The Hindu Business Line : Core manufacturing sectors — Domestic cos stealing a global march in efficiency benchmarks

The Indian manufacturing sector's reliance on quality parameters to achieve efficiency is also borne out of the fact that Indian companies are the second largest Deming Award winners outside of Japan.

New Delhi , Feb. 14

EVEN as China continues to steal the show in the global manufacturing scene with India being relegated to the sidelines as merely a service hub, Indian companies are increasingly setting efficiency benchmarks across some of the core manufacturing sectors.

While Tata Steel is among the lowest-cost steel producers in the world, domestic cement majors led by Gujarat Ambuja are setting new cost efficiency benchmarks, beating global biggies such as Lafarge, Holcim, Heidelberg, and Cemex in terms of overall profitability.

A number of Indian manufacturing majors are also leveraging on economies of scale to emerge cost-competitive.

Bharat Forge, which operates one of the world's largest forging capacities, and Essel Propack, the world's largest manufacturers of laminated tubes, are among the most efficient producers of the product globally.

The Indian manufacturing sector's reliance on quality parameters to achieve efficiency is also borne out of the fact that Indian companies are the second largest Deming Award winners outside of Japan.

Low cost steel: In the steel sector, Tata Steel has managed to emerge as one of the lowest cost producers, beating global biggies such as Usinor, Baosteel, China Steel, and Nippon Steel Severstal in terms of overall efficiency levels as per World Steel Dynamics (WSD) data.

This has been possible largely because it has its own ore and coking coal reserves and through better operational management.

Indian cement majors are turning to cost efficiency measures through the adoption of improved plant processes and innovative cost-cutting measures to emerge among the most profitable firms.

Cementing profits: According to latest IBEF data, Gujarat Ambuja recorded an operating profit margin of 33.9 per cent in 2003-04, compared to 26.3 per cent by Holcim, 13.38 per cent by Lafarge, 24.76 per cent by Italcementi, 16.07 per cent by Heidelberg, and 29 per cent by Mexican cement major, Cemex.

While Gujarat Ambuja is widely considered to be the producer with the lowest costs in the country, mid-sized domestic firm such as Madras Cements and India Cements have also done well in profitability terms in comparison to the global giants, with Madras Cements recording an operating profit margin of 24.6 per cent during the year.

Indian cement majors have been turning to innovative cost-cutting measures.

Gujarat Ambuja, for instance, has controlled costs through a mix of measures such as using large kilns, high degree of automation, and lowering of power and fuel costs.

It has cut energy costs by reducing the usage of coal through use of substitutes such as crushed sugarcane.

The company also pioneered the utilisation of ship transportation to cut freight costs and has established infrastructure such as ports, freight, and handling terminals.

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