Business Opportunity for Raychem RPG products in Indian Railways

By:-Devam SaxenaPGDM 2011-13IIM Calcutta

Objectives

Primary Objective To find out what is the requirement of the following products in Indian Railways:

Cable Joints and Terminations Insulators Lightning Arresters

Secondary Objective

To find out how can this market be grabbed, i.e. form a sales strategy

Introduction

Indian Railways – One of the major focus areas for Raychem RPG for FY 2012-13.

Only 25% (approx.) of the total railway tracks are electrified (16001 rkms out of 63028 rkms).

1825 kms of electrification (725 kms new construction and 1100 kms of electrification) is scheduled in the year 2012-13.

Understanding Railwaysbetter…

Organization

Indian Railways

Organization

CR ECR ECoR

ERNCR

NER

WR

WCRSR

SCRNFR

SER

NRSEC

RKMR

NWR

SWR

17 Zones

Organization

68 divisions

Organization

Minister of Railways

Railway Board

• Chairman, Railway Board• Member Electrical• Member Staff• Member Engineering• Member Traffic• Member Mechanical• Financial Commissioner

Organization

Railway Board

17 GMs & AGMs Zone

DRMs Division

Organization

17 GMs & AGMs Zone

DRMs Division

Engin

eerin

g

Mechan

ical

Electr

ical

S&T

Constr

uction

Operat

ing

Commerc

ial

Medica

l

Safet

y

Stores

Accou

nts

Person

nel

Secur

ity

Departments

Organization17 GMs & AGMs Zone

DRMs Division

Higher

Administrativ

e Grade

Senior

Administrativ

e Grade

Junior

Administrativ

e Grade

Senior Grade

Junior Grade

Structure

Organization17 GMs & AGMs Zone

DRMs Division

Junior

Administrativ

e Grade

Senior Grade

Junior Grade

Structure

Organization8

Manufacturing Units

7 Education and Research

Units• CLW Chitranjan

• CORE Allahabad

• DLW Varanasi

• DMW Patiala• ICF Chennai• MRVC Mumbai

• RCF Kapurthala

• RWF Bangalore

• IRICEN Pune• IREEN Nasik• IRIMEE Jamalpur

• IRISET Secunderabad

• IRITM Lucknow

• RDSO Lucknow

• RSC Vadodara

Organization

Need to know more about:-

• The Electrical Department

• The Stores Department• The Accounts

Department• CORE Allahabad • RDSO Lucknow

The Electrical Department

Electrical Department

General Electrical

Traction Distribution (TRD)

OperationsConstruction

Sub-Departments

The Electrical Department

Grade Designation LocationHAG CEE Zonal HQSAG     

CESE (Service)CEGE (General)CEDE (Distribution)CETE (Traction)CELE (Locomotive)CEE/CON(Construction)

Zonal HQZonal HQZonal HQZonal HQZonal HQZonal HQ

JAG Dy. CEE (Zonal/Divisional)Sr. DEE

Zonal HQ/Div. OfficeDivisional Office

Sr. DEE Divisional OfficeJr. AEE/Zonal

AEE/DivisionalZonal HQDivisional Office

Gazetted Establishment

The Stores Department

Grade Designation LocationHAG Controller of Stores (COS) Office of COSSAG Chief Material Manager

(CMM)Office of COS

JAG Dy. Chief Material Manager (Dy. CMM)

Zonal HQ/ Divisional HQ/ Depots

Sr. Senior Materials Manager (SMM)

Zonal HQ/ Divisional HQ/ Depots

Jr. Assistant Materials Manager (AMM)

Zonal HQ/ Divisional HQ/ Depots

Gazetted Establishment

The Accounts Department

Grade Designation LocationHAS FA & CAO Zonal HQSAG FA & CAO (G)

FA & CAO (T)FA & CAO (W&S)

Various Locations

JAG Dy. FA & CAO Various Locations

Sr. Sr. AFA Various LocationsJr. AFA Various Locations

Gazetted Establishment

CORE Allahabad

• Centrally responsible for all the electrification work in Indian Railways

• Responsible for several approvals needed by vendors for supplying their products to railways

