make in india - praj way.. - pune international centre...pharma biotech f&b cosmetics...

Make in India -

Praj Way..

Pramod Chaudhari

Executive Chairman, Praj Industries

29 Dec 2015, Pune

© Praj Industries Ltd www.praj.net 2

I • Praj Story - Evolution & Growth

II

• Make in India

• SME Sector

• Govt. Push for SME

III

• Transforming SME

• Growth Frontiers for SME

• SME Global Benchmarking

IV • Take away

Outline


Outline


II

• Make in India

• SME Sector


III




IV • Take away


Who we are ?


A knowledge based

company

A global Indian

company

A Customer

centric

company

A socially responsible corporate citizen

End-to-end

solution

provider Expertise and experience in

process and integration

engineering Customized solutions

Strong focus on

sustainable development

References across

five continents

Technology backed

solutions


What Do we Do ?


Alcohol/ Ethanol plants

Brewery plants

Water and Wastewater Treatment Systems

Critical Process

Equipment & Systems

HiPurity Systems

Pharma

Biotech

F&B

Cosmetics

Bio-Products

-Distillery bioconsumable

s

-Livestock, health & nutrition products

-Human health & nutrition

-Biochemicals


Audit and FEED

Technology & Engineering

Process Equipment Manufacturing

Installation and Integration

Commissioning & Handover

Life cycle Management

Project Management

What is value chain ?


Inception

as SSI in

1983

Set-up

In-house

R&D

Center

Venture

funding

by ICICI

IPO

Forays into

synergistic

fields like

brewery

Enters

S E Asia

Alliance

with

Filtrox for

Filtration

systems

Enters South

America &

Africa

Alliance with

Meura for high

performance

Mash Filters

Launch of

PRAJ Matrix

Enters Europe

Forays into

process

equipment,

water & waste

water treatment

solutions

Pilot Plant

2nd gen

bioethanol

demo plant

Enters high

purity

water

segment

through

Praj Hi

Purity

Systems

Unveils new

identity

Patents

Developm

ent &

commerci

alization

of new

bio-

molecules

How have we grown ?


Identifying the Right Opportunity - Ethanol/Distillery Industry {1983 - 84}

• Technology Intensive

• Innovation Driven

• Value addition to agri-commodity

The Challenges - {1985-88}

• Access to Technology – EU Collaboration

• Raising Funds - Enter VCs (first of its kind)

• Gaining Customers – Trial by Fire. Adaptation & Innovation

• Competition from formidable MNCs – Walking Extra Mile and Strong Value Proposition.

Getting Together the Team - {1989-90}

• Budding Intrapreneurs meet Entrepreneur

• Unquestionable buy-in from the Team

Praj Story: Evolution 1st Decade {1/2}


Leading with Passion - {1991-95}

• Setting stage for Systematic Innovation

• Established R & D Center in the first five years of operation

IPO in 1994

• Exit of Venture Capitalist

• Shareholder value

Dream of Leap forward

• Internationalization

• Next growth phase through multiple diversification

AMP at HBS - 1995

Praj Story: Evolution 1st Decade {2/2}


2nd Decade : Trials, Tribulations

Fault Lines in Growth & Diversification

Too much Dependence on Collaborators

Challenging Economic Climate – ASEAN Crisis

Experiencing air pocket

Leading to Tough Decisions

U turn on the strategy

Private Placement - Influx of Funds

Setting the stage for the next wave

• Sticking to Knitting – Focus

• New Opportunities, New Markets

Leading from the front

Finally, Take off

Cash is King


Accelerating Innovation World Class R & D facility

Accelerating Scale up World class manufacturing facility

at the Port ( Kandla SEZ)

Setting up global network

Advent of Marquee Investors Vinod Khosla, Marubeni, Tata

Institutionalizing Focus on Processes & Excellence

Sharper focus on Shareholder value

CSR activities strengthened

Intrapreneurship

3rd Decade: Scale Up , Going Global, Institution Building


Future: Time for Transformation

Creating an engine for the Next Praj:

Embark Growth Trajectory

Value Maximization

New World Order

Re-energizing Innovation & Excellence

through processes led by Sr. leadership team

Provide greater organizational sustainability

Leadership development & Succession Planning

Change of Address

A more transparent, ergonomic workplace

Sustainability Imperatives despite VUCA


Future: Time for Transformation

Engagement of MNC consultant

To set levers for enhancing shareholder value

Setting the stage for new metrics of performance

Business Unit Concept embedded

Focus on PBT and ROCE

Induction of External Talent

Rigor of Performance Indicator

Change in Identity

To convey the changed business, customer profile and way of working

14

Future Perfect

To be a global leader in green technology by providing environment friendly and sustainable end-to-end solutions that can make the world a better place



II

• Make in India

• SME Sector


III




IV • Take away

Outline


Make in India {1/3}

WHAT is it ?

