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1 January 20, 2015, New Delhi LARSEN & TOUBRO A.K. Datta, Zonal Manager Larsen & Toubro Ltd, Mumbai Mission 1 Billion : The challenges ahead An equipment.

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Presentation on theme: "1 January 20, 2015, New Delhi LARSEN & TOUBRO A.K. Datta, Zonal Manager Larsen & Toubro Ltd, Mumbai Mission 1 Billion : The challenges ahead An equipment."— Presentation transcript:

1 1 January 20, 2015, New Delhi LARSEN & TOUBRO A.K. Datta, Zonal Manager Larsen & Toubro Ltd, Mumbai Mission 1 Billion : The challenges ahead An equipment manufacturer’s perspective

2 2 Contents Introduction : L&T, Komatsu Komatsu Product Range After Sales Support Network of L&T Our presence in Coal PSUs CIL Tenders : Current Scenario & Our Suggestions The way forward

3 3 Sales Turnover Rs 85,889 Cr # PBIT Rs 7,489 Cr # Employees 67,828 * # FY1314, * As on March 31, 2014 CMB Hydrocarbon Heavy Engineering L&T Construction Power Information Technology Electrical & Automation Ship Building Railway Projects Financial Services Machinery & Industrial Products Two Danish Visionaries LARSEN & TOUBRO It’s all about Imagineering Henning Holck-Larsen ( – ) Soren Kristian Toubro ( – ) An Engineering Behemoth A journey of 77 years… Introduction : Larsen & Toubro Construction & Mining Business L&T Construction Equipment Ltd (LTCEL) Bangalore, Karnataka HYDRAULIC EXCAVATORS PC71 | PC130 | PC210 PC300 | PC450 | 300CK KOMATSU INDIA PVT. LTD Chennai, T.N DUMP TRUCKS HD465  60 Ton Class HD785  100 Ton Class > 50 Years Experience

4 4 Introduction : Komatsu Affiliates Liaison & Regional Offices Distributors Affiliates Liaison & Regional Offices Distributors Established on May 13, 1921 Sales : USD Billion (FY1314) Sales : USD Billion (FY1314) Employees : 47,208

5 5 Model Operating WEIGHT BKT CuM PC PC PC PC PC PC PC Model Flywheel HP D D D D D Model BKT CuM WA WA WA WA WA WA WA Model Payload TON 960E E E E190 HD HD HD46560 Model Flywheel HP Blade CuM WD WD WD ~ 22.5 WD Model Flywheel HP Blade M GD GD Komatsu Product Range Tables denote Mining Equipment

6 6 Pan India Coverage Tamil Nadu Kerala Goa Karnataka Maharashtra Jammu and Kashmir Gujarat Rajasthan Haryana Punjab Himachal Pradesh Uttaranchal Uttar Pradesh Madhya Pradesh Bihar Jharkhand Chhattishgarh Andhra Pradesh Orissa West Bengal Sikkim Assam Arunachal Pradesh Nagaland Manipur Mizoram Tripura Meghalaya Bhutan Bahadurgarh Durgapur Pune 5 fully equipped Service Stations Pan India Coverage Specialized Service Training Testing Facilities 5 fully equipped Service Stations Pan India Coverage Specialized Service Training Testing Facilities Value added services Preventive Maintenance Clinics Annual / Full Maintenance Contracts Site Support Agreements On site Workshops Assy. Exchange Program Component Repairs RECON / REMAN Value added services Preventive Maintenance Clinics Annual / Full Maintenance Contracts Site Support Agreements On site Workshops Assy. Exchange Program Component Repairs RECON / REMAN Spare Parts Support Central Ware house – Planning, procurement & stocking of parts Stocking points at 22 territories mainly for insurance parts. Parts inventory at customer sites Spare Parts Support Central Ware house – Planning, procurement & stocking of parts Stocking points at 22 territories mainly for insurance parts. Parts inventory at customer sites Product Support : Infrastructure Kanchipuram Nagpur