RDSO Lucknow

• Responsible for development of standards for materials and products needed by Indian Railways

• Technical investigation, statutory clearances, testing and providing consultancy services

Procurement Process

• Promoter of open market

• Utilizes tender system for procurement

• Tenders are called by the Gazette of Stores Department (Table showing Power of Gazette)

• Railways uses two methods:• Procure material through tendering• Contract out the procurement of material

while contracting out the jobs

Tendering Process

Consuming Authority

Concerned Stores

Authority

Tender Applicants

Tender Committee/ Accepting Authority

Firm with winning tender

Creates demand Calls

for Tenders

Submit TendersDiscuss and

accept tender

Supplies the product

Tender Committee

Value Stores Consuming Finance10 L to 30 L Sr. (SMM) Sr. (DEE) Jr. (AFA)30 L to 1 Cr JAG (Dy. CMM) JAG(Dy.CEE/

Sr.DEE)Sr. (Sr. AFA)

1 Cr to 2 Cr JAG (Dy. CMM) JAG(Dy.CEE/Sr.DEE)

JAG(Dy.FA & CAO)

2 Cr to 15 Cr SAG (CMM) SAG (CEDE/CETE) SAG (FA & CAO)15 Cr to 25 Cr HAG (COS) HAG (CEE) SAG (FA & CAO)25 Cr to 50 Cr HAG (COS) HAG (CEE) HAG (FA & CAO)

Tender Accepting Authority

Value Accepting Authority10 L to 30 L JAG (Dy. CMM)30 L to 1 Cr SAG (CMM)1 Cr to 2 Cr SAG (CMM)2 Cr to 15 Cr HAG (COS)15 Cr to 25 Cr AGM25 Cr to 50 Cr GM

Below 10 L, the tender is accepted by AMM for value up to 2 L. Above 2 L, the SMM becomes the accepting authority.

Types of Items Procured

• Stock Items:• Annual requirement can be predicted• EAC: Estimated Annual Consumption• BAVR: Book Average Rate

• Non-Stock Items:• No consumption pattern• Procured as and when needed

Inventory Control

• Use Selective Inventory Control (ABC Analysis)

• Allows for control of larger share of expenses by controlling lesser number of items

• Every year a value is set for Annual Consumption (=EAC * BAVR) for dividing items in ABC categories.

Category % of no. of items % of annual consumption value

A 10 70B 20 20C 70 10

Inventory Control• For example:

• For SE Railways:

• For Eastern Railways:

Category Annual ConsumptionA Rs. 35,00,001 or moreB Rs. 17,50,001 to Rs. 35,00,000C Rs. 17,50,000 or less

Category Annual ConsumptionA Rs. 33,92,001 or moreB Rs. 6,10,001 to Rs. 33,92,000C1 Rs. 25,001 to Rs. 6,10,000C2 Rs. 25,000 or less

Description of Productsconsidered…

Cable Joints and Terminations:

Different Technologies

Heat Shrink

Cold ShrinkCompound

Cable Joints and Terminations:

Among these technologies, the heat shrink technology has proven to be the most suitable technology, as it is very durable, is cost effective and takes least time for setting.

Cable Joints and Terminations:

What Indian Railway requires?

• LT - 3.5 core 1.1kV• Heat Shrink Straight through Jointing Kit for PILC/XLPE

Cables (Size range – 25 mm2 to 400 mm2)• Heat Shrink Indoor/Outdoor End Termination Kit for

PILC/XLPE Cables (Size range – 70 mm2 to 240 mm2)• HT – 3 core 11 kV

• Heat Shrink Straight through Jointing Kit for PILC/XLPE Cables (Size range – 25 mm2 to 400 mm2)

• Heat Shrink Indoor/Outdoor End Termination Kit for PILC/XLPE Cables (Size range – 70 mm2 to 240 mm2)

Cable Joints and Terminations:

• LT - 3.5 core 1.1kV• Heat Shrink Straight through Jointing Kit for PILC/XLPE

Cables (Size range – 1.5 mm2 to 1000 mm2)• Heat Shrink Indoor/Outdoor End Termination Kit for

PILC/XLPE Cables (Size range – 4 mm2 to 1000 mm2)• HT – 3 core 11 kV

• Heat Shrink Straight through Jointing Kit for PILC/XLPE Cables (Size range – 16 mm2 to 400 mm2)

• Heat Shrink Indoor/Outdoor End Termination Kit for PILC/XLPE Cables (Size range – 16 mm2 to 400 mm2)

What Raychem can offer?

Insulators: Different Technologies

Porcelain

Polymeric (Composite)

Insulators:

Among these technologies, the polymeric technology has proven to be the most suitable technology, as it is lightweight and thus, easy to handle and install

Insulators

What Indian Railway requires?

• 25 kV Post Insulator (Polymeric/ Composite)• 25 kV Solid-core/cut-in Insulator (Polymeric/ Composite)• 25kV Solid-core suspension Insulator (Polymeric/

Composite)• 25 kV Stay Arm Insulator (Polymeric/ Composite)• 25 kV Bracket Insulator (Polymeric/ Composite)• 25 kV 9-Tonne Insulator (Polymeric/ Composite)• 132 kV Support Insulator (Polymeric/ Composite)• 132 kV Disc Insulator (Polymeric/ Composite)

Insulators:

• All types of polymeric insulators up to 36 kV• Where we lag behind is the RDSO approval

What Raychem can offer?

Lightning (Surge) Arresters:Different Technologies

Porcelain

Polymeric (Composite)

Lightning (Surge) Arresters:

Among these technologies, the polymeric technology has proven to be the most suitable technology, as it is lightweight and thus, easy to handle and install

Lightning (Surge) Arresters:

What Indian Railway requires?

• 132 kV Lightning Arrester, and• 42 kV Lightning Arrestor

Lightning (Surge) Arresters:

• Polymeric Surge Arresters from 1.1 KV to 800KV range.• Porcelain Surge Arresters from 6.6KV to 36KV range.• Where we lag behind is the CORE approval.

What Raychem can offer?

Research Methodology

Unstructured (Informal) Interactions

Structured (Formal) Interactions

Data Collection and Analysis

Principle and Assumptions

Consumption

Maintenance

Construction

Maintenance:

Business Opportunity = EAC * BAVR

Construction:

• 1825 Kms of Construction planned• Estimate per unit distance available• Consumption=(Consumption per unit

distance )* (Total distance)• BO = Consumption * Price as per estimate

(Exhibit)

Data, Findings and Analysis

Data for South Eastern Railways (2493 Rkms):-

Stock ItemsP.L. No. Description EAC BAVR (Rs.) Business

Opportunity (Rs.)

46453544

Stay Arm Insulator

1225 1291.17 1581683.25

46453562

Post Insulator 16 N/A N/A

46453570

9 Tonne Insulator

310 1325.46 410892.6

46453672

Sectioning Insulator

50 3591.44 179572

46454767

Bracket Insulator

1275 1170.39 1492247.25

      Total 3664395.1

Data for Eastern Railways (2422 Rkms):-Stock Items

P.L. No. Description EAC BAVR (Rs.) Business Opportunity (Rs.)

46990094 Composite 9 Tonne Insulator 50 1295 64750

46990112 Composite Stay Arm Insulator 1820 1320 2402400

46990124 Composite Bracket Tube Insulator

3630 1160 4210800

46990173 Composite Bracket Insulator (Std.)

500 1170.39 585195

46990215 Composite Stay Arm Insulator (Std.)

500 1430.28 715140

46990303 Porcelain 9 Tonne Insulator (R-6020)

50 1711.87 85593.5

46610704 Porcelain Stay Arm Insulator (R1-6000)

50 1357.52 67876

46610753 Porcelain Section Insulator (Core-R1-6100)

36 1712.5 61650

46610807 Porcelain Section Insulator (Core-R1-6110)

301 2801.67 843302.67

46610984 Porcelain Stay Arm Insulator P/zone (R1-6002)

525 1515.44 795606

46601010 Porcelain 9 Tonne Insulator P/zone (R1-6020-1)

420 1529 642180

      Total 10474493.17

Thus, considering just the stock items for S.E. Railways and Eastern Railways, the total business opportunity is (Rs.3664395.1+Rs.10474493.17=) Rs. 1,41,38,888.27