• Govt. of India initiative to encourage

multinational as well as Indian companies to

manufacture their products in India for the

domestic as well as global market consumption

Making career in India

• Engaging with core industries and Manufacturing sector in India as rewarding career destination.

Brain Gain

• Attracting Indian talent working abroad, back home to harness global best practices in Indian industry


Make in India {2/3}

World’s top economies built on the back of strong manufacturing capabilities !

WHY manufacturing matters?

• Key to sustainable and resilient economy

• Secures future for the country

• Critical for national security

• Overall development of nation

• Every Job in Mfg. Creates 2-3 jobs in Service

• Significant contribution to forex earnings

• Pride factor - ’Made In India’


Make in India: Objectives {3/3}

Facilitate investment

Convert India into global manufacturing hub

Enhance skill development

Build a sustainable eco-system for Mfg. infrastructure

Raising the business confidence in India

Aim High quality standards; Foster innovation

Minimize impact on environment

Improve ‘Ease of Doing Business’ Ranking


Make in India: Status {1/2}

India contributes @ 2.2% of global Mfg. Output

Contributes @ 15-16% to GDP Vs. @55% from services

Employees @ 12% of workforce

Lags behind global peers in Planning, SCM, quality and maintenance

Labor force less productive than China & Thailand Source: www.ibef.org


Falling share of Mfg. in GDP Bottleneck for Growth

Contribution of Mfg. sector in country GDP has been on decline

High cost of RM, Energy and fierce competition being top reasonsy

All out efforts are being made to revive growth of sector

Source: PwC report 2014

Make in India: Status {2/2}

Growth rate


SME Sector: Status {1/4}

Vibrant SME sector is backbone of manufacturing !

Source: MSME Govt. of India

2nd largest employer after agriculture ;> 80 million jobs

Large scale employment at lower capital cost than large industries

Augments in industrialization of rural & backward areas; over 46 Mn. units in India

Reduces regional imbalances between rural and urban areas

Assuring more equitable distribution of national income & wealth.

45% contribution to overall Mfg. output and 40% share of total exports

8% of country GDP ; 6,000 + products

Enterprises with < 20 employees comprise of 73% of employment in the Mfg. sector

Characteristics

• Innovative capabilities in niche manufacturing,

• Comparative advantages of advanced engineering,

• Low-cost manufacturing and overheads,

• Ability to speedily absorb new technologies

• Local skills and capabilities



Strong Presence

Auto component

Foundry industry,

Electronics industry,

Chemicals,

Leather, textiles,

Agro and food processing,

Pharmaceuticals,

Transport tourism industry

ISRO’s Mangalyan has > 10 components from SME tool room !


SME Sector: Auto Component Success story {3/4}

Over 10000 SME players accounting for @ 15%

sales

Revenues up from US$ 26.5Bn in FY 08 to US$ 66Bn FY

16E- CAGR of 12%

•Favorable Govt. Policies •Focus on Quality & Innovation, Design •Modern shop floor practices •PE Deals •Sustained FDI •Lowest Cost •19Mn. Direct / Indirect Jobs •7% growth in GDP FY15

Source: www.ibef.org



Innovative approach in operations required to meet challenges !

Challenges

Sub-optimal scale of operation/ production capacities

Technological obsolescence

Supply chain inefficiencies

Increasing domestic & global competition

Working capital shortages and inadequate capital

Insufficient skilled manpower

Turbulent and uncertain market scenario.

Ineffective marketing strategy, identification of new markets,

constraints on modernization & expansions absence


Govt. Push in Developing SME {1/2}


Collateral free lending and subsidy schemes

Eco system for commercializing technologies through Technology Centre

System Program and center of excellence IISc, Bengaluru

Vendor development program involving buyer-seller meets

Launched MSME -Cluster Development Program

966 clusters and 171 infrastructure development programs

Several schemes in the area of lean manufacturing, certification, technology

up-gradation, technology commercialization, design clinics, quality, IPR

awareness etc.

Udyog Aadhaar Memorandum for the simplification and universalization of MSME

100,000 on-line registrations within first 3 months; 25% in Maharashtra


Govt. Push in Developing SME {2/2}

Challenges continue to plague SME sector despite Govt. support !