7 7 Dump Truck Overhaul Hydraulic Repair bay Hydraulic Test Bench Crankshaft Grinding Machine Dozer Overhauling Engine Repair Bay Best-in-class Support Infrastructure Product Support : Facilities

8 8 MARC : 497 m/c, 535 men at 52 sites SSA : 62 m/c, 37 men at 8 sites MARC : 497 m/c, 535 men at 52 sites SSA : 62 m/c, 37 men at 8 sites (Machines | Manpower) NCL Singraui 59 | 48 Tata, NM,JD,WB 26 | 29 EMTA Pakur 79 | 69 Rungta 12| 1 SCCL, Manuguru 27 | 5 SCCL, RMGDM 28 | 7 SECL, Dpk, Gvr 9 | 10 SAIL 15 | 5 ESSEL (BCML) 4 | 13 HINDALCO 3 | 8 PLR, Sar 8 | 3 EMTA, Tara, BRJA 52 | 47 EMTA, GRB, BRJ 9 | 11 HZL, DECO 31 | 62 HZL, DECO 45 | 35 SHREE, Beawar 7 | 25 Ultratech, KOT 14 | 17 Adani (A&M) 4 | 4 Lafarge, Sonadih 3 | 6 Holcim, BTPRA 16 | 13 EMTA, Baranj 64 | 77 Holcim, Chanda 8 | 10 Holcim, Maratha 6 | 11 Dorajiya, Wani 5 | 1 Dalmia, Trichy 12 | 10 MARC Sites SSA Sites SHREE, Raipur 1 | 3 BCCL 18| 8 Ultratech, Gul 1 | 2 PLR, BKD 4 | 3 Major MARC and SSA Projects Rich experience in executing MARC & SSA MARC : Maintenance & Repair Contract; SSA : Site Support Agreement

9 9 ModelMachine Type Total Total Our association with Coal PSUs … Equipment supplied Equipment supplied as on ; include orders under execution SECL NCL MCL ECL BCCL CCL HD T Dump Truck D HP Dozer GD HP Motor Grader WA Cu.m FEL PC Cu.m Hyd Excavator HD465 60T Dump Truck PC Cu.m Hyd Excavator WA Cu.m FEL 300CK 4.0 Cu.m Hyd Excavator SCCL WCL

10 10 Coal Mining… with a difference Mission 1 Billion Tonnes !!! Availability Productivity Guaranteed Parts Consumption Safety Features Environment Friendly Operator Comfort After-sales Support Revamp equipment evaluation & selection criteria Revamp equipment evaluation & selection criteria Superior equipment performance – key to success 2 19

11 11 Mining Equipment Manufacturer : Concerns  Equipment performance is the backbone of any mining company  In India, as compared to global standards, the following parameters have a lot of scope for improvement ›Equipment availability ›Equipment utilization ›Operators’ skill ›Maintenance practices ›Respect for safety and environment, etc  With the advent of ICT*, the above have become easy to monitor  The challenge for CIL is to incorporate such superior features in the NIT scope and evaluation process  Such steps shall contribute towards improving equipment utilization, thereby leading to enhanced productivity. * Information & Communication Technology This is the time to embrace the change

12 12 CIL Tenders : Current scenario & our suggestions TECHNICAL Qualification criteria are extremely broad-based Deficiency : 1.No weightage for technical superiority 2.Discourages participation by manufacturers of equipment with advanced / latest features Current ScenarioOur suggestion 1.Re-introduce Technical Merit Rating (TMR) system with adjusted bid price mechanism 2.The earlier system of disqualification under TMR, may be done away with Calls for Availability Guarantee (AG) of years Deficiency : 1.Does not value reliability over a longer period of equipment life 2.Does not reward higher AG achievement 1.AG for atleast 50% period of the economic life of the equipment 2.Better rating for AG over & above NIT Enlarging participation cannot be the guiding factor for equipment procurement

