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‘Local brands should automate for pan-India presence’

Monday, Jan 06, 2014

Large and medium Indian industries have near-perfected the art of balancing automation and labour, given the low labour cost in the country.

However, the SME segment lags behind and is yet to understand that a marginal investment in automation could make it a bit more competitive, says Bhaskar Mandal, Sector Cluster Lead, Industry Sector, Siemens South Asia.

In a chat with Business Line, Mandal points out that in the Indian context, reduction in automation could be justified with lower labour cost, especially when quality and efficiencies are not compromised.

In India, Siemens provides a complete range of automation products and systems, industrial automation systems, large and standard drives and motors, special purpose motors, process and motion control systems. For the financial year ending September 30, 2013, the Industry sector sales were Rs 3,344 crore.

Excerpts from the interview:

What is the level of industrial automation in India verses the West?

We have a long way to go. But there is a big difference in what is in the developed world and the developing world.

For example, if an automobile manufacturer puts up a plant in Germany it would be 70 per cent automated with 30 per cent labour intervention. The same company would reverse it in India, as low-cost labour is available. This applies to global players.

Indian companies’ automation levels are lower than 30 per cent.

How does China compare with India and Europe?

Automation is for mass production with assured quality and consistency. In China, the automation level is almost 50 per cent.

Automation calls for upfront investment. How will it benefit local brands?

Local brands need to automate to achieve a pan-India presence. They have to make their products better and repeatable and achieve a higher degree of efficiency if they need to grow from their home base.

Typically, they lose out to companies which invest in upfront automation. These companies know that it would take three years to recover their investments but then they are ‘future ready’.

There is lot of untapped productivity in the Indian economy. So if we can make the SMEs a little more competitive then we can see value.

There are many areas where Siemens can justify RoI (return on investment) in six to eight months. Energy efficiency is one where efficient motors can make a change.

At some places, we even guarantee the RoI.

How about inventory management in terms of automation verses manual?

Let us take the automobile industry. When you automate the cycle time to produce a product becomes shorter. So, one gets a faster reaction time to address demand.

Carmakers who log heavy bookings go in for additional automation and scale it down once the bookings come down.

Which are the areas you target for the automation business?

All industries have varying degrees of automation. We focus on automobile industries, pharmaceuticals, food and beverage, cement, glass, refrigeration and continuous process industries such as chemicals.

How much is your defence business?

We are bound by a strong non-disclosure agreement. Our software companies have a strong presence, be it in the Indian Navy or Air Force. We support them to localise certain products. Siemens PLM only provides the software tools with which they design their requirements.