ASPIRE - A Scheme for promoting Innovation & rural entrepreneurship

Sets up a network of technology centers

Sets up incubation centers to accelerate entrepreneurship

Promote start-ups for innovation & entrepreneurship in agro-industry

Provides necessary skill set for setting up business enterprises

Facilitates the market linkages available to entrepreneurs

Provide hand holding for a critical period to ensure self-sustainability

Creates a framework for Start-up Promotion through SIDBI.



II

• Make in India

• SME Sector


III




IV • Take away

Outline

Transforming SME {1/3}

From….. To

Traditional ancillary unit … Outsourcing partner

Reverse engineering …. Re-engineering

Low cost machine shop …. High quality producer

Component sub-vendor …. Supplier of a product

Built as per print …. Customized Engineering

Machining & conversion …. Certification and compliance

Domestic operator …. International Player


Moving up the value chain by acquiring skills & capabilities !

Tabling ‘SME Agenda’ at ALL major socio-economic and political events

Mechanism to ensure Govt. fiscal incentive schemes reach & benefit SME

Establishing linkages between Banks, FIs, Ministry boards with SME

Testing labs and product certification for ensuring quality standards

Effectiveness in training and skill up gradation for work force

Market intelligence and analytics for emerging business opportunities

Special SME Cell at Embassies and Commercial consuls for assistance

Enhancing effectiveness of Innovation, Incubation and IP protection

Brand building initiatives for Indian SME sector



Investors SME manufacturing orientation to VCs, PEs, Angel investors

Incubation Phase

Capital by way of seed funding for ideation to proto-type

Start-up Phase

2015 Watershed year for start-ups; However no fan-fair for Manufacturing - Can “Start-up India” show way ?

‘Non-Fund’ Support for transition from proto-type to pilot production e.g. SBLC ,BGs

Growth Phase

Capital & investment allowances to frog leap from pilot scale to commercial scale of production , Modernization , up-gradation , energy saving , organization build

Big ticket events

Recognizing & earmarking SME slots

Permits Simplification of approvals, clearances and inspections

© Praj Industries Ltd www.praj.net 30 Unleashing SME potential is key to success of Make in India !



SME Global Perspective

Source: The Economist Intelligence Unit (EIU)


SME Global Benchmarking; SME @ Germany {1/3}

3.7 Mn or > 99% firms in Germany SME

Make 52% earnings; >1 of every 2 Euros

@ 37% of total sales i.e. > 2 Tr. Euros

Employs >89% trainee tomorrows resource

SME employs >68% of workforce

Source: Federal Ministry of Economics & technology Germany

95% family owned; 85% family managed

Strong in Industrial & capital goods sector

54% firms brought new product / process

@14% spending in R&D

Sound finance - 54% Equity rest bank loans

@70% are B2B Cos. based in small towns

Long term view - Invest in society welfare



II

• Make in India

• SME Sector


III




IV • Take away

Outline


Imperatives for Indian SME {1/2}

Moving to specialized and value added products is vital!

Innovation Technology R&D

Consortium approach involving likeminded players

Strategic alliances & technology collaborations companies abroad

Early adaption to Business Model innovation

Harness global account management; Select few large scale players

High-end technology boutique - Proto type, pilot & zero series product

3rd party accreditations, certifications for quality , design & engg.

Focus on process innovation rather than just product innovation

Internationalization


SME Internationalization {2/3} Imperatives for SME {2/2}

Accessing newer markets & global customers is critical !

Tap newer markets through credible export / trading houses

Working through global accounts - piggy backing

Draw upon prowess of digital marketing for stakeholder outreach

Leveraging intn’l forums , delegations for niche market / tie-up

Use Indian embassies & trade mission aboard for linkages

Develop expertise for Smart commercial deals

State

Local

Center


Harmony in ecosystem

Make in

India: SME

• Modalities for implementation

• Framework & structure for execution

• Conception and formation of policy • Setting up road-

map for implementation

• Expediting . • De-bottlenecking

operational issues


Putting it altogether ..

Strong Mfg. sector a MUST for healthy economy.

Growth of large Mfg. Cos closely tied to SME

Vibrant SME can power India’s growth story globally

Standard of living in country heavily influenced by SME

Rigor & speed critical for implementing Govt. schemes for SME

Need to reconfigure SME in wake of ‘Make In India’

Adapting Innovation technology and R&D is business imperative

Internationalization is next growth frontier for SME

Harmony between center, state, private sector, industry associations, academia, banking fraternity can make SME globally competitive

make in india - praj way.. - pune international centre...pharma biotech f&b cosmetics...

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