N.B.: This opportunity can be extended over to all the zones of Indian Railways in the ratio of their route kms, but considering the differences in terrain and geographical conditions, this will provide us erroneous results. If we neglect this error, the total business opportunity across the country would be:

Business Opportunity= Rs. (14138888.27/4915)*63028

= Rs. 18,13,11,464

Construction:

Products Requirement for every 25 kms (a) in units

Requirement for 1825 kms (b=a*73) in units

Price as per the estimate (c) in Rupees per unit

Total business opportunity (b*c) in Rupees

25 kV Post Insulator 20 1460 7822 1,14,20,12025 kV Solid-core/cut-in Insulator

71 5183 7822 4,05,41,426

25kV Solid-core suspension Insulator

15 1095 7822 85,65,090

Section Insulator assembly

12 876 32071 2,80,94,196

25 kV Stay Arm Insulator

650 47450 1320 6,26,34,000

25 kV Bracket Insulator 650 47450 1170.39 5,55,35,005.5Total 20,67,89,837.

5

Construction:Across 1825 kms, the no. of TSS and SP can be approximated to (1825/60=30.41) thirty one. Thus,Products Requirement

for every TSS (a) in units

Requirement for 31 TSS (a*31) in units

Price as per the estimate (c) in Rupees per unit

Total business opportunity (b*c) in Rupees

132 kV Lightning Arrestor Assembly

4 124 1,68,859 2,09,38,516

42 kV Lightning Arrestor Assembly

7 217 24,808 53,83,336

132 kV Support Insulator 20 620 21,199 1,31,43,380132 kV Termination with Disc Insulator

10 310 14,021 43,46,510

25 kV Post Insulator 150 4650 2,474 1,15,04,10025 kV suspension 9 Tonne Insulator

20 620 2,954 18,31,480

Total 5,76,47,322

Construction:

Taking the distance between consecutive SSP as 15, the total number of SSP in 1875 kms will be (1875/15=) 125Thus, total number of SP/SSP= 125 (SSP) + 31 (SP)=156Since, two 42 kV LA assemblies are required for every SP/SSP;Thus, no. of LA assemblies required- 312Price of one LA assembly- Rs. 79606Thus, business opportunity (79606*312)- Rs. 2,48,37,072 Thus, the total business opportunity available through construction is Rs. 28,92,74,231.5 across the country.

Findings:• Very less big players in the market• Present players little myopic.• Competition:

• Cable Joints and Terminations• Yamuna Densons• M-Seal (3M)

• Insulators• Aditya Birla Insulators• Goldstone Infratech Limited• Insulators and Electricals Company (A unit of

Hindustan Vidyut Products Ltd)• BHEL Ceramics• Modern Insulator Limited• Asiatic Electrical and Switchgear Pvt. Ltd.• Deccan Enterprises Private Limited

Findings:

• Tool and Gauge Company• Khattri Castings• Kamgar Engineering

• Lightning Arresters• Oblum Electrical Industries PVT LTD • ELPRO International Ltd.• LAMCO Industries Private Ltd.

Conclusions

Cable Joints and Terminations:

• Requirement for Cable Joints and Terminations cannot be predicted.

• Maximum business via contractors.• Negligible direct business.• More requirement in construction than maintenance• No approvals required.• Required at the Sub-stations and General purposes.• Required by Electrical General Department.• Yamuna Densons – The major competitor.

Insulators:

• Direct business possible• Requirement in both construction as well as maintenance.• Biggest opportunity among the other three products

considered.• Required by Electrical TRD Department.• Require RDSO approval.

