with our partner Yanmar in the 40-50 hp segment.