13 13 CIL Tenders : Current scenario & our suggestions TECHNICAL Current ScenarioOur suggestion No weightage is given for user's past experience with the quoted models Deficiency : 1.Achievement of AG for the stipulated period (as per PO) is considered sufficient for proven-ness 2.Low equipment utilization shields poor equipment performance, if any, even if AG is formally achieved 3.No mechanism to bring post-AG period experience for evaluation 1.Introduce : a. MTBF (measure of equipment reliability) b. MTTR (measure of after-sales support strength) The above tools can be used to monitor a.equipment performance for its lifetime b.can form as input for evaluation of similar equipment for subsequent tenders 2. In case of below-par past performance of the quoted model : a.Demand higher amount of PBG (Phase # 1) b.Disqualification of the equipment model unless the problem areas are rectified & proven (Phase # 2) MTBF : Mean Time Between Failure; MTTR : Mean Time To Repair Guaranteed Parts Consumption Deficiency : 1.Unused inventory 2.Tedious record keeping Thus, no specific benefit to CIL Introduce ‘Cost Cap’ for spare parts. Generates more value proposition for buyer & seller; win-win situation Expand proven-ness criteria : MTBF, MTTR alongwith AG

14 14 Expand the horizon of evaluation by including other important elements CIL Tenders : Current scenario & our suggestions SAFETY, ENVIRONMENT & OPERATOR COMFORT Has scope of improvement for inclusion of safety & environment-friendly features Current ScenarioOur suggestion Latest safety standards & environment friendly features (e.g. better emission norms, higher oil change interval etc) should be included in NIT Fails to fully utilize the after-sales support capabilities of manufacturers Deficiency : 1.Duplication of infrastructure at projects 2.Deprived of latest maintenance and continuous improvement practices 1.Introduce rating system (based on MTTR) for after-sales support capabilities 2.Opt for long-term MARC to ensure best performance for the entire economic life of the equipment AFTER-SALES PRODUCT SUPPORT MTTR : Mean Time To Repair; MARC : Maintenance & Repair Contract No weightage for features aiding operator comfort Deficiency : Ignores the fact that operator comfort is key for equipment utilization, productivity & fuel consumption Latest standards on operator comfort should be included in NIT

15 15 CIL Tenders : Current scenario & our suggestions COMMERCIAL Successful bidder is selected only on L1 basis Deficiency : 1.Discourage manufacturers of quality equipment to seriously participate in tenders 2.Deprives CIL of latest technologies and its benefits to improve productivity & reduce cost of production Current ScenarioOur suggestion Successful bidder should be determined by adjusted bid price mechanism This adjustment should be based on Technical Merit Score (which should be re-introduced) and should consist of the following : a)Technical features, especially those aiding production & safety b)AG, over & above NIT norm c)After-sales support capabilities 100% order on L1 bidder Deficiency : 1.Longer lead time for supply of the entire fleet 2.Discourages competition Distribution of order between L1 and L2. Will benefit CIL by : 1.Shortening of lead time 2.Keeping healthy competition amongst suppliers Create a level playing field for fair competition

16 16 CIL Tenders : Current scenario & our suggestions Low duration of outsourcing contracts; generally 3 or 4 years Current ScenarioOur suggestion Increase the contract duration to 8 ~ 10 years No incentive for exceeding performance parameters Incentivize higher OB / Coal production over the contracted quantities Current tenders are silent on minimum size of equipment or specify very low sizes Clearly mention the minimum size of equipment as per the volume of OB / Coal to be handled / year OB/COAL OUTSOURCING TENDERS Illustration : 100T Dump Truck Depreciation Cost (Rs / Hour) Enable contractors to serve CIL better

17 17 Cost / BCM : An illustration … 100 Ton Dump Truck * Indicative for 1.5 km lead & 20 m lift haul road profile Note : The above is for illustration purposes only & should not be taken as any form of guarantee

18 18 Radical change in tender norms & evaluation criteria 1.Re-introduce Technical Merit Rating (TMR) system, incorporating the following : a.Technical features, especially those aiding production & safety b.AG, over & above NIT norm c.After-sales support capabilities 2.Successful bidder should be determined by Adjusted Price Bid Mechanism, based on the above TMR 3.Constitute a Steering Committee to look into revamping the tender norms & evaluation criteria. The way forward…

19 Thank You


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