Lightning (Surge) Arresters:

• Direct business possible• Major requirement for construction.• Required by Electrical TRD Department.• Require CORE approval.

Action Plan

Approach contractors

• Follow all the tenders for electrical works• Approach all contractors participating in the bid

Improve Visibility

• Provide our latest price list to the demand forming department of consumption side.

• Get registered on the e-procurement site• If possible, get into a rate contract with DGS&D

Spread Awareness

• Presentation in front of gazette• Explain why we are better than others

For Cable Joints and Terminations:

Obtain Drawings

• Get RDSO vendor approval for manufacturing.• Obtain required Specifications/ Drawings from RDSO Lucknow.

R&D and Manufacturing

• Manufacture products as per the specifications• RDSO provides assistance which can be sought for, if needed.• Some new specification can also be suggested to RDSO which

if included, provides us an leap over other players.

Get Approvals

• Get RDSO approval for Insulators• Get CORE approval for Lightning Arresters

For Insulators and LAs:

Spread Awareness

• Presentation in front of gazette• Explain why we are better than others

Increase Visibility

• Provide our latest price list to the demand forming department of consumption side.

• Get registered on the e-procurement site• If possible, get into a rate contract with DGS&D

Approach contractors

• Follow all the tenders for electrical works• Approach all contractors participating in the bid

For Insulators and LAs (contd.):

For Insulators and LAs:

According to a Sr. DEE: “If big companies like yours consider acquiring or getting into a partnership with the companies which fabricate products like traction mast, i.e., for which there are no other players in the market, the business will be really helped.”

So, we can also try moving in this direction.

Appendix

Appendix 1: Important Websites:

• Indian Railways (http://www.indianrailways.gov.in/)• Can get links to all zonal railways sites from here

• All codes and manuals (http://www.indianrailways.gov.in/railwayboard/view_section.jsp?lang=0&id=0,5,377)

• CORE (http://www.core.indianrailways.gov.in/)• RDSO (http://www.rdso.indianrailways.gov.in/)• RDSO Vendor Interface (

http://www.rdso.indianrailways.gov.in/view_section.jsp?lang=0&id=0,5)

• RDSO Online Purchase of documents (http://www.rdsoqa.org/qamd/Vendor_Application_Form_next.aspx)

• E-Procurement (http://www.ireps.gov.in)• DGS&D (http://www.dgsnd.gov.in/)

Appendix 2: List of Contractors:• R K Electric Automation Limited, Hyderabad.

• Contact - 04023720426• ECI Engineering & Construction Co. Ltd., Hyderabad.

• Contact - 04024786099• Ranjit and Company, Ranchi

• Contact - 06512511708• BCPL Railway Infrastructures Limited/ Bapi Construction Private Limited, Kolkata

• 13B, Bidhan Sarani, Chanda Plaza, 4th Floor• Contact – 03322198668• http://www.bcril.com

• Bright Power Projects (I) Pvt. Ltd., Mumbai• Contact – 02242333777

• Kalicon Electricals, 50, Prince Anwar Shah Road, Kolkata• Contact – 9339306625

• Bikash Enterprises, 143/C, Dr. Rajendra Road, Kolkata-20• Contact – 03324314825 / 9830016377

• Mukherjee Commercial Enetrprises, Reckjoiani, Rajarhat, North 24 Paraganas, Kolkata-135• Contact - 03325737248

• Macintosh Burn Limited, Kolkata, MBL House, DD 18/8, Sector-1, Salt Lake City, Kolkata – 64• Contact – 03323581418/1420, 03323371654, 03323592645/3068• www.macintoshburn.com

• Swamina International Private Limited, Plot Y-20, EP Block, Sector –V, Salt Lake, Kolkata – 91• Contact – 03364502408

• B. P. Construction, Sri Kunj Apartment, Devi Mandap Road, Ratu Road, Ranchi – 834065• Contact – 06512525232 / 9430144687

Appendix 2: TSS Diagram:

Thank You…