Rane Group – Deming Prizes Galore!
Vinod Dasari, then Managing Director, Ashok Leyland, once told me: “there are more Deming award-winning companies in an hour’s drive around Chennai than the whole of the US and Europe combined.”
Frequently we come across news on Tamil Nadu-based companies emerging as Deming award winners. The $ 4 billion Rane Group recently announced the Rane NSK Steering Systems receiving the Deming Prize at Tokyo. L Ganesh, Chairman of the group, mentioned that the group has been honoured with three Deming grand prizes and five Deming prizes for its various business units.
The Deming Prize is presented annually by the Union of Japanese Scientists and Engineers to companies that have achieved distinctive performance benchmarks through the application of Total Quality Management (TQM). Ganesh said that the TQM journey that started in 2000 had come a full circle with all the major manufacturing businesses of the group having secured the Deming Prize.
For over five decades the Rane Group is a preferred supplier of their wide range of auto components to vehicle manufacturers in India and abroad. The group manufactures steering and suspension systems, friction materials, valve train components, occupant safety systems, die-cast products and provides connected mobility solutions.
Chips off the old block drive SFL in top gear
In 1998, Suresh Krishna won the prestigious Japanese award for Total Productivity Management (TPM). This was the first received by an Indian manufacturing unit focusing on systems and work practices that ensured the fullest utilization of men and machines contributing to total productivity. His daughter Arathi Krishna, who took charge as Managing Director in April this year, set up another first: she got for SFL the Deming Prize for all its 17 plants located across the country. She is the first woman to receive this award.
SFL, a unit of Rs 50,000 crore TVS Group, is engaged in a wide range of industrial and services businesses centered around the transport sector. Sundram Fasteners that celebrated its golden jubilee in 2017 posted a revenue of Rs 3425.73 crore and a profit after tax of Rs 367.47 crore. The company’s share of exports in the total revenues is Rs 1144 crore. Founder Suresh Krishna has handed the reins to daughters Arathi and Arundathi.
Ultratech capacity will soon cross 100 million tonnes
A welcome consolidation of fragmented industrial capacities is taking place across sectors. This has been aided by the strict enforcement of the Insolvency and Bankruptcy Code Act (IBC) and the quick and effective decisions of the National Company Law Appellate Tribunal (NCLAT). Under this we are witnessing a consolidation of the steel sector: with the acquisition of Bhushan Steel, Tata Steel’s total Indian capacity expanded by around 40 per cent. The merger of Vodafone and Idea made the combine overtake Airtel. The latest is the cement giant Ultratech acquiring Binani Cement.
The Aditya Birla Group’s Ultratech evolved rapidly after the acquisition over a decade ago of L&T’s profitable and large cement capacities. With the latest purchase of Binani’s plants, Ultratech has over 50 cement plants spread across India with overall capacity in the region of 100 million tonnes.
Royal Sundaram partners Ageas Insurance, Belgium
In 1948 T S Santhanam, founder of Sundaram Finance, set up a general insurance company, Madras Motor Insu-
rance Company (MMI). The company branched into other areas of general insurance, fire and marine in 1960 when it changed its name to Madras Motor and General Insurance Company (MMGI). It was well-integrated with the business of TVS built around transport. The sector was nationalised in 1972, and a lucrative business was lost. When the insurance sector was opened for the private sector in 2000, Sundaram Finance, waiting for such an opportunity, seized it with full force. Royal Sundaram General Insurance Company surfaced. Earlier it had financial participation by Royal and Sun Alliance Insurance Plc, UK, which held 26 per cent of equity. SF acquired the British company’s share in 2015.
Stalwarts in insurance like G K Raman and his successors like TT Srinivasaraghavan have been steering the company efficiently. During 2017-18 the company earned a gross return premium of Rs 2643 crore and after-tax profit of Rs 83 crore. Royal Sundaram is ranked 9th in the privately-owned category of the general insurance market with strong positions in motor and health insurance.
Announcing the collaboration, T T Srinivasaraghavan, Managing Director, Sundaram Finance Ltd, said: “Ageas’ unique approach of working through local partnerships and joint ventures can create significant value for Royal Sundaram.”
Ageas Insurance International NV, Belgium will acquire 40 per cent of the share capital of Royal Sundaram for a total consideration of Rs 1520 crore. After divesting 25.90 percent of its holding, Sundaram Finance will hold 50 percent, Ageas 40 per cent and other existing shareholders 10 per cent of the capital of Royal Sundaram.
Ageas is No.1 in the life insurance and No. 2 in non-life in the Belgian insurance market. The company’s business is worth around € 9 billion, with 40 million customers in 15 countries across the globe, including Asia, Europe, and the UK.
The global experience and deep pockets of Ageas would help Royal Sundaram accelerate its growth. The vast infrastructure built by promoter Sundaram Finance in terms of geographical spread and reach to several thousand vehicle operators should be of particular help.
Vinod Dasari, the corporate Rahul Dravid
Like Rahul Dravid, Vinod Dasari has announced his retirement at the peak of his career. Ashok Leyland has been performing at peak levels setting up records in production, revenue and profits. The launch of new products in quick succession, combined with the boom in demand contributed to strident growth, especially in the last couple of years. In 2017-18, vehicle sales touched a record of 174,873 units, a jump of 67 per cent over the production in 2014-15. Gross sales were at Rs 26,525 crore with after-tax profits at a handsome Rs 2652 crore. During his tenure as the chief executive, stockholders’ funds nearly doubled. Share prices, until recently, have been booming.
Vinod Dasari graduated from the McCormick School of Engineering and the Kellogg School of Management. Earlier he was Joint Managing Director at Cummins and President of Global Railroad Business at Timken. He joined the Hinduja Group in 2005.
Ford Motors racing the indigenous race
The advent of Ford Motors into Tamil Nadu in 1996 was an important watershed and a game-changer. Soon after
liberalisation in 1991, policymakers of Tamil Nadu headed by J Jayalalithaa offered a slew of attractive incentives.
Energetic IAS officers like M Raman and Saktikanta Das were pro-active. There was also the dynamic American Ambassador, Frank Wisner. I still remember the launch in January 1996 on a grand style. Several other global leaders including Hyundai, BMW, Renault-Nissan, etc., flocked to Tamil Nadu. The simultaneous nurturing of the auto component sector made Chennai the Detroit of Asia.
Ford started with its Escort model assembled by Mahindra & Mahindra at Nashik; it was not popular and lost out to Maruti, Hyundai and for a while Daewoo that introduced attractive, better-designed small cars.
Despite the headstart, Ford operations were not profitable. Its slow rate of indigenisation denied it cost advantages. While the much later entrant Renault focused on research to launch the small car Kwid with 97 per cent original content right from the beginning, Ford was slow in product development with the native talent. But the focus in recent years is rewarding. The indigenous content has reportedly improved to around 80 per cent. Ford has set up a state-of-the-art research centre near Chennai to employ about 5000 on research and development for global markets. The local content has reportedly improved to around 80 per cent.
Ford Motors has two manufacturing units at Maraimalainagar near Chennai and Sanand in Gujarat with an installed capacity to produce 4.4 lakh cars and 6.1 lakh engines per annum that account for around 9 per cent of its global production of about 50 lakh. The operations are becoming profitable. For the first time in two decades, the company has reported profits. – S Viswanathan